UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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| Item 1.01 | Entry into a Material Agreement. |
On July 26, 2024, Lineage, Inc. (the “Company” and, unless the context otherwise requires, together with its consolidated subsidiaries, “we,” “us,” or “our”) closed its registered underwritten public offering (the “Offering”) of 56,882,051 shares of common stock, $0.01 par value per share (the “Common Stock”), pursuant to the Company’s registration statement on Form S-11 (File No. 333-280470) and the registration statement on Form S-11 (File No. 333-280995) filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended (the “Securities Act”) (together, the “Registration Statement”).
Underwriting Agreement
In connection with the Offering, the Company entered into the Underwriting Agreement, dated July 24, 2024, by and among the Company, Lineage OP, LP (the “Operating Partnership”), Lineage Logistics Holdings, LLC (“Lineage Holdings”) and Morgan Stanley & Co. LLC, Goldman Sachs & Co. LLC, BofA Securities, Inc., J.P. Morgan Securities LLC and Wells Fargo Securities, LLC, as representatives of the several underwriters named therein (the “Underwriting Agreement”). The Underwriting Agreement contains customary representations, warranties, covenants and agreements by the Company, the Operating Partnership and Lineage Holdings, customary conditions to closing, indemnification obligations of the Company, the Operating Partnership, Lineage Holdings and the underwriters, including for liabilities under the Securities Act, certain other obligations of the parties and termination provisions. The underwriters have a 30-day option to purchase 8,532,307 additional shares of Common Stock.
The summary above is qualified in its entirety by the text of the Underwriting Agreement, which is as Exhibit 1.1 to this Current Report on Form 8-K and incorporated herein by reference.
Agreement of Limited Partnership of Lineage OP, LP
On July 24, 2024, the Company, as sole general partner of the Operating Partnership, entered into an agreement of limited partnership (the “Partnership Agreement”) and a Unit Designation – Legacy Units (the “Legacy Unit Designation”) thereto. As described in the Registration Statement, pursuant to the Partnership Agreement, the Operating Partnership may issue common units of limited partnership interest (“OP units”), Legacy Class A OP Units, Legacy Class B OP Units (together with the Legacy Class A Units, “Legacy OP Units”) and LTIP Units. In addition, the Operating Partnership may authorize and issue additional classes of units of partnership interest in the future.
Pursuant to the Partnership Agreement, members of the Operating Partnership will have rights beginning 14 months after the issuance of the OP units to require the Operating Partnership to redeem all or part of their OP units (excluding any Legacy OP Units) for cash equal to the then-current market value of an equal number of shares of the Common Stock (determined in accordance with and subject to adjustment under the Partnership Agreement) or, at the Company’s election, to exchange their OP units for shares of Common Stock on a one-for-one basis subject to certain adjustments and the restrictions on ownership and transfer of the Company’s stock set forth in the Company’s charter. Over the course of the first three years following the closing of the Offering, all of the Legacy OP Units will ultimately be reclassified into OP units. Reclassification will be on a one-for-one basis, with each Legacy OP Unit becoming a single OP unit upon its reclassification.
The Company is the sole general partner of, and currently owns a 90.8% partner interest in, the Operating Partnership. Except as otherwise expressly provided in the Partnership Agreement, the Company, as general partner, has the exclusive power to manage and conduct the business of the Operating Partnership.
The foregoing description of the Partnership Agreement, including the Legacy Unit Designation, is only a summary and is qualified in its entirety by reference to the full text of the Partnership Agreement and the Legacy Unit Designation, copies of which are filed as Exhibits 10.1 and 10.2, respectively, to this Current Report on Form 8-K and incorporated herein by reference.
Ninth Amended and Restated Operating Agreement of Lineage Logistics Holdings, LLC
On July 24, 2024, the Operating Partnership, as managing member of Lineage Holdings, entered into the Ninth Amended and Restated Operating Agreement of Lineage Logistics Holdings, LLC (the “Operating Agreement”). As described in the Registration Statement, pursuant to the Operating Agreement, Lineage Holdings may issue common units and a class of units of membership interest designated as OPEUs (“OPEUs”) and may authorize and issue additional classes of units of membership interest.
Beginning July 26, 2026, each holder of OPEUs will have the right, subject to the terms and conditions set forth in the Operating Agreement, to require the Operating Partnership to exchange all or a portion of the OPEUs held by such holder for OP units, based on an exchange ratio of one OP unit for each OPEU, subject to adjustment as provided in the Operating Agreement. Holders of OP units issued in exchange for such OPEUs will not be able to redeem OP units until after the settlement of all legacy BGLH equity and all Legacy OP Units.
The Operating Partnership is the sole managing member of, and currently owns a 99.4% membership interest in, Lineage Holdings. Except as otherwise expressly provided in the Operating Agreement, the Operating Partnership, as managing member, has the exclusive power to manage and conduct the business of Lineage Holdings.
The foregoing description of the Operating Agreement is only a summary and is qualified in its entirety by reference to the full text of the Operating Agreement, a copy of which is filed as Exhibit 10.3 to this Current Report on Form 8-K and incorporated herein by reference.
Transition Services Agreement
On July 24, 2024, Lineage Holdings entered into a transition services agreement (the “Transition Services Agreement”) with Bay Grove Management Company, LLC, a Delaware limited liability company (“BGMC”), pursuant to which BGMC will provide us with certain transition services supporting capital deployment and mergers and acquisitions activity until July 26, 2027, unless earlier terminated pursuant to the terms of the agreement, to help us build our full internal capability during that period. The Transition Services Agreement may be terminated by mutual written consent of Lineage Holdings or BGMC or by Lineage Holdings for cause (as defined in the Transition Services Agreement). Lineage Holdings will pay BGMC an annual fee equal to $8.0 million, or $24.0 million in the aggregate for the three-year period, which fee is payable in advance in equal quarterly installments. Lineage Holdings has also agreed to reimburse BGMC for all its out-of-pocket expenses incurred or accrued in connection with the performance of the services under the Transition Services Agreement. The foregoing description of the Transition Services Agreement is only a summary and is qualified in its entirety by reference to the full text of the Transition Services Agreement, a copy of which is filed as Exhibit 10.4 to this Current Report on Form 8-K and incorporated herein by reference.
Stockholders Agreement
On July 24, 2024, the Company entered into a stockholders agreement (the “Stockholders Agreement”) with BG Lineage Holdings, LLC (“BGLH”), Adam Forste, Kevin Marchetti, D1 Master Holdco II LLC (“D1 Capital”), BGO Cold Storage Holdings II, LP (“BGO”) and Stonepeak Aspen Holdings LLC (“Stonepeak”).
The Stockholders Agreement requires the Company to nominate for election as its directors at any meeting of its stockholders a number of individuals designated by BGLH (each a “BGLH Director”) such that, following the election of any directors and taking into account any director continuing to serve as such without the need for re-election, the number of BGLH Directors serving as directors of the Company will be equal to: (1) if BGLH and its affiliates together continue to beneficially own at least 50% of the outstanding shares of Common Stock, OPEUs held by persons other than the operating partnership and OP units (including OP units issuable upon reclassification of Legacy OP Units) held by persons other than us (collectively, the “total outstanding interests”) as of the record date for such meeting, the lowest whole number that is greater than 50% of the total number of directors comprising the Company’s board of directors; (2) if BGLH and its affiliates together continue to beneficially own at least 40% (but less than 50%) of the total outstanding interests as of the record date for such meeting, the lowest whole number that is at least 40% of the total number of directors comprising the Company’s board of directors; (3) if BGLH and its affiliates together continue to beneficially own at least 30% (but less than 40%) of the total outstanding interests as of the record date for such meeting, the lowest whole number that is at least 30% of the total number of directors comprising the Company’s board of directors; (4) if BGLH and its affiliates together continue to beneficially own at least 20% (but less than 30%) of the total outstanding interests as of the record date for such meeting, the lowest whole number that is at least 20% of the total number of directors comprising the Company’s board of directors; and (5) if BGLH and its affiliates together continue to beneficially own at least 5% (but less than 20%) of the total outstanding interests as of the record date for such meeting, the lowest whole number that is at least 10% of the total number of directors comprising the Company’s board of directors.
Following the date that BGLH is no longer entitled to designate at least two BGLH Directors, the Stockholders Agreement will require the Company to nominate for election as its directors at any meeting of its stockholders one individual designated by each of Mr. Forste (the “Forste Director”) and Mr. Marchetti (the “Marchetti Director”) if, as of the record date for such meeting, Mr. Forste, together with his affiliates, or Mr. Marchetti, together with his affiliates, as applicable, continue to beneficially own a number of total outstanding interests representing at least 1.76% of the total outstanding interests outstanding as of July 26, 2024.
The Stockholders Agreement will also require the Company to nominate for election as its directors at any meeting of its stockholders a number of individuals designated by Stonepeak (each a “Stonepeak Director”) as follows: (1) two Stonepeak Directors if Stonepeak and its affiliates together continue to own at least 25% of the shares of Common Stock outstanding as of the record date for such meeting (calculated as set forth in the Stockholders Agreement); (2) one Stonepeak Director if Stonepeak and its affiliates together continue to
own (x) at least 10% (but less than 25%) of the shares of Common Stock outstanding as of the record date for such meeting (calculated as set forth in the Stockholders Agreement) or (y) any BGLH equity. If at any time Stonepeak has the right to designate two individuals for election as directors under the Stockholders Agreement and there are less than two Stonepeak Directors serving on the board of directors, the Stonepeak Director serving on the board of directors will have the power to cast two votes with respect to any matters presented to the board of directors.
In addition, for so long as BentallGreenOak owns (x) at least 10% of the total outstanding interests as of the record date for such meeting (calculated as set forth in the Stockholders Agreement) or (y) any BGLH equity, the Stockholders Agreement requires the Company to nominate for election as its directors at any meeting of its stockholders one individual designated by BentallGreenOak (the “BentallGreenOak Director”). We have agreed that the BentallGreenOak Director shall not be appointed to serve as (i) the chairperson of the Company’s board of directors or (ii) the chairperson of any committee of the Company’s board of directors.
For so long as the Stockholders Agreement remains in effect with respect to each of BGLH, Stonepeak, BentallGreenOak, Mr. Forste or Mr. Marchetti, such investor’s director may not be removed without the consent of such investor. In the case of a vacancy on the Company’s board of directors created by the removal or resignation of a BGLH Director, Stonepeak Director, BentallGreenOak Director, Forste Director or Marchetti Director, the Stockholders Agreement requires the Company to nominate for election an individual designated by the applicable investor to fill the vacancy. In addition, the Stockholders Agreement requires that any action with the purpose of, or that would have the effect of, discontinuing the Company’s qualification as a domestically controlled qualified investment entity will require the consent of each of Stonepeak, D1 Capital and BentallGreenOak for so long as each such entity is entitled to receive shares of Common Stock upon a distribution in kind from BGLH to owners of its equity.
The Stockholders Agreement will terminate with respect to each of BGLH, Stonepeak, D1 Capital, BentallGreenOak, Mr. Forste and Mr. Marchetti at the earlier to occur of (i) the applicable investor is no longer entitled to nominate a director pursuant to the Stockholders Agreement (or, with respect to D1 Capital, on the date when D1 Capital ceases to own (x) 10% or more of the total outstanding interests (calculated with respect to its share of any Common Stock held through BGLH as if no Founders Equity Share was due in respect of any BGLH equity held by D1 Capital and its affiliates) or (y) any BGLH equity) or (ii) the date on which the applicable investor requests that the agreement terminate with respect to itself.
In addition, the Stockholders Agreement will provide that the Company, on its own behalf and in its capacity as the general partner of the Operating Partnership, must use commercially reasonable efforts to (i) structure certain significant exit transactions (including mergers, consolidations and sales of substantially all of our assets or the assets of the Operating Partnership and its subsidiaries) in a manner that is tax-deferred to Messrs. Marchetti and Forste, their respective estate planning vehicles, family members and controlled affiliates, does not cause such parties to recognize gain for federal income tax purposes, and provides for substantially similar tax protections after such transactions, and (ii) cause the Operating Partnership or its subsidiaries to continuously maintain sufficient levels of indebtedness that are allocable for federal income tax purposes to Messrs. Marchetti and Forste and their respective personal holding entities to prevent them from recognizing gain as a result of any negative tax capital account or insufficient debt allocation, provided that such amount of debt shall not be required to exceed the amount allocable to the parties immediately following this offering, subject to certain exceptions. The Stockholders Agreement further provides that, prior to entering into an agreement to consummate such an exit transaction, the parties will negotiate in good faith on a tax-deferred structure that is reasonably acceptable to Messrs. Marchetti and Forste, their respective estate planning vehicles, family members and controlled affiliates. If the parties are unable to reach agreement after 45 days of negotiation, the Company’s recommended tax deferred structure will prevail. If material terms of the proposed transaction are modified or changed, the negotiation period will be extended by 30 days. In connection with the obligation to maintain sufficient liability allocations, if the Company or the Operating Partnership believes insufficient liabilities may be allocated to Messrs. Marchetti and Forste and their respective personal holding entities, the Company shall, and shall cause its subsidiaries to, provide Messrs. Marchetti and Forste, their respective estate planning vehicles, family members and controlled affiliates with an opportunity to guarantee indebtedness. These rights granted to Messrs. Marchetti and Forste, their respective estate planning vehicles, family members and controlled affiliates will last with respect to each as long as such person (or his estate planning vehicles, family members and controlled affiliates) has not disposed of more than 60% of his interest in us or obtained a fair market value adjusted tax basis as a result of the death of Messrs. Marchetti or Forste, respectively.
The foregoing description of the Stockholders Agreement is only a summary and is qualified in its entirety by reference to the full text of the Stockholders Agreement, a copy of which is filed as Exhibit 10.5 to this Current Report on Form 8-K and incorporated herein by reference.
Registration Rights Agreements
On July 2024, the Company entered into a registration rights agreement with BGLH, pursuant to which the Company granted it and certain of its affiliates with certain “demand” registration rights and “piggyback” registration rights, including rights to demand that the
Company undertake a public offering of shares of Common Stock for the Company’s own account and use the net proceeds from such offering to purchase or redeem shares of Common Stock held by individuals designated by BGLH, with respect to 161,924,302 shares of Common Stock held by BGLH and 22,232,708 shares of Common Stock issuable upon redemption of 22,232,708 OP units. The registration rights agreement also provides that we will pay certain expenses relating to such registrations and indemnify the registration rights holders against certain liabilities that may arise under the Securities Act of 1933, as amended (the “Securities Act”).
On July 2024, the Company entered into a registration rights agreement with holders of registrable securities (including Adam Forste and Kevin Marchetti, our Co-Executive Chairmen, affiliates of D1 Capital, affiliates of BGO and affiliates of Stonepeak), pursuant to which the Company granted them with certain resale registration rights with respect to shares of Common Stock that they may receive upon distributions from BGLH or upon exchange of OP units (including any OP units received in any reclassification of Legacy OP Units). The registration rights agreements will also provide that we will pay certain expenses relating to such registrations and indemnify the registration rights holders against certain liabilities which may arise under the Securities Act.
The foregoing descriptions of the registration rights agreements are only summaries and are qualified in their entirety by reference to the full text of the registration rights agreements, copies of which are filed as Exhibits 10.6 and 10.7 to this Current Report on Form 8-K and incorporated herein by reference.
Aircraft Time Sharing Agreement
On July 2024, the Company entered into an aircraft time sharing agreement (the “Time Sharing Agreement”) with Bay Grove Capital LLC (“Bay Grove”) under which we may lease the aircraft from Bay Grove for certain flights in accordance with applicable federal aviation regulations. For all such use under the Time Sharing Arrangement, we will pay for time sharing costs in accordance with applicable federal aviation regulations. Time sharing costs include, among other items, fuel and oil costs, crew and food and beverage costs, hangar and tie-down costs, landing fees, airport taxes, and similar assessments, and other costs incurred in planning for and operating the applicable flight. The term of the Time Sharing Agreement is one year, which term will be automatically renewed for successive one year terms at the end of each year. The foregoing description of the Time Sharing Agreement is only a summary and is qualified in its entirety by reference to the full text of the Time Sharing Agreement, a copy of which is filed as Exhibit 10.8 to this Current Report on Form 8-K and incorporated herein by reference.
Put Option Agreement
On July 24, 2024, the Company, the Operating Partnership and Lineage Holdings entered into a put option agreement with BGLH (the “Put Option Agreement”), to provide successive special repurchase rights and cash and equity top-up rights to certain legacy investors that mirror those given by BGLH to its investors and those given by the Operating Partnership to its investors, in each case, in connection with certain minimum value guarantees and/or the alternative option to elect cash or equity top-up rights to achieve a certain minimum equity valuation at a specific date. The foregoing description of the Put Option Agreement is only a summary and is qualified in its entirety by reference to the full text of the Put Option Agreement, a copy of which is filed as Exhibit 10.9 to this Current Report on Form 8-K and incorporated herein by reference.
Expense Reimbursement and Indemnification Agreement
On July 24, 2024, Lineage Holdings entered into an expense reimbursement and indemnification agreement (the “Expense Reimbursement and Indemnification Agreement”) with BGLH, BG Lineage Holdings LHR, LLC and BGMC, pursuant to which Lineage Holdings has agreed to (i) advance to or reimburse such entities for all of their expenses in any way related to our company, including expenses incurred in connection with the coordinated settlement process that will occur for up to three years for all legacy investors in both BGLH and the Operating Partnership and (ii) indemnify such entities to the fullest extent permitted by applicable law against liabilities that may arise in any way related to our company, including liabilities incurred in connection with or as a result of the coordinated settlement process. The foregoing description of the Expense Reimbursement and Indemnification Agreement is only a summary and is qualified in its entirety by reference to the full text of the Expense Reimbursement and Indemnification Agreement, a copy of which is filed as Exhibit 10.10 to this Current Report on Form 8-K and incorporated herein by reference.
Indemnification Agreements
The Company entered into an indemnification agreement with each of the Company’s directors and executive officers effective as of July 24, 2024 (collectively, the “Indemnification Agreements”). The Indemnification Agreements provide, in general, that the Company will indemnify these individuals to the maximum extent permitted under Maryland law and the Company’s charter against liabilities that may arise by reason of their service to us, and to advance expenses incurred as a result of any proceeding against them as to which they could be indemnified upon our receipt of certain affirmations and undertakings. Insofar as indemnification for
liabilities arising under the Securities Act may be permitted to directors or executive officers, we have been informed that in the opinion of the SEC, such indemnification is against public policy and is therefore unenforceable. The foregoing description of the Indemnification Agreements is only a summary and is qualified in its entirety by reference to the form of Indemnification Agreement, which is filed as Exhibit 10.11 to this Current Report on Form 8-K and incorporated herein by reference.
| Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
Indemnification Agreements
The information set forth in Item 1.01 under the heading “Indemnification Agreements” is incorporated herein by reference.
Board of Directors
Effective July 24, 2024, Messrs. John Carrafiell, Greg Lehmkuhl, Luke Taylor, Michael Turner and James Wyper and Mses. Shellye Archambeau, Joy Falotico and Lynn Wentworth were elected to the board of directors of the Company. Mses. Falotico and Wentworth and Mr. Turner will serve on the Company’s Audit Committee. Messrs. Forste, Carrafiell and Wyper and Ms. Wentworth will serve on the Company’s Compensation Committee. Messrs. Forste and Marchetti and Ms. Archambeau will serve on the Company’s Nominating and Corporate Governance Committee. Mr. Turner and Ms. Wentworth will serve on the Company’s Equity Award Committee. Messrs. Forste, Marchetti and Turner and Mses. Archambeau, Falotico and Wentworth were nominated by BGLH, Messrs. Taylor and Wyper were nominated by Stonepeak and Mr. Carrafiell was nominated by BGO, in each case, pursuant to the Stockholders Agreement and elected to the Board of Directors of the Company.
Biographical information regarding the directors, equity awards made to eligible non-employee directors, a description of the material terms of the directors’ annual compensation and relationships required to be disclosed pursuant to Item 404(a) of Regulation S-K have previously been reported by the Company in the Registration Statement.
| Item 5.03 | Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year. |
Articles of Amendment and Restatement
On July 24, 2024, the Company filed with the State Department of Assessments and Taxation of Maryland its Articles of Amendment and Restatement. A copy of the Company’s Articles of Amendment and Restatement, which became effective on the filing date of July 24, 2024, is attached hereto as Exhibit 3.1 and is incorporated herein by reference.
Amended and Restated Bylaws
The Company also adopted its Amended and Restated Bylaws effective July 24, 2024. A copy of the Company’s Amended and Restated Bylaws dated July 24, 2024 is attached hereto as Exhibit 3.2 and is incorporated herein by reference.
| Item 8.01 | Other Events. |
On July 24, 2024, the Company redeemed its Series A preferred stock, the Operating Partnership redeemed its Series A preferred units and Lineage Holdings redeemed its Series A preferred units, in each case, for $0.6 million in cash plus any accrued but unpaid dividends.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits:
The following exhibits are included with this Current Report on Form 8-K:
SIGNATURES
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 hereunto duly authorized.
| LINEAGE, INC. | ||
| By: | /s/ Greg Lehmkuhl | |
| Name: | Greg Lehmkuhl | |
| Title: | President and Chief Executive Officer | |
| Date: | July 26, 2024 | |
Exhibit 1.1
EXECUTION VERSION
56,882,051 Shares
LINEAGE, INC.
COMMON STOCK, $0.01 PAR VALUE PER SHARE
UNDERWRITING AGREEMENT
July 24, 2024
July 24, 2024
Morgan Stanley & Co. LLC
Goldman Sachs & Co. LLC
BofA Securities, Inc.
J.P. Morgan Securities LLC
Wells Fargo Securities, LLC
| c/o | Morgan Stanley & Co. LLC |
1585 Broadway
New York, New York 10036
| c/o | Goldman Sachs & Co. LLC |
200 West Street
New York, New York 10282
| c/o | BofA Securities, Inc. |
One Bryant Park
New York, New York 10036
| c/o | J.P. Morgan Securities LLC |
383 Madison Avenue
New York, New York 10179
| c/o | Wells Fargo Securities, LLC |
500 West 33rd Street, 14th Floor
New York, New York 10001
Ladies and Gentlemen:
Lineage, Inc., a Maryland corporation (the “Company”), Lineage OP, LP, a Maryland limited partnership (the “Operating Partnership”), and Lineage Logistics Holdings, LLC, a Delaware limited liability company (“Holdings” and, together with the Company and the Operating Partnership, the “Transaction Entities”), propose that the Company issue and sell to the several Underwriters named in Schedule I hereto (the “Underwriters”) 56,882,051 shares of its common stock, $0.01 par value per share (the “Firm Shares”). The Company also proposes to issue and sell to the several Underwriters not more than an additional 8,532,307 shares of its common stock, $0.01 par value per share (the “Additional Shares”), if and to the extent that Morgan Stanley & Co. LLC (“Morgan Stanley”), Goldman Sachs & Co. LLC, BofA Securities, Inc., J.P. Morgan Securities LLC and Wells Fargo Securities, LLC, as representatives of the offering (collectively, the “Representatives”), shall have determined to exercise, on behalf of the Underwriters, the right to purchase such shares of common stock granted to the Underwriters in Section 2 hereof. The Firm Shares and the Additional Shares are hereinafter collectively referred to as the “Shares.” The shares of common stock, $0.01 par value per share, of the Company to be outstanding after giving effect to the sales contemplated hereby are hereinafter
referred to as the “Common Stock.” The Company has filed with the Securities and Exchange Commission (the “Commission”) a registration statement on Form S-11 (File No. 333-280470), including a preliminary prospectus, relating to the Shares. The registration statement as amended at the time it becomes effective, including the information (if any) deemed to be part of the registration statement at the time of effectiveness pursuant to Rule 430A under the Securities Act of 1933, as amended (the “Securities Act”), is hereinafter referred to as the “Registration Statement”; the prospectus in the form first used to confirm sales of Shares (or in the form first made available to the Underwriters by the Company to meet requests of purchasers pursuant to Rule 173 under the Securities Act) is hereinafter referred to as the “Prospectus.” If the Company has filed an abbreviated registration statement to register additional shares of Common Stock pursuant to Rule 462(b) under the Securities Act (a “Rule 462 Registration Statement”), then any reference herein to the term “Registration Statement” shall be deemed to include such Rule 462 Registration Statement.
For the avoidance of doubt, all references to the Transaction Entities in this Agreement, including in the Representations and Warranties section below, shall mean the Transaction Entities individually and/or collectively, as the context may require.
For purposes of this Agreement, “free writing prospectus” has the meaning set forth in Rule 405 under the Securities Act, “preliminary prospectus” shall mean each prospectus used prior to the effectiveness of the Registration Statement and each prospectus that omitted information pursuant to Rule 430A under the Securities Act that was used after such effectiveness and prior to the execution and delivery of this Agreement, “Time of Sale Prospectus” means the preliminary prospectus contained in the Registration Statement at the time of its effectiveness together with the documents and pricing information set forth in Schedule II hereto, and “broadly available road show” means a “bona fide electronic road show” as defined in Rule 433(h)(5) under the Securities Act that has been made available without restriction to any person. As used herein, the terms “Registration Statement,” “preliminary prospectus,” “Time of Sale Prospectus” and “Prospectus” shall include the documents, if any, incorporated by reference therein as of the date hereof.
The Company, upon receipt thereof, will contribute the net proceeds from the sale by the Company of the Firm Shares and the Additional Shares, if any, to the Operating Partnership, in exchange for common units of limited partnership interest of the Operating Partnership (the “OP Units”). On or prior to the Closing Date, the Transaction Entities will effect certain reorganization and other transactions as described in the Registration Statement, the Time of Sale Prospectus and the Prospectus under the caption “Structure and Formation of Our Company – Formation Transactions” (collectively, the “Formation Transactions”). In this Agreement, we refer to the agreements pursuant to which the Formation Transactions will be effected as the “Formation Transaction Agreements.” All references to (x) subsidiaries of the Transaction Entities shall be understood to refer to subsidiaries of the Transaction Entities after giving effect to the Formation Transactions, and (y) properties of the Transaction Entities or any of their respective subsidiaries shall be understood to refer to the properties of the Transaction Entities or any of their respective subsidiaries, respectively, after giving effect to the Formation Transactions.
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Morgan Stanley has agreed to reserve a portion of the Shares to be purchased by it under this Agreement for sale to the Company’s directors, officers, employees and business associates and other parties related to the Company, each as identified by the Company (collectively, “Participants”), provided, that, at the direction of the Company, the sale of such Shares to certain Participants located in Canada will be administered by RBC Capital Markets, LLC (“RBC”) on behalf of the Company as the dealer for such Participants, as set forth in each of the Time of Sale Prospectus and the Prospectus under the heading “Underwriters” (the “Directed Share Program”). The Shares to be sold by Morgan Stanley and/or its affiliates, as well as RBC, pursuant to the Directed Share Program, at the direction of the Company, are referred to hereinafter as the “Directed Shares”. Any Directed Shares not orally confirmed for purchase by any Participant by the end of the business day on which this Agreement is executed will be offered to the public by the Underwriters as set forth in the Prospectus.
| 1. | Representations and Warranties. Each of the Transaction Entities, jointly and severally, represents and warrants to and agrees with each of the Underwriters that: |
| (a) | The Registration Statement has become effective; no stop order suspending the effectiveness of the Registration Statement is in effect, and no proceedings for such purpose or pursuant to Section 8A under the Securities Act are pending before or, to the knowledge of the Transaction Entities, threatened by the Commission. |
| (b) | (i) The Registration Statement, when it became effective, did not contain and, as amended or supplemented, if applicable, will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, (ii) the Registration Statement and the Prospectus comply and, as amended or supplemented, if applicable, will comply in all material respects with the Securities Act and the applicable rules and regulations of the Commission thereunder, (iii) the Time of Sale Prospectus does not, and at the time of each sale of the Shares in connection with the offering when the Prospectus is not yet available to prospective purchasers and at the Closing Date (as defined in Section 4) and any Option Closing Date (as defined in Section 2), the Time of Sale Prospectus, as then amended or supplemented by the Company, if applicable, will not, contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, (iv) each broadly available road show, if any, when considered together with the Time of Sale Prospectus, does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading and (v) the Prospectus does not contain and, as amended or supplemented, if applicable, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, except that the representations and warranties set forth in this paragraph do not apply to statements or omissions in the Registration Statement, the Time of Sale Prospectus or the Prospectus based upon information relating to any Underwriter furnished to the Company in writing by such Underwriter through the Representatives expressly for use therein. |
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| (c) | The Company is not an “ineligible issuer” in connection with the offering pursuant to Rules 164, 405 and 433 under the Securities Act. Any free writing prospectus that the Company is required to file pursuant to Rule 433(d) under the Securities Act has been, or will be, filed with the Commission in accordance with the requirements of the Securities Act and the applicable rules and regulations of the Commission thereunder. Each free writing prospectus that the Company has filed, or is required to file, pursuant to Rule 433(d) under the Securities Act or that was prepared by or on behalf of or used or referred to by the Company complies or will comply in all material respects with the requirements of the Securities Act and the applicable rules and regulations of the Commission thereunder. Except for the free writing prospectuses, if any, identified in Schedule II hereto, and electronic road shows, if any, each furnished to the Representatives before first use, the Company has not prepared, used or referred to, and will not, without the Representatives’ prior consent, prepare, use or refer to, any free writing prospectus. |
| (d) | The Company has been duly incorporated, is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, has the corporate power and authority to own or lease its property and to conduct its business as described in each of the Registration Statement, the Time of Sale Prospectus and the Prospectus and is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so qualified or be in good standing would not, singly or in the aggregate, have a material adverse effect on the Transaction Entities and their respective subsidiaries, taken as a whole, or on the performance by the Transaction Entities of their respective obligations under this Agreement or by the Transaction Entities and their respective subsidiaries, as applicable, under the Formation Transaction Agreements (collectively, a “Material Adverse Effect”). As used herein, “subsidiary” or “subsidiaries” means the direct and indirect subsidiaries of the Company, the Operating Partnership and/or Holdings, as applicable, but not any unconsolidated joint venture of the Company, the Operating Partnership or Holdings. |
| (e) | The Operating Partnership has been duly formed, is validly existing as a limited partnership in good standing under the laws of the jurisdiction of its formation, has the limited partnership power and authority to own or lease its property and to conduct its business as described in each of the Registration Statement, the Time of Sale Prospectus and the Prospectus and is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so qualified or be in good standing would not, singly or in the aggregate, have a Material Adverse Effect. The Company is, and following the Formation Transactions will remain, the sole general partner of the Operating Partnership. |
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| (f) | Holdings has been duly formed, is validly existing as a limited liability company in good standing under the laws of the jurisdiction of its formation, has the limited liability company power and authority to own or lease its property and to conduct its business as described in each of the Registration Statement, the Time of Sale Prospectus and the Prospectus and is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so qualified or be in good standing would not, singly or in the aggregate, have a Material Adverse Effect. The Operating Partnership is, and following the Formation Transactions will remain, the sole managing member of Holdings. |
| (g) | The Agreement of Limited Partnership of the Operating Partnership, dated July 24, 2024 (the “Operating Partnership Agreement”) is in full force and effect and, at the Closing Date or any Option Closing Date, as the case may be, the aggregate percentage interests of the Company in the Operating Partnership will be as set forth in the Registration Statement, the Time of Sale Prospectus and the Prospectus; provided that, to the extent any portion of the Underwriters’ option to purchase the Additional Shares is exercised hereunder, the percentage interests of the Company in the Operating Partnership will be adjusted accordingly. At the Closing Date or any Option Closing Date, as the case may be, the Company will contribute the proceeds from the sale of the Firm Shares and, to the extent any portion of the Underwriters’ option is exercised, the Additional Shares, to the Operating Partnership in exchange for a number of OP Units equal to the number of Firm Shares and Additional Shares issued, and the Operating Partnership will further contribute the proceeds to Holdings in exchange for a number of LLC Interests (as defined below) equal to the number of OP Units issued. All of the OP Units and LLC Interests issued in consideration of the contribution of the proceeds from the sale of the Firm Shares and the Additional Shares (if any) have been duly authorized and, at the Closing Date or any Option Closing Date, as the case may be, will be duly and validly authorized and issued, owned by the Company or the Operating Partnership, as applicable, free and clear of all liens, encumbrances, equities or claims, and none of such OP Units or LLC Interests will be issued in violation of any preemptive rights, resale rights, rights of first offer or refusal or other similar rights. |
| (h) | The terms of the OP Units and the legacy units (the “Legacy Units”) described in Exhibit F to the Operating Partnership Agreement, conform in all material respects to the description thereof contained in the Registration Statement, the Time of Sale Prospectus and the Prospectus. Except as disclosed in the Registration Statement, the Time of Sale Prospectus and the Prospectus, (i) no OP Units or Legacy Units are reserved for any purpose, (ii) there are no outstanding securities convertible into or exchangeable for any OP Units, Legacy Units, or any other ownership interests of the Operating Partnership and (iii) there are no outstanding options, rights (preemptive or otherwise) or warrants to purchase or subscribe for OP Units, Legacy Units or any other ownership interests of the Operating Partnership. |
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| (i) | The Ninth Amended and Restated Operating Agreement of Holdings, dated July 24, 2024 (the “Holdings LLC Agreement”) is in full force and effect and, at the Closing Date or any Option Closing Date, as the case may be, the aggregate percentage interests of the Operating Partnership in Holdings and the other owners of limited liability company interests of Holdings (“LLC Interests”) or any other ownership interests in Holdings will be as set forth in the Registration Statement, the Time of Sale Prospectus and the Prospectus. The terms of the LLC Interests conform in all material respects to the description thereof contained in the Registration Statement, the Time of Sale Prospectus and the Prospectus. Except as disclosed in the Registration Statement, the Time of Sale Prospectus and the Prospectus, (i) no LLC Interests are reserved for any purpose, (ii) there are no outstanding securities convertible into or exchangeable for any LLC Interests or any other ownership interests of Holdings and (iiii) there are no outstanding options, rights (preemptive or otherwise) or warrants to purchase or subscribe for LLC Interests or any other ownership interests of Holdings. |
| (j) | The OP Units, Legacy Units and LLC Interests issued or to be issued in the Formation Transactions, as the case may be, have been or will be duly and validly authorized and, on the Closing Date, will be validly issued, and none of such OP Units, Legacy Units and LLC Interests will be issued in violation of any preemptive rights, resale rights, rights of first offer or refusal or other similar rights. The issuance by the Operating Partnership of the OP Units, Legacy Units and by Holdings of the LLC Interests, in connection with the Formation Transactions are exempt from the registration requirements of the Securities Act and applicable state securities, real estate syndication and Blue Sky laws. |
| (k) | The conversion of Lineage OP, LLC from a Delaware limited liability company to a Maryland limited partnership, including the related Certificate of Conversion filed in connection with such conversion with the Secretary of State of the State of Delaware, and the Articles of Conversion filed in connection with such conversion with the State Department of Assessments and Taxation of Maryland, and the related reclassification of the limited liability company interests of Lineage OP, LLC to units of partnership interests of the Operating Partnership has been duly authorized by all necessary limited liability company action of Lineage OP, LLC. |
| (l) | Each subsidiary of the Company (other than the Operating Partnership and Holdings) has been duly incorporated, organized or formed, is validly existing as a corporation or other business entity in good standing under the laws of the jurisdiction of its incorporation, organization or formation, has the corporate or other business entity power and authority to own or lease its property and to conduct its business as described in each of the Registration Statement, the Time of Sale Prospectus and the Prospectus and is duly qualified to transact business |
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| and is in good standing in each jurisdiction (to the extent the concept of good standing or an equivalent concept is applicable in such jurisdiction) in which the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so qualified or be in good standing would not, singly or in the aggregate, have a Material Adverse Effect; and all of the issued shares of capital stock or other equity interests of each subsidiary of the Company (other than the Operating Partnership and Holdings) have been duly and validly authorized and issued and are fully paid (in the case of any subsidiaries that are organized as limited liability companies, limited partnerships or other business entities, to the extent required under the applicable limited liability company, limited partnership or other organizational agreement) and non-assessable (except in the case of interests held by general partners or similar entities under the applicable laws of other jurisdictions, in the case of any subsidiaries that are organized as limited liability companies, as such non-assessability may be affected by Section 18-607 or Section 18-804 of the Delaware Limited Liability Company Act or similar provisions under the applicable laws of other jurisdictions or the applicable limited liability company agreement and, in the case of any subsidiaries that are organized as limited partnerships, as such non-assessability may be affected by Section 17-607 or Section 17-804 of the Delaware Revised Uniform Limited Partnership Act or similar provisions under the applicable laws of other jurisdictions or the applicable limited partnership agreement), and are owned directly or indirectly by the Company, free and clear of all liens, encumbrances, equities or claims, except as disclosed in the Registration Statement, the Time of Sale Prospectus and the Prospectus. The Company does not own or control, directly or indirectly, any corporation, association or other entity other than the subsidiaries listed in Exhibit 21.1 to the Registration Statement and certain other subsidiaries which, considered in the aggregate as a single subsidiary, do not constitute a “significant subsidiary” within the meaning of Section 1-02 of Regulation S-X promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). |
| (m) | Except as disclosed in the Registration Statement, the Time of Sale Prospectus and the Prospectus, (i) the Company is not currently prohibited, directly or indirectly, from making any distributions to its stockholders, and (ii) no subsidiary of the Company (including the Operating Partnership and Holdings) is currently prohibited, directly or indirectly, under any agreement or other instrument to which it is a party or is subject, from paying any dividends to the Company, from making any other distribution on such subsidiary’s capital stock or similar ownership interest, from repaying to the Company any loans or advances to such subsidiary from the Company, or, except as prohibited by any mortgage or other loan documents, from transferring any of such subsidiary’s properties or assets to the Company or any other subsidiary of the Company. |
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| (n) | This Agreement has been duly authorized, executed and delivered by each of the Transaction Entities. The Formation Transaction Agreements have been duly authorized, executed and delivered by the Transaction Entities, in each case, to the extent that such entity is a party thereto. Each Formation Transaction Agreement constitutes a legally valid and binding obligation of the Transaction Entities, and any entities controlled directly or indirectly by the Transaction Entities, as applicable, in each case, to the extent that such entity is a party thereto, enforceable against each of them that is a party thereto in accordance with its terms, except to the extent that such enforceability may be limited by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors’ rights and remedies generally, and subject, as to enforceability, to general principles of equity and, with respect to rights to indemnity and contribution thereunder, except as rights may be limited by applicable law or policies underlying such law. |
| (o) | The statements in the Registration Statement, the Time of Sale Prospectus and the Prospectus under the headings “Certain Relationships and Related Party Transactions,” “Structure and Formation of Our Company,” “Description of the Partnership Agreement of Lineage OP, LP,” “Description of the Operating Agreement of Lineage Logistics Holdings, LLC,” “Description of Our Capital Stock,” “Certain Provisions of Maryland Law and of Our Charter and Bylaws,” “Shares Eligible for Future Sale” and “Federal Income Tax Considerations,” insofar as such statements summarize legal matters, agreements, documents or legal or governmental proceedings discussed therein, are accurate and fair summaries of such legal matters, agreements, documents or legal or governmental proceedings, in all material respects. |
| (p) | The authorized capital stock of the Company conforms as to legal matters to the description thereof contained in each of the Registration Statement, the Time of Sale Prospectus and the Prospectus. |
| (q) | The shares of capital stock of the Company outstanding prior to the issuance of the Shares have been duly authorized and are validly issued, fully paid and non-assessable, are not subject to any preemptive or similar rights and have been offered and sold in compliance with U.S. federal and applicable securities laws. The units of partnership interest of the Operating Partnership and limited liability company interests of Holdings, respectively, outstanding prior to the issuance of the Shares are validly issued, are not subject to any preemptive or similar rights and have been offered and sold in compliance with U.S. federal and applicable securities laws. Except as described in or expressly contemplated by the Registration Statement, the Time of Sale Prospectus and the Prospectus, there are no outstanding rights (including, without limitation, preemptive rights), warrants or options to acquire, or instruments convertible into or exchangeable for, any equity interest in the Company, the Operating Partnership and Holdings, respectively, or any of their respective subsidiaries, or any contract, commitment, agreement, understanding or arrangement of any kind relating to the issuance of any equity interests of such entity, any such convertible or exchangeable securities or any such rights, warrants or options; the units of partnership interest of the Operating Partnership and the limited liability company interests of Holdings, respectively, are owned directly or indirectly by the Company, free and clear of all liens, encumbrances, equities or claims, except as disclosed in the Registration Statement, the Time of Sale Prospectus and the Prospectus. |
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| (r) | The Shares have been duly authorized and, when issued, delivered and paid for in accordance with the terms of this Agreement, will be validly issued, fully paid and non-assessable, and the issuance of the Shares will not be subject to any preemptive or similar rights. |
| (s) | The execution and delivery by each of the Transaction Entities of, and the performance by each of them, as applicable, of their respective obligations under, this Agreement and the Formation Transaction Agreements, in each case, to the extent that such entity is a party, will not conflict with, result in a breach or violation of, or constitute a default under, or imposition of any lien, charge or encumbrance upon any property or assets of the Transaction Entities or any of their subsidiaries pursuant to, or otherwise contravene, (i) any provision of applicable law, or the articles of amendment and restatement or bylaws of the Company, the certificate of limited partnership of the Operating Partnership and the Operating Partnership Agreement, or the certificate of formation of limited liability company of Holdings and the Holdings LLC Agreement, (ii) any agreement or other instrument, binding upon the Transaction Entities or any of their respective subsidiaries, as the case may be, or (iii) any judgment, order or decree of any governmental body, agency or court having jurisdiction over the Transaction Entities or any of their respective subsidiaries, except, in the case of clauses (ii) and (iii) above, for any such conflict, breach, violation, default, imposition or contravention that would not, singly or in the aggregate, have a Material Adverse Effect, and no consent, approval, authorization or order of, qualification with or filing by or with, any governmental body, agency or court is required for the performance by the Transaction Entities of their respective obligations under this Agreement and the Formation Transaction Agreements, except for those that have been obtained or completed, the registration of the Shares under the Securities Act and such as may be required by the Financial Industry Regulatory Authority, Inc. (“FINRA”) or the securities or Blue Sky laws of the various states in connection with the offer and sale of the Shares. |
| (t) | None of the Transaction Entities nor any of their respective subsidiaries is (i) in violation of its articles of amendment or restatement or bylaws or similar organizational documents; or (ii) in default, and no event has occurred that, with notice or lapse of time or both, would constitute such a default, in the due performance or observance of any term, covenant or condition contained in any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Transaction Entities or any of their respective subsidiaries is a party or by which the Transaction Entities or any of their respective subsidiaries is bound or to which any of the property or assets of the Transaction Entities or any of their respective subsidiaries is subject, except, in the case of clauses (ii) above, for any such default or violation that would not, singly or in the aggregate, have a Material Adverse Effect. |
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| (u) | There has not occurred any material adverse change, or any development involving a prospective material adverse change, in the condition, financial or otherwise, or in the earnings, business or operations of the Transaction Entities and their respective subsidiaries, taken as a whole, from that set forth in the Time of Sale Prospectus. |
| (v) | There are no legal, governmental or regulatory proceedings, actions, investigations, demands, claims, suits, arbitrations or inquiries (collectively, “Proceedings”) pending or, to the knowledge of the Transaction Entities, threatened to which any of the Transaction Entities or any of their respective subsidiaries is a party or to which any of the properties of the Transaction Entities or any of their respective subsidiaries is subject (i) other than Proceedings accurately described in all material respects in each of the Registration Statement, the Time of Sale Prospectus and the Prospectus and proceedings that would not, singly or in the aggregate, have a Material Adverse Effect or (ii) that are required to be described in the Registration Statement, the Time of Sale Prospectus or the Prospectus and are not so described; and there are no statutes, regulations, contracts or other documents that are required to be described in the Registration Statement, the Time of Sale Prospectus or the Prospectus or to be filed as exhibits to the Registration Statement that are not described or filed as required. |
| (w) | Except as disclosed in the Registration Statement, the Time of Sale Prospectus and the Prospectus, there are no persons with registration rights or other similar rights to have any securities registered for sale pursuant to the Registration Statement, the Time of Sale Prospectus and the Prospectus or otherwise registered for sale or sold under the Securities Act by any of the Transaction Entities or any of their respective subsidiaries. |
| (x) | Each preliminary prospectus filed as part of the Registration Statement as originally filed or as part of any amendment thereto, or filed pursuant to Rule 424 under the Securities Act, complied when so filed in all material respects with the Securities Act and the applicable rules and regulations of the Commission thereunder. |
| (y) | None of the Transaction Entities or any of their respective subsidiaries is, and after giving effect to the offering and sale of the Shares and the application of the proceeds thereof as described in each of the Registration Statement, the Time of Sale Prospectus and the Prospectus, none of the Transaction Entities will be, required to register as an “investment company” or an entity “controlled” by an “investment company” as such terms are defined in the Investment Company Act of 1940, as amended. |
| (z) | The Transaction Entities and each of their respective subsidiaries (i) are in compliance with any and all applicable foreign, federal, state and local laws and regulations relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants (collectively, “Environmental Laws”), (ii) have received all permits, licenses or |
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| other approvals required of them under applicable Environmental Laws to conduct their respective businesses and (iii) are in compliance with all terms and conditions of any such permit, license or approval, except where such noncompliance with Environmental Laws, failure to receive required permits, licenses or other approvals or failure to comply with the terms and conditions of such permits, licenses or approvals would not, singly or in the aggregate, have a Material Adverse Effect. |
| (aa) | There are no costs or liabilities associated with Environmental Laws (including, without limitation, any capital or operating expenditures required for clean-up, closure of properties or compliance with Environmental Laws or any permit, license or approval, any related constraints on operating activities and any potential liabilities to third parties) which would, singly or in the aggregate, have a Material Adverse Effect. |
| (bb) | (i) None of the Transaction Entities, any of their respective subsidiaries or any director, officer, or employee thereof, or, to the Transaction Entities’ knowledge, any affiliate, agent or representative of the Transaction Entities or any of their respective subsidiaries, has taken or will take any action in furtherance of an offer, payment, promise to pay, or authorization or approval of the payment, giving or receipt of money, property, gifts or anything else of value, directly or indirectly, to any person to improperly influence official action by that person for the benefit of the Transaction Entities or any of their respective subsidiaries or affiliates, or to otherwise secure any improper advantage, or to any person in violation of (a) the U.S. Foreign Corrupt Practices Act of 1977, (b) the UK Bribery Act 2010, and (c) any other applicable law, regulation, order, decree or directive having the force of law and relating to bribery or corruption (collectively, the “Anti-Corruption Laws”). |
| (cc) | The operations of the Transaction Entities and each of their respective subsidiaries are and have been conducted at all times in material compliance with all applicable anti-money laundering laws, rules, and regulations, including the financial recordkeeping and reporting requirements contained therein, and including the Bank Secrecy Act of 1970, applicable provisions of the USA PATRIOT Act of 2001, the Money Laundering Control Act of 1986, and the Anti-Money Laundering Act of 2020, (collectively, the “Anti-Money Laundering Laws”). |
| (dd) | No relationship, direct or indirect, exists between or among any of the Transaction Entities or any of their respective subsidiaries, on the one hand, and the directors, officers, stockholders, customers, suppliers or other affiliates of the Transaction Entities or any of their respective subsidiaries, on the other, that is required by the Securities Act to be described in each of the Registration Statement, the Time of Sale Prospectus and the Prospectus and that is not so described. |
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| (ee) | (i) None of the Transaction Entities, any of their respective subsidiaries, or any director, officer or employee thereof or, to the Transaction Entities’ knowledge, any agent, affiliate, or representative of the Transaction Entities or any of their respective subsidiaries, is an individual or entity (“Person”) that is, or is owned or controlled by one or more Persons that are: |
| (A) | the subject of any sanctions administered or enforced by the United States Government (including the U.S. Department of the Treasury’s Office of Foreign Assets Control and the U.S. Department of State), the United Nations Security Council, the European Union, His Majesty’s Treasury, or any other relevant sanctions authority (collectively, “Sanctions”), or |
| (B) | located, organized or resident in a country or territory that is the subject of comprehensive territorial Sanctions (including, without limitation, the so-called Donetsk People’s Republic, the so-called Luhansk People’s Republic, or any other Covered Region of Ukraine identified pursuant to Executive Order 14065, Crimea, Cuba, Iran, North Korea and Syria). |
| (ii) | The Transaction Entities will not, directly or indirectly, use the proceeds of the offering, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other Person: |
| (A) | to fund or facilitate any activities or business of or with any Person or in any country or territory that, at the time of such funding or facilitation, is, or whose government is, the subject of Sanctions; or |
| (B) | to fund or facilitate any money laundering or terrorist financing activities; or |
| (C) | in any other manner that would cause or result in a violation of any Anti-Corruption Laws, Anti-Money Laundering Laws, or Sanctions by any Person (including any Person participating in the offering, whether as underwriter, advisor, investor or otherwise). |
| (iii) | The Transaction Entities and any of their respective subsidiaries have not engaged in, are not now engaged in, and will not engage in, any dealings or transactions with any Person, or in any country or territory, that at the time of the dealing or transaction is or was, or whose government is or was, the subject of Sanctions. |
| (ff) | The Transaction Entities and any of their respective subsidiaries have conducted and will conduct their businesses in compliance with the Anti-Corruption Laws, the Anti-Money Laundering Laws, and Sanctions, and no investigation, inquiry, action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Transaction Entities or any of their respective subsidiaries with respect to the Anti-Corruption Laws, the Anti-Money Laundering Laws or Sanctions is pending or, to the knowledge of the |
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| Transaction Entities, threatened. The Transaction Entities and their respective subsidiaries and affiliates have instituted and maintained and will continue to maintain policies and procedures reasonably designed to promote and achieve compliance with the Anti-Corruption Laws, the Anti-Money Laundering Laws, Sanctions, and with the representations and warranties contained herein. |
| (gg) | Subsequent to the respective dates as of which information is given in, and except as otherwise disclosed in, each of the Registration Statement, the Time of Sale Prospectus and the Prospectus, (i) the Transaction Entities and their respective subsidiaries, taken as a whole, have not incurred any material liability or obligation, direct or contingent, nor entered into any material transaction; (ii) none of the Transaction Entities has purchased or redeemed any of its outstanding capital stock or partnership interests, nor declared, paid or otherwise made any dividend or distribution of any kind on its capital stock other than ordinary and customary dividends; and (iii) there has not been any material change in the capital stock, partnership interests, limited liability company interests, short-term debt or long-term debt of the Transaction Entities and their respective subsidiaries, taken as a whole. |
| (hh) | (i) The Transaction Entities and each of their respective subsidiaries, have good and marketable title in fee simple to, or leasehold interest under a lease in, the real properties owned or leased by the Transaction Entities and their respective subsidiaries (collectively, the “Properties”), in each case, free and clear of all security interests, mortgages, pledges, liens, encumbrances, claims or equities of any kind other than those that (A) are described in the Registration Statement, the Time of Sale Prospectus or the Prospectus or (B) do not, singly or in the aggregate, materially affect the value of such Property and do not materially interfere with the use made and proposed to be made of such Property by the Transaction Entities and any of their respective subsidiaries; (ii) except as would not, singly or in the aggregate, result in a Material Adverse Effect, (A) each of the leases under which a Transaction Entity or one of its subsidiaries is a tenant relating to a Property are in full force and effect and no default or event of default has occurred under any such lease with respect to such Property and none of the Transaction Entities or any of their respective subsidiaries has received any notice of any event which, whether with or without the passage of time or the giving of notice, or both, would constitute a default under such lease and (B) none of the Transaction Entities or any of their respective subsidiaries has received any notice of any material claim of any sort that has been asserted by anyone adverse to the rights of the Transaction Entities or any of their respective subsidiaries under any of the leases mentioned above, or affecting or questioning the rights of the Transaction Entities and any of their respective subsidiaries to the continued possession of the leased premises under any such lease; (iii) except as disclosed in the Registration Statement, the Time of Sale Prospectus and the Prospectus, no tenant under any of the leases of the Properties to which a Transaction Entity or any of its subsidiaries is a party (as a landlord) (the “Leases”) has a right of first refusal or an option to purchase any Property, which, if exercised, would reasonably be expected to have a Material Adverse Effect; (iv) the Transaction |
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| Entities have no knowledge that any Property fails to comply with all applicable codes, laws and regulations (including, without limitation, building and zoning codes, laws and regulations and laws relating to access to such Property), except for such failures to comply that would not, singly or in the aggregate, result in a Material Adverse Effect; (v) except as disclosed in the Registration Statement, the Time of Sale Prospectus and the Prospectus, no mortgage or deed of trust encumbering any Property is convertible into ownership interests in Transaction Entity or any of its subsidiaries; and (vi) except as described in the Registration Statement, the Time of Sale Prospectus and the Prospectus, none of the Transaction Entities or any of their respective subsidiaries or, to the knowledge of either of the Transaction Entities, any lessee under a Lease is in default under any of the Leases, and none of the Transaction Entities or any of their respective subsidiaries knows of any event which, whether with or without the passage of time or the giving of notice, or both, would constitute a default under any of the Leases, except in each case, for such defaults that would not, singly or in the aggregate, result in a Material Adverse Effect. |
| (ii) | Except as would not, singly or in the aggregate, have a Material Adverse Effect on the Transaction Entities and their subsidiaries, taken as a whole, (i) the Transaction Entities and their respective subsidiaries own or have a valid license to all patents, inventions, copyrights, know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures), trademarks, service marks and trade names (collectively, “Intellectual Property Rights”) used in or reasonably necessary to the conduct of their businesses as currently conducted; (ii) the Intellectual Property Rights owned by the Transaction Entities and their respective subsidiaries and, to the Transaction Entities’ knowledge, the Intellectual Property Rights licensed to the Transaction Entities and their respective subsidiaries, are valid, subsisting and, to the knowledge of the Transaction Entities, enforceable, and there is no pending or, to the Transaction Entities’ knowledge, threatened action, suit, proceeding or claim by others challenging the validity, scope or enforceability of any such Intellectual Property Rights; (iii) neither the Transaction Entities nor any of their respective subsidiaries have received any written notice alleging any infringement, misappropriation or other violation of Intellectual Property Rights of others; (iv) to the Transaction Entities’ knowledge, no third party is infringing, misappropriating or otherwise violating, or has infringed, misappropriated or otherwise violated, any Intellectual Property Rights owned by the Transaction Entities; (v) neither the Transaction Entities nor any of their respective subsidiaries infringe, misappropriate or otherwise violate, or has infringed, misappropriated or otherwise violated, any Intellectual Property Rights of others; (vi) all employees or contractors engaged in the development of Intellectual Property Rights on behalf of the Transaction Entities or any subsidiary of the Transaction Entities have executed an invention assignment agreement whereby such employees or contractors presently assign all of their right, title and interest in and to such Intellectual Property Rights to the Transaction Entities or the applicable subsidiary, and to the Transaction Entities’ knowledge no such agreement has been breached or violated; and (vii) the Transaction Entities and their respective subsidiaries use, and have used, commercially reasonable efforts to appropriately maintain all information intended to be maintained as a trade secret. |
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| (jj) | (i) The Transaction Entities and their respective subsidiaries use and have used any and all software and other materials distributed under a “free,” “open source,” or similar licensing model (including but not limited to the MIT License, Apache License, GNU General Public License, GNU Lesser General Public License and GNU Affero General Public License) (“Open Source Software”) in material compliance with all license terms applicable to such Open Source Software; and (ii) to the Transaction Entities’ knowledge, neither the Transaction Entities nor any of their respective subsidiaries uses or distributes or has used or distributed any Open Source Software in any manner that requires or has required (A) the Transaction Entities or any of their respective subsidiaries to permit reverse engineering of any software code or other technology owned by the Transaction Entities or any of their respective subsidiaries or (B) any software code or other technology owned by the Transaction Entities or any of their respective subsidiaries to be (1) disclosed or distributed in source code form, (2) licensed for the purpose of making derivative works or (3) redistributed at no charge. |
| (kk) | (i) Except as would not, singly or in the aggregate, have a Material Adverse Effect, the Transaction Entities and each of their respective subsidiaries have complied and are presently in compliance with all internal privacy policies, contractual obligations, industry standards, applicable laws, statutes, judgments, orders, rules and regulations of any court or arbitrator or other governmental or regulatory authority and any other legal obligations, in each case, relating to the collection, use, transfer, import, export, storage, protection, disposal and disclosure by the Transaction Entities or any of their respective subsidiaries of personal, personally identifiable, household, sensitive, confidential or regulated data (“Data Security Obligations”, and such data, “Data”); (ii) the Transaction Entities have not received any written notification of or written complaint regarding and are unaware of any other facts that, individually or in the aggregate, would reasonably indicate non-compliance with any Data Security Obligation and that would, singly or in the aggregate, have a Material Adverse Effect; and (iii) there is no action, suit or proceeding by or before any court or governmental agency, authority or body pending or, to the Transaction Entities’ knowledge, threatened alleging non-compliance with any Data Security Obligation. |
| (ll) | Except as would not, singly or in the aggregate, have a Material Adverse Effect, the Transaction Entities and each of their respective subsidiaries have taken all commercially reasonable technical and organizational measures necessary to protect information technology systems and Data used in connection with the operation of the Transaction Entities’ and their respective subsidiaries’ businesses. Without limiting the foregoing, the Transaction Entities and their respective subsidiaries have used commercially reasonable efforts to establish and maintain, and have established, maintained, implemented and complied with, reasonable information technology, information security, cyber security and data |
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| protection controls, policies and procedures, including oversight, access controls, encryption, technological and physical safeguards and business continuity/disaster recovery and security plans that are designed to protect against, detect, and reasonably prevent material breach, destruction, loss, unauthorized distribution, use, access, disablement, misappropriation or modification, or other compromise or misuse of information technology systems or Data used in connection with the operation of the Transaction Entities’ and their respective subsidiaries’ businesses (“Breach”). There has been no Breach (except for those that have been remedied without material cost, liability or obligation), and the Transaction Entities and their respective subsidiaries have not been notified of and have no knowledge of any event or condition that would reasonably be expected to result in, any such material Breach. |
| (mm) | Except as would not, singly or in the aggregate, have a Material Adverse Effect, the Transaction Entities and each of their respective subsidiaries have: (i) conducted and conduct reasonable vulnerability testing and risk assessments of critical information technology systems used in connection with the operation of the Transaction Entities’ and their respective subsidiaries’ businesses (collectively, “Information Security Reviews”); (ii) corrected or mitigated any material vulnerabilities identified in such Information Security Reviews; and (iii) installed software security patches and other fixes or mitigation measures to identified technical information security vulnerabilities. |
| (nn) | No material labor dispute with the employees of the Transaction Entities or any of their respective subsidiaries exists, or, to the knowledge of the Transaction Entities, is imminent, and the Transaction Entities are not aware of any existing, threatened or imminent labor disturbance by the employees of any of their principal suppliers, manufacturers or contractors, in each case that would, singly or in the aggregate, have a Material Adverse Effect. |
| (oo) | (i) Each employee benefit plan, within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), for which the Transaction Entities or any of their respective subsidiaries would have any liability (each, a “Plan”) has been maintained in compliance with its terms and the requirements of any applicable statutes, orders, rules and regulations, including but not limited to ERISA and the Internal Revenue Code of 1986, as amended (the “Code”); (ii) with respect to any Plan, no prohibited transaction, within the meaning of Section 406 of ERISA or Section 4975 of the Code, has occurred with respect to any “benefit plan investor” within the meaning of the Department of Labor regulation at 29 C.F.R. § 2510.3-101, as modified by Section 3(42) of ERISA, excluding transactions effected pursuant to a statutory or administrative exemption; (iii) each Plan that is intended to be qualified under Section 401(a) of the Code is so qualified, and nothing has occurred, whether by action or by failure to act, which would cause the loss of such qualification; and (iv) none of the Transaction Entities or any member of their respective “Controlled Groups” (each Controlled Group, defined as any entity, whether or not incorporated, that is under common control with the applicable Transaction |
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| Entity within the meaning of Section 4001(a)(14) of ERISA or any entity that would be regarded as a single employer with the applicable Transaction Entity under Section 414(b), (c),(m) or (o) of the Code) has any liability under Title IV of ERISA, except in each case with respect to the events or conditions set forth in (i) through (iv) hereof, as would not, singly or in the aggregate, have a Material Adverse Effect. |
| (pp) | The Transaction Entities and each of their respective subsidiaries have insurance policies issued by insurers of recognized financial responsibility covering the Transaction Entities’ and each of their respective subsidiaries’ respective Properties, operations, personnel and businesses, including business interruption insurance, which insurance insures against such losses and risks and in such amounts as are prudent and customary in the businesses in which they are engaged and in light of the value of their properties, except as would not, singly or in the aggregate, have a Material Adverse Effect; and none of the Transaction Entities or any of their respective subsidiaries has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not, singly or in the aggregate, have a Material Adverse Effect. |
| (qq) | The Transaction Entities and each of their respective subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal, state or foreign regulatory authorities necessary to conduct their respective businesses, and neither the Transaction Entities nor any of their respective subsidiaries have received any notice of proceedings relating to the revocation or modification of any such certificate, authorization or permit which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would have a Material Adverse Effect. |
| (rr) | Commencing with its taxable year ended December 31, 2020, the Company has been organized and has operated in conformity with the requirements for qualification and taxation as a real estate investment trust (a “REIT”) under Sections 856 through 860 of the Code, and its form of organization and proposed method of operation, as described in the Registration Statement, the Time of Sale Prospectus and the Prospectus, will enable it to continue to meet the requirements for qualification and taxation as a REIT under the Code. All statements regarding the Company’s qualification and taxation as a REIT and descriptions of the Company’s organization and proposed method of operation (to the extent they relate to the Company’s qualification and taxation as a REIT) set forth in the Registration Statement, the Time of Sale Prospectus and the Prospectus are accurate summaries of the legal or tax matters described therein in all material respects. |
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| (ss) | The financial statements included in each of the Registration Statement, the Time of Sale Prospectus and the Prospectus, together with the related schedules and notes thereto, comply as to form in all material respects with the applicable accounting requirements of the Securities Act and present fairly the consolidated financial position of the Company and its consolidated subsidiaries as of the dates shown and its results of operations and cash flows for the periods shown, and such financial statements have been prepared in conformity with generally accepted accounting principles in the United States (“U.S. GAAP”) applied on a consistent basis throughout the periods covered thereby except for any normal year-end adjustments in the Company’s quarterly financial statements. The summary selected historical consolidated financial and other data included in each of the Registration Statement, the Time of Sale Prospectus and the Prospectus present fairly in all material respects the information shown therein and, except for the “non-GAAP financial measures” (as such term is defined by the rules and regulations of the Commission) presented therein, have been compiled on a basis consistent with that of the audited or unaudited, as applicable, financial statements of the Company included therein. All disclosures contained in the Registration Statement, the Time of Sale Prospectus and the Prospectus regarding “non-GAAP financial measures” (as such term is defined by the rules and regulations of the Commission) comply in all material respects with Regulation G under the Exchange Act, and Item 10 of Regulation S-K under the Securities Act, in each case to the extent applicable. The other financial information included in each of the Registration Statement, the Time of Sale Prospectus and the Prospectus has been derived from the accounting records of the Company and its consolidated subsidiaries and presents fairly in all material respects the information shown thereby. The summary selected pro forma consolidated financial and other data, and pro forma financial statements and the related notes thereto included in each of the Registration Statement, the Time of Sale Prospectus and the Prospectus present fairly the information shown therein, have been prepared in accordance with the Commission’s rules and guidelines with respect to pro forma financial statements and have been properly compiled on the bases described therein, and the assumptions used in the preparation thereof are reasonable and the adjustments used therein are appropriate to give effect to the transactions and circumstances referred to therein. The statistical, industry-related and market-related data included in each of the Registration Statement, the Time of Sale Prospectus and the Prospectus are based on or derived from sources that the Transaction Entities reasonably and in good faith believe are reliable and accurate and such data is consistent with the sources from which they are derived, in each case in all material respects. |
| (tt) | KPMG LLP, who have certified certain financial statements of the Company and its subsidiaries and delivered its report with respect to the audited consolidated financial statements and schedules filed with the Commission as part of the Registration Statement and included in each of the Registration Statement, the Time of Sale Prospectus and the Prospectus, is an independent registered public accounting firm with respect to the Company within the meaning of the Securities Act and the applicable rules and regulations thereunder adopted by the Commission and the Public Company Accounting Oversight Board (United States). |
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| (uu) | The Company and its consolidated subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with U.S. GAAP and to maintain asset accountability; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. Since the end of the Company’s most recent audited fiscal year, except as disclosed in each of the Registration Statement, the Time of Sale Prospectus and the Prospectus, there has been (i) no material weakness in the Company’s internal control over financial reporting (whether or not remediated) and (ii) no change in the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting (it being understood that these clauses (i) and (ii) shall not require the Company to comply with Section 404 of the Sarbanes Oxley Act of 2002, as amended, and the rules and regulations promulgated in connection therewith as of an earlier date than it would otherwise be required to do so under applicable law). |
| (vv) | Except as disclosed in the Registration Statement, the Time of Sale Prospectus or the Prospectus, the Company has not sold, issued or distributed any shares of Common Stock during the six-month period preceding the date hereof, including any sales pursuant to Rule 144A under, or Regulation D or S of, the Securities Act, other than shares issued pursuant to employee benefit plans, equity incentive plans or other employee or director compensation plans or pursuant to outstanding equity-based awards, rights or warrants. |
| (ww) | The Registration Statement, the Prospectus, the Time of Sale Prospectus and any preliminary prospectus comply, and any amendments or supplements thereto will comply, with any applicable laws or regulations of foreign jurisdictions in which the Prospectus, the Time of Sale Prospectus or any preliminary prospectus, as amended or supplemented, if applicable, are distributed in connection with the Directed Share Program. |
| (xx) | No consent, approval, authorization or order of, or qualification with, any governmental body or agency, other than those obtained, is required in connection with the offering of the Directed Shares in any jurisdiction where the Directed Shares are being offered. |
| (yy) | The Common Stock has been approved for listing on the Nasdaq Global Select Market, subject to official notice of issuance. |
| (zz) | Except as disclosed in the Registration Statement, the Time of Sale Prospectus or the Prospectus, there are no unpaid transfer taxes or other similar fees or charges required to be paid in connection with the execution and delivery of this Agreement or the issuance by the Company or sale of the Shares. |
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| (aaa) | Except, in each case, as would not reasonably be expected to have a Material Adverse Effect, the Transaction Entities and each of their respective subsidiaries have filed all U.S. federal, state, local and non-U.S. tax returns required to be filed through the date of this Agreement or have requested extensions thereof and have timely paid all taxes (including interest, penalties and additions thereto) required to be paid (whether or not shown on any tax returns), except as currently being contested in good faith and for which reserves required by U.S. GAAP have been created in the financial statements of the Company, the Transaction Entities and each of their respective subsidiaries are not subject to any ongoing or pending audit, administrative proceedings or court proceedings, in each case with regard to any material U.S. federal, state, local or non-U.S. tax of any nature except as disclosed in the Registration Statement, the Time of Sale Prospectus or the Prospectus, and no tax deficiency has been determined adversely to the Transaction Entities or any of their respective subsidiaries (nor do the Transaction Entities nor any of their respective subsidiaries have any notice or knowledge of any tax deficiency that is likely to be asserted and which could reasonably be expected to be determined adversely to the Transaction Entities or their respective subsidiaries). |
| (bbb) | The Company (i) has not alone engaged in any Testing-the-Waters Communication with any person other than Testing-the-Waters Communications with the consent of the Representatives with entities that are reasonably believed to be qualified institutional buyers within the meaning of Rule 144A under the Securities Act or institutions that are reasonably believed to be accredited investors within the meaning of Rule 501 under the Securities Act and (ii) has not authorized anyone other than the Representatives to engage in Testing-the-Waters Communications. The Company reconfirms that the Representatives have been authorized to act on its behalf in undertaking Testing-the-Waters Communications. The Company has not distributed any Testing-the-Waters Communication that is a written communication within the meaning of Rule 405 under the Securities Act other than those listed on Schedule III hereto. “Testing-the-Waters Communication” means any communication with potential investors undertaken in reliance on Rule 163B of the Securities Act. |
| (ccc) | As of the time of each sale of the Shares in connection with the offering when the Prospectus is not yet available to prospective purchasers, none of (A) the Time of Sale Prospectus, (B) any free writing prospectus, when considered together with the Time of Sale Prospectus, and (C) any individual Testing-the-Waters Communication, when considered together with the Time of Sale Prospectus, included, includes or will include an untrue statement of a material fact or omitted, omits or will omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. |
| (ddd) | Neither of the Transaction Entities nor any of their respective subsidiaries or affiliates has taken, directly or indirectly, any action designed to or that would reasonably be expected to cause or result in any stabilization or manipulation of the price of the Shares. |
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| (eee) | Neither the issuance, sale and delivery of the Shares nor the application of the proceeds thereof by the Company as described in each of the Registration Statement, the Time of Sale Prospectus and the Prospectus will violate Regulation T, U or X of the Board of Governors of the Federal Reserve System or any other regulation of such Board of Governors. |
| (fff) | Neither of the Transaction Entities nor any of their respective subsidiaries is a party to any contract, agreement or understanding with any person (other than this Agreement) that would give rise to a valid claim against any of them or any Underwriter for a brokerage commission, finder’s fee or like payment in connection with the offering and sale of the Shares. |
| (ggg) | In connection with any offer and sale of Directed Shares outside the United States, each Preliminary Prospectus, the Prospectus and any amendment or supplement thereto, complied and will comply in all material respects with any applicable laws or regulations of foreign jurisdictions in which the same is distributed. The Transaction Entities have not offered, or caused Morgan Stanley, RBC or any DSP Entity, as defined in Section 9, to offer, Directed Shares to any person with the specific intent to unlawfully influence (i) any purchaser of Directed Shares or any of such purchaser’s respective affiliates to alter such party’s level or type of business with any Transaction Entity, or (ii) a trade journalist or publication to write or publish favorable information about the Transaction Entities or any of their respective affiliates, or their respective businesses or products. |
| 2. | Agreements to Sell and Purchase. The Company hereby agrees to sell to the several Underwriters, and each Underwriter, upon the basis of the representations and warranties herein contained, but subject to the terms and conditions hereinafter stated, agrees, severally and not jointly, to purchase from the Company the respective numbers of Firm Shares set forth in Schedule I hereto opposite its name at $75.075 a share (the “Purchase Price”). |
On the basis of the representations and warranties contained in this Agreement, and subject to its terms and conditions, the Company agrees to sell to the Underwriters the Additional Shares, and the Underwriters shall have the right to purchase, severally and not jointly, up to 8,532,307 Additional Shares at the Purchase Price, provided, however, that the amount paid by the Underwriters for any Additional Shares shall be reduced by an amount per share equal to any dividends declared by the Company and payable on the Firm Shares but not payable on such Additional Shares. The Representatives may exercise this right on behalf of the Underwriters in whole or from time to time in part by giving written notice not later than 30 days after the date of this Agreement. Any exercise notice shall specify the number of Additional Shares to be purchased by the Underwriters and the date on which such shares are to be purchased. Each purchase date must be at least one business day after the written notice is given and
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may not be earlier than the closing date for the Firm Shares or later than ten business days after the date of such notice. As used herein, “business day” means a day on which the Nasdaq Global Select Market is open for trading and on which banks in New York are open for business and are not permitted by law or executive order to be closed. Additional Shares may be purchased as provided in Section 4 hereof solely for the purpose of covering over-allotments made in connection with the offering of the Firm Shares. On each day, if any, that Additional Shares are to be purchased (an “Option Closing Date”), each Underwriter agrees, severally and not jointly, to purchase the number of Additional Shares (subject to such adjustments to eliminate fractional shares as the Representatives may determine) that bears the same proportion to the total number of Additional Shares to be purchased on such Option Closing Date as the number of Firm Shares set forth in Schedule I hereto opposite the name of such Underwriter bears to the total number of Firm Shares.
| 3. | Terms of Public Offering. The Company is advised by the Representatives that the Underwriters propose to make a public offering of their respective portions of the Shares as soon after the Registration Statement and this Agreement have become effective as in the Representatives’ judgment is advisable. The Company is further advised by the Representatives that the Shares are to be offered to the public initially at $78.00 a share (the “Public Offering Price”) and to certain dealers selected by the Representatives at a price that represents a concession not in excess of $1.755 a share under the Public Offering Price. |
| 4. | Payment and Delivery. Payment for the Firm Shares shall be made to the Company in Federal or other funds immediately available in New York City against delivery of such Firm Shares for the respective accounts of the several Underwriters at 10:00 a.m., New York City time, on July 26, 2024, or at such other time on the same or such other date, not later than August 2, 2024, as shall be designated in writing by the Representatives. The time and date of such payment are hereinafter referred to as the “Closing Date.” |
Payment for any Additional Shares shall be made to the Company in Federal or other funds immediately available in New York City against delivery of such Additional Shares for the respective accounts of the several Underwriters at 10:00 a.m., New York City time, on the date specified in the corresponding notice described in Section 2 or at such other time on the same or on such other date, in any event not later than five business days thereafter, as shall be designated in writing by the Representatives.
The Firm Shares and Additional Shares shall be registered in such names and in such denominations as the Representatives shall request not later than one full business day prior to the Closing Date or the applicable Option Closing Date, as the case may be. The Firm Shares and Additional Shares shall be delivered to the Representatives on the Closing Date or an Option Closing Date, as the case may be, for the respective accounts of the several Underwriters against payment of the Purchase Price therefor, with any transfer or other taxes payable in connection with the transfer of the Shares to the Underwriters having been duly paid.
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| 5. | Conditions to the Underwriters’ Obligations. The obligations of the Company to sell the Shares to the Underwriters and the several obligations of the Underwriters to purchase and pay for the Shares on the Closing Date are subject to the condition that the Registration Statement shall have become effective not later than 4:30 p.m. (New York City time) on the date hereof. |
The several obligations of the Underwriters are subject to the following further conditions:
| (a) | Subsequent to the execution and delivery of this Agreement and prior to the Closing Date: |
| (i) | no order suspending the effectiveness of the Registration Statement shall be in effect, and no proceeding for such purpose or pursuant to Section 8A under the Securities Act shall be pending before or threatened by the Commission; |
| (ii) | there shall not have occurred any downgrading, nor shall any notice have been given of any intended or potential downgrading or of any review for a possible change that does not indicate the direction of the possible change, in the rating accorded to the Company or any of its subsidiaries or any of the securities of the Company or any of its subsidiaries by any “nationally recognized statistical rating organization,” as such term is defined in Section 3(a)(62) of the Exchange Act; and |
| (iii) | there shall not have occurred any change, or any development involving a prospective change, in the condition, financial or otherwise, or in the earnings, business or operations of the Company and its subsidiaries, taken as a whole, from that set forth in the Time of Sale Prospectus that, in the Representatives’ judgment, is material and adverse and that makes it, in the Representatives’ judgment, impracticable to market the Shares on the terms and in the manner contemplated in the Time of Sale Prospectus. |
| (b) | The Underwriters shall have received on the Closing Date a certificate, dated the Closing Date and signed by an executive officer of the Company, to the effect (i) set forth in Sections 5(a)(i) and 5(a)(ii) above, (ii) to the effect that the representations and warranties of the Transaction Entities contained in this Agreement are true and correct as of the Closing Date and that the Transaction Entities have complied with all of the agreements and satisfied all of the conditions on its part to be performed or satisfied hereunder on or before the Closing Date and (iii) that there shall not have occurred any material and adverse change, or any development involving a prospective material and adverse change, in the condition, financial or otherwise, or in the earnings, business or operations of the Company and its subsidiaries, taken as a whole, from that set forth in the Time of Sale Prospectus. |
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The officer signing and delivering such certificate may rely upon the best of his or her knowledge as to proceedings threatened.
| (c) | The Underwriters shall have received on the date of execution and delivery of this Agreement and on the Closing Date a certificate, dated the date of execution and delivery of this Agreement and the Closing Date and signed by the Chief Financial Officer of the Company, to the effect set forth in Exhibit D hereto. |
| (d) | The Underwriters shall have received on the Closing Date an opinion and negative assurance letter of Latham & Watkins LLP, outside counsel for the Transaction Entities, dated the Closing Date, to the effect set forth in Exhibit E hereto. |
| (e) | The Underwriters shall have received on the Closing Date an opinion letter of Latham & Watkins LLP, tax counsel for the Transaction Entities, dated the Closing Date, to the effect set forth in Exhibit F hereto. |
| (f) | The Underwriters shall have received on the Closing Date an opinion letter of Venable LLP, Maryland counsel for the Transaction Entities, dated the Closing Date, to the effect set forth in Exhibit G hereto. |
| (g) | The Underwriters shall have received on the Closing Date an opinion and negative assurance letter of Goodwin Procter LLP, counsel for the Underwriters, dated the Closing Date, in form and substance reasonably satisfactory to the Representatives. |
With respect to the negative assurance letters to be delivered pursuant to Sections 5(d) and 5(g) above, Latham & Watkins LLP and Goodwin Procter LLP may state that their opinions and beliefs are based upon their participation in the preparation of the Registration Statement, the Time of Sale Prospectus and the Prospectus and any amendments or supplements thereto and review and discussion of the contents thereof, but are without independent check or verification, except as specified.
The opinions of Latham & Watkins LLP and Venable LLP referenced in Sections 5(d), 5(e) and 5(f) above shall be rendered to the Underwriters at the request of the Transaction Entities and shall so state therein.
| (h) | The Underwriters shall have received, on each of the date hereof and the Closing Date, a letter dated the date hereof or the Closing Date, as the case may be, in form and substance satisfactory to the Underwriters, from KPMG LLP, independent public accountants, containing statements and information of the type ordinarily included in accountants’ “comfort letters” to underwriters with respect to the financial statements and certain financial information contained in the Registration Statement, the Time of Sale Prospectus and the Prospectus; provided that the letter delivered on the Closing Date shall use a “cut-off date” not earlier than the date hereof. |
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| (i) | The “lock-up” agreements, each substantially in the form of Exhibit A hereto, between the Representatives and certain shareholders, officers and directors of the Company relating to restrictions on sales and certain other dispositions of shares of Common Stock or certain other securities, delivered to the Representatives on or before the date hereof (the “Lock-up Agreements”), shall be in full force and effect on the Closing Date. |
| (j) | On or prior to the Closing Date, the Formation Transactions shall have been consummated in accordance with the Formation Transaction Agreements. |
| (k) | The several obligations of the Underwriters to purchase Additional Shares hereunder are subject to the delivery to the Representatives on the applicable Option Closing Date of the following: |
| (i) | a certificate, dated the Option Closing Date and signed by the Chief Financial Officer of the Company, confirming that the certificate delivered on the Closing Date pursuant to Section 5(c) hereof remains true and correct as of such Option Closing Date; |
| (ii) | a certificate, dated the Option Closing Date and signed by an executive officer of the Company, confirming that the certificate delivered on the Closing Date pursuant to Section 5(b) hereof remains true and correct as of such Option Closing Date; |
| (iii) | an opinion and negative assurance letter of Latham & Watkins LLP, outside counsel for the Transaction Entities, dated the Option Closing Date, relating to the Additional Shares to be purchased on such Option Closing Date and otherwise to the same effect as the opinion required by Section 5(d) hereof; |
| (iv) | an opinion letter of Latham & Watkins LLP, tax counsel for the Transaction Entities, dated the Option Closing Date, to the same effect as the opinion required by Section 5(e) hereof; |
| (v) | an opinion letter of Venable LLP, Maryland counsel for the Transaction Entities, dated the Option Closing Date, relating to the Additional Shares to be purchased on such Option Closing Date and otherwise to the same effect as the opinion required by Section 5(f) hereof; |
| (vi) | an opinion and negative assurance letter of Goodwin Procter LLP, counsel for the Underwriters, dated the Option Closing Date, relating to the Additional Shares to be purchased on such Option Closing Date and otherwise to the same effect as the opinion required by Section 5(g) hereof; |
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| (vii) | a letter dated the Option Closing Date, in form and substance satisfactory to the Underwriters, from KPMG LLP, independent public accountants, substantially in the same form and substance as the letter furnished to the Underwriters pursuant to Section 5(h) hereof; provided that the letter delivered on the Option Closing Date shall use a “cut-off date” not earlier than two business days prior to such Option Closing Date; and |
| (viii) | such other documents as the Representatives may reasonably request with respect to the good standing of the Company, the due authorization and issuance of the Additional Shares to be sold on such Option Closing Date and other matters related to the issuance of such Additional Shares. |
| 6. | Covenants of the Transaction Entities. Each of the Transaction Entities, jointly and severally, covenants with each Underwriter as follows: |
| (a) | To furnish to the Representatives an electronic copy of the Registration Statement (including exhibits thereto), the Time of Sale Prospectus, the Prospectus and any supplements and amendments thereto or to the Registration Statement. |
| (b) | Before amending or supplementing the Registration Statement, the Time of Sale Prospectus or the Prospectus, to furnish to the Representatives an electronic copy of each such proposed amendment or supplement and not to file any such proposed amendment or supplement to which any of the Representatives reasonably objects, and to file with the Commission within the applicable period specified in Rule 424(b) under the Securities Act any prospectus required to be filed pursuant to such Rule. |
| (c) | To furnish to the Representatives an electronic copy of each proposed free writing prospectus (including electronic road shows) to be prepared by or on behalf of, used by, or referred to by the Company and not to use or refer to any proposed free writing prospectus to which any of the Representatives reasonably objects. |
| (d) | Not to take any action that would result in an Underwriter or the Company being required to file with the Commission pursuant to Rule 433(d) under the Securities Act a free writing prospectus prepared by or on behalf of the Underwriter that the Underwriter otherwise would not have been required to file thereunder. |
| (e) | If the Time of Sale Prospectus is being used to solicit offers to buy the Shares at a time when the Prospectus is not yet available to prospective purchasers and any event shall occur or condition exist as a result of which it is necessary to amend or supplement the Time of Sale Prospectus in order to make the statements therein, in the light of the circumstances, not misleading, or if any event shall occur or condition exist as a result of which the Time of Sale Prospectus conflicts with the information contained in the Registration Statement then on file, or if, in the opinion of counsel for the Underwriters, it is necessary to amend or supplement the Time of Sale Prospectus to comply with applicable law, forthwith to prepare, file with the Commission and furnish, at its own expense, to the Underwriters and to any dealer upon request, either amendments or supplements to the Time of Sale Prospectus so that the statements in the Time of Sale Prospectus as so amended or supplemented will not, in the light of the circumstances when the Time of Sale Prospectus is delivered to a prospective purchaser, be misleading or so that the Time of Sale Prospectus, as amended or supplemented, will no longer conflict with the Registration Statement, or so that the Time of Sale Prospectus, as amended or supplemented, will comply with applicable law. |
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| (f) | If, during such period after the first date of the public offering of the Shares as in the opinion of counsel for the Underwriters the Prospectus (or in lieu thereof the notice referred to in Rule 173(a) of the Securities Act) is required by law to be delivered in connection with sales by an Underwriter or dealer, any event shall occur or condition exist as a result of which it is necessary to amend or supplement the Prospectus in order to make the statements therein, in the light of the circumstances when the Prospectus (or in lieu thereof the notice referred to in Rule 173(a) of the Securities Act) is delivered to a purchaser, not misleading, or if, in the opinion of counsel for the Underwriters, it is necessary to amend or supplement the Prospectus to comply with applicable law, forthwith to prepare, file with the Commission and furnish, at its own expense, to the Underwriters and to the dealers (whose names and addresses the Representatives will furnish to the Company) to which Shares may have been sold by the Representatives on behalf of the Underwriters and to any other dealers upon request, either amendments or supplements to the Prospectus so that the statements in the Prospectus as so amended or supplemented will not, in the light of the circumstances when the Prospectus (or in lieu thereof the notice referred to in Rule 173(a) of the Securities Act) is delivered to a purchaser, be misleading or so that the Prospectus, as amended or supplemented, will comply with applicable law. |
| (g) | To use its reasonable best efforts to list, subject to notice of issuance, the Shares on the Nasdaq Global Select Market. |
| (h) | To endeavor to qualify the Shares for offer and sale under the securities or Blue Sky laws of such jurisdictions as the Representatives shall reasonably request (provided, however, that the Transaction Entities shall not be obligated to subject themselves to taxation in respect of doing business in any jurisdiction in which they are not otherwise so subject). |
| (i) | To make generally available to the Company’s security holders and to the Representatives as soon as practicable an earnings statement covering a period of at least the prior twelve months beginning with the first fiscal quarter of the Company occurring after the date of this Agreement which shall satisfy the provisions of Section 11(a) of the Securities Act and the rules and regulations of the Commission thereunder, which requirement shall be satisfied by a filing with the Commission containing this information. |
| (j) | To comply with all applicable securities and other laws, rules and regulations in each jurisdiction in which the Directed Shares are offered in connection with the Directed Share Program. |
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| (k) | To use its reasonable best efforts to cause the Company to meet the requirements to qualify, for the taxable year ending December 31, 2024, for taxation as a REIT under the Code, and to use its reasonable best efforts to cause the Company to continue to qualify for taxation as a REIT under the Code, unless the Company’s board of directors determines that it is no longer in the best interests of the Company to so qualify or to be so qualified. |
| (l) | To use the net proceeds received from the sale of the Shares pursuant to this Agreement in the manner specified in the Time of Sale Prospectus under the caption “Use of Proceeds.” |
| (m) | Whether or not the transactions contemplated in this Agreement are consummated or this Agreement is terminated, to pay or cause to be paid all expenses incident to the performance of their obligations under this Agreement, including: (i) the fees, disbursements and expenses of the Transaction Entities’ counsel and the Transaction Entities’ accountants in connection with the registration and delivery of the Shares under the Securities Act and all other fees or expenses in connection with the preparation and filing of the Registration Statement, any preliminary prospectus, the Time of Sale Prospectus, the Prospectus, any free writing prospectus prepared by or on behalf of, used by, or referred to by the Company and amendments and supplements to any of the foregoing, including all printing costs associated therewith, and the mailing and delivering of copies thereof to the Underwriters and dealers, in the quantities hereinabove specified, (ii) all costs and expenses related to the transfer and delivery of the Shares to the Underwriters, including any stamp, transfer or other similar taxes payable thereon, (iii) the cost of printing or producing any Blue Sky or legal investment memorandum in connection with the offer and sale of the Shares under state securities laws and all expenses in connection with the qualification of the Shares for offer and sale under state securities laws as provided in Section 6(h) hereof, including filing fees and the reasonable fees and disbursements of counsel for the Underwriters in connection with such qualification and in connection with the Blue Sky or legal investment memorandum (in an amount not to exceed $15,000), (iv) all filing fees and the reasonable fees and disbursements of counsel to the Underwriters (in an amount not to exceed $30,000) incurred in connection with the review and qualification of the offering of the Shares by FINRA, (v) all fees and expenses in connection with the preparation and filing of the registration statement on Form 8-A relating to the Common Stock and all costs and expenses incident to listing the Shares on the Nasdaq Global Select Market, (vi) the cost of printing certificates representing the Shares, (vii) the costs and charges of any transfer agent, registrar or depositary, (viii) the costs and expenses of the Company relating to investor presentations on any “road show” undertaken in connection with the marketing of the offering of the Shares, including, without limitation, expenses associated with the preparation or dissemination of any electronic road show, expenses associated with the production of road show slides and graphics, fees and expenses of any consultants engaged in connection with the road show presentations with the prior approval of the Company, travel and lodging expenses of the representatives and officers of the Company and any such |
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| consultants, and 50% of the cost of any aircraft or ground transportation chartered in connection with the road show (the remaining 50% of such cost to be paid by the Underwriters), (ix) the document production charges and expenses associated with printing this Agreement, (x) all fees and disbursements of counsel incurred by the Underwriters in connection with the Directed Share Program and transfer taxes, stamp duties, similar taxes or duties, if any, incurred by the Underwriters in connection with the Directed Share Program and (xi) all other costs and expenses incident to the performance of the obligations of the Transaction Entities hereunder for which provision is not otherwise made in this Section. It is understood, however, that except as provided in this Section, Section 8 entitled “Indemnity and Contribution”, Section 9 entitled “Directed Share Program Indemnification” and the last paragraph of Section 11 below, the Underwriters will pay all of their costs and expenses, including fees and disbursements of their counsel, stock transfer taxes payable on resale of any of the Shares by them and any advertising expenses connected with any offers they may make. |
| (n) | If at any time following the distribution of any Testing-the-Waters Communication that is a written communication within the meaning of Rule 405 under the Securities Act there occurred or occurs an event or development as a result of which such Testing-the-Waters Communication included or would include an untrue statement of a material fact or omitted or would omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances existing at that subsequent time, not misleading, the Company will promptly notify the Representatives and will promptly amend or supplement, at its own expense, such Testing-the-Waters Communication to eliminate or correct such untrue statement or omission. |
| (o) | The Company will deliver to each Underwriter (or its agent), on the date of execution of this Agreement, a properly completed and executed Certification Regarding Beneficial Owners of Legal Entity Customers, together with copies of identifying documentation, and the Company undertakes to provide such additional supporting documentation as each Underwriter may reasonably request in connection with the verification of the foregoing Certification. |
| (p) | To prepare the Prospectus in a form approved by the Representatives and to file such Prospectus pursuant to Rule 424(b) under the Securities Act prior to the earlier of (i) the Closing Date and (ii) the Commission’s close of business on the second business day following the execution and delivery of this Agreement, or, if applicable, such earlier time as may be required by Rule 430A(a)(3) under the Securities Act. |
The Company also covenants with each Underwriter that, without the prior written consent of the Representatives on behalf of the Underwriters, it will not, and will not publicly disclose an intention to, during the period ending 180 days after the date of the Prospectus (the “Restricted Period”), (1) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or
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indirectly, any shares of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock or (2) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock, whether any such transaction described in clause (1) or (2) above is to be settled by delivery of Common Stock or such other securities, in cash or otherwise or (3) file any registration statement with the Commission relating to the offering of any shares of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock.
The restrictions contained in the preceding paragraph shall not apply to (A) the Shares to be sold hereunder, (B) Common Stock or securities convertible into or exercisable or exchangeable for Common Stock (including OP Units, Legacy Units or LLC Interests) issued by any Transaction Entity in the Formation Transactions, (C) the issuance by the Company of shares of Common Stock upon the exercise of an option or warrant or the conversion of a security outstanding on the date hereof or as a result of the Formation Transactions, in each case as described in each of the Time of Sale Prospectus and Prospectus, (D) any Common Stock or securities convertible into or exercisable or exchangeable for shares of Common Stock (including OP Units) issued or granted pursuant to any employee benefit plan, qualified stock option plan or other employee compensation plan of the Company or the Operating Partnership referred to in the Registration Statement, the Time of Sale Prospectus and the Prospectus, (E) facilitating the establishment of a trading plan on behalf of a shareholder, officer or director of the Company pursuant to Rule 10b5-1 under the Exchange Act for the transfer of shares of Common Stock, provided that (i) such plan does not provide for the transfer of Common Stock during the Restricted Period and (ii) to the extent a public announcement or filing under the Exchange Act, if any, is required of or voluntarily made by the Company regarding the establishment of such plan, such announcement or filing shall include a statement to the effect that no transfer of Common Stock may be made under such plan during the Restricted Period, (F) any shares of Common Stock or securities convertible into or exercisable or exchangeable for shares of Common Stock (including OP Units and restricted stock units), in the aggregate not to exceed 10% of the total number of shares of Common Stock issued and outstanding immediately following the completion of the transactions contemplated by this Agreement (assuming full conversion, exchange or exercise of all outstanding securities convertible into or exercisable or exchangeable for shares of Common Stock (including OP Units, LLC Interests and restricted stock units)), issued in connection with property acquisitions, mergers or acquisitions, joint ventures, commercial relationships or other strategic transactions, provided, however, that the recipient of such shares of Common Stock or securities convertible into or exercisable or exchangeable for shares of Common Stock shall be required to execute a Lock-up Agreement in substantially the form attached as Exhibit A hereto for the duration of the Restricted Period or (G) the filing of a registration statement or amendment thereto relating to any employee benefit plan, qualified stock option plan or other employee compensation plan of the Company and/or the Operating Partnership referred to in the Registration Statement, Time of Sale Prospectus and Prospectus.
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If the Representatives, in their sole discretion, agree to release or waive the restrictions on the transfer of Shares set forth in a Lock-up Agreement for an officer or director of the Company and provide the Company with notice of the impending release or waiver at least three business days before the effective date of the release or waiver substantially in the form of Exhibit B, the Company agrees to announce the impending release or waiver by a press release substantially in the form of Exhibit C hereto through a major news service at least two business days before the effective date of the release or waiver.
| 7. | Covenants of the Underwriters. Each Underwriter, severally and not jointly, covenants with the Company not to take any action that would result in the Company being required to file with the Commission under Rule 433(d) a free writing prospectus prepared by or on behalf of such Underwriter that otherwise would not be required to be filed by the Company thereunder, but for the action of the Underwriter. |
| 8. | Indemnity and Contribution. (a) The Transaction Entities, jointly and severally, agree to indemnify and hold harmless each Underwriter, each person, if any, who controls any Underwriter within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act and each affiliate of any Underwriter within the meaning of Rule 405 under the Securities Act from and against any and all losses, claims, damages and liabilities (including, without limitation, any legal or other expenses reasonably incurred in connection with defending or investigating any such action or claim) that arise out of, or are based upon, any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or any amendment thereof, any preliminary prospectus, the Time of Sale Prospectus or any amendment or supplement thereto, any issuer free writing prospectus as defined in Rule 433(h) under the Securities Act, any information relating to the Transaction Entities that the Company has filed, or is required to file, pursuant to Rule 433(d) under the Securities Act, any road show as defined in Rule 433(h) under the Securities Act (a “road show”), the Prospectus or any amendment or supplement thereto, or any Testing-the-Waters Communication, or arise out of, or are based upon, any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as such losses, claims, damages or liabilities arise out of, or are based upon, any such untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with any information relating to any Underwriter furnished to the Company in writing by such Underwriter through the Representatives expressly for use therein, it being understood and agreed that the only such information furnished by the Underwriters through the Representatives consists of the information described as such in paragraph (b) below. |
| (b) | Each Underwriter agrees, severally and not jointly, to indemnify and hold harmless the Transaction Entities, their directors, officers who sign the Registration Statement and each person, if any, who controls the Transaction Entities within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act to the same extent as the foregoing indemnity from the Transaction Entities to such Underwriter, but only with reference to information relating to such Underwriter furnished to the Transaction Entities in |
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| writing by such Underwriter through the Representatives expressly for use in the Registration Statement, any preliminary prospectus, the Time of Sale Prospectus, any issuer free writing prospectus, road show or the Prospectus or any amendment or supplement thereto, it being understood and agreed upon that the only such information furnished by any Underwriter consists of the following information in the Prospectus furnished on behalf of each Underwriter under the caption “Underwriters”: (i) information relating to the concession amount in the first sentence appearing in the third paragraph thereunder, (ii) the seventh paragraph thereunder, and (iii) the first, second and ninth sentences appearing in the thirteenth paragraph thereunder. |
| (c) | In case any proceeding (including any governmental investigation) shall be instituted involving any person in respect of which indemnity may be sought pursuant to Section 8(a) or 8(b), such person (the “indemnified party”) shall promptly notify the person against whom such indemnity may be sought (the “indemnifying party”) in writing and the indemnifying party, upon request of the indemnified party, shall retain counsel reasonably satisfactory to the indemnified party to represent the indemnified party and any others the indemnifying party may designate in such proceeding and shall pay the fees and disbursements of such counsel related to such proceeding. In any such proceeding, any indemnified party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel or (ii) the named parties to any such proceeding (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them and/or the indemnifying party and the indemnified party have different available defenses. It is understood that the indemnifying party shall not, in respect of the legal expenses of any indemnified party in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the fees and expenses of more than one separate firm (in addition to any local counsel) for all such indemnified parties and that all such fees and expenses shall be reimbursed as they are incurred. Such firm shall be designated in writing by the Representatives, in the case of parties indemnified pursuant to Section 8(a), and by the Transaction Entities, in the case of parties indemnified pursuant to Section 8(b). The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel as contemplated by the second and third sentences of this paragraph, the indemnifying party agrees that it shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 45 days after receipt by such indemnifying party of the aforesaid request and (ii) such |
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| indemnifying party shall not have reimbursed the indemnified party in accordance with such request prior to the date of such settlement. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened proceeding in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party, unless such settlement (i) includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such proceeding and (ii) does not include any statement as to or any admission of wrongdoing, culpability or a failure to act by or on behalf of any indemnified party. |
| (d) | To the extent the indemnification provided for in Section 8(a) or 8(b) is unavailable to an indemnified party or insufficient in respect of any losses, claims, damages or liabilities referred to therein, then each indemnifying party under such paragraph, in lieu of indemnifying such indemnified party thereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (i) in such proportion as is appropriate to reflect the relative benefits received by the Transaction Entities on the one hand and the Underwriters on the other hand from the offering of the Shares or (ii) if the allocation provided by clause 8(d)(i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause 8(d)(i) above but also the relative fault of the Transaction Entities on the one hand and of the Underwriters on the other hand in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative benefits received by the Transaction Entities on the one hand and the Underwriters on the other hand in connection with the offering of the Shares shall be deemed to be in the same respective proportions as the net proceeds from the offering of the Shares (before deducting expenses) received by the Transaction Entities and the total underwriting discounts and commissions received by the Underwriters, in each case as set forth in the table on the cover of the Prospectus, bear to the aggregate Public Offering Price of the Shares. The relative fault of the Transaction Entities on the one hand and the Underwriters on the other hand shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Transaction Entities or by the Underwriters and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Underwriters’ respective obligations to contribute pursuant to this Section 8 are several in proportion to the respective number of Shares they have purchased hereunder, and not joint. |
| (e) | The Transaction Entities and the Underwriters agree that it would not be just or equitable if contribution pursuant to this Section 8 were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations referred to in Section 8(d). The amount paid or payable by an |
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| indemnified party as a result of the losses, claims, damages and liabilities referred to in Section 8(d) shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 8, no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Shares underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages that such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The remedies provided for in this Section 8 are not exclusive and shall not limit any rights or remedies which may otherwise be available to any indemnified party at law or in equity. |
| (f) | The indemnity and contribution provisions contained in this Section 8 and the representations, warranties and other statements of the Transaction Entities contained in this Agreement shall remain operative and in full force and effect regardless of (i) any termination of this Agreement, (ii) any investigation made by or on behalf of any Underwriter, any person controlling any Underwriter or any affiliate of any Underwriter or by or on behalf of the Transaction Entities, their officers or directors or any person controlling the Transaction Entities and (iii) acceptance of and payment for any of the Shares. |
| 9. | Directed Share Program Indemnification. (a) In connection with the offer and sale of the Directed Shares, the Company agrees to indemnify and hold harmless each of Morgan Stanley, RBC, each person, if any, who controls Morgan Stanley or RBC, respectively, within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act and each affiliate of Morgan Stanley or RBC, respectively, within the meaning of Rule 405 of the Securities Act (“DSP Entities”) from and against any and all losses, claims, damages and liabilities (including, without limitation, any legal or other expenses reasonably incurred in connection with defending or investigating any such action or claim) (i) that arise out of, or are based upon, any untrue statement or alleged untrue statement of a material fact contained in any material prepared by or with the consent of the Company for distribution to Participants in connection with the Directed Share Program or arise out of, or are based upon, any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; (ii) that arise out of, or are based upon, the failure of any Participant to pay for and accept delivery of Directed Shares that the Participant agreed to purchase; (iii) related to, arising out of, or in connection with the Directed Share Program, other than losses, claims, damages or liabilities (or expenses relating thereto) that are finally judicially determined to have resulted from the bad faith or gross negligence of DSP Entities or (iv) that arise out of the violation of any applicable laws or regulations of foreign jurisdictions where the Directed Shares have been offered. |
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| (b) | In case any proceeding (including any governmental investigation) shall be instituted involving any DSP Entity in respect of which indemnity may be sought pursuant to Section 9(a), the DSP Entity seeking indemnity shall promptly notify the Transaction Entities in writing and the Company, upon request of the DSP Entity, shall retain counsel reasonably satisfactory to the DSP Entity to represent the DSP Entity and any others the Company may designate in such proceeding and shall pay the fees and disbursements of such counsel related to such proceeding. In any such proceeding, any DSP Entity shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such DSP Entity unless (i) the Company shall have agreed to the retention of such counsel or (ii) the named parties to any such proceeding (including any impleaded parties) include both the Company and the DSP Entity and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. The Company shall not, in respect of the legal expenses of the DSP Entities in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the fees and expenses of more than one separate firm (in addition to any local counsel) for all DSP Entities. Any such separate firm for the DSP Entities affiliated with Morgan Stanley shall be designated in writing by Morgan Stanley1. The Company shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the Company agrees to indemnify the DSP Entities from and against any loss or liability by reason of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time a DSP Entity shall have requested the Company to reimburse it for fees and expenses of counsel as contemplated by the second and third sentences of this paragraph, the Company agrees that it shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 30 days after receipt by the Company of the aforesaid request and (ii) the Company shall not have reimbursed the DSP Entity in accordance with such request prior to the date of such settlement. The Company shall not, without the prior written consent of Morgan Stanley, with respect to sales by entities affiliated with Morgan Stanley, and RBC with respect to sales by entities affiliated with RBC, effect any settlement of any pending or threatened proceeding in respect of which any DSP Entity is or could have been a party and indemnity could have been sought hereunder by such DSP Entity, unless such settlement includes an unconditional release of the relevant DSP Entities from all liability on claims that are the subject matter of such proceeding. |
| (c) | To the extent the indemnification provided for in Section 9(a) is unavailable to a DSP Entity or insufficient in respect of any losses, claims, damages or liabilities referred to therein, then the Company in lieu of indemnifying the DSP Entity thereunder, shall contribute to the amount paid or payable by the DSP Entity as a result of such losses, claims, damages or liabilities (i) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one |
| 1 | NTD: RBC to confirm whether a similar concept should be added for the RBC entities. |
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| hand and the DSP Entities on the other hand from the offering of the Directed Shares or (ii) if the allocation provided by clause 9(c)(i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause 9(c)(i) above but also the relative fault of the Company on the one hand and of the DSP Entities on the other hand in connection with any statements or omissions that resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and the DSP Entities on the other hand in connection with the offering of the Directed Shares shall be deemed to be in the same respective proportions as the net proceeds from the offering of the Directed Shares (before deducting expenses) and the total underwriting discounts and commissions received by the DSP Entities for the Directed Shares, bear to the aggregate Public Offering Price of the Directed Shares. If the loss, claim, damage or liability is caused by an untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact, the relative fault of the Company on the one hand and the DSP Entities on the other hand shall be determined by reference to, among other things, whether the untrue or alleged untrue statement or the omission or alleged omission relates to information supplied by the Company or by the DSP Entities and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. |
| (d) | The Company and the DSP Entities agree that it would not be just or equitable if contribution pursuant to this Section 9 were determined by pro rata allocation (even if the DSP Entities were treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations referred to in Section 9(c). The amount paid or payable by the DSP Entities as a result of the losses, claims, damages and liabilities referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by the DSP Entities in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 9, no DSP Entity shall be required to contribute any amount in excess of the amount by which the total price at which the Directed Shares distributed to the public were offered to the public exceeds the amount of any damages that such DSP Entity has otherwise been required to pay. The remedies provided for in this Section 9 are not exclusive and shall not limit any rights or remedies which may otherwise be available to any indemnified party at law or in equity. |
| (e) | The indemnity and contribution provisions contained in this Section 9 shall remain operative and in full force and effect regardless of (i) any termination of this Agreement, (ii) any investigation made by or on behalf of any DSP Entity or the Company, its officers or directors or any person controlling the Company and (iii) acceptance of and payment for any of the Directed Shares. |
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| 10. | Termination. The Underwriters may terminate this Agreement by notice given by the Representatives to the Transaction Entities, if after the execution and delivery of this Agreement and prior to or on the Closing Date or any Option Closing Date, as the case may be, (i) trading generally shall have been suspended or materially limited on, or by, as the case may be, any of the New York Stock Exchange, the NYSE American or the Nasdaq Global Select Market, (ii) trading of any securities of the Company shall have been suspended on any exchange or in any over-the-counter market, (iii) a material disruption in securities settlement, payment or clearance services in the United States shall have occurred, (iv) any moratorium on commercial banking activities shall have been declared by Federal or New York State authorities or (v) there shall have occurred any outbreak or escalation of hostilities, or any change in financial markets or any calamity or crisis that, in the Representatives’ judgment, is material and adverse and which, singly or together with any other event specified in this clause (v), makes it, in the Representatives’ judgment, impracticable or inadvisable to proceed with the offer, sale or delivery of the Shares on the terms and in the manner contemplated in the Time of Sale Prospectus or the Prospectus. |
| 11. | Effectiveness; Defaulting Underwriters. This Agreement shall become effective upon the execution and delivery hereof by the parties hereto. |
If, on the Closing Date or an Option Closing Date, as the case may be, any one or more of the Underwriters shall fail or refuse to purchase Shares that it has or they have agreed to purchase hereunder on such date, and the aggregate number of Shares which such defaulting Underwriter or Underwriters agreed but failed or refused to purchase is not more than one-tenth of the aggregate number of the Shares to be purchased on such date, the other Underwriters shall be obligated severally in the proportions that the number of Firm Shares set forth opposite their respective names in Schedule I bears to the aggregate number of Firm Shares set forth opposite the names of all such non-defaulting Underwriters, or in such other proportions as the Representatives may specify, to purchase the Shares which such defaulting Underwriter or Underwriters agreed but failed or refused to purchase on such date; provided that in no event shall the number of Shares that any Underwriter has agreed to purchase pursuant to this Agreement be increased pursuant to this Section 11 by an amount in excess of one-ninth of such number of Shares without the written consent of such Underwriter. If, on the Closing Date, any Underwriter or Underwriters shall fail or refuse to purchase Firm Shares and the aggregate number of Firm Shares with respect to which such default occurs is more than one-tenth of the aggregate number of Firm Shares to be purchased on such date, and arrangements satisfactory to the Representatives and the Transaction Entities for the purchase of such Firm Shares are not made within 36 hours after such default, this Agreement shall terminate without liability on the part of any non-defaulting Underwriter or the Transaction Entities. In any such case either the Representatives or the Transaction Entities shall have the right to postpone the Closing Date, but in no event for longer than seven days, in order that the required changes, if any, in the Registration Statement, in the Time of Sale Prospectus, in the Prospectus or in any other documents or arrangements may be effected. If, on an Option Closing Date, any Underwriter or Underwriters shall fail or refuse to purchase Additional Shares and the aggregate number of Additional Shares with respect to which such default occurs is more than one-tenth of the aggregate number of Additional Shares to be purchased on such Option Closing Date, the non-defaulting Underwriters shall have the option to (i) terminate their obligation
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hereunder to purchase the Additional Shares to be sold on such Option Closing Date or (ii) purchase not less than the number of Additional Shares that such non-defaulting Underwriters would have been obligated to purchase in the absence of such default. Any action taken under this paragraph shall not relieve any defaulting Underwriter from liability in respect of any default of such Underwriter under this Agreement.
If this Agreement shall be terminated by the Underwriters, or any of them, because of any failure or refusal on the part of the Transaction Entities to comply with the terms or to fulfill any of the conditions of this Agreement (which, for purposes of this Section 11, shall not include termination by the Underwriters under items (i), (iii), (iv) or (v) of Section 10 or this Section 11), or if for any reason the Transaction Entities shall be unable to perform their respective obligations under this Agreement, the Transaction Entities will reimburse the Underwriters or such Underwriters as have so terminated this Agreement with respect to themselves, severally, for all out-of-pocket expenses (including the fees and disbursements of their counsel) reasonably incurred by such Underwriters in connection with this Agreement or the offering contemplated hereunder.
| 12. | Entire Agreement. (a) This Agreement, together with any contemporaneous written agreements and any prior written agreements (to the extent not superseded by this Agreement) that relate to the offering of the Shares, represents the entire agreement between the Transaction Entities and the Underwriters with respect to the preparation of any preliminary prospectus, the Time of Sale Prospectus, the Prospectus, the conduct of the offering, and the purchase and sale of the Shares. |
| (b) | The Transaction Entities acknowledge that in connection with the offering of the Shares: (i) the Underwriters have acted at arm’s length, are not agents of, and owe no fiduciary duties to, the Transaction Entities or any other person, (ii) the Underwriters owe the Transaction Entities only those duties and obligations set forth in this Agreement, any contemporaneous written agreements and prior written agreements (to the extent not superseded by this Agreement), if any, (iii) the Underwriters may have interests that differ from those of the Transaction Entities, and (iv) none of the activities of the Underwriters in connection with the transactions contemplated herein constitutes a recommendation, investment advice, or solicitation of any action by the Underwriters with respect to any entity or natural person. Each of the Transaction Entities waives to the full extent permitted by applicable law any claims it may have against the Underwriters arising from an alleged breach of fiduciary duty in connection with the offering of the Shares. |
| 13. | Recognition of the U.S. Special Resolution Regimes. (a) In the event that any Underwriter that is a Covered Entity becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer from such Underwriter of this Agreement, and any interest and obligation in or under this Agreement, will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if this Agreement, and any such interest and obligation, were governed by the laws of the United States or a state of the United States. |
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| (b) | In the event that any Underwriter that is a Covered Entity or a BHC Act Affiliate of such Underwriter becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under this Agreement that may be exercised against such Underwriter are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if this Agreement were governed by the laws of the United States or a state of the United States. |
For purposes of this Section a “BHC Act Affiliate” has the meaning assigned to the term “affiliate” in, and shall be interpreted in accordance with, 12 U.S.C. § 1841(k). “Covered Entity” means any of the following: (i) a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b); (ii) a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b); or (iii) a “covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b). “Default Right” has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable. “U.S. Special Resolution Regime” means each of (i) the Federal Deposit Insurance Act and the regulations promulgated thereunder and (ii) Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the regulations promulgated thereunder.
| 14. | Counterparts. For the convenience of the parties hereto, any number of counterparts of this Agreement may be executed by the parties hereto, each of which shall be an original instrument and all of which taken together shall constitute one and the same Agreement. Delivery of a signed counterpart of this Agreement by e-mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) or facsimile transmission shall constitute valid and sufficient delivery thereof. |
| 15. | Applicable Law. This Agreement, and any claim, controversy or dispute relating to or arising out of this Agreement, shall be governed by and construed in accordance with the internal laws of the State of New York, without giving effect to the conflict of laws provisions thereof to the extent such principles or rules would require or permit the application of the laws of any jurisdiction other than those of the State of New York. |
| 16. | Headings. The headings of the sections of this Agreement have been inserted for convenience of reference only and shall not be deemed a part of this Agreement. |
| 17. | Notices. All communications hereunder shall be in writing and effective only upon receipt and if to the Underwriters shall be delivered, mailed or sent to Morgan Stanley & Co. LLC at 1585 Broadway, New York, New York 10036, Attention: Equity Syndicate Desk, with a copy to the Legal Department; Goldman Sachs & Co. LLC at 200 West Street, New York, New York 10282; BofA Securities, Inc. at One Bryant Park, New York, New York 10036; J.P. Morgan Securities LLC at 383 Madison Avenue, New York, New York 10179, Attention: Equity Syndicate Desk Fax: (212) 633-8358; Wells Fargo Securities, LLC at 500 West 33rd Street, New York, New York 10001, Attention: Equity Syndicate Department (fax no: (212) 214-5918); with a copy to Goodwin Procter LLP, 100 Northern Avenue, Boston, MA 02210, attention: Scott C. Chase, Esq., fax: (617) |
39
| 321-4413; and if to the Company and the Operating Partnership shall be delivered, mailed or sent to Lineage, Inc., 46500 Humboldt Drive, Novi, MI 48377, Attention: Legal Department; legalnotice@onelineage.com, with a copy to Latham & Watkins LLP, 355 S Grand Avenue, Suite 100, Los Angeles, CA 90071, Attention: Julian T.H. Kleindorfer and Lewis W. Kneib. |
[Remainder of page intentionally blank]
40
If the foregoing is in accordance with your understanding, please indicate your acceptance of this Agreement by signing in the space provided below.
| Very truly yours,
LINEAGE, INC. | ||||
| By: | /s/ Greg Lehmkuhl | |||
| Name: | Greg Lehmkuhl | |||
| Title: | Chief Executive Officer | |||
| LINEAGE OP, LP By: LINEAGE, INC., its General Partner | ||||
| By: | /s/ Greg Lehmkuhl | |||
| Name: | Greg Lehmkuhl | |||
| Title: | Chief Executive Officer | |||
| LINEAGE LOGISTICS HOLDINGS, LLC | ||||
| By: | /s/ Greg Lehmkuhl | |||
| Name: | Greg Lehmkuhl | |||
| Title: | Chief Executive Officer | |||
I-1
| Accepted as of the date hereof
Morgan Stanley & Co. LLC Goldman Sachs & Co. LLC BofA Securities, Inc. J.P. Morgan Securities LLC Wells Fargo Securities, LLC | ||||
| Acting severally on behalf of themselves and the several Underwriters named in Schedule I hereto. | ||||
| By: | Morgan Stanley & Co. LLC | |||
| By: | /s/ Aala Saifi | |||
| Name: | Aala Saifi | |||
| Title: | Vice President | |||
| By: | Goldman Sachs & Co. LLC | |||
| By: | /s/ Ryan Cunn | |||
| Name: | Ryan Cunn | |||
| Title: | Managing Director | |||
| By: | BofA Securities, Inc. | |||
| By: | /s/ Chris Djoganopoulos | |||
| Name: | Chris Djoganopoulos | |||
| Title: | Managing Director | |||
| By: | J.P. Morgan Securities LLC | |||
| By: | /s/ Samantha Carter | |||
| Name: | Samantha Carter | |||
| Title: | Vice President | |||
| By: | Wells Fargo Securities, LLC | |||
| By: | /s/ Rohit Mehta | |||
| Name: | Rohit Mehta | |||
| Title: | Executive Director | |||
I-2
SCHEDULE I
| Underwriter |
Number of Firm Shares To Be Purchased |
|||
| Morgan Stanley & Co. LLC |
14,430,120 | |||
| Goldman Sachs & Co. LLC |
8,618,151 | |||
| BofA Securities, Inc. |
7,935,567 | |||
| J.P. Morgan Securities LLC |
7,935,567 | |||
| Wells Fargo Securities, LLC |
4,282,517 | |||
| RBC Capital Markets, LLC |
1,355,689 | |||
| Rabo Securities USA, Inc. |
1,355,689 | |||
| Scotia Capital (USA) Inc. |
1,355,689 | |||
| UBS Securities LLC |
1,207,796 | |||
| Capital One Securities, Inc. |
1,084,551 | |||
| Truist Securities, Inc. |
1,084,551 | |||
| Evercore Group L.L.C. |
912,009 | |||
| Robert W. Baird & Co. Incorporated |
912,009 | |||
| KeyBanc Capital Markets Inc. |
788,764 | |||
| Mizuho Securities USA LLC |
788,764 | |||
| PNC Capital Markets LLC |
616,222 | |||
| Deutsche Bank Securities Inc. |
443,680 | |||
| CBRE Capital Advisors, Inc. |
369,733 | |||
| HSBC Securities (USA) Inc. |
369,733 | |||
| Piper Sandler & Co. |
369,733 | |||
| Regions Securities LLC |
369,733 | |||
| Blaylock Van, LLC |
36,973 | |||
| Cabrera Capital Markets LLC |
36,973 | |||
| C.L. King & Associates, Inc. |
36,973 | |||
| Drexel Hamilton, LLC |
36,973 | |||
| Guzman & Company |
36,973 | |||
| Loop Capital Markets LLC |
36,973 | |||
| Roberts & Ryan Investments, Inc. |
36,973 | |||
| R. Seelaus & Co., LLC |
36,973 | |||
| Total: |
56,882,051 | |||
|
|
|
|||
I-3
SCHEDULE II
Time of Sale Prospectus
| 1. | Preliminary Prospectus issued July 22, 2024 |
| 2. | Pricing information: |
Firm Shares to be sold by the Company: 56,882,051
Additional Shares: 8,532,307
Public Offering Price: $78.00 per share
II-1
SCHEDULE III
Testing the Waters Materials
| 1. | November 13, 2023 |
| 2. | January 4, 2024 |
| 3. | January 22, 2024 |
| 4. | January 26, 2024 |
| 5. | February 6, 2024 |
| 6. | April 1, 2024 |
| 7. | April 9, 2024 |
| 8. | April 15, 2024 |
| 9. | April 18, 2024 |
III-1
EXHIBIT A
[FORM OF LOCK-UP AGREEMENT]
[ATTACHED]
A-1
[FORM OF LOCK-UP AGREEMENT]
_____________, 2024
Morgan Stanley & Co. LLC
BofA Securities, Inc.
Goldman Sachs & Co. LLC
J.P. Morgan Securities LLC
Wells Fargo Securities, LLC
c/o Morgan Stanley & Co. LLC
1585 Broadway
New York, New York 10036
c/o BofA Securities, Inc.
One Bryant Park
New York, New York 10036
c/o Goldman Sachs & Co. LLC
200 West Street
New York, New York 10282
c/o J.P. Morgan Securities LLC
383 Madison Avenue
New York, New York 10179
c/o Wells Fargo Securities, LLC
550 S. Tryon Street, 5th Floor
Charlotte, North Carolina 28202
Ladies and Gentlemen:
The undersigned understands that Morgan Stanley & Co. LLC, BofA Securities, Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC and Wells Fargo Securities, LLC (collectively, the “Representatives”) propose to enter into an Underwriting Agreement (the “Underwriting Agreement”) with Lineage, Inc., a Maryland corporation (the “Company”), providing for the public offering (the “Public Offering”) by the several underwriters identified therein, including the Representatives (the “Underwriters”), of shares (the “Shares”) of common stock, par value $0.01 per share, of the Company (the “Common Stock”).
To induce the Underwriters that may participate in the Public Offering to continue their efforts in connection with the Public Offering, the undersigned hereby agrees that, without the prior written consent of the Representatives on behalf of the Underwriters, it will not, will not cause any direct or indirect affiliate to, and will not publicly disclose an intention to, during the period commencing on the date hereof and ending 180 days after the date of the final prospectus (the
A-1
“Restricted Period”) relating to the Public Offering (the “Prospectus”), (1) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any shares of Common Stock beneficially owned (as such term is used in Rule 13d-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), by the undersigned or any other securities so owned convertible into or exercisable or exchangeable for shares of Common Stock (including, for the avoidance of doubt, common units of partnership interest in Lineage OP, LP, the Company’s operating partnership (“OP Units”), Legacy Class A OP Units, Legacy Class B OP Units and OPEUs (each as defined in the Prospectus)), whether now owned or hereafter acquired by the undersigned or with respect to which the undersigned has or hereafter acquires the power of disposition (collectively, the “Restricted Securities”) or (2) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the Restricted Securities, whether any such transaction described in clause (1) or (2) above (any transaction described in clause (1) or (2) above, collectively, “Transfers”) is to be settled by delivery of Restricted Securities or such other securities, in cash or otherwise. The undersigned acknowledges and agrees that the foregoing precludes the undersigned from engaging in any hedging or other transaction designed or intended, or which could reasonably be expected to lead to or result in, a sale or disposition of any Restricted Securities, even if any such sale or disposition transaction or transactions would be made or executed by or on behalf of someone other than the undersigned.
The foregoing restrictions shall not apply to Transfers of any Restricted Securities:
| (a) | acquired in the Public Offering (other than, for officers and directors of the Company, any issuer-directed Shares purchased in the Public Offering) or in open market transactions after the completion of the Public Offering; |
| (b) | as a bona fide gift or charitable contribution; |
| (c) | as distributions to limited partners, members or stockholders of the undersigned; |
| (d) | to an immediate family member of the undersigned or any trust or other entity for the direct or indirect benefit of the undersigned or the immediate family of the undersigned (for purposes of this lock-up agreement, “immediate family” shall mean any relationship by blood, marriage or adoption, not more remote than first cousin); |
| (e) | to a corporation, partnership, limited liability company or other entity that controls or is controlled by, or is under common control with, the undersigned, or is wholly owned by the undersigned and/or by members of the undersigned’s immediate family; |
| (f) | by will, other testamentary document or intestate succession upon the death of the undersigned or for bona fide estate planning purposes; |
| (g) | by operation of law, such as pursuant to an order of a court or regulatory agency (for purposes of this lock-up agreement, a “court or regulatory agency” means any domestic or foreign, federal, state or local government, including any political subdivision thereof, any governmental or quasi-governmental authority, department, agency or official, any court or administrative body or any national securities exchange or similar self-regulatory body or organization, in each case of competent jurisdiction) or pursuant to a domestic order or in connection with a divorce settlement; |
A-2
| (h) | to the Company or its subsidiaries pursuant to any redemption or conversion right relating to OP Units, Legacy Class A OP Units, Legacy Class B OP Units or OPEUs; |
| (i) | to the Company or its subsidiaries pursuant to (A) the exercise on a net issuance basis by the undersigned of any award granted pursuant to the Company’s employee benefit plans as described in the Prospectus, or (B) share withholdings to cover applicable taxes in connection with the vesting or settlement of any award granted pursuant to the Company’s employee benefit plans as described in the Prospectus; |
| (j) | to a bona fide third party pursuant to a merger, consolidation, tender offer or other similar transaction pursuant to an offer made to all holders of Common Stock and involving a change of control of the Company and approved by the Company’s board of directors; or |
| (k) | as a pledge, hypothecation or other granting of a security interest in Restricted Securities to one or more lending institutions as collateral or security for any loan, advance or extension of credit (provided that at the time of making the loan, advance or extension of credit, such loan, advance or extension of credit does not exceed 33% of the total value of the total collateral so pledged, hypothecated or granted) and any Transfer upon foreclosure upon such Restricted Securities. |
provided that in the case of any Transfer pursuant to clauses (b), (c), (d), (e) or (f) [(except for any Transfer pursuant to clause (c) by the undersigned to “small holders” (as defined in the Prospectus)], each transferee, donee or distributee, as applicable, shall sign and deliver a lock-up agreement substantially in the form of this agreement for the balance of the Restricted Period; provided further that in the case of any Transfer pursuant to clauses (a), (d) and (e), no filing under Section 16(a) of the Exchange Act, reporting a reduction in beneficial ownership of shares of Common Stock, shall be required or shall be voluntarily made during the Restricted Period; provided further that any Transfer pursuant to clause (b) shall not involve a disposition for value, and any filing under Section 16(a) of the Exchange Act reporting a Transfer pursuant to clause (b) shall clearly indicate in the footnotes thereto that such Transfer is not for value, that the shares of Common Stock subject to such Transfer remain subject to restrictions set forth herein and that the filing relates to the circumstances described in clause (b); provided further that any Transfer pursuant to clause (c) shall not involve a disposition for value, and any filing under Section 16(a) of the Exchange Act reporting a reduction in beneficial ownership of shares of Common Stock resulting from a Transfer pursuant to clause (c) shall clearly indicate in the footnotes thereto that such Transfer is not for value, that the shares of Common Stock subject to such Transfer remain subject to restrictions set forth herein [(except for any Transfer pursuant to clause (c) by the undersigned to “small holders” (as defined in the Prospectus), in which case, the footnotes shall indicate that the shares of Common Stock subject to such Transfer is subject to the restrictions of Rule 144)] and that the filing relates to the circumstances described in clause (c), and no other public filing (other than those that might be required during the Restricted Period pursuant to Section 13 of the Exchange Act) or announcement shall be required or shall be made voluntarily in connection with such Transfer; provided further that in connection with any filing under Section 16(a) of the Exchange Act reporting a reduction in beneficial ownership
A-3
of shares of Common Stock resulting from a Transfer pursuant to clause (i), such filing shall indicate that such Transfer has been net share settled; and provided further that in connection with any Transfer pursuant to clause (k), the undersigned shall provide the Representatives prior written notice informing them of any public filing, report or announcement with respect to such pledge, hypothecation or other grant of a security interest.
“Change of control” shall mean the Transfer (whether by tender offer, merger, consolation or other similar transaction), in one transaction or a series of related transactions, to a person or group of affiliated persons (other than an underwriter pursuant to an offering), of the Company’s voting securities if, after such Transfer, such person or group of affiliated persons would hold more than 50% of the outstanding voting securities of the Company (or the surviving entity).
The foregoing restrictions shall also not apply to facilitating the establishment of a trading plan on behalf of a shareholder, officer or director of the Company pursuant to Rule 10b5-1 under the Exchange Act for the Transfer of shares of Common Stock, provided that (x) such plan does not provide for the Transfer of shares of Common Stock during the Restricted Period and (y) to the extent a public announcement or disclosure, or filing under the Exchange Act, regarding the establishment of such plan is required or voluntarily made by or on behalf of the undersigned or the Company, such announcement, disclosure or filing shall include a statement to the effect that no Transfer of shares of Common Stock may be made under such plan during the Restricted Period.
In addition, the undersigned agrees that, without the prior written consent of the Representatives on behalf of the Underwriters, it will not, during the Restricted Period, make any demand for or exercise any right with respect to, the registration of any Restricted Securities.
If the undersigned is an officer or director of the Company, the undersigned further agrees that the foregoing restrictions shall be equally applicable to any issuer-directed Shares the undersigned may purchase in the Public Offering.
If the undersigned is an officer or director of the Company, (i) the Representatives agree that, at least three business days before the effective date of any release or waiver of the foregoing restrictions in connection with a Transfer of shares of Common Stock, the Representatives will notify the Company of the impending release or waiver, and (ii) the Company has agreed in the Underwriting Agreement to announce the impending release or waiver by press release through a major news service at least two business days before the effective date of the release or waiver. Any release or waiver granted by the Representatives hereunder to any such officer or director shall only be effective two business days after the publication date of such press release. The provisions of this paragraph will not apply if (a) the release or waiver is effected solely to permit a Transfer not for consideration or to an immediate family member as defined in FINRA Rule 5130(i)(5) and (b) the transferee has agreed in writing to be bound by the same terms described in this agreement to the extent and for the duration that such terms remain in effect at the time of the Transfer.
A-4
[If any record or beneficial owner of any securities of the Company other than the undersigned (each, a “Triggering Shareholder”) is granted an early release or waiver from the restrictions described herein or in any other similar agreement during the Restricted Period (each, a “Triggering Release”), then the undersigned shall also be granted an early release or waiver, as applicable, from its obligations hereunder on the same terms and conditions as the Triggering Release with respect to the same percentage of the undersigned’s Restricted Securities as the percentage that the securities being released or waived in the Triggering Release represent with respect to the Restricted Securities held by the Triggering Shareholder at the time of the Triggering Release. Notwithstanding the foregoing, the pro rata release or waiver described in this paragraph will not apply: (a) if the aggregate number of shares released pursuant to all Triggering Releases is less than or equal to 1.0% of the total number of outstanding shares of Common Stock (assuming the conversion, exercise or exchange of securities convertible into or exercisable or exchangeable for shares of Common Stock) calculated as of the date of the last such Triggering Release; (b) if it is effected solely to permit a Transfer not for consideration and the transferee has agreed in writing to be bound by the same terms described in this lock-up agreement to the extent and for the duration that such terms remain in effect at the time of the transfer; (c) in connection with an early release or waiver from the restrictions described herein during the Restricted Period in connection with an underwritten public offering, whether or not such offering or sale is wholly or partially a secondary offering of the Company’s securities, so long as the undersigned is provided with the opportunity to be released and participate in such offering, pro rata relative to the Triggering Shareholder; or (d) if the Triggering Release is granted due to circumstances of an emergency or hardship as determined by the Representatives in their sole judgment. For purposes of determining record or beneficial ownership of a shareholder, all shares of Restricted Securities held by investment funds affiliated with such shareholder shall be aggregated.]
The undersigned acknowledges and agrees that the Underwriters have not provided any recommendation or investment advice nor have the Underwriters solicited any action from the undersigned with respect to the Public Offering, and the undersigned has consulted their own legal, accounting, financial, regulatory and tax advisors to the extent deemed appropriate. The undersigned further acknowledges and agrees that, although the Underwriters may provide certain Regulation Best Interest and Form CRS disclosures or other related documentation to you in connection with the Public Offering, the Underwriters are not making a recommendation to you to participate in the Public Offering or sell any shares of Common Stock at the price determined in the Public Offering, and nothing set forth in such disclosures or documentation is intended to suggest that any Underwriter is making such a recommendation.
Whether or not the Public Offering actually occurs depends on a number of factors, including market conditions. Any Public Offering will only be made pursuant to an Underwriting Agreement, the terms of which are subject to negotiation between the Company and the Underwriters.
The undersigned hereby represents and warrants that the undersigned has full power, capacity and authority to enter into this lock-up agreement. The undersigned understands that the Company and the Underwriters are relying upon this lock-up agreement in proceeding toward the consummation of the Public Offering. The undersigned further understands that this lock-up agreement is irrevocable and shall be binding upon the undersigned’s heirs, legal representatives, successors and assigns.
A-5
This lock-up agreement shall automatically terminate and be of no further effect upon the earliest to occur, if any, of: (i) the date of the filing with the Securities and Exchange Commission of a notice of withdrawal of the Registration Statement on Form S-11 (which covers Shares) pursuant to Rule 477 promulgated under the Securities Act, (ii) the Company advises the Representatives in writing prior to the execution of the Underwriting Agreement, that it has determined not to proceed with the Public Offering, (iii) the Underwriting Agreement is executed but is terminated (other than the provisions thereof that survive termination) prior to payment for and delivery of the Shares to be sold thereunder, and (iv) September 30, 2024, in the event that the Underwriting Agreement has not been executed on or before that date; provided, however, that the Company may, by written notice to the undersigned prior to such date, extend such date for a period of up to six additional months.
This agreement shall be governed by and construed in accordance with the laws of the State of New York.
| Very truly yours, |
| (Name) |
| (Address) |
A-6
EXHIBIT B
FORM OF WAIVER OF LOCK-UP
_____________, 20__
[Name and Address of
Officer or Director
Requesting Waiver]
Dear Mr./Ms. [Name]:
This letter is being delivered to Morgan Stanley & Co. LLC, Goldman Sachs & Co. LLC, BofA Securities, Inc., J.P. Morgan Securities LLC, Wells Fargo Securities, LLC (collectively, the “Representatives”) in connection with the offering by Lineage, Inc. (the “Company”) of _____ shares of common stock, $__ par value (the “Common Stock”), of the Company and the lock-up agreement dated ____, 2024 (the “Lock-up Agreement”), executed by you in connection with such offering, and your request for a [waiver] [release] dated ____, 20__, with respect to ____ shares of Common Stock (the “Shares”).
The Representatives hereby agree to [waive] [release] the transfer restrictions set forth in the Lock-up Agreement, but only with respect to the Shares, effective _____, 20__; provided, however, that such [waiver] [release] is conditioned on the Company announcing the impending [waiver] [release] by press release through a major news service at least two business days before effectiveness of such [waiver] [release]. This letter will serve as notice to the Company of the impending [waiver] [release].
Except as expressly [waived] [released] hereby, the Lock-up Agreement shall remain in full force and effect.
| Very truly yours, |
| Morgan Stanley & Co. LLC Goldman Sachs & Co. LLC BofA Securities, Inc. J.P. Morgan Securities LLC Wells Fargo Securities, LLC |
| Acting severally on behalf of themselves and the several Underwriters named in Schedule I hereto |
B-1
| By: | ||
| Name: | ||
| Title: |
cc: Company
B-2
EXHIBIT C
FORM OF PRESS RELEASE
[Name of Company]
[Date]
[Name of Issuer] (the “Company”) announced today that Morgan Stanley & Co. LLC, Goldman Sachs & Co. LLC, BofA Securities, Inc., J.P. Morgan Securities LLC, Wells Fargo Securities, LLC, the lead book-running managers in the Company’s recent public sale of _____ shares of its common stock is [waiving][releasing] a lock-up restriction with respect to ____ shares of the Company’s common stock held by [certain officers or directors] [an officer or director] of the Company. The [waiver][release] will take effect on ____, 20__, and the shares may be sold on or after such date.
This press release is not an offer for sale of the securities in the United States or in any other jurisdiction where such offer is prohibited, and such securities may not be offered or sold in the United States absent registration or an exemption from registration under the United States Securities Act of 1933, as amended.
C-1
EXHIBIT D
FORM OF CERTIFICATE OF CHIEF FINANCIAL OFFICER
[ATTACHED]
D-1
EXHIBIT E
FORM OF OPINION AND NEGATIVE ASSURANCE LETTER OF LATHAM & WATKINS LLP
[INTENTIONALLY OMITTED]
E-1
EXHIBIT F
FORM OF TAX OPINION OF LATHAM & WATKINS LLP
[INTENTIONALLY OMITTED]
F-1
EXHIBIT G
FORM OF OPINION OF VENABLE LLP
[INTENTIONALLY OMITTED]
G-1
Exhibit 10.1
AGREEMENT OF LIMITED PARTNERSHIP
OF
LINEAGE OP, LP
a Maryland limited partnership
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION, UNLESS IN THE OPINION OF COUNSEL SATISFACTORY TO THE PARTNERSHIP THE PROPOSED SALE, TRANSFER OR OTHER DISPOSITION MAY BE EFFECTED WITHOUT REGISTRATION UNDER THE SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES OR “BLUE SKY” LAWS.
dated as of July 24, 2024
TABLE OF CONTENTS
| Page | ||||||||
| ARTICLE 1 DEFINED TERMS | 2 | |||||||
| ARTICLE 2 ORGANIZATIONAL MATTERS | 23 | |||||||
| Section 2.1 | Continuation; Conversion | 23 | ||||||
| Section 2.2 | Name | 23 | ||||||
| Section 2.3 | Principal Office and Resident Agent; Principal Executive Office | 23 | ||||||
| Section 2.4 | Power of Attorney | 24 | ||||||
| Section 2.5 | Partnership Interests Are Securities | 25 | ||||||
| ARTICLE 3 PURPOSE | 25 | |||||||
| Section 3.1 | Purpose and Business | 25 | ||||||
| Section 3.2 | Powers | 25 | ||||||
| Section 3.3 | Partnership Only for Purposes Specified | 25 | ||||||
| Section 3.4 | Representations and Warranties by the Partners | 26 | ||||||
| ARTICLE 4 CAPITAL CONTRIBUTIONS | 28 | |||||||
| Section 4.1 | Capital Contributions of the Partners | 28 | ||||||
| Section 4.2 | Issuances of Partnership Interests | 29 | ||||||
| Section 4.3 | Additional Funds and Capital Contributions | 31 | ||||||
| Section 4.4 | Equity Incentive Plans | 32 | ||||||
| Section 4.5 | Dividend Reinvestment Plan, Cash Option Purchase Plan, Equity Incentive Plan or Other Plan | 33 | ||||||
| Section 4.6 | No Interest; No Return | 33 | ||||||
| Section 4.7 | Conversion or Redemption of Capital Shares | 33 | ||||||
| Section 4.8 | Other Contribution Provisions | 34 | ||||||
| ARTICLE 5 DISTRIBUTIONS | 34 | |||||||
| Section 5.1 | Requirement and Characterization of Distributions | 34 | ||||||
| Section 5.2 | Distributions in Kind | 35 | ||||||
| Section 5.3 | Amounts Withheld | 35 | ||||||
| Section 5.4 | Distributions upon Liquidation | 35 | ||||||
| Section 5.5 | Distributions to Reflect Additional Partnership Units | 35 | ||||||
| Section 5.6 | Restricted Distributions | 35 | ||||||
| ARTICLE 6 ALLOCATIONS | 35 | |||||||
| Section 6.1 | Timing and Amount of Allocations of Net Income and Net Loss | 35 | ||||||
| Section 6.2 | General Allocations | 36 | ||||||
| Section 6.3 | Additional Allocation Provisions | 37 | ||||||
| Section 6.4 | Regulatory Allocation Provisions | 38 | ||||||
| Section 6.5 |
Tax Allocations | 40 | ||||||
i
| ARTICLE 7 MANAGEMENT AND OPERATIONS OF BUSINESS | 41 | |||||||
| Section 7.1 |
Management | 41 | ||||||
| Section 7.2 |
Certificate of Limited Partnership | 45 | ||||||
| Section 7.3 |
Restrictions on General Partner’s Authority | 46 | ||||||
| Section 7.4 |
Reimbursement of the General Partner | 48 | ||||||
| Section 7.5 |
Outside Activities of the General Partner | 50 | ||||||
| Section 7.6 |
Transactions with Affiliates | 50 | ||||||
| Section 7.7 |
Indemnification | 51 | ||||||
| Section 7.8 |
Liability of the General Partner | 53 | ||||||
| Section 7.9 |
Title to Partnership Assets | 57 | ||||||
| Section 7.10 |
Reliance by Third Parties | 57 | ||||||
| ARTICLE 8 RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS | 57 | |||||||
| Section 8.1 |
Limitation of Liability | 57 | ||||||
| Section 8.2 |
Management of Business | 57 | ||||||
| Section 8.3 |
Outside Activities of Limited Partners | 58 | ||||||
| Section 8.4 |
Return of Capital | 58 | ||||||
| Section 8.5 |
Rights of Limited Partners Relating to the Partnership | 58 | ||||||
| Section 8.6 |
Partnership Right to Call Partnership Common Units | 59 | ||||||
| Section 8.7 |
Rights as Objecting Partner | 59 | ||||||
| ARTICLE 9 BOOKS, RECORDS, ACCOUNTING AND REPORTS | 59 | |||||||
| Section 9.1 |
Records and Accounting | 59 | ||||||
| Section 9.2 |
Partnership Year | 60 | ||||||
| Section 9.3 |
Reports | 60 | ||||||
| ARTICLE 10 TAX MATTERS | 61 | |||||||
| Section 10.1 |
Preparation of Tax Returns | 61 | ||||||
| Section 10.2 |
Tax Elections | 61 | ||||||
| Section 10.3 |
Partnership Representative | 61 | ||||||
| Section 10.4 |
Withholding | 62 | ||||||
| Section 10.5 |
Organizational Expenses | 63 | ||||||
| Section 10.6 |
Survival | 63 | ||||||
| ARTICLE 11 PARTNER TRANSFERS AND WITHDRAWALS | 63 | |||||||
| Section 11.1 |
Transfer | 63 | ||||||
| Section 11.2 |
Transfer of General Partner’s Partnership Interest | 63 | ||||||
| Section 11.3 |
Limited Partners’ Rights to Transfer | 66 | ||||||
| Section 11.4 |
Admission of Substituted Limited Partners | 69 | ||||||
| Section 11.5 |
Assignees | 69 | ||||||
| Section 11.6 |
General Provisions | 70 | ||||||
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| ARTICLE 12 ADMISSION OF PARTNERS | 71 | |||||||
| Section 12.1 | Admission of Successor General Partner | 71 | ||||||
| Section 12.2 | Admission of Additional Limited Partners | 72 | ||||||
| Section 12.3 | Amendment of Agreement and Certificate of Limited Partnership | 73 | ||||||
| Section 12.4 | Limit on Number of Partners | 73 | ||||||
| Section 12.5 | Admission | 73 | ||||||
| ARTICLE 13 DISSOLUTION, LIQUIDATION AND TERMINATION | 73 | |||||||
| Section 13.1 | Dissolution | 73 | ||||||
| Section 13.2 | Winding Up | 74 | ||||||
| Section 13.3 | Deemed Contribution and Distribution | 75 | ||||||
| Section 13.4 | Rights of Holders | 76 | ||||||
| Section 13.5 | Notice of Dissolution | 76 | ||||||
| Section 13.6 | Cancellation of Certificate of Limited Partnership | 76 | ||||||
| Section 13.7 | Reasonable Time for Winding-Up | 76 | ||||||
| ARTICLE 14 PROCEDURES FOR ACTIONS AND CONSENTS OF PARTNERS; AMENDMENTS; MEETINGS | 77 | |||||||
| Section 14.1 | Procedures for Actions and Consents of Partners | 77 | ||||||
| Section 14.2 | Amendments | 77 | ||||||
| Section 14.3 | Actions and Consents of the Partners | 77 | ||||||
| ARTICLE 15 GENERAL PROVISIONS | 79 | |||||||
| Section 15.1 | Redemption Rights of Qualifying Parties | 79 | ||||||
| Section 15.2 | Addresses and Notice | 86 | ||||||
| Section 15.3 | Titles and Captions | 86 | ||||||
| Section 15.4 | Pronouns and Plurals | 86 | ||||||
| Section 15.5 | Further Action | 86 | ||||||
| Section 15.6 | Binding Effect | 86 | ||||||
| Section 15.7 | Waiver | 86 | ||||||
| Section 15.8 | Counterparts | 87 | ||||||
| Section 15.9 | Applicable Law; Consent to Jurisdiction; Waiver of Jury Trial | 87 | ||||||
| Section 15.10 | Entire Agreement | 87 | ||||||
| Section 15.11 | Invalidity of Provisions | 88 | ||||||
| Section 15.12 | Limitation to Preserve REIT Status | 88 | ||||||
| Section 15.13 | No Partition | 89 | ||||||
| Section 15.14 | No Third-Party Rights Created Hereby | 89 | ||||||
| Section 15.15 | No Rights as Stockholders | 89 | ||||||
| Section 15.16 | REIT Subsidiary Ownership Restrictions | 89 | ||||||
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| ARTICLE 16 LTIP UNITS | 96 | |||||||
| Section 16.1 | Designation | 96 | ||||||
| Section 16.2 | Vesting | 96 | ||||||
| Section 16.3 | Adjustments | 97 | ||||||
| Section 16.4 | Distributions | 98 | ||||||
| Section 16.5 | Allocations | 99 | ||||||
| Section 16.6 | Transfers | 99 | ||||||
| Section 16.7 | Redemption | 99 | ||||||
| Section 16.8 | Legend | 99 | ||||||
| Section 16.9 | Conversion to Partnership Common Units | 100 | ||||||
| Section 16.10 | Voting | 103 | ||||||
| Section 16.11 | Section 83 Safe Harbor | 103 | ||||||
| Exhibits List | ||||
| Exhibit A | EXAMPLES REGARDING ADJUSTMENT FACTOR | A-1 | ||
| Exhibit B | NOTICE OF REDEMPTION | B-1 | ||
| Exhibit C | CONVERSION NOTICE | C-1 | ||
| Exhibit D | FORCED CONVERSION NOTICE | D-1 | ||
| Exhibit E | UNIT DESIGNATION – | |||
| SERIES A PREFERRED UNITS | E-1 | |||
| Exhibit F | UNIT DESIGNATION – LEGACY UNITS | F-1 | ||
iv
AGREEMENT OF LIMITED PARTNERSHIP
OF LINEAGE OP, LP
THIS AGREEMENT OF LIMITED PARTNERSHIP OF Lineage OP, LP (the “Partnership”), dated as of July 24, 2024 (the “Effective Date”), is made and entered into by and among Lineage, Inc., a Maryland corporation, as the General Partner, and the Persons from time to time party hereto, as limited partners.
RECITALS
A. The Partnership was originally formed as a limited liability company under the Delaware Limited Liability Company Act (as amended from time to time) on December 12, 2017 under the name BG LLH Intermediate, LLC (the “LLC”).
B. The LLC subsequently changed its name to Lineage OP, LLC on October 11, 2023.
C. On the Effective Date, Articles of Conversion were filed with the State Department of Assessments and Taxation of the State of Maryland and a Certificate of Conversion was filed with the Secretary of State of the State of Delaware with an effective time of 12:30 p.m., Eastern Time (the “Effective Time”), to convert the LLC into a Maryland limited partnership (the “Conversion”).
D. On the Effective Date, a Certificate of Limited Partnership of the Partnership was filed with the State Department of Assessments and Taxation of the State of Maryland.
E. Prior to the Effective Time: (i) the Partnership’s general partner previously served as the managing member of the LLC; and (ii) the Partnership was governed by its prior limited liability company operating agreement (the “Prior Agreement”).
F. In connection with the Conversion: (i) the managing member of the LLC became the general partner of the Partnership; and (ii) the other members of the LLC became the limited partners of the Partnership.
G. The Partnership serves as the operating partnership for Lineage, Inc., a Maryland corporation and a real estate investment trust (“Lineage REIT”).
H. The Partnership runs the Lineage business through its subsidiary, Lineage Logistics Holdings, LLC, a Delaware limited liability company and the main operating entity for Lineage REIT and the Partnership (“Lineage Holdings”). The Partnership holds the controlling interest in Lineage Holdings on the Effective Date.
I. The requisite approvals for all amendments reflected herein have been received.
J. The members of the LLC and the partners of the Partnership hereby amend and restate the Prior Agreement in its entirety as set forth herein and agree to continue the Partnership as a Maryland limited partnership in accordance with the Act.
K. This Agreement of Limited Partnership of Lineage OP, LP (as hereafter amended, restated, modified, supplemented or replaced, this “Agreement”) supersedes and replaces the Prior Agreement in its entirety effective as of the Effective Time.
L. As of the Effective Time, all of the LLC’s outstanding membership interests have been reclassified into either Partnership Common Units, Series A Preferred Units or Legacy Units of the Partnership, as set forth herein. The Series A Preferred Units and the Legacy Units are currently expected to be temporary classes with a limited existence as set forth in their respective Unit Designations.
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE 1
DEFINED TERMS
The following definitions shall be for all purposes, unless otherwise clearly indicated to the contrary, applied to the terms used in this Agreement:
“Act” means the Maryland Revised Uniform Limited Partnership Act, Title 10 of the Corporations and Associations Article of the Annotated Code of Maryland, as it may be amended from time to time, and any successor to such statute.
“Actions” has the meaning set forth in Section 7.7(a) hereof.
“Additional Funds” has the meaning set forth in Section 4.3(a) hereof.
“Additional Limited Partner” means a Person who is admitted to the Partnership as a limited partner pursuant to the Act and Section 4.2 and Section 12.2 hereof and who is shown as such on the books and records of the Partnership.
“Adjusted Capital Account” means, with respect to any Partner, the balance in such Partner’s Capital Account as of the end of the relevant Partnership Year or other applicable period, after giving effect to the following adjustments:
| (a) | increase such Capital Account by any amounts that such Partner is obligated to restore pursuant to this Agreement upon liquidation of such Partner’s Partnership Interest or that such Person is deemed to be obligated to restore pursuant to Regulations Section 1.704-1(b)(2)(ii)(c) or the penultimate sentence of each of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5); and |
| (b) | decrease such Capital Account by the items described in Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6). |
The foregoing definition of “Adjusted Capital Account” is intended to comply with the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
“Adjusted Capital Account Deficit” means, with respect to any Partner, the deficit balance, if any, in such Partner’s Adjusted Capital Account as of the end of the relevant Partnership Year or other applicable period.
“Adjustment Event” has the meaning set forth in Section 16.3 hereof.
2
“Adjustment Factor” means 1.0; provided, however, that in the event that:
| (a) | the General Partner (i) declares or pays a dividend on its outstanding REIT Shares wholly or partly in REIT Shares or makes a distribution to all holders of its outstanding REIT Shares wholly or partly in REIT Shares, (ii) splits or subdivides its outstanding REIT Shares or (iii) effects a reverse stock split or otherwise combines its outstanding REIT Shares into a smaller number of REIT Shares, the Adjustment Factor shall be adjusted by multiplying the Adjustment Factor previously in effect by a fraction, (A) the numerator of which shall be the number of REIT Shares issued and outstanding on the record date for such dividend, distribution, split, subdivision, reverse split or combination (assuming for such purposes that such dividend, distribution, split, subdivision, reverse split or combination has occurred as of such time) and (B) the denominator of which shall be the actual number of REIT Shares (determined without the above assumption) issued and outstanding on the record date for such dividend, distribution, split, subdivision, reverse split or combination; |
| (b) | the General Partner distributes any rights, options or warrants to all holders of its REIT Shares to subscribe for or to purchase or to otherwise acquire REIT Shares, or other securities or rights convertible into, exchangeable for or exercisable for REIT Shares, at a price per share less than the Value of a REIT Share on the record date for such distribution (each a “Distributed Right”), then, as of the distribution date of such Distributed Rights or, if later, the time such Distributed Rights become exercisable, the Adjustment Factor shall be adjusted by multiplying the Adjustment Factor previously in effect by a fraction (i) the numerator of which shall be the number of REIT Shares issued and outstanding on the record date (or, if later, the date such Distributed Rights become exercisable) plus the maximum number of REIT Shares purchasable under such Distributed Rights and (ii) the denominator of which shall be the number of REIT Shares issued and outstanding on the record date (or, if later, the date such Distributed Rights become exercisable) plus a fraction (A) the numerator of which is the maximum number of REIT Shares purchasable under such Distributed Rights times the minimum purchase price per REIT Share under such Distributed Rights and (B) the denominator of which is the Value of a REIT Share as of the record date (or, if later, the date such Distributed Rights become exercisable); provided, however, that, if any such Distributed Rights expire or become no longer exercisable, then the Adjustment Factor shall be adjusted, effective retroactive to the date of distribution of the Distributed Rights (or, if applicable, the later time that the Distributed Rights became exercisable), to reflect a reduced maximum number of REIT Shares or any change in the minimum purchase price for the purposes of the above fraction; and |
| (c) | the General Partner shall, by dividend or otherwise, distribute to all holders of its REIT Shares evidences of its indebtedness or assets (including securities, but excluding any dividend or other distribution referred to in subsection (a) or (b) above), which evidences of indebtedness or assets relate to assets not received by the General Partner pursuant to a pro rata distribution by the Partnership, then the Adjustment Factor shall be adjusted to equal the amount determined by multiplying |
3
| the Adjustment Factor in effect immediately prior to the close of business as of the applicable record date by a fraction (i) the numerator of which shall be such Value of a REIT Share as of the record date and (ii) the denominator of which shall be the Value of a REIT Share as of the record date less the then fair market value (as determined by the General Partner, whose determination shall be conclusive) of the portion of the evidences of indebtedness or assets so distributed applicable to one REIT Share. |
Notwithstanding the foregoing, no adjustments to the Adjustment Factor will be made for any class or series of Partnership Interests to the extent that the Partnership makes or effects any correlative distribution or payment to all of the Partners holding Partnership Interests of such class or series, or effects any correlative split or reverse split in respect of the Partnership Interests of such class or series. Any adjustments to the Adjustment Factor shall become effective immediately after such event, retroactive to the record date, if any, for such event. For illustrative purposes, examples of adjustments to the Adjustment Factor are set forth on Exhibit A attached hereto.
“Affiliate” means, with respect to any Person, any Person directly or indirectly controlling or controlled by or under common control with such Person. For the purposes of this definition, “control” when used with respect to any Person means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise, and the terms “controlling” and “controlled” have meanings correlative to the foregoing.
“Agreement” has the meaning set forth in the Recitals.
“Applicable Percentage” has the meaning set forth in Section 15.1(b) hereof.
“Appraisal” means, with respect to any assets, the written opinion of an independent third party experienced in the valuation of similar assets, selected by the General Partner. Such opinion may be in the form of an opinion by such independent third party that the value for such property or asset as set by the General Partner is fair, from a financial point of view, to the Partnership.
“Assignee” means a Person to whom a Partnership Interest has been Transferred in a manner permitted under this Agreement, but who has not become a Substituted Limited Partner, and who has the rights set forth in Section 11.5 hereof.
“Available Cash” means, the amount of any applicable cash or other property or assets of the Partnership that the General Partner, in its sole discretion, determines is available for distribution by the Partnership, taking into account such factors as the General Partner deems necessary, advisable or appropriate in its sole discretion, including, any actual or anticipated expenses, liabilities, obligations, costs and commitments relating to the conduct of the business of the Partnership.
Notwithstanding the foregoing, Available Cash shall not include (a) any cash received or reductions in reserves, or take into account any disbursements made, or reserves established, after dissolution and the commencement of the liquidation and winding up of the Partnership or (b) any Capital Contributions, whenever received or any payments, expenditures or investments made with such Capital Contributions.
4
“Beneficial Ownership” means ownership of a Partnership Interest by a Person that is or would be treated as a direct or indirect owner of such Partnership Interest through the application of Section 544 of the Code, as modified by Sections 856(h)(1)(B) and 856(h)(3)(A) of the Code. The terms “Beneficial Owner,” “Beneficially Owns,” “Beneficially Owning” and “Beneficially Owned” shall have correlative meanings.
“Board of Directors” means the Board of Directors of the General Partner.
“Business Day” means any day except a Saturday, Sunday or other day on which commercial banks in the City of New York, New York are authorized by law to close.
“Capital Account” means, with respect to any Partner, the capital account maintained by the General Partner for such Partner on the Partnership’s books and records in accordance with the following provisions:
| (a) | To each Partner’s Capital Account, there shall be added such Partner’s Capital Contributions, such Partner’s distributive share of Net Income and any items in the nature of income or gain that are specially allocated pursuant to Section 6.3 or Section 6.4 hereof, and the amount of any Partnership liabilities assumed by such Partner or that are secured by any property distributed to such Partner. |
| (b) | From each Partner’s Capital Account, there shall be subtracted the amount of cash and the Gross Asset Value of any Partnership property distributed to such Partner pursuant to any provision of this Agreement, such Partner’s distributive share of Net Losses and any items in the nature of expenses or losses that are specially allocated pursuant to Section 6.3 or Section 6.4 hereof, and the amount of any liabilities of such Partner assumed by the Partnership or that are secured by any property contributed by such Partner to the Partnership (except to the extent already reflected in the amount of such Partner’s Capital Contribution). |
| (c) | In the event any interest in the Partnership is Transferred in accordance with the terms of this Agreement (which Transfer does not result in the termination of the Partnership for U.S. federal income tax purposes), the transferee shall succeed to the Capital Account of the transferor to the extent that it relates to the Transferred interest. |
| (d) | In determining the amount of any liability for purposes of subsections (a) and (b) hereof, there shall be taken into account Code Section 752(c) and any other applicable provisions of the Code and Regulations. |
| (e) | The provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Regulations promulgated under Section 704 of the Code, and shall be interpreted and applied in a manner consistent with such Regulations. If the General Partner shall determine that it is necessary or appropriate to modify the manner in which the Capital Accounts are maintained in order to comply with such Regulations, the General Partner may make such modification, provided that such modification is not likely to have any material effect on the amounts distributable to any Partner pursuant to Article 13 hereof |
5
| upon the dissolution of the Partnership. The General Partner may, in its sole discretion, (i) make any adjustments that are necessary or appropriate to maintain equality between the Capital Accounts of the Partners and the amount of Partnership capital reflected on the Partnership’s balance sheet, as computed for book purposes, in accordance with Regulations Section 1.704-1(b)(2)(iv)(q) and (ii) make any modifications that are necessary or appropriate in the event that unanticipated events might otherwise cause this Agreement not to comply with Regulations Section 1.704-1(b) or Section 1.704-2. |
“Capital Account Limitation” means, with respect to a Holder of LTIP Units, (x) the Economic Capital Account Balance of such Holder, to the extent attributable to such Holder’s ownership of LTIP Units, divided by (y) the Common Unit Economic Balance, in each case as determined as of the effective date of conversion.
“Capital Contribution” means, with respect to any Partner, the amount of money and the initial Gross Asset Value of any Contributed Property that such Partner contributes or is deemed to contribute pursuant to Article 4 hereof.
“Capital Share” means a share of any class or series of stock of the General Partner now or hereafter authorized other than a REIT Share.
“Cash Amount” means an amount of cash equal to the product of (a) the Value of a REIT Share and (b) the REIT Shares Amount determined as of the applicable Valuation Date.
“Certificate” means the Certificate of Limited Partnership of the Partnership filed with the SDAT, as amended from time to time in accordance with the terms hereof and the Act.
“Charitable Beneficiary” means one or more beneficiaries of the Trust as determined pursuant to Section 15.16(i)(vi); provided that each such organization must be described in Section 501(c)(3) of the Code and contributions to each such organization must be eligible for deduction under each of Sections 170(b)(1)(A), 2055 and 2522 of the Code.
“Charity” means an entity described in Section 501(c)(3) of the Code or any trust all the beneficiaries of which are such entities.
“Charter” means the charter of the General Partner, within the meaning of Section 1-101 of the Maryland General Corporation Law.
“Closing Price” has the meaning set forth in the definition of “Value.”
“COD Income” has the meaning set forth in Section 6.3(c) hereof.
“Code” means the Internal Revenue Code of 1986, as amended and in effect from time to time or any successor statute thereto, as interpreted by the applicable Regulations thereunder. Any reference herein to a specific section or sections of the Code shall be deemed to include a reference to any corresponding provision of future law.
6
“Common Unit Economic Balance” means (i) the Capital Account balance of the General Partner, plus the amount of the General Partner’s share of any Partner Minimum Gain or Partnership Minimum Gain, in either case to the extent attributable to the General Partner’s ownership of Partnership Common Units and computed on a hypothetical basis after taking into account all allocations through the date on which any allocation is made under Section 6.2(c) hereof, divided by (ii) the number of the General Partner’s Partnership Common Units.
“Consent” means the consent to, approval of, or vote in favor of a proposed action by a Partner given in accordance with Article 14 hereof. The terms “Consented” and “Consenting” have correlative meanings.
“Consent of the General Partner” means the Consent of the sole General Partner, which Consent, except as otherwise specifically required by this Agreement, may be obtained prior to or after the taking of any action for which it is required by this Agreement and may be given or withheld by the General Partner in its sole and absolute discretion.
“Consent of the Limited Partners” means, subject to and except as set forth in any Unit Designation, the Consent of a Majority in Interest of the Limited Partners, which Consent shall be obtained prior to the taking of any action for which it is required by this Agreement and, except as otherwise provided in this Agreement, may be given or withheld by each Limited Partner in its sole and absolute discretion; provided, however, that, if any such action affects only certain classes or series of Partnership Interests, “Consent of the Limited Partners” means the Consent of a Majority in Interest of the Limited Partners of the affected classes or series of Partnership Interests.
“Consent of the Partners” means, subject to and except as set forth in any Unit Designation, the Consent of the General Partner and the Consent of a Majority in Interest of the Partners, which Consent shall be obtained prior to the taking of any action for which it is required by this Agreement and, except as otherwise provided in this Agreement, may be given or withheld by the General Partner or the Limited Partners in their sole and absolute discretion; provided, however, that, solely with respect to any action taken pursuant to Section 7.3(b) and Section 14.2, if any such action affects only certain classes or series of Partnership Interests, “Consent of the Partners” means the Consent of the General Partner and the Consent of a Majority in Interest of the Partners of the affected classes or series of Partnership Interests.
“Constituent Person” has the meaning set forth in Section 16.9(g) hereof.
“Constructive Ownership” means ownership of a Partnership Interest by a Person that is or would be treated as a direct or indirect owner of such Partnership Interest through the application of Section 318(a) of the Code, as modified by Section 856(d)(5) of the Code. The terms “Constructive Owner,” “Constructively Owns,” “Constructively Owning” and “Constructively Owned” shall have correlative meanings.
“Contributed Property” means each Property or other asset, in such form as may be permitted by the Act, but excluding cash, contributed or deemed contributed to the Partnership.
7
“Controlled Entity” means, as to any Partner, (a) any corporation more than fifty percent (50%) of the outstanding voting stock of which is owned by such Partner or such Partner’s Family Members or Affiliates, (b) any trust, whether or not revocable, of which such Partner or such Partner’s Family Members or Affiliates are the sole beneficiaries, (c) any partnership of which such Partner or its Affiliates are the managing partners and in which such Partner, such Partner’s Family Members or Affiliates hold partnership interests representing at least twenty-five percent (25%) of such partnership’s capital and profits and (d) any limited liability company of which such Partner or its Affiliates are the managers and in which such Partner, such Partner’s Family Members or Affiliates hold membership interests representing at least twenty-five percent (25%) of such limited liability company’s capital and profits.
“Conversion” has the meaning set forth in the Recitals.
“Conversion Date” has the meaning set forth in Section 16.9(b) hereof.
“Conversion Notice” has the meaning set forth in Section 16.9(b) hereof.
“Conversion Right” has the meaning set forth in Section 16.9(a) hereof.
“Cut-Off Date” means the tenth (10th) Business Day after the General Partner’s receipt of a Notice of Redemption.
“Debt” means, as to any Person, as of any date of determination: (a) all indebtedness of such Person for borrowed money or for the deferred purchase price of property or services; (b) all amounts owed by such Person to banks or other Persons in respect of reimbursement obligations under letters of credit, surety bonds and other similar instruments guaranteeing payment or other performance of obligations by such Person; (c) all indebtedness for borrowed money or for the deferred purchase price of property or services secured by any lien on any property owned by such Person, to the extent attributable to such Person’s interest in such property, even though such Person has not assumed or become liable for the payment thereof; and (d) lease obligations of such Person that, in accordance with generally accepted accounting principles, should be capitalized.
“Depreciation” means, for each Partnership Year or other applicable period, an amount equal to the federal income tax depreciation, amortization or other cost recovery deduction allowable with respect to an asset for such year or other period, except that if the Gross Asset Value of an asset differs from its adjusted basis for federal income tax purposes at the beginning of such year or other period, Depreciation shall be an amount that bears the same ratio to such beginning Gross Asset Value as the federal income tax depreciation, amortization or other cost recovery deduction for such year or other period bears to such beginning adjusted tax basis; provided, however, that if the federal income tax depreciation, amortization or other cost recovery deduction for such year or other period is zero, Depreciation shall be determined with reference to such beginning Gross Asset Value using any reasonable method selected by the General Partner.
“Designated Individual” has the meaning set forth in Section 10.3(a) hereof.
“Disregarded Entity” means, with respect to any Person, (i) any “qualified REIT subsidiary” (within the meaning of Code Section 856(i)(2)) of such Person, (ii) any entity treated as a disregarded entity for Federal income tax purposes with respect to such Person, or (iii) any grantor trust if the sole owner of the assets of such trust for Federal income tax purposes is such Person.
8
“Distributed Right” has the meaning set forth in the definition of “Adjustment Factor.”
“Domestically Controlled Qualified Investment Entity” means a “domestically controlled qualified investment entity” within the meaning of Section 897(h)(4)(B) of the Code.
“Economic Capital Account Balance” means, with respect to a Holder of LTIP Units, its Capital Account balance, plus the amount of its share of any Partner Minimum Gain or Partnership Minimum Gain, in either case to the extent attributable to its ownership of LTIP Units.
“Effective Date” has the meaning set forth in the Introduction.
“Effective Time” has the meaning set forth in the Recitals.
“Eligible LTIP Unit” means, as of the time any Liquidating Gain is available to be allocated to an LTIP Unit, an LTIP Unit to the extent, since the date of issuance of such LTIP Unit, such Liquidating Gain when aggregated with other Liquidating Gains realized since the date of issuance of such LTIP Unit exceeds Liquidating Losses realized since the date of issuance of such LTIP Unit.
“Equity Plan” means any stock, unit or equity purchase plan, restricted stock, unit or equity plan or other similar equity compensation plan now or hereafter adopted by the Partnership or the General Partner, including the Plan.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
“Excepted Holder” means the General Partner and any other Person for whom an Excepted Holder Limit is created by the General Partner pursuant to Section 15.16(g).
“Excepted Holder Limit” means for each Excepted Holder the percentage limit (or limitation on the number of Partnership Units held) established pursuant to Section 15.16(g), which limit may be expressed as a percentage of the capital interests or profit interests in the Partnership. The Excepted Holder Limit for the General Partner shall be 100%.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and any successor statute thereto, and the rules and regulations of the SEC promulgated thereunder.
“Expense Reimbursement and Indemnification Agreement” means the Expense Reimbursement and Indemnification Agreement, dated as of July 24, 2024, by and among Lineage Holdings, BG Lineage Holdings, LLC, BG Lineage Holdings LHR, LLC and Bay Grove Management Company, LLC.
“Family Members” means, as to a Person that is an individual, such Person’s spouse, ancestors, descendants (whether by blood or by adoption or step-descendants by marriage), brothers and sisters, nieces and nephews and inter vivos or testamentary trusts (whether revocable or irrevocable) of which only such Person and such Person’s spouse, ancestors, descendants (whether by blood or by adoption or step-descendants by marriage), brothers and sisters and nieces and nephews are beneficiaries.
9
“Final Adjustment” has the meaning set forth in Section 10.3(b)(ii) hereof.
“Forced Conversion” has the meaning set forth in Section 16.9(d) hereof.
“Forced Conversion Notice” has the meaning set forth in Section 16.9(d) hereof.
“Funding Debt” means any Debt incurred by or on behalf of the General Partner for the purpose of providing funds to the Partnership.
“General Partner” means Lineage REIT for so long as it remains a general partner of the Partnership, and/or any of its successors and assigns that become a general partner of the Partnership, in each case, that is admitted from time to time to the Partnership as a general partner, and has not ceased to be a general partner, pursuant to the Act and this Agreement, in such Person’s capacity as a general partner of the Partnership.
“General Partner Interest” means the entire Partnership Interest held by a General Partner hereof, which Partnership Interest may be expressed as a number of Partnership Common Units, Partnership Preferred Units or any other Partnership Units.
“Gross Asset Value” means, with respect to any asset, the asset’s adjusted basis for federal income tax purposes, except as follows:
| (a) | The initial Gross Asset Value of any asset contributed by a Partner to the Partnership shall be the gross fair market value of such asset on the date of contribution, as determined by the General Partner and agreed to by the contributing Person. |
| (b) | The Gross Asset Values of all Partnership assets immediately prior to the occurrence of any event described in clauses (i) through (v) below shall be adjusted to equal their respective gross fair market values, as determined by the General Partner using such reasonable method of valuation as it may adopt, as of the following times: |
| (i) | the acquisition of an additional interest in the Partnership (including, without limitation, acquisitions pursuant to Section 4.2 hereof or contributions or deemed contributions by the General Partner pursuant to Section 4.2 hereof) by a new or existing Partner in exchange for more than a de minimis Capital Contribution; |
| (ii) | the distribution by the Partnership to a Partner of more than a de minimis amount of Partnership property as consideration for an interest in the Partnership; |
| (iii) | the liquidation of the Partnership within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g); |
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| (iv) | the grant of an interest in the Partnership (other than a de minimis interest) as consideration for the provision of services to or for the benefit of the Partnership by an existing Partner acting in a partner capacity, or by a new Partner acting in a partner capacity or in anticipation of becoming a Partner of the Partnership (including the grant of an LTIP Unit); and |
| (v) | at such other times as the General Partner shall reasonably determine necessary or advisable in order to comply with Regulations Sections 1.704-1(b) and 1.704-2. |
| (c) | The Gross Asset Value of any Partnership asset distributed to a Partner shall be the gross fair market value of such asset on the date of distribution, as determined by the distributee and the General Partner; provided, however, that if the distributee is the General Partner or if the distributee and the General Partner cannot agree on such a determination, such gross fair market value shall be determined by Appraisal. |
| (d) | The Gross Asset Values of Partnership assets shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such assets pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Regulations Section 1.704-1(b)(2)(iv)(m); provided, however, that Gross Asset Values shall not be adjusted pursuant to this subsection (d) to the extent that the General Partner reasonably determines that an adjustment pursuant to subsection (b) above is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment pursuant to this subsection (d). |
| (e) | If the Gross Asset Value of a Partnership asset has been determined or adjusted pursuant to subsection (a), subsection (b) or subsection (d) above, such Gross Asset Value shall thereafter be adjusted by the Depreciation taken into account with respect to such asset for purposes of computing Net Income and Net Losses. |
| (f) | If any unvested LTIP Units are forfeited, as described in Section 16.2(b), upon such forfeiture, the Gross Asset Value of the Partnership’s assets shall be reduced by the amount of any reduction of such Partner’s Capital Account attributable to the forfeiture of such LTIP Units. |
“Hart-Scott-Rodino Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
“Holder” means either (a) a Partner or (b) an Assignee owning a Partnership Interest.
“Incapacity” or “Incapacitated” means: (a) as to any Partner who is an individual, death, total physical disability or entry by a court of competent jurisdiction adjudicating such Partner incompetent to manage such Partner’s person or such Partner’s estate; (b) as to any Partner that is a corporation or limited liability company, the filing of a certificate of dissolution, or its equivalent, for the corporation or the revocation of its charter; (c) as to any Partner that is a partnership, the dissolution and commencement of winding up of the partnership; (d) as to any Partner that is an estate, the distribution by the fiduciary of the estate’s entire interest in the Partnership; (e) as to any trustee of a trust that is a Partner, the termination of the trust (but not the substitution of a new
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trustee); or (f) as to any Partner, the bankruptcy of such Partner. For purposes of this definition, bankruptcy of a Partner shall be deemed to have occurred when (i) the Partner commences a voluntary proceeding seeking liquidation, reorganization or other relief of or against such Partner under any bankruptcy, insolvency or other similar law now or hereafter in effect, (ii) the Partner is adjudged as bankrupt or insolvent, or a final and non-appealable order for relief under any bankruptcy, insolvency or similar law now or hereafter in effect has been entered against the Partner, (iii) the Partner executes and delivers a general assignment for the benefit of the Partner’s creditors, (iv) the Partner files an answer or other pleading admitting or failing to contest the material allegations of a petition filed against the Partner in any proceeding of the nature described in clause (ii) above, (v) the Partner seeks, consents to or acquiesces in the appointment of a trustee, receiver or Liquidator for the Partner or for all or any substantial part of the Partner’s properties, (vi) any proceeding seeking liquidation, reorganization or other relief under any bankruptcy, insolvency or other similar law now or hereafter in effect has not been dismissed within one hundred twenty (120) days after the commencement thereof, (vii) the appointment without the Partner’s consent or acquiescence of a trustee, receiver or Liquidator has not been vacated or stayed within ninety (90) days of such appointment, or (viii) an appointment referred to in clause (vii) above is not vacated within ninety (90) days after the expiration of any such stay.
“Indemnitee” means (a) any Person made, or threatened to be made, a party to a proceeding by reason of its status as (i) the present or any former General Partner, (ii) each former managing member of the LLC, each former manager of the LLC and each Person serving in a similar executive capacity appointed by the former managing member or manager and exercising rights and duties delegated by the former managing member or manager, (iii) each Person serving with the prior approval of any former managing member or former manager as a director, manager, officer, employee or other agent of any former managing member or former manager or another organization, (iv) any Person who formerly served in any of the foregoing capacities, or (v) a present or former director of the General Partner or a present or former officer of the Partnership or the General Partner and (b) such other Persons (including Affiliates or employees of the General Partner or the Partnership) as the General Partner may designate from time to time (whether before or after the event giving rise to potential liability), in its sole and absolute discretion.
“Individual” means an “individual” within the meaning of Section 542(a)(2) of the Code, but not including a qualified trust subject to the look-through rule of Section 856(h)(3)(A)(i) of the Code.
“Initial Holding Period” means, with respect to any Partnership Common Units held by a Qualifying Party or any of their successors-in-interest, a period ending on the day before the first fourteen-month anniversary of such date that the Qualifying Party first became a Holder of such Partnership Common Units; provided, however, that the General Partner may, in its sole and absolute discretion, pursuant to the terms of any Unit Designation or by written agreement with a Qualifying Party or any such successor-in-interest, shorten or lengthen the Initial Holding Period applicable to any Partnership Common Units, held by a Qualifying Party and/or its successors-in-interest to a period of shorter or longer than fourteen (14) months; provided, further, that with respect to a Partnership Common Unit that is issued upon conversion of an LTIP Unit pursuant to Section 16.9, the Initial Holding Period of such Partnership Common Unit shall end on the day before the first eighteen (18) month anniversary of the date that the underlying LTIP Unit was first issued; provided, further, that, for purposes of Section 15.1, with respect to a Partnership Common Unit that has been issued in exchange for a Lineage Holdings OPEU pursuant to the terms of the Lineage Operating Agreement, the Initial Holding Period shall end on the date of the Final Distribution (as such term is defined in the Unit Designation – Legacy Units included as Exhibit F).
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“IRS” means the Internal Revenue Service.
“Legacy Units” means the classes of units described in the Unit Designation – Legacy Units included as Exhibit F.
“Limited Partner” means any Person that is admitted from time to time to the Partnership as a limited partner, and has not ceased to be a limited partner pursuant to the Act and this Agreement, of the Partnership, including any Substituted Limited Partner or Additional Limited Partner, in each case in such Person’s capacity as a limited partner of the Partnership.
“Limited Partner Interest” means a Partnership Interest of a Limited Partner in the Partnership representing a fractional part of the Partnership Interests of all Limited Partners and includes any and all benefits to which the holder of such a Partnership Interest may be entitled as provided in this Agreement, together with all obligations of such Person to comply with the terms and provisions of this Agreement. A Limited Partner Interest may be expressed as a number of Partnership Common Units, Partnership Preferred Units or other Partnership Units.
“Lineage Holdings” has the meaning set forth in the Recitals.
“Lineage Holdings Agreement” means the governing limited liability company agreement of Lineage Holdings as in effect from time to time.
“Lineage Holdings OPEUs” means operating partnership equivalent units of interest in Lineage Holdings that are exchangeable at the holder’s election for Partnership Common Units on a one-for-one basis pursuant to the terms of the Lineage Holdings Agreement, subject to adjustment in certain circumstances, at any time following the second anniversary of the first closing of the initial public offering of the REIT Shares.
“Lineage REIT” has the meaning set forth in the Recitals.
“Liquidating Event” has the meaning set forth in Section 13.1 hereof.
“Liquidating Gains” means any net gain realized in connection with the actual or hypothetical sale of all or substantially all of the assets of the Partnership (including upon the occurrence of any Liquidating Event or Terminating Capital Transaction), including but not limited to net gain realized in connection with an adjustment to the Gross Asset Value of Partnership assets under the definition of Gross Asset Value in Article 1 of this Agreement.
“Liquidating Losses” means any net loss realized in connection with the actual or hypothetical sale of all or substantially all of the assets of the Partnership (including upon the occurrence of any Liquidating Event or Terminating Capital Transaction), including but not limited to net loss realized in connection with an adjustment to the Gross Asset Value of Partnership assets under the definition of Gross Asset Value in Article 1 of this Agreement.
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“Liquidator” has the meaning set forth in Section 13.2(a) hereof.
“LLC” has the meaning set forth in the Recitals.
“LTIP Unit Agreement” means any written agreement(s) between the Partnership and any recipient of LTIP Units evidencing the terms and conditions of any LTIP Units, including any vesting, forfeiture and other terms and conditions as may apply to such LTIP Units, consistent with the terms hereof and of the Plan (or other applicable Equity Plan governing such LTIP Units).
“LTIP Unit Distribution Payment Date” has the meaning set forth in Section 16.4(c) hereof.
“LTIP Units” means the Partnership Units designated as such having the rights, powers, privileges, restrictions, qualifications and limitations set forth herein, in the Plan and under the applicable LTIP Unit Agreement. LTIP Units can be issued in one or more classes, or one or more series of any such classes bearing such relationship to one another as to allocations, distributions, and other rights as the General Partner shall determine in its sole and absolute discretion subject to Maryland law and this Agreement.
“Majority in Interest of the Limited Partners” means Limited Partners (other than any Limited Partner fifty percent (50%) or more of whose equity is owned, directly or indirectly, by the General Partner) holding in the aggregate Percentage Interests that are greater than fifty percent (50%) of the aggregate Percentage Interests of all such Limited Partners entitled to Consent to or withhold Consent from a proposed action, voting together as a single class. For purposes of calculating Percentage Interests in connection with this definition, except as otherwise provided in a Unit Designation with respect to any Consent to be given pursuant to such Unit Designation: (a) any outstanding Legacy Units will be deemed to have been reclassified into Partnership Common Units pursuant to the terms of the applicable Unit Designation immediately prior to the record date for the applicable vote or Consent; and (b) the right to give or withhold Consent for all such Legacy Units that have been deemed reclassified as Partnership Common Units for these purposes will continue to be held by the Person(s) entitled to give or withhold Consent for such Legacy Units prior to any reclassification and such Person(s) will be deemed to be the Limited Partner(s) holding all Percentage Interests associated with such Partnership Common Units for purposes of exercising any Consent right pursuant to this definition.
“Majority in Interest of the Partners” means Partners holding in the aggregate Percentage Interests that are greater than fifty percent (50%) of the aggregate Percentage Interests of all Partners entitled to Consent to or withhold Consent from a proposed action, voting together as a single class. For purposes of calculating Percentage Interests in connection with this definition, any outstanding Legacy Units will be deemed to have been reclassified into Partnership Common Units pursuant to the terms of the applicable Unit Designation immediately prior to the record date for the applicable vote or Consent.
“Market Price” has the meaning set forth in the definition of “Value.”
“Maryland Courts” has the meaning set forth in Section 15.9(b) hereof.
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“Net Income” or “Net Loss” means, for each Partnership Year or other applicable period, an amount equal to the Partnership’s taxable income or loss for such year or other applicable period, determined in accordance with Code Section 703(a) (for this purpose, all items of income, gain, loss or deduction required to be stated separately pursuant to Code Section 703(a)(1) shall be included in taxable income or loss), with the following adjustments:
| (a) | Any income of the Partnership that is exempt from federal income tax and not otherwise taken into account in computing Net Income (or Net Loss) pursuant to this definition of “Net Income” or “Net Loss” shall be added to (or subtracted from, as the case may be) such taxable income (or loss); |
| (b) | Any expenditure of the Partnership described in Code Section 705(a)(2)(B) or treated as a Code Section 705(a)(2)(B) expenditure pursuant to Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account in computing Net Income (or Net Loss) pursuant to this definition of “Net Income” or “Net Loss,” shall be subtracted from (or added to, as the case may be) such taxable income (or loss); |
| (c) | In the event the Gross Asset Value of any Partnership asset is adjusted pursuant to subsection (b) or subsection (c) of the definition of “Gross Asset Value,” the amount of such adjustment shall be taken into account as gain or loss from the disposition of such asset for purposes of computing Net Income or Net Loss; |
| (d) | Gain or loss resulting from any disposition of property with respect to which gain or loss is recognized for federal income tax purposes shall be computed by reference to the Gross Asset Value of the property disposed of, notwithstanding that the adjusted tax basis of such property differs from its Gross Asset Value; |
| (e) | In lieu of the depreciation, amortization and other cost recovery deductions that would otherwise be taken into account in computing such taxable income or loss, there shall be taken into account Depreciation for such Partnership Year or other applicable period; |
| (f) | To the extent that an adjustment to the adjusted tax basis of any Partnership asset pursuant to Code Section 734(b) or Code Section 743(b) is required pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(4) to be taken into account in determining Capital Accounts as a result of a distribution other than in liquidation of a Partner’s interest in the Partnership, the amount of such adjustment shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases the basis of the asset) from the disposition of the asset and shall be taken into account for purposes of computing Net Income or Net Loss; and |
| (g) | Notwithstanding any other provision of this definition of “Net Income” or “Net Loss,” any item that is specially allocated pursuant to Article 6 hereof shall not be taken into account in computing Net Income or Net Loss. The amounts of the items of Partnership income, gain, loss or deduction available to be specially allocated pursuant to Section 6.3 or Section 6.4 hereof shall be determined by applying rules analogous to those set forth in this definition of “Net Income” or “Net Loss.” |
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“New Securities” means (a) any rights, options, warrants or convertible or exchangeable securities having the right to subscribe for or purchase REIT Shares, Preferred Shares or Capital Shares, excluding grants under any Equity Plan, or (b) any Debt issued by the General Partner that provides any of the rights described in clause (a).
“Nonrecourse Deductions” has the meaning set forth in Regulations Section 1.704-2(b)(1), and the amount of Nonrecourse Deductions for a Partnership Year shall be determined in accordance with the rules of Regulations Section 1.704-2(c).
“Nonrecourse Liability” has the meaning set forth in Regulations Sections 1.704-2(b)(3) and 1.752-1(a)(2).
“Notice of Redemption” means the Notice of Redemption substantially in the form of Exhibit B attached to this Agreement.
“Offered Shares” has the meaning set forth in Section 15.1(h)(i)(a) hereof.
“Offering Common Units” has the meaning set forth in Section 15.1(h)(i)(a) hereof.
“Ownership Limit” means the restriction or restrictions on the ownership and transfer of stock of the General Partner imposed under the Charter.
“Partner” means the General Partner or a Limited Partner, and “Partners” means the General Partner and the Limited Partners.
“Partner Minimum Gain” means an amount, with respect to each Partner Nonrecourse Debt, equal to the Partnership Minimum Gain that would result if such Partner Nonrecourse Debt were treated as a Nonrecourse Liability, determined in accordance with Regulations Section 1.704-2(i)(3).
“Partner Nonrecourse Debt” has the meaning set forth in Regulations Section 1.704-2(b)(4).
“Partner Nonrecourse Deductions” has the meaning set forth in Regulations Section 1.704-2(i)(1), and the amount of Partner Nonrecourse Deductions with respect to a Partner Nonrecourse Debt for a Partnership Year shall be determined in accordance with the rules of Regulations Section 1.704-2(i)(2).
“Partnership” means Lineage OP, LP and any successor thereto.
“Partnership Common Unit” means a fractional, undivided share of the Partnership Interests of all Partners issued pursuant to Section 4.1 and Section 4.2 hereof, but does not include any Partnership Preferred Unit, LTIP Unit or any other Partnership Unit specified in a Unit Designation as being other than a Partnership Common Unit.
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“Partnership Equivalent Units” has the meaning set forth in Section 4.7(a) hereof.
“Partnership Interest” means an ownership interest in the Partnership held by either a Limited Partner or a General Partner and includes any and all benefits to which the holder of such a Partnership Interest may be entitled as provided in this Agreement, together with all obligations of such Person to comply with the terms and provisions of this Agreement. There may be one or more classes or series of Partnership Interests. A Partnership Interest may be expressed as a number of Partnership Common Units, Partnership Preferred Units or other Partnership Units; however, notwithstanding that the General Partner, and any Limited Partner may have different rights and privileges as specified in this Agreement (including differences in rights and privileges with respect to their Partnership Interests), the Partnership Interest held by the General Partner or any other Partner and designated as being of a particular class or series shall not be deemed to be a separate class or series of Partnership Interest from a Partnership Interest having the same designation as to class and series that is held by any other Partner solely because such Partnership Interest is held by the General Partner or any other Partner having different rights and privileges as specified under this Agreement. A Partnership Interest may be expressed as a number of Partnership Common Units, Partnership Preferred Units or other Partnership Units.
“Partnership Minimum Gain” has the meaning set forth in Regulations Section 1.704-2(b)(2), and the amount of Partnership Minimum Gain, as well as any net increase or decrease in Partnership Minimum Gain, for a Partnership Year shall be determined in accordance with the rules of Regulations Section 1.704-2(d).
“Partnership Preferred Unit” means a fractional, undivided share of the Partnership Interests of a particular class or series that the General Partner has authorized pursuant to Section 4.2 hereof that has distribution rights, or rights upon liquidation, winding up and dissolution, that are superior or prior to the Partnership Common Units.
“Partnership Record Date” means the record date established by the General Partner for the purpose of determining the Partners entitled to notice of or to vote at any meeting of Partners or to consent to any matter, or to receive any distribution or the allotment of any other rights, or in order to make a determination of Partners for any other proper purpose, which, in the case of a distribution of Available Cash pursuant to Section 5.1 hereof, shall generally be the same as the record date established by the General Partner for a distribution to its stockholders of some or all of its portion of such distribution.
“Partnership Representative” has the meaning set forth in Section 10.3(a) hereof.
“Partnership Unit” means a Partnership Common Unit, a Partnership Preferred Unit, an LTIP Unit, any other class of unit described in any Unit Designation, or any other unit of the fractional, undivided share of the Partnership Interests that the General Partner has authorized pursuant to Section 4.2 hereof.
“Partnership Vote” has the meaning set forth in Section 11.2(e) hereof.
“Partnership Year” has the meaning set forth in Section 9.2 hereof.
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“Percentage Interest” means, with respect to each Partner, the fraction, expressed as a percentage, the numerator of which is the aggregate number of Partnership Units of all classes and series held by such Partner and the denominator of which is the total number of Partnership Units of all classes and series held by all Partners; provided, however, that, to the extent applicable in context, the term “Percentage Interest” means, with respect to a Partner, the fraction, expressed as a percentage, the numerator of which is the aggregate number of Partnership Units of a specified class or series (or specified group of classes and/or series) held by such Partner and the denominator of which is the total number of Partnership Units of such specified class or series (or specified group of classes and/or series) held by all Partners.
“Performance LTIP Units” shall mean LTIP Units that vest in whole or in part based on the attainment of performance-vesting conditions; provided, however, that Performance LTIP Units shall not include any LTIP Units designated or characterized as so-called “retentive LTIP Units” in an applicable LTIP Unit Agreement or otherwise so designated or characterized by the Partnership.
“Performance Unit Sharing Percentage” shall mean 10%.
“Permitted Transfer” has the meaning set forth in Section 11.3(a) hereof.
“Person” means an individual or a corporation, partnership, trust, unincorporated organization, association, limited liability company or other entity.
“Plan” means the Lineage 2024 Incentive Award Plan, as may be amended, modified or restated from time to time.
“Pledge” has the meaning set forth in Section 11.3(a) hereof.
“Preferred Share” means a share of stock of the General Partner of any class or series now or hereafter authorized or reclassified that has dividend rights, or rights upon liquidation, winding up and dissolution, that are superior or prior to the REIT Shares.
“Pricing Agreement” has the meaning set forth in Section 15.1(h)(iii)(b) hereof.
“Prior Agreement” has the meaning set forth in the Recitals.
“Prohibited Owner” means, with respect to any purported transfer of Partnership Interests, any Person that, but for the provisions of Section 15.16(i), would Beneficially Own or Constructively Own Partnership Interests.
“Properties” means any assets and property of the Partnership such as, but not limited to, interests in real property and personal property, including, without limitation, fee interests, interests in ground leases, easements and rights of way, interests in limited liability companies, joint ventures or partnerships, interests in mortgages, and Debt instruments as the Partnership may hold from time to time and “Property” means any one such asset or property.
“Proposed Section 83 Safe Harbor Regulation” has the meaning set forth in Section 16.11 hereof.
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“PTET” means a pass-through entity or similar tax imposed by an applicable state governmental authority.
“Put Option Agreement” means the Put Option Agreement, dated as of July 24, 2024, by and among BG Lineage Holdings, LLC, Lineage REIT, the Partnership and Lineage Holdings.
“Qualified Transferee” means an “accredited investor” as defined in Rule 501 promulgated under the Securities Act.
“Qualifying Party” means (a) a Limited Partner, (b) an Assignee or (c) a Person, including a lending institution as the pledgee of a Pledge, who is the transferee of a Limited Partner Interest in a Permitted Transfer; provided, however, that a Qualifying Party shall not include the General Partner.
“Redemption” has the meaning set forth in Section 15.1(a) hereof.
“Register” has the meaning set forth in Section 4.1 hereof.
“Regulations” means the income tax regulations under the Code, whether such regulations are in proposed, temporary or final form, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations).
“Regulatory Allocations” has the meaning set forth in Section 6.4(a)(viii) hereof.
“REIT” means a real estate investment trust qualifying under Code Section 856.
“REIT Partner” means (a) the General Partner or any Affiliate of the General Partner to the extent such person has in place an election to qualify as a REIT and (b) any Disregarded Entity with respect to any such Person.
“REIT Payment” has the meaning set forth in Section 15.12 hereof.
“REIT Qualification Date” means such date as the General Partner shall determine is necessary or advisable for the Partnership in connection with an election by a REIT Subsidiary to be taxed as a REIT to ensure that the REIT Subsidiary satisfies the REIT qualification requirements under Section 856 of the Code.
“REIT Requirements” has the meaning set forth in Section 5.1 hereof.
“REIT Share” means a share of common stock of Lineage REIT (and its successors and assigns), $0.01 par value per share, but shall not include any class or series of Lineage REIT’s common stock classified after the date of this Agreement.
“REIT Shares Amount” means a number of REIT Shares equal to the product of (a) the number of Tendered Units and (b) the Adjustment Factor; provided, however, that, in the event that the General Partner issues to all holders of REIT Shares as of a certain record date rights, options, warrants or convertible or exchangeable securities entitling the General Partner’s stockholders to subscribe for or purchase REIT Shares, or any other securities or property
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(collectively, the “Rights”), with the record date for such Rights issuance falling within the period starting on the date of the Notice of Redemption and ending on the day immediately preceding the Specified Redemption Date, which Rights will not be distributed before the relevant Specified Redemption Date, then the REIT Shares Amount shall also include such Rights that a holder of that number of REIT Shares would be entitled to receive, expressed, where relevant hereunder, in a number of REIT Shares determined by the General Partner.
“REIT Subsidiary” means any REIT in which the Partnership owns, directly or indirectly, an equity interest.
“REIT Subsidiary Ownership Limit” means not more than a 9.8% capital interest or profits interest in the Partnership. The capital interest or profits interest represented by any Partner’s Partnership Units shall be determined by the General Partner in good faith, which determination shall be conclusive for all purposes hereof.
“Related Party” means, with respect to any Person, any other Person to whom ownership of shares of the General Partner’s stock by the first such Person would be attributed under Code Section 544 (as modified by Code Section 856(h)(1)(B)) or Code Section 318(a) (as modified by Code Section 856(d)(5)).
“Restriction Termination Date” means the last date, subsequent to the REIT Qualification Date, on which the Partnership owns, directly or indirectly, any equity interest in a REIT Subsidiary, or such other date as may be determined by the General Partner in its sole discretion.
“Rights” has the meaning set forth in the definition of “REIT Shares Amount.”
“Safe Harbors” has the meaning set forth in Section 11.3(c) hereof.
“SDAT” means the State Department of Assessments and Taxation of the State of Maryland.
“SEC” means the Securities and Exchange Commission.
“Section 83 Safe Harbor” has the meaning set forth in Section 16.11 hereof.
“Securities Act” means the Securities Act of 1933, as amended, and any successor statute thereto, and the rules and regulations of the SEC promulgated thereunder.
“Series A Preferred Units” means the series of Partnership Preferred Units designated as “Series A Preferred Units” and described in the Unit Designation – Series A Preferred Units included as Exhibit E.
“Single Funding Notice” has the meaning set forth in Section 15.1(h)(i)(b) hereof.
“Special Redemption” has the meaning set forth in Section 15.1(a) hereof.
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“Specified Redemption Date” means the fifteenth (15th) Business Day after the receipt by the General Partner of a Notice of Redemption; provided, however, that no Specified Redemption Date shall occur with respect to a Partnership Common Unit during the Initial Holding Period applicable to such Partnership Common Unit (except pursuant to a Special Redemption), provided, further, that if the General Partner elects a Stock Option Funding pursuant to Section 15.1(h) hereof, such Specified Redemption Date shall be deferred until the next Business Day following the date of the closing of the Stock Option Funding.
“Stock Offering Funding” has the meaning set forth in Section 15.1(h)(i)(a) hereof.
“Stock Offering Funding Amount” has the meaning set forth in Section 15.1(h)(ii) hereof.
“Stock Offering Net Proceeds” has the meaning set forth in Section 15.1(h)(ii) hereof.
“Stockholder Meeting” means a meeting of the holders of REIT Shares convened for the purpose of conducting a Stockholder Vote as contemplated in Section 11.2(e) hereof.
“Stockholder Vote” has the meaning set forth in Section 11.2(e) hereof.
“Stockholder Vote Transaction” has the meaning set forth in Section 11.2(e) hereof.
“Subsidiary” means, with respect to any Person, any corporation or other entity of which a majority of (a) the voting power of the voting equity securities or (b) the outstanding equity interests is owned, directly or indirectly, by such Person; provided, however, that, with respect to the Partnership, “Subsidiary” means solely a partnership or limited liability company (taxed, for federal income tax purposes, as a partnership or as a Disregarded Entity and not as an association or publicly traded partnership taxable as a corporation) of which the Partnership is a member or any “taxable REIT subsidiary” of the General Partner in which the Partnership owns shares of stock, unless the ownership of shares of stock of a corporation or other entity (other than a “taxable REIT subsidiary”) will not jeopardize the General Partner’s status as a REIT or any General Partner Affiliate’s status as a “qualified REIT subsidiary” (within the meaning of Code Section 856(i)(2)), in which event the term “Subsidiary” shall include such corporation or other entity.
“Substituted Limited Partner” means a Person who is admitted as a Limited Partner to the Partnership pursuant to the Act and (a) Section 11.4 hereof or (b) pursuant to any Unit Designation.
“Surviving Partnership” has the meaning set forth in Section 11.2(b)(ii) hereof.
“Tax Items” has the meaning set forth in Section 6.5(a) hereof.
“Tendered Units” has the meaning set forth in Section 15.1(a) hereof.
“Tendering Party” has the meaning set forth in Section 15.1(a) hereof.
“Terminating Capital Transaction” means any sale or other disposition of all or substantially all of the assets of the Partnership or a related series of transactions that, taken together, result in the sale or other disposition of all or substantially all of the assets of the Partnership, in any case, not in the ordinary course of the Partnership’s business.
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“Termination Transaction” has the meaning set forth in Section 11.2(b) hereof.
“Transaction” has the meaning set forth in Section 16.9(g) hereof.
“Transfer” means any sale, assignment, bequest, conveyance, devise, gift (outright or in trust), Pledge, encumbrance, hypothecation, mortgage, exchange, transfer or other disposition or act of alienation, whether voluntary, involuntary or by operation of law; provided, however, that when the term is used in Article 11 hereof, except as otherwise expressly provided, “Transfer” does not include (a) any Redemption of Partnership Common Units by the Partnership, or acquisition of Tendered Units by the General Partner, pursuant to Section 15.1, (b) any conversion of LTIP Units into Partnership Common Units pursuant to Section 16.9 hereof, (c) any reclassification of any class or series of Partnership Units into any other class or series of Partnership Units, (d) any redemption of Partnership Units pursuant to any Unit Designation, or (e) any issuance of Partnership Common Units in connection with the exchange of Lineage Holdings OPEUs therefor pursuant to the terms of the Lineage Holdings Agreement. The terms “Transferred” and “Transferring” have correlative meanings.
“Trust” means any trust for the exclusive benefit of one or more Charitable Beneficiaries, as provided for in Section 15.16(a)(ii).
“Trustee” means the Person not affiliated with the Partnership and any Prohibited Owner, that is appointed by the Partnership to serve as trustee of the Trust.
“Unit Designation” has the meaning set forth in Section 4.2(b) hereof.
“Unvested LTIP Units” has the meaning set forth in Section 16.2(a) hereof.
“Valuation Date” means the date of receipt by the General Partner of a Notice of Redemption pursuant to Section 15.1 herein, or such other date as specified herein, or, if such date is not a Business Day, the immediately preceding Business Day.
“Value” means, on any Valuation Date with respect to a REIT Share, the average of the daily Market Prices for ten (10) consecutive trading days immediately preceding the Valuation Date (except that the Market Price for the trading day immediately preceding the date of exercise of a stock option under any Equity Plan shall be substituted for such average of daily market prices for purposes of Section 4.4 hereof). The term “Market Price” on any date means, with respect to any class or series of outstanding REIT Shares, the Closing Price for such REIT Shares on such date. The “Closing Price” on any date means the last sale price for such REIT Shares, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, for such REIT Shares, in either case as reported on the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which such REIT Shares are listed or admitted to trading or, if such REIT Shares are not listed or admitted to trading on any national securities exchange, the last quoted price, or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by the principal automated quotation system that may then be in use or, if such REIT Shares are not quoted by any such system, the average of the closing bid and asked prices as furnished by a professional market maker making a market in such REIT Shares selected by the Board of Directors or, in the event that no trading price is available for such REIT Shares, the fair market value of the REIT Shares, as determined by the Board of Directors.
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In the event that the REIT Shares Amount includes Rights that a holder of REIT Shares would be entitled to receive, then the Value of such Rights shall be determined by the General Partner on the basis of such quotations and other information as it considers appropriate.
“Vested LTIP Units” has the meaning set forth in Section 16.2(a) hereof.
ARTICLE 2
ORGANIZATIONAL MATTERS
Section 2.1 Continuation; Conversion. The Partnership was originally formed as a limited liability company by the filing of a Certificate of Formation of BG Intermediate, LLC on December 12, 2017 with the Secretary of State of the State of Delaware. The LLC converted to a Maryland limited partnership pursuant to Articles of Conversion and a Certificate of Limited Partnership filed on the Effective Date with the State Department of Assessments and Taxation of the State of Maryland and the filing of a Certificate of Conversion with the Secretary of State of the State of Delaware. The Partners hereby continue the Partnership under the Act indefinitely, and for the purposes and upon the terms and conditions hereinafter set forth, unless the Partnership is dissolved sooner pursuant to the provisions of Article 13 hereof or as otherwise provided by law. Except as expressly provided herein to the contrary, the rights and obligations of the Partners and the administration and termination of the Partnership shall be governed by the Act. The Partnership Interest of each Partner shall be personal property for all purposes.
Section 2.2 Name. The name of the Partnership is “Lineage OP, LP.” The Partnership’s business may be conducted under any other name or names deemed advisable by the General Partner, including the name of the General Partner or any Affiliate thereof. The words “Limited Partnership,” “LP,” “Ltd.” or similar words or letters shall be included in the Partnership’s name where necessary for the purposes of complying with the laws of any jurisdiction that so requires. The General Partner in its sole and absolute discretion may change the name of the Partnership at any time and from time to time and shall notify the Partners of such change in the next regular communication to the Partners.
Section 2.3 Principal Office and Resident Agent; Principal Executive Office. The address of the principal office of the Partnership in the State of Maryland is located at c/o CSC-Lawyers Incorporating Service Company, 7 St. Paul Street, Baltimore, Maryland 21202, or such other place within the State of Maryland as the General Partner may from time to time designate, and the resident agent of the Partnership in the State of Maryland is a Maryland corporation, or such other resident of the State of Maryland as the General Partner may from time to time designate. The principal office of the Partnership is located at 46500 Humboldt Drive, Novi, Michigan 48377, or such other place as the General Partner may from time to time designate by notice to the Limited Partners. The Partnership may maintain offices at such other place or places within or outside the State of Maryland as the General Partner may from time to time designate.
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Section 2.4 Power of Attorney.
(a) Each Limited Partner and Assignee hereby irrevocably constitutes and appoints the General Partner, any Liquidator, and authorized officers and attorneys-in-fact of each, and each of those acting singly, in each case with full power of substitution, as its true and lawful agent and attorney-in-fact, with full power and authority in its name, place and stead to:
(i) execute, swear to, seal, acknowledge, deliver, file and record in the appropriate public offices: (A) all certificates, documents and other instruments (including, without limitation, this Agreement and the Certificate and all amendments, supplements or restatements thereof) that the General Partner or the Liquidator deems appropriate or necessary to form, qualify or continue the existence or qualification of the Partnership as a limited partnership (or a partnership in which the limited partners have limited liability to the extent provided by applicable law) in the State of Maryland and in all other jurisdictions in which the Partnership may conduct business or own property; (B) all instruments that the General Partner or any Liquidator deems appropriate or necessary to reflect any amendment, change, modification or restatement of this Agreement in accordance with its terms; (C) all conveyances and other instruments or documents that the General Partner or the Liquidator deems appropriate or necessary to reflect the dissolution and liquidation of the Partnership pursuant to the terms of this Agreement, including, without limitation, a certificate of cancellation; (D) all conveyances and other instruments or documents that the General Partner or the Liquidator deems appropriate or necessary to reflect the distribution or exchange of assets of the Partnership pursuant to the terms of this Agreement; (E) all instruments relating to the admission, acceptance, withdrawal, removal or substitution of any Partner pursuant to the terms of this Agreement or the Capital Contribution of any Partner; and (F) all certificates, documents and other instruments relating to the determination of the rights, preferences and privileges relating to Partnership Interests; and
(ii) subject to a Partner’s consent rights provided by this Agreement, execute, swear to, acknowledge and file all ballots, consents, approvals, waivers, certificates and other instruments appropriate or necessary, in the sole and absolute discretion of the General Partner or any Liquidator, to make, evidence, give, confirm or ratify any vote, consent, approval, agreement or other action that is made or given by the Partners hereunder or is consistent with the terms of this Agreement.
Nothing contained herein shall be construed as authorizing the General Partner or any Liquidator to amend this Agreement except in accordance with Section 14.2 hereof or as may be otherwise expressly provided for in this Agreement.
(b) The foregoing power of attorney is hereby declared to be irrevocable and a special power coupled with an interest, in recognition of the fact that each of the Limited Partners and Assignees will be relying upon the power of the General Partner or the Liquidator to act as contemplated by this Agreement in any filing or other action by it on behalf of the Partnership, and it shall survive and not be affected by the subsequent Incapacity of any Limited Partner or Assignee and the Transfer of all or any portion of such Person’s Partnership Interest and shall extend to such Person’s heirs, successors, assigns and personal representatives. Each such Limited Partner and Assignee hereby agrees to be bound by any representation made by the General Partner
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or the Liquidator, acting in good faith pursuant to such power of attorney; and each such Limited Partner and Assignee hereby waives any and all defenses that may be available to contest, negate or disaffirm the action of the General Partner or the Liquidator, taken in good faith under such power of attorney. Each Limited Partner and Assignee shall execute and deliver to the General Partner or the Liquidator, within fifteen (15) days after receipt of the General Partner’s or the Liquidator’s request therefor, such further designation, powers of attorney and other instruments as the General Partner or the Liquidator (as the case may be) deems necessary to effectuate this Agreement and the purposes of the Partnership. Notwithstanding anything else set forth in this Section 2.4(b), no Limited Partner shall incur any personal liability for any action of the General Partner or the Liquidator taken under such power of attorney.
Section 2.5 Partnership Interests Are Securities. All Partnership Interests shall be securities within the meaning of, and governed by, (a) Article 8 of the Maryland Uniform Commercial Code and (b) Article 8 of the Uniform Commercial Code of any other applicable jurisdiction.
ARTICLE 3
PURPOSE
Section 3.1 Purpose and Business. The purpose and nature of the Partnership is to conduct any business, enterprise or activity permitted by or under the Act, including, without limitation, (a) to engage in all lawful transactions and business activities as may be determined from time to time by the General Partner, (b) to acquire, own, invest in, manage and/or dispose of any assets, entities, interests or investments of any kind, (c) to enter into any partnership, joint venture, business trust arrangement, limited liability company or other similar arrangement, (d) to conduct the Partnership’s business directly or through one or more Subsidiaries, partnerships, joint ventures, business trusts, limited liability companies, other entities or arrangements, and (e) to do anything necessary, appropriate, proper, advisable, incidental to or convenient for any or all of the foregoing.
Section 3.2 Powers. The Partnership shall be empowered to do any and all acts and things necessary, appropriate, proper, advisable, incidental to or convenient for the furtherance and accomplishment of the purposes and business described herein and for the protection and benefit of the Partnership, including, without limitation, full power and authority, directly or through its ownership interest in other entities, to enter into, perform and carry out contracts of any kind, to borrow and lend money and to issue evidence of indebtedness, whether or not secured by mortgage, deed of trust, pledge or other lien, to acquire, own, manage, improve and develop real property and lease, sell, transfer and dispose of real property and any other property or assets.
Section 3.3 Partnership Only for Purposes Specified. The Partnership is a limited partnership existing pursuant to the Act, and this Agreement shall not be deemed to create a company, venture or partnership between or among the Partners or any other Persons with respect to any activities whatsoever other than the activities within the purposes of the Partnership as specified in Section 3.1 hereof; however, to the extent applicable, the Partnership is a “partnership at will” (and is not a partnership formed for a definite term or particular undertaking) within the meaning of the Act. Except as otherwise provided in this Agreement, no Partner shall have any authority to act for, bind, commit or assume any obligation or responsibility on behalf of the
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Partnership, its properties or any other Partner. No Partner, in its capacity as a Partner under this Agreement, shall be responsible or liable for any indebtedness or obligation of another Partner, nor shall the Partnership be responsible or liable for any indebtedness or obligation of any Partner, incurred either before or after the execution and delivery of this Agreement by such Partner, except as to those responsibilities, liabilities, indebtedness or obligations incurred pursuant to and as limited by the terms of this Agreement and the Act.
Section 3.4 Representations and Warranties by the Partners.
(a) Each Partner that is an individual (including, without limitation, each Additional Limited Partner or Substituted Limited Partner as a condition to becoming an Additional Limited Partner or a Substituted Limited Partner) represents and warrants to, and covenants with, each other Partner that (i) the consummation of the transactions contemplated by this Agreement to be performed by such Partner will not result in a breach or violation of, or a default under, any material agreement by which such Partner or any of such Partner’s property is bound, or any statute, regulation, order or other law to which such Partner is subject, (ii) if five percent (5%) or more (by value) of the Partnership’s interests are or will be owned by such Partner within the meaning of Code Section 7704(d)(3), such Partner does not, and for so long as it is a Partner will not, own, directly or indirectly, (A) stock of any corporation that is a tenant of (I) the General Partner, the Partnership, any REIT Subsidiary or any Disregarded Entity with respect to the General Partner, the Partnership or any REIT Subsidiary or (II) any partnership, venture or limited liability company of which the General Partner, the Partnership, any REIT Subsidiary or any Disregarded Entity with respect to the General Partner, the Partnership or any REIT Subsidiary is a direct or indirect member or (B) an interest in the assets or net profits of any non-corporate tenant of (I) the General Partner, the Partnership, any REIT Subsidiary or any Disregarded Entity with respect to the General Partner, the Partnership or any REIT Subsidiary or (II) any partnership, venture or limited liability company of which the General Partner, the Partnership, any REIT Subsidiary or any Disregarded Entity with respect to the General Partner, the Partnership or any REIT Subsidiary is a direct or indirect member, (iii) such Partner’s ownership of Partnership Interests does and will not cause any Individual to Beneficially Own more than 9.8% of the value of the outstanding capital stock or other equity interests in any REIT Subsidiary, (iv) such Partner’s Beneficial Ownership or Constructive Ownership of Partnership Interests does not and will not result in any REIT Subsidiary failing to qualify as a REIT (including as a result of causing any REIT Subsidiary to constructively own, determined in accordance with Sections 856(d)(2)(B) and 856(d)(5) of the Code, an interest in a tenant that is described in Section 856(d)(2)(B) of the Code if the income derived by the REIT Subsidiary from such tenant would cause the REIT Subsidiary to fail to satisfy any of the gross income requirements of Section 856(c) of the Code), (v) such Partner has the legal capacity to enter into this Agreement and perform such Partner’s obligations hereunder, and (vi) this Agreement is binding upon, and enforceable against, such Partner in accordance with its terms. Notwithstanding the foregoing, a Partner that is an individual shall not be subject to the ownership restrictions set forth in clauses (ii) or (iii) of the immediately preceding sentence to the extent such Partner obtains the written Consent of the General Partner prior to violating any such restrictions, which consent the General Partner may give or withhold in its sole and absolute discretion. Each Partner that is an individual shall also represent and warrant to the Partnership that such Partner is neither a “foreign person” within the meaning of Code Section 1445(f) nor a foreign partner within the meaning of Code Section 1446(e).
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(b) Each Partner that is not an individual (including, without limitation, each Additional Limited Partner or Substituted Limited Partner as a condition to becoming an Additional Limited Partner or a Substituted Limited Partner), other than the General Partner, represents and warrants to, and covenants with, each other Partner that (i) all transactions contemplated by this Agreement to be performed by it have been duly authorized by all necessary action, including, without limitation, that of its general partner(s), committee(s), trustee(s), beneficiaries, directors and/or stockholder(s) (as the case may be) as required, (ii) the consummation of such transactions shall not result in a breach or violation of, or a default under, its partnership or operating agreement, trust agreement, charter or bylaws (as the case may be) any material agreement by which such Partner or any of such Partner’s properties or any of its partners, members, beneficiaries, trustees or stockholders (as the case may be) is or are bound, or any statute, regulation, order or other law to which such Partner or any of its partners, members, trustees, beneficiaries or stockholders (as the case may be) is or are subject, (iii) if five percent (5%) or more (by value) of the Partnership’s interests are or will be owned by such Partner within the meaning of Code Section 7704(d)(3), such Partner does not, and for so long as it is a Partner will not, own, directly or indirectly, (A) stock of any corporation that is a tenant of (I) the General Partner, the Partnership, any REIT Subsidiary or any Disregarded Entity with respect to the General Partner, the Partnership or any REIT Subsidiary or (II) any partnership, venture or limited liability company of which the General Partner, the Partnership, any REIT Subsidiary or any Disregarded Entity with respect to the General Partner, the Partnership or any REIT Subsidiary is a direct or indirect member or (B) an interest in the assets or net profits of any non-corporate tenant of (I) the General Partner, the Partnership, any REIT Subsidiary or any Disregarded Entity with respect to the General Partner, the Partnership or any REIT Subsidiary or (II) any partnership, venture or limited liability company of which the General Partner, the Partnership, any REIT Subsidiary or any Disregarded Entity with respect to the General Partner, the Partnership or any REIT Subsidiary is a direct or indirect member, (iv) such Partner’s ownership of Partnership Interests does and will not cause any Individual to Beneficially Own more than 9.8% of the value of the outstanding capital stock or other equity interests in any REIT Subsidiary, (v) such Partner’s Beneficial Ownership or Constructive Ownership of Partnership Interests does not and will not result in any REIT Subsidiary failing to qualify as a REIT (including as a result of causing any REIT Subsidiary to constructively own, determined in accordance with Sections 856(d)(2)(B) and 856(d)(5) of the Code, an interest in a tenant that is described in Section 856(d)(2)(B) of the Code if the income derived by the REIT Subsidiary from such tenant would cause the REIT Subsidiary to fail to satisfy any of the gross income requirements of Section 856(c) of the Code), and (vi) this Agreement is binding upon, and enforceable against, such Partner in accordance with its terms. Notwithstanding the foregoing, a Partner that is not an individual shall not be subject to the ownership restrictions set forth in clauses (iii) or (iv) of the immediately preceding sentence to the extent such Partner obtains the written Consent of the General Partner prior to violating any such restrictions, which consent the General Partner may give or withhold in its sole and absolute discretion. Each Partner that is not an individual shall also represent and warrant to the Partnership that such Partner is neither a “foreign person” within the meaning of Code Section 1445(f) nor a foreign partner within the meaning of Code Section 1446(e).
(c) Each Partner (including, without limitation, each Additional Limited Partner or Substituted Limited Partner as a condition to becoming an Additional Limited Partner or Substituted Limited Partner) represents, warrants and agrees that (i) it has acquired and continues to hold its interest in the Partnership for its own account for investment purposes only and not for
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the purpose of, or with a view toward, the resale or distribution of all or any part thereof in violation of applicable laws, and not with a view toward selling or otherwise distributing such interest or any part thereof at any particular time or under any predetermined circumstances in violation of applicable laws and (ii) it is a sophisticated investor, able and accustomed to handling sophisticated financial matters for itself, particularly real estate investments, and that it has a sufficiently high net worth that it does not anticipate a need for the funds that it has invested in the Partnership in what it understands to be a highly speculative and illiquid investment.
(d) The representations and warranties contained in Sections 3.4(a), 3.4(b) and 3.4(c) hereof shall survive the execution and delivery of this Agreement by each Partner (and, in the case of an Additional Limited Partner or a Substituted Limited Partner, the admission of such Additional Limited Partner or Substituted Limited Partner as a Limited Partner in the Partnership) and the dissolution, liquidation and termination of the Partnership.
(e) Each Partner (including, without limitation, each Additional Limited Partner or Substituted Limited Partner as a condition to becoming an Additional Limited Partner or Substituted Limited Partner) hereby acknowledges that no representations as to potential profit, cash flows, funds from operations or yield, if any, in respect of the Partnership or the General Partner have been made by any Partner or any employee or representative or Affiliate of any Partner, and that projections and any other information, including, without limitation, financial and descriptive information and documentation, that may have been in any manner submitted to such Partner shall not constitute any representation or warranty of any kind or nature, express or implied.
(f) Notwithstanding the foregoing, the General Partner may, in its sole and absolute discretion, permit the modification of any of the representations and warranties contained in Sections 3.4(a), 3.4(b) and 3.4(c) above as applicable to any Partner (including, without limitation any Additional Limited Partner or Substituted Limited Partner or any transferee of either), provided that such representations and warranties, as modified, shall be set forth in either (i) a Unit Designation applicable to the Partnership Units held by such Partner or (ii) a separate writing addressed to the Partnership and the General Partner.
ARTICLE 4
CAPITAL CONTRIBUTIONS
Section 4.1 Capital Contributions of the Partners. The Partners have heretofore made Capital Contributions to the Partnership. Except as provided by law or in Section 4.2, 4.3, or 10.4 hereof, the Partners shall have no obligation or, except with the prior Consent of the General Partner, right to make any additional Capital Contributions or loans to the Partnership. The General Partner shall cause to be maintained in the principal business office of the Partnership, or such other place as may be determined by the General Partner, the books and records of the Partnership, which shall include, among other things, a register containing the name, address, and number, class and series of Partnership Units of each Partner, and such other information as the General Partner may deem necessary or desirable (the “Register”). The Register shall not be part of this Agreement. The General Partner shall from time to time update the Register as necessary to accurately reflect the information therein, including as a result of any sales, exchanges or other Transfers, or any redemptions, issuances or similar events involving Partnership Units. Any reference in this
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Agreement to the Register shall be deemed a reference to the Register as in effect from time to time. Subject to the terms of this Agreement, the General Partner may take any action authorized hereunder in respect of the Register without any need to obtain the consent or approval of any other Partner. No action of any Limited Partner shall be required to amend or update the Register. Except as required by law, no Limited Partner shall be entitled to receive a copy of the information set forth in the Register relating to any Partner other than itself.
Section 4.2 Issuances of Partnership Interests. The Partnership may create and issue Interests of any class, series or kind, as determined by the General Partner with the approval of the Board of Directors. Subject to the rights of any Holder of any Partnership Interest set forth in a Unit Designation:
(a) Initial Classes of Partnership Interests. As of the Effective Time, the Partnership has the following classes of Units:
(i) Partnership Common Units. The Partnership Common Units are Partnership Units with the rights, preferences, privileges and obligations set forth in this Agreement.
(ii) LTIP Units. The LTIP Units are Partnership Units with the rights, preferences, privileges and obligations set forth in this Agreement.
(iii) Other Classes. The Partnership has each additional class of Units identified in a Unit Designation that exists as of the Effective Time, with the rights, preferences, privileges and obligations set forth in this Agreement as modified by such Unit Designation.
(b) General. The General Partner is hereby authorized to cause the Partnership to issue additional Partnership Interests, in the form of Partnership Units, for any Partnership purpose, at any time or from time to time, to the Partners (including the General Partner) or to other Persons, and to admit such Persons as Additional Limited Partners, for such consideration and on such terms and conditions as shall be established by the General Partner in its sole and absolute discretion, all without the approval of any Limited Partner or any other Person. Without limiting the foregoing, the General Partner is expressly authorized to cause the Partnership to issue Partnership Units (i) upon the conversion, redemption or exchange of any Debt, Partnership Units, or other securities issued by the Partnership, (ii) for less than fair market value, (iii) for no consideration, (iv) in connection with any merger of any other Person into the Partnership, (v) upon the contribution of property or assets to the Partnership, or (vi) in exchange for the contribution of Lineage Holdings OPEUs to the Partnership. Any additional Partnership Interests may be issued in one or more classes, or one or more series of any of such classes, with such designations, preferences, conversion or other rights, voting powers or rights, restrictions, limitations as to distributions, qualifications or terms or conditions of redemption (including, without limitation, terms that may be senior or otherwise entitled to preference over existing Partnership Units) as shall be determined by the General Partner, in its sole and absolute discretion without the approval of any Limited Partner or any other Person, and set forth in a written document thereafter attached to and made an exhibit to this Agreement, which exhibit shall be an amendment to this Agreement and shall be incorporated herein by this reference (each, a “Unit Designation”), without the
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approval of any Limited Partner or any other Person. Without limiting the generality of the foregoing, the General Partner shall have authority to specify: (A) the allocations of items of Partnership income, gain, loss, deduction and credit to each such class or series of Partnership Interests; (B) the right of each such class or series of Partnership Interests to share (on a pari passu, junior or preferred basis) in Partnership distributions; (C) the rights of each such class or series of Partnership Interests upon dissolution and liquidation of the Partnership; (D) the voting rights, if any, of each such class or series of Partnership Interests; and (E) the conversion, redemption or exchange rights applicable to each such class or series of Partnership Interests. Except as expressly set forth in any Unit Designation or as may otherwise be required under the Act, a Partnership Interest of any class or series other than a Partnership Common Unit shall not entitle the holder thereof to vote on, or consent to, any matter. Upon the issuance of any additional Partnership Interest, the General Partner shall update the Register and the books and records of the Partnership as appropriate to reflect such issuance. All parties hereto are deemed to approve the terms of each Unit Designation that is entered into in accordance with this Agreement.
(c) Issuances of LTIP Units. Without limiting the generality of the foregoing, from time to time, the General Partner is hereby authorized to issue LTIP Units to Persons providing services to or for the benefit of the Partnership for such consideration or for no consideration as the General Partner may determine to be appropriate and on such terms and conditions as shall be established by the General Partner, and admit such Persons as Limited Partners. Except to the extent a Capital Contribution is made with respect to an LTIP Unit or as otherwise determined by the General Partner, each LTIP Unit is intended to qualify as a profits interest in the Partnership within the meaning of the Code, the Regulations, and any published guidance by the IRS with respect thereto. Except as may be provided from time to time by the General Partner with respect to one or more classes or series of LTIP Units, LTIP Units shall have the terms set forth in Article 16.
(d) Issuances to the General Partner. No additional Partnership Units shall be issued to the General Partner unless (i) the additional Partnership Units are issued to all Partners holding Partnership Common Units and Legacy Units in proportion to their respective Percentage Interests in Partnership Common Units and Legacy Units, collectively, (ii) (A) the additional Partnership Units are (I) Partnership Common Units issued in connection with an issuance of REIT Shares, or (II) Partnership Equivalent Units (other than Partnership Common Units) issued in connection with an issuance of Preferred Shares, New Securities or other interests in the General Partner (other than REIT Shares), and (B) the General Partner contributes to the Partnership the cash proceeds or other consideration received in connection with the issuance of such REIT Shares, Preferred Shares, New Securities or other interests in the General Partner; (iii) the additional Partnership Units are issued upon the conversion, redemption or exchange of Debt, Partnership Units or other securities issued by the Partnership, (iv) the additional Partnership Units are issued pursuant to Section 4.3(b), Section 4.3(e), Section 4.4 or Section 4.5 or (v) the additional Partnership Units are issued pursuant to the exercise of the rights set forth in the Put Option Agreement.
(e) No Preemptive Rights. Except as expressly provided in this Agreement, in any Unit Designation or in the Put Option Agreement, no Person, including, without limitation, any Partner or Assignee, shall have any preemptive, preferential, participation or similar right or rights to subscribe for or acquire any Partnership Interest.
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(f) Reclassification of Units. Except as otherwise set forth in a Unit Designation, with the Consent of the General Partner and the Partner holding the applicable Unit of any class, such Unit may be reclassified as a Unit of any other class, provided that such reclassification does not have a material adverse impact on the other Units; provided, further that the reclassification rights provided by this Section 4.2(f) shall not apply to LTIP Units which shall be governed by Article 16. The reclassification of any Unit does not constitute a redemption or issuance of any Unit for purposes of this Agreement (but this sentence shall not be deemed to describe or impact the tax treatment of any such reclassification for U.S. federal income tax purposes or otherwise). The foregoing shall not be deemed to describe or impact the tax treatment of any such reclassification for U.S. federal income or other tax purposes.
Section 4.3 Additional Funds and Capital Contributions.
(a) General. The General Partner may, at any time and from time to time, determine that the Partnership requires additional funds (“Additional Funds”) for the acquisition or development of additional Properties, for the redemption of Partnership Units or for such other purposes as the General Partner may determine, in its sole and absolute discretion. Additional Funds may be obtained by the Partnership, at the election of the General Partner, in any manner provided in, and in accordance with, the terms of this Section 4.3 without the approval of any Limited Partner or any other Person.
(b) Additional Capital Contributions. The General Partner, on behalf of the Partnership, may obtain any Additional Funds by accepting Capital Contributions from any Partners or other Persons. In connection with any such Capital Contribution (of cash or property), the General Partner is hereby authorized to cause the Partnership from time to time to issue additional Partnership Units (as set forth in Section 4.2 above) in consideration therefor and the Percentage Interests of the General Partner and the Limited Partners shall be adjusted to reflect the issuance of such additional Partnership Units.
(c) Loans by Third Parties. The General Partner, on behalf of the Partnership, may obtain any Additional Funds by causing the Partnership to incur Debt to any Person (other than the General Partner (but, for this purpose, disregarding any Debt that may be deemed incurred to the General Partner by virtue of clause (c) of the definition of Debt)) upon such terms as the General Partner determines appropriate, including making such Debt convertible, redeemable or exchangeable for Partnership Units or REIT Shares; provided, however, that the Partnership shall not incur any such Debt if any Partner would be personally liable for the repayment of such Debt (unless such Partner otherwise agrees).
(d) General Partner Loans. The General Partner, on behalf of the Partnership, may obtain any Additional Funds by causing the Partnership to incur Debt to the General Partner if (i) such Debt is, to the extent permitted by law, on substantially the same terms and conditions (including interest rate, repayment schedule, and conversion, redemption, repurchase and exchange rights) as Funding Debt incurred by the General Partner, the net proceeds of which are loaned to the Partnership to provide such Additional Funds, or (ii) such Debt is on terms and conditions no less favorable to the Partnership than would be available to the Partnership from any third party; provided, however, that the Partnership shall not incur any such Debt if any Partner would be personally liable for the repayment of such Debt (unless such Partner otherwise agrees).
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(e) Issuance of Securities by the General Partner. The General Partner shall not issue any additional REIT Shares, Capital Shares or New Securities unless the General Partner contributes the cash proceeds or other consideration received from the issuance of such additional REIT Shares, Capital Shares or New Securities (as the case may be) and from the exercise of the rights contained in any such additional Capital Shares or New Securities to the Partnership in exchange for (x) in the case of an issuance of REIT Shares, Partnership Common Units, or (y) in the case of an issuance of Capital Shares or New Securities, Partnership Equivalent Units; provided, however, that notwithstanding the foregoing, the General Partner may issue REIT Shares, Capital Shares or New Securities (i) pursuant to Section 4.4 or Section 15.1(b) hereof, (ii) pursuant to a dividend or other distribution (including any stock split) of REIT Shares, Capital Shares or New Securities to holders of REIT Shares, Capital Shares or New Securities (as the case may be), (iii) upon a conversion, redemption or exchange of Capital Shares, (iv) upon a conversion, redemption, exchange or exercise of New Securities, (v) in connection with an acquisition of Partnership Units or a property or other asset to be owned, directly or indirectly, by the General Partner or (vi) pursuant to the exercise of rights set forth in the Put Option Agreement. In the event of any issuance of additional REIT Shares, Capital Shares or New Securities by the General Partner, and the contribution to the Partnership, by the General Partner, of the cash proceeds or other consideration received from such issuance (or property acquired with such proceeds), if any, if the cash proceeds actually received by the General Partner are less than the gross proceeds of such issuance as a result of any underwriter’s discount or other expenses paid or incurred in connection with such issuance, then the General Partner shall be deemed to have made a Capital Contribution to the Partnership in the amount equal to the sum of the cash proceeds of such issuance plus the amount of such underwriter’s discount and other expenses paid by the General Partner (which discount and expense shall be treated as an expense for the benefit of the Partnership for purposes of Section 7.4). In the event that the General Partner issues any additional REIT Shares, Capital Shares or New Securities and contributes the cash proceeds or other consideration received from the issuance thereof to the Partnership, the Partnership is expressly authorized to issue a number of Partnership Common Units or Partnership Equivalent Units to the General Partner equal to the number of REIT Shares, Capital Shares or New Securities so issued, divided by the Adjustment Factor then in effect, in accordance with this Section 4.3(e) without any further act, approval or vote of any Partner or any other Persons.
Section 4.4 Equity Incentive Plans. Nothing in this Agreement shall be construed or applied to preclude or restrain the General Partner or the Partnership from adopting, modifying or terminating equity incentive plans for the benefit of employees, directors, consultants or other service providers of the General Partner, the Partnership or any of their Affiliates or from issuing REIT Shares, Capital Shares or New Securities pursuant to any such plans. The General Partner may implement such plans and any actions taken under such plans (such as the grant or exercise of options to acquire REIT Shares, or the issuance of restricted REIT Shares), whether taken with respect to or by an employee or other service provider of the General Partner, the Partnership or its Subsidiaries, in a manner determined by the General Partner, which may be set forth in plan implementation guidelines that the General Partner may establish or amend from time to time. The Partners acknowledge and agree that, in the event that any such plan is adopted, modified or terminated by the General Partner, amendments to this Agreement may become necessary or advisable and that any approval or Consent to any such amendments requested by the General Partner shall be deemed granted by the Limited Partners. The Partnership is expressly authorized to issue Partnership Units (a) in accordance with the terms of any such equity incentive plans, or (b) in an amount equal to the number of REIT Shares, Capital Shares or New Securities issued pursuant to any such equity incentive plans, without any further act, approval or vote of any Partner or any other Persons.
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Section 4.5 Dividend Reinvestment Plan, Cash Option Purchase Plan, Equity Incentive Plan or Other Plan. Except as may otherwise be provided in this Article 4, all amounts received or deemed received by the General Partner in respect of any dividend reinvestment plan, cash option purchase plan, equity incentive or other equity or subscription plan or agreement, either (a) shall be utilized by the General Partner to effect open market purchases of REIT Shares, or (b) if the General Partner elects instead to issue new REIT Shares with respect to such amounts, shall be contributed by the General Partner to the Partnership in exchange for additional Partnership Common Units. Upon such contribution, the Partnership will issue to the General Partner a number of Partnership Common Units equal to the quotient of (i) the new REIT Shares so issued, divided by (ii) the Adjustment Factor then in effect.
Section 4.6 No Interest; No Return. No Partner shall be entitled to interest on its Capital Contribution or on such Partner’s Capital Account. Except as provided herein or by law, no Partner shall have any right to demand or receive the return of its Capital Contribution from the Partnership.
Section 4.7 Conversion or Redemption of Capital Shares.
(a) Conversion of Capital Shares. If, at any time, any of the Capital Shares are converted into REIT Shares, in whole or in part, then a number of Partnership Units with preferences, conversion and other rights, restrictions (other than restrictions on transfer), rights and limitations as to dividends and other distributions and qualifications that are substantially the same as the preferences, conversion and other rights, restrictions (other than restrictions on transfer), rights and limitations as to distributions and qualifications as those of such Capital Shares (“Partnership Equivalent Units”) (for the avoidance of doubt, Partnership Equivalent Units need not have voting rights, redemption rights or restrictions on transfer that are substantially similar to the corresponding Capital Shares) equal to the number of Capital Shares so converted shall automatically be converted into a number of Partnership Common Units equal to the quotient of (i) the number of REIT Shares issued upon such conversion divided by (ii) the Adjustment Factor then in effect, and the Percentage Interests of the General Partner and the Limited Partners shall be adjusted to reflect such conversion.
(b) Redemption or Repurchase of Capital Shares or REIT Shares. Except as otherwise provided in Section 7.4(c), if, at any time, any Capital Shares are redeemed or otherwise repurchased (whether by exercise of a put or call, automatically or by means of another arrangement) by the General Partner, the Partnership shall, immediately prior to such redemption or repurchase of Capital Shares, redeem an equal number of Partnership Equivalent Units held by the General Partner upon the same terms and for the same price per Partnership Equivalent Unit as such Capital Shares are redeemed or repurchased. If, at any time, any REIT Shares are redeemed or otherwise repurchased by the General Partner, the Partnership shall, immediately prior to such redemption or repurchase of REIT Shares, redeem or repurchase a number of Partnership Common Units held by the General Partner equal to the quotient of (i) the REIT Shares so redeemed or repurchased, divided by (ii) the Adjustment Factor then in effect, such redemption or repurchase
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to be upon the same terms and for the same price per Partnership Common Unit (after giving effect to application of the Adjustment Factor) as such REIT Shares are redeemed or repurchased. Notwithstanding the foregoing, the provisions of this Section 4.7(b) shall not apply in the event that such repurchase of REIT Shares is paired with a stock split or stock dividend such that after giving effect to such repurchase and subsequent stock split or stock dividend there shall be outstanding an equal number of REIT Shares as were outstanding prior to such repurchase and subsequent stock split or stock dividend.
Section 4.8 Other Contribution Provisions. In the event that any Partner is admitted to the Partnership and is given a Capital Account in exchange for services rendered to the Partnership, such transaction shall be treated by the Partnership and the affected Partner as if the Partnership had compensated such partner in cash and such Partner had contributed the cash that the Partner would have received to the capital of the Partnership. In addition, with the Consent of the General Partner, one or more Partners may enter into contribution agreements with the Partnership which have the effect of providing a guarantee of certain obligations of the Partnership (and/or a wholly-owned Subsidiary of the Partnership).
ARTICLE 5
DISTRIBUTIONS
Section 5.1 Requirement and Characterization of Distributions. Subject to the rights of any Holder of any Partnership Interest set forth in a Unit Designation, the General Partner may cause the Partnership to distribute such amounts, at such times, as the General Partner may, in its sole and absolute discretion, determine, to the Holders as of any Partnership Record Date: (a) first, with respect to any Partnership Units that are entitled to any preference in distribution, in accordance with the rights of Holders of such class(es) of Partnership Units (and, within each such class, among the Holders of each such class, pro rata in proportion to their respective Percentage Interests of such class or as otherwise prescribed for that class on such Partnership Record Date); and (b) second, with respect to any Partnership Units that are not entitled to any preference in distribution, in accordance with the rights of Holders of such class(es) of Partnership Units, including pursuant to any applicable Unit Designation, as applicable (and, within each such class, among the Holders of each such class, pro rata in proportion to their respective Percentage Interests of such class on such Partnership Record Date, or, with respect to a particular class, within that class as otherwise set forth in the applicable Unit Designation). Distributions payable with respect to any Partnership Units, other than any Partnership Units issued to the General Partner in connection with the issuance of REIT Shares by the General Partner, that were not outstanding during the entire quarterly period in respect of which any distribution is made shall be prorated based on the portion of the period that such Partnership Units were outstanding. The General Partner shall make such reasonable efforts, as determined by it in its sole and absolute discretion and consistent with the General Partner’s qualification as a REIT, to cause the Partnership to distribute sufficient amounts to enable the General Partner, for so long as the General Partner has determined to qualify as a REIT, to pay stockholder dividends that will (i) satisfy the requirements for qualifying as a REIT under the Code and Regulations (the “REIT Requirements”) and (ii) except to the extent otherwise determined by the General Partner, eliminate any U.S. federal income or excise tax liability of the General Partner. Notwithstanding anything in the foregoing to the contrary, a Holder of LTIP Units will only be entitled to distributions with respect to an LTIP Unit as set forth in Article 16 hereof and in making distributions pursuant to this Section 5.1, the General Partner of the Partnership shall take into account the provisions of Section 16.4 hereof.
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Section 5.2 Distributions in Kind. Except as expressly provided herein or in a Unit Designation, no right is given to any Holder to demand and receive property other than cash as provided in this Agreement. Except as expressly provided herein or in a Unit Designation, the General Partner may determine, in its sole and absolute discretion, to make a distribution in kind of Partnership assets to the Holders, and such assets shall be distributed in such a fashion as to ensure that the fair market value is distributed and allocated in accordance with Articles 5, 6 and 13 hereof; provided, however, that the General Partner shall not make a distribution in kind to any Holder unless (a) the Holder has been given ninety (90) days prior written notice of such distribution, (b) the Holder has waived such minimum notice, or (c) such distribution in kind is made in accordance with the terms of a Unit Designation applicable to the Partnership Units receiving such distribution.
Section 5.3 Amounts Withheld. All amounts withheld pursuant to the Code or any provisions of any state, local or non-United States tax law and Section 10.4 hereof with respect to any allocation, payment or distribution to any Holder shall be treated as amounts paid or distributed to such Holder pursuant to Section 5.1 hereof for all purposes under this Agreement.
Section 5.4 Distributions upon Liquidation. Notwithstanding the other provisions of this Article 5 or any applicable Unit Designation, net proceeds from a Terminating Capital Transaction, and any other amounts distributed after the occurrence of a Liquidating Event, shall be distributed to the Holders in accordance with Section 13.2 hereof.
Section 5.5 Distributions to Reflect Additional Partnership Units. In the event that the Partnership issues additional Partnership Units pursuant to the provisions of Article 4 hereof, subject to the rights of any Holder of any Partnership Interest set forth in a Unit Designation, the General Partner is hereby authorized to make such revisions to this Article 5 and to Articles 6, 11 and 12 hereof as it determines are necessary or desirable to reflect the issuance of such additional Partnership Units, including, without limitation, making preferential distributions to Holders of certain classes of Partnership Units.
Section 5.6 Restricted Distributions. Notwithstanding any provision to the contrary contained in this Agreement, neither the Partnership nor the General Partner, on behalf of the Partnership, shall make a distribution to any Holder if such distribution would violate the Act or other applicable law.
ARTICLE 6
ALLOCATIONS
Section 6.1 Timing and Amount of Allocations of Net Income and Net Loss. Net Income and Net Loss of the Partnership shall be determined and allocated with respect to each Partnership Year as of the end of each such year, provided that the General Partner may in its discretion allocate Net Income and Net Loss for a shorter period as of the end of such period (and, for purposes of this Article 6, references to the term “Partnership Year” may include such shorter periods). Except as otherwise provided in this Article 6, and subject to Section 11.6(c) hereof, an allocation to a Holder of a share of Net Income or Net Loss shall be treated as an allocation of the same share of each item of income, gain, loss or deduction that is taken into account in computing Net Income or Net Loss.
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Section 6.2 General Allocations.
(a) General. Subject to the other provisions of this Article 6 and Section 16.5, for purposes of adjusting the Capital Accounts of the Partners, the Net Income, Net Losses and, to the extent necessary, individual items of income, gain, loss, credit and deduction, for any Partnership Year shall be allocated among the Partners in a manner such that the Adjusted Capital Account of each Partner, immediately after making such allocation is, as nearly as possible, equal (proportionately) to the distributions that would be made to such Partner pursuant to Section 13.2(a)(iv) if the Partnership were dissolved, its affairs wound up and its assets sold for cash equal to their Gross Asset Value, all Partnership liabilities were satisfied (limited with respect to each Nonrecourse Liability to the Gross Asset Value of the asset securing such liability), and the net assets of the Partnership were distributed in accordance with Section 13.2(a)(iv) to the Partners immediately after making such allocation; provided, however, that the General Partner may adjust the allocations that are determined (without regard to this proviso) pursuant to this Section 6.2 if the General Partner determines reasonably and in good faith that such adjustment is required to comply with the requirements of Section 704(b) of the Code and the Treasury Regulations promulgated thereunder, or to give economic effect to Article 5, Article 7, Article 13 and the other relevant provisions of this Agreement.
(b) Allocations to Reflect Issuance of Additional Partnership Interests. In the event that the Partnership issues additional Partnership Interests to the General Partner or any Additional Limited Partner pursuant to Section 4.2 or 4.3, the General Partner shall make such revisions to this Section 6.2 or to Section 12.2(c) or 13.2(a) as it determines are necessary to reflect the terms of the issuance of such additional Partnership Interests, including making preferential allocations to certain classes of Partnership Interests, subject to the terms of any Unit Designation with respect to Partnership Interests then outstanding.
(c) Special Allocations with Respect to Eligible LTIP Units. In the event that Liquidating Gains are allocated under this Section 6.2(c), Net Income and Net Losses allocable under Section 6.2(a) shall be recomputed without regard to the Liquidating Gains so allocated. After giving effect to the special allocations set forth in Section 6.4(a) hereof, and notwithstanding the provisions of Section 6.2(a) above, any Liquidating Gains shall first be allocated to the Holders of Eligible LTIP Units until the Economic Capital Account Balances of such Holders, to the extent attributable to their ownership of Eligible LTIP Units, are equal to (i) the Common Unit Economic Balance, multiplied by (ii) the number of their Eligible LTIP Units. Any such allocations shall be made among the Holders of Eligible LTIP Units in proportion to the amounts required to be allocated to each under this Section 6.2(c). The parties agree that the intent of this Section 6.2(c) and the other provisions of Article 6 and Section 16.5 is to make the Capital Account balances of the Holders of LTIP Units with respect to their LTIP Units economically equivalent to the Capital Account balance of the General Partner with respect to its Partnership Common Units (on a per unit basis), but only to the extent that, at the time any Liquidating Gain is to be allocated, the Partnership has recognized cumulative net gains with respect to its assets since the issuance of the LTIP Unit.
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Section 6.3 Additional Allocation Provisions. Notwithstanding the foregoing provisions of this Article 6:
(a) Special Allocations Upon Liquidation. In the event that the Partnership disposes of all or substantially all of its assets in a transaction that will lead to a liquidation of the Partnership pursuant to Article 13 hereof, then: (i) any Liquidating Gains shall first be allocated to each Holder of Eligible LTIP Units in accordance with Section 6.2(c); and (ii) any Net Income or Net Loss realized in connection with such transaction and thereafter (recomputed without regard to the Liquidating Gains allocated pursuant to clause (i) above) shall be specially allocated for such Partnership Year (and to the extent permitted by Section 761(c) of the Code, for the immediately preceding Partnership Year) among the Holders as required so as to cause liquidating distributions pursuant to Section 13.2(a)(iv) hereof to be made in the same amounts and proportions as would have resulted had such distributions instead been made pursuant to Article 5 hereof. In addition, if there is an adjustment to the Gross Asset Value of the assets of the Partnership pursuant to paragraph (b) of the definition of Gross Asset Value, allocations of Net Income or Net Loss arising from such adjustment shall be allocated in the same manner as described in the prior sentence.
(b) Offsetting Allocations. Notwithstanding the provisions of Section 6.1 and Section 6.2(a), but subject to Section 6.3 and Section 6.4, in the event Net Income or items thereof are being allocated to a Partner to offset prior Net Loss or items thereof which have been allocated to such Partner (including any allocations of Net Income or items thereof pursuant to Section 6.3(a)), the General Partner shall attempt to allocate such offsetting Net Income or items thereof which are of the same or similar character (including without limitation Section 704(b) book items versus tax items) to the original allocations with respect to such Partner.
(c) CODI Allocations. Notwithstanding anything to the contrary contained herein, if any indebtedness of the Partnership encumbering the Properties contributed to the Partnership in connection with the General Partner’s initial offering is settled or paid off at a discount, any resulting COD Income of the Partnership shall be specially allocated proportionately (as determined by the General Partner) to those Holders that were partners in entities that contributed, or were deemed to contribute, the applicable Property to the Partnership in connection with such initial offering to the extent the number of Partnership Units received by such Holders in exchange for their interests in such entities was determined, in part, by taking into account the anticipated discounted settlement or pay-off of such indebtedness. For purposes of the foregoing, “COD Income” shall mean income recognized by the Partnership pursuant to Code Section 61(a)(12).
(d) PTET. The expense of any PTET paid by the Partnership and determined in whole or in part by reference to specific Partner attributes or status and that the General Partner determines to be attributable to fewer than all Partners or to different Partners in different proportions shall be allocated to the Partner or Partners to whom attributable in the amounts so attributable.
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Section 6.4 Regulatory Allocation Provisions. Notwithstanding the foregoing provisions of this Article 6:
(a) Regulatory Allocations.
(i) Minimum Gain Chargeback. Except as otherwise provided in Regulations Section 1.704-2(f), notwithstanding the provisions of Section 6.2 hereof, or any other provision of this Article 6, if there is a net decrease in Partnership Minimum Gain during any Partnership Year, each Holder shall be specially allocated items of Partnership income and gain for such year (and, if necessary, subsequent years) in an amount equal to such Holder’s share of the net decrease in Partnership Minimum Gain, as determined under Regulations Section 1.704-2(g). Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Holder pursuant thereto. The items to be allocated shall be determined in accordance with Regulations Sections 1.704-2(f)(6) and 1.704-2(j)(2). This Section 6.4(a)(i) is intended to qualify as a “minimum gain chargeback” within the meaning of Regulations Section 1.704-2(f) and shall be interpreted consistently therewith.
(ii) Partner Minimum Gain Chargeback. Except as otherwise provided in Regulations Section 1.704-2(i)(4) or in Section 6.4(a)(i) hereof, if there is a net decrease in Partner Minimum Gain attributable to a Partner Nonrecourse Debt during any Partnership Year, each Holder who has a share of the Partner Minimum Gain attributable to such Partner Nonrecourse Debt, determined in accordance with Regulations Section 1.704-2(i)(5), shall be specially allocated items of Partnership income and gain for such year (and, if necessary, subsequent years) in an amount equal to such Holder’s share of the net decrease in Partner Minimum Gain attributable to such Partner Nonrecourse Debt, determined in accordance with Regulations Section 1.704-2(i)(4). Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Holder pursuant thereto. The items to be so allocated shall be determined in accordance with Regulations Sections 1.704-2(i)(4) and 1.704-2(j)(2). This Section 6.4(a)(ii) is intended to qualify as a “chargeback of partner nonrecourse debt minimum gain” within the meaning of Regulations Section 1.704-2(i) and shall be interpreted consistently therewith.
(iii) Nonrecourse Deductions and Partner Nonrecourse Deductions. Any Nonrecourse Deductions for any Partnership Year shall be specially allocated (x) first, among the Holders of Partnership Common Units in accordance with their respective Percentage Interests with respect to Partnership Common Units and (y) thereafter, among the Holders of other classes of Partnership Units as determined by the General Partner. Any Partner Nonrecourse Deductions for any Partnership Year shall be specially allocated to the Holder(s) who bears the economic risk of loss with respect to the Partner Nonrecourse Debt to which such Partner Nonrecourse Deductions are attributable, in accordance with Regulations Section 1.704-2(i).
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(iv) Qualified Income Offset. If any Holder unexpectedly receives an adjustment, allocation or distribution described in Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of Partnership income and gain shall be specially allocated, in accordance with Regulations Section 1.704-1(b)(2)(ii)(d), to such Holder in an amount and manner sufficient to eliminate, to the extent required by such Regulations, the Adjusted Capital Account Deficit of such Holder as quickly as possible, provided that an allocation pursuant to this Section 6.4(a)(iv) shall be made if and only to the extent that such Holder would have an Adjusted Capital Account Deficit after all other allocations provided in this Article 6 have been tentatively made as if this Section 6.4(a)(iv) were not in the Agreement. It is intended that this Section 6.4(a)(iv) qualify and be construed as a “qualified income offset” within the meaning of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
(v) Gross Income Allocation. In the event that any Holder has a deficit Capital Account at the end of any Partnership Year that is in excess of the sum of (1) the amount (if any) that such Holder is obligated to restore to the Partnership upon complete liquidation of such Holder’s Partnership Interest (including, the Holder’s interest in outstanding Partnership Preferred Units and other Partnership Units) and (2) the amount that such Holder is deemed to be obligated to restore pursuant to Regulations Section 1.704-1(b)(2)(ii)(c) or the penultimate sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5), each such Holder shall be specially allocated items of Partnership income and gain in the amount of such excess to eliminate such deficit as quickly as possible, provided that an allocation pursuant to this Section 6.4(a)(v) shall be made if and only to the extent that such Holder would have a deficit Capital Account in excess of such sum after all other allocations provided in this Article 6 have been tentatively made as if this Section 6.4(a)(v) and Section 6.4(a)(iv) hereof were not in the Agreement.
(vi) Limitation on Allocation of Net Loss. To the extent that any allocation of Net Loss would cause or increase an Adjusted Capital Account Deficit as to any Holder, such allocation of Net Loss shall be reallocated (x) first, among the other Holders of Partnership Common Units in accordance with their respective Percentage Interests with respect to Partnership Common Units and (y) thereafter, among the Holders of other classes of Partnership Units as determined by the General Partner, subject to the limitations of this Section 6.4(a)(vi).
(vii) Section 754 Adjustment. To the extent that an adjustment to the adjusted tax basis of any Partnership asset pursuant to Code Section 734(b) or Code Section 743(b) is required, pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(2) or Regulations Section 1.704-1(b)(2)(iv)(m)(4), to be taken into account in determining Capital Accounts as the result of a distribution to a Holder in complete liquidation of its interest in the Partnership, the amount of such adjustment to the Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis), and such gain or loss shall be specially allocated (x) first, among the Holders of Partnership Common Units in accordance with their respective Percentage Interests with respect to Partnership Common Units and (y) thereafter, among the Holders of other classes of Partnership Units as determined by the General Partner, in each case in the event that Regulations Section 1.704-1(b)(2)(iv)(m)(2) applies, or to the Holder(s) to whom such distribution was made in the event that Regulations Section 1.704-1(b)(2)(iv)(m)(4) applies.
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(viii) Curative Allocations. The allocations set forth in Sections 6.4(a)(i), (ii), (iii), (iv), (v), (vi) and (vii) hereof (the “Regulatory Allocations”) are intended to comply with certain regulatory requirements, including the requirements of Regulations Sections 1.704-1(b) and 1.704-2. Notwithstanding the provisions of Section 6.1 and Section 6.2 hereof, the Regulatory Allocations shall be taken into account in allocating other items of income, gain, loss and deduction among the Holders so that to the extent possible without violating the requirements giving rise to the Regulatory Allocations, the net amount of such allocations of other items and the Regulatory Allocations to each Holder shall be equal to the net amount that would have been allocated to each such Holder if the Regulatory Allocations had not occurred.
(ix) Forfeiture Allocations. Upon a forfeiture of any Unvested LTIP Units by any Partner, gross items of income, gain, loss or deduction shall be allocated to such Partner if and to the extent required by final Regulations promulgated after the Effective Date to ensure that allocations made with respect to all unvested Partnership Interests are recognized under Code Section 704(b).
(x) LTIP Units. For purposes of the allocations set forth in this Section 6.4(a), each issued and outstanding LTIP Unit will be treated as one outstanding Partnership Common Unit; provided, however, that for purposes of determining Percentage Interests with respect to Partnership Common Units, each Performance LTIP Unit that has not satisfied the applicable performance vesting condition will be treated as a fraction of one outstanding Partnership Common Unit equal to one Partnership Common Unit multiplied by the Performance Unit Sharing Percentage.
(b) Allocation of Excess Nonrecourse Liabilities. Excess nonrecourse liabilities within the meaning of Section 1.752-3(a)(3) of the Regulations may be allocated to a Holder up to the amount of built-in gain that is allocable to the Holder on Code Section 704(c) property or property for which reverse Code Section 704(c) allocations are applicable (where such property is subject to the nonrecourse liability to the extent that such built-in gain exceeds the gain described in Section 1.752-3(a)(2) of the Regulations with respect to such property). To the extent that the entire amount of the excess nonrecourse liability is not allocated under the prior sentence, the remaining amount of the excess nonrecourse liability shall be allocated under one of the other methods contained in Section 1.752- 3(a)(3) of the Regulations. Additionally, excess nonrecourse liabilities shall not be required to be allocated under the same method each year.
Section 6.5 Tax Allocations.
(a) In General. Except as otherwise provided in this Section 6.5, for income tax purposes under the Code and the Regulations, each Partnership item of income, gain, loss and deduction (collectively, “Tax Items”) shall be allocated among the Holders in the same manner as its correlative item of “book” income, gain, loss or deduction is allocated pursuant to Section 6.2 and Section 6.3 hereof.
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(b) Section 704(c) Allocations. Notwithstanding Section 6.5(a) hereof, Tax Items with respect to Property that is contributed to the Partnership with an initial Gross Asset Value that varies from its basis in the hands of the contributing Partner immediately preceding the date of contribution shall be allocated among the Holders for income tax purposes pursuant to Regulations promulgated under Code Section 704(c) so as to take into account such variation. The Partnership shall account for such variation under any method approved under Code Section 704(c) and the applicable Regulations as chosen by the General Partner. In the event that the Gross Asset Value of any Partnership asset is adjusted pursuant to subsection (b) of the definition of “Gross Asset Value” (provided in Article 1 hereof), subsequent allocations of Tax Items with respect to such asset shall take account of the variation, if any, between the adjusted basis of such asset and its Gross Asset Value in the same manner as under Code Section 704(c) and the applicable Regulations and using the method chosen by the General Partner; provided, however, that with respect to any “reverse” Code Section 704(c) allocations described in Section 1.704-3(a)(6)(i) of the Regulations, the General Partner shall use the traditional method under Section 1.704-3(b) of the Regulations or the traditional method with curative allocations under Section 1.704-3(c) of the Regulations. Allocations pursuant to this Section 6.5(b) are solely for purposes of Federal, state and local income taxes and shall not affect, or in any way be taken into account in computing, any Partner’s Capital Account or share of Net Income, Net Loss, or any other items or distributions pursuant to any provision of this Agreement.
ARTICLE 7
MANAGEMENT AND OPERATIONS OF BUSINESS
Section 7.1 Management.
(a) Except as otherwise expressly provided in this Agreement, including any Unit Designation, all management powers over the business and affairs of the Partnership are and shall be exclusively vested in the General Partner, and no Limited Partner shall have any right to participate in or exercise control or management power over the business and affairs of the Partnership. No General Partner may be removed by the Partners, with or without cause, except with the Consent of the General Partner. In addition to the powers now or hereafter granted a general partner of a limited partnership under applicable law or that are granted to the General Partner under any other provision of this Agreement, the General Partner, subject to the other provisions hereof including, without limitation, Section 3.2 and Section 7.3, and the rights of any Holder of any Partnership Interest set forth in a Unit Designation, shall have full and exclusive power and authority, without the consent or approval of any Limited Partner, to do or authorize all things deemed necessary or desirable by it to conduct the business and affairs of the Partnership, to exercise or direct the exercise of all of the powers of the Partnership and a general partner under the Act and this Agreement and to effectuate the purposes of the Partnership, including, without limitation:
(i) the making of any expenditures, the lending or borrowing of money or selling of assets (including, without limitation, making prepayments on loans and borrowing money to permit the Partnership to make distributions to the Holders in such amounts as will permit the General Partner to prevent the imposition of any federal income tax on the General Partner (including, for this purpose, any excise tax pursuant to Code Section 4981), to make distributions to its stockholders and payments to any taxing authority sufficient to permit the General Partner to maintain REIT status or otherwise to satisfy the REIT Requirements), the assumption or guarantee of, or other contracting for, indebtedness and other liabilities, the issuance of evidences of indebtedness (including the securing of same by deed to secure debt, mortgage, deed of trust or other lien or encumbrance on the Partnership’s assets) and the incurring of any obligations to conduct the activities of the Partnership;
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(ii) the making of tax, regulatory and other filings, or rendering of periodic or other reports to governmental or other agencies having jurisdiction over the business or assets of the Partnership;
(iii) the taking of any and all acts to ensure that the Partnership will not be classified as a “publicly traded partnership” under Code Section 7704;
(iv) subject to Section 11.2 hereof, the acquisition, sale, transfer, exchange or other disposition of any, all or substantially all of the assets (including the goodwill) of the Partnership (including, but not limited to, the exercise or grant of any conversion, option, privilege or subscription right or any other right available in connection with any assets at any time held by the Partnership) or the merger, consolidation, reorganization or other combination of the Partnership with or into another entity;
(v) the mortgage, pledge, encumbrance or hypothecation of any assets of the Partnership, the assignment of any assets of the Partnership in trust for creditors or on the promise of the assignee to pay the debts of the Partnership, the use of the assets of the Partnership (including, without limitation, cash on hand) for any purpose consistent with the terms of this Agreement and on any terms that the General Partner sees fit, including, without limitation, the financing of the operations and activities of the General Partner, the Partnership or any of the Partnership’s Subsidiaries, the lending of funds to other Persons (including, without limitation, the General Partner and/or the Partnership’s Subsidiaries) and the repayment of obligations of the Partnership, its Subsidiaries and any other Person in which the Partnership has an equity investment, and the making of capital contributions to and equity investments in the Partnership’s Subsidiaries;
(vi) the management, operation, leasing, landscaping, repair, alteration, demolition, replacement or improvement of any Property;
(vii) the negotiation, execution and performance of any contracts, including leases (including ground leases), easements, management agreements, rights of way and other property-related agreements, conveyances or other instruments to conduct the Partnership’s operations or implement the General Partner’s powers under this Agreement, including contracting with contractors, developers, consultants, governmental authorities, accountants, legal counsel, other professional advisors and other agents and the payment of their expenses and compensation, as applicable, out of the Partnership’s assets;
(viii) the distribution of Partnership cash or other Partnership assets in accordance with this Agreement, the holding, management, investment and reinvestment of cash and other assets of the Partnership, and the collection and receipt of revenues, rents and income of the Partnership;
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(ix) the selection and dismissal of employees of the Partnership (if any) (including, without limitation, employees having titles or offices such as “president,” “vice president,” “secretary” and “treasurer”), and agents, outside attorneys, accountants, consultants and contractors of the Partnership and the determination of their compensation and other terms of employment or hiring;
(x) the maintenance of insurance (including, without limitation, directors and officers insurance) for the benefit of the Partnership and the Partners (including, without limitation, the General Partner);
(xi) the formation of, or acquisition of an interest in, and the contribution of property to, any further limited or general partnerships, limited liability companies, joint ventures or other relationships that it deems desirable (including, without limitation, the acquisition of interests in, and the contributions of property to, any Subsidiary and any other Person in which the General Partner has an equity investment from time to time);
(xii) the control of any matters affecting the rights and obligations of the Partnership, including the settlement, compromise, submission to arbitration or any other form of dispute resolution, or abandonment, of any claim, cause of action, liability, debt or damages, due or owing to or from the Partnership, the commencement or defense of suits, legal proceedings, administrative proceedings, arbitrations or other forms of dispute resolution, and the representation of the Partnership in all suits or legal proceedings, administrative proceedings, arbitrations or other forms of dispute resolution, the incurring of legal expense, and the indemnification of any Person against liabilities and contingencies to the extent permitted by law;
(xiii) the undertaking of any action in connection with the Partnership’s direct or indirect investment in any Subsidiary or any other Person (including, without limitation, the contribution or loan of funds by the Partnership to such Persons);
(xiv) the determination of the fair market value of any Partnership property distributed in kind using such reasonable method of valuation as the General Partner may adopt; provided, however, that such methods are otherwise consistent with the requirements of this Agreement;
(xv) the enforcement of any rights against any Partner pursuant to representations, warranties, covenants and indemnities relating to such Partner’s contribution of property or assets to the Partnership;
(xvi) the exercise, directly or indirectly, through any attorney-in-fact acting under a general or limited power of attorney, of any right, including the right to vote, appurtenant to any asset or investment held by the Partnership;
(xvii) the exercise of any of the powers of the General Partner enumerated in this Agreement on behalf of or in connection with any Subsidiary of the Partnership or any other Person in which the Partnership has a direct or indirect interest, or jointly with any such Subsidiary or other Person;
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(xviii) the exercise of any of the powers of the General Partner enumerated in this Agreement on behalf of any Person in which the Partnership does not have an interest, pursuant to contractual or other arrangements with such Person;
(xix) the making, execution and delivery of any and all deeds, leases, notes, deeds to secure debt, mortgages, deeds of trust, security agreements, conveyances, contracts, guarantees, warranties, indemnities, waivers, releases, confessions of judgment or any other legal instruments or agreements in writing;
(xx) the issuance of additional Partnership Units in connection with Capital Contributions by Additional Limited Partners and additional Capital Contributions by Partners pursuant to Article 4 hereof;
(xxi) an election to dissolve the Partnership pursuant to Section 13.1(b) hereof;
(xxii) the distribution of cash to acquire Partnership Common Units held by a Limited Partner in connection with a Redemption under Section 15.1 hereof;
(xxiii) an election to acquire Tendered Units in exchange for REIT Shares;
(xxiv) the maintenance of the Register from time to time to reflect accurately at all times the Capital Contributions and Percentage Interests of the Partners as the same are adjusted from time to time to reflect redemptions, Capital Contributions, the issuance of Partnership Units, the admission of any Additional Limited Partner or any Substituted Limited Partner or otherwise, which shall not be deemed an amendment to this Agreement, as long as the matter or event being reflected in the Register otherwise is authorized by this Agreement; and
(xxv) the registration of any class of securities of the Partnership under the Securities Act or the Exchange Act, and the listing of any debt securities of the Partnership on any exchange.
(b) Each of the Limited Partners agrees that, except as provided in Section 7.3 hereof and subject to the rights of any Holder of any Partnership Interest set forth in a Unit Designation, the General Partner is authorized to execute and deliver any affidavit, agreement, certificate, consent, instrument, notice, power of attorney, waiver or other writing or document in the name and on behalf of the Partnership and to otherwise exercise any power of the General Partner under this Agreement and the Act on behalf of the Partnership without any further act, approval or vote of the Partners or any other Persons, notwithstanding any other provision of the Act or any applicable law, rule or regulation and, in the absence of any specific corporate action on the part of the General Partner to the contrary, the taking of any action or the execution of any such document or writing by an officer of the General Partner, in the name and on behalf of the General Partner, in its capacity as the general partner of the Partnership, shall conclusively evidence (i) the approval thereof by the General Partner, in its capacity as the general partner of the Partnership, (ii) the General Partner’s determination that such action, document or writing is necessary, advisable, appropriate, desirable or prudent to conduct the business and affairs of the Partnership, exercise the powers of the Partnership under this Agreement and the Act or effectuate the purposes of the Partnership, or any other determination by the General Partner required by this Agreement in connection with the taking of such action or execution of such document or writing, and (iii) the authority of such officer with respect thereto.
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(c) At all times from and after the date hereof, the General Partner may cause the Partnership to obtain and maintain (i) casualty, liability and other insurance on the Properties and (ii) liability insurance for the Indemnitees hereunder.
(d) At all times from and after the date hereof, the General Partner may cause the Partnership to establish and maintain working capital and other reserves in such amounts as the General Partner, in its sole and absolute discretion, determines from time to time.
(e) The determination as to any of the following matters, made by or at the direction of the General Partner consistent with this Agreement and the Act, shall be final and conclusive and shall be binding upon the Partnership and every Limited Partner: the amount of assets at any time available for distribution or the redemption of Partnership Common Units; the amount and timing of any distribution; any determination to redeem Tendered Units; the amount, purpose, time of creation, increase or decrease, alteration or cancellation of any reserves or charges and the propriety thereof (whether or not any obligation or liability for which such reserves or charges shall have been created shall have been paid or discharged); the amount of any Partner’s Capital Account, Adjusted Capital Account or Adjusted Capital Account Deficit; the amount of Net Income, Net Loss or Depreciation for any period; any special allocations of Net Income or Net Loss pursuant to Sections 6.2(b), 6.2(c), 6.3, 6.4, 6.5 or 16.5; the Gross Asset Value of any Partnership asset; the Value of any REIT Share; the timing and amount of any adjustment to the Adjustment Factor; any adjustment to the number of outstanding LTIP Units pursuant to Section 16.3; the timing, number and redemption or repurchase price of the redemption or repurchase of any Partnership Units pursuant to Section 4.7(b); any interpretation of the terms, preferences, conversion or other rights, voting powers or rights, restrictions, limitations as to dividends or distributions, qualifications or terms or conditions of redemption of any class or series of Partnership Interest; the fair value, or any sale, bid or asked price to be applied in determining the fair value, of any asset owned or held by the Partnership or of any Partnership Interest; the number of authorized or outstanding Units of any class or series; any matter relating to the acquisition, holding and disposition of any assets by the Partnership; or any other matter relating to the business and affairs of the Partnership or required or permitted by applicable law, this Agreement or otherwise to be determined by the General Partner.
Section 7.2 Certificate of Limited Partnership. The General Partner may file amendments to and restatements of the Certificate and do all the things to maintain the Partnership as a limited partnership (or a partnership in which the limited partners have limited liability) under the laws of the State of Maryland and each other state, the District of Columbia or any other jurisdiction, in which the Partnership may elect to do business or own property. Subject to the terms of Section 8.5(a) hereof, the General Partner shall not be required, before or after filing, to deliver or mail a copy of the Certificate or any amendment thereto to any Limited Partner. The General Partner shall use all reasonable efforts to cause to be filed such other certificates or documents for the formation, continuation, qualification and operation of a limited partnership (or a partnership in which the limited partners have limited liability to the extent provided by applicable law) in the State of Maryland and any other state, or the District of Columbia or other jurisdiction, in which the Partnership may elect to do business or own property.
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Section 7.3 Restrictions on General Partner’s Authority.
(a) The General Partner may not take any action in contravention of an express prohibition or limitation of this Agreement without the Consent of the Limited Partners, and may not, without limitation:
(i) take any action that would make it impossible to carry on the ordinary business of the Partnership, except as otherwise provided in this Agreement;
(ii) perform any act that would subject a Limited Partner to liability as a general partner in any jurisdiction or any other liability except as provided herein or under the Act; or
(iii) subject to the terms set forth in any Unit Designation, enter into any contract, mortgage, loan or other agreement that expressly prohibits or restricts (A) the General Partner or the Partnership from performing its specific obligations under Section 15.1 hereof in full or (B) a Limited Partner from exercising its rights under Section 15.1 hereof to effect a Redemption in full, except, in either case, (x) with the Consent of each Limited Partner affected by the prohibition or restriction or (y) in connection with or as a result of a Termination Transaction that, in accordance with Section 11.2(b)(i) and/or (ii), does not require the Consent of the Limited Partners; it being understood that entry into any contract, mortgage, loan or other agreement that prohibits a Redemption for the Cash Amount shall not be deemed to violate this provision or to require the Consent of the Limited Partners or any Limited Partner affected thereby.
(b) Except as provided in Section 7.3(c) hereof, the General Partner shall not, without the prior Consent of the Partners, amend, modify or terminate this Agreement; provided that with respect to any Unit Designation, such Unit Designation may only be amended in the manner set forth therein and the terms of this Section 7.3(b) shall not apply.
(c) Notwithstanding Section 7.3(b) and 14.2 hereof but subject to the rights of any Holder of any Partnership Interest set forth in a Unit Designation and subject to the rights of any Holder of any Partnership Interest as set forth in Section 8.6, the General Partner shall have the power, without the Consent of the Partners or the consent or approval of any Limited Partner or any other Person, to amend this Agreement as may be required to facilitate or implement any of the following purposes:
(i) to add to the obligations of the General Partner or surrender any right or power granted to the General Partner or any Affiliate of the General Partner for the benefit of the Limited Partners;
(ii) to reflect the admission, substitution or withdrawal of Partners, the Transfer of any Partnership Interest, the termination of the Partnership in accordance with this Agreement, or the adjustment of outstanding LTIP Units as contemplated by Section 16.3, and to update the Register in connection with such admission, substitution, withdrawal, Transfer or adjustment;
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(iii) to reflect a change that is of an inconsequential nature or does not adversely affect the Limited Partners in any material respect, or to cure any ambiguity, correct or supplement any provision in this Agreement not inconsistent with law or with other provisions, or make other changes with respect to matters arising under this Agreement that will not be inconsistent with law or with the provisions of this Agreement;
(iv) to set forth or amend the designations, preferences, conversion and other rights, voting powers, restrictions, limitations as to distributions, qualifications and terms and conditions of redemption of the Holders of any additional Partnership Interests issued pursuant to Article 4 (including any changes contemplated by Section 5.5 above);
(v) to satisfy any requirements, conditions or guidelines contained in any order, directive, opinion, ruling or regulation of a Federal or state court or agency or contained in Federal or state law or the listing standards of any securities exchange upon which the General Partner’s securities are then listed or admitted for trading;
(vi) (A) to reflect such changes as are reasonably necessary or appropriate for the General Partner to maintain its status as a REIT or to satisfy the REIT Requirements, or (B) to reflect the Transfer of all or any part of a Partnership Interest among the General Partner and any Disregarded Entity with respect to the General Partner;
(vii) to modify either or both of the manner in which items of Net Income or Net Loss are allocated pursuant to Article 6 or the manner in which Capital Accounts are adjusted, computed, or maintained (but in each case only to the extent otherwise provided in this Agreement and as may be permitted under applicable law);
(viii) to reflect the issuance of additional Partnership Interests in accordance with Section 4.2;
(ix) as contemplated by the last sentence of Section 4.4;
(x) to reflect any other modification to this Agreement as is reasonably necessary for the business or operations of the Partnership or the General Partner and which does not violate Section 7.3(d); and
(xi) to effect or facilitate a Termination Transaction that, in accordance with Section 11.2(b)(i) and/or (ii), does not require the Consent of the Limited Partners and, if the Partnership is the Surviving Partnership in any Termination Transaction, to modify Section 15.1 or any related definitions to provide that the holders of interests in such Surviving Partnership have rights that are consistent with Section 11.2(b)(ii).
(d) Notwithstanding Sections 7.3(b), 7.3(c) (other than as set forth below in this Section 7.3(d), or, with respect to a particular class or series of Partnership Units, except as otherwise set forth in the Unit Designation applicable to such class or series of Partnership Units) and 14.2 hereof, this Agreement shall not be amended, and no action may be taken by the General Partner, without the Consent of each Partner adversely affected thereby, if such amendment or action would (i) convert a Limited Partner Interest in the Partnership into a General Partner Interest (except as a result of the General Partner acquiring such Partnership Interest), (ii) adversely modify
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in any material respect the limited liability of a Limited Partner, (iii) alter the rights of any Partner to receive the distributions to which such Partner is entitled pursuant to Article 5 or Section 13.2(a)(iv) hereof, or alter the allocations specified in Article 6 hereof (except, in any case, as permitted pursuant to Sections 4.2, 5.5, 7.3(c) (including clause (xi) thereof) and Article 6 hereof), (iv) alter or modify the Redemption rights, Cash Amount or REIT Shares Amount as set forth in Section 15.1 hereof (except, in any case, as permitted pursuant to clause (xi) of Section 7.3(c) hereof), (v) alter or modify Section 11.2 hereof (except as permitted pursuant to clause (xi) of Section 7.3(c) hereof), (vi) subject to Section 7.8(i) remove the powers and restrictions related to REIT Requirements or permitting the General Partner to avoid paying tax under Code Sections 857 or 4981 contained in Section 7.1 and Section 7.3, or (vii) amend this Section 7.3(d), or, in each case for all provisions referenced in this Section 7.3(d), amend or modify any related definitions or Exhibits (except as permitted pursuant to clause (viii) of Section 7.3(c) hereof). Further, no amendment may alter the restrictions on the General Partner’s authority set forth elsewhere in this Section 7.3 without the Consent specified therein. Any such amendment or action consented to by any Partner shall be effective as to that Partner, notwithstanding the absence of such consent by any other Partner.
Section 7.4 Reimbursement of the General Partner.
(a) The General Partner shall not be compensated for its services as General Partner of the Partnership except as provided in this Agreement (including the provisions of Articles 5 and 6 hereof and the provisions of any applicable Unit Designation, in each case regarding distributions, payments and allocations to which the General Partner may be entitled in its capacity as the General Partner).
(b) Subject to Section 7.4(d) and Section 15.12 hereof, the Partnership shall be responsible for and shall pay all expenses relating to the Partnership’s and the General Partner’s organization and the ownership of each of their assets and operations. The General Partner is hereby authorized to pay compensation for accounting, administrative, legal, technical, management and other services rendered to the Partnership. The Partnership shall be liable for, and shall reimburse the General Partner, on a monthly basis, or such other basis as the General Partner may determine in its sole and absolute discretion, for all sums expended in connection with the Partnership’s business, including, without limitation, (i) expenses relating to the ownership of interests in and management and operation of, or for the benefit of, the Partnership, (ii) compensation of officers and employees, including, without limitation, payments under future compensation plans, of the General Partner, or the Partnership that may provide for stock units, or phantom stock, pursuant to which employees of the General Partner, or the Partnership will receive payments based upon dividends on or the value of REIT Shares, (iii) director fees and expenses of the General Partner or its Affiliates, (iv) any expenses (other than the purchase price) incurred by the General Partner in connection with the redemption or other repurchase of its Capital Shares, (v) all costs and expenses of the General Partner in connection with the preparation of reports and other distributions to its stockholders and any regulatory or governmental authorities or agencies and, as applicable, all costs and expenses of the General Partner as a reporting company (including, without limitation, costs of filings with the SEC), (vi) all costs and expenses of the General Partner in connection with its operation as a REIT, (vii) all costs and expenses of the General Partner in connection with the offering, sale, syndication, private placement or public offering of stock, bonds, securities or other interests and financing or refinancing of any type related to the
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Partnership or its assets or activities and (viii) all costs and expenses, if any, of the General Partner in connection with the entry into any reimbursement or indemnification agreement by the General Partner or its Subsidiaries; provided, however, that the amount of any reimbursement to the General Partner shall be reduced by any interest earned by the General Partner with respect to bank accounts or other instruments or accounts held by it on behalf of the Partnership as permitted pursuant to Section 7.5 hereof. The Partners acknowledge that all such expenses of the General Partner are deemed to be for the benefit of the Partnership. Such reimbursements shall be in addition to any reimbursement of the General Partner as a result of indemnification pursuant to Section 7.7 hereof. The Partnership and the General Partner will also be authorized to cause any expenses that would otherwise be paid or borne by the Partnership to instead be paid or borne by one or more of the Partnership’s Subsidiaries, including Lineage Holdings.
(c) If the General Partner shall elect to purchase from its stockholders Capital Shares for the purpose of delivering such Capital Shares to satisfy an obligation under any dividend reinvestment program adopted by the General Partner, any employee stock purchase plan adopted by the General Partner or any similar obligation or arrangement undertaken by the General Partner in the future, in lieu of the treatment specified in Section 4.7(b), the purchase price paid by the General Partner for such Capital Shares shall be considered expenses of the Partnership and shall be advanced to the General Partner or reimbursed to the General Partner, subject to the condition that: (i) if such REIT Shares subsequently are sold by the General Partner, the General Partner shall pay or cause to be paid to the Partnership any proceeds received by the General Partner for such REIT Shares (which sales proceeds shall include the amount of dividends reinvested under any dividend reinvestment or similar program; provided, that a transfer of REIT Shares for Partnership Units pursuant to Section 15.1 would not be considered a sale for such purposes); and (ii) if such REIT Shares are not retransferred by the General Partner within thirty (30) days after the purchase thereof, or the General Partner otherwise determines not to retransfer such REIT Shares, the General Partner shall cause the Partnership to redeem a number of Partnership Units determined in accordance with Section 4.7(b), as adjusted, (x) pursuant to Section 7.5 (in the event the General Partner acquires material assets, other than on behalf of the Partnership) and (y) for stock dividends and distributions, stock splits and subdivisions, reverse stock splits and combinations, distributions of rights, warrants or options, and distributions of evidences of indebtedness or assets relating to assets not received by the General Partner pursuant to a pro rata distribution by the Partnership (in which case such advancement or reimbursement of expenses shall be treated as having been made as a distribution in redemption of such number of Partnership Units held by the General Partner).
(d) To the extent practicable, Partnership expenses shall be billed directly to and paid by the Partnership or one or more of its Subsidiaries, including Lineage Holdings, and, subject to Section 15.12 hereof, if and to the extent any reimbursements to the General Partner or any of its Affiliates by the Partnership or any of its Subsidiaries pursuant to this Section 7.4 constitute gross income to such Person (as opposed to the repayment of advances made by such Person on behalf of the Partnership), such amounts shall be treated as “guaranteed payments” within the meaning of Code Section 707(c) and shall not be treated as distributions for purposes of computing the Partners’ Capital Accounts.
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Section 7.5 Outside Activities of the General Partner. The General Partner shall not directly or indirectly enter into or conduct any business, other than in connection with, (a) the ownership, acquisition and disposition of Partnership Interests, (b) the management of the business and affairs of the Partnership, (c) the operation of the General Partner as a reporting company with a class (or classes) of securities registered under the Exchange Act, (d) its operations as a REIT, (e) the offering, sale, syndication, private placement or public offering of stock, bonds, securities or other interests, (f) financing or refinancing of any type related to the Partnership or its assets or activities, and (g) such activities as are incidental thereto; provided, however, that, except as otherwise provided herein, any funds raised by the General Partner pursuant to the preceding clauses (e) and (f) shall be made available to the Partnership, whether as Capital Contributions, loans or otherwise, as appropriate, and, provided, further, that the General Partner may, in its sole and absolute discretion, from time to time hold or acquire assets in its own name or otherwise other than through the Partnership so long as the General Partner takes commercially reasonable measures to ensure that the economic benefits and burdens of such Property are otherwise vested in the Partnership, through assignment, mortgage loan or otherwise or, if it is not commercially reasonable to vest such economic interests in the Partnership, the Partners shall negotiate in good faith to amend this Agreement, including, without limitation, the definition of “Adjustment Factor,” to reflect such activities and the direct ownership of assets by the General Partner. Nothing contained herein shall be deemed to prohibit the General Partner from executing guarantees of Partnership debt. The General Partner and all Disregarded Entities with respect to the General Partner, taken as a group, shall not own any assets or take title to assets (other than temporarily in connection with an acquisition prior to contributing such assets to the Partnership) other than (i) interests in Disregarded Entities with respect to the General Partner, (ii) Partnership Interests as the General Partner, (iii) a minority interest in any Subsidiary of the Partnership that the General Partner holds to maintain such Subsidiary’s status as a partnership for Federal income tax purposes or otherwise, and (iv) such cash and cash equivalents, bank accounts or similar instruments or accounts as such group deems reasonably necessary, taking into account Section 7.1(d) hereof and the requirements necessary for the General Partner to qualify as a REIT and for the General Partner to carry out its responsibilities contemplated under this Agreement and the Charter. Any Partnership Interests acquired by the General Partner, whether pursuant to the exercise by a Limited Partner of its right to Redemption, or otherwise, shall be automatically converted into a General Partner Interest comprised of an identical number of Partnership Units with the same terms as the class or series so acquired. Any Affiliates of the General Partner may acquire Limited Partner Interests and shall, except as expressly provided in this Agreement, be entitled to exercise all rights of a Limited Partner relating to such Limited Partner Interests.
Section 7.6 Transactions with Affiliates.
(a) The Partnership may lend or contribute funds to, and borrow funds from, Persons in which the Partnership has an equity investment, and such Persons may borrow funds from, and lend or contribute funds to, the Partnership, on terms and conditions established in the sole and absolute discretion of the General Partner. The foregoing authority shall not create any right or benefit in favor of any Person.
(b) Except as provided in Section 7.5 hereof, the Partnership may transfer assets to joint ventures, limited liability companies, partnerships, corporations, business trusts or other business entities in which it is or thereby becomes a participant upon such terms and subject to such conditions consistent with this Agreement and applicable law.
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(c) The General Partner and its Affiliates may sell, transfer or convey any property to, or purchase any property from, the Partnership, directly or indirectly, on terms and conditions established by the General Partner in its sole and absolute discretion.
(d) The General Partner, in its sole and absolute discretion and without the approval of the Partners or any of them or any other Persons, may propose and adopt (on behalf of the Partnership or its Subsidiaries) employee benefit plans (including without limitation plans that contemplate the issuance of LTIP Units) funded by the Partnership or its Subsidiaries for the benefit of employees of the General Partner, the Partnership, Subsidiaries of the Partnership or any Affiliate of any of them in respect of services performed, directly or indirectly, for the benefit of the General Partner, the Partnership or any of the Partnership’s Subsidiaries.
(e) Notwithstanding anything to the contrary set forth in this Agreement, any transaction entered into by and among the General Partner, the Partnership and their respective Subsidiaries, as appliable, in connection with the initial public offering of the REIT Shares and related formation transactions is hereby approved by all Partners.
Section 7.7 Indemnification.
(a) To the fullest extent permitted by applicable law, the Partnership shall indemnify each Indemnitee from and against any and all losses, claims, damages, liabilities, joint or several, expenses (including, without limitation, attorneys’ fees and other legal fees and expenses), judgments, fines, settlements and other amounts arising from any and all claims, demands, actions, suits or proceedings, civil, criminal, administrative or investigative, that relate to the operations of the Partnership (“Actions”) as set forth in this Agreement in which such Indemnitee may be involved, or is threatened to be involved, as a party or otherwise; provided, however, that the Partnership shall not indemnify an Indemnitee (i) if the act or omission of the Indemnitee was material to the matter giving rise to the Action and either was committed in bad faith or was the result of active and deliberate dishonesty; (ii) in the case of any criminal proceeding, if the Indemnitee had reasonable cause to believe that the act or omission was unlawful; or (iii) for any transaction for which such Indemnitee actually received an improper personal benefit in violation or breach of any provision of this Agreement; and provided, further, that no payments pursuant to this Agreement shall be made by the Partnership to indemnify or advance funds to any Indemnitee (A) with respect to any Action initiated or brought voluntarily by such Indemnitee (and not by way of defense) unless (I) approved or authorized by the General Partner or (II) incurred to establish or enforce such Indemnitee’s right to indemnification under this Agreement, and (B) in connection with one or more Actions or claims brought by the Partnership or involving such Indemnitee if such Indemnitee is found liable to the Partnership on any portion of any claim in any such Action.
(b) Without limitation, the foregoing indemnity shall extend to any liability of any Indemnitee, pursuant to a loan guaranty or otherwise, for any indebtedness of the Partnership or any Subsidiary of the Partnership (including, without limitation, any indebtedness which the Partnership or any Subsidiary of the Partnership has assumed or taken subject to), and the General Partner is hereby authorized and empowered, on behalf of the Partnership, to enter into one or more indemnity agreements consistent with the provisions of this Section 7.7 in favor of any Indemnitee having or potentially having liability for any such indebtedness. It is the intention of this Section 7.7(b) that the Partnership indemnify each Indemnitee to the fullest extent permitted
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by law and this Agreement. The termination of any proceeding by judgment, order or settlement does not create a presumption that the Indemnitee did not meet the requisite standard of conduct set forth in this Section 7.7(b). The termination of any proceeding by conviction of an Indemnitee or upon a plea of nolo contendere or its equivalent by an Indemnitee, or an entry of an order of probation against an Indemnitee prior to judgment, does not create a presumption that such Indemnitee acted in a manner contrary to that specified in this Section 7.7(b) with respect to the subject matter of such proceeding. Any indemnification pursuant to this Section 7.7 shall be made only out of the assets of the Partnership, and neither the General Partner nor any other Holder shall have any obligation to contribute to the capital of the Partnership or otherwise provide funds to enable the Partnership to fund its obligations under this Section 7.7.
(c) To the fullest extent permitted by law, expenses incurred by an Indemnitee who is a party to a proceeding or otherwise subject to or the focus of or is involved in any Action shall be paid or reimbursed by the Partnership as incurred by the Indemnitee in advance of the final disposition of the Action upon receipt by the Partnership of (i) a written affirmation by the Indemnitee of the Indemnitee’s good faith belief that the standard of conduct necessary for indemnification by the Partnership as authorized in Section 7.7(a) has been met, and (ii) a written undertaking by or on behalf of the Indemnitee to repay the amount if it shall ultimately be determined that the standard of conduct has not been met.
(d) The indemnification provided by this Section 7.7 shall be in addition to any other rights to which an Indemnitee or any other Person may be entitled under any agreement, pursuant to any vote of the Partners, as a matter of law or otherwise, and shall continue as to an Indemnitee who has ceased to serve in such capacity and shall inure to the benefit of the heirs, successors, assigns and administrators of the Indemnitee unless otherwise provided in a written agreement with such Indemnitee or in the writing pursuant to which such Indemnitee is indemnified.
(e) The Partnership may, but shall not be obligated to, purchase and maintain insurance, on behalf of any of the Indemnitees and such other Persons as the General Partner shall determine, against any liability that may be asserted against or expenses that may be incurred by such Person in connection with the Partnership’s activities, regardless of whether the Partnership would have the power to indemnify such Person against such liability under the provisions of this Agreement.
(f) Any liabilities which an Indemnitee incurs as a result of acting on behalf of the Partnership or the General Partner (whether as a fiduciary or otherwise) in connection with the operation, administration or maintenance of an employee benefit plan or any related trust or funding mechanism (whether such liabilities are in the form of excise taxes assessed by the IRS, penalties assessed by the U.S. Department of Labor, restitutions to such a plan or trust or other funding mechanism or to a participant or beneficiary of such plan, trust or other funding mechanism, or otherwise) shall be treated as liabilities or judgments or fines under this Section 7.7, unless such liabilities arise as a result of (i) an act or omission of such Indemnitee that was material to the matter giving rise to the Action and either was committed in bad faith or was the result of active and deliberate dishonesty; (ii) in the case of any criminal proceeding, an act or omission that such Indemnitee had reasonable cause to believe was unlawful, or (iii) any transaction in which such Indemnitee actually received an improper personal benefit in violation or breach of any provision of this Agreement.
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(g) In no event may an Indemnitee subject any of the Holders to personal liability by reason of the indemnification provisions set forth in this Agreement.
(h) An Indemnitee shall not be denied indemnification in whole or in part under this Section 7.7 because the Indemnitee had an interest in the transaction with respect to which the indemnification applies if the transaction was otherwise permitted by the terms of this Agreement.
(i) The provisions of this Section 7.7 are for the benefit of the Indemnitees, their heirs, successors, assigns and administrators and shall not be deemed to create any rights for the benefit of any other Persons. Any amendment, modification or repeal of this Section 7.7 or any provision hereof shall be prospective only and shall not in any way affect the limitations on the Partnership’s liability to any Indemnitee under this Section 7.7 as in effect immediately prior to such amendment, modification or repeal with respect to claims arising from or relating to matters occurring, in whole or in part, prior to such amendment, modification or repeal, regardless of when such claims may arise or be asserted.
(j) Any obligation or liability whatsoever of the General Partner which may arise at any time under this Agreement or any other instrument, transaction, or undertaking contemplated hereby shall be satisfied, if at all, out of the assets of the General Partner or the Partnership only. No such obligation or liability shall be personally binding upon, nor shall resort for the enforcement thereof be had to, any of the General Partner’s directors, stockholders, officers, employees, or agents, regardless of whether such obligation or liability is in the nature of contract, tort or otherwise.
(k) It is the intent of the parties that any amounts paid by the Partnership to the General Partner pursuant to this Section 7.7 shall be treated as “guaranteed payments” within the meaning of Code Section 707(c) and shall not be treated as distributions for purposes of computing the Partners’ Capital Accounts.
(l) Notwithstanding anything to the contrary in this Section 7.7: (i) the Partnership shall have the power to purchase and maintain insurance on behalf of any Indemnitee and any such other Person as the General Partner shall determine in accordance with Section 7.7(e) and accordingly, obligations of the Partnership or its Affiliates shall in each case be secondary to the obligations of any of their insurers; and (ii) nothing in this Section 7.7 shall limit any right of any Person pursuant to the Expense Reimbursement and Indemnification Agreement even if inconsistent with this Section 7.7 in any respect.
Section 7.8 Liability of the General Partner.
(a) To the maximum extent permitted under the Act, the only duties that the General Partner owes to the Partnership, any Partner or any other Person (including any creditor of any Partner or assignee of any Partnership Interest), fiduciary or otherwise, are to perform its contractual obligations as expressly set forth in this Agreement consistently with the obligation of good faith and fair dealing. The General Partner, in its capacity as such, shall have no other duty, fiduciary or otherwise, to the Partnership, any Partner or any other Person (including any creditor of any Partner or any assignee of Partnership Interest). The provisions of this Agreement other than this Section 7.8 shall create contractual obligations of the General Partner only, and no such provision shall be interpreted to expand or modify the fiduciary duties of the General Partner under the Act.
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(b) The Limited Partners agree that: (i) the General Partner is acting for the benefit of the Partnership, the Limited Partners and the General Partner’s stockholders collectively; (ii) notwithstanding any duty otherwise existing at law or in equity, in the event of a conflict between the interests of the Partnership or any Partner, on the one hand, and the separate interests of the General Partner or its stockholders, on the other hand, the General Partner may give priority to the separate interests of the General Partner or the stockholders of the General Partner (including, without limitation, with respect to tax consequences to Limited Partners, Assignees or the General Partner’s stockholders), and, in the event of such a conflict, and any action or failure to act on the part of the General Partner (or the General Partner’s directors, officers or agents) that gives priority to the separate interests of the General Partner or its stockholders that does not result in a violation of the contract rights of the Limited Partners under this Agreement does not violate the duty of loyalty or any other duty owed by the General Partner to the Partnership and/or the Partners or violate the obligation of good faith and fair dealing; and (iii) the General Partner shall not be liable to the Partnership or to any Partner for monetary damages for losses sustained, liabilities incurred or benefits not derived by the Partnership or any Limited Partner in connection with such decisions, except for liability for the General Partner’s fraud, willful misconduct or gross negligence.
(c) Subject to its obligations and duties as General Partner set forth in this Agreement and applicable law, the General Partner may exercise any of the powers granted to it by this Agreement and perform any of the duties imposed upon it hereunder either directly or by or through its officers, employees, representatives or agents. The General Partner shall not be responsible to the Partnership or any Partner for any misconduct or negligence on the part of any such officer, employee, representative or agent appointed by it in good faith.
(d) Any obligation or liability whatsoever of the General Partner which may arise at any time under this Agreement or any other instrument, transaction, or undertaking contemplated hereby shall be satisfied, if at all, out of the assets of the General Partner or the Partnership only. No such obligation or liability shall be personally binding upon, nor shall resort for the enforcement thereof be had to, any of the General Partner’s directors, stockholders, officers, employees, representatives or agents, regardless of whether such obligation or liability is in the nature of contract, tort or otherwise. Notwithstanding anything to the contrary set forth in this Agreement, none of the directors or officers of the General Partner shall be liable or accountable in damages or otherwise to the Partnership, any Partners, or any Assignees for losses sustained, liabilities incurred or benefits not derived as a result of errors in judgment or mistakes of fact or law or of any act or omission or by reason of their service as such. This Agreement is executed by the officers of the General Partner solely as officers of the same and not in their own individual capacities.
(e) Notwithstanding anything herein to the contrary, except for liability for fraud, willful misconduct or gross negligence on the part of the General Partner, or pursuant to any express indemnities given to the Partnership by the General Partner pursuant to any other written instrument, the General Partner shall not have any personal liability whatsoever, to the Partnership or to the other Partners, for any action or omission taken in its capacity as the General Partner or
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for the debts or liabilities of the Partnership or the Partnership’s obligations hereunder, except pursuant to Section 15.1. Without limitation of the foregoing, and except for liability for fraud, willful misconduct or gross negligence, or pursuant to Section 15.1 or any such express indemnity, no property or assets of the General Partner, other than its interest in the Partnership, shall be subject to levy, execution or other enforcement procedures for the satisfaction of any judgment (or other judicial process) in favor of any other Partner(s) and arising out of, or in connection with, this Agreement.
(f) To the extent that, under applicable law, the General Partner has duties (including fiduciary duties) and liabilities relating thereto to the Partnership or the Limited Partners, the General Partner shall not be liable to the Partnership or to any other Partner for its good faith reliance on the provisions of this Agreement. The provisions of this Agreement, to the extent that they restrict or modify the duties and liabilities of the General Partner under the Act or otherwise existing under applicable law, are agreed by the Partners to operate as an express limitation of any such duties and liabilities and to replace such other duties and liabilities of such General Partner and further acknowledged and agreed that such provisions are fundamental elements to the agreement of the Limited Partners and the General Partner to enter into this Agreement and without such provisions the Limited Partners and the General Partner would not have entered into this Agreement.
(g) In exercising its authority under this Agreement, the General Partner may, but shall be under no obligation to, take into account the tax consequences to any Partner of any action taken (or not taken) by it, and any action or failure to act on the part of the General Partner that does or does not take into account any such tax consequences that does not result in a violation of the contract rights of the Limited Partners under this Agreement does not violate the duty of loyalty or any other duty owed by the General Partner to the Partnership and/or the Partners or violate the obligation of good faith and fair dealing. The General Partner and the Partnership shall not have any liability to any Partner under any circumstances as a result of any income tax liability incurred by such Partner as a result of an action (or inaction) by the General Partner pursuant to its authority under this Agreement.
(h) Whenever in this Agreement the General Partner (whether in its capacity as General Partner or in any other capacity permitted under this Agreement, including, without limitation, as Liquidator) is permitted or required to make a decision (i) in its “sole and absolute discretion,” “sole discretion” or “discretion” or under a grant of similar authority or latitude, the General Partner shall be entitled to consider only such interests and factors as it desires, including its own interests, and shall have no duty or obligation to give any consideration to any interest or factors affecting the Partnership or the Partners or any of them, and any such decision or determination made by the General Partner that does not consider such interests or factors affecting the Partnership or the Partners, or any of them, and that does not result in a violation of the contract rights of the Limited Partners under this Agreement does not violate the duty of loyalty or any other duty owed by the General Partner to the Partnership and/or the Partners, or (ii) in its “good faith” or under another expressed standard, the General Partner shall act under such express standard and shall not be subject to any other or different standards imposed by this Agreement or any other agreement contemplated herein or by relevant provisions of law or in equity or otherwise. If any question should arise with respect to the operation of the Partnership, which is not otherwise specifically provided for in this Agreement or the Act, or with respect to the interpretation of this
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Agreement, the General Partner is hereby authorized to make a final determination with respect to any such question and to interpret this Agreement in such a manner as it shall deem, in its sole discretion, to be fair and equitable, and its determination and interpretations so made shall be final and binding on all parties. The General Partner’s “sole and absolute discretion,” “sole discretion” and “discretion” under this Agreement shall be exercised consistently with good faith reliance on the provisions of this Agreement and the obligation of good faith and fair dealing under the Act (as modified by the Agreement).
(i) The General Partner may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, bond, debenture or other paper or document believed by it in good faith to be genuine and to have been signed or presented by the proper party or parties. In performing its duties under this Agreement and the Act, the General Partner shall be entitled to rely on the provisions of this Agreement and on any information, opinion, report or statement, including any financial statement or other financial data or the records or books of account of the Partnership or any subsidiary of the Partnership, prepared or presented by any officer, employee or agent of the General Partner, any agent of the Partnership or any such subsidiary, or by any lawyer, certified public accountant, appraiser or other person engaged by the General Partner, the Partnership or any such subsidiary as to any matter within such person’s professional or expert competence, and any act taken or omitted to be taken in reliance upon any such information, opinion, report or statement as to matters that the General Partner reasonably believes to be within such Person’s professional or expert competence shall be conclusively presumed to have been done or omitted in good faith and in accordance with such information, opinion, report or statement.
(j) No director, officer or agent of the General Partner shall have any duties directly to the Partnership or any Partner. No director, officer or agent of the General Partner shall be directly liable to the Partnership or any Partner for money damages by reason of their service as such.
(k) Notwithstanding any other provision of this Agreement or the Act, any action of the General Partner on behalf of the Partnership or any decision of the General Partner to refrain from acting on behalf of the Partnership, undertaken in the good faith belief that such action or omission is necessary or advisable in order (i) to protect the ability of the General Partner to continue to qualify as a REIT, (ii) for the General Partner otherwise to satisfy the REIT Requirements, (iii) for the General Partner to avoid incurring any taxes under Code Section 857 or Code Section 4981, or (iv) for any General Partner Affiliate to continue to qualify as a “qualified REIT subsidiary” (within the meaning of Code Section 856(i)(2)) or “taxable REIT subsidiary” (within the meaning of Code Section 856(l)), is expressly authorized under this Agreement and is deemed approved by all of the Limited Partners and does not violate the duty of loyalty or any other duty or obligation, fiduciary or otherwise, of the General Partner to the Partnership or any other Partner.
(l) Any amendment, modification or repeal of this Section 7.8 or any provision hereof shall be prospective only and shall not in any way affect the limitations on the General Partner’s and its officers’ and directors’ liability to the Partnership and the Limited Partners under this Section 7.8 as in effect immediately prior to such amendment, modification or repeal with respect to claims arising from or relating to matters occurring, in whole or in part, prior to such amendment, modification or repeal, regardless of when such claims may arise or be asserted.
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Section 7.9 Title to Partnership Assets. Title to Partnership assets, whether real, personal or mixed and whether tangible or intangible, shall be deemed to be owned by the Partnership as an entity, and no Partner, individually or collectively with other Partners or Persons, shall have any ownership interest in such Partnership assets or any portion thereof. Title to any or all of the Partnership assets may be held in the name of the Partnership, the General Partner or one or more nominees, as the General Partner may determine, including Affiliates of the General Partner. The General Partner hereby declares and warrants that any Partnership assets for which legal title is held in the name of the General Partner or any nominee or Affiliate of the General Partner shall be held by the General Partner or such nominee or Affiliate for the use and benefit of the Partnership in accordance with the provisions of this Agreement. All Partnership assets shall be recorded as the property of the Partnership in its books and records, irrespective of the name in which legal title to such Partnership assets is held.
Section 7.10 Reliance by Third Parties. Notwithstanding anything to the contrary in this Agreement, any Person dealing with the Partnership shall be entitled to assume that the General Partner has full power and authority, without the consent or approval of any other Partner, or Person, to encumber, sell or otherwise use in any manner any and all assets of the Partnership and to enter into any contracts on behalf of the Partnership, and take any and all actions on behalf of the Partnership, and such Person shall be entitled to deal with the General Partner as if it were the Partnership’s sole party in interest, both legally and beneficially. Each Limited Partner hereby waives any and all defenses or other remedies that may be available against such Person to contest, negate or disaffirm any action of the General Partner in connection with any such dealing. In no event shall any Person dealing with the General Partner or its representatives be obligated to ascertain that the terms of this Agreement have been complied with or to inquire into the necessity or expediency of any act or action of the General Partner or its representatives. Each and every certificate, document or other instrument executed on behalf of the Partnership by the General Partner or its representatives shall be conclusive evidence in favor of any and every Person relying thereon or claiming thereunder that (a) at the time of the execution and delivery of such certificate, document or instrument, this Agreement was in full force and effect, (b) the Person executing and delivering such certificate, document or instrument was duly authorized and empowered to do so for and on behalf of the Partnership and (c) such certificate, document or instrument was duly executed and delivered in accordance with the terms and provisions of this Agreement and is binding upon the Partnership.
ARTICLE 8
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
Section 8.1 Limitation of Liability. No Limited Partner shall have any liability under this Agreement except for intentional harm or gross negligence on the part of such Limited Partner or as expressly provided in this Agreement (including, without limitation, Section 10.4 hereof) or under the Act.
Section 8.2 Management of Business. Subject to the rights and powers of the General Partner hereunder, no Limited Partner or Assignee (other than the General Partner, any of its Affiliates or any officer, director, member, employee, partner, agent or trustee of the General Partner, the Partnership or any of their Affiliates, in their capacity as such) shall take part in the operations, management or control (within the meaning of the Act) of the Partnership’s business,
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transact any business in the Partnership’s name or have the power to sign documents for or otherwise bind the Partnership. The transaction of any such business by the General Partner, any of its Affiliates or any officer, director, member, employee, partner, agent, representative, or trustee of the General Partner, the Partnership or any of their Affiliates, in their capacity as such, shall not affect, impair or eliminate the limitations on the liability of the Limited Partners or Assignees under this Agreement.
Section 8.3 Outside Activities of Limited Partners. Subject to any agreements entered into pursuant to Section 7.6 hereof and any other agreements entered into by a Limited Partner or any of its Affiliates with the General Partner, the Partnership or a Subsidiary (including, without limitation, any employment agreement), any Limited Partner and any Assignee, officer, director, employee, agent, trustee, Affiliate, member or stockholder of any Limited Partner shall be entitled to and may have business interests and engage in business activities in addition to those relating to the Partnership, including business interests and activities that are in direct or indirect competition with the Partnership or that are enhanced by the activities of the Partnership. Neither the Partnership nor any Partner shall have any rights by virtue of this Agreement in any business ventures of any Limited Partner or Assignee. Subject to such agreements, none of the Limited Partners nor any other Person shall have any rights by virtue of this Agreement or the partnership relationship established hereby in any business ventures of any other Person (other than the General Partner), and such Person shall have no obligation pursuant to this Agreement, subject to Section 7.6 hereof and any other agreements entered into by a Limited Partner or its Affiliates with the General Partner, the Partnership or a Subsidiary, to offer any interest in any such business ventures to the Partnership, any Limited Partner, or any such other Person, even if such opportunity is of a character that, if presented to the Partnership, any Limited Partner or such other Person, could be taken by such Person. In deciding whether to take any actions in such capacity, the Limited Partners and their respective Affiliates shall be under no obligation to consider the separate interests of the Partnership or its subsidiaries and to the maximum extent permitted by applicable law shall have no fiduciary duties or similar obligations to the Partnership or any other Partners, or to any subsidiary of the Partnership, and shall not be liable for monetary damages for losses sustained, liabilities incurred or benefits not derived by the other Partners in connection with such acts except for liability for fraud, willful misconduct or gross negligence.
Section 8.4 Return of Capital. Except pursuant to the rights of Redemption set forth in Section 15.1 hereof or in any Unit Designation, no Limited Partner shall be entitled to the withdrawal or return of its Capital Contribution, except to the extent of distributions made pursuant to this Agreement or upon dissolution of the Partnership as provided herein. Except to the extent provided in Article 5 and Article 6 hereof or otherwise expressly provided in this Agreement or in any Unit Designation, no Limited Partner or Assignee shall have priority over any other Limited Partner or Assignee either as to the return of Capital Contributions or as to profits, losses or distributions.
Section 8.5 Rights of Limited Partners Relating to the Partnership.
(a) In addition to other rights provided by this Agreement or by the Act, and except as limited by Section 8.5(c) hereof, the General Partner shall deliver to each Limited Partner a copy of any information mailed or electronically delivered to all of the common stockholders of the General Partner as soon as practicable after such mailing.
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(b) The Partnership shall notify any Limited Partner that is a Qualifying Party, on request, of the then current Adjustment Factor and any change made to the Adjustment Factor shall be set forth in the quarterly report required by Section 9.3(b) hereof immediately following the date such change becomes effective.
(c) Notwithstanding any other provision of this Section 8.5, the General Partner may keep confidential from the Limited Partners (or any of them), for such period of time as the General Partner determines in its sole and absolute discretion to be reasonable, any information that (i) the General Partner believes to be in the nature of trade secrets or other information the disclosure of which the General Partner in good faith believes is not in the best interests of the Partnership or the General Partner or (ii) the Partnership or the General Partner is required by law or by agreement to keep confidential.
Section 8.6 Partnership Right to Call Partnership Common Units. Notwithstanding any other provision of this Agreement: (a) on and after the date on which the aggregate Percentage Interests of the Partnership Common Units held by Limited Partners are less than one percent (1%) of the outstanding Partnership Common Units, the Partnership shall have the right, but not the obligation, from time to time and at any time to redeem any and all outstanding Partnership Common Units and (b) at any time a Holder together with such Holder’s Affiliates hold in the aggregate less than fifty thousand (50,000) Partnership Common Units (as adjusted, if applicable, by the Adjustment Factor then in effect), the Partnership shall have the right in its sole discretion, but not the obligation to such Holders or Holder, from time to time and at any time to redeem all or any portion of the outstanding Partnership Common Units held by such Holders or Holder, in each case by treating any Holder thereof as a Tendering Party who has delivered a Notice of Redemption pursuant to Section 15.1 hereof for the amount of Partnership Common Units to be specified by the General Partner, by notice to such Holder that the Partnership has elected to exercise its rights under this Section 8.6. Such notice given by the General Partner to a Holder pursuant to this Section 8.6 shall be treated as if it were a Notice of Redemption delivered to the General Partner by such Holder. For purposes of this Section 8.6, (a) the General Partner may treat any Holder (whether or not otherwise a Qualifying Party) as a Qualifying Party that is a Tendering Party and (b) the provisions of Section 15.1(f)(ii) and Section 15.1(f)(iii) hereof shall not apply, but the remainder of Section 15.1 hereof shall apply, mutatis mutandis.
Section 8.7 Rights as Objecting Partner. No Limited Partner and no Holder of a Partnership Interest shall be entitled to exercise any of the rights of an objecting stockholder provided for under Title 3, Subtitle 2 of the Maryland General Corporation Law or any successor statute in connection with a merger of the Partnership.
ARTICLE 9
BOOKS, RECORDS, ACCOUNTING AND REPORTS
Section 9.1 Records and Accounting.
(a) The General Partner shall keep or cause to be kept at the principal place of business of the Partnership those records and documents, if any, required to be maintained by the Act and any other books and records deemed by the General Partner to be appropriate with respect to the Partnership’s business, including, without limitation, all books and records necessary to provide
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to the Limited Partners any information, lists and copies of documents required to be provided pursuant to Section 8.5(a), Section 9.3 or Article 13 hereof. Any records maintained by or on behalf of the Partnership in the regular course of its business may be kept on any information storage device, provided that the records so maintained are convertible into clearly legible written form within a reasonable period of time.
(b) The books of the Partnership shall be maintained, for financial and tax reporting purposes, on an accrual basis in accordance with generally accepted accounting principles, or on such other basis as the General Partner determines to be necessary or appropriate. To the extent permitted by sound accounting practices and principles, the Partnership and the General Partner may operate with integrated or consolidated accounting records, operations and principles.
Section 9.2 Partnership Year. For purposes of this Agreement, “Partnership Year” means the fiscal year of the Partnership, which shall be the same as the tax year of the Partnership. The tax year shall be the calendar year unless otherwise required by the Code.
Section 9.3 Reports.
(a) After the close of each Partnership Year, the General Partner shall use commercially reasonable efforts to cause to be mailed to each Limited Partner of record as of the close of the Partnership Year, financial statements of the Partnership, or of the General Partner if such statements are prepared solely on a consolidated basis with the General Partner, for such Partnership Year, presented in accordance with generally accepted accounting principles, such statements to be audited by a nationally recognized firm of independent public accountants selected by the General Partner.
(b) After the close of each calendar quarter (except the last calendar quarter of each year), the General Partner shall use commercially reasonable efforts to cause to be mailed to each Limited Partner of record as of the last day of the calendar quarter, a report containing unaudited financial statements of the Partnership for such calendar quarter, or of the General Partner if such statements are prepared solely on a consolidated basis with the General Partner, and such other information as may be required by applicable law or regulation or as the General Partner determines to be appropriate.
(c) The General Partner shall have satisfied its obligations under Section 9.3(a) and Section 9.3(b) by posting or making available the reports required by this Section 9.3 on the website maintained from time to time by the Partnership or the General Partner, provided that such reports are able to be printed or downloaded from such website, or by the filing with the SEC for public availability by the General Partner of any Annual Report on Form 10-K, Quarterly Report on Form 10-Q or Current Report on Form 8-K, containing the required information with respect to the Partnership or the General Partner.
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ARTICLE 10
TAX MATTERS
Section 10.1 Preparation of Tax Returns. The General Partner shall arrange for the preparation and timely filing of all returns with respect to Partnership income, gains, deductions, losses and other items required of the Partnership for Federal and state income tax purposes and shall use all reasonable efforts to furnish, within ninety (90) days of the close of each taxable year, the tax information reasonably required by Limited Partners for Federal and state income tax and any other tax reporting purposes. The Limited Partners shall promptly provide the General Partner with such information relating to the Contributed Properties as is readily available to the Limited Partners, including tax basis and other relevant information, as may be reasonably requested by the General Partner from time to time.
Section 10.2 Tax Elections. Except as otherwise provided herein, the General Partner shall, in its sole and absolute discretion, determine whether to make any available election pursuant to the Code, including, but not limited to, the election under Code Section 754. The General Partner shall have the right to seek to revoke any such election (including, without limitation, any election under Code Section 754) upon the General Partner’s determination in its sole and absolute discretion that such revocation is in the best interests of the Partners.
Section 10.3 Partnership Representative.
(a) The General Partner shall be the “partnership representative” of the Partnership under Code Section 6223 for federal income tax purposes (the “Partnership Representative”). The Partnership Representative shall receive no compensation for its services. All third-party costs and expenses incurred by the Partnership Representative in performing its duties as such (including legal and accounting fees and expenses) shall be borne by the Partnership in addition to any reimbursement pursuant to Section 7.4 hereof. Nothing herein shall be construed to restrict the Partnership from engaging an accounting firm to assist the Partnership Representative in discharging its duties hereunder. The General Partner shall appoint an individual (the “Designated Individual”) through whom the Partnership Representative will act in accordance with Regulations Section 301.6223-1 and any other applicable IRS guidance. The Designated Individual is authorized to take any action the Partnership Representative is authorized to take under this Agreement. The Limited Partners shall promptly provide the Partnership Representative with such information as is readily available to the Limited Partners as may be reasonably requested by the Partnership Representative from time to time in connection with any tax audit or judicial review proceeding.
(b) The Partnership Representative is authorized, but not required:
(i) to enter into any settlement with the IRS with respect to any administrative or judicial proceedings for the adjustment of Partnership items required to be taken into account by a Partner for income tax purposes (such administrative proceedings being referred to as a “tax audit” and such judicial proceedings being referred to as “judicial review”), and in the settlement agreement the Partnership Representative may expressly state that such agreement shall bind all Partners;
(ii) in the event that a notice of a final administrative adjustment at the Partnership level of any item required to be taken into account by a Partner for tax purposes (a “Final Adjustment”) is mailed to the Partnership Representative, to seek judicial review of such Final Adjustment, including the filing of a petition for readjustment with the United States Tax Court or the United States Claims Court, or the filing of a complaint for refund with the District Court of the United States for the district in which the Partnership’s principal place of business is located;
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(iii) to intervene in any action brought by any other Partner for judicial review of a final adjustment;
(iv) to file a request for an administrative adjustment with the IRS at any time and, if any part of such request is not allowed by the IRS, to file an appropriate pleading (petition or complaint) for judicial review with respect to such request;
(v) to enter into an agreement with the IRS to extend the period for assessing any tax that is attributable to any item required to be taken into account by a Partner for tax purposes, or an item affected by such item;
(vi) to make an election under Code Section 6226; and
(vii) to take any other action on behalf of the Partners or any of them in connection with any tax audit or judicial review proceeding to the extent permitted by applicable law or regulations.
The taking of any action and the incurring of any expense by the Partnership Representative in connection with any such proceeding, except to the extent required by law, is a matter in the sole and absolute discretion of the Partnership Representative and the provisions relating to indemnification of the General Partner set forth in Section 7.7 hereof shall be fully applicable to the Partnership Representative and the Designated Individual in their capacities as such.
Section 10.4 Withholding. Each Limited Partner hereby authorizes the Partnership to withhold from or pay on behalf of or with respect to such Limited Partner any amount of Federal, state, local or foreign taxes that the General Partner determines the Partnership is required to withhold or pay with respect to any amount distributable or allocable to such Limited Partner pursuant to this Agreement, including, without limitation, any taxes required to be withheld or paid by the Partnership pursuant to Code Section 1441, Code Section 1442, Code Section 1445, Code Section 1446, Code Section 1471, Code Section 1472, Code Section 6225 or Code Section 6232 or any PTET allocable to a Limited Partner. Any amount withheld with respect to a Limited Partner pursuant to this Section 10.4 shall be treated as paid or distributed, as applicable, to such Limited Partner for all purposes under this Agreement. Any amount paid on behalf of or with respect to a Limited Partner, in excess of any amount actually withheld from a Limited Partner’s distributions, shall constitute a loan by the Partnership to such Limited Partner, which loan shall be repaid by such Limited Partner within thirty (30) days after the affected Limited Partner receives written notice from the General Partner that such payment must be made, provided that the Limited Partner shall not be required to repay such deemed loan if either (a) the Partnership withholds such payment from a distribution that would otherwise be made to the Limited Partner or (b) the General Partner determines, in its sole and absolute discretion, that such payment may be satisfied out of the Available Cash of the Partnership that would, but for such payment, be distributed to the Limited Partner. Any amounts payable by a Limited Partner hereunder shall bear interest at the base rate on corporate loans at large United States money center commercial banks, as published from time to time in the Wall Street Journal (but not higher than the maximum lawful rate) from the date such amount is due (i.e., thirty (30) days after the Limited Partner receives written notice of such amount) until such amount is paid in full.
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Section 10.5 Organizational Expenses. The General Partner may cause the Partnership to elect to deduct expenses, if any, incurred by it in organizing the Partnership ratably over a 180-month period as provided in Section 709 of the Code.
Section 10.6 Survival. Each Limited Partner’s obligations and the Partnership’s rights under this Article 10 shall survive the dissolution, liquidation, and winding up of the Partnership and, unless otherwise agreed by the General Partner in its sole discretion, the Transfer of any Partnership Interest.
ARTICLE 11
PARTNER TRANSFERS AND WITHDRAWALS
Section 11.1 Transfer.
(a) No part of the interest of a Partner shall be subject to the claims of any creditor, to any spouse for alimony or support, or to legal process, and may not be voluntarily or involuntarily alienated or encumbered except as may be specifically provided for in this Agreement.
(b) No Partnership Interest shall be Transferred, in whole or in part, except in accordance with the terms and conditions set forth in this Article 11 and, if any additional terms and conditions are set forth in a Unit Designation applicable to such Partnership Interest, in accordance with the terms and conditions set forth in this Article 11 and such additional terms and conditions set forth in the applicable Unit Designation. Any Transfer or purported Transfer of a Partnership Interest not made in accordance with this Article 11 shall be null and void ab initio.
(c) No Transfer of any Partnership Interest may be made to a lender to the Partnership or any Person who is related (within the meaning of Section 1.752-4(b) of the Regulations) to any lender to the Partnership whose loan constitutes a Nonrecourse Liability, without the Consent of the General Partner; provided, however, that, as a condition to such Consent, the lender may be required to enter into an arrangement with the Partnership and the General Partner to redeem or exchange for the REIT Shares Amount any Partnership Units in which a security interest is held by such lender simultaneously with the time at which such lender would be deemed to be a partner in the Partnership for purposes of allocating liabilities to such lender under Section 752 of the Code (provided that, for purpose of calculating the REIT Shares Amount in this Section 11.1(c), “Tendered Units” shall mean all such Partnership Units in which a security interest is held by such lender).
Section 11.2 Transfer of General Partner’s Partnership Interest.
(a) Except as provided in this Section 11.2 or in a Unit Designation, and subject to the rights of any Holder of any Partnership Interest set forth in a Unit Designation, the General Partner shall not voluntarily withdraw from the Partnership and shall not Transfer its General Partner Interest (whether by sale, disposition, statutory merger or consolidation, liquidation or otherwise) other than solely an economic interest as a Limited Partner or Assignee without the Consent of the Limited Partners (excluding, for purposes of such consent, any outstanding LTIP Units), which
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may be given or withheld by each such Limited Partner in its sole and absolute discretion. It is a condition to any Transfer of a General Partner Interest otherwise permitted hereunder (including any Transfer permitted pursuant to Section 11.2(b) and Section 11.2(c), but excluding any Transfer of solely an economic interest as a Limited Partner or Assignee) that: (i) coincident with such Transfer, the transferee is admitted as a General Partner pursuant to Section 12.1 hereof; (ii) the transferee assumes, by operation of law or express agreement, all of the obligations of the transferor General Partner under this Agreement with respect to such Transferred Partnership Interest; and (iii) the transferee has executed such instruments as may be necessary to effectuate such admission and to confirm the agreement of such transferee to be bound by all the terms and provisions of this Agreement with respect to the Partnership Interest so acquired and the admission of such transferee as a General Partner.
(b) Certain Transactions of the General Partner. Subject to the rights of any Holder of any Partnership Interest set forth in a Unit Designation and except as necessary or appropriate to give effect to those rights, the General Partner may not (x) merge, consolidate or otherwise combine its assets with another entity, (y) sell all or substantially all of its assets not in the ordinary course of the Partnership’s business or (z) reclassify, recapitalize, repurchase or change any outstanding shares of the General Partner’s stock or other outstanding equity interests (in case of each of the foregoing clauses (x) through (z), other than in connection with a stock split, reverse stock split, stock dividend change in par value, increase in authorized shares, designation or issuance of new classes of equity securities or any event that does not require the approval of the General Partner’s stockholders) (each, a “Termination Transaction”) unless:
(i) the Termination Transaction has been approved by the Consent of the Partners and, in connection with such Termination Transaction, all of the Limited Partners will receive, or will have the right to elect to receive (and shall be provided the opportunity to make such an election if the holders of REIT Shares generally are also provided such an opportunity), for each Partnership Common Unit an amount of cash, securities and/or other property equal to the product of the Adjustment Factor and the greatest amount of cash, securities or other property paid to a holder of one REIT Share in consideration of one REIT Share pursuant to the terms of such Termination Transaction; provided, that if, in connection with such Termination Transaction, a purchase, tender or exchange offer shall have been made to and accepted by the holders of the outstanding REIT Shares, each holder of Partnership Common Units shall receive, or shall have the right to elect to receive, the greatest amount of cash, securities or other property which such holder of Partnership Common Units would have received had it exercised its right to Redemption pursuant to Article 15 hereof and received REIT Shares in exchange for its Partnership Common Units immediately prior to the expiration of such purchase, tender or exchange offer and had thereupon accepted such purchase, tender or exchange offer and then such Termination Transaction shall have been consummated; or
(ii) all of the following conditions are met: (A) substantially all of the assets directly or indirectly owned by the surviving entity are owned directly or indirectly by the Partnership or another limited partnership or limited liability company which is the survivor of a merger, consolidation or combination of assets with the Partnership (in each case, the “Surviving Partnership”); (B) Limited Partners that held Partnership Common Units immediately prior to the consummation of such Termination Transaction own a
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percentage interest of the Surviving Partnership based on the relative fair market value of the net assets of the Partnership and the other net assets of the Surviving Partnership immediately prior to the consummation of such transaction; (C) the rights, preferences and privileges in the Surviving Partnership of such Limited Partners are at least as favorable as those in effect with respect to the Partnership Common Units immediately prior to the consummation of such transaction and as those applicable to any other limited partners or non-managing members of the Surviving Partnership; and (D) the rights of such Limited Partners include at least one of the following: (I) the right to redeem their interests in the Surviving Partnership for the consideration available to such persons pursuant to Section 11.2(b)(i) or (II) the right to redeem their interests in the Surviving Partnership for cash on terms substantially equivalent to those in effect with respect to their Partnership Common Units immediately prior to the consummation of such transaction, or, if the ultimate controlling person of the Surviving Partnership has publicly traded common equity securities, such common equity securities, with an exchange ratio based on the determination of relative fair market value of such securities and the REIT Shares.
(c) Notwithstanding the other provisions of this Article 11 (other than Section 11.6(d) hereof), the General Partner may Transfer all or any of its Partnership Interests at any time to any Person that is, at the time of such Transfer an Affiliate of the General Partner, including any “qualified REIT subsidiary” (within the meaning of Code Section 856(i)(2)), without the Consent of any Limited Partners. The provisions of Section 11.2(b), 11.3, 11.4(a) and 11.5 hereof shall not apply to any Transfer permitted by this Section 11.2(c).
(d) In connection with any transaction permitted by Section 11.2(b) hereof, the relative fair market values shall be reasonably determined by the General Partner as of the time of such transaction and, to the extent applicable, shall be no less favorable to the Limited Partners than the relative values reflected in the terms of such transaction.
(e) The General Partner may not consummate (x) a Termination Transaction, (y) a merger, consolidation or other combination of the assets of the Partnership with another entity or (z) a sale of all or substantially all of the assets of the Partnership, in each case which transaction (a “Stockholder Vote Transaction”) is submitted for the approval of the holders of REIT Shares of the General Partner (a “Stockholder Vote”) unless: (i) the General Partner first provides the Limited Partners with advance notice at least equal in time to the advance notice given to holders of REIT Shares in connection with such Stockholder Vote, (ii) in connection with such advance notice, the General Partner provides the Limited Partners with written materials describing the proposed Stockholder Vote Transaction (which may consist of the proxy statement or registration statement used in connection with the Stockholder Vote) and (iii) the Stockholder Vote Transaction is approved by the holders of the Partnership Common Units (the “Partnership Vote”) at the same level of approval as required for the Stockholder Vote (for example, (x) if the approval of holders of outstanding REIT Shares entitled to cast a majority of the votes entitled to be cast on the matter is required to approve the Stockholder Vote Transaction in the Stockholder Vote, then the approval of holders of outstanding Partnership Common Units (including votes deemed to be cast by the General Partner) entitled to cast a majority of votes entitled to be cast on the matter will be required to approve the Stockholder Vote Transaction in the Partnership Vote or (y) if the approval of a majority of the votes cast by holders of outstanding REIT Shares present at a meeting of such holders at which a quorum is present is required to approve the Stockholder Vote
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Transaction in the Stockholder Vote, then the approval of a majority of the votes cast (including votes deemed to be cast by the General Partner) by holders of outstanding Partnership Common Units present at a meeting of such holders at which a quorum is present will be required to approve the Stockholder Vote Transaction in the Partnership Vote). For purposes of the Partnership Vote, (i) each Partner holding Partnership Common Units (other than the General Partner or any of its Subsidiaries) shall be entitled to cast a number of votes equal to the total number of Partnership Common Units held by such Partner as of the record date for the Stockholder Meeting, and (ii) the General Partner and its Subsidiaries shall not be entitled to vote thereon and shall instead be deemed to have cast a number of votes equal to the sum of (x) the total number of Partnership Common Units held by the General Partner as of the record date for the Stockholder Meeting divided by the Adjustment Factor then in effect plus (y) the total number of shares of unvested restricted REIT Shares with respect to which the General Partner does not hold back-to-back Partnership Common Units as of the record date for the Stockholder Meeting, in proportion to the manner in which all outstanding REIT Shares were voted in the Stockholder Vote (for example, “For,” “Against,” “Abstain” and “Not Present”). Any such Partnership Vote will be taken in accordance with Section 14.3 below (including Section 14.3(b) thereof permitting actions to be taken by written consent without a meeting), mutatis mutandis to give effect to the foregoing provisions of this Section 11.2(e), except that, solely for purposes of determining whether a quorum is present at any meeting of the Partners at which a Partnership Vote will occur, the General Partner shall be considered to be entitled to cast at such meeting all votes that the General Partner will be deemed to have cast in such Partnership Vote as provided in this Section 11.2(e).
Section 11.3 Limited Partners’ Rights to Transfer.
(a) General. Prior to the end of the Initial Holding Period and except as provided in Section 11.1(c) hereof, and subject to any additional or contrary terms and conditions applicable to any Partnership Interest pursuant to a Unit Designation, no Limited Partner shall Transfer all or any portion of its Partnership Interest to any transferee without the Consent of the General Partner; provided, however, that any Limited Partner may, at any time, without the consent or approval of the General Partner, (x) Transfer all or part of its Partnership Interest to any Family Member (including a Transfer by a Family Member that is an inter vivos or testamentary trust (whether revocable or irrevocable) to a Family Member that is a beneficiary of such trust), any Charity, any Controlled Entity or any Affiliate, or (y) pledge (a “Pledge”) all or any portion of its Partnership Interest to a lending institution as collateral or security for a bona fide loan or other extension of credit, and Transfer such pledged Partnership Interest to such lending institution in connection with the exercise of remedies under such loan or extension of credit (any Transfer or Pledge permitted by this proviso is hereinafter referred to as a “Permitted Transfer”). After such Initial Holding Period, subject to any additional or contrary terms and conditions applicable to any Partnership Interest pursuant to a Unit Designation, each Limited Partner, and each transferee of Partnership Units or Assignee pursuant to a Permitted Transfer, shall have the right to Transfer all or any portion of its Partnership Interest to any Person, without the Consent of the General Partner but subject to the provisions of Section 11.4 hereof and to satisfaction of each of the following conditions:
(i) General Partner Right of First Refusal. The transferor Limited Partner (or the Partner’s estate in the event of the Partner’s death) shall give written notice of the proposed Transfer to the General Partner, which notice shall state (A) the identity and
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address of the proposed transferee and (B) the amount and type of consideration proposed to be received for the Transferred Partnership Units. The General Partner shall have ten (10) Business Days upon which to give the transferor Limited Partner notice of its election to acquire the Partnership Units on the terms set forth in such notice. If it so elects, it shall purchase the Partnership Units on such terms within ten (10) Business Days after giving notice of such election; provided, however, that in the event that the proposed terms involve a purchase for cash, the General Partner may at its election deliver in lieu of all or any portion of such cash a note from the General Partner payable to the transferor Limited Partner at a date as soon as reasonably practicable, but in no event later than one hundred eighty (180) days after such purchase, and bearing interest at an annual rate equal to the total dividends declared with respect to one (1) REIT Share for the four (4) preceding fiscal quarters of the General Partner, divided by the Value as of the closing of such purchase; and provided, further, that such closing may be deferred to the extent necessary to effect compliance with the Hart-Scott-Rodino Act, if applicable, and any other applicable requirements of law. If it does not so elect, the transferor Limited Partner may Transfer such Partnership Units to a third party, on terms no more favorable to the transferee than the proposed terms, subject to the other conditions of this Section 11.3.
(ii) Qualified Transferee. Unless otherwise approved by the General Partner in its sole discretion in writing, any Transfer of a Partnership Interest shall be made only to a single Qualified Transferee; provided, however, that, for such purposes, all Qualified Transferees that are Affiliates, or that comprise investment accounts or funds managed by a single Qualified Transferee and its Affiliates, shall be considered together to be a single Qualified Transferee; and provided, further, that each Transfer meeting the minimum Transfer restriction of Section 11.3(a)(iv) hereof may be to a separate Qualified Transferee.
(iii) Opinion of Counsel. The transferor Limited Partner shall deliver or cause to be delivered to the General Partner an opinion of counsel reasonably satisfactory to it to the effect that the proposed Transfer may be effected without registration under the Securities Act and will not otherwise violate the registration provisions of the Securities Act and the regulations promulgated thereunder or violate any state securities laws or regulations applicable to the Partnership or the Partnership Interests Transferred; provided, however, that the General Partner may, in its sole discretion, waive this condition upon the request of the transferor Limited Partner. If, in the opinion of such counsel, such Transfer would require the filing of a registration statement under the Securities Act or would otherwise violate any Federal or state securities laws or regulations applicable to the Partnership or the Partnership Units, the General Partner may prohibit any Transfer otherwise permitted under this Section 11.3 by a Limited Partner of Partnership Interests.
(iv) Minimum Transfer Restriction. Any Transferring Partner must Transfer not less than the lesser of (A) five hundred (500) Partnership Units or (B) all of the remaining Partnership Units owned by such Transferring Partner, without, in each case, the Consent of the General Partner; provided, however, that, for purposes of determining compliance with the foregoing restriction, all Partnership Units owned by Affiliates of a Limited Partner shall be considered to be owned by such Limited Partner.
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(v) Exception for Permitted Transfers. The conditions of Sections 11.3(a)(i) through 11.3(a)(iv) hereof shall not apply in the case of a Permitted Transfer.
It is a condition to any Transfer otherwise permitted hereunder (whether or not such Transfer is effected during or after the Initial Holding Period) that the transferee assumes by operation of law or express agreement all of the obligations of the transferor Limited Partner under this Agreement with respect to such Transferred Partnership Interest, and no such Transfer (other than pursuant to a statutory merger or consolidation wherein all obligations and liabilities of the transferor Partner are assumed by a successor corporation by operation of law) shall relieve the transferor Partner of its obligations under this Agreement without the Consent of the General Partner. Notwithstanding the foregoing, any transferee of any Transferred Partnership Interest shall be subject to any restrictions on ownership and transfer of stock of the General Partner contained in the Charter that may limit or restrict such transferee’s ability to exercise its Redemption rights, including, without limitation, the Ownership Limit. Any transferee, whether or not admitted as a Substituted Limited Partner, shall take subject to the obligations of the transferor hereunder. Unless admitted as a Substituted Limited Partner, no transferee, whether by a voluntary Transfer, by operation of law or otherwise, shall have any rights hereunder, other than the rights of an Assignee as provided in Section 11.5 hereof.
(b) Incapacity. If a Limited Partner is subject to Incapacity, the executor, administrator, trustee, committee, guardian, conservator or receiver of such Limited Partner’s estate shall have all the rights of a Limited Partner, but not more rights than those enjoyed by other Limited Partners, for the purpose of settling or managing the estate, and such power as the Incapacitated Limited Partner possessed to Transfer all or any part of its interest in the Partnership. The Incapacity of a Limited Partner, in and of itself, shall not dissolve or terminate the Partnership.
(c) Adverse Tax Consequences. Notwithstanding anything to the contrary in this Agreement, the General Partner shall have the authority (but shall not be required) to take any steps it determines are necessary or appropriate in its sole and absolute discretion to prevent the Partnership from being taxable as a corporation for Federal income tax purposes. In furtherance of the foregoing, except with the Consent of the General Partner, no Transfer by a Limited Partner of its Partnership Interests (including any Redemption, any conversion of LTIP Units into Partnership Common Units, any other acquisition of Partnership Units by the General Partner or any acquisition of Partnership Units by the Partnership) may be made to or by any Person if such Transfer could (i) result in the Partnership being treated as an association taxable as a corporation; (ii) result in a termination of the Partnership under Code Section 708; (iii) be treated as effectuated through an “established securities market” or a “secondary market (or the substantial equivalent thereof)” within the meaning of Code Section 7704 and the Regulations promulgated thereunder, (iv) result in the Partnership being unable to qualify for at least one of the “safe harbors” set forth in Regulations Section 1.7704-1 (or such other guidance subsequently published by the IRS setting forth safe harbors under which interests will not be treated as “readily tradable on a secondary market (or the substantial equivalent thereof)” within the meaning of Section 7704 of the Code) (the “Safe Harbors”) or (v) based on the advice of counsel to the Partnership or the General Partner, adversely affect the ability of the General Partner to continue to qualify as a REIT or subject the General Partner to any additional taxes under Code Section 857 or Code Section 4981.
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Section 11.4 Admission of Substituted Limited Partners. Except as otherwise provided in a Unit Designation:
(a) No Limited Partner shall have the right to substitute a transferee (including any transferees pursuant to Transfers permitted by Section 11.3 hereof) as a Limited Partner in its place. A transferee of a Limited Partner Interest may be admitted as a Substituted Limited Partner only with the Consent of the General Partner. The failure or refusal by the General Partner to permit a transferee of any such interests to become a Substituted Limited Partner shall not give rise to any cause of action against the Partnership or the General Partner. Subject to the foregoing, an Assignee shall not be admitted as a Substituted Limited Partner until and unless it furnishes to the General Partner (i) evidence of acceptance, in form and substance satisfactory to the General Partner, of all the terms, conditions and applicable obligations of this Agreement, (ii) a counterpart signature page to this Agreement executed by such Assignee and (iii) such other documents and instruments as the General Partner may require in its sole discretion to effect such Assignee’s admission as a Substituted Limited Partner.
(b) Concurrently with, and as evidence of, the admission of a Substituted Limited Partner, the General Partner shall update the Register and the books and records of the Partnership to reflect the name, address and number and class and/or series of Partnership Units of such Substituted Limited Partner and to eliminate or adjust, if necessary, the name, address and number of Partnership Units of the predecessor of such Substituted Limited Partner.
(c) A transferee who has been admitted as a Substituted Limited Partner in accordance with this Article 11 shall have all the rights and powers and be subject to all the restrictions and liabilities of a Limited Partner under this Agreement.
Section 11.5 Assignees. If the General Partner does not Consent to the admission of any permitted transferee under Section 11.3 hereof as a Substituted Limited Partner, as described in Section 11.4 hereof, or in the event that any Partnership Interest is deemed to have been Transferred notwithstanding the restrictions set forth in this Article 11, such transferee shall be considered an Assignee for purposes of this Agreement. An Assignee shall be entitled to all the rights of an assignee of a limited partnership interest under the Act, including the right to receive distributions from the Partnership and the share of Net Income, Net Losses and other items of income, gain, loss, deduction and credit of the Partnership attributable to the Partnership Interest assigned to such transferee and the rights to Transfer the Partnership Interest provided in this Article 11, but shall not be deemed to be a holder of a Partnership Interest for any other purpose under this Agreement (other than as expressly provided in Section 15.1 hereof with respect to a Qualifying Party that becomes a Tendering Party), and shall not be entitled to effect a Consent or vote with respect to such Partnership Interest on any matter presented to the Partners for approval (such right to Consent or vote, to the extent provided in this Agreement or under the Act, fully remaining with the transferor Limited Partner). In the event that any such transferee desires to make a further Transfer of any such Partnership Interest, such transferee shall be subject to all the provisions of this Article 11 to the same extent and in the same manner as any Limited Partner desiring to make a Transfer of a Limited Partner Interest.
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Section 11.6 General Provisions.
(a) No Limited Partner may withdraw from the Partnership other than as a result of: (i) a permitted Transfer of all of such Limited Partner’s Partnership Interest in accordance with this Article 11 with respect to which the transferee becomes a Substituted Limited Partner; (ii) pursuant to a redemption (or acquisition by the General Partner) of all of its Partnership Interest pursuant to a Redemption under Section 15.1 hereof and/or pursuant to any Unit Designation or (iii) the acquisition by the General Partner of all of such Limited Partner’s Partnership Interest, whether or not pursuant to Section 15.1(b) hereof.
(b) Any Limited Partner who shall Transfer all of its Partnership Units in a Transfer (i) permitted pursuant to this Article 11 where such transferee was admitted as a Substituted Limited Partner, (ii) pursuant to the exercise of its rights to effect a redemption of all of its Partnership Units pursuant to a Redemption under Section 15.1 hereof and/or pursuant to any Unit Designation or (iii) to the General Partner, whether or not pursuant to Section 15.1(b) hereof, shall cease to be a Limited Partner.
(c) If any Partnership Unit is Transferred in compliance with the provisions of this Article 11, or is redeemed by the Partnership, or acquired by the General Partner pursuant to Section 15.1 hereof, on any day other than the first day of a Partnership Year, then Net Income, Net Losses, each item thereof and all other items of income, gain, loss, deduction and credit attributable to such Partnership Unit for such Partnership Year shall be allocated to the transferor Partner or the Tendering Party (as the case may be) and, in the case of a Transfer other than a Redemption, to the transferee Partner, by taking into account their varying interests during the Partnership Year in accordance with Code Section 706(d), using the “interim closing of the books” method or another permissible method selected by the General Partner in its sole and absolute discretion. The Partners hereby agree that any such selection by the General Partner is made by “agreement of the partners” within the meaning of Regulations Section 1.706-4(f). Solely for purposes of making such allocations, unless the General Partner decides in its sole and absolute discretion to use another method permitted under the Code, each of such items for the calendar month in which a Transfer occurs shall be allocated to the transferee Partner and none of such items for the calendar month in which a Transfer or a Redemption occurs shall be allocated to the transferor Partner, or the Tendering Party (as the case may be) if such Transfer occurs on or before the fifteenth (15th) day of the month, otherwise such items shall be allocated to the transferor. All distributions of Available Cash attributable to such Partnership Unit with respect to which the Partnership Record Date is before the date of such Transfer, assignment or Redemption shall be made to the transferor Partner or the Tendering Party (as the case may be) and, in the case of a Transfer other than a Redemption, all distributions of Available Cash thereafter attributable to such Partnership Unit shall be made to the transferee Partner.
(d) In addition to any other restrictions on Transfer herein contained, in no event may any Transfer of a Partnership Interest by any Partner (including any Redemption, any conversion of LTIP Units into Partnership Common Units, any acquisition of Partnership Units by the General Partner or any other acquisition of Partnership Units by the Partnership) be made: (i) to any Person who lacks the legal right, power or capacity to own a Partnership Interest; (ii) in violation of applicable law; (iii) except with the Consent of the General Partner, of any component portion of a Partnership Interest, such as the Capital Account, or rights to distributions, separate and apart
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from all other components of a Partnership Interest; (iv) in the event that such Transfer could cause either the General Partner or any General Partner Affiliate to cease to comply with the REIT Requirements or to cease to qualify as a “qualified REIT subsidiary” (within the meaning of Code Section 856(i)(2)); (v) except with the Consent of the General Partner, if such Transfer could, based on the advice of counsel to the Partnership or the General Partner, cause a termination of the Partnership for Federal or state income tax purposes (except as a result of the Redemption (or acquisition by the General Partner) of all Partnership Common Units held by all Limited Partners); (vi) if such Transfer could, based on the advice of legal counsel to the Partnership or the General Partner, cause the Partnership to cease to be classified as a partnership for federal income tax purposes (except as a result of the Redemption (or acquisition by the General Partner) of all Partnership Common Units held by all Limited Partners); (vii) if such Transfer would cause the Partnership to become, with respect to any employee benefit plan subject to Title I of ERISA, a “party-in-interest” (as defined in ERISA Section 3(14)) or a “disqualified person” (as defined in Code Section 4975(c)) or result in a “prohibited transaction” (within the meaning of ERISA or the Code); (viii) if such Transfer could, based on the advice of legal counsel to the Partnership or the General Partner, cause any portion of the assets of the Partnership to constitute assets of any employee benefit plan pursuant to Department of Labor Regulations Section 2510.3-101, as modified by Section 3(42) of ERISA; (ix) if such Transfer requires the registration of such Partnership Interest pursuant to any applicable Federal or state securities laws; (x) except with the Consent of the General Partner, if such Transfer could (A) be treated as effectuated through an “established securities market” or a “secondary market” (or the substantial equivalent thereof) within the meaning of Section 7704 of the Code and the Regulations promulgated thereunder, (B) cause the Partnership to become a “publicly traded partnership,” as such term is defined in Sections 469(k)(2) or 7704(b) of the Code, or (C) cause the Partnership to fail to qualify for at least one of the Safe Harbors; (xi) if such Transfer causes the Partnership (as opposed to the General Partner) to become a reporting company under the Exchange Act; or (xii) if such Transfer subjects the Partnership to regulation under the Investment Company Act of 1940, the Investment Advisers Act of 1940 or ERISA, each as amended. The General Partner shall, in its sole discretion, be permitted to take all action necessary to prevent the Partnership from being classified as a “publicly traded partnership” under Code Section 7704.
(e) Except as otherwise provided in a Unit Designation, Transfers pursuant to this Article 11 may only be made on the first (1st) day of a fiscal quarter of the Partnership, unless the General Partner otherwise Consents.
ARTICLE 12
ADMISSION OF PARTNERS
Section 12.1 Admission of Successor General Partner. A successor to all of the General Partner’s General Partner Interest pursuant to a Transfer permitted by Section 11.2 hereof who is proposed to be admitted as a successor General Partner shall be admitted to the Partnership as the General Partner, effective immediately upon such Transfer. Upon any such Transfer and the admission of any such transferee as a successor General Partner in accordance with this Section 12.1, the transferor General Partner shall be relieved of its obligations under this Agreement and shall cease to be a general partner of the Partnership without any separate Consent of the Limited Partners or the consent or approval of any other Partners. Any such successor General Partner shall carry on the business and affairs of the Partnership without dissolution. In
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each case, the admission shall be subject to the successor General Partner executing and delivering to the Partnership an acceptance of all of the terms and conditions of this Agreement and such other documents or instruments as may be required to effect the admission of such Person as a General Partner. Upon any such Transfer, the transferee shall become the successor General Partner for all purposes herein, and shall be vested with the powers and rights of the transferor General Partner, and shall be liable for all obligations and responsible for all duties of the General Partner. Concurrently with, and as evidence of, the admission of a successor General Partner, the General Partner shall update the Register and the books and records of the Partnership to reflect the name, address and number and classes and/or series of Partnership Units of such successor General Partner. In the event that the General Partner withdraws from the Partnership, or transfers its entire Partnership Interest, in violation of this Agreement, or otherwise dissolves or terminates or ceases to be the general partner of the Partnership, a Majority in Interest of the Partners may elect to continue the Partnership by selecting a successor general partner in accordance with Section 13.1(a) hereof.
Section 12.2 Admission of Additional Limited Partners.
(a) A Person (other than an existing Partner) who makes a Capital Contribution to the Partnership in exchange for Partnership Units after the Effective Date and in accordance with this Agreement or is issued LTIP Units in exchange for no consideration in accordance with Section 4.2(b) hereof shall be admitted to the Partnership as an Additional Limited Partner only upon furnishing to the General Partner (i) evidence of acceptance, in form and substance satisfactory to the General Partner, of all of the terms and conditions of this Agreement, including, without limitation, the power of attorney granted in Section 2.4 hereof, (ii) a counterpart signature page to this Agreement executed by such Person and (iii) such other documents or instruments as the General Partner may require in its sole and absolute discretion in order to effect such Person’s admission as an Additional Limited Partner. Concurrently with, and as evidence of, the admission of an Additional Limited Partner, the General Partner shall update the Register and the books and records of the Partnership to reflect the name, address and number and classes and/or series of Partnership Units of such Additional Limited Partner.
(b) Notwithstanding anything to the contrary in this Section 12.2, no Person shall be admitted as an Additional Limited Partner without the Consent of the General Partner. The admission of any Person as an Additional Limited Partner shall become effective on the date upon which the name of such Person is recorded on the books and records of the Partnership, following the Consent of the General Partner to such admission and the satisfaction of all the conditions set forth in Section 12.2(a).
(c) If any Additional Limited Partner is admitted to the Partnership, or if an existing Partner acquires an additional Partnership Interest, on any day other than the first (1st) day of a Partnership Year, then Net Income, Net Losses, each item thereof and all other items of income, gain, loss, deduction and credit allocable among Holders for such Partnership Year shall be allocated among such Partner and all other Holders by taking into account their varying interests during the Partnership Year in accordance with Code Section 706(d), using the “interim closing of the books” method or another permissible method selected by the General Partner. The Partners hereby agree that any such selection by the General Partner is made by “agreement of the partners” within the meaning of Regulations Section 1.706-4(f). Solely for purposes of making such
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allocations, each of such items for the calendar month in which an admission of any Additional Limited Partner occurs shall be allocated among all the Holders including such Additional Limited Partner, in accordance with the principles described in Section 11.6(c) hereof. All distributions of Available Cash with respect to which the Partnership Record Date is before the date of such admission shall be made solely to Partners and Assignees other than the Additional Limited Partner, if any, and all distributions of Available Cash thereafter shall be made to all the Partners and Assignees including such Additional Limited Partner.
(d) Any Additional Limited Partner admitted to the Partnership that is an Affiliate of the General Partner shall be deemed to be a “General Partner Affiliate” hereunder and shall be reflected as such on the Register and the books and records of the Partnership.
Section 12.3 Amendment of Agreement and Certificate of Limited Partnership. For the admission to the Partnership of any Partner, the General Partner shall take all steps necessary and appropriate under the Act to update the Register, amend the records of the Partnership and, if necessary, to prepare as soon as practical an amendment of this Agreement and, if required by law, shall prepare and file an amendment to the Certificate and may for this purpose exercise the power of attorney granted pursuant to Section 2.4 hereof.
Section 12.4 Limit on Number of Partners. Unless otherwise permitted by the General Partner in its sole and absolute discretion, no Person shall be admitted to the Partnership as an Additional Limited Partner if the effect of such admission would be to cause the Partnership to have a number of Partners that would cause the Partnership to become a reporting company under the Exchange Act.
Section 12.5 Admission. A Person shall be admitted to the Partnership as a limited partner of the Partnership or a general partner of the Partnership only upon strict compliance, and not upon substantial compliance, with the requirements set forth in this Agreement for admission to the Partnership as a Limited Partner or a General Partner.
ARTICLE 13
DISSOLUTION, LIQUIDATION AND TERMINATION
Section 13.1 Dissolution. The Partnership shall not be dissolved by the admission of Substituted Limited Partners or Additional Limited Partners or by the admission of a successor General Partner in accordance with the terms of this Agreement. Upon the withdrawal of the General Partner, any successor General Partner shall continue the business and affairs of the Partnership without dissolution. However, the Partnership shall dissolve, and its affairs shall be wound up, upon the first to occur of any of the following (each a “Liquidating Event”):
(a) an event of withdrawal, as defined in Section 10-402(2)—(9) of the Act (including, without limitation, bankruptcy), or the withdrawal in violation of this Agreement, of the last remaining General Partner unless, within ninety (90) days after the withdrawal, a Majority in Interest of the Partners remaining agree in writing, in their sole and absolute discretion, to continue the Partnership and to the appointment, effective as of the date of such withdrawal, of a successor General Partner;
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(b) an election to dissolve the Partnership made by the General Partner in its sole and absolute discretion, with or without the Consent of the Partners;
(c) entry of a decree of judicial dissolution of the Partnership pursuant to the provisions of the Act; or
(d) the Redemption or other acquisition by the Partnership or the General Partner of all Partnership Units other than Partnership Units held by the General Partner.
Section 13.2 Winding Up.
(a) Upon the occurrence of a Liquidating Event, the Partnership shall continue solely for the purposes of winding up its affairs in an orderly manner, liquidating its assets and satisfying the claims of its creditors and the Holders. After the occurrence of a Liquidating Event, no Holder shall take any action that is inconsistent with, or not necessary to or appropriate for, the winding up of the Partnership’s business and affairs. The General Partner (or, in the event that there is no remaining General Partner or the General Partner has dissolved, become bankrupt within the meaning of the Act or ceased to operate, any Person elected by a Majority in Interest of the Partners (the General Partner or such other Person being referred to herein as the “Liquidator”)) shall be responsible for overseeing the winding up and dissolution of the Partnership and shall take full account of the Partnership’s liabilities and property, and the Partnership property shall be liquidated as promptly as is consistent with obtaining the fair value thereof, and the proceeds therefrom (which may, to the extent determined by the General Partner, include shares of stock in the General Partner) shall be applied and distributed in the following order:
(i) First, to the satisfaction of all of the Partnership’s debts and liabilities to creditors other than the Holders (whether by payment or the making of reasonable provision for payment thereof);
(ii) Second, to the satisfaction of all of the Partnership’s debts and liabilities to the General Partner (whether by payment or the making of reasonable provision for payment thereof), including, but not limited to, amounts due as reimbursements under Section 7.4 hereof;
(iii) Third, to the satisfaction of all of the Partnership’s debts and liabilities to the other Holders (whether by payment or the making of reasonable provision for payment thereof); and
(iv) Fourth, to the Partners in accordance with Article 5 and any Unit Designation.
The General Partner shall not receive any additional compensation for any services performed pursuant to this Article 13 other than reimbursement of its expenses as set forth in Section 7.4.
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(b) Notwithstanding the provisions of Section 13.2(a) hereof that require liquidation of the assets of the Partnership, but subject to the order of priorities set forth therein, if prior to or upon dissolution of the Partnership, the Liquidator determines that an immediate sale of part or all of the Partnership’s assets would be impractical or would cause undue loss to the Holders, the Liquidator may, in its sole and absolute discretion, defer for a reasonable time the liquidation of any assets except those necessary to satisfy liabilities of the Partnership (including to those Holders as creditors) and/or distribute to the Holders, in lieu of cash, as tenants in common and in accordance with the provisions of Section 13.2(a) hereof, undivided interests in such Partnership assets as the Liquidator deems not suitable for liquidation. Any such distributions in kind shall be made only if, in the good faith judgment of the Liquidator, such distributions in kind are in the best interest of the Holders, and shall be subject to such conditions relating to the disposition and management of such properties as the Liquidator deems reasonable and equitable and to any agreements governing the operation of such properties at such time. The Liquidator shall determine the fair market value of any property distributed in kind using such reasonable method of valuation as it may adopt.
(c) If any Holder has a deficit balance in its Capital Account (after giving effect to all contributions, distributions and allocations for all taxable years, including the year during which such liquidation occurs), except as otherwise agreed to by such Holder, such Holder shall have no obligation to make any contribution to the capital of the Partnership with respect to such deficit, and such deficit shall not be considered a debt owed to the Partnership or to any other Person for any purpose whatsoever.
(d) In the sole and absolute discretion of the General Partner or the Liquidator, a pro rata portion of the distributions that would otherwise be made to the Holders pursuant to this Article 13 may be:
(i) distributed to a trust established for the benefit of the General Partner and the Holders for the purpose of liquidating Partnership assets, collecting amounts owed to the Partnership, and paying any contingent or unforeseen liabilities or obligations of the Partnership or of the General Partner arising out of or in connection with the Partnership and/or Partnership activities. The assets of any such trust shall be distributed to the Holders, from time to time, in the discretion of the General Partner, in the same proportions and amounts as would otherwise have been distributed to the Holders pursuant to this Agreement; or
(ii) withheld or escrowed to provide a reasonable reserve for Partnership liabilities (contingent or otherwise) and to reflect the unrealized portion of any installment obligations owed to the Partnership, provided that such withheld or escrowed amounts shall be distributed to the Holders in the manner and order of priority set forth in Section 13.2(a) hereof as soon as practicable.
(e) The provisions of Section 7.8 hereof shall apply to any Liquidator appointed pursuant to this Article 13 as though the Liquidator were the General Partner of the Partnership.
Section 13.3 Deemed Contribution and Distribution. Notwithstanding any other provision of this Article 13, in the event that the Partnership is liquidated within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g), but no Liquidating Event has occurred, the Partnership’s Property shall not be liquidated, the Partnership’s liabilities shall not be paid or discharged and the Partnership’s affairs shall not be wound up. Instead, for federal income tax purposes the
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Partnership shall be deemed to have contributed all of its assets and liabilities to a new partnership in exchange for an interest in the new partnership; and immediately thereafter, distributed Partnership Units to the Partners in the new partnership in accordance with their respective Capital Accounts in liquidation of the Partnership, and the new partnership is deemed to continue the business of the Partnership. Nothing in this Section 13.3 shall be deemed to have constituted a Transfer to an Assignee as a Substituted Limited Partner without compliance with the provisions of Section 11.4 or Section 13.3 hereof.
Section 13.4 Rights of Holders. Except as otherwise provided in this Agreement and subject to the rights of any Holder of any Partnership Interest set forth in a Unit Designation, (a) each Holder shall look solely to the assets of the Partnership for the return of its Capital Contribution, (b) no Holder shall have the right or power to demand or receive property other than cash from the Partnership and (c) no Holder shall have priority over any other Holder as to the return of its Capital Contributions, distributions or allocations.
Section 13.5 Notice of Dissolution. In the event that a Liquidating Event occurs or an event occurs that would, but for an election or objection by one or more Partners pursuant to Section 13.1 hereof, result in a dissolution of the Partnership, the General Partner or Liquidator shall, within thirty (30) days thereafter, provide written notice thereof to each Holder and, in the General Partner’s or Liquidator’s sole and absolute discretion or as required by the Act, to all other parties with whom the Partnership regularly conducts business (as determined in the sole and absolute discretion of the General Partner or Liquidator), and the General Partner or Liquidator may, or, if required by the Act, shall, publish notice thereof in a newspaper of general circulation in each place in which the Partnership regularly conducts business (as determined in the sole and absolute discretion of the General Partner or Liquidator).
Section 13.6 Cancellation of Certificate of Limited Partnership. Upon the completion of the liquidation of the Partnership cash and property as provided in Section 13.2 hereof, the Partnership shall be terminated, a certificate of cancellation shall be filed with the SDAT, all qualifications of the Partnership as a foreign limited partnership or association in jurisdictions other than the State of Maryland shall be cancelled, and such other actions as may be necessary to terminate the Partnership shall be taken.
Section 13.7 Reasonable Time for Winding-Up. A reasonable time shall be allowed for the orderly winding-up of the business and affairs of the Partnership and the liquidation of its assets pursuant to Section 13.2 hereof, in order to minimize any losses otherwise attendant upon such winding-up, and the provisions of this Agreement shall remain in effect between and among the Partners during the period of liquidation; provided, however, reasonable efforts shall be made to complete such winding-up within twenty-four (24) months after the adoption of a plan of liquidation of the General Partner, as provided in Section 562(b)(1)(B) of the Code, if necessary, in the sole and absolute discretion of the General Partner.
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ARTICLE 14
PROCEDURES FOR ACTIONS AND CONSENTS OF PARTNERS; AMENDMENTS; MEETINGS
Section 14.1 Procedures for Actions and Consents of Partners. The actions requiring Consent of any Partner or Partners pursuant to this Agreement, including Section 7.3 hereof, or otherwise pursuant to applicable law, are subject to the procedures set forth in this Article 14.
Section 14.2 Amendments. Amendments to this Agreement may be proposed by the General Partner or by Limited Partners holding twenty-five percent (25%) or more of the Partnership Interests held by Limited Partners and, except as set forth in Section 7.3(b) and Section 7.3(c) and subject to Section 7.3(d), Section 16.10 and the rights of any Holder of any Partnership Interest set forth in a Unit Designation, shall be approved by the Consent of the Partners. Amendments to a Unit Designation may also be proposed and approved in the manner set forth in the Unit Designation without complying with the foregoing. Following such proposal, the General Partner shall submit to the Partners entitled to vote thereon any proposed amendment that, pursuant to the terms of this Agreement, requires the consent, approval or vote of such Partners. The General Partner shall seek the consent, approval or vote of the Partners entitled to vote thereon on any such proposed amendment in accordance with Section 14.3 hereof. Upon obtaining any such Consent, or any other Consent required by this Agreement, and without further action or execution by any other Person, including any Limited Partner, (a) any amendment to this Agreement may be implemented and reflected in a writing executed solely by the General Partner, and (b) the Limited Partners shall be deemed a party to and bound by such amendment of this Agreement. For the avoidance of doubt, notwithstanding anything to the contrary in this Agreement, this Agreement may not be amended without the Consent of the General Partner.
Section 14.3 Actions and Consents of the Partners.
(a) Meetings of the Partners may be called only by the General Partner to transact any business that the General Partner determines. The call shall state the nature of the business to be transacted. Notice of any such meeting shall be given to all Partners entitled to act at the meeting not less than seven (7) days nor more than sixty (60) days prior to the date of such meeting. Partners may vote in person or by proxy at such meeting. Unless approval by a different number or proportion of the Partners is required by this Agreement, the affirmative vote of Partners holding a majority of the Percentage Interests held by the Partners entitled to act on any proposal shall be sufficient to approve such proposal at a meeting of the Partners. Whenever the vote, consent or approval of Partners is permitted or required under this Agreement, such vote, consent or approval may be given at a meeting of Partners or in accordance with the procedure prescribed in Section 14.3(b) hereof.
(b) Any action requiring the Consent of any Partner or group of Partners pursuant to this Agreement or that is required or permitted to be taken at a meeting of the Partners may be taken without a meeting if a consent in writing or by electronic transmission setting forth the action so taken or consented to is given by Partners whose affirmative vote would be sufficient to approve such action or provide such Consent at a meeting of the Partners. Such consent may be in one instrument or in several instruments, and shall have the same force and effect as the affirmative vote of such Partners at a meeting of the Partners. Such consent shall be filed with the General
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Partner. An action so taken shall be deemed to have been taken at a meeting held on the effective date so certified. For purposes of obtaining a Consent in writing or by electronic transmission, the General Partner may require a response within a reasonable specified time, but not less than fifteen (15) days, and failure to respond in such time period shall constitute a Consent that is consistent with the General Partner’s recommendation with respect to the proposal; provided, however, that an action shall become effective at such time as requisite Consents are received even if prior to such specified time.
(c) Each Partner entitled to act at a meeting of the Partners may authorize any Person or Persons to act for it by proxy on all matters in which a Partner is entitled to participate, including waiving notice of any meeting, or voting or participating at a meeting. Each proxy must be signed by the Partner or its attorney-in-fact. No proxy shall be valid after the expiration of eleven (11) months from the date thereof unless otherwise provided in the proxy (or there is receipt of a proxy authorizing a later date). Every proxy shall be revocable at the pleasure of the Partner executing it, such revocation to be effective upon the Partnership’s receipt of written notice of such revocation from the Partner executing such proxy, unless such proxy states that it is irrevocable and is coupled with an interest.
(d) The General Partner may set, in advance, a record date for the purpose of determining the Partners (i) entitled to Consent to any action, (ii) entitled to receive notice of or vote at any meeting of the Partners or (iii) in order to make a determination of Partners for any other proper purpose. Such date, in any case, shall not be prior to the close of business on the day the record date is fixed and shall be not more than ninety (90) days and, in the case of a meeting of the Partners, not less than five (5) days, before the date on which the meeting is to be held or Consent is to be given. If no record date is fixed, the record date for the determination of Partners entitled to notice of or to vote at a meeting of the Partners shall be at the close of business on the day on which the notice of the meeting is sent, and the record date for any other determination of Partners shall be the effective date of such Partner action, distribution or other event. When a determination of the Partners entitled to vote at any meeting of the Partners has been made as provided in this section, such determination shall apply to any adjournment thereof.
(e) Each meeting of Partners shall be conducted by the General Partner or such other Person as the General Partner may appoint pursuant to such rules for the conduct of the meeting as the General Partner or such other Person deems appropriate in its sole and absolute discretion. Without limitation, meetings of Partners may be conducted in the same manner as meetings of the General Partner’s stockholders and may be held at the same time as, and as part of, the meetings of the General Partner’s stockholders.
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ARTICLE 15
GENERAL PROVISIONS
Section 15.1 Redemption Rights of Qualifying Parties. In addition to the rights afforded to a Partnership Interest in a Unit Designation:
(a) After the applicable Initial Holding Period, a Qualifying Party shall have the right (subject to the terms and conditions set forth herein) to require the Partnership to redeem all or a portion of the Partnership Common Units held by such Qualifying Party (Partnership Common Units that have in fact been tendered for redemption being hereafter referred to as “Tendered Units”) in exchange (a “Redemption”) for the Cash Amount payable on the Specified Redemption Date. The Partnership may, in the General Partner’s sole and absolute discretion, redeem Tendered Units at the request of the Holder thereof prior to the end of the applicable Initial Holding Period (subject to the terms and conditions set forth herein) (a “Special Redemption”); provided, however, that the General Partner first receives an opinion of counsel reasonably satisfactory to it to the effect that the proposed Special Redemption will not cause the Partnership or the General Partner to violate any Federal or state securities laws or regulations applicable to the Special Redemption, the issuance and sale of the Tendered Units to the Tendering Party or the issuance and sale of REIT Shares to the Tendering Party pursuant to Section 15.1(b) of this Agreement. Any Redemption shall be exercised pursuant to a Notice of Redemption delivered to the General Partner by the Qualifying Party when exercising the Redemption right (the “Tendering Party”). The Partnership’s obligation to effect a Redemption, however, shall not arise or be binding against the Partnership until the earlier of (i) the date the General Partner notifies the Tendering Party that the General Partner declines to acquire some or all of the Tendered Units under Section 15.1(b) hereof following receipt of a Notice of Redemption and (ii) the Business Day following the Cut-Off Date. In the event of a Redemption, the Cash Amount shall be delivered as a certified or bank check payable to the Tendering Party or, in the General Partner’s sole and absolute discretion, in immediately available funds, in each case, on or before the Specified Redemption Date; provided, however, that the General Partner may elect to cause the Specified Redemption Date to be delayed for up to an additional sixty (60) Business Days to the extent required for the General Partner to cause additional REIT Shares to be issued to provide financing to be used to make such payment of the Cash Amount.
(b) Notwithstanding the provisions of Section 15.1(a) hereof, on or before the close of business on the Cut-Off Date, the General Partner may, in the General Partner’s sole and absolute discretion but subject to the Ownership Limit, elect to acquire some or all (such percentage being referred to as the “Applicable Percentage”) of the Tendered Units from the Tendering Party in exchange for REIT Shares. If the General Partner elects to acquire some or all of the Tendered Units pursuant to this Section 15.1(b), the General Partner shall give written notice thereof to the Tendering Party on or before the close of business on the Cut-Off Date. If the General Partner elects to acquire any of the Tendered Units for REIT Shares, the General Partner shall issue and deliver such REIT Shares to the Tendering Party pursuant to the terms of this Section 15.1(b), in which case (i) the General Partner shall assume directly the obligation with respect thereto and shall satisfy the Tendering Party’s exercise of its Redemption right with respect to such Tendered Units and (ii) such transaction shall be treated, for federal income tax purposes, as a transfer by the Tendering Party of such Tendered Units to the General Partner in exchange for the REIT Shares Amount. If the General Partner so elects, on the Specified Redemption Date, the Tendering Party shall sell such number of the Tendered Units to the General Partner in exchange for a number of REIT Shares equal to the product of the REIT Shares Amount and the Applicable Percentage; provided, however, that the General Partner may elect to cause the Specified Redemption Date to be delayed for up to an additional sixty (60) Business Days to the extent required for the General Partner to cause additional REIT Shares to be issued. The Tendering Party shall submit (A) such information, certification or affidavit as the General Partner may reasonably require in connection with the application of the Ownership Limit to any such acquisition and (B) such written representations, investment letters, legal opinions or other instruments necessary, in the General Partner’s view, to effect compliance with the Securities Act. In the event of a purchase of the
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Tendered Units by the General Partner pursuant to this Section 15.1(b), the Tendering Party shall no longer have the right to cause the Partnership to effect a Redemption of such Tendered Units and, upon notice to the Tendering Party by the General Partner given on or before the close of business on the Cut-Off Date that the General Partner has elected to acquire some or all of the Tendered Units pursuant to this Section 15.1(b), the obligation of the Partnership to effect a Redemption of the Tendered Units as to which the General Partner’s notice relates shall not accrue or arise. A number of REIT Shares equal to the product of the Applicable Percentage and the REIT Shares Amount, if applicable, shall be delivered by the General Partner as duly authorized, validly issued, fully paid and non-assessable REIT Shares and, if applicable, Rights, free of any pledge, lien, encumbrance or restriction, other than the Ownership Limit, the Securities Act and relevant state securities or “blue sky” laws. Neither any Tendering Party whose Tendered Units are acquired by the General Partner pursuant to this Section 15.1(b), any Partner, any Assignee nor any other interested Person shall have any right to require or cause the General Partner to register, qualify or list any REIT Shares owned or held by such Person, whether or not such REIT Shares are issued pursuant to this Section 15.1(b), with the SEC, with any state securities commissioner, department or agency, under the Securities Act or the Exchange Act or with any stock exchange; provided, however, that this limitation shall not be in derogation of any registration or similar rights granted pursuant to any other written agreement between the General Partner and any such Person. Notwithstanding any delay in such delivery, the Tendering Party shall be deemed the owner of such REIT Shares and such Rights for all purposes, including, without limitation, rights to vote or consent, receive dividends, and exercise all rights, as of the Specified Redemption Date. REIT Shares issued upon an acquisition of the Tendered Units by the General Partner pursuant to this Section 15.1(b) may contain such legends regarding restrictions under the Securities Act and applicable state securities laws as the General Partner determines to be necessary or advisable in order to ensure compliance with such laws.
(c) Notwithstanding the provisions of Section 15.1(a) and 15.1(b) hereof:
(i) The Tendering Parties shall have no rights under this Agreement that would otherwise be prohibited by the Charter and shall have no rights to require the Partnership to redeem Partnership Common Units if the acquisition of such Partnership Common Units by the General Partner pursuant to Section 15.1(b) hereof would cause any Person to violate the Ownership Limit. To the extent that any attempted Redemption or acquisition of the Tendered Units by the General Partner pursuant to Section 15.1(b) hereof would be in violation of this Section 15.1(c)(i), to the fullest extent permitted by law, it shall be void, and the Tendering Party shall not acquire any rights or economic interests in REIT Shares otherwise issuable by the General Partner under Section 15.1(b) hereof or cash otherwise payable under Section 15.1(a) hereof.
(ii) No Tendering Party may deliver a Notice of Redemption during the period from December 15 of any year through January 15 of the following year.
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(d) If the General Partner does not elect to acquire the Tendered Units pursuant to Section 15.1(b) hereof:
(i) The Partnership may elect to raise funds for the payment of the Cash Amount either (A) by requiring that the General Partner contribute to the Partnership funds from the proceeds of a registered public offering by the General Partner of REIT Shares sufficient to purchase the Tendered Units or (B) from any other sources (including, but not limited to, the sale of any Property and the incurrence of additional Debt) available to the Partnership. Without limiting Section 15.1(h) hereof, any proceeds from a public offering that are in excess of the Cash Amount shall be for the sole benefit of the General Partner. The General Partner shall make a Capital Contribution of any such amounts to the Partnership for an additional General Partner Interest in accordance with Section 4.3(e).
(ii) If the Cash Amount is not paid on or before the Specified Redemption Date, interest shall accrue with respect to the Cash Amount from the day after the Specified Redemption Date to and including the date on which the Cash Amount is paid at a rate equal to the base rate on corporate loans at large United States money center commercial banks, as published from time to time in the Wall Street Journal (but not higher than the maximum lawful rate).
(e) Notwithstanding the provisions of Section 15.1(b) hereof, the General Partner shall not, under any circumstances, elect to acquire any Tendered Units in exchange for REIT Shares if such exchange would be prohibited under the Charter.
(f) Notwithstanding anything herein to the contrary (but subject to Section 15.1(c) hereof), with respect to any Redemption (or any tender of Partnership Common Units for Redemption if the Tendered Units are acquired by the General Partner pursuant to Section 15.1(b) hereof) pursuant to this Section 15.1:
(i) All Partnership Common Units acquired by the General Partner pursuant to Section 15.1(b) hereof shall automatically, and without further action required, be converted into and deemed to be a General Partner Interest comprised of the same number of Partnership Common Units.
(ii) Subject to the Ownership Limit, no Tendering Party may effect a Redemption for less than one thousand (1,000) Partnership Common Units or, if such Tendering Party holds (as a Limited Partner or, economically, as an Assignee) less than one thousand (1,000) Partnership Common Units, all of the Partnership Common Units held by such Tendering Party, without, in each case, the Consent of the General Partner.
(iii) If (A) a Tendering Party surrenders its Tendered Units during the period after the Partnership Record Date with respect to a distribution and before the record date established by the General Partner for a distribution to its stockholders of some or all of its portion of such Partnership distribution, and (B) the General Partner elects to acquire any of such Tendered Units in exchange for REIT Shares pursuant to Section 15.1(b), such Tendering Party shall pay to the General Partner on the Specified Redemption Date an amount in cash equal to the portion of the Partnership distribution in respect of the Tendered Units exchanged for REIT Shares, insofar as such distribution relates to the same period for which such Tendering Party would receive a distribution in respect of such REIT Shares.
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(iv) The consummation of such Redemption (or an acquisition of Tendered Units by the General Partner pursuant to Section 15.1(b) hereof, as the case may be) shall be subject to the expiration or termination of the applicable waiting period, if any, under the Hart-Scott-Rodino Act.
(v) The Tendering Party shall continue to own (subject, in the case of an Assignee, to the provisions of Section 11.5 hereof) all Partnership Common Units subject to any Redemption, and be treated as a Limited Partner or an Assignee, as applicable, with respect to such Partnership Common Units for all purposes of this Agreement, until such Partnership Common Units are either paid for by the Partnership pursuant to Section 15.1(a) hereof or transferred to the General Partner and paid for, by the issuance of the REIT Shares, pursuant to Section 15.1(b) hereof on the Specified Redemption Date. Until a Specified Redemption Date and an acquisition of the Tendered Units by the General Partner pursuant to Section 15.1(b) hereof, the Tendering Party shall have no rights as a stockholder of the General Partner with respect to the REIT Shares issuable in connection with such acquisition.
(g) In connection with an exercise of Redemption rights pursuant to this Section 15.1, except as otherwise Consented to by the General Partner, the Tendering Party shall submit the following to the General Partner, in addition to the Notice of Redemption:
(i) A written affidavit, dated the same date as the Notice of Redemption, (A) disclosing the actual and constructive ownership, as determined for purposes of Code Sections 856(a)(6) and 856(h), of REIT Shares by (I) such Tendering Party and (II) to the best of their knowledge any Related Party and (B) representing that, after giving effect to the Redemption or an acquisition of the Tendered Units by the General Partner pursuant to Section 15.1(b) hereof, neither the Tendering Party nor to the best of their knowledge any Related Party will own REIT Shares in violation of the Ownership Limit;
(ii) A written representation that neither the Tendering Party nor to the best of their knowledge any Related Party has any intention to acquire any additional REIT Shares prior to the closing of the Redemption or an acquisition of the Tendered Units by the General Partner pursuant to Section 15.1(b) hereof on the Specified Redemption Date;
(iii) An undertaking to certify, at and as a condition of the closing of (A) the Redemption or (B) the acquisition of Tendered Units by the General Partner pursuant to Section 15.1(b) hereof on the Specified Redemption Date, that either (I) the actual and constructive ownership of REIT Shares by the Tendering Party and to the best of its knowledge any Related Party remain unchanged from that disclosed in the affidavit required by Section 15.1(g)(i) or (II) after giving effect to the Redemption or the acquisition of Tendered Units by the General Partner pursuant to Section 15.1(b) hereof, neither the Tendering Party nor, to the best of its knowledge, any other Person shall own REIT Shares in violation of the Ownership Limit; and
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(iv) In connection with any Special Redemption, the General Partner shall have the right to receive an opinion of counsel reasonably satisfactory to it to the effect that the proposed Special Redemption will not cause the Partnership or the General Partner to violate any Federal or state securities laws or regulations applicable to the Special Redemption, the issuance and sale of the Tendered Units to the Tendering Party or the issuance and sale of REIT Shares to the Tendering Party pursuant to Section 15.1(b) of this Agreement.
(h) Stock Offering Funding Option.
(i)
(a) Notwithstanding Section 15.1(a) or Section 15.1(b) hereof, if (i) one or more Limited Partners have delivered to the General Partner a Notice of Redemption, and (ii) the number of Tendered Units (the “Offering Common Units”) exceeds $100,000,000 gross value, based on a Partnership Common Unit value equal to the Value of a REIT Share, and (iii) Lineage REIT is then eligible to file a registration statement on Form S-3 (or any successor form similar thereto), then, notwithstanding that the Redemption of such Tendered Units pursuant to Section 15.1(a) and the acquisition of such Tendered Units by the General Partner pursuant to Section 15.1(b), on the Specified Redemption Date would otherwise be prohibited by Section 15.1(c), the General Partner may, at its election, cause the Partnership to redeem the Offering Common Units with the proceeds of an offering, whether registered under the Securities Act or exempt from such registration, underwritten, offered and sold directly to investors or through agents or other intermediaries, or otherwise distributed (a “Stock Offering Funding”), of a number of REIT Shares (“Offered Shares”) equal to the REIT Shares Amount with respect to the Offering Common Units pursuant to the terms of this Section 15.1(h); provided, however, that the General Partner shall be under no obligation to provide a waiver of the Ownership Limit in connection with this Section 15.1(h). The General Partner must provide notice of its exercise of the election described above to purchase the Tendered Units through a Stock Offering Funding on or before the tenth (10th) Business Day after the receipt by the General Partner of the applicable Notice of Redemption.
(b) If the General Partner elects a Stock Offering Funding with respect to a Notice of Redemption, the General Partner may give notice (a “Single Funding Notice”) of such election to all Limited Partners who did not provide the Notice of Redemption pursuant to Section 15.1(a) no less than two (2) days before the anticipated sale and require that all such Limited Partners elect whether or not to effect a Redemption to be funded through such Stock Offering Funding. If a Limited Partner elects to effect such a Redemption, it shall give notice thereof and of the number of Partnership Common Units to be made subject thereto in writing to the General Partner within two (2) Business Days after receipt of the Single Funding Notice, and such Limited Partner shall be treated as a Tendering Party for all purposes of this Section 15.1(h).
(ii) If the General Partner elects a Stock Offering Funding, on the Specified Redemption Date, the Partnership shall redeem each Offering Common Unit that is still a Tendered Unit on such date for cash in immediately available funds in an amount (the “Stock Offering Funding Amount”) equal to the net proceeds per Offered Share received by the General Partner from the Stock Offering Funding, determined after deduction of underwriting fees, discounts or commissions attributable to the sale of Offered Shares and any transfer taxes relating to the registration or sale of the Offered Shares (the “Stock Offering Net Proceeds”).
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(iii) If the General Partner elects a Stock Offering Funding, the following additional terms and conditions shall apply:
(a) As soon as practicable after the General Partner elects to effect a Stock Offering Funding, the General Partner shall use its reasonable best efforts to effect as promptly as possible a registration, qualification or compliance (including, without limitation, the execution of an undertaking to file post-effective amendments, appropriate qualifications under applicable blue sky or other state securities laws and appropriate compliance with applicable regulations issued under the Securities Act and any other governmental requirements or regulations) as would permit or facilitate the sale and distribution of the Offered Shares; provided, that, the General Partner shall not by reason hereof, be required to submit to general service of process in any jurisdiction or subject itself to any material tax obligation, or qualify to do business in any jurisdiction in which such submission, qualification or obligation would not be otherwise required provided, further, notwithstanding Section 15.1(h)(i)(a) hereof, if the General Partner shall deliver a notice from either the Co-Executive Chairman or the Chief Executive Officer and President, Chief Financial Officer, Global Chief Operations Officer, Chief Legal Officer, Chief Commercial Officer, Chief Human Resource Officer, Chief Information Officer, Chief Transformation Officer or Chief Network Optimization Officer to the Tendering Party (a “Stock Offering Funding Delay Notice”) certifying that the General Partner has determined that such filing, registration or qualification would be materially detrimental to the General Partner because it would require disclosure of material non-public information that the General Partner has a bona fide business purpose for preserving as confidential or the disclosure of which would materially impede the General Partner’s ability to consummate a significant transaction, and that the General Partner is not otherwise required by applicable securities laws or regulations to disclose, then the General Partner may delay making any filing or delay the effectiveness of such filing, registration or qualification until the earliest of (i) the date upon which the General Partner notifies the Tendering Party in writing that such delay is no longer necessary, and (ii) the ninetieth (90th) day after delivery of the Stock Offering Funding Delay Notice.
(b) The General Partner shall advise each Tendering Party, regularly and promptly upon any written request, of the status of the Stock Offering Funding process, including the timing of all filings, the selection of and understandings with underwriters, agents, dealers and brokers, the nature and contents of all communications with the SEC and other governmental bodies, the nature of marketing activities, and any other matters reasonably related to the timing, price and expenses (to the extent payable by the Tendering Parties) relating to the Stock Offering Funding and the compliance by the General Partner with its obligations with respect thereto. In addition, the General Partner and each Tendering Party may, but shall be under no obligation to, enter into understandings in writing (“Pricing Agreements”) whereby the Tendering Party will agree in advance as to the acceptability of a Stock Offering Net Proceeds amount at or below a specified amount. Furthermore, the General Partner shall establish pricing notification procedures with each such Tendering Party, such that the Tendering Party will have the maximum opportunity practicable to determine whether to become a Withdrawing Partner pursuant to Section 15.1(h)(iii)(c) hereof.
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(c) The General Partner, upon notification of the price per REIT Share in the Stock Offering Funding from the managing underwriter(s), in the case of a registered public offering, or lead placement agent(s), in the event of an unregistered offering, engaged by the General Partner in order to sell the Offered Shares, shall immediately use its reasonable best efforts to notify each Tendering Party of the price per REIT Share in the Stock Offering Funding and resulting anticipated Stock Offering Net Proceeds. Each Tendering Party shall have one (1) hour from the delivery of such written notice (as such time may be extended by the General Partner in its sole and absolute discretion) to elect to withdraw its Redemption (a Tendering Party making such an election being a “Withdrawing Partner”), and Partnership Common Units with a REIT Shares Amount equal to such excluded Offered Shares shall be considered to be withdrawn from the related Redemption; provided, however, that the General Partner shall keep each of the Tendering Parties reasonably informed as to the likely timing of delivery of its notice. If a Tendering Party, within such time period, does not notify the General Partner of such Tendering Party’s election not to become a Withdrawing Partner, then such Tendering Party shall, except as otherwise provided in a Pricing Agreement, be deemed not to have withdrawn from the Redemption, without liability to the General Partner. To the extent that the General Partner is unable after using its reasonable best efforts to notify any Tendering Party, such unnotified Tendering Party shall, except as otherwise provided in any Pricing Agreement, be deemed not to have elected to become a Withdrawing Partner. Each Tendering Party whose Redemption is being funded through the Stock Offering Funding who does not become a Withdrawing Partner shall have the right, subject to the approval of the managing underwriter(s) or placement agent(s) and restrictions of any applicable securities laws, to submit for Redemption additional Partnership Common Units in a number no greater than the number of Partnership Common Units withdrawn. If more than one Tendering Party so elects to redeem additional Partnership Common Units, then such Partnership Common Units shall be redeemed on a pro rata basis, based on the number of additional Partnership Common Units sought to be so redeemed.
(d) The General Partner shall take all reasonable action in order to effectuate the sale of the Offered Shares, including, but not limited to, the entering into of an underwriting or placement agreement in customary form with the managing underwriter(s) or placement agent(s) selected for such underwriting. The General Partner shall have the opportunity to include such number of shares for its own account as it may elect in a Stock Offering Funding. Notwithstanding any other provision of this Agreement, if the managing underwriter(s) or placement agent(s) advises the General Partner in writing that marketing factors require a limitation of the number of shares to be offered, then (i) first, the amount of shares to be included for the account of the General Partner shall be reduced to the extent necessary to reduce the total amount of shares to be included in such offering to the amount recommended by such managing underwriter(s) or placement agent(s), and (ii) if such reduction is insufficient to reduce the offering to the amount recommended by such managing underwriter(s) or placement agent(s), then, the General Partner shall so advise all Tendering Parties and the number of Partnership Common Units to be sold to the General Partner pursuant to the Redemption shall be allocated among all Tendering Parties in proportion, as nearly as practicable, to the respective number of Partnership Common Units as to which each Tendering Party elected to effect a Redemption. For the sake of clarity, no Offered Shares excluded from the underwriting by reason of the managing underwriter’s or placement agent’s marketing limitation shall be included in such offering.
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(i) LTIP Unit Exception and Redemption of Partnership Common Units Issued Upon Conversion of LTIP Units. Holders of LTIP Units shall not be entitled to the right of Redemption provided for in Section 15.1 of this Agreement, unless and until such LTIP Units have been converted into Partnership Common Units (or any other class or series of Partnership Common Units entitled to such right of Redemption) in accordance with their terms.
Section 15.2 Addresses and Notice. Any notice, demand, request or report required or permitted to be given or made to a Partner or Assignee under this Agreement shall be in writing and shall be deemed given or made when delivered in person or when sent by first class United States mail or by other means of written or electronic communication (including by telecopy, facsimile, electronic mail or commercial courier service) to the Partner, or Assignee at the address set forth in the Register or such other address of which the Partner shall notify the General Partner in accordance with this Section 15.2.
Section 15.3 Titles and Captions. All article or section titles or captions in this Agreement are for convenience only. They shall not be deemed part of this Agreement and in no way define, limit, extend or describe the scope or intent of any provisions hereof. Except as specifically provided otherwise, references to “Articles” or “Sections” are to Articles and Sections of this Agreement.
Section 15.4 Pronouns and Plurals. Whenever the context may require, any pronouns used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns, pronouns and verbs shall include the plural and vice versa.
Section 15.5 Further Action. The parties shall execute and deliver all documents, provide all information and take or refrain from taking action as may be necessary or appropriate to achieve the purposes of this Agreement.
Section 15.6 Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their heirs, executors, administrators, successors, legal representatives and permitted assigns.
Section 15.7 Waiver.
(a) No failure by any party to insist upon the strict performance of any covenant, duty, agreement or condition of this Agreement or to exercise any right or remedy consequent upon a breach thereof shall constitute waiver of any such breach or any other covenant, duty, agreement or condition.
(b) The restrictions, conditions and other limitations on the rights and benefits of the Limited Partners contained in this Agreement, and the duties, covenants and other requirements of performance or notice by the Limited Partners, are for the benefit of the Partnership and, except for an obligation to pay money to the Partnership, may be waived or relinquished by the General
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Partner, in its sole and absolute discretion, on behalf of the Partnership in one or more instances from time to time and at any time; provided, however, that any such waiver or relinquishment may not be made if it would have the effect of (i) creating liability for any other Limited Partner, (ii) causing the Partnership to cease to qualify as a limited partnership, (iii) reducing the amount of cash otherwise distributable to the Limited Partners (other than any such reduction that affects all of the Limited Partners holding the same class or series of Partnership Units on a uniform or pro rata basis, if approved by a Majority in Interest of the Partners holding such class or series of Partnership Units), (iv) resulting in the classification of the Partnership as an association or publicly traded partnership taxable as a corporation or (v) violating the Securities Act, the Exchange Act or any state “blue sky” or other securities laws; and provided, further, that any waiver relating to compliance with the Ownership Limit or other restrictions in the Charter shall be made and shall be effective only as provided in the Charter.
Section 15.8 Counterparts. This Agreement may be executed in counterparts, all of which together shall constitute one agreement binding on all the parties hereto, notwithstanding that all such parties are not signatories to the original or the same counterpart. Each party shall become bound by this Agreement immediately upon affixing its signature hereto.
Section 15.9 Applicable Law; Consent to Jurisdiction; Waiver of Jury Trial.
(a) This Agreement shall be construed and enforced in accordance with and governed by the laws of the State of Maryland, without regard to the principles of conflicts of law. In the event of a conflict between any provision of this Agreement and any non-mandatory provision of the Act, the provisions of this Agreement shall control and take precedence.
(b) Each Partner hereby (i) submits to the non-exclusive jurisdiction of any state or federal court sitting in the State of Maryland (collectively, the “Maryland Courts”), with respect to any dispute arising out of this Agreement or any transaction contemplated hereby to the extent such courts would have subject matter jurisdiction with respect to such dispute, (ii) irrevocably waives, and agrees not to assert by way of motion, defense, or otherwise, in any such action, any claim that it is not subject personally to the jurisdiction of any of the Maryland Courts, that its property is exempt or immune from attachment or execution, that the action is brought in an inconvenient forum, or that the venue of the action is improper, (iii) agrees that notice or the service of process in any action, suit or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby shall be properly served or delivered if delivered to such Partner at such Partner’s last known address as set forth in the Partnership’s books and records, and (iv) irrevocably waives any and all right to trial by jury in any legal proceeding arising out of or related to this Agreement or the transactions contemplated hereby.
Section 15.10 Entire Agreement. This Agreement, including the Exhibits hereto, contains all of the understandings and agreements between and among the Partners with respect to the subject matter of this Agreement and the rights, interests and obligations of the Partners with respect to the Partnership. Notwithstanding the immediately preceding sentence, the Partners hereby acknowledge and agree that the General Partner, without the approval of any Limited Partner, may enter into side letters or similar written agreements with Limited Partners that are not Affiliates of the General Partner, executed contemporaneously with the admission of such Limited Partner to the Partnership, affecting the terms hereof, as negotiated with such Limited Partner and which the General Partner in its sole discretion deems necessary, desirable or appropriate. The parties hereto agree that any terms, conditions or provisions contained in such side letters or similar written agreements with a Limited Partner shall govern with respect to such Limited Partner notwithstanding the provisions of this Agreement.
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Section 15.11 Invalidity of Provisions. If any provision of this Agreement is or becomes invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not be affected thereby.
Section 15.12 Limitation to Preserve REIT Status. Notwithstanding anything else in this Agreement, to the extent that the amount to be paid, credited, distributed or reimbursed by the Partnership to any REIT Partner or its officers, directors, employees or agents, whether as a reimbursement, fee, expense or indemnity (a “REIT Payment”), would constitute gross income to the REIT Partner for purposes of Code Section 856(c)(2) or Code Section 856(c)(3), then, notwithstanding any other provision of this Agreement, the amount of such REIT Payments, as selected by the General Partner in its discretion from among items of potential distribution, reimbursement, fees, expenses and indemnities, shall be reduced for any Partnership Year so that the REIT Payments, as so reduced, for or with respect to such REIT Partner shall not exceed the lesser of:
(a) an amount equal to the excess, if any, of (i) four percent (4%) of the REIT Partner’s total gross income (but excluding the amount of any REIT Payments and any amounts excluded from gross income pursuant to Section 856(c) of the Code) for the Partnership Year that is described in subsections (A) through (I) of Code Section 856(c)(2) over (ii) the amount of gross income (within the meaning of Code Section 856(c)(2)) derived by the REIT Partner from sources other than those described in subsections (A) through (I) of Code Section 856(c)(2) (but not including the amount of any REIT Payments or any amounts excluded from gross income pursuant to Section 856(c) of the Code); or
(b) an amount equal to the excess, if any, of (i) twenty-four percent (24%) of the REIT Partner’s total gross income (but excluding the amount of any REIT Payments and any amounts excluded from gross income pursuant to Section 856(c) of the Code) for the Partnership Year that is described in subsections (A) through (I) of Code Section 856(c)(3) over (ii) the amount of gross income (within the meaning of Code Section 856(c)(3)) derived by the REIT Partner from sources other than those described in subsections (A) through (I) of Code Section 856(c)(3) (but not including the amount of any REIT Payments or any amounts excluded from gross income pursuant to Section 856(c) of the Code);
provided, however, that REIT Payments in excess of the amounts set forth in clauses (i) and (ii) above may be made if the General Partner, as a condition precedent, obtains an opinion of tax counsel that the receipt of such excess amounts should not adversely affect the REIT Partner’s ability to qualify as a REIT. To the extent that REIT Payments may not be made in a Partnership Year as a consequence of the limitations set forth in this Section 15.12, such REIT Payments shall carry over and shall be treated as arising in the following Partnership Year if such carry over does not adversely affect the REIT Partner’s ability to qualify as a REIT, provided, however, that any such REIT Payment shall not be carried over more than three Partnership Years, and any such remaining payments shall no longer be due and payable. The purpose of the limitations contained in this Section 15.12 is to prevent any REIT Partner from failing to qualify as a REIT under the Code by reason of such REIT Partner’s share of items, including distributions, reimbursements, fees, expenses or indemnities, receivable directly or indirectly from the Partnership, and this Section 15.12 shall be interpreted and applied to effectuate such purpose.
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Section 15.13 No Partition. No Partner nor any successor-in-interest to a Partner shall have the right while this Agreement remains in effect to have any property of the Partnership partitioned, or to file a complaint or institute any proceeding at law or in equity to have such property of the Partnership partitioned, and each Partner, on behalf of itself and its successors and assigns hereby waives any such right. It is the intention of the Partners that the rights of the parties hereto and their successors-in-interest to Partnership property, as among themselves, shall be governed by the terms of this Agreement, and that the rights of the Partners and their respective successors-in-interest shall be subject to the limitations and restrictions as set forth in this Agreement.
Section 15.14 No Third-Party Rights Created Hereby. The provisions of this Agreement are solely for the purpose of defining the interests of the Holders, inter se; and no other Person (i.e., a party who is not a signatory hereto or a permitted successor to such signatory hereto) shall have any right, power, title or interest by way of subrogation or otherwise, in and to the rights, powers, title and provisions of this Agreement. No creditor or other third party having dealings with the Partnership (other than as expressly provided herein with respect to Indemnitees) shall have the right to enforce the right or obligation of any Partner to make Capital Contributions or loans to the Partnership or to pursue any other right or remedy hereunder or at law or in equity. None of the rights or obligations of the Partners herein set forth to make Capital Contributions or loans to the Partnership shall be deemed an asset of the Partnership for any purpose by any creditor or other third party, nor may any such rights or obligations be sold, transferred or assigned by the Partnership or pledged or encumbered by the Partnership to secure any debt or other obligation of the Partnership or any of the Partners.
Section 15.15 No Rights as Stockholders. Nothing contained in this Agreement shall be construed as conferring upon the Holders of Partnership Units any rights whatsoever as stockholders of the General Partner, including without limitation any right to receive dividends or other distributions made to stockholders of the General Partner or to vote or to consent or receive notice as stockholders in respect of any meeting of stockholders for the election of directors of the General Partner or any other matter.
Section 15.16 REIT Subsidiary Ownership Restrictions.
(a) Ownership Limitations. During the period commencing on the REIT Qualification Date and prior to the Restriction Termination Date:
(i) Basic Restrictions.
(A) (1) No Person, other than an Excepted Holder, shall Beneficially Own or Constructively Own Partnership Interests in excess of the REIT Subsidiary Ownership Limit, and (2) No Excepted Holder shall Beneficially Own or Constructively Own Partnership Interests in excess of the Excepted Holder Limit for such Excepted Holder.
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(B) No Person shall Beneficially Own or Constructively Own Partnership Interests to the extent that such Beneficial Ownership or Constructive Ownership would result in any REIT Subsidiary being “closely held” within the meaning of Section 856(h) of the Code (without regard to whether the ownership interest is held during the last half of a taxable year), or otherwise failing to qualify as a REIT (including Beneficial Ownership or Constructive Ownership that would result in any REIT Subsidiary actually owning or constructively owning, determined in accordance with Sections 856(d)(2)(B) and 856(d)(5) of the Code, an interest in a tenant that is described in Section 856(d)(2)(B) of the Code if the income derived by the REIT Subsidiary from such tenant would cause the REIT Subsidiary to fail to satisfy any of the gross income requirements of Section 856(c) of the Code).
(ii) Transfer in Trust. If any event occurs or has occurred, or any transfer of Partnership Interests is about to occur, which, if effective, would result in any Person Beneficially Owning or Constructively Owning Partnership Interests in violation of Section 15.16(a)(i)(A) or Section 15.16(a)(i)(B):
(A) Then the Partnership Interests the Beneficial Ownership or Constructive Ownership of which otherwise would cause such Person to violate Section 15.16(a)(i)(A) or Section 15.16(a)(i)(B) shall be automatically transferred to a Trust for the exclusive benefit of one or more Charitable Beneficiaries, as described in Section 15.16(i), effective as of the close of business on the Business Day immediately prior to the date of such transfer, and such Person shall acquire no rights in such Partnership Interests; or
(B) If the transfer to the Trust described in Section 15.16(a)(ii)(A) would not be effective for any reason to prevent the violation of Section 15.16(a)(i)(A) or Section 15.16(a)(i)(B), then the transfer of the Partnership Interests that otherwise would cause any Person to violate Section 15.16(a)(i)(A) or Section 15.16(a)(i)(B) shall be void ab initio, and the intended transferee shall acquire no rights in such Partnership Interests.
(C) In determining which Partnership Interests are to be transferred to a Trust in accordance with this Section 15.16(a)(ii) and Section 15.16(i) hereof, Partnership Interests shall be so transferred to a Trust in such manner as minimizes the aggregate value of the Partnership Interests that are transferred to the Trust (except as provided in Section 15.16(f)) and, to the extent not inconsistent therewith, on a pro rata basis.
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(D) To the extent that, upon a transfer of Interests pursuant to this Section 15.16(a)(ii), a violation of any provision of Section 15.16(a)(i) would nonetheless be continuing, then Interests shall be transferred to that number of Trusts, each having a Trustee and a Charitable Beneficiary or Beneficiaries that are distinct from those of each other Trust, such that there is no violation of any provision of Section 15.16(a)(i) hereof.
(b) Remedies for Breach. If the General Partner shall at any time determine in good faith that a transfer or other event has taken place that results in a violation of Section 15.16(a) or that a Person intends to acquire or has attempted to acquire Beneficial Ownership or Constructive Ownership of any Partnership Interests in violation of Section 15.16(a) (whether or not such violation is intended), the General Partner shall take such action as it deems advisable to refuse to give effect to or to prevent such transfer or other event, including refusing to give effect to such transfer pursuant to this Agreement or in the records of the Partnership, or instituting proceedings to enjoin such transfer or other event; provided, however, that any transfer or attempted transfer or other event in violation of Section 15.16(a) shall automatically result in the transfer to the Trust described above, and, where applicable, such transfer (or other event) shall be void ab initio as provided above irrespective of any action (or non-action) by the General Partner.
(c) Notice of Restricted Transfer. Any Person that acquires or attempts or intends to acquire Beneficial Ownership or Constructive Ownership of Partnership Interests that will or may violate Section 15.16(a)(i) or any Person that would have owned Partnership Interests that resulted in a transfer to the Trust pursuant to the provisions of Section 15.16(a)(ii) shall immediately give written notice to the Partnership of such event or, in the case of such a proposed or attempted transaction, give at least fifteen (15) days prior written notice, and shall provide to the Partnership such other information as the Partnership may request in order to determine the effect, if any, of such transfer on any REIT Subsidiary’s status as a REIT.
(d) Owners Required To Provide Information. From the REIT Qualification Date and prior to the Restriction Termination Date:
(i) Each Person that owns Partnership Interests shall, within a reasonable time after demand, provide to the Partnership the name and address of such owner, the Partnership Interests Beneficially Owned, a description of the manner in which such Partnership Interests are held, and such additional information as the Partnership may request in order to determine the effect, if any, of such Beneficial Ownership on any REIT Subsidiary’s status as a REIT or Domestically Controlled Qualified Investment Entity, or to ensure compliance with the REIT Subsidiary Ownership Limit; and
(ii) Each Person that is a Beneficial Owner or Constructive Owner of Partnership Interests and each Person that holds Partnership Interests for a Beneficial Owner or Constructive Owner shall, within a reasonable time after demand, provide to the Partnership such information as the Partnership may request in order to determine any REIT Subsidiary’s status as a REIT or Domestically Controlled Qualified Investment Entity, to comply with the requirements of any taxing authority or governmental authority or to determine such compliance, or to ensure compliance with the REIT Subsidiary Ownership Limit.
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(e) Remedies Not Limited. Nothing contained in this Section 15.16 shall limit the authority of the General Partner to take such other action as it deems necessary or advisable to protect any REIT Subsidiary’s status as a REIT or to assist the Partnership, any REIT Subsidiary and their owners in preserving the REIT Subsidiary’s status as a REIT.
(f) Ambiguity. In the case of an ambiguity in the application of any of the provisions of this Section 15.16, or any definition contained in this Agreement, the General Partner shall have the power to determine the application of the provisions of this Section 15.16 or any such definition with respect to any situation based on the facts known to it. In the event this Section 15.16 requires an action by the General Partner and this Agreement fails to provide specific guidance with respect to such action, the General Partner shall determine the action to be taken so long as such action is not contrary to the provisions of this Agreement. If a Person would have (but for the remedies set forth in this Section 15.16) acquired Beneficial Ownership or Constructive Ownership of Partnership Interests in violation of Section 15.16(a), such remedies (as applicable) shall apply first to the Partnership Interests which, but for such remedies, would have been actually owned by such Person, and second to Partnership Interests which, but for such remedies, would have been Beneficially Owned or Constructively Owned (but not actually owned) by such Person, pro rata among the Persons who actually own such Partnership Interests based upon the relative number of the Partnership Interests held by each such Person.
(g) Exceptions and Cooperation.
(i) The General Partner, in its sole and absolute discretion, may exempt (prospectively or retroactively) a Person from the limits set forth in Section 15.16(a)(i)(A), or may establish or increase an Excepted Holder Limit for such Person, if the General Partner determines, based on such representations and undertakings from such Person to the extent required by the General Partner and as are reasonably necessary to ascertain that such exemption will not cause such Person to violate Section 15.16(a)(i)(B).
(ii) The Partners, the General Partner and the Partnership agree that, in the event any Partner would like to modify its Excepted Holder Limit, the Partners, the General Partner and the Partnership shall reasonably cooperate to amend such Excepted Holder Limit; provided, however, that such cooperation shall not require the Partnership, the General Partner or any Partner to agree to allow any REIT Subsidiary to accrue gross income in a taxable year that does not qualify under Section 856(c)(2) of the Code in excess of 0.5% of the REIT Subsidiary’s gross income for such taxable year or take any action that could otherwise jeopardize the REIT Subsidiary’s status as a REIT.
(iii) Subject to Section 15.16(a)(i)(B) and this Section 15.16(g)(iii), the General Partner may from time to time increase (or decrease) the REIT Subsidiary Ownership Limit for one or more Persons and decrease (or increase) the REIT Subsidiary Ownership Limit for all other Persons. No decreased REIT Subsidiary Ownership Limit will be effective for any Person whose percentage of capital or profits interest in the Partnership is in excess of such decreased REIT Subsidiary Ownership Limit until such time as such Person’s percentage of capital or profits interest in the Partnership equals or falls below the decreased REIT Subsidiary Ownership Limit; provided, however, that any further acquisition of Partnership Interests by any such Person (other than a Person for whom an
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exemption has been granted pursuant to Section 15.16(g)(i) or an Excepted Holder) in excess of the Partnership Interests owned by such Person on the date the decreased REIT Subsidiary Ownership Limit became effective will be in violation of the REIT Subsidiary Ownership Limit. No increase to the REIT Subsidiary Ownership Limit may be approved if the new REIT Subsidiary Ownership Limit (taking into account any then-existing Excepted Holder Limits to the extent appropriate as determined by the General Partner) would allow five or fewer Individuals to Beneficially Own, in the aggregate, more than 49.0% of the capital or profits interests in the Partnership.
(h) Legend. Each certificate representing Partnership Interests (if the Partnership Interests are certificated) shall bear substantially the following legend, in addition to any other legends required by applicable law or otherwise deemed appropriate by the General Partner in its sole discretion:
“The Partnership Interests represented by this certificate are subject to restrictions on Beneficial Ownership and Constructive Ownership and transfer for the purpose of each REIT Subsidiary’s maintenance of its status as a real estate investment trust (“REIT”) under the Internal Revenue Code of 1986, as amended (the “Code”). Subject to certain further restrictions and except as expressly provided in the Partnership’s governing operating agreement, (i) no Person may Beneficially Own or Constructively Own in excess of a 9.8% capital interest or profits interest in the Partnership unless such Person is an Excepted Holder (in which case the Excepted Holder Limit shall be applicable) and (ii) no Person may Beneficially Own or Constructively Own Partnership Interests that would result in any REIT Subsidiary being “closely held” under Section 856(h) of the Code or otherwise cause the REIT Subsidiary to fail to qualify as a REIT. Any Person that Beneficially Owns or Constructively Owns or attempts to Beneficially Own or Constructively Own Partnership Interests that cause or will cause a Person to Beneficially Own or Constructively Own Partnership Interests in excess or in violation of the above limitations must immediately notify the Partnership. If any of the restrictions on transfer or ownership are violated, the Partnership Interests, or a portion thereof, represented hereby will be automatically transferred to a Trustee of a Trust for the exclusive benefit of one or more Charitable Beneficiaries. Furthermore, upon the occurrence of certain events, attempted transfers in violation of the restrictions described above may be void ab initio. All capitalized terms in this legend and not defined in this legend have the meanings set forth in the Partnership’s governing operating agreement, as the same may be amended from time to time, a copy of which, including the restrictions on transfer and ownership, will be furnished to each holder of Partnership Interests on request and without charge. Requests for such a copy may be directed to the Partnership at its principal office.”
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Instead of the foregoing legend, any certificate may state that the Partnership will furnish a full statement about certain restrictions on transferability to a Partner on request and without charge.
(i) Transfer of Interests in Trust.
(i) Ownership in Trust. Upon any purported transfer or other event described in Section 15.16(a)(ii) that would result in a transfer of Partnership Interests to a Trust, such Partnership Interests shall be deemed to have been transferred to the Trustee as trustee of a Trust for the exclusive benefit of one or more Charitable Beneficiaries. Such transfer to the Trustee shall be deemed to be effective as of the close of business on the Business Day immediately prior to the purported transfer or other event that results in the transfer to the Trust pursuant to Section 15.16(a)(ii). The Trustee shall be appointed by the Partnership and shall be a Person unaffiliated with the Partnership and any Prohibited Owner. Each Charitable Beneficiary shall be designated by the Partnership as provided in Section 15.16(i)(vi).
(ii) Status of Partnership Interests Held by the Trustee. Partnership Interests held by the Trustee shall be issued and outstanding Partnership Interests of the Partnership. The Prohibited Owner shall have no rights in Partnership Interests held by the Trustee. The Prohibited Owner shall not benefit economically from ownership of any Partnership Interests held in trust by the Trustee, shall have no rights to distributions and shall not possess any rights to vote or other rights attributable to the Partnership Interests held in the Trust.
(iii) Distribution and Voting Rights. The Trustee shall have all voting rights and rights to distributions with respect to Partnership Interests held in the Trust, which rights shall be exercised for the exclusive benefit of the Charitable Beneficiary. Any distribution paid prior to the discovery by the Partnership that the Interests have been transferred to the Trustee shall be paid by the recipient of such distribution to the Trustee upon demand and any distribution authorized but unpaid shall be paid when due to the Trustee. Any distribution so paid to the Trustee shall be held in trust for the Charitable Beneficiary. The Prohibited Owner shall have no voting rights with respect to Interests held in the Trust and, subject to Maryland law, effective as of the date that the Partnership Interests have been transferred to the Trustee, the Trustee shall have the authority (at the Trustee’s sole discretion) (i) to rescind as void any vote cast by a Prohibited Owner prior to the discovery by the Partnership that the Partnership Interests have been transferred to the Trustee and (ii) to recast such vote in accordance with the desires of the Trustee acting for the benefit of the Charitable Beneficiary; provided, however, that if the Partnership has already taken irreversible limited liability company action or other action, then the Trustee shall not have the authority to rescind and recast such vote. Notwithstanding the provisions of this Section 15.16, until the Partnership has received notification that Partnership Interests have been transferred into a Trust, the Partnership shall be entitled to rely on its Partnership Interest transfer and other records for purposes of determining Partners entitled to vote at meetings, determining the validity and authority of proxies and otherwise conducting votes of Partners.
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(iv) Sale of Partnership Interests by Trustee. Within twenty (20) days of receiving notice from the Partnership that the Partnership Interests have been transferred to the Trust, the Trustee shall sell (subject to the remaining provisions of this Section 15.16) all of the Partnership Interests transferred to the Trust to any other Person that is not a Prohibited Owner. Such Partnership Interests shall be sold for such consideration and on such other terms as the General Partner determines in its sole discretion. Upon such sale, the interest of the Charitable Beneficiary in the Partnership Interests sold shall terminate and the Trustee shall distribute the net proceeds of the sale to the Prohibited Owner and to the Charitable Beneficiary as provided in this Section 15.16(i)(iv). The Prohibited Owner shall receive an amount equal to (1) the lesser of (x) the price paid by the Prohibited Owner for the Partnership Interests or, if the Prohibited Owner did not give value for the Partnership Interests in connection with the event causing the Partnership Interests to be held in the Trust (e.g., in the case of a gift, devise or other such transaction), the fair market value (as determined by the General Partner in good faith) of the Partnership Interests on the day of the event causing the Partnership Interests to be held in the Trust and (y) the price received by the Trustee (net of any commissions and other expenses of sale, including costs and expenses incurred by the Partnership, the General Partner and their respective Affiliates) from the sale or other disposition of the Partnership Interests held in the Trust, less (2) the aggregate amount of all of the Partnership’s expenses in connection with each of the purported transfer to the Prohibited Owner and the transfer by the Trust (including in each case, but not limited to, the legal and accounting fees incurred by the Partnership, the General Partner and/or their respective Affiliates), which the Trustee will pay to the Partnership prior to any distribution of funds to the Prohibited Owner. The Trustee may also reduce the amount payable to the Prohibited Owner by the amount of distributions which have been paid to the Prohibited Owner and are owed by the Prohibited Owner to the Trustee pursuant to Section 15.16(i)(iii). Any net sales proceeds in excess of the amount payable to the Prohibited Owner shall be immediately paid to the Charitable Beneficiary. If, prior to the discovery by the Partnership that Interests have been transferred to the Trustee, such Partnership Interests are transferred by a Prohibited Owner, then (i) such Partnership Interests shall be deemed to have been transferred on behalf of the Trust and (ii) to the extent that the Prohibited Owner received an amount for such Partnership Interests that exceeds the amount that such Prohibited Owner was entitled to receive pursuant to this Section 15.16(i)(iv), such excess shall be paid to the Trustee upon demand.
(v) Purchase Right in Partnership Interests Transferred to the Trustee. Partnership Interests transferred to the Trustee shall be deemed to have been offered for sale to the Partnership, or its designee, at a price equal to (1) the lesser of (x) the price in the transaction that resulted in such transfer to the Trust (or, in the case of a devise or gift, the fair market value (as determined by the General Partner in good faith) at the time of such devise or gift) and (y) the fair market value (as determined by the General Partner in good faith) on the date the Partnership, or its designee, accepts such offer, less (2) the aggregate amount of all of the expenses of the Partnership, the General Partner and their respective Affiliates in connection with each of the purported transfer to the Prohibited Owner and the transfer by the Trust (including in each case, but not limited to, the legal and accounting fees incurred by the Partnership, the General Partner and/or their respective Affiliates), which the Trustee will pay to the Partnership prior to any distribution of funds to the Prohibited Owner. The Partnership may also reduce the amount payable to the
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Prohibited Owner by the amount of distributions which have been paid to the Prohibited Owner and are owed by the Prohibited Owner to the Trustee pursuant to Section 15.16(i)(iii). The Partnership, or its designee, shall pay the amount of any such reduction to the Trustee for the benefit of the Charitable Beneficiary. The Partnership, or its designee, shall have the right to accept such offer until the Trustee has sold the Partnership Interests held in the Trust pursuant to Section 15.16(i)(iv). Upon such a sale to the Partnership or its designee, the interest of the Charitable Beneficiary in the Partnership Interests sold shall terminate and the Trustee shall distribute the net proceeds of the sale, after the deductions contemplated above, to the Prohibited Owner.
(vi) Designation of Charitable Beneficiaries. By written notice to the Trustee, the Partnership shall designate one or more nonprofit organizations to be the Charitable Beneficiary of the interest in the Trust such that (i) the Partnership Interests held in the Trust would not violate the restrictions set forth in Section 15.16(a)(i) in the hands of such Charitable Beneficiary and (ii) each such organization must be described in Section 501(c)(3) of the Code and contributions to each such organization must be eligible for deduction under each of Sections 170(b)(1)(A), 2055 and 2522 of the Code.
(vii) Facilitating Amendments at General Partner’s Discretion. Notwithstanding anything to the contrary in this Agreement, in the event of any transfers to or by a Trust in accordance with this Section 15.16(i), the General Partner shall be entitled, in its sole discretion and without the consent or agreement of any other Partner, to make such amendments to this Agreement as it deems necessary from time to time in order to reflect that the Trust(s) or any subsequent transferees may not assume all of the obligations attaching to the subject Interests, including the obligations to make Capital Contributions.
(j) Enforcement. The Partnership is authorized specifically to seek equitable relief, including injunctive relief, to enforce the provisions of this Section 15.16.
ARTICLE 16
LTIP UNITS
Section 16.1 Designation. A class of Partnership Units in the Partnership designated as the “LTIP Units” is hereby established. The number of LTIP Units that may be issued is not limited by this Agreement.
Section 16.2 Vesting.
(a) Vesting, Generally. LTIP Units may, in the sole discretion of the General Partner, be issued subject to vesting, forfeiture and additional restrictions on Transfer pursuant to the terms of the applicable LTIP Unit Agreement or Equity Plan. The terms of any LTIP Unit Agreement may be modified by the General Partner from time to time in its sole discretion, subject to any restrictions on amendment imposed by the relevant LTIP Unit Agreement or by the Plan or any other applicable Equity Plan. LTIP Units that were fully vested and nonforfeitable when issued or that have vested and are no longer subject to forfeiture under the terms of an LTIP Unit Agreement are referred to as “Vested LTIP Units”; all other LTIP Units are referred to as “unvested LTIP Units.”
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(b) Forfeiture. Upon the forfeiture of any LTIP Units in accordance with the applicable LTIP Unit Agreement and Equity Plan (including any forfeiture effected through repurchase), the LTIP Units so forfeited (or repurchased) shall immediately, and without any further action, be treated as cancelled and no longer outstanding for any purpose. Unless otherwise specified in the applicable LTIP Unit Agreement, no consideration or other payment shall be due with respect to any LTIP Units that have been forfeited, other than any distributions declared prior to the effective date of the forfeiture with respect to a Partnership Record Date and with respect to such LTIP Units. Except as otherwise provided in this Agreement (including without limitation Section 6.4(a)(ix)), the Plan (or other applicable Equity Plan) and the applicable LTIP Unit Agreement, in connection with any forfeiture (or repurchase) of such LTIP Units, the balance of the portion of the Capital Account of the Holder of LTIP Units that is attributable to all of such Holder’s LTIP Units shall be reduced by the amount, if any, by which it exceeds the target balance contemplated by Section 6.2(c), calculated with respect to such Holder’s remaining LTIP Units, if any.
Section 16.3 Adjustments. The Partnership shall maintain at all times a one-to-one correspondence between LTIP Units and Partnership Common Units for conversion, distribution and other purposes, including, without limitation, complying with the following procedures; provided, that the foregoing is not intended to alter any of (a) the special allocations pursuant to Section 6.2(c) hereof, (b) differences between distributions to be made with respect to LTIP Units and Partnership Common Units pursuant to Section 13.2 and Section 16.4(b) hereof in the event that the Capital Accounts attributable to the LTIP Units are less than those attributable to Partnership Common Units due to insufficient special allocation pursuant to Section 6.2(c) or (c) any related provisions. If an Adjustment Event occurs, then the General Partner shall take any action reasonably necessary, including any amendment to this Agreement, any LTIP Unit Agreement and/or any update to the Register adjusting the number of outstanding LTIP Units or subdividing or combining outstanding LTIP Units, in any case, to maintain a one-for-one conversion and economic equivalence ratio between Partnership Common Units and LTIP Units. An “Adjustment Event” shall mean any of the following events: (i) the Partnership makes a distribution on all outstanding Partnership Common Units in Partnership Units, (ii) the Partnership subdivides the outstanding Partnership Common Units into a greater number of units or combines the outstanding Partnership Common Units into a smaller number of units, (iii) the Partnership issues any Partnership Units in exchange for its outstanding Partnership Common Units by way of a reclassification or recapitalization of its Partnership Common Units or (iv) any other non-recurring event or transaction that would, as determined by the General Partner in its sole discretion, have the similar effect of diluting or expanding the rights or benefits (or potential benefits) intended to be conferred by outstanding LTIP Units. If more than one Adjustment Event occurs, any adjustment to the LTIP Units may be made only once using a single formula that takes into account each and every Adjustment Event as if all Adjustment Events occurred simultaneously. For the avoidance of doubt, the following shall not be Adjustment Events: (x) the issuance of Partnership Units in a financing, reorganization, acquisition or other similar business transaction, (y) the issuance of Partnership Units pursuant to any employee benefit or compensation plan or distribution reinvestment plan, or (z) the issuance of any Partnership Units to the General Partner in respect of a Capital Contribution to the Partnership of proceeds from the sale of securities by the General Partner. If the Partnership takes an action affecting the Partnership Common Units other than actions specifically described above as “Adjustment Events” and in the opinion of the General Partner such action would require an action to maintain the one-to-one
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correspondence described above, the General Partner shall have the right to take such action, to the extent permitted by law, in such manner and at such time as the General Partner, in its sole discretion, may determine to be reasonably appropriate under the circumstances to preserve the one-to-one correspondence described above. If an amendment is made to this Agreement adjusting the number of outstanding LTIP Units as herein provided, the Partnership shall promptly file in the books and records of the Partnership an officer’s certificate setting forth a brief statement of the facts requiring such adjustment, which certificate shall be conclusive evidence of the correctness of such adjustment absent manifest error. Promptly after filing of such certificate, the Partnership shall mail a notice to each Holder of LTIP Units setting forth the adjustment to such Holder’s LTIP Units and the effective date of such adjustment.
Section 16.4 Distributions.
(a) Operating Distributions. Except as otherwise provided in this Agreement, any LTIP Unit Agreement, the Plan (or any other applicable Equity Plan), or by the General Partner with respect to any particular class or series of LTIP Units, Holders of LTIP Units shall be entitled to receive, if, when and as authorized by the General Partner out of funds or other property legally available for the payment of distributions, regular, special, extraordinary or other distributions (other than distributions upon the occurrence of a Liquidating Event or proceeds from a Terminating Capital Transaction) which may be made from time to time, in an amount per unit equal to (i) with respect to any LTIP Units that are not Performance LTIP Units, the amount of any such distributions that would have been payable to such Holders if the LTIP Units had been Partnership Common Units (if applicable, assuming such LTIP Units were held for the entire period to which such distributions relate) and (ii) with respect to any Performance LTIP Units, an amount equal to (A) in the case of Performance LTIP Units that have not satisfied the applicable performance vesting condition, the product of the distribution made to Holders of Partnership Common Units per Partnership Common Unit multiplied by the Performance Unit Sharing Percentage, and (B) in the case of Performance LTIP Units that have satisfied the applicable performance vesting condition, the distribution made to Holders of Partnership Common Units per Partnership Common Unit, in each case, if applicable, assuming such LTIP Units were held for the entire period to which such distributions relate.
(b) Liquidating Distributions. Holders of LTIP Units shall also be entitled to receive, if, when and as authorized by the General Partner out of funds or other property legally available for the payment of distributions, distributions upon the occurrence of a Liquidating Event or representing proceeds from a Terminating Capital Transaction in an amount per LTIP Unit equal to the amount of any such distributions payable on one Partnership Common Unit, whether made prior to, on or after the LTIP Unit Distribution Payment Date, provided that the amount of such distributions shall not exceed the positive balances of the Capital Accounts of the Holders of such LTIP Units to the extent attributable to the ownership of such LTIP Units.
(c) Distributions Generally. Distributions on the LTIP Units, if authorized, shall be payable on such dates and in such manner as may be authorized by the General Partner (any such date, an “LTIP Unit Distribution Payment Date”). Absent a contrary determination by the General Partner, the LTIP Unit Distribution Payment Date shall be the same as the corresponding date relating to the corresponding distribution on the Partnership Common Units. The record date for determining which Holders of LTIP Units are entitled to receive distributions shall be the Partnership Record Date.
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Section 16.5 Allocations.
(a) Holders of LTIP Units that are not Performance LTIP Units and Holders of Performance LTIP Units that have satisfied the applicable performance condition shall be allocated Net Income and Net Loss in amounts per LTIP Unit equal to the amounts allocated per Partnership Common Unit. The allocations provided by the preceding sentence shall be subject to Section 6.2(a) and in addition to any special allocations required by Section 6.2(c).
(b) Holders of Performance LTIP Units that have not satisfied the applicable performance condition shall be allocated Net Income and Net Loss in amounts per Performance LTIP Unit equal to the amounts allocated per Performance LTIP Unit that has satisfied the applicable performance condition; provided, however, that for purposes of allocations of Net Income and Net Loss pursuant to Section 6.2(a) and Section 6.4, with respect to a Performance LTIP Unit that has not satisfied the applicable performance condition, the amount of Net Income and Net Loss allocable to such Performance LTIP Unit be an amount equal to what is allocated to a Partnership Common Unit multiplied by the Performance Unit Sharing Percentage.
(c) The General Partner is authorized in its discretion to delay or accelerate the participation of the LTIP Units in allocations of Net Income and Net Loss under this Section 16.5, or to adjust the allocations made under this Section 16.5, so that the ratio of (i) the total amount of Net Income or Net Loss allocated with respect to each LTIP Unit in the taxable year in which that LTIP Unit’s LTIP Unit Distribution Payment Date falls (excluding special allocations under Section 6.2(c)), to (ii) the total amount distributed to that LTIP Unit with respect to such period, is more nearly equal to the ratio of (i) the Net Income and Net Loss allocated with respect to the General Partner’s Partnership Common Units in such taxable year to (ii) the amounts distributed to the General Partner with respect to such Partnership Common Units and such taxable year.
Section 16.6 Transfers. Subject to the terms and limitations contained in an applicable LTIP Unit Agreement and the Plan (or any other applicable Equity Plan) and except as expressly provided in this Agreement with respect to LTIP Units, a Holder of LTIP Units shall be entitled to transfer such Holder’s LTIP Units to the same extent, and subject to the same restrictions as Holders of Partnership Common Units are entitled to transfer their Partnership Common Units pursuant to Article 11.
Section 16.7 Redemption. The Redemption Right provided to Qualifying Parties under Section 15.1 shall not apply with respect to LTIP Units unless and until they are converted to Partnership Common Units as provided in Section 16.9 below.
Section 16.8 Legend. Any certificate evidencing an LTIP Unit shall bear an appropriate legend, as determined by the General Partner, indicating that additional terms, conditions and restrictions on transfer, including without limitation under any LTIP Unit Agreement and the Plan (or any other applicable Equity Plan), apply to the LTIP Unit.
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Section 16.9 Conversion to Partnership Common Units.
(a) A Qualifying Party holding LTIP Units shall have the right (the “Conversion Right”), at such Qualifying Party’s option, at any time to convert all or a portion of such Qualifying Party’s Vested LTIP Units into Partnership Common Units, taking into account all adjustments (if any) made pursuant to Section 16.3; provided, however, that a Qualifying Party may not exercise the Conversion Right for less than one thousand (1,000) Vested LTIP Units or, if such Qualifying Party holds less than one thousand (1,000) Vested LTIP Units, all of the Vested LTIP Units held by such Qualifying Party to the extent not subject to the limitation on conversion under Section 16.9(b) below. Qualifying Parties shall not have the right to convert Unvested LTIP Units into Partnership Common Units until they become Vested LTIP Units; provided, however, that in anticipation of any event that will cause such Qualifying Party’s Unvested LTIP Units to become Vested LTIP Units (and subject to the timing requirements set forth in Section 16.9(b) below), such Qualifying Party may give the Partnership a Conversion Notice conditioned upon and effective as of the time of vesting and such Conversion Notice, unless subsequently revoked by the Qualifying Party in writing prior to such vesting event, shall be accepted by the Partnership subject to such condition. In all cases, the conversion of any LTIP Units into Partnership Common Units shall be subject to the conditions and procedures set forth in this Section 16.9.
(b) A Qualifying Party may convert such Qualifying Party’s Vested LTIP Units into an equal number of fully paid and non-assessable Partnership Common Units, giving effect to all adjustments (if any) made pursuant to Section 16.3. Notwithstanding the foregoing, in no event may a Qualifying Party convert a number of Vested LTIP Units that exceeds the Capital Account Limitation. In order to exercise such Qualifying Party’s Conversion Right, a Qualifying Party shall deliver a written notice (a “Conversion Notice”) in substantially the form attached as Exhibit C to the Partnership (with a copy to the General Partner) not less than three (3) calendar days nor more than ten (10) calendar days prior to the date (the “Conversion Date”) specified in such Conversion Notice; provided, however, that if the General Partner has not given to the Qualifying Party notice of a proposed or upcoming Transaction (as defined below) at least thirty (30) days prior to the effective date of such Transaction, then the Qualifying Party shall have the right to deliver a Conversion Notice until the earlier of (x) the tenth (10th) calendar day after such notice from the General Partner of a Transaction or (y) the third (3rd) Business Day immediately preceding the effective date of such Transaction. A Conversion Notice shall be provided in the manner provided in Section 15.2. Each Qualifying Party seeking to convert Vested LTIP Units covenants and agrees with the Partnership that all Vested LTIP Units to be converted pursuant to this Section 16.9 shall be free and clear of all liens and encumbrances.
Notwithstanding anything herein to the contrary, if the Initial Holding Period with respect to the Partnership Common Units into which the Vested LTIP Units are convertible has elapsed, a Qualifying Party may deliver a Notice of Redemption pursuant to Section 15.1(a) relating to such Partnership Common Units in advance of the Conversion Date; provided, however, that the redemption of such Partnership Common Units by the Partnership shall in no event take place until on or after the Conversion Date. For clarity, it is noted that the objective of this paragraph is to put a Qualifying Party in a position where, if such Qualifying Party so wishes, the Partnership Common Units into which such Qualifying Party’s Vested LTIP Units will be converted can be redeemed by the Partnership pursuant to Section 15.1(a) simultaneously with such conversion, with the further consequence that, if the General Partner elects to assume the Partnership’s
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redemption obligation with respect to such Partnership Common Units under Section 15.1(b) by delivering to such Qualifying Party REIT Shares rather than cash, then such Qualifying Party can have such REIT Shares issued to such Qualifying Party simultaneously with the conversion of such Qualifying Party’s Vested LTIP Units into Partnership Common Units. The General Partner shall use commercially reasonable efforts to cooperate with a Qualifying Party to coordinate the timing of the different events described in the foregoing sentence.
(c) Notwithstanding the provisions of Section 16.9(a) and 16.9(b) hereof: (i) no Qualifying Party may exercise its Conversion Right pursuant to this Agreement more than one (1) time during any fiscal quarter of the Partnership; and (ii) no Qualifying Party may deliver a Notice of Conversion during the period from December 1 of any year through January 1 of the following year, nor shall any Conversion Date occur during the period from December 21 of any year through January 22 of the following year.
(d) The Partnership, at any time at the election of the General Partner, may cause any number of Vested LTIP Units to be converted (a “Forced Conversion”) into an equal number of Partnership Common Units, giving effect to all adjustments (if any) made pursuant to Section 16.3; provided, however, that the Partnership may not cause a Forced Conversion of any LTIP Units that would not at the time be eligible for conversion at the election of such Qualifying Party pursuant to Section 16.9(b). In order to exercise its right of Forced Conversion, the Partnership shall deliver a written notice (a “Forced Conversion Notice”) in substantially the form attached hereto as Exhibit D to the applicable Holder of LTIP Units not less than three (3) calendar days prior to the Conversion Date specified in such Forced Conversion Notice. A Forced Conversion Notice shall be provided in the manner provided in Section 15.2.
(e) A conversion of Vested LTIP Units for which the Holder thereof has given a Conversion Notice or the Partnership has given a Forced Conversion Notice shall occur automatically after the close of business on the applicable Conversion Date without any action on the part of such Holder of LTIP Units, other than the surrender of any certificate or certificates evidencing such Vested LTIP Units, as of which time such Holder of LTIP Units shall be credited on the books and records of the Partnership as of the opening of business on the next day with the number of Partnership Common Units into which such LTIP Units were converted. After the conversion of LTIP Units as aforesaid, the Partnership shall deliver to such Holder of LTIP Units, upon such Holder’s written request, a certificate of the General Partner certifying the number of Partnership Common Units and remaining LTIP Units, if any, held by such person immediately after such conversion. The Assignee of any Limited Partner pursuant to Article 11 hereof may exercise the rights of such Limited Partner pursuant to this Section 16.9 and such Limited Partner shall be bound by the exercise of such rights by the Assignee.
(f) For purposes of making future allocations under Section 6.2(c) and applying the Capital Account Limitation, the portion of the Economic Capital Account Balance of the applicable Holder of LTIP Units that is treated as attributable to such Holder’s LTIP Units shall be reduced, as of the date of conversion, by the product of the number of LTIP Units converted and the Common Unit Economic Balance.
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(g) If the Partnership or the General Partner shall be a party to any transaction (including without limitation a merger, consolidation, unit exchange, self-tender offer for all or substantially all Partnership Common Units or other business combination or reorganization, or sale of all or substantially all of the Partnership’s assets, but excluding any transaction which constitutes an Adjustment Event) in each case as a result of which Partnership Common Units shall be exchanged for or converted into the right, or the Holders shall otherwise be entitled, to receive cash, securities or other property or any combination thereof (each of the foregoing being referred to herein as a “Transaction”), then the General Partner shall, immediately prior to the Transaction, exercise its right to cause a Forced Conversion with respect to the maximum number of LTIP Units then eligible for conversion, taking into account any allocations that occur in connection with the Transaction or that would occur in connection with the Transaction if the assets of the Partnership were sold at the Transaction price or, if applicable, at a value determined by the General Partner in good faith using the value attributed to the Partnership Common Units in the context of the Transaction (in which case the Conversion Date shall be the effective date of the Transaction and the conversion shall occur immediately prior to the effectiveness of the Transaction). In anticipation of such Forced Conversion and the consummation of the Transaction, the Partnership shall use commercially reasonable efforts to cause each Holder of LTIP Units to be afforded the right to receive in connection with such Transaction in consideration for the Partnership Common Units into which such Holder’s LTIP Units will be converted the same kind and amount of cash, securities and other property (or any combination thereof) receivable upon the consummation of such Transaction by a Holder of the same number of Partnership Common Units, assuming such Holder is not a Person with which the Partnership consolidated or into which the Partnership merged or which merged into the Partnership or to which such sale or transfer was made, as the case may be (a “Constituent Person”), or an affiliate of a Constituent Person. In the event that Holders of Partnership Common Units have the opportunity to elect the form or type of consideration to be received upon consummation of the Transaction, prior to such Transaction the General Partner shall give prompt written notice to each Holder of LTIP Units of such opportunity, and shall use commercially reasonable efforts to afford the Holder of LTIP Units the right to elect, by written notice to the General Partner, the form or type of consideration to be received upon conversion of each LTIP Unit held by such Holder into Partnership Common Units in connection with such Transaction. If a Holder of LTIP Units fails to make such an election, such Holder (and any of such Holder’s transferees) shall receive upon conversion of each LTIP Unit held by such Holder (or by any of such Holder’s transferees) the same kind and amount of consideration that a Holder of Partnership Common Units would receive if such Holder of Partnership Common Units failed to make such an election. Subject to the rights of the Partnership and the General Partner under any LTIP Unit Agreement and the relevant terms of the Plan or any other applicable Equity Plan, the Partnership shall use commercially reasonable efforts to cause the terms of any Transaction to be consistent with the provisions of this Section 16.9(g) and to enter into an agreement with the successor or purchasing entity, as the case may be, for the benefit of any Holder of LTIP Units whose LTIP Units will not be converted into Partnership Common Units in connection with the Transaction that will (i) contain provisions enabling the Qualifying Parties that remain outstanding after such Transaction to convert their LTIP Units into securities as comparable as reasonably practicable under the circumstances to the Partnership Common Units and (ii) preserve as far as reasonably practicable under the circumstances the distribution, special allocation, conversion, and other rights set forth in the Agreement for the benefit of the Holder of LTIP Units.
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Section 16.10 Voting. Except as expressly provided in this Agreement, Limited Partners holding LTIP Units shall have the same voting rights as Limited Partners holding Partnership Common Units, with the LTIP Units voting together as a single class with the Partnership Common Units and having one vote per LTIP Unit and Holders of LTIP Units shall not be entitled to approve, vote on or consent to any other matter. The foregoing voting provision will not apply if, at or prior to the time when the action with respect to which such vote would otherwise be required will be effected, all outstanding LTIP Units shall have been converted (or provision is made for such conversion to occur as of or prior to such time into Partnership Common Units).
Section 16.11 Section 83 Safe Harbor. Each Partner authorizes the General Partner to elect to apply the safe harbor (the “Section 83 Safe Harbor”) set forth in proposed Regulations Section 1.83-3(l) and proposed IRS Revenue Procedure published in Notice 2005-43 (together, the “Proposed Section 83 Safe Harbor Regulation”) (under which the fair market value of a Partnership Interest that is Transferred in connection with the performance of services is treated as being equal to the liquidation value of the interest), or in similar Regulations or guidance, if such Proposed Section 83 Safe Harbor Regulation or similar Regulations are promulgated as final or temporary Regulations. If the General Partner determines that the Partnership should make such election, the General Partner is hereby authorized to amend this Agreement without the consent of any other Partner to provide that (i) the Partnership is authorized and directed to elect the Section 83 Safe Harbor, (ii) the Partnership and each of its Partners (including any Person to whom a Partnership Interest, including an LTIP Unit, is Transferred in connection with the performance of services) will comply with all requirements of the Section 83 Safe Harbor with respect to all Partnership Interests Transferred in connection with the performance of services while such election remains in effect and (iii) the Partnership and each of its Partners will take all actions necessary, including providing the Partnership with any required information, to permit the Partnership to comply with the requirements set forth or referred to in the applicable Regulations for such election to be effective until such time (if any) as the General Partner determines, in its sole discretion, that the Partnership should terminate such election. The General Partner is further authorized to amend this Agreement to modify Article 6 to the extent the General Partner determines in its discretion that such modification is necessary or desirable as a result of the issuance of any applicable law, Regulations, notice or ruling relating to the tax treatment of the transfer of a Partnership Interests in connection with the performance of services. Notwithstanding anything to the contrary in this Agreement, each Partner expressly confirms that it will be legally bound by any such amendment.
[Remainder of Page Left Blank Intentionally]
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IN WITNESS WHEREOF, this Agreement has been executed as of the date first written above.
| GENERAL PARTNER: | ||
| LINEAGE, INC., a Maryland corporation | ||
| By: | /s/ Adam Forste | |
| Name: | Adam Forste | |
| Its: | Co-Executive Chairman | |
| LIMITED PARTNERS: | ||
| All Limited Partners whose names are set forth in the Register | ||
| By: | Lineage, Inc., as attorney-in-fact for the Limited Partners whose names are set forth in the Register | |
| By: | /s/ Adam Forste | |
| Name: | Adam Forste | |
| Its: | Co-Executive Chairman | |
[Agreement of Limited Partnership of Lineage OP, LP – Signature Page]
EXHIBIT A
EXAMPLES REGARDING ADJUSTMENT FACTOR
For purposes of the following examples, it is assumed that (a) the Adjustment Factor in effect on [ ] is 1.0 and (b) on [ ] (the “Partnership Record Date” for purposes of these examples), prior to the events described in the examples, there are 100 REIT Shares issued and outstanding.
Example 1
On the Partnership Record Date, the General Partner declares a dividend on its outstanding REIT Shares in REIT Shares. The amount of the dividend is one REIT Share paid in respect of each REIT Share owned. Pursuant to Paragraph (a) of the definition of “Adjustment Factor,” the Adjustment Factor shall be adjusted on the Partnership Record Date, effective immediately after the stock dividend is declared, as follows:
1.0 * 200/100 = 2.0
Accordingly, the Adjustment Factor after the stock dividend is declared is 2.0.
Example 2
On the Partnership Record Date, the General Partner distributes options to purchase REIT Shares to all holders of its REIT Shares. The amount of the distribution is one option to acquire one REIT Share in respect of each REIT Share owned. The strike price is $4.00 a share. The Value of a REIT Share on the Partnership Record Date is $5.00 per share. Pursuant to Paragraph (ii) of the definition of “Adjustment Factor,” the Adjustment Factor shall be adjusted on the Partnership Record Date, effective immediately after the options are distributed, as follows:
1.0 * (100 + 100)/(100 + [100 * $4.00/$5.00]) = 1.1111
Accordingly, the Adjustment Factor after the options are distributed is 1.1111. If the options expire or become no longer exercisable, then the retroactive adjustment specified in Paragraph (ii) of the definition of “Adjustment Factor” shall apply.
Example 3
On the Partnership Record Date, the General Partner distributes assets to all holders of its REIT Shares. The amount of the distribution is one asset with a fair market value (as determined by the General Partner) of $1.00 in respect of each REIT Share owned. It is also assumed that the assets do not relate to assets received by the General Partner pursuant to a pro rata distribution by the Partnership. The Value of a REIT Share on the Partnership Record Date is $5.00 a share. Pursuant to Paragraph (iii) of the definition of “Adjustment Factor,” the Adjustment Factor shall be adjusted on the Partnership Record Date, effective immediately after the assets are distributed, as follows:
1.0 * $5.00/($5.00 - $1.00) = 1.25
Accordingly, the Adjustment Factor after the assets are distributed is 1.25.
A-1
EXHIBIT B
NOTICE OF REDEMPTION
| To: | Lineage, Inc. |
46500 Humboldt Drive
Novi, Michigan 48377
The undersigned Limited Partner or Assignee hereby irrevocably tenders for Redemption Partnership Common Units in Lineage OP, LP in accordance with the terms of the Agreement of Limited Partnership of Lineage OP, LP, dated as of July 24, 2024 (the “Agreement”), and the Redemption rights referred to therein. The undersigned Limited Partner or Assignee:
| (a) | undertakes (i) to surrender such Partnership Common Units and any certificate therefor at the closing of the Redemption and (ii) to furnish to the General Partner, prior to the Specified Redemption Date, the documentation, instruments and information required under Section 15.1(a) and Section 15.1(g) of the Agreement; |
| (b) | directs that the certified check representing the Cash Amount, or the REIT Shares Amount, as applicable, deliverable upon the closing of such Redemption be delivered to the address specified below; |
| (c) | represents, warrants, certifies and agrees that: |
| (i) | the undersigned Limited Partner or Assignee is a Qualifying Party, |
| (ii) | the undersigned Limited Partner or Assignee has, and at the closing of the Redemption will have, good, marketable and unencumbered title to such Partnership Common Units, free and clear of the rights or interests of any other person or entity, |
| (iii) | the undersigned Limited Partner or Assignee has, and at the closing of the Redemption will have, the full right, power and authority to tender and surrender such Partnership Common Units as provided herein, and |
| (iv) | the undersigned Limited Partner or Assignee has obtained the consent or approval of all persons and entities, if any, having the right to consent to or approve such tender and surrender; and |
| (d) | acknowledges that he will continue to own such Partnership Common Units until and unless either (i) such Partnership Common Units are acquired by the General Partner pursuant to Section 15.1(b) of the Agreement or (ii) such redemption transaction closes. |
All capitalized terms used herein and not otherwise defined shall have the same meaning ascribed to them respectively in the Agreement.
B-1
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| Name of Limited Partner or Assignee | ||||
| (Signature of Limited Partner or Assignee) | ||||
| (Street Address) | ||||
| (City) (State) (Zip Code) | ||||
| Signature Medallion Guaranteed by: | ||||
| Issue Check Payable to: | ||||
| Please insert social security or identifying number: | ||||
B-2
EXHIBIT C
NOTICE OF ELECTION BY PARTNER TO CONVERT
LTIP UNITS INTO PARTNERSHIP COMMON UNITS
The undersigned holder of LTIP Units hereby irrevocably (i) elects to convert the number of LTIP Units in Lineage OP, LP (the “Partnership”) set forth below into Partnership Common Units in accordance with the terms of the Agreement of Limited Partnership of the Partnership; and (ii) directs that any cash in lieu of Partnership Common Units that may be deliverable upon such conversion to be deliverable upon such conversion be delivered to the address specified below. The undersigned hereby represents, warrants, and certifies that the undersigned (a) has title to such LTIP Units, free and clear of the rights or interests of any other person or entity other than the Partnership; (b) has the full right, power, and authority to cause the conversion of such LTIP Units as provided herein; and (c) has obtained the consent or approval of all persons or entities, if any, having the right to consent or approve such conversion.
| Name of LTIP Unit Holder: |
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| Please Print Name as Registered with Partnership | ||||||
| Number of LTIP Units to be Converted: |
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| Date of this Notice: |
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| (Signature of LTIP Unit Holder) | ||||||
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| (Street Address) | ||||||
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| (City) (State) (Zip Code) | ||||||
| Signature Medallion Guaranteed by: | ||||||
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| Issue Check Payable to: |
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| Please insert social security or identifying number: |
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C-1
EXHIBIT D
NOTICE OF ELECTION BY PARTNERSHIP TO FORCE CONVERSION
OF LTIP UNITS INTO PARTNERSHIP COMMON UNITS
Lineage OP, LP (the “Partnership”) hereby irrevocably elects to cause the number of LTIP Units held by the LTIP Unit Holder set forth below to be converted into Partnership Common Units in accordance with the terms of Agreement of Limited Partnership of the Partnership.
| Name of LTIP Unit Holder: |
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| Please Print Name as Registered with Partnership | ||||||
| Number of LTIP Units to be Converted: |
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| Date of this Notice: |
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D-1
EXHIBIT E
UNIT DESIGNATION – SERIES A PREFERRED UNITS
[See attached.]
E-1
EXHIBIT F
UNIT DESIGNATION – LEGACY UNITS
[See attached.]
F-1
Exhibit 10.2
UNIT DESIGNATION – LEGACY UNITS
OF
LINEAGE OP, LP
Effective as of July 24, 2024
TABLE OF CONTENTS
| ARTICLE 1 DEFINED TERMS | 1 | |||||||
| ARTICLE 2 DESIGNATION; CLASSES OF LEGACY UNITS | 10 | |||||||
| Section 2.1 | Designation | 10 | ||||||
| Section 2.2 | Generally | 12 | ||||||
| Section 2.3 | Reclassification of Legacy Units | 12 | ||||||
| Section 2.4 | Redemption Rights | 13 | ||||||
| Section 2.5 | Issuance of Additional Legacy Units | 13 | ||||||
| Section 2.6 | Issuance of Additional Securities by the General Partner | 13 | ||||||
| Section 2.7 | Legacy Holder Representative; Voting and Dispositive Power | 13 | ||||||
| Section 2.8 | Appointment of LHR as Attorney-in-Fact | 14 | ||||||
| Section 2.9 | LHR Reimbursement, Expenses and Liability | 15 | ||||||
| Section 2.10 | Restrictions on General Partner’s Authority | 15 | ||||||
| Section 2.11 | Initial Holding Period | 16 | ||||||
| ARTICLE 3 DISTRIBUTIONS | 16 | |||||||
| Section 3.1 | Requirement and Characterization of Distributions | 16 | ||||||
| Section 3.2 | Distributions Upon Dissolution | 24 | ||||||
| Section 3.3 | Distribution of Assets in Kind | 24 | ||||||
| ARTICLE 4 RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS | 25 | |||||||
| Section 4.1 | General Restrictions on Legacy Transfers | 25 | ||||||
| Section 4.2 | Permitted Transfers | 26 | ||||||
| Section 4.3 | Waiver of General Partner Right of First Refusal; Other Requirements | 29 | ||||||
| Section 4.4 | Redemption; Reclassification; Repurchase | 29 | ||||||
| Section 4.5 | IPO Restructuring; Conversion | 32 | ||||||
| Section 4.6 | Settlement Process | 33 | ||||||
| Section 4.7 | Defaults | 45 | ||||||
| ARTICLE 5 GENERAL PROVISIONS | 48 | |||||||
| Section 5.1 | Release | 48 | ||||||
| Section 5.2 | Effect on Partnership Agreement | 48 | ||||||
| Section 5.3 | Governing Law | 48 | ||||||
| Section 5.4 | Entire Agreement | 48 | ||||||
| Section 5.5 | Addresses and Notices | 48 | ||||||
| Section 5.6 | Titles and Captions | 48 | ||||||
| Section 5.7 | Pronouns and Plurals | 49 | ||||||
| Section 5.8 | Further Action | 49 | ||||||
| Section 5.9 | Binding Effect | 49 | ||||||
| Section 5.10 | Waiver | 49 | ||||||
| Section 5.11 | Counterparts | 49 | ||||||
| Section 5.12 | Execution and Delivery | 50 | ||||||
| Section 5.13 | Invalidity of Provisions | 50 | ||||||
| Section 5.14 | No Third-Party Rights Created Hereby | 50 | ||||||
| Section 5.15 | Amendment | 50 | ||||||
Exhibit A Form of Broker Instruction
i
UNIT DESIGNATION – LEGACY UNITS
OF
LINEAGE OP, LP
This Unit Designation – Legacy Units (this “Legacy Unit Designation”) is made as of July 24, 2024 by Lineage, Inc., a Maryland corporation, as the general partner (the “General Partner”) of Lineage OP, LP, a Maryland limited partnership (the “Partnership”), pursuant to the Agreement of Limited Partnership of the Partnership dated as of July 24, 2024 (as amended through the date hereof, the “Partnership Agreement”). BG Lineage Holdings LHR, LLC is also party hereto in its capacity as representative of the limited partners holding the units described in this Legacy Unit Designation (in such capacity, the “Legacy Holder Representative” or the “LHR”). Capitalized terms used but not defined in this Legacy Unit Designation shall have the meanings ascribed to them in the Partnership Agreement.
A. This Legacy Unit Designation pertains solely to Partners who acquired their interests in the Partnership prior to the Effective Time and to the interests they acquired prior to the Effective Time.
B. The purpose of this Legacy Unit Designation is (i) to carry forward the existing economic and other arrangements in respect of the Partnership as among Partners who acquired their interests in the Partnership prior to the Effective Time with respect to the interests acquired prior to the Effective Time and (ii) to provide for a coordinated process over a period of up to three years following the initial public offering of interests in Lineage REIT to settle the Legacy Units (defined below) held by such Partners, which settlements will be made in cash, Partnership Common Units or a combination thereof.
C. Such Partners have appointed BG Lineage Holdings LHR, LLC, a Delaware limited liability company, to act as the Legacy Holder Representative with the powers, authority, rights and responsibilities set forth for the LHR herein.
D. This Legacy Unit Designation sets forth the terms and conditions applicable to the Legacy Units.
NOW THEREFORE, in consideration of the mutual covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, the General Partner hereby sets forth this Legacy Unit Designation as follows:
ARTICLE 1
DEFINED TERMS
The following definitions shall be for all purposes, unless otherwise clearly indicated to the contrary, applied to the terms used in this Legacy Unit Designation:
“A-1 Sub-Unit,” “A-2 Sub-Unit,” “A-3 Sub-Unit” or “A-4 Sub-Unit” means the A-Piece Sub-Unit of a Legacy Class A-1 Unit, the A-Piece Sub-Unit of a Legacy Class A-2 Unit, the A-Piece Sub-Unit of a Legacy Class A-3 Unit or the A-Piece Sub-Unit of a Legacy Class A-4 Unit, as applicable.
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“A-Piece Sub-Unit” has the meaning set forth in Section 2.1(c).
“Affiliate Group” has the meaning set forth in Section 4.6(b)(ii)(B).
“Alternative Priority Return” means (i) with respect to each outstanding Legacy Class A-3 Unit into which a Prior Class A-6 Unit was reclassified and for each fiscal quarter, an amount equal to a 20% per annum rate of return on the outstanding balance of the Legacy Contributions (as such amount may change from time to time) with respect to such Prior Class A-6 Unit, computed from the later of March 24, 2014 and the issuance date of such Prior Class A-6 Unit (and if the Prior Class A-6 Unit held by such Legacy Holder was acquired during such fiscal quarter, the amount of such Alternative Priority Return for such quarter will be prorated based upon the number of days such Legacy Holder held such Prior Class A-6 Unit or reclassified Legacy Class A-3 Unit (under each of the prior classification and current classification), as compared to the total number of days during such quarter) through the end of the fiscal quarter (or, if the Partnership is liquidated during such fiscal quarter, through the date of the final distributions under Section 3.2), and (ii) with respect to each outstanding Legacy Class A-3 Unit into which a Prior Class A-7 Unit, Prior Class A-9 Unit, Prior Class A-11 Unit, Prior Class A-13 Unit, Prior Class A-15 Unit, Prior Class A-16 Unit, Prior Class A-17 Unit, Prior Class A-20 Unit, Prior Class A-21 Unit, Prior Class A-25 Unit or Prior Class A-26 Unit was reclassified, and for each fiscal quarter, an amount equal to a 20% per annum rate of return, compounded annually, on the outstanding balance of the Legacy Contributions (as such amount may change from time to time) with respect to such Prior Class A Unit computed from the issuance date of such Prior Class A Unit (and if such Prior Class A Unit was acquired during such fiscal quarter, the amount of such Alternative Priority Return for such quarter will be prorated based upon the number of days such Legacy Holder held such Prior Class A Unit or reclassified Legacy Class A Unit (under each of the prior classification and current classification), as compared to the total number of days during such quarter) through the end of the fiscal quarter (or, if the Partnership is liquidated during such fiscal quarter, through the date of the final distributions under Section 3.2); provided that each Legacy Class A-3 Unit into which a Prior Class A-6 Unit, Prior Class A-7 Unit, Prior Class A-9 Unit or Prior Class A-11 Unit outstanding on January 31, 2020 has been reclassified shall be treated for all purposes of this definition of “Alternative Priority Return” as if such unit was issued by the LLC and outstanding since the date of the issuance of the corresponding unit of BGLH that gave rise to such Prior Class A-6 Unit, Prior Class A-7 Unit, Prior Class A-9 Unit or Prior Class A-11 Unit by virtue of the restructuring transactions that occurred with respect to BG LLH Intermediate, LLC and certain of its related entities on or about January 31, 2020.
“Applicable Settlement Events” means settlement events (i) that occur in connection with synthetic secondary transactions or (ii) that the LHR has otherwise elected to include as “Applicable Settlement Events.”
“Bay Grove” means Bay Grove Capital Group, LLC, a Delaware limited liability company.
“Bay Grove Affiliate” means any of (i) Bay Grove, (ii) Bay Grove Management Company, LLC, a Delaware limited liability company, (iii) BG Cold, LLC, or (iv) Adam Forste, Kevin Marchetti or entities controlled and substantially owned by Adam Forste and/or Kevin Marchetti and/or their family members or estate planning vehicles.
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“Benefit Plan Investor” has the meaning set forth in Section 4.2(a)(i).
“BGLH” means BG Lineage Holdings, LLC, a Delaware limited liability company.
“C-1 Sub-Unit,” “C-2 Sub-Unit,” “C-3 Sub-Unit” or “C-4 Sub-Unit” means the C-Piece Sub-Unit of a Legacy Class A-1 Unit, the C-Piece Sub-Unit of a Legacy Class A-2 Unit, the C-Piece Sub-Unit of a Legacy Class A-3 Unit or the C-Piece Sub-Unit of a Legacy Class A-4 Unit, as applicable.
“C-Piece Sub-Unit” has the meaning set forth in Section 2.1(c).
“Cash Settlements” has the meaning set forth in Section 4.6(b)(ii)(F).
“Cutback Settlement” has the meaning set forth in Section 4.6(b)(ii)(G)(5).
“Cutback Units” has the meaning set forth in Section 4.6(b)(ii)(G)(5).
“Daily VWAP” means, for any Trading Day or portion of a Trading Day, the per share volume-weighted average price as displayed under the heading “Bloomberg VWAP” on Bloomberg page “LINE <equity> AQR” (or its equivalent successor if such page is not available) in respect of the period from the scheduled open of trading until the scheduled close of trading of the primary trading session on such Trading Day (or if such volume-weighted average price is unavailable, the market value of one REIT Share on such Trading Day determined, using a volume-weighted average method, by a nationally recognized independent investment banking firm retained for this purpose by BGLH and/or the LHR). The “Daily VWAP” shall be determined without regard to after-hours trading or any other trading outside of the regular trading session trading hours.
“Default” has the meaning set forth in Section 4.7(a).
“Default Price” has the meaning set forth in Section 4.7(b)(iii).
“Defaulting Partner” has the meaning set forth in Section 4.7(a).
“Electing Rollover Guarantee Holders” means those Legacy Class A-4 Holders that accept Small Holder treatment for purposes of the Small Holder Early Settlement, with such acceptance provided in the manner prescribed by the LHR in writing not later than the twentieth (20th) day after the IPO Closing, in exchange for surrendering all Guarantee Rights on some or all of their Legacy Units; but such Persons hold Electing Rollover Guarantee Holder status solely in respect of those Legacy Units for which the Guarantee Rights are being surrendered.
“ERISA Regulations” means the regulations promulgated by the U.S. Department of Labor in 29 C.F.R. § 2510.3-101, and any amendments or successor regulations thereto, as modified by Section 3(42) of ERISA.
3
“Exchange” means the Nasdaq Global Select Market or, if REIT Shares are not then listed on the Nasdaq Global Select Market, on the principal other U.S. national or regional securities exchange on which REIT Shares are then listed or, if REIT Shares are not then listed on a U.S. national or regional securities exchange, on the principal other market on which REIT Shares are then listed or admitted for trading.
“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended, and any successor statute thereto, and the rules and regulations of the U.S. Securities and Exchange Commission promulgated thereunder.
“Exculpated Persons” has the meaning set forth in Section 5.1.
“Final Distribution” has the meaning set forth in Section 4.6(b)(i).
“Foreign Person” has the meaning set forth in Section 4.2(d).
“Founders Equity Share” has the meaning set forth in Section 2.1(c).
“General Partner” is defined in the Introduction.
“Guarantee Rights” means the special rights of the Legacy Class A-4 Units set forth in Section 4.4(c).
“IPO Closing” means the initial closing of the Lineage IPO.
“IPO Restructuring” means all changes to the documentation, structure and arrangements for the Partnership and each of the other Lineage Entities in order to transition such entities from a private company structure to a public company structure, support the next phase of growth in the Lineage REIT business and allow for an orderly settlement of pre-IPO legacy holdings following the Lineage IPO, including all changes of any kind made during the period leading up to the consummation of the Lineage IPO, including the changes made to all of the agreements entered into at the Effective Time.
“Large Investor” means a Limited Partner that was designated as a “Large Investor” in the Partnership’s books and records prior to the Effective Time.
“Last Reported Sale Price” of the REIT Shares for any Trading Day means the closing sale price per share (or, if no closing sale price is reported, the average of the last bid price and the last ask price per share or, if more than one in either case, the average of the average last bid prices and the average last ask prices per share) of REIT Shares on such Trading Day as reported in composite transactions for the principal U.S. national or regional securities exchange on which the REIT Shares are then listed. If the REIT Shares are not listed on a U.S. national or regional securities exchange on such Trading Day, then the Last Reported Sale Price will be the last quoted bid price per REIT Share on such Trading Day in the over-the-counter market as reported by OTC Markets Group Inc. or a similar organization. If the REIT Shares are not so quoted on such Trading Day, then the Last Reported Sale Price will be the average of the mid-point of the last bid price and the last ask price per REIT Share on such Trading Day from a nationally recognized independent investment banking firm selected by the LHR. For purposes of this definition, a
4
“Trading Day” shall not include a day on which there is the occurrence or existence, during the one-half-hour period ending at the scheduled close of trading on such date on the principal U.S. national or regional securities exchange or other market on which the REIT Shares are listed for trading or trades, of any material suspension or limitation imposed on trading (by reason of movements in price exceeding limits permitted by the relevant exchange or otherwise) in the REIT Shares or in any options contracts or futures contracts relating to the REIT Shares.
“Legacy Class A Units” means the Legacy Class A Units of the Partnership (each comprised of an A-Piece Sub-Unit and a C-Piece Sub-Unit) having the rights, preferences and privileges set forth for such Legacy Class A Units in this Legacy Unit Designation. The Legacy Class A Units are currently divided into Sub-Classes (identified herein as Legacy Class A-1 Units, Legacy Class A-2 Units, Legacy Class A-3 Units and Legacy Class A-4 Units), in accordance with Section 2.1, each of which has the particular features set forth for such Sub-Class in this Legacy Unit Designation. When the term “Legacy Class A Units” is used in this Legacy Unit Designation, it refers to all or any such Sub-Classes and/or Sub-Units in the aggregate or individually, as the context may indicate. The Legacy Class A Units are owned by the Partners, based on their respective legally separate A-Piece Sub-Unit and C-Piece Sub-Unit holdings as described in this Legacy Unit Designation and as set forth on the Partnership’s books and records. Legacy Class A Units are not Partnership Common Units.
“Legacy Class A-4 Election Notice” has the meaning set forth in Section 4.4(c).
“Legacy Class A-4 Holder” means a Partner holding A-4 Sub-Units.
“Legacy Class A-4 Payment Date” has the meaning set forth in Section 4.4(c).
“Legacy Class A-4 Redemption Election” has the meaning set forth in Section 4.4(c).
“Legacy Class A-4 Representative” means the Person designated from time to time by holders of a majority of the A-4 Sub-Units as the Legacy Class A-4 Representative (which position may be redesignated by the holders of a majority of the A-4 Sub-Units at any time upon written notice to the General Partner and the LHR, provided that there shall at all times be a single Legacy Class A-4 Representative designated to act for all holders of A-4 Sub-Units).
“Legacy Class A-4 Target Amount” has the meaning set forth in Section 4.4(c).
“Legacy Class A-4 Top-Up Election” has the meaning set forth in Section 4.4(c).
“Legacy Class A-4 Unit FMV” means the fair market value of each Legacy Class A-4 Unit as determined in good faith by the LHR based on the 20-Trading-Day Trailing VWAP for the REIT Shares immediately prior to the applicable date of determination.
“Legacy Class A-4 Unit Redemption Price” has the meaning set forth in Section 4.4(c).
“Legacy Class B Units” means the Legacy Class B Units of the Partnership having the rights, preferences and privileges set forth for such Legacy Class B Units in this Legacy Unit Designation. The Class B Units are owned by the Partners as set forth on the Partnership’s books and records. Legacy Class B Units are not Partnership Common Units.
5
“Legacy Contributions” means for each Legacy Class A Unit of any Sub-Class, the amount set forth in the Partnership’s books and records as the “Legacy Contributions per Unit,” as such balance may be reduced from time to time by aggregate distributions to the Legacy Holder in respect of such Sub-Class Units pursuant to Section 3.1(a)(i)(B), Section 3.1(a)(ii)(B), Section 3.1(a)(iii)(A)(2), Section 3.1(a)(iii)(B)(2), Section 3.1(a)(iv)(A)(2) or Section 3.1(a)(iv)(B)(2), as applicable (and Section 3.2 to the extent attributed to Section 3.1(a)(i)(B), Section 3.1(a)(ii)(B), Section 3.1(a)(iii)(A)(2), Section 3.1(a)(iii)(B)(2), Section 3.1(a)(iv)(A)(2) or Section 3.1(a)(iv)(B)(2), as applicable).
“Legacy Holder(s)” means each holder of Legacy Class A Units and/or Legacy Class B Units, individually or collectively, as the context requires, and includes each such holder after its Legacy Units have been reclassified as Partnership Common Units until such time as the Settlement Process has concluded with respect to all Legacy Units and Partnership Common Units held by such holder.
“Legacy Holder Representative” has the meaning set forth in the Introduction.
“Legacy Return Amount” means the amount per Unit for each Sub-Class set forth as the “Legacy Return Amount” in the Partnership’s books and records.
“Legacy Transfer” means, with respect to any Legacy Units or any beneficial interest therein, any direct or indirect transfer, sale, assignment, bequest, conveyance, devise, gift (outright or in trust), mortgage, exchange, pledge, charge, hypothecation, securitization, grant of participation, grant of security interest, encumbrance, separation or alienation of beneficial interest (including the creation of any derivative or synthetic interest) or other disposition by any other means, whether for value or no value and whether voluntary, involuntary (including by operation of law or by judgment, levy, attachment, garnishment, bankruptcy or other legal or equitable proceedings), of all or part of such Legacy Units, or an agreement to do any of the foregoing. The term “Legacy Transferred” shall have a correlative meaning.
“Legacy Unit Designation” has the meaning set forth in the Introduction.
“Legacy Units” means collectively, the Legacy Class A Units and the Legacy Class B Units, individually or collectively, as the context requires. Legacy Units are not Partnership Common Units.
“LHR” has the meaning set forth in the Introduction.
“Lineage Entities” means, collectively, the General Partner, the Partnership, Lineage Holdings, their respective direct and indirect subsidiaries, and any other Affiliates of any of the foregoing. For purposes of this Legacy Unit Designation, none of BGLH, the LHR or any Bay Grove Affiliate is considered a “Lineage Entity” or an Affiliate of any Lineage Entity.
“Lineage Holdings” means Lineage Logistics Holdings, LLC, a Delaware limited liability company.
“Lineage IPO” means the initial public offering of the common stock of Lineage REIT pursuant to the Securities Act.
6
“Lineage REIT” means Lineage, Inc., a Maryland corporation.
“Market Disruption Event” means (i) a failure by the primary Exchange on which REIT Shares are listed or admitted for trading to open for trading during its regular trading session or (ii) the occurrence or existence prior to 1:00 p.m., New York City time, on any scheduled trading day for REIT Shares for more than one half-hour period in the aggregate during regular trading hours of any suspension or limitation imposed on trading (by reason of movements in price exceeding limits permitted by the relevant stock exchange or otherwise) in REIT Shares or in any options contracts or futures contracts relating to REIT Shares.
“Non-Defaulting Partner” means any Partner other than a Defaulting Partner.
“Partnership” has the meaning set forth in the Introduction.
“Partnership Agreement” has the meaning set forth in the Introduction.
“Permitted Legacy Transfers” has the meaning set forth in Section 4.2(a).
“Prior Class A Units,” “Prior Class A-BG Units,” “Prior Class A-1 Units,” “Prior Class A-2 Units,” “Prior Class A-3 Units,” “Prior Class A-4 Units,” “Prior Class A-5 Units,” “Prior Class A-6 Units,” “Prior Class A-7 Units,” “Prior Class A-9 Units,” “Prior Class A-11 Units,” “Prior Class A-13 Units,” “Prior Class A-15 Units,” “Prior Class A-16 Units,” “Prior Class A-17 Units,” “Prior Class A-20 Units,” “Prior Class A-21 Units,” “Prior Class A-25 Units” or “Prior Class A-26 Units” means the previously existing Class A Units of the LLC (designated as Class A Units, Class A-BG Units, Class A-1 Units, Class A-2 Units, Class A-3 Units, Class A-4 Units, Class A-5 Units, Class A-6 Units, Class A-7 Units, Class A-9 Units, Class A-11 Units, Class A-13 Units, Class A-15 Units, Class A-16 Units, Class A-17 Units, Class A-20 Units, Class A-21 Units, Class A-25 Units and Class A-26 Units) prior to the LLC’s conversion to the Partnership. When the term “Prior Class A Units” is used in this Legacy Unit Designation it shall be deemed to refer to all Prior Class A Unit sub-classes in the aggregate.
“Prior Class B Units” means the previously existing Class B Units of the LLC (designated as Class B Units) prior to the LLC’s conversion to the Partnership.
“Prior Class C Units” means the previously existing Class C Units of the LLC (designated as Class C Units) prior to the LLC’s conversion to the Partnership.
“Prior Side Letter” means any side letter, letter agreement or other similar agreement entered into by any Legacy Holder(s) with any Lineage Entity (or any of their respective predecessors or controlling Persons) in connection with an investment in the Partnership prior to the Effective Time, which side letter, letter agreement or other similar agreement provides such Legacy Holder(s) with any right or benefit in respect of the Partnership or the Legacy Units (or any predecessor of the Partnership or the Legacy Units) that is not set forth in this Legacy Unit Designation or in the Partnership Agreement.
7
“Priority Return” means, (i) with respect to each outstanding Legacy Class A Unit into which a Prior Class A-1 Unit, Prior Class A-2 Unit, Prior Class A-3 Unit, Prior Class A-4 Unit, Prior Class A-5 Unit or Prior Class A-6 Unit was reclassified, and for each fiscal quarter, an amount equal to an 8% per annum rate of return on the outstanding balance of the Legacy Contributions (as such amount may change from time to time) with respect to such Prior Class A Unit, computed from the later of March 24, 2014 and the issuance date of such Prior Class A Unit (and if the Prior Class A Unit held by such Legacy Holder was acquired during such fiscal quarter, the amount of such Priority Return for such quarter will be prorated based upon the number of days such Legacy Holder held such Prior Class A Unit or reclassified Legacy Class A Unit (under each of the prior classification and current classification), as compared to the total number of days during such quarter) through the end of the fiscal quarter (or, if the Partnership is liquidated during such fiscal quarter, through the date of the final distributions under Section 3.2), and (ii) with respect to each outstanding Legacy Class A Unit into which a Prior Class A-7 Unit, Prior Class A-9 Unit, Prior Class A-11 Unit, Prior Class A-13 Unit, Prior Class A-15 Unit, Prior Class A-16 Unit, Prior Class A-17 Unit, Prior Class A-20 Unit, Prior Class A-21 Unit, Prior Class A-25 Unit or Prior Class A-26 Unit was reclassified, and for each fiscal quarter, an amount equal to an 8% per annum rate of return, compounded annually, on the outstanding balance of the Legacy Contributions (as such amount may change from time to time) with respect to such Prior Class A Unit computed from the issuance date of such Prior Class A Unit (and if the Prior Class A Unit held by such Legacy Holder was acquired during such fiscal quarter, the amount of such Priority Return for such quarter will be prorated based upon the number of days such Legacy Holder held such Prior Class A Unit or reclassified Legacy Class A Unit (under each of the prior classification and current classification), as compared to the total number of days during such quarter) through the end of the fiscal quarter (or, if the Partnership is liquidated during such fiscal quarter, through the date of the final distributions under Section 3.2); provided that each Legacy Class A Unit into which a Prior Class A-1 Unit, Prior Class A-2 Unit, Prior Class A-3 Unit, Prior Class A-4 Unit, Prior Class A-5 Unit, Prior Class A-6 Unit, Prior Class A-7 Unit, Prior Class A-9 Unit or Prior Class A-11 Unit, in each case outstanding on January 31, 2020, has been reclassified shall be treated for all purposes of this definition of “Priority Return” as if such unit was issued by the LLC and outstanding since the date of the issuance of the corresponding unit of BGLH that gave rise to such Prior Class A Unit by virtue of the restructuring transactions that occurred with respect to BG LLH Intermediate, LLC and certain of its related entities on or about January 31, 2020.
“Reimbursement Agreement” means the Expense Reimbursement and Indemnification Agreement entered into substantially in the form attached as an exhibit to the Form S-11 Registration Statement of Lineage REIT, as the same may be amended, amended and restated or otherwise modified from time to time.
“Secondary Transaction” has the meaning set forth in Section 4.1(b).
“Securities Settlements” has the meaning set forth in Section 4.6(b)(ii)(E).
“Settlement Process” has the meaning set forth in Section 4.6(b)(i).
“Small Holder Early Settlement” has the meaning set forth in Section 4.6(b)(iii)(A).
“Small Holder Early Settlement Election” means a timely and properly submitted election submitted by a Legacy Class A-4 Holder in the manner prescribed by the LHR or its Affiliates, pursuant to which such Legacy Class A-4 Holder has accepted Small Holder treatment in exchange for the surrender of all Guarantee Rights in respect of the Legacy Units for which such Legacy Class A-4 Holder has elected Small Holder treatment.
8
“Small Holders” means those Legacy Holders who were notified prior to the Effective Time by any Lineage Entity or Bay Grove Affiliate that they are “Small Holders.”
“Stockholders Agreement” means the Stockholders Agreement entered into substantially in the form attached as an exhibit to the Form S-11 Registration Statement of Lineage REIT, as the same may be amended, amended and restated, supplemented or otherwise modified from time to time.
“Sub-Class” or “Sub-Class Units” means the separate sub-class of the Legacy Class A Units (being Legacy Class A-1, Legacy Class A-2, Legacy Class A-3 or Legacy Class A-4) to which such reference applies.
“Sub-Class Ratio” means, with respect to each Sub-Class of Legacy Class A Units, the percentage interest of such Sub-Class of Legacy Class A Units relative to all Legacy Class A Units, calculated from a fraction the numerator of which is all outstanding Legacy Class A Units of such Sub-Class and the denominator of which is all outstanding Legacy Class A Units of all Sub-Classes, as set forth in the books and records of the Partnership.
“Subscription Agreement” means any subscription agreement, purchase agreement or similar agreement for the subscription or purchase of Prior Class A Units or Prior Class B Units, in each case entered into by any Legacy Holder in connection with any purchase of or commitment to purchase any Prior Class A Units or Prior Class B Units issued on or after July 1, 2020, together with all exhibits, schedules, annexes and other attachments thereto and all investor questionnaires submitted therewith.
“Trading Day” means a day on which trading in REIT Shares generally occurs on the Exchange, except that if REIT Shares are not so listed or admitted for trading, “Trading Day” means a Business Day.
“TSA” means the Transition Services Agreement entered into substantially in the form attached as an exhibit to the Form S-11 Registration Statement of Lineage REIT, as the same may be amended, amended and restated, supplemented or otherwise modified from time to time.
“20-Trading-Day Trailing VWAP” means the arithmetic average of the Daily VWAPs for each day in the twenty (20) consecutive Trading Day period ending on the Trading Day prior to the applicable valuation date. For purposes of this definition, a “Trading Day” shall not include a day on which a Market Disruption Event occurs or has been deemed to have occurred.
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ARTICLE 2
DESIGNATION; CLASSES OF LEGACY UNITS
Section 2.1 Designation. As of the Effective Time, all of the outstanding membership interests in the LLC have been reclassified into the following classes of Partnership Units:
(a) Series A Preferred Units. Effective as of the Effective Time, certain of the Prior Class A-BG Units (as set forth in the books and records of the Partnership) have collectively been reclassified into a single Series A Preferred Unit, having the rights, preferences and privileges set forth for Series A Preferred Units in the Partnership Agreement and the Unit Designation – Series A Preferred Units.
(b) Partnership Common Units. Effective as of the Effective Time, each Prior Class A-BG Unit not described in Section 2.1(a) has been reclassified into a single Partnership Common Unit, having the rights, preferences and privileges set forth for Partnership Common Units in the Partnership Agreement.
(c) Legacy Class A Units. Effective as of the Effective Time, each Prior Class A Unit that was not a Prior Class A-BG Unit, and the Prior Class C Unit interest that was entitled to a share of the profits in respect of each such Prior Class A Unit, have been reclassified into two legally separate sub-units that together comprise a single Legacy Class A Unit as follows: (1) each Prior Class A Unit has been reclassified into the “A” portion sub-unit of a Legacy Class A Unit (the “A-Piece Sub-Unit”) and (2) the Prior Class C Unit interest that was entitled to a share of the profits in respect of such Prior Class A Unit has been reclassified into the “C” portion sub-unit of the same Legacy Class A Unit (the “C-Piece Sub-Unit” and distribution rights associated with the C-Piece Sub-Unit, the “Founders Equity Share”). The A-Piece Sub-Unit and the C-Piece Sub-Unit represent legally separate and distinct ownership interests in, and shares of, the portion of the Partnership’s equity that is represented by a single Legacy Class A Unit. The A-Piece Sub-Unit and C-Piece Sub-Unit within a single Legacy Class A Unit constitute separate property rights; and the rights and benefits associated with any A-Piece Sub-Unit are not available to satisfy the creditors of any holder of a C-Piece Sub-Unit, nor are the rights and benefits associated with any C-Piece Sub-Unit available to satisfy the creditors of any holder of an A-Piece Sub-Unit. The rights and benefits associated with any A-Piece Sub-Unit belong solely to that A-Piece Sub-Unit and not to the corresponding Legacy Class A Unit generally; and the rights and benefits associated with any C-Piece Sub-Unit belong solely to that C-Piece Sub-Unit and not to the corresponding Legacy Class A Unit generally. In addition, the obligations and liabilities associated with any A-Piece Sub-Unit are obligations and liabilities solely of that A-Piece Sub-Unit and not of the corresponding C-Piece Sub-Unit or the associated Legacy Class A Unit generally; and the obligations and liabilities associated with any C-Piece Sub-Unit are obligations and liabilities solely of that C-Piece Sub-Unit and not of the corresponding A-Piece Sub-Unit or the associated Legacy Class A Unit generally. Each Legacy Class A Unit (and the A-Piece Sub-Unit and C-Piece Sub-Unit that comprise such Legacy Class A Unit) is designated to one of four sub-class demarcations: Legacy Class A-1 Units; Legacy Class A-2 Units; Legacy Class A-3 Units; or Legacy Class A-4 Units. Each Legacy Class A Unit, regardless of sub-class, is economically equivalent to, and holds the same distribution priority as, one Partnership Common Unit. Further to the foregoing:
(i) Legacy Class A-1 Units. Effective as of the Effective Time, (A) each Prior Class A-1 Unit, each Prior Class A-2 Unit, each Prior Class A-3 Unit, each Prior Class A-4 Unit and each Prior Class A-5 Unit was reclassified into a single A-Piece Sub-Unit of a single Legacy Class A-1 Unit (or A-1 Sub-Unit) and (B) the corresponding Prior Class C Unit interest that was entitled to a share of the profits in respect of each Prior Class A-1 Unit, each Prior Class A-2 Unit, each Prior Class A-3 Unit, each Prior Class A-4 Unit and each Prior Class A-5 Unit was reclassified into a single C-Piece Sub-Unit of the corresponding Legacy Class A-1 Unit (or C-1 Sub-Unit).
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(ii) Legacy Class A-2 Units. Effective as of the Effective Time, (A) each Prior Class A-6 Unit, each Prior Class A-7 Unit, each Prior Class A-9 Unit, each Prior Class A-11 Unit, each Prior Class A-13 Unit, each Prior Class A-15 Unit, each Prior Class A-16 Unit, each Prior Class A-20 Unit, each Prior Class A-25 Unit and each Prior Class A-26 Unit, in each case that was owned by a Large Investor, was reclassified into a single A-Piece Sub-Unit of a single Legacy Class A-2 Unit (or A-2 Sub-Unit) and (B) the corresponding Prior Class C Unit interest that was entitled to a share of the profits in respect of each such Prior Class A-6 Unit, each such Prior Class A-7 Unit, each such Prior Class A-9 Unit, each such Prior Class A-11 Unit, each such Prior Class A-13 Unit, each such Prior Class A-15 Unit, each such Prior Class A-16 Unit, each such Prior Class A-20 Unit, each such Prior Class A-25 Unit and each such Prior Class A-26 Unit was reclassified into a single C-Piece Sub-Unit of the corresponding Legacy Class A-2 Unit (or C-2 Sub-Unit).
(iii) Legacy Class A-3 Units. Effective as of the Effective Time, (A) each Prior Class A-6 Unit, each Prior Class A-7 Unit, each Prior Class A-9 Unit, each Prior Class A-11 Unit, each Prior Class A-13 Unit, each Prior Class A-15 Unit, each Prior Class A-16 Unit, each Prior Class A-20 Unit, each Prior Class A-25 Unit and each Prior Class A-26 Unit, in each case that was owned by a Partner that was not a Large Investor, was reclassified into a single A-Piece Sub-Unit of a single Legacy Class A-3 Unit (or A-3 Sub-Unit) and (B) the corresponding Prior Class C Unit interest that was entitled to a share of the profits in respect of each such Prior Class A-6 Unit, each such Prior Class A-7 Unit, each such Prior Class A-9 Unit, each such Prior Class A-11 Unit, each such Prior Class A-13 Unit, each such Prior Class A-15 Unit, each such Prior Class A-16 Unit, each such Prior Class A-20 Unit, each such Prior Class A-25 Unit and each such Prior Class A-26 Unit was reclassified into a single C-Piece Sub-Unit of the corresponding Legacy Class A-3 Unit (or C-3 Sub-Unit).
(iv) Legacy Class A-4 Units. Effective as of the Effective Time, (A) each Prior Class A-21 Unit was reclassified into a single A-Piece Sub-Unit of a single Legacy Class A-4 Unit (or A-4 Sub-Unit) and (B) the corresponding Prior Class C Unit interest that was entitled to a share of the profits in respect of each Prior Class A-21 Unit was reclassified into a single C-Piece Sub-Unit of the corresponding Legacy Class A-4 Unit (or C-4 Sub-Unit).
(v) Subject to Settlement. Each Legacy Class A Unit is subject to settlement pursuant to the Settlement Process as set forth in Section 4.6 hereof.
(d) Legacy Class B Units. Effective as of the Effective Time, each Prior Class B Unit was reclassified into a single Legacy Class B Unit. Each Legacy Class B Unit is economically equivalent to, and holds the same distribution priority as, one Partnership Common Unit. Each Legacy Class B Unit is subject to settlement pursuant to the Settlement Process as set forth in Section 4.6 hereof.
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(e) Ownership Records. The Partnership Common Units and the Series A Preferred Units, in each case into which the Prior Class A-BG Units have been reclassified, are owned by the General Partner, and the Legacy Units are owned by the Legacy Holders as set forth in the books and records of the Partnership.
Section 2.2 Generally. Each Legacy Unit represents an equal share of ownership in the Partnership with each Partnership Common Unit. All Legacy Units have the same rights, liabilities and obligations that apply to Partnership Common Units except to the extent otherwise set forth in this Legacy Unit Designation. In the event of any conflict or inconsistency between the Partnership Agreement and this Legacy Unit Designation as to the terms, rights, liabilities or obligations of the Legacy Units, this Legacy Unit Designation governs.
Section 2.3 Reclassification of Legacy Units.
(a) Each Legacy Class A Unit and Legacy Class B Unit may be reclassified into an equal number of Partnership Common Units at any time and from time to time at the discretion of the LHR (and without the consent or approval of any other Person) between the IPO Closing and the third (3rd) anniversary of the IPO Closing, and the Legacy Units shall be so reclassified from time to time as provided in Section 4.6 of this Legacy Unit Designation; provided however, that no fractional Partnership Common Units shall be permitted to exist upon the reclassification of Legacy Class A Units or Legacy Class B Units; and instead, after aggregating the number of all Partnership Common Units into which Legacy Units are to be so reclassified for any single Legacy Holder as of the applicable date on which such reclassification is to occur, any remaining A-Piece Sub-Unit, C-Piece Sub-Unit or other fractional Legacy Unit that equates to less than one (1) Partnership Common Unit (which in each case shall be no more than one fractional unit per Legacy Holder per reclassification date) will instead be settled through a cash payment to the Legacy Holder for the fractional unit not received. For purposes of this Section 2.3(a), the cash payment amount shall be determined by the LHR, in its reasonable discretion, on a basis consistent with the calculation of the Cash Amount that would be determined for a fraction of a Partnership Common Unit, treating the Legacy Holder of such fractional Legacy Unit as a Tendering Party who has delivered a Notice of Redemption pursuant to Section 15.1 of the Partnership Agreement for the applicable fraction of a Partnership Common Unit that such fractional Legacy Unit represents. For purposes of this Section 2.3(a), no other provisions of Section 15.1 of the Partnership Agreement shall apply. The provisions of Section 4.2(f)(i) of the Partnership Agreement shall not apply to the Legacy Units for so long as they are classified as such; reclassification of the Legacy Units shall be governed exclusively by this Legacy Unit Designation.
(b) Prior to any reclassification of the Legacy Units into Partnership Common Units, the LHR shall notify the General Partner thereof in writing at least five (5) days prior to the applicable reclassification date, which notice shall identify the particular Legacy Units to be reclassified into Partnership Common Units, the resulting holders of such Partnership Common Units and the date upon which such reclassification will occur. The identified Legacy Units shall be deemed to have been reclassified automatically into such Partnership Common Units held by such identified holders upon the specified reclassification date unless the LHR has otherwise notified the General Partner in writing prior to the specified reclassification date. The LHR may adjust or revoke any such reclassification prior to its effective date upon written notice to the General Partner thereof.
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Section 2.4 Redemption Rights.
(a) Without limiting the provisions of Section 4.6 (but subject to Section 4.6(b)(ii)(B)), following the reclassification of Legacy Units into Partnership Common Units, such Partnership Common Units are redeemable for cash or, at the option of the General Partner, exchangeable for REIT Shares as set forth in Article 15 of the Partnership Agreement; provided, however, that notwithstanding anything to the contrary in the Partnership Agreement: (i) Section 15.1(h) of the Partnership Agreement shall not apply to Partnership Common Units that were reclassified as such from Legacy Units; (ii) the term “Cut-Off Date,” when used with respect to Partnership Common Units that were reclassified as such from Legacy Units, shall mean the fifth (5th) Business Day after the General Partner’s receipt of a Notice of Redemption; and (iii) the term “Specified Redemption Date,” when used with respect to Partnership Common Units that were reclassified as such from Legacy Units, shall mean the tenth (10th) Business Day after the receipt by the General Partner of a Notice of Redemption.
(b) Legacy Units, for so long as they remain classified as such, are not redeemable (except as provided in Section 4.4) or subject to conversion into REIT Shares.
Section 2.5 Issuance of Additional Legacy Units. The General Partner is hereby authorized to cause the Partnership to issue additional Legacy Class A-4 Units pursuant to Section 4.4 of this Legacy Unit Designation in connection with the rights of holders of Legacy Class A-4 Units. Except as set forth in the prior sentence and except for any issuances or adjustments corresponding to changes in the Adjustment Factor, no additional Legacy Units shall be issued after the Effective Date.
Section 2.6 Issuance of Additional Securities by the General Partner. Notwithstanding Section 4.3(e) of the Partnership Agreement, the General Partner may issue REIT Shares, Capital Shares or New Securities in connection with the rights of holders of Legacy Class A-4 Units, and such issuance shall be made in accordance with the Put Option Agreement.
Section 2.7 Legacy Holder Representative; Voting and Dispositive Power.
(a) Each Legacy Holder designates, appoints and empowers the LHR to act for, vote on, consent to or approve, and determine in its sole discretion, all matters that would be subject to the vote, consent or approval of, or determination by, the Legacy Holders in respect of the Partnership, the Partnership Agreement or this Legacy Unit Designation (including amendments and modifications to the Partnership Agreement and this Legacy Unit Designation), other than solely the making of the elections to be made by a Legacy Holder in connection with the Settlement Process as contemplated by Section 4.6 of this Legacy Unit Designation (which elections shall be made solely by the applicable Legacy Holder).
(b) Each Legacy Holder designates, appoints and empowers the LHR to execute and effectuate all matters related to the Settlement Process pursuant to Section 4.6 of this Legacy Unit Designation in accordance with (i) the terms of such Section 4.6 and (ii) the elections made by such Legacy Holder in connection with the Settlement Process as set forth in Section 4.6 of this Legacy Unit Designation.
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(c) The designation, appointment and empowerment of the LHR pursuant to this Section 2.7 will terminate as to each Legacy Unit after both of the following have occurred in respect of such Legacy Unit: (i) such Legacy Unit has been reclassified into a Partnership Common Unit; and (ii) the Settlement Process with respect to such reclassified unit is complete.
Section 2.8 Appointment of LHR as Attorney-in-Fact. Each Legacy Holder irrevocably constitutes and appoints the LHR as its true and lawful attorney-in-fact with full power and authority in its name, place and stead, including the power of substitution and re-substitution, to execute, acknowledge, deliver, swear to, file and record at the appropriate public offices such documents as may be necessary or appropriate to carry out the provisions of this Legacy Unit Designation and to effect any of the provisions of this Legacy Unit Designation, including:
(i) All amendments to this Legacy Unit Designation or the Partnership Agreement adopted in accordance with the terms hereof or any separate authorization given by such Legacy Holder or by the Legacy Holders as a group (or any applicable subset thereof that has been separately authorized in accordance with any documents or agreements governing prior to the Effective Time), and all instruments which the LHR deems appropriate to reflect a change or modification of the Partnership in accordance with the terms of this Legacy Unit Designation, the Partnership Agreement or any separate authorization given by such Legacy Holder or by the Legacy Holders as a group (or any applicable subset thereof that has been separately authorized in accordance with any documents or agreements governing prior to the Effective Time).
(ii) All instruments and agreements necessary or convenient in the determination of the LHR to effect any of the provisions of this Legacy Unit Designation or otherwise implement or effectuate the IPO Restructuring, the Lineage IPO or the Settlement Process, including any purchase agreement, contribution agreement, merger agreement, indemnity agreement, escrow agreement, stockholders agreement, lock-up agreement, operating partnership agreement, other agreement, consent, waiver, governmental filing, certificates representing such Partner’s units duly endorsed for transfer (free and clear of any liens, claims and encumbrances) and any similar, related or other documents.
(iii) All bills of sale or other transfer documents that the LHR determines are necessary, advisable or convenient to effectuate transfers or sales of a Defaulting Partner’s Partnership Units pursuant to Section 4.7 or otherwise to give effect to any remedy pursuant to Section 4.7 in connection with any Default.
(iv) All lock-ups necessary, convenient or in the best interests of the Partnership in the determination of the LHR in connection with the Lineage IPO and the Settlement Process, consistent with Section 4.6.
(v) All certificates, agreements and other instruments, which the LHR deems necessary or appropriate, to effect redemptions under the Settlement Process, including all instruments and documentation required by any transfer agent.
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(b) The appointment by all Legacy Holders of the LHR as attorney-in-fact shall be deemed to be a power coupled with an interest, in recognition of the fact that each of the Legacy Holders under this Legacy Unit Designation will be relying upon the power of the LHR to act as contemplated by this Legacy Unit Designation in any filing and other action by it on behalf of the Partnership or the Legacy Holders, shall survive the incapacitation of any Person hereby giving such power, and the transfer or assignment or reclassification of all or any portion of the Legacy Units of such Person in the Partnership; provided that in the event of the assignment by a Legacy Holder of all of its Legacy Units, the foregoing power of attorney of an assignor Legacy Holder shall survive such assignment; and provided further that if such assignee is admitted as a substitute Partner pursuant to the Partnership Agreement and this Legacy Unit Designation, the foregoing power of attorney shall survive with respect to the transferring Partner only to the extent of, and for the purpose of, enabling the LHR to execute, acknowledge, swear to and file any instruments necessary to effect the substitution of the assignee as a substitute Partner. This power of attorney may be exercised by such attorney-in-fact for all Legacy Holders (or any of them) by a single signature of the LHR acting as attorney-in-fact with or without listing all of the Legacy Holders executing an instrument.
Section 2.9 LHR Reimbursement, Expenses and Liability.
(a) The Legacy Holders approve the form of Reimbursement Agreement attached as an exhibit to the Form S-11 Registration Statement of Lineage REIT, pursuant to which, among other matters, Lineage Holdings will (i) assume responsibility for all obligations, costs, fees, expenses and liabilities of the LHR, (ii) assume responsibility for various obligations, costs, fees, expenses and liabilities of BGLH and the Bay Grove Affiliates and (iii) indemnify the LHR, BGLH, the Bay Grove Affiliates and other Persons as set forth therein.
(b) The LHR is not obligated to make any advance to, or for the account of, the Partnership, nor to pay any sums to any Person other than from amounts provided by the Partnership or another Lineage Entity; the LHR is not obligated to incur any liability or obligation for the account of the Partnership or any other Lineage Entity without assurance that the necessary funds for the discharge of the liability or obligation will be provided by the Partnership or another Lineage Entity; and the LHR shall be included as an “Indemnitee” as defined in the Partnership Agreement.
(c) The Legacy Holders approve the form of TSA attached as an exhibit to the Form S-11 Registration Statement of Lineage REIT, pursuant to which a Bay Grove Affiliate will provide the Lineage Entities with transition services supporting capital deployment and mergers and acquisitions activity for three years following the Lineage IPO in exchange for the compensation and other benefits to the Bay Grove Affiliates set forth in the TSA.
Section 2.10 Restrictions on General Partner’s Authority.
(a) The General Partner may not take any action in contravention of an express prohibition or limitation of this Legacy Unit Designation without the written consent of the LHR, and may not enter into any contract, mortgage, loan or other agreement on behalf of the Partnership that prohibits or restricts the Final Distribution, any other Securities Settlement or any Cash Settlement without the written consent of the LHR.
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(b) Except as provided in Section 7.3(c) of the Partnership Agreement, the General Partner shall not, without the prior consent of the LHR, amend, modify or terminate this Legacy Unit Designation at any time during which any Partnership Units continue to be classified as Legacy Units.
Section 2.11 Initial Holding Period. Notwithstanding anything to the contrary in the Partnership Agreement, the Initial Holding Period applicable to any Legacy Unit, and any Partnership Common Unit that is a reclassified Legacy Unit, shall be deemed to have expired on the date on which such Legacy Unit is reclassified as a Partnership Common Unit.
ARTICLE 3
DISTRIBUTIONS
Section 3.1 Requirement and Characterization of Distributions.
(a) Certain Distributions. The Legacy Units are not entitled to any preference in distribution relative to the Partnership Common Units or the LTIP Units; instead, all Legacy Units, all Partnership Common Units and all LTIP Units are pari passu. Pursuant to Section 5.1 of the Partnership Agreement, the Partnership shall make distributions to the Legacy Holders in such amounts and at such times as the General Partner may determine in the following order of priority:
All distributions made pursuant to clause (b) of Section 5.1 of the Partnership Agreement shall first be apportioned among the Partnership Common Units, the Legacy Class A Units, the Legacy Class B Units, the LTIP Units and any other Partnership Units that are pari passu with the Partnership Common Units based on the Percentage Interest held by each relative to all Partnership Common Units, Legacy Class A Units, Legacy Class B Units, LTIP Units and any other Partnership Units that are pari passu with the Partnership Common Units, collectively. Amounts initially apportioned to the Partnership Common Units, the LTIP Units or any other Partnership Units that are pari passu with the Partnership Common Units shall be distributed in accordance with Section 5.1 of the Partnership Agreement. Amounts initially apportioned to holders of the Legacy Class B Units shall be distributed pro rata to such holders based on their respective Percentage Interests (relative to each other holder of Legacy Class B Units). Amounts initially apportioned to the Legacy Class A Units shall be further apportioned among the various Sub-Classes of Legacy Class A Units pro rata in proportion to their respective Sub-Class Ratios. The amounts so apportioned to each Sub-Class of Legacy Class A Units shall be distributed as follows:
(i) Legacy Class A-1 Distributions. Amounts apportioned to the Legacy Class A-1 Units shall be further apportioned to each Legacy Class A-1 Unit in equal amounts and such apportioned amounts shall be distributed as follows:
(A) Priority Return: First, 100% to the holder of the A-1 Sub-Unit until the amount distributed in respect of such A-1 Sub-Unit pursuant to this Section 3.1(a)(i)(A) (plus any distributions pursuant to Section 3.2), and the amounts distributed in respect of such A-1 Sub-Unit’s predecessor Prior Class A Unit under the corresponding provisions of the Prior Agreement, equals the sum of the accrued and unpaid Priority Return in respect of such A-1 Sub-Unit of plus the Legacy Return Amount in respect of such A-1 Sub-Unit;
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(B) Return of Capital: Second, after such A-1 Sub-Unit has satisfied the distributions set forth in Section 3.1(a)(i)(A) (it being understood that each A-1 Sub-Unit will enter the distribution tranche represented by this Section 3.1(a)(i)(B) at different times), distributions shall continue to the holder of such A-1 Sub-Unit until the amount distributed in respect of such A-1 Sub-Unit pursuant to this Section 3.1(a)(i)(B) (plus any distributions on such A-1 Sub-Unit pursuant to Section 3.2 that are not applied to Section 3.1(a)(i)(A)), and the amounts distributed in respect of such A-1 Sub-Unit’s predecessor Prior Class A Unit under the corresponding provisions of the Prior Agreement, equals the Legacy Contributions with respect to such A-1 Sub-Unit;
(C) Catch-Up: Third, after such A-1 Sub-Unit has satisfied the distributions set forth in Section 3.1(a)(i)(B) (it being understood that each A-1 Sub-Unit will enter the distribution tranche represented by this Section 3.1(a)(i)(C) at different times), distributions shall be paid to the holder of the Founders Equity Share for such Legacy Class A-1 Unit until the amounts distributed pursuant to this Section 3.1(a)(i)(C) (plus any distributions on such Legacy Class A-1 Unit pursuant to Section 3.2 that are not applied to Section 3.1(a)(i)(A) or Section 3.1(a)(i)(B)), and the amounts distributed in respect of the Founders Equity Share on the predecessor Prior Class C Unit interest under the corresponding provisions of the Prior Agreement, equals 20% of the total amounts distributed pursuant to Section 3.1(a)(i)(A) and this Section 3.1(a)(i)(C) (including amounts distributed pursuant to Section 3.2 that are attributable to Section 3.1(a)(i)(A)) and amounts distributed under the corresponding provisions of the Prior Agreement; and
(D) 80/20 Split: Thereafter, once such Legacy Class A-1 Unit has satisfied the distributions set forth in Section 3.1(a)(i)(C) (it being understood that each Legacy Class A-1 Unit will enter the distribution tranche represented by this Section 3.1(a)(i)(D) at different times), distributions shall continue in respect of such Legacy Class A-1 Unit as follows: (A) 80% to the holder of such A-1 Sub-Unit; and (B) 20% to the holder of the Founders Equity Share in respect of such Legacy Class A-1 Unit.
(ii) Legacy Class A-2 Distributions. Amounts apportioned to the Legacy Class A-2 Units shall be further apportioned to each Legacy Class A-2 Unit in equal amounts and such apportioned amounts shall be distributed as follows:
(A) Priority Return: First, 100% to the holder of the A-2 Sub-Unit until the amount distributed in respect of such A-2 Sub-Unit pursuant to this Section 3.1(a)(ii)(A) (plus any distributions pursuant to Section 3.2), and the amounts distributed in respect of such A-2 Sub-Unit’s predecessor Prior Class A Unit under the corresponding provisions of the Prior Agreement, equals the accrued and unpaid Priority Return in respect of such A-2 Sub-Unit;
(B) Return of Capital: Second, after such A-2 Sub-Unit has satisfied the distributions set forth in Section 3.1(a)(ii)(A) (it being understood that each A-2 Sub-Unit will enter the distribution tranche represented by this Section 3.1(a)(ii)(B) at different times), distributions shall continue to the holder of such A-2 Sub-Unit until the amount distributed in respect of such A-2 Sub-Unit pursuant to this Section 3.1(a)(ii)(B) (plus any distributions on such A-2 Sub-Unit pursuant to Section 3.2 that are not applied to Section 3.1(a)(ii)(A)), and the amounts distributed in respect of such A-2 Sub-Unit’s predecessor Prior Class A Unit under the corresponding provisions of the Prior Agreement, equals the Legacy Contributions with respect to such A-2 Sub-Unit;
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(C) Catch-Up: Third, after such A-2 Sub-Unit has satisfied the distributions set forth in Section 3.1(a)(ii)(B) (it being understood that each A-2 Sub-Unit will enter the distribution tranche represented by this Section 3.1(a)(ii)(C) at different times), distributions shall be paid to the holder of the Founders Equity Share for such Legacy Class A-2 Unit until the amounts distributed pursuant to this Section 3.1(a)(ii)(C) (plus any distributions on such Legacy Class A-2 Unit pursuant to Section 3.2 that are not applied to Section 3.1(a)(ii)(A) or Section 3.1(a)(ii)(B)), and the amounts distributed in respect of the Founders Equity Share on the predecessor Prior Class C Unit interest under the corresponding provisions of the Prior Agreement, equals 20% of the total amounts distributed pursuant to Section 3.1(a)(ii)(A) and this Section 3.1(a)(ii)(C) (including amounts distributed pursuant to Section 3.2 that are attributable to Section 3.1(a)(ii)(A)) and amounts distributed under the corresponding provisions of the Prior Agreement; and
(D) 80/20 Split: Thereafter, once such Legacy Class A-2 Unit has satisfied the distributions set forth in Section 3.1(a)(ii)(C) (it being understood that each Legacy Class A-2 Unit will enter the distribution tranche represented by this Section 3.1(a)(ii)(D) at different times), distributions shall continue in respect of such Legacy Class A-2 Unit as follows: (A) 80% to the holder of such A-2 Sub-Unit; and (B) 20% to the holder of the Founders Equity Share in respect of such Legacy Class A-2 Unit.
(iii) Legacy Class A-3 Distributions. Amounts apportioned to the Legacy Class A-3 Units shall be further apportioned to each Legacy Class A-3 Unit in equal amounts and such apportioned amounts shall be distributed according to the first alternative or second alternative below, based on whichever alternative results in the Founders Equity Share receiving the greatest amount of aggregate distributions through and including such date (it being agreed that different alternatives below may apply as of different dates of distribution):
(A) First Alternative:
(1) Priority Return: First, 100% to the holder of the A-3 Sub-Unit until the amount distributed in respect of such A-3 Sub-Unit pursuant to this Section 3.1(a)(iii)(A)(1) and Section 3.1(a)(iii)(B)(1) (plus any distributions pursuant to Section 3.2), and the amounts distributed in respect of such A-3 Sub-Unit’s predecessor Prior Class A Unit under the corresponding provisions of the Prior Agreement, equals the accrued and unpaid Priority Return in respect of such A-3 Sub-Unit;
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(2) Return of Capital: Second, after such A-3 Sub-Unit has satisfied the distributions set forth in Section 3.1(a)(iii)(A)(1) (it being understood that each A-3 Sub-Unit will enter the distribution tranche represented by this Section 3.1(a)(iii)(A)(2) at different times), distributions shall continue to the holder of such A-3 Sub-Unit until the amount distributed in respect of such A-3 Sub-Unit pursuant to this Section 3.1(a)(iii)(A)(2) and Section 3.1(a)(iii)(B)(2) (plus any distributions on such A-3 Sub-Unit pursuant to Section 3.2 that are not applied to Section 3.1(a)(iii)(A)(1) or Section 3.1(a)(iii)(B)(1)), and the amounts distributed in respect of such A-3 Sub-Unit’s predecessor Prior Class A Unit under the corresponding provisions of the Prior Agreement, equals the Legacy Contributions with respect to such A-3 Sub-Unit;
(3) Catch-Up: Third, after such A-3 Sub-Unit has satisfied the distributions set forth in Section 3.1(a)(iii)(A)(2) (it being understood that each A-3 Sub-Unit will enter the distribution tranche represented by this Section 3.1(a)(iii)(A)(3) at different times), distributions shall be paid to the holder of the Founders Equity Share for such Legacy Class A-3 Unit until the amounts distributed pursuant to this Section 3.1(a)(iii)(A)(3) and Section 3.1(a)(iii)(B)(3) (plus any distributions on such Legacy Class A-3 Unit pursuant to Section 3.2 that are not applied to Section 3.1(a)(iii)(A)(1), Section 3.1(a)(iii)(A)(2), Section 3.1(a)(iii)(B)(1) or Section 3.1(a)(iii)(B)(2)), and the amounts distributed in respect of the Founders Equity Share on the predecessor Prior Class C Unit interest under the corresponding provisions of the Prior Agreement, equals 20% of the total amounts distributed pursuant to Section 3.1(a)(iii)(A)(1), Section 3.1(a)(iii)(B)(1), this Section 3.1(a)(iii)(A)(3) and Section 3.1(a)(iii)(B)(3) (including amounts distributed pursuant to Section 3.2 that are attributable to Section 3.1(a)(iii)(A)(1) or Section 3.1(a)(iii)(B)(1)) and amounts distributed under the corresponding provisions of the Prior Agreement; and
(4) 80/20 Split: Thereafter, once such Legacy Class A-3 Unit has satisfied the distributions set forth in Section 3.1(a)(iii)(A)(3) (it being understood that each Legacy Class A-3 Unit will enter the distribution tranche represented by this Section 3.1(a)(iii)(A)(4) at different times), distributions shall continue in respect of such Legacy Class A-3 Unit as follows: (A) 80% to the holder of such A-3 Sub-Unit; and (B) 20% to the holder of the Founders Equity Share in respect of such Legacy Class A-3 Unit.
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(B) Second Alternative:
(1) Priority Return: First, 100% to the holder of the A-3 Sub-Unit until the amount distributed in respect of such A-3 Sub-Unit pursuant to this Section 3.1(a)(iii)(B)(1) and Section 3.1(a)(iii)(A)(1) (plus any distributions pursuant to Section 3.2), and the amounts distributed in respect of such A-3 Sub-Unit’s predecessor Prior Class A Unit under the corresponding provisions of the Prior Agreement, equals the accrued and unpaid Alternative Priority Return in respect of such A-3 Sub-Unit;
(2) Return of Capital: Second, after such A-3 Sub-Unit has satisfied the distributions set forth in Section 3.1(a)(iii)(B)(1) (it being understood that each A-3 Sub-Unit will enter the distribution tranche represented by this Section 3.1(a)(iii)(B)(2) at different times), distributions shall continue to the holder of such A-3 Sub-Unit until the amount distributed in respect of such A-3 Sub-Unit pursuant to this Section 3.1(a)(iii)(B)(2) and Section 3.1(a)(iii)(A)(2) (plus any distributions on such A-3 Sub-Unit pursuant to Section 3.2 that are not applied to Section 3.1(a)(iii)(B)(1) or Section 3.1(a)(iii)(A)(1)), and the amounts distributed in respect of such A-3 Sub-Unit’s predecessor Prior Class A Unit under the corresponding provisions of the Prior Agreement, equals the Legacy Contributions with respect to such A-3 Sub-Unit;
(3) Catch-Up: Third, after such A-3 Sub-Unit has satisfied the distributions set forth in Section 3.1(a)(iii)(B)(2) (it being understood that each A-3 Sub-Unit will enter the distribution tranche represented by this Section 3.1(a)(iii)(B)(3) at different times), distributions shall be paid to the holder of the Founders Equity Share for such Legacy Class A-3 Unit until the amounts distributed pursuant to this Section 3.1(a)(iii)(B)(3) and Section 3.1(a)(iii)(A)(3) (plus any distributions on such Legacy Class A-3 Unit pursuant to Section 3.2 that are not applied to Section 3.1(a)(iii)(B)(1), Section 3.1(a)(iii)(B)(2), Section 3.1(a)(iii)(A)(1) or Section 3.1(a)(iii)(A)(2)), and the amounts distributed in respect of the Founders Equity Share on the predecessor Prior Class C Unit interest under the corresponding provisions of the Prior Agreement, equals 30% of the total amounts distributed pursuant to Section 3.1(a)(iii)(B)(1), Section 3.1(a)(iii)(A)(1), this Section 3.1(a)(iii)(B)(3) and Section 3.1(a)(iii)(A)(3) (including amounts distributed pursuant to Section 3.2 that are attributable to Section 3.1(a)(iii)(B)(1) or Section 3.1(a)(iii)(A)(1)) and amounts distributed under the corresponding provisions of the Prior Agreement; and
(4) 70/30 Split: Thereafter, once such Legacy Class A-3 Unit has satisfied the distributions set forth in Section 3.1(a)(iii)(B)(3) (it being understood that each Legacy Class A-3 Unit will enter the distribution tranche represented by this Section 3.1(a)(iii)(B)(4) at different times), distributions shall continue in respect of such Legacy Class A-3 Unit as follows: (A) 70% to the holder of such A-3 Sub-Unit; and (B) 30% to the holder of the Founders Equity Share in respect of such Legacy Class A-3 Unit.
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(iv) Legacy Class A-4 Distributions. Amounts apportioned to the Legacy Class A-4 Units shall be further apportioned to each Legacy Class A-4 Unit in equal amounts and such apportioned amounts shall be distributed according to the first alternative or second alternative below, based on whichever alternative results in the Founders Equity Share receiving the greatest amount of aggregate distributions through and including such date (it being agreed that different alternatives below may apply as of different dates of distribution):
(A) First Alternative:
(1) Priority Return: First, 100% to the holder of the A-4 Sub-Unit until the amount distributed in respect of such A-4 Sub-Unit pursuant to this Section 3.1(a)(iv)(A)(1) and Section 3.1(a)(iv)(B)(1) (plus any distributions pursuant to Section 3.2), and the amounts distributed in respect of such A-4 Sub-Unit’s predecessor Prior Class A Unit under the corresponding provisions of the Prior Agreement, equals the accrued and unpaid Priority Return in respect of such A-4 Sub-Unit;
(2) Return of Capital: Second, after such A-4 Sub-Unit has satisfied the distributions set forth in Section 3.1(a)(iv)(A)(1) (it being understood that each A-4 Sub-Unit will enter the distribution tranche represented by this Section 3.1(a)(iv)(A)(2) at different times), distributions shall continue to the holder of such A-4 Sub-Unit until the amount distributed in respect of such A-4 Sub-Unit pursuant to this Section 3.1(a)(iv)(A)(2) and Section 3.1(a)(iv)(B)(2) (plus any distributions on such A-4 Sub-Unit pursuant to Section 3.2 that are not applied to Section 3.1(a)(iv)(A)(1) or Section 3.1(a)(iv)(B)(1)), and the amounts distributed in respect of such A-4 Sub-Unit’s predecessor Prior Class A Unit under the corresponding provisions of the Prior Agreement, equals the Legacy Contributions with respect to such A-4 Sub-Unit;
(3) Catch-Up: Third, after such A-4 Sub-Unit has satisfied the distributions set forth in Section 3.1(a)(iv)(A)(2) (it being understood that each A-4 Sub-Unit will enter the distribution tranche represented by this Section 3.1(a)(iv)(A)(3) at different times), distributions shall be paid to the holder of the Founders Equity Share for such Legacy Class A-4 Unit until the amounts distributed pursuant to this Section 3.1(a)(iv)(A)(3) and Section 3.1(a)(iv)(B)(3) (plus any distributions on such Legacy Class A-4 Unit pursuant to Section 3.2 that are not applied to Section 3.1(a)(iv)(A)(1), Section 3.1(a)(iv)(A)(2), Section 3.1(a)(iv)(B)(1) or Section 3.1(a)(iv)(B)(2)), and the amounts distributed in respect of the Founders Equity Share on the predecessor Prior Class C Unit interest under the corresponding provisions of the Prior Agreement, equals 20% of the
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total amounts distributed pursuant to Section 3.1(a)(iv)(A)(1), Section 3.1(a)(iv)(B)(1), this Section 3.1(a)(iv)(A)(3) and Section 3.1(a)(iv)(B)(3) (including amounts distributed pursuant to Section 3.2 that are attributable to Section 3.1(a)(iv)(A)(1) or Section 3.1(a)(iv)(B)(1)) and amounts distributed under the corresponding provisions of the Prior Agreement; and
(4) 80/20 Split: Thereafter, once such Legacy Class A-4 Unit has satisfied the distributions set forth in Section 3.1(a)(iv)(A)(3) (it being understood that each Legacy Class A-4 Unit will enter the distribution tranche represented by this Section 3.1(a)(iv)(A)(4) at different times), distributions shall continue in respect of such Legacy Class A-4 Unit as follows: (A) 80% to the holder of such A-4 Sub-Unit; and (B) 20% to the holder of the Founders Equity Share in respect of such Legacy Class A-4 Unit.
(B) Second Alternative:
(1) Priority Return: First, 100% to the holder of the A-4 Sub-Unit until the amount distributed in respect of such A-4 Sub-Unit pursuant to this Section 3.1(a)(iv)(B)(1) and Section 3.1(a)(iv)(A)(1) (plus any distributions pursuant to Section 3.2), and the amounts distributed in respect of such A-4 Sub-Unit’s predecessor Prior Class A Unit under the corresponding provisions of the Prior Agreement, equals the accrued and unpaid Alternative Priority Return in respect of such A-4 Sub-Unit;
(2) Return of Capital: Second, after such A-4 Sub-Unit has satisfied the distributions set forth in Section 3.1(a)(iv)(B)(1) (it being understood that each A-4 Sub-Unit will enter the distribution tranche represented by this Section 3.1(a)(iv)(B)(2) at different times), distributions shall continue to the holder of such A-4 Sub-Unit until the amount distributed in respect of such A-4 Sub-Unit pursuant to this Section 3.1(a)(iv)(B)(2) and Section 3.1(a)(iv)(A)(2) (plus any distributions on such A-4 Sub-Unit pursuant to Section 3.2 that are not applied to Section 3.1(a)(iv)(B)(1) or Section 3.1(a)(iv)(A)(1)), and the amounts distributed in respect of such A-4 Sub-Unit’s predecessor Prior Class A Unit under the corresponding provisions of the Prior Agreement, equals the Legacy Contributions with respect to such A-4 Sub-Unit;
(3) Catch-Up: Third, after such A-4 Sub-Unit has satisfied the distributions set forth in Section 3.1(a)(iv)(B)(2) (it being understood that each A-4 Sub-Unit will enter the distribution tranche represented by this Section 3.1(a)(iv)(B)(3) at different times), distributions shall be paid to the holder of the Founders Equity Share for such Legacy Class A-4 Unit until the amounts distributed pursuant to this Section 3.1(a)(iv)(B)(3) and Section 3.1(a)(iv)(A)(3) (plus any distributions on such Legacy Class A-4 Unit pursuant to Section 3.2 that are not applied to Section 3.1(a)(iv)(B)(1),
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Section 3.1(a)(iv)(B)(2), Section 3.1(a)(iv)(A)(1) or Section 3.1(a)(iv)(A)(2)), and the amounts distributed in respect of the Founders Equity Share on the predecessor Prior Class C Unit interest under the corresponding provisions of the Prior Agreement, equals 30% of the total amounts distributed pursuant to Section 3.1(a)(iv)(B)(1), Section 3.1(a)(iv)(A)(1), this Section 3.1(a)(iv)(B)(3) and Section 3.1(a)(iv)(A)(3) (including amounts distributed pursuant to Section 3.2 that are attributable to Section 3.1(a)(iv)(B)(1) or Section 3.1(a)(iv)(A)(1)) and amounts distributed under the corresponding provisions of the Prior Agreement; and
(4) 70/30 Split: Thereafter, once such Legacy Class A-4 Unit has satisfied the distributions set forth in Section 3.1(a)(iv)(B)(3) (it being understood that each Legacy Class A-4 Unit will enter the distribution tranche represented by this Section 3.1(a)(iv)(B)(4) at different times), distributions shall continue in respect of such Legacy Class A-4 Unit as follows: (A) 70% to the holder of such A-4 Sub-Unit; and (B) 30% to the holder of the Founders Equity Share in respect of such Legacy Class A-4 Unit.
(v) Cumulative Distributions: For all purposes of this Legacy Unit Designation, any distributions previously made to the holders of any Legacy Units by BGLH during the period in which such Legacy Units were corresponding units of BGLH shall be treated as if distributed by the Partnership to the Legacy Holders holding such Legacy Units for purposes of determining the respective distribution entitlements of the Legacy Holders pursuant to this Legacy Unit Designation (it being agreed that the Founders Equity Share in respect of Legacy Units is separate from the Class C Units remaining in existence at BGLH).
(b) Tax Distributions. From and after the Effective Time, the holder of the Founders Equity Share is not entitled to receive any tax distribution advances from the Partnership. In addition, all prior tax distribution advances made to the holder of the Founders Equity Share by the Partnership have been fully settled with the Partnership, and all rights of the Founders Equity Share to receive distributions without any offset for the prior tax distribution advances made by the Partnership have been fully restored (and the Capital Account balance of the holder of the Founders Equity Share has also been similarly restored). As a result, the holder of the Founders Equity Share is entitled to receive all distributions set forth for the Founders Equity Share in Section 3.1(a) and Section 3.2 of this Legacy Unit Designation without any reduction to or offset against such amounts for any prior tax distributions received.
(c) Prior Special Distributions. From and after the Effective Time, the holder of the Founders Equity Share is not entitled to receive any advances against the Founders Equity Share, and all prior distribution advances made to the holder of the Founders Equity Share have been fully settled with the Partnership, and all rights of the holder of the Founders Equity Share to receive distributions without any offset for any prior distribution advances have been fully restored (and the Capital Account balance of the holder of the Founders Equity Share has also been similarly restored). As a result, the holder of the Founders Equity Share is entitled to receive all distributions set forth for the Founders Equity Share in Section 3.1(a) and Section 3.2 of this Legacy Unit Designation without any reduction to or offset against such amounts.
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(d) Distributions Limited. No Partner shall be entitled to any distribution or payment with respect to any Legacy Units upon the resignation or withdrawal of such Partner. Distributions may be limited and repayable as provided in the Act.
(e) Impact of Reclassification. Any reclassification of Legacy Class A Units into Partnership Common Units shall be treated for purposes of the economic sharing in Section 3.1(a) and Section 3.2 of this Legacy Unit Designation as an in-kind distribution of Partnership Common Units in redemption of the corresponding Legacy Class A Units, such that (i) the holders of the A-Piece Sub-Units associated with each Legacy Class A Unit will receive that portion of the Partnership Common Units into which such Legacy Class A Units are reclassified as reflects the A-Piece Sub-Unit share under Section 3.1(a) and Section 3.2 and (ii) the holder of the Founders Equity Share will receive that portion of the Partnership Common Units into which such Legacy Class A Units are reclassified as reflects the C-Piece Sub-Unit share under Section 3.1(a) and Section 3.2. No fractional Partnership Common Units shall be issued upon the reclassification of Legacy Class A Units; however, each holder’s share will be considered in the aggregate upon the reclassification of any group of Legacy Class A Units in which the A-Piece Sub-Unit is held by the same holder. Any remaining fractional unit will instead be settled through a cash payment for the fractional interest not received.
Section 3.2 Distributions Upon Dissolution. Proceeds from a sale or liquidation of all or substantially all of the assets of the Partnership and amounts available upon dissolution attributable to the Legacy Units, after payment of, or adequate provision for, the debts and obligations of the Partnership as set forth in Section 13.2(a)(i) through Section 13.2(a)(iii) of the Partnership Agreement, shall be distributed to the Legacy Holders in accordance with Section 3.1.
Section 3.3 Distribution of Assets in Kind. No Legacy Holder shall have the right to require any distribution of any assets of the Partnership to be made in cash or in kind. If any assets of the Partnership are distributed in kind, such assets shall be distributed on the basis of their fair market value as determined by the General Partner in good faith. All in kind distributions shall be made in accordance with Section 4.4 or Section 4.6. The General Partner and the LHR may each retain such advisors as it deems necessary to assist it in determining the value of any property to be allocated or distributed by the Partnership. The determination of the General Partner shall be binding on all Legacy Holders; and any determination of the LHR that does not conflict with a determination of the General Partner on these matters shall also be binding on all Legacy Holders.
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ARTICLE 4
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
Section 4.1 General Restrictions on Legacy Transfers. Notwithstanding any right given in any Prior Side Letter or in the Partnership Agreement (including Article 11 thereof), but nevertheless subject to any additional restrictions set forth in Article 11 of the Partnership Agreement:
(a) Generally. Other than as permitted pursuant to Section 4.2, no Legacy Holder may make a Legacy Transfer of all or any part of its Legacy Units or any beneficial interest therein without both (i) the prior written consent of the LHR, which approval may be given or withheld by the LHR in its sole discretion, and (ii) compliance with the Transfer restrictions in Article 11 of the Partnership Agreement. Moreover, in the case of a Legacy Holder for which the Legacy Units represent substantially all of the total assets or property held by such Legacy Holder, a change of control of such Legacy Holder or other indirect Legacy Transfer of Legacy Units shall also be prohibited absent (i) prior written consent of the LHR, which approval may be given or withheld by the LHR in its sole discretion, and (ii) compliance with the Transfer restrictions in Article 11 of the Partnership Agreement. The Legacy Holders and the LHR intend to apply the broadest possible restrictions on Legacy Transfers pursuant to this Legacy Unit Designation in order to promote the success of the Settlement Process and to protect against any competing liquidity measures that could adversely impact pricing, market perception or demand for REIT Shares or Partnership Common Units or in any way impede the Settlement Process. Nothing in this Section 4.1 shall prohibit any Legacy Holder’s participation in the Settlement Process in the manner contemplated pursuant to Section 4.6.
(b) Secondary Transactions. No Legacy Holder may engage in, solicit or respond to offerings for any Legacy Transfer of any Partnership Interest or beneficial interest therein to a third party (a “Secondary Transaction”), including another Partner of the Partnership, without the prior written consent of the LHR, which approval may be given or withheld by the LHR in its sole discretion. In the event any Legacy Holder is approached or presented with an offer to engage in a Secondary Transaction, such Legacy Holder shall use commercially reasonable efforts promptly to provide written notice thereof to the LHR with the details of such offer.
(c) Hedging and Derivatives. A Legacy Holder may not effect or permit any Legacy Transfer of any economic participation in any Legacy Units or any beneficial interest therein, whether by way of a synthetic or other derivative instrument or arrangement or otherwise, nor may a Legacy Holder hedge or short its Legacy Units or any interest therein, in each case without the prior written consent of the LHR, which approval may be given or withheld by the LHR in its sole discretion.
(d) Pledging. A Legacy Holder may not pledge, mortgage, grant any security interest in or lien on, charge, hypothecate or otherwise encumber in any manner any portion of its Legacy Units or any beneficial interest therein, in each case: (i) without the prior written consent of the LHR, which approval may be given or withheld by the LHR in its sole discretion; or (ii) pursuant to a particular transaction that was in effect prior to the Effective Date and previously approved in writing by the General Partner.
(e) Entire Agreement. The Partnership, the LHR, the General Partner and each Legacy Holder hereby agree that this Article 4 of this Legacy Unit Designation, together with any additional restrictions on Transfers pursuant to the Partnership Agreement, constitutes the entire agreement of the Partnership, the LHR, the General Partner and each Legacy Holder relating to Legacy Transfers, Secondary Transactions, hedging, derivatives, pledges and other forms of assignment or encumbrance of any kind regarding Legacy Units or any beneficial interest therein and supersedes all Prior Side Letters (which are terminated in accordance with Section 4.6(a)(ii)) and any other prior contracts, agreements, arrangements or understandings with respect to any such matters.
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Section 4.2 Permitted Transfers. Notwithstanding any right given in any Prior Side Letter (which are terminated in accordance with Section 4.6(a)(ii)):
(a) Certain Permitted Legacy Transfers. Notwithstanding the provisions of Section 4.1 hereof, the following Legacy Transfers (“Permitted Legacy Transfers”) are permitted without the prior written consent of, or notice to, the LHR, and such permitted Legacy Transfers shall additionally be deemed to be “Permitted Transfers” for purposes of the Partnership Agreement, provided in each case that such Legacy Transfers would not violate any of the conditions in Section 4.2(c):
(i) If the Legacy Holder is (or is directly or indirectly owned by) a private investment vehicle managed by an investment manager, (A) a transfer or issuance of interests among direct or indirect limited partners or other similar investors in such private investment vehicle if such private investment vehicle was not formed for the primary purpose of acquiring interests directly or indirectly in any Lineage Entity, and any interests held directly or indirectly in any Lineage Entities are neither the only asset nor the primary asset held by such private investment vehicle or its parent entity and provided further that such transfer does not result in an increase in the aggregate percentage of equity participation by benefit plan investors (as defined in the ERISA Regulations, a “Benefit Plan Investor”) in any class of equity interests in the Partnership, as calculated under the ERISA Regulations, or (B) ownership changes in such Legacy Holder’s investment manager; provided in each case that such transfers or issuances would comply with Section 4.2(d), satisfy the requirements of Section 15.16 of the Partnership Agreement and not cause any remedies under Section 15.16 of the Partnership Agreement to apply, not result in an increase in the aggregate percentage of equity participation by Benefit Plan Investors in any class of equity interests in the Partnership, as calculated under the ERISA Regulations, and not result in any representation made by such Legacy Holder in its Subscription Agreement failing to be true and complete; it being agreed that this Section 4.2(a)(i) permits only qualifying ownership transfers within a Legacy Holder and does not permit any direct transfers of Legacy Units (which would instead be subject to Section 4.1).
(ii) If the Legacy Holder is a family office within the meaning of 17 CFR 275.202(a)(11)(G)-1 in the U.S. Code of Federal Regulations, a transfer or issuance of interests among family members or family office employees holding interests in such Legacy Holder; provided in each case that such transfers or issuances would comply with Section 4.2(d), satisfy the requirements of Section 15.16 of the Partnership Agreement and not cause any remedies under Section 15.16 of the Partnership Agreement to apply, not result in an increase in the aggregate percentage of equity participation by Benefit Plan Investors in any class of equity interests in the Partnership, as calculated under the ERISA Regulations, and not result in any representation made by such Legacy Holder in its Subscription Agreement failing to be true and complete; it being agreed that this Section 4.2(a)(ii) permits only qualifying ownership transfers within a Legacy Holder and does not permit any direct transfers of Legacy Units (which would instead be subject to Section 4.1).
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(b) Permitted Legacy Transfers. The LHR will not withhold or delay its consent to the following types of Legacy Transfers if such Legacy Transfers meet the conditions below:
(i) A Legacy Transfer by beneficiary designation, will or intestate succession;
(ii) A Legacy Transfer to a trust or entity established by the Legacy Holder for the benefit of the Legacy Holder or the Legacy Holder’s immediate family (or the Legacy Holder’s sibling, spouse of sibling, or immediate family of the sibling or spouse of sibling); and
(iii) A Legacy Transfer by a Legacy Holder to an Affiliate of such Legacy Holder, where the LHR in its sole discretion has determined that such Transfer would not constitute a Secondary Transaction;
provided in each of the foregoing cases that, unless otherwise waived by the General Partner and the LHR (as applicable), each in its sole discretion in writing: (A) such transferee has agreed in writing on a form prescribed by the Partnership to be bound by all provisions of the Partnership Agreement and this Legacy Unit Designation, (B) each of the General Partner and the LHR in its sole discretion has determined that such Legacy Transfer would comply with Section 4.2(d), would not result in an increase in the aggregate percentage of equity participation by Benefit Plan Investors in any class of equity interests in the Partnership, as calculated under the ERISA Regulations, (C) each of the General Partner, the LHR or both, as applicable, in their sole discretion has determined that such Legacy Transfer meets the conditions of Section 4.2(c), (D) the General Partner in its sole discretion has determined that the requirements of Section 15.16 of the Partnership Agreement shall have been satisfied and none of the restrictions contained therein would prohibit such Legacy Transfer or cause any remedies contained in Section 15.16 of the Partnership Agreement to apply, (E) the General Partner in its sole discretion has determined that such Legacy Transfer shall either be disregarded for U.S. federal income tax purposes or shall qualify as a “private transfer” within the meaning of Regulations Section 1.7704-1(e)(1), and (F) the LHR in its sole discretion has determined that such Legacy Transfer would not impede, disrupt or interfere with a settlement event or otherwise adversely affect the Settlement Process.
(c) Legacy Transfer Conditions. Notwithstanding any contrary provision in the Partnership Agreement, the Partnership shall not register a Legacy Transfer of Legacy Units by any Legacy Holder, and each Legacy Holder undertakes to each of the other Legacy Holders and the Partnership that it shall not at any time engage in a Legacy Transfer of Legacy Units, unless (in addition to obtaining the consent of the LHR where required in this Legacy Unit Designation and the consent of the General Partner where required in the Partnership Agreement or this Legacy Unit Designation):
(i) Such Legacy Transfer is in compliance with applicable legal and regulatory requirements, including applicable requirements under federal, state and foreign securities laws;
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(ii) The General Partner determines, in its sole discretion, that (A) such Legacy Transfer could not reasonably be expected to result in: (1) the Partnership being treated as a corporation for United States federal income tax purposes or applicable state income tax purposes; (2) the Partnership failing to meet the “lack of actual trading” safe harbor, the private placement safe harbor set forth in Regulations Section 1.7704-1(h) or any other safe harbor from treatment as a “publicly traded partnership” selected by the General Partner, as described in Regulations Section 1.7704-1, or otherwise becoming a “publicly traded partnership,” as such term is defined in Sections 469(k)(2) or 7704(b) of the Code; (3) Partnership Interests being traded on an “established securities market” or a “secondary market or the substantial equivalent thereof” as those terms are defined in Regulations Section 1.7704-1 or (4) a termination of the Partnership for state income tax purposes, if applicable, and (B) such Legacy Transfer could not reasonably be expected to result in any REIT Subsidiary failing to qualify as a REIT for U.S. federal income tax purposes;
(iii) Each of the General Partner and the LHR determines in its sole discretion that such Legacy Transfer could not reasonably be expected to result in the assets of the Partnership being deemed “plan assets” subject to the U.S. Employee Retirement Income Security Act of 1974, as amended, or any successor statute or Section 4975 of the Code; and
(iv) Each of the General Partner and the LHR determines in its sole discretion that such Legacy Transfer could not reasonably be expected to (A) result in a violation of a statute, rule, order, directive, regulation or governmental administrative policy of a U.S. federal or state or non-U.S. governmental authority or stock exchange regulatory organization applicable to any Lineage Entity, the LHR, BGLH, any Bay Grove Affiliate or any of their respective Affiliates or subsidiaries, or (B) subject any Lineage Entity, the LHR, BGLH, any Bay Grove Affiliate or any of their respective Affiliates or subsidiaries to any material regulatory, legal or tax requirement to which it would not otherwise be subject or increase materially any regulatory, legal or tax requirement beyond what it would otherwise have been.
Each of the General Partner and the LHR, in its sole discretion, may waive any or all of the conditions set forth in Section 4.2(c)(iii) or Section 4.2(c)(iv) (but both must waive in order to have an effective waiver of such conditions), and the General Partner, in its sole discretion, may waive any or all of the conditions set forth in Section 4.2(c)(ii).
(d) Foreign Ownership Conditions. Notwithstanding any contrary provision in the Partnership Agreement or this Legacy Unit Designation, no Legacy Holder may make a Legacy Transfer of its Legacy Units to a Foreign Person or permit any direct or indirect Legacy Transfer of any interest in its Legacy Units or in such Legacy Holder to a Foreign Person, in each case except (i) with the prior written consent of the General Partner, which consent may be given or withheld by the General Partner in its sole discretion or (ii) to the extent such Transfer would not increase the number or value (whichever is more restrictive) of such Legacy Holder’s Legacy Units that are held, or treated as held, directly or indirectly by Foreign Persons for purposes of Section 897(h)(4)(B) of the Code. For this purpose, the term “Foreign Person” shall have the meaning ascribed thereto for purposes of Section 897(h)(4)(B) of the Code and the Regulations, including proposed Regulations, promulgated thereunder, and, for the avoidance of doubt, shall
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include a “qualified foreign pension fund” as defined in Section 897(l) of the Code. The foregoing provisions are intended to enable the General Partner (if it so chooses) to qualify as a “domestically controlled qualified investment entity” within the meaning of Section 897(h)(4)(B) of the Code. Any Legacy Transfers in violation of the foregoing which would result in the General Partner failing to so qualify, shall be void ab initio, and the intended transferee shall acquire no rights in Legacy Units directly or indirectly so Legacy Transferred.
Section 4.3 Waiver of General Partner Right of First Refusal; Other Requirements(a) . With respect to all Permitted Legacy Transfers, the General Partner hereby waives (i) its right of first refusal as set forth in Section 11.3(a)(i) of the Partnership Agreement; (ii) the minimum transfer restriction set forth in Section 11.3(a)(iv) of the Partnership Agreement, and (iii) any requirement that Legacy Transfers only be made on the first day of a fiscal quarter of the Partnership, unless the General Partner otherwise Consents. In addition, the General Partner hereby consents to any Substituted Limited Partner approved by the LHR.
Section 4.4 Redemption; Reclassification; Repurchase. Pursuant to Section 4.6, Legacy Units will be reclassified into Partnership Common Units, and upon such reclassification, the holders of the A-Piece Sub-Unit and C-Piece Sub-Unit, respectively, of such Legacy Units will receive that number of Partnership Common Units that it would be entitled to according to the distribution provisions set forth in Section 3.1 herein. No Legacy Holder shall have any right to have any Legacy Units redeemed at any time except as set forth in Section 4.4(c). The LHR may nevertheless cause the General Partner to repurchase Legacy Units (or the Partnership Common Units into which such Legacy Units have been reclassified) from the Legacy Holders in accordance with the Settlement Process or additionally outside the Settlement Process from a Legacy Holder, in the sole discretion of either of the General Partner or the LHR, as follows (other than with respect to the right at the option of the Legacy Class A-4 Representative as set forth in Section 4.4(c) and other than as set forth below):
(a) Regulatory and Tax Compliance. At the election of either of the General Partner or the LHR, Legacy Units may be reclassified into Partnership Common Units or repurchased or redeemed at the fair market value of such Legacy Units as of the date of repurchase (as determined by the General Partner or the LHR, as applicable), to the extent such Legacy Units or the A-Piece Sub-Units of such Legacy Units (as applicable) are held or acquired by a Person not entitled to hold them pursuant to any law or regulation applicable to the Partnership, any other Lineage Entity, or to the extent the General Partner or the LHR deems necessary or appropriate to ensure that the Partnership is not deemed to hold “plan assets” within the meaning of the ERISA Regulations (as determined by either of the General Partner or the LHR, each in its sole discretion). The holders of the A-Piece Sub-Unit and C-Piece Sub-Unit of such reclassified Legacy Units (if such Legacy Units are Legacy Class A Units) will receive the amount that each such holder would receive in a liquidation of the Partnership if the actual value of the Legacy Units so reclassified constituted the entire value of the Partnership and such reclassified Legacy Units constituted the only units of the Partnership.
(b) Former Employees. At the election of the General Partner or the LHR at a price or for the reclassification of Legacy Units into Partnership Common Units, in either case reflecting no more than the fair market value of such Legacy Units as of the date of repurchase or reclassification (as determined by the General Partner or the LHR, as applicable), from any Person who previously was and is no longer employed by or providing service to any Lineage Entity (or in connection with such repurchase or reclassification transaction will no longer be employed by or providing service to any Lineage Entity).
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(c) Special Legacy Class A-4 Right. On March 1, 2025, if the Legacy Class A-4 Units remain outstanding and they are not otherwise then promptly redeemable (and in no event later than 45 days later redeemable) for cash or exchanged for readily liquid equity of Lineage REIT saleable in a public market or private market in either case for an amount per Legacy Class A-4 Unit as would result in an aggregate value paid to the holder of the A-4 Sub-Units of at least the Legacy Class A-4 Target Amount per A-4 Sub-Unit (less the amount of all distributions theretofore made in respect of such A-4 Sub-Unit and its predecessor units to the current or any former holder of such A-4 Sub-Unit or predecessor units) after payment of the Founders Equity Share that would be paid upon redemption of the applicable Legacy Class A-4 Units, then by delivery of written notice thereof to the LHR not later than April 15, 2025, the Legacy Class A-4 Representative shall have the one-time right to provide written notice to the LHR (a “Legacy Class A-4 Election Notice”) requiring the Partnership to either, at the election of the Legacy Class A-4 Representative, (x) purchase, in accordance with this Section 4.4(c), all or any portion of the Legacy Class A-4 Units at a per unit redemption price (the “Legacy Class A-4 Unit Redemption Price”) (paid as described below) equal to the greater of (i) (A) such amount per Legacy Class A-4 Unit as would result in a redemption payment per purchased Legacy Class A-4 Unit to the respective holders of the A-4 Sub-Unit thereof (after deducting the Founders Equity Share that would be paid upon such redemption) of the Legacy Class A-4 Target Amount less (B) the amount of all distributions theretofore made in respect of such Legacy Class A-4 Unit to the current or any former holder of such A-4 Sub-Unit and (ii) the Legacy Class A-4 Unit FMV as of date of the Legacy Class A-4 Election Notice (any election pursuant to this clause (x), a “Legacy Class A-4 Redemption Election”) or (y) pay, in accordance with this Section 4.4(c), to such respective holders an amount per A-4 Sub-Unit held by such holders equal to (i) the Legacy Class A-4 Target Amount less (ii) the Legacy Class A-4 Unit FMV less (iii) the amount of all distributions theretofore made in respect of such A-4 Sub-Unit to the current or any former holder of such A-4 Sub-Unit, which payment obligation shall be satisfied by, at the election of the Legacy Class A-4 Representative, (A) a cash payment, (B) the issuance of new Legacy Class A Units (of such new or existing Sub-Class determined by the LHR in its sole discretion) to such holder, with each such A-Piece Sub-Unit of such Legacy Class A Unit for this purpose being deemed to have a value equal to the Legacy Class A-4 Unit FMV or (C) any combination of the foregoing (i.e., part cash and part new Legacy Class A Units); provided that the issuance of any such new Partnership Interest pursuant to this Section 4.4(c) shall be subject to the LHR’s determination, in its reasonable discretion, that the applicable holder is qualified to acquire such Legacy Class A Units and that the issuance thereof would not, if such issuance was a transfer of an equal number of outstanding Partnership Common Units, violate any provision of Section 11.3 of the Partnership Agreement or the Ownership Limit (any election pursuant to this clause (y), a “Legacy Class A-4 Top-Up Election”). The redemption of such Legacy Class A-4 Units pursuant to a Legacy Class A-4 Redemption Election or the payment pursuant to a Legacy Class A-4 Top-Up Election, as applicable, will occur on or prior to the sixtieth (60th) day following the date on which the LHR has received the applicable Legacy Class A-4 Election Notice, or if such day is not a Business Day then on the first Business Day thereafter (such date, the “Legacy Class A-4 Payment Date”). Each party shall pay the fees and expenses of its own attorneys, accountants and advisors in connection with the transactions contemplated by this Section 4.4(c). At the written request of the Legacy Class A-4 Representative, in order to assist the Legacy Class A-4 Representative in determining whether to exercise the rights in this Section 4.4(c), the LHR shall provide the Legacy Class A-4 Representative with a calculation of the Legacy Class A-4 Unit FMV. “Legacy Class A-4 Target Amount” shall mean an amount per Legacy Class A-4 Unit equal to $107.14.
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(i) Legacy Class A-4 Redemption Elections. If the Legacy Class A-4 Unit Redemption Price in respect of any Legacy Class A-4 Redemption Election is the amount set forth in the foregoing clause (x)(i), then: (1) the redemption payment to the holder of each A-4 Sub-Unit being redeemed in respect of such Legacy Class A-4 Redemption Election will be the full amount that would result in a redemption payment for such A-4 Sub-Unit to the holder thereof (after deducting the Founders Equity Share that would be paid upon such redemption) of the Legacy Class A-4 Target Amount, less the amount of all distributions theretofore made in respect of such A-4 Sub-Unit to the current or any former holder of such A-4 Sub-Unit; and (2) the holder of the Founders Equity Share on such Legacy Class A-4 Units being redeemed will be paid by the Partnership the amount that the holder of the Founders Equity Share would receive in a liquidation of the Partnership if the Legacy Class A-4 Unit FMV of the Legacy Class A-4 Units on the date of the Legacy Class A-4 Election Notice constituted the entire value of the Partnership and such Legacy Class A-4 Units constituted the only units of the Partnership (which payment may be made in cash or through the reclassification of the Legacy Class A-4 Unit Capital Account balance amounts into Partnership Common Units with equivalent value, at the option of the holder of the Founders Equity Share). If the Legacy Class A-4 Unit Redemption Price in respect of any Legacy Class A-4 Redemption Election is the amount set forth in the foregoing clause (x)(ii), then: (1) the redemption payment to the holder of each A-4 Sub-Unit being redeemed will be the amount that the holder of such A-4 Sub-Unit would receive in respect of such A-4 Sub-Unit in a liquidation of the Partnership if the amount equal to the product of the number of outstanding Legacy Class A-4 Units and the Legacy Class A-4 Unit FMV on the date of the Legacy Class A-4 Election Notice constituted the entire value of the Partnership and such Legacy Class A-4 Units constituted the only Units of the Partnership; and (2) the holder of the Founders Equity Share will be paid by the Partnership the amount that the holder of the Founders Equity Share would receive in a liquidation of the Partnership if the amount equal to the product of the number of outstanding Legacy Class A-4 Units and the Legacy Class A-4 Unit FMV on the date of the Legacy Class A-4 Election Notice constituted the entire value of the Partnership and such Legacy Class A-4 Units constituted the only Units of the Partnership (which payment may be made in cash or through the reclassification of the applicable Founders Equity Share Capital Account balance amounts into Partnership Common Units with equivalent value, at the option of the holder of the Founders Equity Share). The Legacy Class A-4 Election Notice in respect of any Legacy Class A-4 Redemption Election shall set forth the number of Legacy Class A-4 Units held by the applicable holder of Legacy Class A-4 Units that such holder elects to redeem. With respect to any Legacy Class A-4 Redemption Election, the Partnership shall cause the Legacy Class A-4 Unit Redemption Price to be paid (in the proportions and manner set forth above) for the A-Piece Sub-Unit of each redeemed Legacy Class A-4 Unit in cash and, if applicable, for the C-Piece Sub-Unit of such Legacy Unit in cash or in kind, on the Legacy Class A-4 Payment Date, provided that each holder of A-4 Sub-Units being redeemed has represented and warranted to the Partnership and the LHR as of the Legacy Class A-4 Payment Date that it holds title to
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such A-4 Sub-Units free and clear of any liens and encumbrances. The Partnership’s obligations pursuant to this Section 4.4(c) ultimately reside with the Lineage Entities and may be honored by any Lineage Entity or any other Person approved by a Lineage Entity and the LHR each in their sole discretion, but in no event shall any such change in obligor relieve the Partnership of any obligation under this Section 4.4(c) to cause the Legacy Class A-4 Unit Redemption Price to be paid to the redeeming Legacy Class A-4 Unit holders on the Legacy Class A-4 Payment Date.
(ii) Legacy Class A-4 Top-Up Elections. Payments (whether paid in cash or in Legacy Units) pursuant to a Legacy Class A-4 Top-Up Election in respect of any A-4 Sub-Unit shall be treated as advances against, and thereby reduce by a like amount, future distributions in respect of such A-4 Sub-Unit pursuant to Section 3.1 of this Legacy Unit Designation.
(iii) Legacy Class A-4 Payments. Notwithstanding anything to the contrary in this Legacy Unit Designation, at the election of the LHR or the General Partner, any payments in cash required under this Section 4.4(c)(iii) may be effected through: (A) Legacy Class A-4 Unit reclassifications into Partnership Common Units, followed by purchases of such Partnership Common Units by the General Partner for cash in the amounts set forth in this Section 4.2(c); or (B) any other structure that the LHR or the General Partner deems appropriate.
Notwithstanding anything to the contrary in this Legacy Unit Designation: (1) all rights pursuant to this Section 4.4(c) of any Legacy Class A-4 Unit or A-4 Sub-Unit for or in respect of which a Small Holder Early Settlement Election has been made, and all obligations of the Partnership, the LHR or the General Partner pursuant to this Section 4.4(c) in respect of any such Legacy Class A-4 Unit and A-4 Sub-Unit, will automatically terminate in full and be of no force or effect (without further act or notice) upon the consummation of the settlement distribution with respect to such Legacy Class A-4 Unit contemplated by the Small Holder Early Settlement Election; and (2) no holder of any Legacy Class A-4 Unit that has declined to participate in the Small Holder Early Settlement shall participate in any interim settlements made pursuant to the Settlement Process as contemplated by Section 4.6 unless either (A) the rights under this Section 4.4(c) no longer apply or (B) the settlement to be made is the Final Distribution.
Section 4.5 IPO Restructuring; Conversion. Subject to Section 4.6 but otherwise notwithstanding any contrary provision in this Legacy Unit Designation, the Partnership and the General Partner will have broadest possible rights, powers and authority to effect and carry out the implementation of the IPO Restructuring, the Lineage IPO, and any further or additional restructuring, merger, conversion, combination and/or other transactions intended to facilitate, support, implement and/or improve upon the IPO Restructuring and/or the Lineage IPO and/or any other matter in connection therewith, in each case on any terms approved by the LHR with respect to the Legacy Holders and/or the Legacy Units; provided that the rights, powers and authority in this Section 4.5 are nevertheless subject to the provisions of Section 4.6.
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Section 4.6 Settlement Process.
(a) Pre-IPO Events. In connection with the Lineage IPO, and at or prior to the Effective Time, as applicable:
(i) Consents Received. The Legacy Holders have given their approval and consent to the IPO Restructuring, the Lineage IPO and all of the matters set forth in this Legacy Unit Designation. The Partnership, the General Partner on behalf of the Partnership, and the LHR, on behalf of the Legacy Holders, shall have the right, power and authority to effectuate any and all matters in respect of the IPO Restructuring, the Lineage IPO and any related transactions that the LHR determines to be within its authority to approve, whether or not set forth in this Legacy Unit Designation.
(ii) Termination of Prior Side Letters; Continuation of Ownership Waiver Letters. All Prior Side Letters are hereby terminated in their entirety effective as of the Effective Date. Notwithstanding the foregoing, all previously-granted Ownership Limit and REIT Subsidiary Ownership Limit waivers for ownership in the Partnership or General Partner that have not been replaced with new waivers will survive, along with any representations and warranties made by Legacy Holders in connection with the receipt of such waivers and in connection with any determination of “domestically controlled qualified investment entity” status within the meaning of Section 897(h)(4)(B) of the Code; and the LHR, on behalf of the applicable Legacy Holders, is authorized to execute documentation with the General Partner to reflect the continuation of such Ownership Limit and REIT Subsidiary Ownership Limit waivers, representations and warranties.
(b) Settlement Process and Other Post-IPO Events. After consummating the IPO Closing, notwithstanding any provision of this Legacy Unit Designation or the Partnership Agreement that could imply any limitation on any activities in this Section 4.6(b):
(i) General Matters. The LHR will implement a coordinated settlement process for the Legacy Holders’ interests in the Partnership over a period of up to three years following the IPO Closing, pursuant to which the Partnership will effect settlements of Legacy Units in cash and Partnership Common Units, over such period on multiple settlement dates at such times and in such amounts as the LHR in its sole discretion deems appropriate (the “Settlement Process”). This process is intended to provide Legacy Holders with the option to receive cash settlements for some or all of their Legacy Units and, without duplication, in-kind securities settlements in Partnership Common Units for some or all of their Legacy Units, in each case over the up-to-three-year settlement period, with a final reclassification of all remaining Legacy Units into Partnership Common Units no later than the third anniversary of the IPO Closing (with flexibility to effect a final reclassification of Legacy Units into Partnership Common Units earlier at the LHR’s option) (collectively, the “Final Distribution”). The timing of each settlement event during the Settlement Process will be determined by the LHR in its sole discretion.
(ii) Settlement Process. The Settlement Process will be conducted by the LHR, on behalf of the Legacy Holders, in such manner as the LHR deems appropriate in its sole discretion, and the LHR is intended to have the broadest possible discretion in all respects in carrying out the Settlement Process and the provisions of this Legacy Unit Designation; provided that the Settlement Process will include the following:
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(A) Cash vs Securities Elections. Prior to the Final Distribution (which will be made in securities for all Legacy Holders, and may or may not be made in connection with an offering-related Cash Settlement event), and except as otherwise provided in this Section 4.6 (including with respect to the Small Holder Early Settlement) or Section 4.4(c), settlements will be made in cash or securities based on elections timely and properly made by Legacy Holders from time to time in the manner specified by the LHR. Elections may only be made and modified pursuant to such procedures as are specified by the LHR to the Legacy Holders or approved by the LHR from time to time.
(B) Securities Settlement Conditions. In order to receive any interim Securities Settlement prior to the Final Distribution, a Legacy Holder must represent and warrant to the LHR and BGLH that, at the time such Legacy Holder makes such election, such Legacy Holder currently intends to (i) be a long-term holder of such Partnership Common Units (or any REIT Shares that such Partnership Common Units shall have been redeemed for) and (ii) not transfer or sell such Partnership Common Units (or any REIT Shares that such Partnership Common Units shall have been redeemed for) until after the Final Distribution has been made. This representation will be deemed to have been breached by a Legacy Holder, regardless of actual intent at the time the representation is made, if that Legacy Holder or any other Legacy Holder in its Affiliate Group transfers any such securities in violation of this Legacy Unit Designation, the Partnership Agreement or the following with respect to any REIT Shares; and similarly, this representation will be deemed to have been satisfied by a Legacy Holder for transfers of such securities that are made in compliance with this Legacy Unit Designation, the Partnership Agreement and the following with respect to any REIT Shares. The LHR and BGLH expect that, at any time prior to the Final Distribution, Legacy Holders making Securities Settlement elections will only effect transfers of Partnership Common Units in accordance with the Partnership Agreement and this Legacy Unit Designation and sales of REIT Shares received in an interim Securities Settlement (if at all) in compliance with clause (1) or clause (2) below or non-sale, in-kind Transfers of Partnership Common Units and/or REIT Shares received in an interim Securities Settlement (if at all) in compliance with clause (3) below (and in the case of Partnership Common Units, also in compliance with the Partnership Agreement), in each case unless (x) otherwise approved in writing by the LHR and in each case solely as a result of a bona fide change in circumstances (as determined or confirmed by the LHR) occurring after the date such Legacy Holder’s or Affiliate Group member’s representation was made or (y) such compliance with clauses (1) through (3) below is waived or suspended by the LHR with respect to all or any particular Partnership Common Units (it being agreed that such waiver shall not be used by the LHR with the intent to advantage certain Legacy Holders with more favorable liquidity rights over others):
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(1) The Legacy Holder instructs the applicable selling broker in writing to use its commercially reasonable efforts to effect sales of REIT Shares received in an interim Securities Settlement in transactions that meet all of the following requirements (it being understood that any order conducted in accordance with these requirements may be cancelled prior to the completion of any Trading Day):
(i) at prices, on any Trading Day, as close as commercially reasonably practicable to the Daily VWAP for such Trading Day or for the remainder of such Trading Day if the relevant order is entered intraday (excluding, however, from such Daily VWAP any trading during periods when sales are suspended as a result of clause (iii) below), it being understood that any such order may be subject to a minimum price;
(ii) up to a number, on any Trading Day, approximately equal to 10% for such Trading Day of the daily trading volume for the regular trading session (including any extension thereof) of the Exchange on such Trading Day (excluding, however, from such daily trading volume any trading during periods when sales are suspended as a result of clause (iii) below);
(iii) no Market Disruption Event has occurred and is continuing or has been deemed to have occurred and be continuing; and
(iv) in compliance with securities laws as well as the applicable selling broker’s policies, practices and procedures; or
(2) The Legacy Holder effects sales of REIT Shares received in an interim Securities Settlement in over-the-counter (OTC) transactions that would not be reportable under FINRA Rules 6282(f)(1), 6380A(e)(1), 6380B(e)(1) or 6622(e)(1) and comply with clause (B)(iv) above; or
(3) The Legacy Holder effects a non-sale, in-kind transfer of Partnership Common Units and/or REIT Shares received in an interim Securities Settlement to its direct or indirect owners or Affiliates, in each case who are bound by the representation in this Section 4.6(b)(ii)(B) to the same extent as if such direct and indirect owners or Affiliates were the Legacy Holder; and for the avoidance of doubt, (A) the Legacy Holder will be responsible for the compliance of such direct and indirect owners and Affiliates with such representation as if each such Person was the Legacy Holder and (B) any violation of such representation by such direct and indirect owners and Affiliates will be attributed to the Legacy Holder.
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For purposes of this Section 4.6(b)(ii)(B), the term “Affiliate Group” with respect to a Legacy Holder means and includes all Affiliates of that Legacy Holder and any additional Persons designated to be included as Affiliates of that Legacy Holder for any purpose in this Legacy Unit Designation or in any then-applicable side letter provision benefitting such Legacy Holder.
The requirements set forth in clause (1) above will be deemed to have been satisfied by a Legacy Holder upon delivery to the LHR of a written acknowledgement by the applicable selling broker of the instructions described in Exhibit A; provided that such Legacy Holder has not at any time delivered any contrary instruction to such selling broker.
If the representation in this Section 4.6(b)(ii)(B) has been breached at any time by a Legacy Holder, any Person to whom such Legacy Holder has directly or indirectly distributed or permitted the distribution of Partnership Common Units or REIT Shares received in an interim Securities Settlement pursuant to clause (3) above or any member of such Legacy Holder’s Affiliate Group, then in each such case the LHR in its sole discretion may discontinue such Legacy Holder’s and each Affiliate Group member’s participation in all further interim settlements of any kind prior to the Final Distribution (whether Cash Settlements or Securities Settlements) and may cause such Legacy Holder and each member of its Affiliate Group to participate solely in the Final Distribution. The LHR shall also have a reservation of rights with respect to all other remedies for such breach that may be available by contract, at law or in equity in the event of any such breach, except that the LHR shall not be entitled to pursue any specific performance remedy to enjoin or prevent any transfer in breach of the representation in this Section 4.6(b)(ii)(B). Notwithstanding the foregoing, a Legacy Holder will not be held responsible for a breach by an Affiliate Group member that is solely related to such Legacy Holder by virtue of being commonly advised but is not under common control with the Legacy Holder. The provisions of this Section 4.6(b)(ii)(B) are solely for the benefit of the LHR and BGLH, and are solely enforceable by the LHR for its benefit and the benefit of BGLH, and shall not inure to the benefit of, or be enforceable by, the General Partner.
(C) Cash vs Securities Allocations. The LHR will determine the total Cash Settlement amount and the total Securities Settlement amount for each settlement event in its sole discretion; and the LHR will determine the allocations to Legacy Holders in its sole discretion taking into account (1) the Cash Settlement and Securities Settlement elections made by each Legacy Holder, (2) the relative values of all Legacy Units then available for settlement, (3) any adjustments the LHR deems appropriate to address regulatory and tax compliance objectives, including those contemplated by Sections 4.6(b)(ii)(H) and (I), and (4) such other factors as the LHR deems appropriate in its sole discretion. Such amounts need not be (and likely will not be) in proportion to the demand for Cash Settlements versus Securities Settlements that has been expressed by Legacy Holders.
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(D) Interim Settlements vs Final Distribution. Legacy Holders that have elected not to participate or that have not timely and properly elected to participate in the interim settlements during the Settlement Process pursuant to the election procedures established prior to the Effective Date will receive a single settlement in securities in the Final Distribution, and will not participate in any Cash Settlements at all or in any interim Securities Settlements that occur during the Settlement Process prior to the Final Distribution. Legacy Holders that have timely and properly elected to participate in the interim settlements during the Settlement Process pursuant to the election procedures established prior to the Effective Date (1) will participate in all interim Cash Settlements and Securities Settlements that occur prior to the Final Distribution, (2) will receive their interim Cash Settlements and/or Securities Settlements based on standing elections made by such Legacy Holders, as such standing elections may be modified by the Legacy Holders from time to time, and (3) will also participate in the Final Distribution with respect to any of their Legacy Units that have not previously been settled at that point.
(E) Securities Settlements. Settlements in securities for Legacy Units will be effected through the reclassification of such Legacy Units into Partnership Common Units (such reclassification of Legacy Units into Partnership Common Units are referred to herein, as “Securities Settlements”). Partnership Common Units received by Legacy Holders in any Securities Settlement may be subject to an underwriter lock-up approved by the LHR and any applicable concurrent securities holding periods required by applicable law (such as Rule 144 promulgated under the Securities Act).
(F) Cash Settlements. Settlements in cash for Legacy Units are generally expected to be effected in a multi-step transaction the first step of which is the reclassification of such Legacy Units into Partnership Common Units, then promptly followed by purchases of such Partnership Common Units by the General Partner for cash (such reclassifications followed by cash repurchase or purchase are referred to herein, as “Cash Settlements”). Cash may be used from any source to effect these purchases, including cash raised in “synthetic secondary” offerings, at-the-market (ATM) offerings, and/or from other capital raising transactions, and cash from operations. Cash Settlements may also be structured in such other manner from time to time as the LHR deems appropriate, which may include (in the LHR’s sole discretion, but without any right of any Legacy Holder to demand the same) different structures for different Legacy Holders for legal, tax, regulatory or other reasons; provided that any separate structuring is not intended to yield different prices or results for the Cash Settlements as among Legacy Holders participating in the same interim settlement event, but rather to afford Legacy Holders that would otherwise be disadvantaged by a particular structure the opportunity to mitigate any such disadvantage.
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(G) Cutbacks.
(1) The LHR in its sole discretion will determine the relative sizes of the Cash Settlement component and Securities Settlement component of each interim settlement event for each Legacy Holder, taking into account the demand for Cash Settlements versus Securities Settlements, the size and nature of the settlement transaction, market conditions and other matters that the LHR deems appropriate. While it is currently anticipated that the most significant interim settlement events will have both Cash Settlement and Securities Settlement components, this is a not a requirement for all settlement events or for any given settlement event; and certain interim settlement events may be available solely as Cash Settlement events, while other interim settlement events may be available solely as Securities Settlement events.
(2) For any Applicable Settlement Event, both Cash Settlements and Securities Settlements are generally expected to be available; and in these instances, the aggregate amount of Cash Settlements determined to be available in such interim settlement event will generally determine the total size of the interim settlement opportunity for the Cash Settlement and Securities Settlement components combined.
(3) If, for any interim settlement event that includes both Cash Settlements and Securities Settlements, the LHR determines in its sole discretion to allow aggregate Securities Settlements that are less than the total Securities Settlement demand based on then-applicable participating investor elections, a cutback will be deemed to exist with respect to the Securities Settlement component of that settlement event. Cutbacks will be effected in the manner determined by the LHR and will be subject in all cases to any adjustments the LHR deems appropriate to address regulatory and tax compliance objectives, including those contemplated by Section 4.6(b)(ii)(I), Section 4.6(b)(ii)(J) and Section 4.6(b)(ii)(K).
(4) Settlement of Founders Equity Share in securities, whether settled on a Legacy Holder’s Cash Settlement or Securities Settlement, is deemed to fall outside of all Securities Settlement limits and allocations determined by the LHR and is permitted in full regardless of the amount of any Securities Settlement or cutbacks.
(5) Legacy Holders (other than holders of Legacy Class A-4 Units and Small Holders for which such election does not apply) have previously made a one-time advance election as to whether, in the event of cutbacks on any Securities Settlement in connection with any Applicable Settlement Event, they wish to (i) settle the Founders Equity Share on the Cutback Units alongside the other settlements occurring in that event, and in such event the cutback portion will cease to accrue any further Founders Equity Share thereafter (a “Cutback Settlement”), or (ii) settle Founders Equity Share on the Cutback Units upon the ultimate settlement of those Cutback Units at a later date. These elections are on file with the LHR, are permanent one-time elections and may not be changed. Any such Legacy Holder that failed to make a timely and proper election in accordance with the procedures specified in respect of these matters is deemed to have chosen to settle Founders Equity Share upon the ultimate settlement of the Cutback Units (i.e., not a Cutback Settlement). For those Legacy Holders
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who timely and properly made a Cutback Settlement election, the settlement of Founders Equity Share will occur at the time of the cutback-related settlement event on their Cutback Units, assuming such event is an Applicable Settlement Event. No other Cutback Units will be entitled to any Cutback Settlement at the time of the cutback-related settlement event, and no Cutback Settlement will occur upon any settlement event that is not an Applicable Settlement Event. Cutback Settlements will be made in accordance with the valuation and calculation methodologies set forth in Section 4.6(b)(ii)(L). “Cutback Units” means the number of Legacy Units by which its total Cash Settlement and Securities Settlement amounts (i.e., not in relation to its Securities Settlement amounts only) fell short of its total pro rata settlement participation eligibility, all as determined by the LHR in its sole discretion (and after making any adjustments the LHR deems appropriate in respect of any requested Securities Settlements that could not be filled for regulatory, tax or similar reasons, including those contemplated by Section 4.6(b)(ii)(I), Section 4.6(b)(ii)(J) and Section 4.6(b)(ii)(K)). The LHR will make all determinations in this regard.
(6) Any Cutback Units will continue to be held as Legacy Units, as applicable, pending a future settlement opportunity and will participate proportionately with other remaining Legacy Units in future settlement opportunities on the same basis as the affected Legacy Holder’s other Legacy Units.
(7) To effect a Cutback Settlement with respect to a Legacy Holder’s eligible Cutback Units, the Cutback Settlement of Founders Equity Share will result in each affected A-Piece Sub-Unit of each Legacy Class A Unit and corresponding C-Piece Sub-Unit of such Legacy Class A Unit being reclassified into the corresponding number of Legacy Class B Units at the applicable settlement value determined pursuant to Section 4.6(b)(ii)(L).
(H) Settlement Allocations. The different proportions in which Cash Settlements and Securities Settlements may be made in any given settlement event, the ability for each Legacy Holder to elect its preferred percentage of Securities Settlement versus Cash Settlement, and the fact that some Legacy Holders have elected to wait until the Final Distribution for any settlement, will collectively result in interim and final settlements being made among Legacy Holders at each event in a manner that does not reflect their pro rata Legacy Unit ownership percentages. Rather, settlements at each event will be made (i) pro rata within the Cash Settlement election group in proportion to remaining cash-election Legacy Units and other securities-election securities held by all investors participating in the Settlement Process, and (ii) pro rata within the Securities Settlement election group in proportion to remaining securities-election Legacy Units and other securities-election securities held by all investors participating in the Settlement Process, in each case subject to any applicable regulatory and tax compliance (including ERISA compliance, REIT ownership limits (including the REIT Subsidiary Ownership Limit) and domestically controlled qualified investment entity considerations). The Legacy Holders consent to this settlement method and the corresponding modification to the otherwise-applicable settlement proportions.
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(I) ERISA Adjustments. Notwithstanding any contrary provision of this Legacy Unit Designation, the LHR is entitled to adjust settlement elections, settlement allocations and cutbacks as applied to any settlement event within the Settlement Process, and within and among any classes of Partnership Units (which may each be treated differently), in order to ensure that equity participation by Benefit Plan Investors in each class of equity interests in the Partnership (all as the LHR determines would be interpreted under ERISA) remains at all times less than 17.5% (or such higher percentage as the LHR deems appropriate in its sole discretion but in any event less than 25%). To ensure compliance with these limitations, the LHR may cause Benefit Plan Investors to accept greater Cash Settlements and lesser Securities Settlements in the Settlement Process in respect of one or more Classes than they have requested in their elections. No prior or additional notice shall be required to effect any such adjustment to the respective settlement results. The LHR will endeavor to treat similarly-situated Legacy Holders proportionally where reasonably practicable as result of any adjustments made pursuant to this paragraph, and the LHR will retain sole discretion to determine whether Legacy Holders are similarly situated. To the extent any Benefit Plan Investors are required to accept greater Cash Settlements for this purpose, adjustments to Cash Settlement participation will be made proportionately as among Benefit Plan Investors in the affected class, as determined by the LHR in its sole discretion.
(J) REIT-Related Adjustments. Notwithstanding any contrary provision of this Legacy Unit Designation, the LHR is entitled to adjust settlement elections, settlement allocations and cutbacks as applied to any settlement event within the Settlement Process, and within and among any classes of Partnership Units (which may each be treated differently), to the extent the General Partner or the LHR determines appropriate to enable the General Partner or any REIT Subsidiary to qualify as a REIT or, if the General Partner determines that it or such REIT Subsidiary should so qualify, as a “domestically controlled qualified investment entity” within the meaning of Section 897(h)(4)(B) of the Code. To ensure compliance with these limitations, the LHR may cause Legacy Holders to accept greater or lesser Cash Settlements and greater or lesser Securities Settlements in the Settlement Process in respect of one or more Classes than they have requested in their elections. No prior or additional notice shall be required to effect any such adjustment to the respective settlement results. The LHR will endeavor to treat similarly-situated Legacy Holders proportionally where reasonably practicable as result of any adjustments made pursuant to this paragraph, and the LHR will retain sole discretion to determine whether Legacy Holders are similarly situated. To the extent any Legacy Holders are required to accept greater or lesser Cash Settlements for this purpose, adjustments to Cash Settlement participation will be made proportionately as among Legacy Holders, as determined by the LHR in its sole discretion.
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(K) Other Regulatory Adjustments. Notwithstanding any contrary provision of this Legacy Unit Designation, the LHR is entitled to adjust settlement elections, settlement allocations and cutbacks as applied to any settlement event within the Settlement Process, and within and among any classes of Partnership Units (which may each be treated differently), to the extent the General Partner or the LHR determines appropriate to comply with any law or regulation applicable to any Lineage Entity, the LHR, BGLH or their respective Affiliates. To ensure compliance with these limitations, the LHR may cause Legacy Holders to accept greater or lesser Cash Settlements and greater or lesser Securities Settlements in the Settlement Process in respect of one or more Classes than they have requested in their elections. No prior or additional notice shall be required to effect any such adjustment to the respective settlement results. The LHR will endeavor to treat similarly-situated Legacy Holders proportionally where reasonably practicable as result of any adjustments made pursuant to this paragraph, and the LHR will retain sole discretion to determine whether Legacy Holders are similarly situated. To the extent any Legacy Holders are required to accept greater or lesser Cash Settlements for this purpose, adjustments to Cash Settlement participation will be made proportionately as among Limited Partners, as determined by the LHR in its sole discretion.
(L) Settlement of Founders Equity Share. The Founders Equity Share will be settled on a unit-by-unit basis at the time of each Legacy Class A Unit’s reclassification into Partnership Common Units and settlement (or, for certain Cutback Units, at the time of cutback as set forth in Section 4.6(b)(ii)(G) using the following methodology and valuation):
(1) The Founders Equity Share applicable to each Legacy Class A Unit will be calculated in accordance with the Founders Equity Share distribution rights pursuant to Section 3.1 in respect of the applicable Legacy Class A Unit being reclassified and settled.
(2) For Legacy Class A Units receiving Cash Settlement, (i) in offering-related Cash Settlement events (i.e., follow-on offerings, block trades, bought deals, synthetic secondaries, etc.), Founders Equity Share calculations will be made based on final cash results (i.e., net of any transaction costs that are borne by the LHR rather than the Lineage Entities, such as underwriters discounts and commissions), and (ii) in any other Cash Settlement event made with cash on hand from other sources (i.e., operations, asset dispositions, at-the-market (ATM) offerings, etc.), Founders Equity Share calculations will be made based on the 20-Trading-Day Trailing VWAP for REIT Shares prior to the applicable settlement event. Such final cash results will be treated as if they were distributed pursuant to Section 3.1 in respect of the applicable Legacy Class A Unit being reclassified and settled.
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(3) For Legacy Class A Units receiving Securities Settlement (excluding pursuant to the Small Holder Early Settlement or the Final Distribution), (i) in Securities Settlement events made in connection with concurrent offering-related Cash Settlement events (i.e., follow-on offerings, block trades, bought deals, synthetic secondaries, etc.), Founders Equity Share calculations will be made based on the Last Reported Sale Price for the REIT Shares on the Trading Day on which pricing occurs for such offering, and (ii) in any other settlement event (other than the Final Distribution if done in connection with an offering-related Cash Settlement event, which will be based on the Last Reported Sale Price for the REIT Shares used in the pricing of the offering-related Cash Settlement event), Founders Equity Share calculations will be made based on the 20-Trading-Day Trailing VWAP for REIT Shares prior to the applicable settlement event. Such values will be treated as if they were distributed pursuant to Section 3.1 in respect of the applicable Legacy Class A Units being reclassified and settled.
(4) For Legacy Class A Units receiving Securities Settlement in the Final Distribution, Founders Equity Share calculations will be based on the 20-Trading-Day Trailing VWAP for REIT Shares prior to the applicable settlement event (other than the Final Distribution if done in connection with an offering-related Cash Settlement event, which will be based on the Last Reported Sale Price for the REIT Shares used in the pricing of the offering-related Cash Settlement event). Such values will be treated as if they were distributed pursuant to Section 3.1 in respect of the applicable Legacy Class A Units being reclassified and settled.
(5) Each settlement of the Founders Equity Share on any Legacy Class A Unit is a final settlement in every instance, and Founders Equity Share amounts are not subject to any clawback under any circumstances.
(6) The Founders Equity Share on Legacy Units will be settled in Partnership Common Units (or in the event of a Cutback Settlement, in Legacy Class B Units), and may participate in any Cash Settlement opportunity alongside the other investors for all or any portion thereof.
(7) Each Legacy Unit will be valued at the same value as a single REIT Share for so long as the Adjustment Factor remains at 1.0; if at any time the Adjustment Factor is higher or lower than 1.0, the value of Legacy Units in relation to REIT Shares will be adjusted accordingly.
(iii) Small Holder Early Settlement. Small Holders will be treated differently than other Legacy Holders in the manner described in this Section 4.6(b)(iii).
(A) Early Settlement Process. Small Holders will have all of their Legacy Units reclassified into Partnership Common Units in full settlement of their Legacy Units on the date that is thirty (30) days after the Lineage IPO (or if not a Business Day, on the first Business Day thereafter) (the “Small Holder Early Settlement”). Small Holders will be responsible for their own securities dispositions at the time of their choosing following the expiration of the applicable underwriter lock-up period and any concurrent securities holding period required by applicable law (such as Rule 144 promulgated under the Securities Act).
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(B) Settlement of Founders Equity Share. The Founders Equity Share will be settled on the Small Holder Early Settlement distribution in kind at the time of such settlement as follows: (i) Founders Equity Share calculations will be made by valuing the REIT Shares based on the Last Reported Sale Price for the REIT Shares on the day prior to the settlement; (ii) each Legacy Unit will be valued at the same value as a REIT Share (provided that the Adjustment Factor remains at 1.0; if on the date of the Small Holder Early Settlement distribution the Adjustment Factor is higher or lower than 1.0, the value of Legacy Units in relation to REIT Shares will be adjusted accordingly); and (iii) such values will be treated as if they were distributed pursuant to Section 3.1 in respect of the applicable Legacy Units being reclassified and settled.
(C) Electing Rollover Guarantee Holders. Legacy Class A-4 Holders are not considered Small Holders but can elect Small Holder treatment for some or all of such Legacy Holder’s Legacy Units regardless of whether they would otherwise constitute Small Holders. Any Legacy Class A-4 Holder that timely and properly elects to be an Electing Rollover Guarantee Holder for some or all of such Legacy Holder’s Legacy Units will participate in the Small Holder Early Settlement regardless of the number of Legacy Units it holds if such Legacy Holder has also agreed to surrender all Guarantee Rights in respect of the Legacy Class A-4 Units for which such Legacy Holder has elected Small Holder treatment. Individual Legacy Class A-4 Holders may make different elections. No other Legacy Holders may elect Small Holder treatment.
(iv) Final Distribution. The Final Distribution shall occur no later than three years following the Lineage IPO; provided that the three-year settlement period may be extended to any such longer period as the LHR determines applies to the general membership of BGLH.
(c) General Provisions.
(i) In connection with the implementation of any of the IPO Restructuring, the Lineage IPO, the Settlement Process or the eventual completion of the Settlement Process in respect of the Legacy Unit class, or if the LHR determines that any further restructuring or other action is required in order to implement any such matters in accordance with this Legacy Unit Designation, each of the Legacy Holders will be required to take or refrain from taking such actions as the LHR shall deem appropriate, which may include:
(A) Promptly executing and delivering all related documentation and taking such other action in support of the Settlement Process as shall be requested by the LHR, the General Partner or the Partnership, including executing and delivering instruments of conveyance and transfer, and any purchase agreement, contribution agreement, merger agreement, indemnity agreement, escrow agreement, stockholders agreement, lock-up agreement, operating partnership agreement, other agreement, consent, waiver, governmental filing, certificates representing such Legacy Holder’s Partnership Units duly endorsed for transfer (free and clear of any liens, claims and encumbrances) and any similar, related or other documents; and
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(B) Taking all such other actions as the LHR, the General Partner or the Partnership may reasonably request and otherwise cooperating in good faith with LHR, the General Partner, the Partnership and the other Legacy Holders.
In addition, each Legacy Holder agrees that it will not object to or otherwise attempt to impede the Settlement Process. The LHR may use its power of attorney to effect any matter pursuant to this Section 4.6 on behalf of any Legacy Holder.
(ii) In connection with the Settlement Process, the LHR may cause the Legacy Holders to enter into agreements containing such rights and obligations of the parties as the LHR may deem appropriate, provided that (A) no Legacy Holder shall have any greater liability as a result thereof than such Legacy Holder would have to the Partnership and (B) no Legacy Holder shall be required to incur any expense or liability pursuant thereto in excess of its interest in the Partnership. If any of such agreements are inconsistent with applicable law or the rules of the principal exchange on which the REIT Shares are listed, the LHR may modify the terms of such agreements to the extent necessary to reflect such applicable law or such exchange rules.
(iii) Each Legacy Holder acknowledges and agrees that Legacy Holders are not entitled to (and each Legacy Holder hereby waives) dissenters’ rights or rights of appraisal under this Legacy Unit Designation or pursuant to the Act or otherwise as may be provided by applicable law, whether in connection with the IPO Restructuring, the Lineage IPO, the Settlement Process or otherwise in relation to the Lineage Entities, the LHR or BGLH. Accordingly, each Legacy Holder agrees that it will neither initiate, seek, join nor abet any claim, suit or other proceeding for dissenters’ rights or rights of appraisal in connection with any matter relating to the any of the Lineage Entities, the LHR or BGLH.
(iv) The LHR may from time to time require one or more Legacy Holders to provide all information regarding such Legacy Holder or its direct or indirect beneficial owners and ownership of securities as may be reasonably requested by the LHR or the Partnership to enable the LHR and the Partnership to determine such Legacy Holder’s eligibility to hold a continuing equity interest in the Partnership and/or any direct or indirect interests in Lineage REIT, and/or receive any Securities Settlement, and each Legacy Holder shall promptly provide such information.
(v) Notwithstanding any contrary provision in this Legacy Unit Designation or the Partnership Agreement, the Partnership may redeem any Legacy Units held by any Legacy Holder that is not eligible to hold Partnership Units as set forth in the Partnership Agreement. The Founders Equity Share shall be calculated and settled on such event in the same manner as the Founders Equity Share is calculated and settled in the Small Holder Early Settlement.
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Section 4.7 Defaults.
(a) Generally. If any Legacy Holder that has entered into a Subscription Agreement attempts or purports to Legacy Transfer all or any part of its Legacy Units other than in accordance with the terms of this Legacy Unit Designation (each such event, a “Default”), then such Legacy Holder may be designated by either of the General Partner or the LHR (in each of the General Partner’s and the LHR’s sole discretion) as in default under this Legacy Unit Designation (a “Defaulting Partner”) and shall thereafter be subject to the provisions of this Section 4.7. A Defaulting Partner’s entire interest in the Partnership, including Partnership Units of any and all classes and sub-classes, shall be subject to the provisions of this Section 4.7. Each of the General Partner and the LHR, in its sole discretion, may choose not to designate any Legacy Holder as a Defaulting Partner and may agree to waive or permit the cure of any Default by a Legacy Holder, subject to such conditions as the General Partner, the LHR and the Defaulting Partner may agree upon. The General Partner or the LHR may apply one or more of the remedies in this Section 4.7 to a Defaulting Partner, and the General Partner and the LHR need not apply the same remedies to each other Defaulting Partner. The General Partner and the LHR shall be entitled to consider the different circumstances of different Legacy Holders with respect to any Defaults to the fullest extent permitted by law, and, to the fullest extent permitted by law, the actions and inactions of the General Partner and/or the LHR in connection with the same shall not operate as a waiver or modification of any rights or remedies pursuant to this Section 4.7 in respect of any Legacy Holder. The General Partner and the LHR shall each have full authority to interpret in good faith the provisions of this Section 4.7 to give effect to the intent of the preceding sentence and the other provisions of this Section 4.7(a).
(b) Default Remedies. In addition to the foregoing, and notwithstanding anything to the contrary in this Legacy Unit Designation, either of the General Partner or the LHR may, in its discretion, take any or all of the following actions with respect to a Defaulting Partner in respect of all or any of the Defaulting Partner’s Partnership Units of any class(es) or sub-class(es) (as determined by each of the General Partner and the LHR in its sole discretion):
(i) reduce all future amounts otherwise distributable to such Defaulting Partner by up to 50% and instead distribute all or any portion of such amounts to the Non-Defaulting Partners holding Legacy Units in accordance with this Legacy Unit Designation as if such amounts were additional amounts apportioned to the Legacy Units pursuant to Section 5.1 of the Partnership Agreement and the provisions of this Legacy Unit Designation;
(ii) cancel up to 50% of such Defaulting Partner’s Partnership Units for no compensation and make corresponding adjustments to such Defaulting Partner’s Capital Account balance, in each case, with effect as of the date on which the Default occurred; or, in lieu of such cancellation, reallocate ownership of such Partnership Units to the other Legacy Holders in proportion to their Legacy Unit holdings for no compensation and make corresponding adjustments to such Defaulting Partner’s Capital Account balance, in each case, with effect as of the date on which the Default occurred;
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(iii) cause such Defaulting Partner to sell, at a per unit price equal to the Default Price and on such other terms and conditions as the General Partner shall determine in its sole discretion, to one or more Non-Defaulting Partners or any other Persons (including any Bay Grove Affiliate) any or all of the Partnership Units of any or all classes or sub-classes then held by such Defaulting Partner at a price equal to the lesser of (A) the price per Partnership Unit paid by such Defaulting Partner for each of its Partnership Units then held and (B) the price per Partnership Unit at which the Partnership is then issuing Partnership Units or could issue Partnership Units, or if no Partnership Units are then being issued or could be issued, the price per Partnership Unit at which the Partnership last issued Partnership Units; and/or
(iv) restrict, limit or terminate any special rights of a Defaulting Partner pursuant to any side letter or any provision of this Legacy Unit Designation that does not have general application to all other Legacy Holders.
The General Partner or the LHR may also apply amounts otherwise distributable to such Defaulting Partner by the Partnership in satisfaction of all amounts payable by such Defaulting Partner to the Partnership, the General Partner, the LHR or any Affiliate of any of the foregoing. The General Partner may charge a Defaulting Partner interest on any amounts not timely paid at a rate equal to the highest lawful rate or such lesser rate as the General Partner may determine in its sole discretion, from the date such amounts were due and payable through the date that full payment of such amounts is actually made or, if such amounts are not paid, through the final termination of the Partnership, and to the extent not paid, such interest charged and other amounts payable may be deducted from amounts otherwise distributable to such Legacy Holder and any such payment of interest shall not constitute a Capital Contribution or a return of distributions. Such amounts not otherwise applied to the payment of amounts specified in Section 4.7(c), plus any interest thereon, may be retained by the Partnership and/or distributed to the Non-Defaulting Partners in such proportions as if such amounts were distributable in accordance with Article 5 of the Partnership Agreement, Section 3.1 of this Legacy Unit Designation and the other provisions of the Partnership Agreement and this Legacy Unit Designation. The General Partner shall make such distribution adjustments, adjustments to the Capital Accounts of the Legacy Holders (including such Defaulting Partner) and other adjustments, as the General Partner or the LHR determines to be appropriate to give effect to any of the provisions of this Section 4.7.
(c) Other Remedies; Payment of Expenses. The General Partner and the LHR shall each have the right to pursue all remedies at law or in equity available to it or the Partnership with respect to the Default of a Defaulting Partner. No right, power or remedy conferred upon the General Partner, the LHR or the Partnership in this Section 4.7 shall be exclusive, and each such right, power or remedy shall be cumulative and in addition to every other right, power or remedy whether conferred in this Section 4.7 (or elsewhere in this Legacy Unit Designation or the Partnership Agreement) or now or hereafter available at law or in equity or by statute or otherwise. Moreover, to the fullest extent permitted by law, no delay in exercising any such right, power or remedy, and no course of dealing between the General Partner and any one or more Defaulting Partners, shall operate as a waiver or otherwise prejudice any such right, power or remedy. In addition to the foregoing, either of the General Partner or the LHR may institute a lawsuit against any Defaulting Partner for specific performance of such Defaulting Partner’s obligation to fund any payments to be made by a Legacy Holder pursuant to any applicable Subscription Agreement, this Legacy Unit Designation or the Partnership Agreement and to collect any overdue amounts under any of the foregoing. Notwithstanding any other provision of this Legacy Unit Designation,
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the Partnership Agreement or any applicable Subscription Agreement, and to the fullest extent permitted by law, each Defaulting Partner agrees to pay on demand all costs and expenses (including attorneys’ fees and any borrowing costs) incurred by or on behalf of the General Partner, the LHR or any Lineage Entity in connection with the enforcement of this Legacy Unit Designation, the Partnership Agreement and/or any applicable Subscription Agreement against such Defaulting Partner sustained as a result of a Default by such Defaulting Partner and any such payment shall not constitute a Capital Contribution or a return of distributions.
(d) Consents. For purposes of any vote, consent or approval of the Legacy Units or the Partnership Units, the General Partner and the LHR each in its sole discretion may determine to exclude from such vote, consent or approval any or all Legacy Units and/or Partnership Units held by any Defaulting Partner and in such event the excluded Legacy Units and/or Partnership Units shall be treated for purposes of such calculation as if such Legacy Units and/or Partnership Units are not issued and outstanding. Additionally, notwithstanding anything to the contrary in this Legacy Unit Designation, whenever the vote, consent or decision of a Legacy Holder is otherwise required or permitted pursuant to this Legacy Unit Designation, the Partnership Agreement or under applicable law, so long as the Defaulting Partner remains designated as a Defaulting Partner by the General Partner or the LHR, or for such longer period as the General Partner or the LHR in its sole discretion may determine, the General Partner or the LHR in its sole discretion may determine that a Defaulting Partner shall not be entitled to participate in such vote or consent, or to make such decision, and in such event such vote, consent or decision shall be tabulated or made as if such Defaulting Partner were not a Legacy Holder or a Partner.
(e) Acknowledgement. Each Legacy Holder that has entered into a Subscription Agreement hereby acknowledges that it has purchased Partnership Units in reliance upon its agreements under this Section 4.7 (as well as the other provisions of this Legacy Unit Designation), that the General Partner, the LHR and the Partnership may have no adequate remedy at law for a breach of any applicable Subscription Agreement and that damages resulting from such breach may be impossible to ascertain as of the date on which such Subscription Agreement was entered into or as of the date of such breach. Each Legacy Holder hereby agrees that the provisions of this Section 4.7 are fair and reasonable in light of the difficulty in ascertaining the actual damages that would be incurred by the Lineage Entities, the General Partner, the LHR and the Non-Defaulting Partners as a result of the Defaulting Partner’s Default and, to the fullest extent permitted by law, represent a prior agreement among the Partners as to specified penalties or consequences for a Defaulting Partner. Without limiting the general effect of the preceding sentences, the Legacy Holders hereby specifically acknowledge and agree that the enforceability of this Section 4.7 is essential to the stability of the Partnership as an organization and to the ability of the Partnership to effectively serve its purpose and conduct its business operations. Each Legacy Holder agrees that, in making any determination pursuant to this Section 4.7, each of the General Partner and the LHR is entitled to take into account the best interests of the Partnership and/or any Lineage Entity, and neither the General Partner nor the LHR shall have any obligation to take into account the best interests of the Defaulting Partner.
(f) Removal of Default Designation. Each of the General Partner and the LHR, in its discretion, may determine to remove a “Defaulting Partner” designation for a Defaulting Partner at any time in its sole discretion. Neither the General Partner nor the LHR shall have any obligation to remove any such designation.
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ARTICLE 5
GENERAL PROVISIONS
Section 5.1 Release. Upon each Legacy Holder’s receipt of Cash Settlement proceeds or reclassified Partnership Units from a Securities Settlement, none of the LHR, BGLH, the Bay Grove Affiliates, or the respective Affiliates or personnel of any of the foregoing (collectively, the “Exculpated Persons”) shall have any remaining liability or obligations of any kind in connection with any such reclassified Legacy Unit other than solely to the extent it has been adjudicated in a final non-appealable judgment that (a) such Person committed gross negligence, willful misconduct or actual fraud in carrying out the Settlement Process with respect to such Legacy Unit or (b) such Person has materially breached this Legacy Unit Designation or the Partnership Agreement in respect of any matter arising after the Effective Time or in respect of the IPO Restructuring or the Lineage IPO, and the affected Legacy Holder notified such Person of such breach within 365 days after the occurrence thereof, and such breach remains uncured. Absent any such finding, each Exculpated Person shall be fully exculpated and released from all liability and obligations of any kind in relation to the reclassified Legacy Units and related settlements and shall have no further liability to the Partnership or any Partner in respect thereof.
Section 5.2 Effect on Partnership Agreement. Except as expressly set forth in this Legacy Unit Designation, all of the terms and provisions of the Partnership Agreement shall remain in full force and effect. From and after the Effective Time, all references in the Partnership Agreement to the “Agreement” shall mean the Partnership Agreement as modified by this Legacy Unit Designation.
Section 5.3 Governing Law. This Legacy Unit Designation shall be construed and enforced in accordance with and governed by the laws of the State of Maryland, without regard to the principles of conflicts of law. In the event of a conflict between any provision of this Legacy Unit Designation and any non-mandatory provision of the Act, the provisions of this Legacy Unit Designation shall control and take precedence.
Section 5.4 Entire Agreement. This Legacy Unit Designation, together with the Partnership Agreement, contains all of the understandings and agreements between and among the Partners with respect to the subject matter contained herein.
Section 5.5 Addresses and Notices. Any notice, demand, request or report required or permitted to be given or made to the LHR under this Legacy Unit Designation shall be in writing and shall be deemed given or made when delivered in person or when sent by first class United States mail or by other means of written or electronic communication (including by telecopy, facsimile, electronic mail or commercial courier service) to the LHR at its address (the General Partner shall maintain a record of the LHR’s address, which record will be available to each Partner upon request) or such other address of which the LHR shall notify the General Partner in accordance with this Section 5.5.
Section 5.6 Titles and Captions. All article or section titles or captions in this Legacy Unit Designation are for convenience only. They shall not be deemed part of this Legacy Unit Designation and in no way define, limit, extend or describe the scope or intent of any provisions hereof. Except as specifically provided otherwise, references to “Articles” or “Sections” are to Articles and Sections of this Legacy Unit Designation.
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Section 5.7 Pronouns and Plurals. Whenever the context may require, any pronouns used in this Legacy Unit Designation shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns, pronouns and verbs shall include the plural and vice versa.
Section 5.8 Further Action. The parties shall execute and deliver all documents, provide all information and take or refrain from taking action as may be necessary or appropriate to achieve the purposes of this Legacy Unit Designation.
Section 5.9 Binding Effect. This Legacy Unit Designation shall be binding upon and inure to the benefit of the parties hereto, the parties to the Partnership Agreement and their respective heirs, executors, administrators, successors, legal representatives and permitted assigns.
Section 5.10 Waiver.
(a) No failure by any party to insist upon the strict performance of any covenant, duty, agreement or condition of this Legacy Unit Designation or to exercise any right or remedy consequent upon a breach thereof shall constitute waiver of any such breach or any other covenant, duty, agreement or condition.
(b) The restrictions, conditions and other limitations on the rights and benefits of the Legacy Holders contained in this Legacy Unit Designation, and the duties, covenants and other requirements of performance or notice by the Legacy Holders, are for the benefit of the Partnership and, except for an obligation to pay money to the Partnership, may be waived or relinquished by the General Partner with the prior written consent of the LHR, each in its sole and absolute discretion, on behalf of the Partnership in one or more instances from time to time and at any time; provided, however, that any such waiver or relinquishment may not be made if it would have the effect of (i) creating liability for any other Limited Partner (ii) causing the Partnership to cease to qualify as a limited partnership, (iii) reducing the amount of cash otherwise distributable to the Limited Partners (other than any such reduction that affects all of the Limited Partners holding the same class or series of Partnership Units on a uniform or pro rata basis, if approved by a Majority in Interest of the Partners holding such class or series of Partnership Units), (iv) resulting in the classification of the Partnership as an association or publicly traded partnership taxable as a corporation or (v) violating the Securities Act, the Exchange Act or any state “blue sky” or other securities laws; and provided, further, that any waiver relating to compliance with the Ownership Limit or other restrictions in the Charter shall be made and shall be effective only as provided in the Charter.
Section 5.11 Counterparts. This Legacy Unit Designation may be executed in counterparts, all of which together shall constitute one agreement binding on all the parties hereto, notwithstanding that all such parties are not signatories to the original or the same counterpart. Each party shall become bound by this Legacy Unit Designation immediately upon affixing its signature hereto.
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Section 5.12 Execution and Delivery. This Legacy Unit Designation may be executed through delivery of duly executed signature pages by facsimile, portable document format (PDF) or any electronic signature complying with the U.S. federal ESIGN Act of 2000 (e.g., www.docusign.com), each of which shall be deemed an original.
Section 5.13 Invalidity of Provisions. If any provision of this Legacy Unit Designation is or becomes invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not be affected thereby.
Section 5.14 No Third-Party Rights Created Hereby. The provisions of this Legacy Unit Designation are solely for the purpose of defining the interests of the Holders, inter se; and no other Person (i.e., a party who is not a signatory hereto or a permitted successor to such signatory hereto) shall have any right, power, title or interest by way of subrogation or otherwise, in and to the rights, powers, title and provisions of this Legacy Unit Designation. No creditor or other third party having dealings with the Partnership shall have the right to pursue any right or remedy hereunder or at law or in equity.
Section 5.15 Amendment.
(a) Amendments to this Legacy Unit Designation may be proposed by the General Partner or the LHR.
(b) This Legacy Unit Designation may only be modified or amended with the written consent of both the General Partner and the LHR; provided that (i) the General Partner shall not unreasonably withhold, condition or delay its consent to any modification or amendment requested by the LHR and (ii) any modification or amendment requested by the LHR that relates solely to the Legacy Units and that would not reasonably be expected to adversely impact any other class of Partnership Units shall be deemed to be reasonably requested by the LHR. This paragraph applies to the Legacy Units in lieu of any other amendment provisions in the Partnership Agreement, and fully replaces and supersedes those provisions as to all matters set forth in this Legacy Unit Designation or otherwise impacting the terms set forth herein. Upon obtaining any such consent, and without further action or execution by any other Person, including any Limited Partner, (1) any amendment to this Legacy Unit Designation may be implemented and reflected in a writing executed solely by the General Partner or the LHR, and (2) the Legacy Holders shall be deemed a party to and bound by such amendment of this Legacy Unit Designation. For the avoidance of doubt, notwithstanding anything to the contrary in this Legacy Unit Designation, this Legacy Unit Designation may not be amended without the consent of the General Partner (not to be unreasonably withheld, conditioned or delayed in respect of any modification or amendment requested by the LHR).
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IN WITNESS WHEREOF, the undersigned have executed this Legacy Unit Designation as of the Effective Time.
| GENERAL PARTNER: | ||
| LINEAGE, INC., | ||
| a Maryland corporation | ||
| By: | /s/ Adam Forste | |
| Name: | Adam Forste | |
| Its: | Co-Executive Chairman | |
| LHR: | ||
| BG LINEAGE HOLDINGS LHR, LLC, | ||
| a Delaware limited liability company | ||
| By: | BG Lineage Holdings, LLC | |
| Its: | Managing Member | |
| By: | Bay Grove Management Company, LLC | |
| Its: | Manager | |
| By: | /s/ Adam Forste | |
| Name: | Adam Forste | |
| Its: | Authorized Person | |
[Unit Designation – Legacy Units of Lineage OP, LP – Signature Page]
EXHIBIT A
TO
LEGACY UNIT DESIGNATION
Form of Broker Instruction
[Broker]
Please sell up to [______] shares of common stock of Lineage, Inc. (Nasdaq: LINE) (the “REIT Shares”) in accordance with the following requirements. Please acknowledge this instruction, including your obligation to use commercially reasonable efforts to comply with the requirements set forth herein, by reply email.
Price: Such sales shall be at an average price, on any Trading Day, as close as commercially reasonably practicable to the Daily VWAP for such Trading Day or the remainder of such Trading Day if entered intraday (excluding, however, from such Daily VWAP any trading during periods when sales are suspended as a result of the third bullet herein)[, but not below a limit price of US$[_____]].
Volume: Such sales shall not exceed on any Trading Day, 10% of the daily trading volume for the regular trading session (including any extension thereof) of the Exchange on such Trading Day (excluding, however, from such daily trading volume any trading during periods when sales are suspended as a result of the third bullet herein).
No Disruption: No sales shall be made at a time when a Market Disruption Event has occurred and is continuing or has been deemed to have occurred and be continuing.
For the avoidance of doubt, all sales shall be made in compliance with securities laws as well as your policies, practices and procedures.
Capitalized terms used herein shall have the following definitions:
“Daily VWAP” means, for any Trading Day or portion of any Trading Day, the per share volume-weighted average price as displayed under the heading “Bloomberg VWAP” on Bloomberg page “LINE <equity> AQR” (or its equivalent successor if such page is not available) in respect of the period from the scheduled open of trading until the scheduled close of trading of the primary trading session on such Trading Day (or if such volume-weighted average price is unavailable, the market value of one REIT Share on such Trading Day determined, using a volume-weighted average method, by a nationally recognized independent investment banking firm retained for this purpose by the General Partner). The “Daily VWAP” shall be determined without regard to after-hours trading or any other trading outside of the regular trading session trading hours.
“Exchange” means the Nasdaq Global Select Market.
“Market Disruption Event” means (i) a failure by the primary Exchange on which REIT Shares are listed or admitted for trading to open for trading during its regular trading session or (ii) the occurrence or existence prior to 1:00 p.m., New York City time, on any scheduled trading day for REIT Shares for more than one half-hour period in the aggregate during regular trading hours of any suspension or limitation imposed on trading (by reason of movements in price exceeding limits permitted by the relevant stock exchange or otherwise) in REIT Shares or in any options contracts or futures contracts relating to REIT Shares.
A-1
“Trading Day” means a day on which trading in REIT Shares generally occurs on the Exchange.
A-2
Exhibit 10.3
NINTH AMENDED AND RESTATED OPERATING AGREEMENT
OF
LINEAGE LOGISTICS HOLDINGS, LLC
a Delaware limited liability company
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION, UNLESS IN THE OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THE PROPOSED SALE, TRANSFER OR OTHER DISPOSITION MAY BE EFFECTED WITHOUT REGISTRATION UNDER THE SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES OR “BLUE SKY” LAWS.
dated as of July 24, 2024
TABLE OF CONTENTS
| Page | ||||||||
| ARTICLE 1 DEFINED TERMS | 2 | |||||||
| ARTICLE 2 ORGANIZATIONAL MATTERS | 19 | |||||||
| Section 2.1 | Formation | 19 | ||||||
| Section 2.2 | Name | 19 | ||||||
| Section 2.3 | Principal Office and Resident Agent; Principal Executive Office | 19 | ||||||
| Section 2.4 | Power of Attorney | 19 | ||||||
| Section 2.5 | LLC Interests Are Securities | 20 | ||||||
| ARTICLE 3 PURPOSE | 21 | |||||||
| Section 3.1 | Purpose and Business | 21 | ||||||
| Section 3.2 | Powers | 21 | ||||||
| Section 3.3 | Limited Liability Company Only for Purposes Specified | 21 | ||||||
| Section 3.4 | Representations and Warranties by the Members | 21 | ||||||
| ARTICLE 4 CAPITAL CONTRIBUTIONS | 24 | |||||||
| Section 4.1 | Capital Contributions of the Members | 24 | ||||||
| Section 4.2 | Issuances of LLC Interests | 24 | ||||||
| Section 4.3 | Additional Funds and Capital Contributions | 26 | ||||||
| Section 4.4 | Equity Incentive Plans | 27 | ||||||
| Section 4.5 | No Interest; No Return | 28 | ||||||
| Section 4.6 | Redemption or Repurchase of OP Units | 28 | ||||||
| Section 4.7 | Other Contribution Provisions | 28 | ||||||
| ARTICLE 5 DISTRIBUTIONS | 28 | |||||||
| Section 5.1 | Requirement and Characterization of Distributions | 28 | ||||||
| Section 5.2 | Distributions in Kind | 29 | ||||||
| Section 5.3 | Amounts Withheld | 29 | ||||||
| Section 5.4 | Distributions upon Liquidation | 29 | ||||||
| Section 5.5 | Distributions to Reflect Additional Company Units | 29 | ||||||
| Section 5.6 | Restricted Distributions | 30 | ||||||
| ARTICLE 6 ALLOCATIONS | 30 | |||||||
| Section 6.1 | Timing and Amount of Allocations of Net Income and Net Loss | 30 | ||||||
| Section 6.2 | General Allocations | 30 | ||||||
| Section 6.3 | Additional Allocation Provisions | 31 | ||||||
| Section 6.4 | Regulatory Allocation Provisions | 31 | ||||||
| Section 6.5 | Tax Allocations | 34 | ||||||
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| ARTICLE 7 MANAGEMENT AND OPERATIONS OF BUSINESS | 34 | |||||||
| Section 7.1 | Management | 34 | ||||||
| Section 7.2 |
Certificate of Formation | 38 | ||||||
| Section 7.3 |
Restrictions on Managing Member’s Authority | 39 | ||||||
| Section 7.4 |
Reimbursement of the Managing Member | 41 | ||||||
| Section 7.5 |
Outside Activities of the Managing Member | 42 | ||||||
| Section 7.6 |
Transactions with Affiliates | 43 | ||||||
| Section 7.7 |
Indemnification | 43 | ||||||
| Section 7.8 |
Liability of the Managing Member | 46 | ||||||
| Section 7.9 |
Title to Company Assets | 49 | ||||||
| Section 7.10 |
Reliance by Third Parties | 49 | ||||||
| ARTICLE 8 RIGHTS AND OBLIGATIONS OF MEMBERS | 50 | |||||||
| Section 8.1 | Limitation of Liability | 50 | ||||||
| Section 8.2 |
Management of Business | 50 | ||||||
| Section 8.3 |
Outside Activities of Members | 50 | ||||||
| Section 8.4 |
Return of Capital | 51 | ||||||
| Section 8.5 |
Rights of Members Relating to the Company | 51 | ||||||
| Section 8.6 |
Company Right to Call Company Common Units | 51 | ||||||
| Section 8.7 |
Rights as Objecting Member | 51 | ||||||
| ARTICLE 9 BOOKS, RECORDS, ACCOUNTING AND REPORTS | 52 | |||||||
| Section 9.1 | Records and Accounting | 52 | ||||||
| Section 9.2 |
Company Year | 52 | ||||||
| Section 9.3 |
Reports | 52 | ||||||
| ARTICLE 10 TAX MATTERS | 53 | |||||||
| Section 10.1 | Preparation of Tax Returns | 53 | ||||||
| Section 10.2 |
Tax Elections | 53 | ||||||
| Section 10.3 |
Partnership Representative | 53 | ||||||
| Section 10.4 |
Withholding | 55 | ||||||
| Section 10.5 |
Organizational Expenses | 55 | ||||||
| Section 10.6 |
Survival | 55 | ||||||
| ARTICLE 11 MEMBER TRANSFERS AND WITHDRAWALS | 55 | |||||||
| Section 11.1 | Transfer | 55 | ||||||
| Section 11.2 |
Transfer of Managing Member’s LLC Interest | 56 | ||||||
| Section 11.3 |
Members’ Rights to Transfer | 59 | ||||||
| Section 11.4 |
Admission of Substituted Members | 61 | ||||||
| Section 11.5 |
Assignees | 61 | ||||||
| Section 11.6 |
General Provisions |
62 | ||||||
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| ARTICLE 12 ADMISSION OF MEMBERS | 63 | |||||||
| Section 12.1 | Admission of Successor Managing Member | 63 | ||||||
| Section 12.2 |
Admission of Additional Members | 64 | ||||||
| Section 12.3 |
Amendment of Agreement and Certificate of Formation | 65 | ||||||
| Section 12.4 |
Limit on Number of Members | 65 | ||||||
| Section 12.5 |
Admission | 65 | ||||||
| ARTICLE 13 DISSOLUTION, LIQUIDATION AND TERMINATION | 65 | |||||||
| Section 13.1 | Dissolution | 65 | ||||||
| Section 13.2 |
Winding Up | 66 | ||||||
| Section 13.3 |
Deemed Contribution and Distribution | 67 | ||||||
| Section 13.4 |
Rights of Holders | 68 | ||||||
| Section 13.5 |
Notice of Dissolution | 68 | ||||||
| Section 13.6 |
Certificate of Cancellation | 68 | ||||||
| Section 13.7 |
Reasonable Time for Winding-Up | 68 | ||||||
| ARTICLE 14 PROCEDURES FOR ACTIONS AND CONSENTS OF MEMBERS; AMENDMENTS; MEETINGS | 68 | |||||||
| Section 14.1 | Procedures for Actions and Consents of Members | 68 | ||||||
| Section 14.2 |
Amendments | 68 | ||||||
| Section 14.3 |
Actions and Consents of the Members | 69 | ||||||
| ARTICLE 15 GENERAL PROVISIONS | 70 | |||||||
| Section 15.1 | Exchange of OPEUs for OP Common Units | 70 | ||||||
| Section 15.2 |
Addresses and Notice | 71 | ||||||
| Section 15.3 |
Titles and Captions | 72 | ||||||
| Section 15.4 |
Pronouns and Plurals | 72 | ||||||
| Section 15.5 |
Further Action | 72 | ||||||
| Section 15.6 |
Binding Effect | 72 | ||||||
| Section 15.7 |
Waiver | 72 | ||||||
| Section 15.8 |
Counterparts | 72 | ||||||
| Section 15.9 |
Applicable Law; Consent to Jurisdiction; Waiver of Jury Trial | 73 | ||||||
| Section 15.10 |
Entire Agreement | 73 | ||||||
| Section 15.11 |
Invalidity of Provisions | 73 | ||||||
| Section 15.12 |
No Partition | 73 | ||||||
| Section 15.13 |
No Third-Party Rights Created Hereby | 74 | ||||||
| Section 15.14 |
No Rights as Unitholders | 74 | ||||||
| Section 15.15 |
REIT Subsidiary Ownership Restrictions | 74 | ||||||
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| Exhibits List | ||||||
| Exhibit A | EXAMPLES REGARDING ADJUSTMENT FACTOR | A-1 | ||||
| Exhibit B | NOTICE OF EXCHANGE | B-1 | ||||
| Exhibit C | UNIT DESIGNATION – SERIES A PREFERRED UNITS |
C-1 | ||||
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NINTH AMENDED AND RESTATED OPERATING AGREEMENT
OF LINEAGE LOGISTICS HOLDINGS, LLC
THIS NINTH AMENDED AND RESTATED OPERATING AGREEMENT OF Lineage Logistics Holdings, LLC (the “Company”), dated as of July 24, 2024 (the “Effective Date”), is made and entered into by and among the Company, Lineage OP, LP, a Maryland limited partnership, as a member and as managing member of the Company, and the Persons identified as the Members on the books and records of the Company.
RECITALS
A. The Company was formed as a limited liability company under the Act on November 30, 2011.
B. Prior to the Effective Time, the Company was governed by the Eighth Amended and Restated Operating Agreement of the Company, effective as of July 23, 2024 (as amended, the “Prior Agreement”).
C. The Company serves as the main operating entity for Lineage, Inc., a Maryland corporation and a real estate investment trust (“Lineage REIT”), and Lineage OP, LP, a Maryland limited partnership that is also the operating partnership of Lineage REIT (“Lineage OP”).
D. On the Effective Date, Articles of Conversion were filed with the State Department of Assessments and Taxation of the State of Maryland and a Certificate of Conversion was filed with the Secretary of State of the State of Delaware with an effective time of 12:30 p.m., Eastern Time (the “Effective Time”), to convert Lineage OP (formerly known as BG LLH Intermediate, LLC) to a Maryland limited partnership and change its name to Lineage OP, LP.
E. The requisite approvals for all amendments reflected herein have been received.
F. The Managing Member and the Members hereby amend and restate the Prior Agreement in its entirety as set forth herein and agree to continue the Company as a Delaware limited liability company in accordance with the Act.
G. This Ninth Amended and Restated Operating Agreement of Lineage Logistics Holdings, LLC (as hereafter amended, restated, modified, supplemented or replaced, this “Agreement”) supersedes and replaces the Prior Agreement in its entirety effective as of the Effective Time.
H. As of the Effective Time, all of the Company’s outstanding membership interests have been reclassified into either Company Common Units, Series A Preferred Units or OPEUs. The Series A Preferred Units and the OPEUs are currently expected to be a temporary class with a limited existence as set forth herein or in its respective Unit Designation.
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE 1
DEFINED TERMS
The following definitions shall be for all purposes, unless otherwise clearly indicated to the contrary, applied to the terms used in this Agreement:
“Act” means the Delaware Limited Liability Company Act, as it may be amended from time to time.
“Actions” has the meaning set forth in Section 7.7(a) hereof.
“Additional Funds” has the meaning set forth in Section 4.3(a) hereof.
“Additional Member” means a Person who is admitted to the Company as a member pursuant to the Act and Section 4.2 and Section 12.2 hereof and who is shown as such on the books and records of the Company.
“Adjusted Capital Account” means, with respect to any Member, the balance in such Member’s Capital Account as of the end of the relevant Company Year or other applicable period, after giving effect to the following adjustments:
| (a) | increase such Capital Account by any amounts that such Member is obligated to restore pursuant to this Agreement upon liquidation of such Member’s LLC Interest or that such Person is deemed to be obligated to restore pursuant to Regulations Section 1.704-1(b)(2)(ii)(c) or the penultimate sentence of each of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5); and |
| (b) | decrease such Capital Account by the items described in Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6). |
The foregoing definition of “Adjusted Capital Account” is intended to comply with the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
“Adjusted Capital Account Deficit” means, with respect to any Member, the deficit balance, if any, in such Member’s Adjusted Capital Account as of the end of the relevant Company Year or other applicable period.
“Adjustment Factor” means 1.0; provided, however, that in the event that:
| (a) | the Managing Member (i) makes a distribution to all holders of its outstanding OP Units wholly or partly in OP Units, (ii) splits or subdivides its outstanding OP Units or (iii) effects a reverse split or otherwise combines its outstanding OP Units into a smaller number of OP Units, the Adjustment Factor shall be adjusted by multiplying the Adjustment Factor previously in effect by a fraction, (A) the numerator of which shall be the number of OP Units issued and outstanding on the record date for such distribution, split, subdivision, reverse split or combination (assuming for such purposes that such distribution, split, subdivision, reverse split or combination has occurred as of such time) and (B) the denominator of which shall be the actual number of OP Units (determined without the above assumption) issued and outstanding on the record date for such distribution, split, subdivision, reverse split or combination; |
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| (b) | the Managing Member distributes any rights, options or warrants to all holders of its OP Units to subscribe for or to purchase or to otherwise acquire OP Units, or other securities or rights convertible into, exchangeable for or exercisable for OP Units, at a price per unit less than the Value of an OP Unit on the record date for such distribution (each a “Distributed Right”), then, as of the distribution date of such Distributed Rights or, if later, the time such Distributed Rights become exercisable, the Adjustment Factor shall be adjusted by multiplying the Adjustment Factor previously in effect by a fraction (i) the numerator of which shall be the number of OP Units issued and outstanding on the record date (or, if later, the date such Distributed Rights become exercisable) plus the maximum number of OP Units purchasable under such Distributed Rights and (ii) the denominator of which shall be the number of OP Units issued and outstanding on the record date (or, if later, the date such Distributed Rights become exercisable) plus a fraction (A) the numerator of which is the maximum number of OP Units purchasable under such Distributed Rights times the minimum purchase price per OP Unit under such Distributed Rights and (B) the denominator of which is the Value of an OP Unit as of the record date (or, if later, the date such Distributed Rights become exercisable); provided, however, that, if any such Distributed Rights expire or become no longer exercisable, then the Adjustment Factor shall be adjusted, effective retroactive to the date of distribution of the Distributed Rights (or, if applicable, the later time that the Distributed Rights became exercisable), to reflect a reduced maximum number of OP Units or any change in the minimum purchase price for the purposes of the above fraction; and |
| (c) | the Managing Member shall distribute to all holders of its OP Units evidences of its indebtedness or assets (including securities, but excluding any dividend or distribution referred to in subsection (a) or (b) above), which evidences of indebtedness or assets relate to assets not received by the Managing Member pursuant to a pro rata distribution by the Company, then the Adjustment Factor shall be adjusted to equal the amount determined by multiplying the Adjustment Factor in effect immediately prior to the close of business as of the applicable record date by a fraction (i) the numerator of which shall be such Value of an OP Unit as of the record date and (ii) the denominator of which shall be the Value of an OP Unit as of the record date less the then fair market value (as determined by the Managing Member, whose determination shall be conclusive) of the portion of the evidences of indebtedness or assets so distributed applicable to one OP Unit. |
Notwithstanding the foregoing, no adjustments to the Adjustment Factor will be made for any class or series of LLC Interests to the extent that the Company makes or effects any correlative distribution or payment to all of the Members holding LLC Interests of such class or series, or effects any correlative split or reverse split in respect of the LLC Interests of such class or series. Any adjustments to the Adjustment Factor shall become effective immediately after such event, retroactive to the record date, if any, for such event. For illustrative purposes, examples of adjustments to the Adjustment Factor are set forth on Exhibit A attached hereto.
3
“Affiliate” means, with respect to any Person, any Person directly or indirectly controlling or controlled by or under common control with such Person. For the purposes of this definition, “control” when used with respect to any Person means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise, and the terms “controlling” and “controlled” have meanings correlative to the foregoing.
“Agreement” has the meaning set forth in the Recitals.
“Appraisal” means, with respect to any assets, the written opinion of an independent third party experienced in the valuation of similar assets, selected by the Managing Member. Such opinion may be in the form of an opinion by such independent third party that the value for such property or asset as set by the Managing Member is fair, from a financial point of view, to the Company.
“Assignee” means a Person to whom an LLC Interest has been Transferred in a manner permitted under this Agreement, but who has not become a Substituted Member, and who has the rights set forth in Section 11.5 hereof.
“Available Cash” means, the amount of any applicable cash or other property or assets of the Company that the Managing Member, in its sole discretion, determines is available for distribution by the Company, taking into account such factors as the Managing Member deems necessary, advisable or appropriate in its sole discretion, including any actual or anticipated expenses, liabilities, obligations, costs and commitments relating to the conduct of the business of the Company. Notwithstanding the foregoing, Available Cash shall not include (a) any cash received or reductions in reserves, or take into account any disbursements made, or reserves established, after dissolution and the commencement of the liquidation and winding up of the Company or (b) any Capital Contributions, whenever received or any payments, expenditures or investments made with such Capital Contributions.
“Beneficial Ownership” means ownership of an LLC Interest by a Person that is or would be treated as a direct or indirect owner of such LLC Interest through the application of Section 544 of the Code, as modified by Sections 856(h)(1)(B) and 856(h)(3)(A) of the Code. The terms “Beneficial Owner,” “Beneficially Owns,” “Beneficially Owning” and “Beneficially Owned” shall have correlative meanings.
“Board of Directors” means the Board of Directors of Lineage REIT.
“Business Day” means any day except a Saturday, Sunday or other day on which commercial banks in the City of New York, New York are authorized by law to close.
4
“Capital Account” means, with respect to any Member, the capital account maintained by the Managing Member for such Member on the Company’s books and records in accordance with the following provisions:
| (a) | To each Member’s Capital Account, there shall be added such Member’s Capital Contributions, such Member’s distributive share of Net Income and any items in the nature of income or gain that are specially allocated pursuant to Section 6.3 or Section 6.4 hereof, and the amount of any Company liabilities assumed by such Member or that are secured by any property distributed to such Member. |
| (b) | From each Member’s Capital Account, there shall be subtracted the amount of cash and the Gross Asset Value of any Company property distributed to such Member pursuant to any provision of this Agreement, such Member’s distributive share of Net Losses and any items in the nature of expenses or losses that are specially allocated pursuant to Section 6.3 or Section 6.4 hereof, and the amount of any liabilities of such Member assumed by the Company or that are secured by any property contributed by such Member to the Company (except to the extent already reflected in the amount of such Member’s Capital Contribution). |
| (c) | In the event any interest in the Company is Transferred in accordance with the terms of this Agreement (which Transfer does not result in the termination of the Company for U.S. federal income tax purposes), the transferee shall succeed to the Capital Account of the transferor to the extent that it relates to the Transferred interest. |
| (d) | In determining the amount of any liability for purposes of subsections (a) and (b) hereof, there shall be taken into account Code Section 752(c) and any other applicable provisions of the Code and Regulations. |
| (e) | The provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Regulations promulgated under Section 704 of the Code, and shall be interpreted and applied in a manner consistent with such Regulations. If the Managing Member shall determine that it is necessary or appropriate to modify the manner in which the Capital Accounts are maintained in order to comply with such Regulations, the Managing Member may make such modification, provided that such modification is not likely to have any material effect on the amounts distributable to any Member pursuant to Article 13 hereof upon the dissolution of the Company. The Managing Member may, in its sole discretion, (i) make any adjustments that are necessary or appropriate to maintain equality between the Capital Accounts of the Members and the amount of Company capital reflected on the Company’s balance sheet, as computed for book purposes, in accordance with Regulations Section 1.704-1(b)(2)(iv)(q) and (ii) make any modifications that are necessary or appropriate in the event that unanticipated events might otherwise cause this Agreement not to comply with Regulations Section 1.704-1(b) or Section 1.704-2. |
“Capital Contribution” means, with respect to any Member, the amount of money and the initial Gross Asset Value of any Contributed Property that such Member contributes or is deemed to contribute pursuant to Article 4 hereof.
5
“Capital Share” means a share of any class or series of stock of Lineage REIT now or hereafter authorized other than a REIT Share.
“Certificate” means the Certificate of Formation of the Company filed under the Act in the Office of the Delaware Secretary of State for the purpose of forming the Company as a Delaware limited liability company and any duly authorized, executed and filed amendments or restatements thereof.
“Charitable Beneficiary” means one or more beneficiaries of the Trust as determined pursuant to Section 15.15(i)(vi); provided that each such organization must be described in Section 501(c)(3) of the Code and contributions to each such organization must be eligible for deduction under each of Sections 170(b)(1)(A), 2055 and 2522 of the Code.
“Charity” means an entity described in Section 501(c)(3) of the Code or any trust all the beneficiaries of which are such entities.
“Closing Price” has the meaning set forth in the definition of “Value.”
“COD Income” has the meaning set forth in Section 6.3(b) hereof.
“Code” means the Internal Revenue Code of 1986, as amended and in effect from time to time or any successor statute thereto, as interpreted by the applicable Regulations thereunder. Any reference herein to a specific section or sections of the Code shall be deemed to include a reference to any corresponding provision of future law.
“Company” has the meaning set forth in the Introduction.
“Company Common Unit” means a fractional, undivided share of the LLC Interests of all Members issued pursuant to Section 4.1 and Section 4.2 hereof, but does not include any Company Preferred Unit, OPEU or any other Company Unit specified in a Unit Designation as being other than a Company Common Unit.
“Company Minimum Gain” has the meaning set forth in Regulations Section 1.704-2(b)(2) for the phrase “partnership minimum gain,” and the amount of Company Minimum Gain, as well as any net increase or decrease in Company Minimum Gain, for a Company Year shall be determined in accordance with the rules of Regulations Section 1.704-2(d).
“Company Preferred Unit” means a fractional, undivided share of the LLC Interests of a particular class or series that the Managing Member has authorized pursuant to Section 4.2 hereof that has distribution rights, or rights upon liquidation, winding up and dissolution, that are superior or prior to the Company Common Units and OPEUs.
“Company Record Date” means the record date established by the Managing Member for the purpose of determining the Members entitled to notice of or to vote at any meeting of Members or to consent to any matter, or to receive any distribution or the allotment of any other rights, or in order to make a determination of Members for any other proper purpose, which, in the case of a distribution of Available Cash pursuant to Section 5.1 hereof, shall generally be the same as the record date established by the Managing Member for a distribution to its stockholders of some or all of its portion of such distribution.
6
“Company Unit” means a Company Common Unit, a Company Preferred Unit, an OPEU, any other class of unit described in any Unit Designation or any other unit of the fractional, undivided share of the LLC Interests that the Managing Member has authorized pursuant to Section 4.2 hereof.
“Company Vote” has the meaning set forth in Section 11.2(e) hereof.
“Company Year” has the meaning set forth in Section 9.2 hereof.
“Consent” means the consent to, approval of, or vote in favor of a proposed action by a Member given in accordance with Article 14 hereof. The terms “Consented” and “Consenting” have correlative meanings.
“Consent of the Managing Member” means the Consent of the sole Managing Member, which Consent, except as otherwise specifically required by this Agreement, may be obtained prior to or after the taking of any action for which it is required by this Agreement and may be given or withheld by the Managing Member in its sole and absolute discretion.
“Consent of the Managing Member and Members” means, subject to and except as set forth in any Unit Designation, the Consent of the Managing Member and the Consent of a Majority in Interest of the Members, which Consent shall be obtained prior to the taking of any action for which it is required by this Agreement and, except as otherwise provided in this Agreement, may be given or withheld by the Managing Member or the Members in their sole and absolute discretion; provided, however, that, solely with respect to any action taken pursuant to Section 7.3(b) and Section 14.2, if any such action affects only certain classes or series of LLC Interests, “Consent of the Managing Member and Members” means the Consent of the Managing Member and the Consent of a Majority in Interest of the Members of the affected classes or series of LLC Interests.
“Consent of the Members” means, subject to and except as set forth in the any Unit Designation, the Consent of a Majority in Interest of the Members, which Consent shall be obtained prior to the taking of any action for which it is required by this Agreement and, except as otherwise provided in this Agreement, may be given or withheld by each Member in its sole and absolute discretion; provided, however, that, if any such action affects only certain classes or series of LLC Interests, “Consent of the Members” means the Consent of a Majority in Interest of the Members of the affected classes or series of LLC Interests.
“Constructive Ownership” means ownership of an LLC Interest by a Person that is or would be treated as a direct or indirect owner of such LLC Interest through the application of Section 318(a) of the Code, as modified by Section 856(d)(5) of the Code. The terms “Constructive Owner,” “Constructively Owns,” “Constructively Owning” and “Constructively Owned” shall have correlative meanings.
“Contributed Property” means each Property or other asset, in such form as may be permitted by the Act, but excluding cash, contributed or deemed contributed to the Company.
7
“Contributing Holder” has the meaning set forth in Section 15.1(a) hereof.
“Controlled Entity” means, as to any Member, (a) any corporation more than fifty percent (50%) of the outstanding voting stock of which is owned by such Member or such Member’s Family Members or Affiliates, (b) any trust, whether or not revocable, of which such Member or such Member’s Family Members or Affiliates are the sole beneficiaries, (c) any partnership of which such Member or its Affiliates are the managing partners and in which such Member, such Member’s Family Members or Affiliates hold partnership interests representing at least twenty-five percent (25%) of such partnership’s capital and profits and (d) any limited liability company of which such Member or its Affiliates are the managers and in which such Member, such Member’s Family Members or Affiliates hold membership interests representing at least twenty-five percent (25%) of such limited liability company’s capital and profits.
“Debt” means, as to any Person, as of any date of determination: (a) all indebtedness of such Person for borrowed money or for the deferred purchase price of property or services; (b) all amounts owed by such Person to banks or other Persons in respect of reimbursement obligations under letters of credit, surety bonds and other similar instruments guaranteeing payment or other performance of obligations by such Person; (c) all indebtedness for borrowed money or for the deferred purchase price of property or services secured by any lien on any property owned by such Person, to the extent attributable to such Person’s interest in such property, even though such Person has not assumed or become liable for the payment thereof; and (d) lease obligations of such Person that, in accordance with generally accepted accounting principles, should be capitalized.
“Delaware Courts” has the meaning set forth in Section 15.9(b) hereof.
“Depreciation” means, for each Company Year or other applicable period, an amount equal to the federal income tax depreciation, amortization or other cost recovery deduction allowable with respect to an asset for such year or other period, except that if the Gross Asset Value of an asset differs from its adjusted basis for federal income tax purposes at the beginning of such year or other period, Depreciation shall be an amount that bears the same ratio to such beginning Gross Asset Value as the federal income tax depreciation, amortization or other cost recovery deduction for such year or other period bears to such beginning adjusted tax basis; provided, however, that if the federal income tax depreciation, amortization or other cost recovery deduction for such year or other period is zero, Depreciation shall be determined with reference to such beginning Gross Asset Value using any reasonable method selected by the Managing Member.
“Designated Individual” has the meaning set forth in Section 10.3(a) hereof.
“Disregarded Entity” means, with respect to any Person, (i) any “qualified REIT subsidiary” (within the meaning of Code Section 856(i)(2)) of such Person, (ii) any entity treated as a disregarded entity for Federal income tax purposes with respect to such Person, or (iii) any grantor trust if the sole owner of the assets of such trust for Federal income tax purposes is such Person.
“Distributed Right” has the meaning set forth in the definition of “Adjustment Factor.”
8
“Domestically Controlled Qualified Investment Entity” means a “domestically controlled qualified investment entity” within the meaning of Section 897(h)(4)(B) of the Code.
“Effective Date” has the meaning set forth in the Introduction.
“Effective Time” has the meaning set forth in the Recitals.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
“Excepted Holder” means the Managing Member, Lineage REIT and any other Person for whom an Excepted Holder Limit is created by the Managing Member pursuant to Section 15.15(g).
“Excepted Holder Limit” means for each Excepted Holder the percentage limit (or limitation on the number of Company Units held) established pursuant to Section 15.15(g), which limit may be expressed as a percentage of the capital interests or profit interests in the Company. The Excepted Holder Limit for each of the Managing Member and Lineage REIT shall be 100%.
“Exchange” has the meaning set forth in Section 15.1(a) hereof.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and any successor statute thereto, and the rules and regulations of the SEC promulgated thereunder.
“Exchanged Units” has the meaning set forth in Section 15.1(a) hereof.
“Expense Reimbursement and Indemnification Agreement” means the Expense Reimbursement and Indemnification Agreement, dated as of July 24, 2024, by and among the Company, BG Lineage Holdings, LLC, BG Lineage Holdings LHR, LLC and Bay Grove Management Company, LLC.
“Family Members” means, as to a Person that is an individual, such Person’s spouse, ancestors, descendants (whether by blood or by adoption or step-descendants by marriage), brothers and sisters, nieces and nephews and inter vivos or testamentary trusts (whether revocable or irrevocable) of which only such Person and such Person’s spouse, ancestors, descendants (whether by blood or by adoption or step-descendants by marriage), brothers and sisters and nieces and nephews are beneficiaries.
“Final Adjustment” has the meaning set forth in Section 10.3(b)(ii) hereof.
“Funding Debt” means any Debt incurred by or on behalf of the Managing Member for the purpose of providing funds to the Company.
“Gross Asset Value” means, with respect to any asset, the asset’s adjusted basis for federal income tax purposes, except as follows:
| (a) | The initial Gross Asset Value of any asset contributed by a Member to the Company shall be the gross fair market value of such asset on the date of contribution, as determined by the Managing Member and agreed to by the contributing Person. |
9
| (b) | The Gross Asset Values of all Company assets immediately prior to the occurrence of any event described in clauses (i) through (v) below shall be adjusted to equal their respective gross fair market values, as determined by the Managing Member using such reasonable method of valuation as it may adopt, as of the following times: |
| (i) | the acquisition of an additional interest in the Company (including, without limitation, acquisitions pursuant to Section 4.2 hereof or contributions or deemed contributions by the Managing Member pursuant to Section 4.2 hereof) by a new or existing Member in exchange for more than a de minimis Capital Contribution; |
| (ii) | the distribution by the Company to a Member of more than a de minimis amount of Company property as consideration for an interest in the Company; |
| (iii) | the liquidation of the Company within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g); |
| (iv) | the grant of an interest in the Company (other than a de minimis interest) as consideration for the provision of services to or for the benefit of the Company by an existing Member acting in a partner capacity, or by a new Member acting in a member capacity or in anticipation of becoming a Member of the Company; and |
| (v) | at such other times as the Managing Member shall reasonably determine necessary or advisable in order to comply with Regulations Sections 1.704-1(b) and 1.704-2. |
| (c) | The Gross Asset Value of any Company asset distributed to a Member shall be the gross fair market value of such asset on the date of distribution, as determined by the distributee and the Managing Member; provided, however, that if the distributee is the Managing Member or if the distributee and the Managing Member cannot agree on such a determination, such gross fair market value shall be determined by Appraisal. |
| (d) | The Gross Asset Values of Company assets shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such assets pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Regulations Section 1.704-1(b)(2)(iv)(m); provided, however, that Gross Asset Values shall not be adjusted pursuant to this subsection (d) to the extent that the Managing Member reasonably determines that an adjustment pursuant to subsection (b) above is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment pursuant to this subsection (d). |
| (e) | If the Gross Asset Value of a Company asset has been determined or adjusted pursuant to subsection (a), subsection (b) or subsection (d) above, such Gross Asset Value shall thereafter be adjusted by the Depreciation taken into account with respect to such asset for purposes of computing Net Income and Net Losses. |
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“Hart-Scott-Rodino Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
“Holder” means either (a) a Member or (b) an Assignee owning an LLC Interest.
“Incapacity” or “Incapacitated” means: (a) as to any Member who is an individual, death, total physical disability or entry by a court of competent jurisdiction adjudicating such Member incompetent to manage such Member’s person or such Member’s estate; (b) as to any Member that is a corporation or limited liability company, the filing of a certificate of dissolution, or its equivalent, for the corporation or the revocation of its charter; (c) as to any Member that is a partnership, the dissolution and commencement of winding up of the partnership; (d) as to any Member that is an estate, the distribution by the fiduciary of the estate’s entire interest in the Company; (e) as to any trustee of a trust that is a Member, the termination of the trust (but not the substitution of a new trustee); or (f) as to any Member, the bankruptcy of such Member. For purposes of this definition, bankruptcy of a Member shall be deemed to have occurred when (i) the Member commences a voluntary proceeding seeking liquidation, reorganization or other relief of or against such Member under any bankruptcy, insolvency or other similar law now or hereafter in effect, (ii) the Member is adjudged as bankrupt or insolvent, or a final and non-appealable order for relief under any bankruptcy, insolvency or similar law now or hereafter in effect has been entered against the Member, (iii) the Member executes and delivers a general assignment for the benefit of the Member’s creditors, (iv) the Member files an answer or other pleading admitting or failing to contest the material allegations of a petition filed against the Member in any proceeding of the nature described in clause (ii) above, (v) the Member seeks, consents to or acquiesces in the appointment of a trustee, receiver or Liquidator for the Member or for all or any substantial part of the Member’s properties, (vi) any proceeding seeking liquidation, reorganization or other relief under any bankruptcy, insolvency or other similar law now or hereafter in effect has not been dismissed within one hundred twenty (120) days after the commencement thereof, (vii) the appointment without the Member’s consent or acquiescence of a trustee, receiver or Liquidator has not been vacated or stayed within ninety (90) days of such appointment, or (viii) an appointment referred to in clause (vii) above is not vacated within ninety (90) days after the expiration of any such stay.
“Indemnitee” means (a) any Person made, or threatened to be made, a party to a proceeding by reason of its status as (i) the present or any former Managing Member or manager of the Company or (ii) a present or former officer of the present or any former Managing Member or manager, or a present or former director or officer of the Company or of the present or any former Managing Member or manager, and (b) such other Persons (including Affiliates or employees of the Managing Member or the Company) as the Managing Member may designate from time to time (whether before or after the event giving rise to potential liability), in its sole and absolute discretion.
“Individual” means an “individual” within the meaning of Section 542(a)(2) of the Code, but not including a qualified trust subject to the look-through rule of Section 856(h)(3)(A)(i) of the Code.
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“IRS” means the Internal Revenue Service.
“Lineage OP” has the meaning set forth in the Recitals.
“Lineage REIT” has the meaning set forth in the Recitals.
“Liquidating Event” has the meaning set forth in Section 13.1 hereof.
“Liquidator” has the meaning set forth in Section 13.2(a) hereof.
“LLC Interest” means a membership interest in the Company held by either a Member or the Managing Member and includes any and all benefits to which the holder of such membership interest may be entitled as provided in this Agreement, together with all obligations of such Person to comply with the terms and provisions of this Agreement. There may be one or more classes or series of LLC Interests. An LLC Interest may be expressed as a number of Company Common Units, Company Preferred Units, OPEUs or other Company Units; however, notwithstanding that the Managing Member, and any Member may have different rights and privileges as specified in this Agreement (including differences in rights and privileges with respect to their LLC Interests), the LLC Interest held by the Managing Member or any other Member and designated as being of a particular class or series shall not be deemed to be a separate class or series of LLC Interests from an LLC Interest having the same designation as to class and series that is held by any other Member solely because such LLC Interest is held by the Managing Member or any other Member having different rights and privileges as specified under this Agreement. An LLC Interest may be expressed as a number of Company Common Units, Company Preferred Units, OPEUs or other Company Units.
“Majority in Interest of the Members” means the Managing Member and Members holding in the aggregate Percentage Interests that are greater than fifty percent (50%) of the aggregate Percentage Interests of all such Members entitled to Consent to or withhold Consent from a proposed action, voting together as a single class. For purposes of calculating Percentage Interest in connection with this definition, each OPEU will be equivalent to one Company Common Unit.
“Managing Member” means Lineage OP, LP for so long as it remains a managing member of the Company, and/or any of its successors and assigns that become a managing member of the Company, in each case, that is admitted from time to time to the Company as a managing member, and has not ceased to be a managing member, pursuant to the Act and this Agreement, in such Person’s capacity as a managing member of the Company.
“Managing Member Interest” means the entire LLC Interest held by the Managing Member hereof, which LLC Interest may be expressed as a number of Company Common Units, Company Preferred Units or any other Company Units.
“Market Price” has the meaning set forth in the definition of “Value.”
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“Member” means any Person that is admitted from time to time to the Company as a member, and has not ceased to be a Member pursuant to the Act and this Agreement, of the Company, including any Substituted Member or Additional Member, in each case in such Person’s capacity as a member of the Company.
“Member Interest” means an LLC Interest of a Member in the Company representing a fractional part of the LLC Interests of all Members and includes any and all benefits to which the holder of such an LLC Interest may be entitled as provided in this Agreement, together with all obligations of such Person to comply with the terms and provisions of this Agreement. A Member Interest may be expressed as a number of Company Common Units, Company Preferred Units, OPEUs or other Company Units.
“Member Minimum Gain” means an amount, with respect to each Member Nonrecourse Debt, equal to the Company Minimum Gain that would result if such Member Nonrecourse Debt were treated as a Nonrecourse Liability, determined in accordance with Regulations Section 1.704-2(i)(3).
“Member Nonrecourse Debt” has the meaning set forth in Regulations Section 1.704-2(b)(4) for the phrase “partner nonrecourse debt.”
“Member Nonrecourse Deductions” has the meaning set forth in Regulations Section 1.704-2(i)(1), and the amount of Member Nonrecourse Deductions with respect to a Member Nonrecourse Debt for a Company Year shall be determined in accordance with the rules of Regulations Section 1.704-2(i)(2) for the phrase “partner nonrecourse deductions.”
“Net Income” or “Net Loss” means, for each Company Year or other applicable period, an amount equal to the Company’s taxable income or loss for such year or other applicable period, determined in accordance with Code Section 703(a) (for this purpose, all items of income, gain, loss or deduction required to be stated separately pursuant to Code Section 703(a)(1) shall be included in taxable income or loss), with the following adjustments:
| (a) | Any income of the Company that is exempt from federal income tax and not otherwise taken into account in computing Net Income (or Net Loss) pursuant to this definition of “Net Income” or “Net Loss” shall be added to (or subtracted from, as the case may be) such taxable income (or loss); |
| (b) | Any expenditure of the Company described in Code Section 705(a)(2)(B) or treated as a Code Section 705(a)(2)(B) expenditure pursuant to Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account in computing Net Income (or Net Loss) pursuant to this definition of “Net Income” or “Net Loss,” shall be subtracted from (or added to, as the case may be) such taxable income (or loss); |
| (c) | In the event the Gross Asset Value of any Company asset is adjusted pursuant to subsection (b) or subsection (c) of the definition of “Gross Asset Value,” the amount of such adjustment shall be taken into account as gain or loss from the disposition of such asset for purposes of computing Net Income or Net Loss; |
| (d) | Gain or loss resulting from any disposition of property with respect to which gain or loss is recognized for federal income tax purposes shall be computed by reference to the Gross Asset Value of the property disposed of, notwithstanding that the adjusted tax basis of such property differs from its Gross Asset Value; |
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| (e) | In lieu of the depreciation, amortization and other cost recovery deductions that would otherwise be taken into account in computing such taxable income or loss, there shall be taken into account Depreciation for such Company Year or other applicable period; |
| (f) | To the extent that an adjustment to the adjusted tax basis of any Company asset pursuant to Code Section 734(b) or Code Section 743(b) is required pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(4) to be taken into account in determining Capital Accounts as a result of a distribution other than in liquidation of a Member’s interest in the Company, the amount of such adjustment shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases the basis of the asset) from the disposition of the asset and shall be taken into account for purposes of computing Net Income or Net Loss; and |
| (g) | Notwithstanding any other provision of this definition of “Net Income” or “Net Loss,” any item that is specially allocated pursuant to Article 6 hereof shall not be taken into account in computing Net Income or Net Loss. The amounts of the items of Company income, gain, loss or deduction available to be specially allocated pursuant to Section 6.3 or Section 6.4 hereof shall be determined by applying rules analogous to those set forth in this definition of “Net Income” or “Net Loss.” |
“New Securities” means (a) any rights, options, warrants or convertible or exchangeable securities having the right to subscribe for or purchase OP Units, excluding grants under any equity plan, or (b) any Debt issued by the Managing Member that provides any of the rights described in clause (a).
“Nonrecourse Deductions” has the meaning set forth in Regulations Section 1.704-2(b)(1), and the amount of Nonrecourse Deductions for a Company Year shall be determined in accordance with the rules of Regulations Section 1.704-2(c).
“Nonrecourse Liability” has the meaning set forth in Regulations Sections 1.704-2(b)(3) and 1.752-1(a)(2).
“Notice of Exchange” means the Notice of Exchange substantially in the form of Exhibit Exhibit B attached to this Agreement.
“OP Agreement” means the limited partnership agreement of the Managing Member.
“OP Common Unit” means an OP Unit that is classified as a “Partnership Common Unit” in the OP Agreement.
“OP Common Units Amount” means a number of OP Common Units equal to the product of (a) the number of Exchanged Units and (b) the Adjustment Factor.
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“OP Unit” means a unit of the Managing Member, but shall not include any class or series of the Managing Member classified after the date of this Agreement.
“OP Units Amount” means, with respect to each affected Company Unit as of any date of determination, the same amount for each affected Company Unit that would be paid to any partner of the Managing Member pursuant to the OP Agreement to redeem a single OP Common Unit pursuant to such OP Common Unit’s redemption rights in the OP Agreement.
“OPEU” means a fractional, undivided share of the LLC Interests of all Members issued pursuant to Section 4.1 and Section 4.2 hereof designated as an “OPEU” having the rights, preferences, privileges and obligations set forth for OPEUs in this Agreement, but does not include any Company Common Unit, Company Preferred Unit or any other Company Unit specified in a Unit Designation as being other than an OPEU.
“Partnership Representative” has the meaning set forth in Section 10.3(a) hereof.
“Percentage Interest” means, with respect to each Member, the fraction, expressed as a percentage, the numerator of which is the aggregate number of Company Units of all classes and series held by such Member and the denominator of which is the total number of Company Units of all classes and series held by all Members; provided, however, that, to the extent applicable in context, the term “Percentage Interest” means, with respect to a Member, the fraction, expressed as a percentage, the numerator of which is the aggregate number of Company Units of a specified class or series (or specified group of classes and/or series) held by such Member and the denominator of which is the total number of Company Units of such specified class or series (or specified group of classes and/or series) held by all Members.
“Permitted Transfer” means, with respect to any Member and any LLC Interest: (a) the Transfer of all or part of such LLC Interest to any Family Member of such Member (including a Transfer by a Family Member that is an inter vivos or testamentary trust (whether revocable or irrevocable) to a Family Member that is a beneficiary of such trust), any Charity, any Controlled Entity or any Affiliate; or (b) a Pledge all or any portion of its LLC Interest to a lending institution as collateral or security for a bona fide loan or other extension of credit, and Transfer such pledged LLC Interest to such lending institution in connection with the exercise of remedies under such loan or extension of credit.
“Person” means an individual or a corporation, partnership, trust, unincorporated organization, association, limited liability company or other entity.
“Pledge” means a pledge as collateral or security for a bona fide loan or other extension of credit, which may include a Transfer of a pledged LLC Interest in connection with the exercise of remedies under such loan or extension of credit.
“Prior Agreement” has the meaning set forth in the Recitals.
“Prohibited Owner” means, with respect to any purported transfer of LLC Interests, any Person that, but for the provisions of Section 15.15(i), would Beneficially Own or Constructively Own LLC Interests.
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“Properties” means any assets and property of the Company such as, but not limited to, interests in real property and personal property, including, without limitation, fee interests, interests in ground leases, easements and rights of way, interests in limited liability companies, joint ventures or partnerships, interests in mortgages, and Debt instruments as the Company may hold from time to time and “Property” means any one such asset or property.
“Put Option Agreement” means the Put Option Agreement, dated as of July 24, 2024, by and among BG Lineage Holdings, LLC, Lineage REIT, the Company and Lineage OP.
“Qualified Transferee” means an “accredited investor” as defined in Rule 501 promulgated under the Securities Act.
“Qualifying Party” means (a) a Member, (b) an Assignee or (c) a Person, including a lending institution as the pledgee of a Pledge, who is the transferee of a Member Interest in a Permitted Transfer; provided, however, that a Qualifying Party shall not include the Managing Member.
“Register” has the meaning set forth in Section 4.1 hereof.
“Regulations” means the income tax regulations under the Code, whether such regulations are in proposed, temporary or final form, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations).
“Regulatory Allocations” has the meaning set forth in Section 6.4(a)(viii) hereof.
“REIT” means a real estate investment trust qualifying under Code Section 856.
“REIT Qualification Date” means such date as the Managing Member shall determine is necessary or advisable for the Company in connection with an election by a REIT Subsidiary to be taxed as a REIT to ensure that the REIT Subsidiary satisfies the REIT qualification requirements under Section 856 of the Code.
“REIT Requirements” has the meaning set forth in Section 5.1 hereof.
“REIT Share” means a share of common stock of Lineage REIT (and its successors and assigns), $0.01 par value per share, but shall not include any class or series of Lineage REIT’s common stock classified after the date of this Agreement.
“REIT Subsidiary” means any REIT in which the Company owns, directly or indirectly, an equity interest.
“REIT Subsidiary Ownership Limit” means not more than a 9.8% capital interest or profits interest in the Company. The capital interest or profits interest represented by any Member’s Company Units shall be determined by the Managing Member in good faith, which determination shall be conclusive for all purposes hereof.
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“Restriction Termination Date” means the last date, subsequent to the REIT Qualification Date, on which the Company owns, directly or indirectly, any equity interest in a REIT Subsidiary, or such other date as may be determined by the Managing Member in its sole discretion.
“Safe Harbors” has the meaning set forth in Section 11.3(c) hereof.
“SEC” means the Securities and Exchange Commission.
“Securities Act” means the Securities Act of 1933, as amended, and any successor statute thereto, and the rules and regulations of the SEC promulgated thereunder.
“Series A Preferred Units” means the series of Company Preferred Units designated as “Series A Preferred Units” and described in the Unit Designation – Series A Preferred Units included as Exhibit Exhibit C.
“Specified Exchange Date” means the fifteenth (15th) Business Day after the receipt by the Managing Member of a Notice of Exchange.
“Stockholder Meeting” means a meeting of the holders of REIT Shares convened for the purpose of conducting a Stockholder Vote as contemplated in Section 11.2(e) hereof.
“Stockholder Vote” has the meaning set forth in Section 11.2(e) hereof.
“Stockholder Vote Transaction” has the meaning set forth in Section 11.2(e) hereof.
“Subsidiary” means, with respect to any Person, any corporation or other entity of which a majority of (a) the voting power of the voting equity securities or (b) the outstanding equity interests is owned, directly or indirectly, by such Person; provided, however, that, with respect to the Company, “Subsidiary” means solely a partnership or limited liability company (taxed, for federal income tax purposes, as a partnership or as a Disregarded Entity and not as an association or publicly traded partnership taxable as a corporation) of which the Company is a member or any “taxable REIT subsidiary” of the Managing Member in which the Company owns shares of stock, unless the ownership of shares of stock of a corporation or other entity (other than a “taxable REIT subsidiary”) will not jeopardize Lineage REIT’s status as a REIT or any Lineage REIT Affiliate’s status as a “qualified REIT subsidiary” (within the meaning of Code Section 856(i)(2)), in which event the term “Subsidiary” shall include such corporation or other entity.
“Substituted Member” means a Person who is admitted as a Member to the Company pursuant to the Act and (a) Section 11.4 hereof or (b) pursuant to any Unit Designation.
“Surviving Company” has the meaning set forth in Section 11.2(b)(ii) hereof.
“Tax Items” has the meaning set forth in Section 6.5(a) hereof.
“Tax Matters Partner” has the meaning set forth in Section 10.3(c) hereof.
“Terminating Capital Transaction” means any sale or other disposition of all or substantially all of the assets of the Company or a related series of transactions that, taken together, result in the sale or other disposition of all or substantially all of the assets of the Company, in any case, not in the ordinary course of the Company’s business.
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“Termination Transaction” has the meaning set forth in Section 11.2(b) hereof.
“Transfer” means any sale, assignment, bequest, conveyance, devise, gift (outright or in trust), Pledge, encumbrance, hypothecation, mortgage, exchange, transfer or other disposition or act of alienation, whether voluntary, involuntary or by operation of law; provided, however, that when the term is used in Article 11 hereof, except as otherwise expressly provided, “Transfer” does not include any Exchange of OPEUs for OP Common Units pursuant to Section 15.1. The terms “Transferred” and “Transferring” have correlative meanings.
“Trust” means any trust for the exclusive benefit of one or more Charitable Beneficiaries, as provided for in Section 15.15(a)(ii).
“Trustee” means the Person not affiliated with the Company and any Prohibited Owner, that is appointed by the Company to serve as trustee of the Trust.
“Unit Designation” has the meaning set forth in Section 4.2(b) hereof.
“Value” means, with respect to an OP Unit, a measurement equivalent to, on any date of determination, the average of the daily Market Prices for ten (10) consecutive trading days immediately preceding such date of determination (except that the Market Price for the trading day immediately preceding the date of exercise of a stock option under any equity plan shall be substituted for such average of daily market prices for purposes of Section 4.4 hereof). The term “Market Price” on any date means, with respect to any class or series of outstanding REIT Shares, the Closing Price for such REIT Shares on such date. The “Closing Price” on any date means the last sale price for such REIT Shares, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, for such REIT Shares, in either case as reported on the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which such REIT Shares are listed or admitted to trading or, if such REIT Shares are not listed or admitted to trading on any national securities exchange, the last quoted price, or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by the National Association of Securities Dealers, Inc. Automated Quotation System or, if such system is no longer in use, the principal other automated quotation system that may then be in use or, if such REIT Shares are not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in such REIT Shares selected by the Board of Directors or, in the event that no trading price is available for such REIT Shares, the fair market value of the REIT Shares, as determined by the Board of Directors.
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ARTICLE 2
ORGANIZATIONAL MATTERS
Section 2.1 Formation. The Company was originally formed by the filing of a Certificate of Formation on November 31, 2011 with the Secretary of State of the State of Delaware. The Members hereby continue the Company under the Act indefinitely, and for the purposes and upon the terms and conditions hereinafter set forth unless the Company is dissolved sooner pursuant to the provisions of Article 13 hereof or as otherwise provided by law. Except as expressly provided herein to the contrary, the rights and obligations of the Members and the administration and termination of the Company shall be governed by the Act. The LLC Interest of each Member shall be personal property for all purposes.
Section 2.2 Name. The name of the Company is “Lineage Logistics Holdings, LLC.” The Company’s business may be conducted under any other name or names deemed advisable by the Managing Member, including the name of the Managing Member or any Affiliate thereof. The words “Limited Liability Company,” “LLC,” “Ltd.” or similar words or letters shall be included in the Company’s name where necessary for the purposes of complying with the laws of any jurisdiction that so requires. The Managing Member in its sole and absolute discretion may change the name of the Company at any time and from time to time and shall notify the Members of such change in the next regular communication to the Members.
Section 2.3 Principal Office and Resident Agent; Principal Executive Office. The address of the principal office of the Company in the State of Delaware is located at c/o Corporation Service Company, 251 Little Falls Drive, Wilmington, Delaware 19808, County of New Castle, or such other place within the State of Delaware as the Managing Member may from time to time designate, and the resident agent of the Company in the State of Delaware is a Delaware corporation, or such other resident of the State of Delaware as the Managing Member may from time to time designate. The principal office of the Company is located at 46500 Humboldt Drive, Novi, Michigan 48377, or such other place as the Managing Member may from time to time designate by notice to the Members. The Company may maintain offices at such other place or places within or outside the State of Delaware as the Managing Member may from time to time designate.
Section 2.4 Power of Attorney.
(a) Each Member and Assignee hereby irrevocably constitutes and appoints the Managing Member, any Liquidator, and authorized officers and attorneys-in-fact of each, and each of those acting singly, in each case with full power of substitution, as its true and lawful agent and attorney-in-fact, with full power and authority in its name, place and stead to:
(i) execute, swear to, seal, acknowledge, deliver, file and record in the appropriate public offices: (A) all certificates, documents and other instruments (including, without limitation, this Agreement and the Certificate and all amendments, supplements or restatements thereof) that the Managing Member or the Liquidator deems appropriate or necessary to form, qualify or continue the existence or qualification of the Company as a limited liability company (or an entity in which the members will have limited liability to the extent provided by applicable law) in the State of Delaware and in all other jurisdictions in which the Company may conduct business or own property; (B) all instruments that the Managing Member or any Liquidator deems appropriate or necessary to reflect any amendment, change, modification or restatement of this Agreement in accordance with its terms; (C) all conveyances and other instruments or documents that the Managing Member or the Liquidator deems appropriate or necessary to reflect the dissolution and liquidation of the Company pursuant to the terms of this Agreement, including, without limitation, a certificate of cancellation; (D) all conveyances and other instruments or documents that the
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Managing Member or the Liquidator deems appropriate or necessary to reflect the distribution or exchange of assets of the Company pursuant to the terms of this Agreement; (E) all instruments relating to the admission, acceptance, resignation, withdrawal, removal or substitution of any Member pursuant to the terms of this Agreement or the Capital Contribution of any Member; and (F) all certificates, documents and other instruments relating to the determination of the rights, preferences and privileges relating to LLC Interests; and
(ii) subject to a Member’s consent rights provided by this Agreement, execute, swear to, acknowledge and file all ballots, consents, approvals, waivers, certificates and other instruments appropriate or necessary, in the sole and absolute discretion of the Managing Member or any Liquidator, to make, evidence, give, confirm or ratify any vote, consent, approval, agreement or other action that is made or given by the Members hereunder or is consistent with the terms of this Agreement.
Nothing contained herein shall be construed as authorizing the Managing Member or any Liquidator to amend this Agreement except in accordance with Section 14.2 hereof or as may be otherwise expressly provided for in this Agreement.
(b) The foregoing power of attorney is hereby declared to be irrevocable and a special power coupled with an interest, in recognition of the fact that each of the Members and Assignees will be relying upon the power of the Managing Member or the Liquidator to act as contemplated by this Agreement in any filing or other action by it on behalf of the Company, and it shall survive and not be affected by the subsequent Incapacity of any Member or Assignee and the Transfer of all or any portion of such Person’s LLC Interest and shall extend to such Person’s heirs, successors, assigns and personal representatives. Each such Member and Assignee hereby agrees to be bound by any representation made by the Managing Member or the Liquidator, acting in good faith pursuant to such power of attorney; and each such Member and Assignee hereby waives any and all defenses that may be available to contest, negate or disaffirm the action of the Managing Member or the Liquidator, taken in good faith under such power of attorney. Each Member and Assignee shall execute and deliver to the Managing Member or the Liquidator, within fifteen (15) days after receipt of the Managing Member’s or the Liquidator’s request therefor, such further designation, powers of attorney and other instruments as the Managing Member or the Liquidator (as the case may be) deems necessary to effectuate this Agreement and the purposes of the Company. Notwithstanding anything else set forth in this Section 2.4(b), no Member shall incur any personal liability for any action of the Managing Member or the Liquidator taken under such power of attorney.
Section 2.5 LLC Interests Are Securities. All LLC Interests shall be securities within the meaning of, and governed by, (a) Article 8 of the Delaware Uniform Commercial Code and (b) Article 8 of the Uniform Commercial Code of any other applicable jurisdiction.
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ARTICLE 3
PURPOSE
Section 3.1 Purpose and Business. The purpose and nature of the Company is to conduct any business, enterprise or activity permitted by or under the Act, including, without limitation, (a) to engage in all lawful transactions and business activities as may be determined from time to time by the Managing Member, (b) to acquire, own, invest in, manage and/or dispose of any assets, entities, interests or investments of any kind, (c) to enter into any partnership, joint venture, business trust arrangement, limited liability company or other similar arrangement, (d) to conduct the Company’s business directly or through one or more Subsidiaries, partnerships, joint ventures, business trusts, limited liability companies, other entities or arrangements, and (e) to do anything necessary, appropriate, proper, advisable, incidental to or convenient for any or all of the foregoing.
Section 3.2 Powers. The Company shall be empowered to do any and all acts and things necessary, appropriate, proper, advisable, incidental to or convenient for the furtherance and accomplishment of the purposes and business described herein and for the protection and benefit of the Company including, without limitation, full power and authority, directly or through its ownership interest in other entities, to enter into, perform and carry out contracts of any kind, to borrow and lend money and to issue evidence of indebtedness, whether or not secured by mortgage, deed of trust, pledge or other lien, to acquire, own, manage, improve and develop real property and lease, sell, transfer and dispose of real property and any other property or assets.
Section 3.3 Limited Liability Company Only for Purposes Specified. The Company is a limited liability company existing pursuant to the Act, and this Agreement shall not be deemed to create a company, venture or partnership between or among the Members or any other Persons with respect to any activities whatsoever other than the activities within the purposes of the Company as specified in Section 3.1 hereof. Except as otherwise provided in this Agreement, no Member shall have any authority to act for, bind, commit or assume any obligation or responsibility on behalf of the Company, its properties or any other Member. No Member, in its capacity as a Member under this Agreement, shall be responsible or liable for any indebtedness or obligation of another Member, nor shall the Company be responsible or liable for any indebtedness or obligation of any Member, incurred either before or after the execution and delivery of this Agreement by such Member, except as to those responsibilities, liabilities, indebtedness or obligations incurred (a) pursuant to and as limited by the terms of this Agreement and the Act or (b) pursuant to a separate contract between any of such Persons.
Section 3.4 Representations and Warranties by the Members.
(a) Each Member that is an individual (including, without limitation, each Additional Member or Substituted Member as a condition to becoming an Additional Member or a Substituted Member) represents and warrants to, and covenants with, each other Member that (i) the consummation of the transactions contemplated by this Agreement to be performed by such Member will not result in a breach or violation of, or a default under, any material agreement by which such Member or any of such Member’s property is bound, or any statute, regulation, order or other law to which such Member is subject, (ii) if five percent (5%) or more (by value) of the Company’s interests are or will be owned by such Member within the meaning of Code Section 7704(d)(3), such Member does not, and for so long as it is a Member will not, own, directly or indirectly, (A) stock of any corporation that is a tenant of (I) the Company, any REIT Subsidiary or any Disregarded Entity with respect to the Company or any REIT Subsidiary or (II) any partnership, venture or limited liability company of which the Company, any REIT Subsidiary or any Disregarded Entity with respect to the Company or any REIT Subsidiary is a direct or indirect
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member or (B) an interest in the assets or net profits of any non-corporate tenant of (I) the Company, any REIT Subsidiary or any Disregarded Entity with respect to the Company or any REIT Subsidiary or (II) any partnership, venture or limited liability company of which the Company, any REIT Subsidiary or any Disregarded Entity with respect to the Company or any REIT Subsidiary is a direct or indirect member, (iii) such Member’s ownership of LLC Interests does and will not cause any Individual to Beneficially Own more than 9.8% of the value of the outstanding capital stock or other equity interests in any REIT Subsidiary, (iv) such Member’s Beneficial Ownership or Constructive Ownership of LLC Interests does not and will not result in any REIT Subsidiary failing to qualify as a REIT (including as a result of causing any REIT Subsidiary to constructively own, determined in accordance with Sections 856(d)(2)(B) and 856(d)(5) of the Code, an interest in a tenant that is described in Section 856(d)(2)(B) of the Code if the income derived by the REIT Subsidiary from such tenant would cause the REIT Subsidiary to fail to satisfy any of the gross income requirements of Section 856(c) of the Code), (v) such Member has the legal capacity to enter into this Agreement and perform such Member’s obligations hereunder, and (vi) this Agreement is binding upon, and enforceable against, such Member in accordance with its terms. Notwithstanding the foregoing, a Member that is an individual shall not be subject to the ownership restrictions set forth in clauses (ii) or (iii) of the immediately preceding sentence to the extent such Member obtains the written Consent of the Managing Member prior to violating any such restrictions, which consent the Managing Member may give or withhold in its sole and absolute discretion. Each Member that is an individual shall also represent and warrant to the Company that such Member is neither a “foreign person” within the meaning of Code Section 1445(f) nor a foreign partner within the meaning of Code Section 1446(e).
(b) Each Member that is not an individual (including, without limitation, each Additional Member or Substituted Member as a condition to becoming an Additional Member or a Substituted Member, but excluding the Managing Member) represents and warrants to, and covenants with, each other Member that (i) all transactions contemplated by this Agreement to be performed by it have been duly authorized by all necessary action, including, without limitation, that of its general partner(s), committee(s), trustee(s), beneficiaries, directors and/or stockholder(s) (as the case may be) as required, (ii) the consummation of such transactions shall not result in a breach or violation of, or a default under, its partnership or operating agreement, trust agreement, charter or bylaws (as the case may be) any material agreement by which such Member or any of such Member’s properties or any of its partners, members, beneficiaries, trustees or stockholders (as the case may be) is or are bound, or any statute, regulation, order or other law to which such Member or any of its partners, members, trustees, beneficiaries or stockholders (as the case may be) is or are subject, (iii) if five percent (5%) or more (by value) of the Company’s interests are or will be owned by such Member within the meaning of Code Section 7704(d)(3), such Member does not, and for so long as it is a Member will not, own, directly or indirectly, (A) stock of any corporation that is a tenant of (I) the Company, any REIT Subsidiary or any Disregarded Entity with respect to the Company or any REIT Subsidiary or (II) any partnership, venture or limited liability company of which the Company, any REIT Subsidiary or any Disregarded Entity with respect to the Company or any REIT Subsidiary is a direct or indirect member or (B) an interest in the assets or net profits of any non-corporate tenant of (I) the Company, any REIT Subsidiary or any Disregarded Entity with respect to the Company or any REIT Subsidiary or (II) any partnership, venture or limited liability company of which the Company, any REIT Subsidiary or any Disregarded Entity with respect to the Company or any REIT Subsidiary is a direct or indirect
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member, (iv) such Member’s ownership of LLC Interests does and will not cause any Individual to Beneficially Own more than 9.8% of the value of the outstanding capital stock or other equity interests in any REIT Subsidiary, (v) such Member’s Beneficial Ownership or Constructive Ownership of LLC Interests does not and will not result in any REIT Subsidiary failing to qualify as a REIT (including as a result of causing any REIT Subsidiary to constructively own, determined in accordance with Sections 856(d)(2)(B) and 856(d)(5) of the Code, an interest in a tenant that is described in Section 856(d)(2)(B) of the Code if the income derived by the REIT Subsidiary from such tenant would cause the REIT Subsidiary to fail to satisfy any of the gross income requirements of Section 856(c) of the Code), and (vi) this Agreement is binding upon, and enforceable against, such Member in accordance with its terms. Notwithstanding the foregoing, a Member that is not an individual shall not be subject to the ownership restrictions set forth in clauses (iii) or (iv) of the immediately preceding sentence to the extent such Member obtains the written Consent of the Managing Member prior to violating any such restrictions, which consent the Managing Member may give or withhold in its sole and absolute discretion. Each Member that is not an individual shall also represent and warrant to the Company that such Member is neither a “foreign person” within the meaning of Code Section 1445(f) nor a foreign partner within the meaning of Code Section 1446(e).
(c) Each Member (including, without limitation, each Additional Member or Substituted Member as a condition to becoming an Additional Member or Substituted Member) represents, warrants and agrees that (i) it has acquired and continues to hold its interest in the Company for its own account for investment purposes only and not for the purpose of, or with a view toward, the resale or distribution of all or any part thereof in violation of applicable laws, and not with a view toward selling or otherwise distributing such interest or any part thereof at any particular time or under any predetermined circumstances in violation of applicable laws and (ii) it is a sophisticated investor, able and accustomed to handling sophisticated financial matters for itself, particularly real estate investments, and that it has a sufficiently high net worth that it does not anticipate a need for the funds that it has invested in the Company in what it understands to be a highly speculative and illiquid investment.
(d) The representations and warranties contained in Sections 3.4(a), 3.4(b) and 3.4(c) hereof shall survive the execution and delivery of this Agreement by each Member (and, in the case of an Additional Member or a Substituted Member, the admission of such Additional Member or Substituted Member as a Member in the Company) and the dissolution, liquidation and termination of the Company.
(e) Each Member (including, without limitation, each Additional Member or Substituted Member as a condition to becoming an Additional Member or Substituted Member) hereby acknowledges that no representations as to potential profit, cash flows, funds from operations or yield, if any, in respect of the Company or the Managing Member have been made by any Member or any employee or representative or Affiliate of any Member, and that projections and any other information, including, without limitation, financial and descriptive information and documentation, that may have been in any manner submitted to such Member shall not constitute any representation or warranty of any kind or nature, express or implied.
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(f) Notwithstanding the foregoing, the Managing Member may, in its sole and absolute discretion, permit the modification of any of the representations and warranties contained in Sections 3.4(a), 3.4(b) and 3.4(c) above as applicable to any Member (including, without limitation any Additional Member or Substituted Member or any transferee of either), provided that such representations and warranties, as modified, shall be set forth in either (i) a Unit Designation applicable to the Company Units held by such Member or (ii) a separate writing addressed to the Company and the Managing Member.
ARTICLE 4
CAPITAL CONTRIBUTIONS
Section 4.1 Capital Contributions of the Members. The Members have heretofore made Capital Contributions to the Company. Except as provided by law or in Sections 4.2, 4.3, or 10.4 hereof, the Members shall have no obligation or, except with the prior Consent of the Managing Member, right to make any additional Capital Contributions or loans to the Company. The Managing Member shall cause to be maintained in the principal business office of the Company, or such other place as may be determined by the Managing Member, the books and records of the Company, which shall include, among other things, a register containing the name, address, and number, class and series of Company Units of each Member, and such other information as the Managing Member may deem necessary or desirable (the “Register”). The Register shall not be part of this Agreement. The Managing Member shall from time to time update the Register as necessary to accurately reflect the information therein, including as a result of any sales, exchanges or other Transfers, or any redemptions, issuances or similar events involving Company Units. Any reference in this Agreement to the Register shall be deemed a reference to the Register as in effect from time to time. Subject to the terms of this Agreement, the Managing Member may take any action authorized hereunder in respect of the Register without any need to obtain the consent or approval of any other Member. No action of any Member shall be required to amend or update the Register. Except as required by law, no Member shall be entitled to receive a copy of the information set forth in the Register relating to any Member other than itself.
Section 4.2 Issuances of LLC Interests. The Company may create and issue LLC Interests of any class, series or kind, as determined by the Managing Member. Subject to the rights of any Holder of any LLC Interest set forth in a Unit Designation:
(a) Classes of LLC Interests. As of the Effective Time, the Company has the following authorized, issued and/or outstanding classes of LLC Interests:
(i) Company Common Units. The Company Common Units are Company Units with the rights, preferences, privileges and obligations set forth in this Agreement.
(ii) OPEUs. The OPEUs are Company Units with the rights, preferences, privileges and obligations set forth in this Agreement.
(iii) Other Classes. The Company has each additional class of Company Units identified in a Unit Designation that exists as of the Effective Time, with the rights, preferences, privileges and obligations set forth in this Agreement as modified by such Unit Designation.
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(b) General. The Managing Member is hereby authorized to cause the Company to issue additional LLC Interests, in the form of Company Units, for any Company purpose, at any time or from time to time, to the Members (including the Managing Member) or to other Persons, and to admit such Persons as Additional Members, for such consideration and on such terms and conditions as shall be established by the Managing Member in its sole and absolute discretion, all without the approval of any Member or any other Person. Without limiting the foregoing, the Managing Member is expressly authorized to cause the Company to issue Company Units (i) upon the conversion, redemption or exchange of any Debt, Company Units, or other securities issued by the Company, (ii) for less than fair market value, (iii) for no consideration, (iv) in connection with any merger of any other Person into the Company,(v) upon the contribution of property or assets to the Company, or (vi) to the Managing Member upon the Exchange of OPEUs for OP Common Units of the Managing Member. Any additional LLC Interests may be issued in one or more classes, or one or more series of any of such classes, with such designations, preferences, conversion or other rights, voting powers or rights, restrictions, limitations as to distributions, qualifications or terms or conditions of redemption (including, without limitation, terms that may be senior or otherwise entitled to preference over existing Company Units) as shall be determined by the Managing Member, in its sole and absolute discretion without the approval of any Member or any other Person, and set forth in a written document thereafter attached to and made an exhibit to this Agreement, which exhibit shall be an amendment to this Agreement and shall be incorporated herein by this reference (each, a “Unit Designation”), without the approval of any Member or any other Person. Without limiting the generality of the foregoing, the Managing Member shall have authority to specify: (A) the allocations of items of Company income, gain, loss, deduction and credit to each such class or series of LLC Interests; (B) the right of each such class or series of LLC Interests to share (on a pari passu, junior or preferred basis) in Company distributions; (C) the rights of each such class or series of LLC Interests upon dissolution and liquidation of the Company; (D) the voting rights, if any, of each such class or series of LLC Interests; and (E) the conversion, redemption or exchange rights applicable to each such class or series of LLC Interests. Except as expressly set forth in any Unit Designation or as may otherwise be required under the Act, an LLC Interest of any class or series other than a Company Common Unit or OPEU shall not entitle the holder thereof to vote on, or consent to, any matter. Upon the issuance of any additional LLC Interest, the Managing Member shall update the Register and the books and records of the Company as appropriate to reflect such issuance. All parties hereto are deemed to approve the terms of each Unit Designation entered into in accordance with this Agreement.
(c) Issuances to the Managing Member. No additional Company Units shall be issued to the Managing Member unless (i) the additional Company Units are issued to all Members holding Company Common Units and OPEUs in proportion to their respective Percentage Interests in Company Common Units and OPEUs, collectively, (ii) (A) the additional Company Units are (I) Company Common Units issued in connection with an issuance of OP Units and/or REIT Shares, or (II) OPEUs (other than Company Common Units) issued in connection with an issuance of OP Units, New Securities or other interests in the Managing Member, and (B) the Managing Member contributes to the Company the cash proceeds or other consideration received in connection with the issuance of such OP Units, preferred equity of the Managing Member, New Securities or other interests in the Managing Member, (iii) the additional Company Units are issued upon the conversion, redemption or exchange of Debt, Company Units or other securities issued by the Company, (iv) the additional Company Units are issued pursuant to Sections 4.3(b), 4.3(e) or 4.4, (v) the additional Company Units are issued pursuant to the exercise of rights set forth in the Put Option Agreement, or (vi) the additional Company Units are issued pursuant to an exchange described in Section 15.1.
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(d) No Preemptive Rights. Except as expressly provided in this Agreement, in any Unit Designation or in the Put Option Agreement, no Person, including, without limitation, any Member or Assignee, shall have any preemptive, preferential, participation or similar right or rights to subscribe for or acquire any LLC Interest.
(e) Reclassification of Company Units. Except as otherwise set forth in a Unit Designation, with the Consent of the Managing Member and the Member holding the applicable Company Unit of any class, such Company Unit may be reclassified as a Company Unit of any other class, provided that such reclassification does not have a material adverse impact on the other Company Units. The reclassification of any Company Unit does not constitute a redemption or issuance of any Company Unit for purposes of this Agreement (but this sentence shall not be deemed to describe or impact the tax treatment of any such reclassification for U.S. federal income tax purposes or otherwise). The foregoing shall not be deemed to describe or impact the tax treatment of any such reclassification for U.S. federal income or other tax purposes.
Section 4.3 Additional Funds and Capital Contributions.
(a) General. The Managing Member may, at any time and from time to time, determine that the Company requires additional funds (“Additional Funds”) for the acquisition or development of additional Properties, for the redemption of Company Units or for such other purposes as the Managing Member may determine, in its sole and absolute discretion. Additional Funds may be obtained by the Company, at the election of the Managing Member, in any manner provided in, and in accordance with, the terms of this Section 4.3 without the approval of any Member or any other Person.
(b) Additional Capital Contributions. The Managing Member, on behalf of the Company, may obtain any Additional Funds by accepting Capital Contributions from any Members or other Persons. In connection with any such Capital Contribution (of cash or property), the Managing Member is hereby authorized to cause the Company from time to time to issue additional Company Units (as set forth in Section 4.2 above) in consideration therefor and the Percentage Interests of the Managing Member and the Members shall be adjusted to reflect the issuance of such additional Company Units.
(c) Loans by Third Parties. The Managing Member, on behalf of the Company, may obtain any Additional Funds by causing the Company to incur Debt to any Person (other than the Managing Member (but, for this purpose, disregarding any Debt that may be deemed incurred to the Managing Member by virtue of clause (iii) of the definition of Debt)) upon such terms as the Managing Member determines appropriate, including making such Debt convertible, redeemable or exchangeable for Company Units, OP Units or REIT Shares; provided, however, that the Company shall not incur any such Debt if any Member would be personally liable for the repayment of such Debt (unless such Member otherwise agrees).
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(d) Managing Member Loans. The Managing Member, on behalf of the Company, may obtain any Additional Funds by causing the Company to incur Debt to the Managing Member if (i) such Debt is, to the extent permitted by law, on substantially the same terms and conditions (including interest rate, repayment schedule, and conversion, redemption, repurchase and exchange rights) as Funding Debt incurred by the Managing Member, the net proceeds of which are loaned to the Company to provide such Additional Funds, or (ii) such Debt is on terms and conditions no less favorable to the Company than would be available to the Company from any third party; provided, however, that the Company shall not incur any such Debt if any Member would be personally liable for the repayment of such Debt (unless such Member otherwise agrees).
(e) Issuance of Securities by the Managing Member. The Managing Member shall not issue any additional OP Units or New Securities unless the Managing Member contributes the cash proceeds or other consideration received from the issuance of such additional OP Units or New Securities (as the case may be) and from the exercise of the rights contained in any such additional New Securities to the Company in exchange for Company Common Units; provided, however, that notwithstanding the foregoing, the Managing Member may issue OP Units or New Securities (i) pursuant to Section 4.4 hereof, (ii) pursuant to a dividend or distribution (including any stock split) of OP Units or New Securities to holders of OP Units or New Securities (as the case may be), (iii) upon a conversion, redemption, exchange or exercise of New Securities, (iv) in connection with an acquisition of Company Units or a property or other asset to be owned, directly or indirectly, by the Managing Member, (v) pursuant to the exercise of rights set forth in the Put Option Agreement, or (vi) pursuant to an exchange described in Section 15.1. In the event of any issuance of additional OP Units or New Securities by the Managing Member, and the contribution to the Company, by the Managing Member, of the cash proceeds or other consideration received from such issuance (or property acquired with such proceeds), if any, if the cash proceeds actually received by the Managing Member are less than the gross proceeds of such issuance as a result of any underwriter’s discount or other expenses paid or incurred in connection with such issuance, then the Managing Member shall be deemed to have made a Capital Contribution to the Company in the amount equal to the sum of the cash proceeds of such issuance plus the amount of such underwriter’s discount and other expenses paid by the Managing Member (which discount and expense shall be treated as an expense for the benefit of the Company for purposes of Section 7.4). In the event that the Managing Member issues any additional OP Units or New Securities and contributes the cash proceeds or other consideration received from the issuance thereof to the Company, the Company is expressly authorized to issue a number of Company Common Units to the Managing Member equal to the number of OP Units or New Securities so issued, divided by the Adjustment Factor then in effect, in accordance with this Section 4.3(e) without any further act, approval or vote of any Member or any other Persons.
Section 4.4 Equity Incentive Plans. Nothing in this Agreement shall be construed or applied to preclude or restrain the Managing Member or the Company from adopting, modifying or terminating equity incentive plans for the benefit of employees, directors, consultants or other service providers of the Managing Member, the Company or any of their Affiliates or from issuing Company Common Units or New Securities pursuant to any such plans. The Managing Member may implement such plans and any actions taken under such plans (such as the grant or exercise of options to acquire OP Unit, or the issuance of restricted OP Unit), whether taken with respect to or by an employee or other service provider of the Managing Member, the Company or its Subsidiaries, in a manner determined by the Managing Member, which may be set forth in plan implementation guidelines that the Managing Member may establish or amend from time to time. The Members acknowledge and agree that, in the event that any such plan is adopted, modified or
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terminated by the Managing Member, amendments to this Agreement may become necessary or advisable and that any approval or Consent to any such amendments requested by the Managing Member shall be deemed granted by the Members. The Company is expressly authorized to issue Company Units (a) in accordance with the terms of any such equity incentive plans, or (b) in an amount equal to the number of Company Common Units or New Securities issued pursuant to any such equity incentive plans, without any further act, approval or vote of any Member or any other Persons.
Section 4.5 No Interest; No Return. No Partner shall be entitled to interest on its Capital Contribution or on such Member’s Capital Account. Except as provided herein or by law, no Member shall have any right to demand or receive the return of its Capital Contribution from the Company.
Section 4.6 Redemption or Repurchase of OP Units. If, at any time, any OP Units are redeemed or otherwise repurchased (whether by exercise of a put or call, automatically or by means of another arrangement) by the Managing Member or Lineage REIT, the Company shall, immediately prior to such redemption or repurchase of OP Units, redeem an equal number of Company Common Units held by the Managing Member upon the same terms and for the same price per Company Common Unit as such OP Units are redeemed or repurchased.
Section 4.7 Other Contribution Provisions. In the event that any Member is admitted to the Company and is given a Capital Account in exchange for services rendered to the Company, such transaction shall be treated by the Company and the affected Member as if the Company had compensated such partner in cash and such Member had contributed the cash that the Member would have received to the capital of the Company. In addition, with the Consent of the Managing Member, one or more Members may enter into contribution agreements with the Company which have the effect of providing a guarantee of certain obligations of the Company (and/or a wholly-owned Subsidiary of the Company).
ARTICLE 5
DISTRIBUTIONS
Section 5.1 Requirement and Characterization of Distributions. Subject to the rights of any Holder of any LLC Interest set forth in a Unit Designation, the Managing Member may cause the Company to distribute such amounts, at such times, as the Managing Member may, in its sole and absolute discretion, determine, to the Holders as of any Company Record Date: (a) first, with respect to any Company Units that are entitled to any preference in distribution, in accordance with the rights of Holders of such class(es) of Company Units (and, within each such class, among the Holders of each such class, pro rata in proportion to their respective Percentage Interests of such class or as otherwise prescribed for that class on such Company Record Date); and (b) second, with respect to any Company Units that are not entitled to any preference in distribution, in accordance with the rights of Holders of such class(es) of Company Units, including pursuant to any applicable Unit Designation, as applicable (and, within each such class, among the Holders of each such class, pro rata in proportion to their respective Percentage Interests of such class on such Company Record Date, or, with respect to a particular class, within that class as otherwise set forth in the applicable Unit Designation); it being agreed that the Company Common Units and the OPEUs will be treated as a single class for purposes of all distributions made pursuant to this
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Agreement, with distributions being shared among all such Company Units pro rata in proportion to their respective Percentage Interests as if the Company Common Units and OPEUs were a single class with all Company Common Units and all OPEUs being equal to one another. Distributions payable with respect to any Company Units, other than any Company Units issued to the Managing Member in connection with the issuance of OP Units by the Managing Member, that were not outstanding during the entire quarterly period in respect of which any distribution is made shall be prorated based on the portion of the period that such Company Units were outstanding. The Managing Member shall make such reasonable efforts, as determined by it in its sole and absolute discretion and consistent with Lineage REIT’s qualification as a REIT, to cause the Company to distribute sufficient amounts in the order and priority set forth in this Section 5.1 as will enable the Managing Member to distribute sufficient amounts to Lineage REIT to enable Lineage REIT for so long as Lineage REIT has determined to qualify as a REIT, to pay stockholder dividends that will (i) satisfy the requirements for qualifying as a REIT under the Code and Regulations (the “REIT Requirements”) and (ii) except to the extent otherwise determined by the Managing Member, eliminate any U.S. federal income or excise tax liability of Lineage REIT.
Section 5.2 Distributions in Kind. Except as expressly provided herein or in a Unit Designation, no right is given to any Holder to demand and receive property other than cash as provided in this Agreement. Except as expressly provided herein or in a Unit Designation, the Managing Member may determine, in its sole and absolute discretion, to make a distribution in kind of Company assets to the Holders, and such assets shall be distributed in such a fashion as to ensure that the fair market value is distributed and allocated in accordance with Articles 5, 6 and 13 hereof; provided, however, that the Managing Member shall not make a distribution in kind to any Holder unless (a) the Holder has been given ninety (90) days prior written notice of such distribution, (b) the Holder has waived such minimum notice, or (c) such distribution in kind is made in accordance with the terms of a Unit Designation applicable to the Company Units receiving such distribution.
Section 5.3 Amounts Withheld. All amounts withheld pursuant to the Code or any provisions of any state, local or non-United States tax law and Section 10.4 hereof with respect to any allocation, payment or distribution to any Holder shall be treated as amounts paid or distributed to such Holder pursuant to Section 5.1 hereof for all purposes under this Agreement.
Section 5.4 Distributions upon Liquidation. Notwithstanding the other provisions of this Article 5 or any applicable Unit Designation, net proceeds from a Terminating Capital Transaction, and any other amounts distributed after the occurrence of a Liquidating Event, shall be distributed to the Holders in accordance with Section 13.2 hereof.
Section 5.5 Distributions to Reflect Additional Company Units. In the event that the Company issues additional Company Units pursuant to the provisions of Article 4 hereof, subject to the rights of any Holder of any LLC Interest set forth in a Unit Designation, the Managing Member is hereby authorized to make such revisions to this Article 5 and to Articles 6, 11 and 12 hereof as it determines are necessary or desirable to reflect the issuance of such additional Company Units, including, without limitation, making preferential distributions to Holders of certain classes of Company Units.
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Section 5.6 Restricted Distributions. Notwithstanding any provision to the contrary contained in this Agreement, neither the Company nor the Managing Member, on behalf of the Company, shall make a distribution to any Holder if such distribution would violate the Act or other applicable law.
ARTICLE 6
ALLOCATIONS
Section 6.1 Timing and Amount of Allocations of Net Income and Net Loss. Net Income and Net Loss of the Company shall be determined and allocated with respect to each Company Year as of the end of each such year, provided that the Managing Member may in its discretion allocate Net Income and Net Loss for a shorter period as of the end of such period (and, for purposes of this Article 6, references to the term “Company Year” may include such shorter periods). Except as otherwise provided in this Article 6, and subject to Section 11.6(c) hereof, an allocation to a Holder of a share of Net Income or Net Loss shall be treated as an allocation of the same share of each item of income, gain, loss or deduction that is taken into account in computing Net Income or Net Loss.
Section 6.2 General Allocations.
(a) General. Subject to the other provisions of this Article 6, for purposes of adjusting the Capital Accounts of the Members, the Net Income, Net Losses and, to the extent necessary, individual items of income, gain, loss, credit and deduction, for any Company Year shall be allocated among the Members in a manner such that the Adjusted Capital Account of each Member, immediately after making such allocation is, as nearly as possible, equal (proportionately) to the distributions that would be made to such Member pursuant to Section 13.2(a)(iv) if the Company were dissolved, its affairs wound up and its assets sold for cash equal to their Gross Asset Value, all Company liabilities were satisfied (limited with respect to each Nonrecourse Liability to the Gross Asset Value of the asset securing such liability), and the net assets of the Company were distributed in accordance with Section 13.2(a)(iv) to the Members immediately after making such allocation; provided, however, that the Managing Member may adjust the allocations that are determined (without regard to this proviso) pursuant to this Section 6.2 if the Managing Member determines reasonably and in good faith that such adjustment is required to comply with the requirements of Section 704(b) of the Code and the Treasury Regulations promulgated thereunder, or to give economic effect to Articles 5, 7, 13 and the other relevant provisions of this Agreement.
(b) Allocations to Reflect Issuance of Additional LLC Interests. In the event that the Company issues additional LLC Interests to the Managing Member or any Additional Members pursuant to Section 4.2 or Section 4.3, the Managing Member shall make such revisions to this Section 6.2 or to Section 12.2(c) or Section 13.2(a) as it determines are necessary to reflect the terms of the issuance of such additional LLC Interests, including making preferential allocations to certain classes of LLC Interests, subject to the terms of any Unit Designation with respect to LLC Interests then outstanding.
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Section 6.3 Additional Allocation Provisions. Notwithstanding the foregoing provisions of this Article 6:
(a) Offsetting Allocations. Notwithstanding the provisions of Section 6.1 and Section 6.2(a), but subject to Section 6.3 and Section 6.4, in the event Net Income or items thereof are being allocated to a Member to offset prior Net Loss or items thereof which have been allocated to such Member, the Managing Member shall attempt to allocate such offsetting Net Income or items thereof which are of the same or similar character (including without limitation Section 704(b) book items versus tax items) to the original allocations with respect to such Member.
(b) CODI Allocations. Notwithstanding anything to the contrary contained herein, if any indebtedness of the Company encumbering the Properties contributed to the Company in connection with the Managing Member’s initial offering is settled or paid off at a discount, any resulting COD Income of the Company shall be specially allocated proportionately (as determined by the Managing Member) to those Holders that were partners in entities that contributed, or were deemed to contribute, the applicable Property to the Company in connection with such initial offering to the extent the number of Company Units received by such Holders in exchange for their interests in such entities was determined, in part, by taking into account the anticipated discounted settlement or pay-off of such indebtedness. For purposes of the foregoing, “COD Income” shall mean income recognized by the Company pursuant to Code Section 61(a)(12).
Section 6.4 Regulatory Allocation Provisions. Notwithstanding the foregoing provisions of this Article 6:
(a) Regulatory Allocations.
(i) Minimum Gain Chargeback. Except as otherwise provided in Regulations Section 1.704-2(f), notwithstanding the provisions of Section 6.2 hereof, or any other provision of this Article 6, if there is a net decrease in Company Minimum Gain during any Company Year, each Holder shall be specially allocated items of Company income and gain for such year (and, if necessary, subsequent years) in an amount equal to such Holder’s share of the net decrease in Company Minimum Gain, as determined under Regulations Section 1.704-2(g). Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Holder pursuant thereto. The items to be allocated shall be determined in accordance with Regulations Sections 1.704-2(f)(6) and 1.704-2(j)(2). This Section 6.4(a)(i) is intended to qualify as a “minimum gain chargeback” within the meaning of Regulations Section 1.704-2(f) and shall be interpreted consistently therewith.
(ii) Member Minimum Gain Chargeback. Except as otherwise provided in Regulations Section 1.704-2(i)(4) or in Section 6.4(a)(i) hereof, if there is a net decrease in Member Minimum Gain attributable to a Member Nonrecourse Debt during any Company Year, each Holder who has a share of the Member Minimum Gain attributable to such Member Nonrecourse Debt, determined in accordance with Regulations Section 1.704-2(i)(5), shall be specially allocated items of Company income and gain for such year (and, if necessary, subsequent years) in an amount equal to such Holder’s share of the net
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decrease in Member Minimum Gain attributable to such Member Nonrecourse Debt, determined in accordance with Regulations Section 1.704-2(i)(4). Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Holder pursuant thereto. The items to be so allocated shall be determined in accordance with Regulations Sections 1.704-2(i)(4) and 1.704-2(j)(2). This Section 6.4(a)(ii) is intended to qualify as a “chargeback of partner nonrecourse debt minimum gain” within the meaning of Regulations Section 1.704-2(i) and shall be interpreted consistently therewith.
(iii) Nonrecourse Deductions and Member Nonrecourse Deductions. Any Nonrecourse Deductions for any Company Year shall be specially allocated (x) first, among the Holders of Company Common Units and OPEUs in accordance with their respective Percentage Interests with respect to Company Common Units and OPEUs and (y) thereafter, among the Holders of other classes of Company Units as determined by the Managing Member. Any Member Nonrecourse Deductions for any Company Year shall be specially allocated to the Holder(s) who bears the economic risk of loss with respect to the Member Nonrecourse Debt to which such Member Nonrecourse Deductions are attributable, in accordance with Regulations Section 1.704-2(i).
(iv) Qualified Income Offset. If any Holder unexpectedly receives an adjustment, allocation or distribution described in Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of Company income and gain shall be specially allocated, in accordance with Regulations Section 1.704-1(b)(2)(ii)(d), to such Holder in an amount and manner sufficient to eliminate, to the extent required by such Regulations, the Adjusted Capital Account Deficit of such Holder as quickly as possible, provided that an allocation pursuant to this Section 6.4(a)(iv) shall be made if and only to the extent that such Holder would have an Adjusted Capital Account Deficit after all other allocations provided in this Article 6 have been tentatively made as if this Section 6.4(a)(iv) were not in the Agreement. It is intended that this Section 6.4(a)(iv) qualify and be construed as a “qualified income offset” within the meaning of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
(v) Gross Income Allocation. In the event that any Holder has a deficit Capital Account at the end of any Company Year that is in excess of the sum of (1) the amount (if any) that such Holder is obligated to restore to the Company upon complete liquidation of such Holder’s LLC Interest (including, the Holder’s interest in outstanding Company Preferred Units and other Company Units) and (2) the amount that such Holder is deemed to be obligated to restore pursuant to Regulations Section 1.704-1(b)(2)(ii)(c) or the penultimate sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5), each such Holder shall be specially allocated items of Company income and gain in the amount of such excess to eliminate such deficit as quickly as possible, provided that an allocation pursuant to this Section 6.4(a)(v) shall be made if and only to the extent that such Holder would have a deficit Capital Account in excess of such sum after all other allocations provided in this Article 6 have been tentatively made as if this Section 6.4(a)(v) and Section 6.4(a)(iv) hereof were not in the Agreement.
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(vi) Limitation on Allocation of Net Loss. To the extent that any allocation of Net Loss would cause or increase an Adjusted Capital Account Deficit as to any Holder, such allocation of Net Loss shall be reallocated (x) first, among the other Holders of Company Common Units and OPEUs in accordance with their respective Percentage Interests with respect to Company Common Units and OPEUs and (y) thereafter, among the Holders of other classes of Company Units as determined by the Managing Member, subject to the limitations of this Section 6.4(a)(vi).
(vii) Section 754 Adjustment. To the extent that an adjustment to the adjusted tax basis of any Company asset pursuant to Code Section 734(b) or Code Section 743(b) is required, pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(2) or Regulations Section 1.704-1(b)(2)(iv)(m)(4), to be taken into account in determining Capital Accounts as the result of a distribution to a Holder in complete liquidation of its interest in the Company, the amount of such adjustment to the Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis), and such gain or loss shall be specially allocated (x) first, among the Holders of Company Common Units and OPEUs in accordance with their respective Percentage Interests with respect to Company Common Units and OPEUs and (y) thereafter, among the Holders of other classes of Company Units as determined by the Managing Member, in each case in the event that Regulations Section 1.704-1(b)(2)(iv)(m)(2) applies, or to the Holder(s) to whom such distribution was made in the event that Regulations Section 1.704-1(b)(2)(iv)(m)(4) applies.
(viii) Curative Allocations. The allocations set forth in Sections 6.4(a)(i), (ii), (iii), (iv), (v), (vi) and (vii) hereof (the “Regulatory Allocations”) are intended to comply with certain regulatory requirements, including the requirements of Regulations Sections 1.704-1(b) and 1.704-2. Notwithstanding the provisions of Section 6.1 and Section 6.2 hereof, the Regulatory Allocations shall be taken into account in allocating other items of income, gain, loss and deduction among the Holders so that to the extent possible without violating the requirements giving rise to the Regulatory Allocations, the net amount of such allocations of other items and the Regulatory Allocations to each Holder shall be equal to the net amount that would have been allocated to each such Holder if the Regulatory Allocations had not occurred.
(b) Allocation of Excess Nonrecourse Liabilities. Excess nonrecourse liabilities within the meaning of Section 1.752-3(a)(3) of the Regulations may be allocated to a Holder up to the amount of built-in gain that is allocable to the Holder on Code Section 704(c) property or property for which reverse Code Section 704(c) allocations are applicable (where such property is subject to the nonrecourse liability to the extent that such built-in gain exceeds the gain described in Section 1.752-3(a)(2) of the Regulations with respect to such property). To the extent that the entire amount of the excess nonrecourse liability is not allocated under the prior sentence, the remaining amount of the excess nonrecourse liability shall be allocated under one of the other methods contained in Section 1.752- 3(a)(3) of the Regulations. Additionally, excess nonrecourse liabilities shall not be required to be allocated under the same method each year.
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Section 6.5 Tax Allocations.
(a) In General. Except as otherwise provided in this Section 6.5, for income tax purposes under the Code and the Regulations, each Company item of income, gain, loss and deduction (collectively, “Tax Items”) shall be allocated among the Holders in the same manner as its correlative item of “book” income, gain, loss or deduction is allocated pursuant to Section 6.2 and Section 6.3 hereof.
(b) Section 704(c) Allocations. Notwithstanding Section 6.5(a) hereof, Tax Items with respect to Property that is contributed to the Company with an initial Gross Asset Value that varies from its basis in the hands of the contributing Member immediately preceding the date of contribution shall be allocated among the Holders for income tax purposes pursuant to Regulations promulgated under Code Section 704(c) so as to take into account such variation. The Company shall account for such variation under any method approved under Code Section 704(c) and the applicable Regulations as chosen by the Managing Member. In the event that the Gross Asset Value of any Company asset is adjusted pursuant to subsection (b) of the definition of “Gross Asset Value” (provided in Article 1 hereof), subsequent allocations of Tax Items with respect to such asset shall take account of the variation, if any, between the adjusted basis of such asset and its Gross Asset Value in the same manner as under Code Section 704(c) and the applicable Regulations and using the method chosen by the Managing Member; provided, however, that with respect to any “reverse” Code Section 704(c) allocations described in Section 1.704-3(a)(6)(i) of the Regulations, the Managing Member shall use the traditional method under Section 1.704-3(b) of the Regulations or the traditional method with curative allocations under Section 1.704-3(c) of the Regulations. Allocations pursuant to this Section 6.5(b) are solely for purposes of Federal, state and local income taxes and shall not affect, or in any way be taken into account in computing, any Member’s Capital Account or share of Net Income, Net Loss, or any other items or distributions pursuant to any provision of this Agreement.
ARTICLE 7
MANAGEMENT AND OPERATIONS OF BUSINESS
Section 7.1 Management.
(a) Except as otherwise expressly provided in this Agreement, including any Unit Designation, all management powers over the business and affairs of the Company are and shall be exclusively vested in the Managing Member, and no Member shall have any right to participate in or exercise control or management power over the business and affairs of the Company. No Managing Member may be removed by the Members, with or without cause, except with the Consent of the Managing Member. Without limiting the other provisions of this Agreement, the Managing Member shall constitute a “manager” under the Act and shall have all of the rights and powers of a “manager” under the Act except as otherwise expressly provided in this Agreement. In addition to the powers now or hereafter granted a managing member of a limited liability company under applicable law or that are granted to the Managing Member under any other provision of this Agreement, the Managing Member, subject to the other provisions hereof including, without limitation, Section 3.2 and Section 7.3, and the rights of any Holder of any LLC Interest set forth in a Unit Designation, shall have full and exclusive power and authority, without the consent or approval of any Member, to do or authorize all things deemed necessary or desirable
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by it to conduct the business and affairs of the Company, to exercise or direct the exercise of all of the powers of the Company and a managing member under the Act and this Agreement and to effectuate the purposes of the Company including, without limitation:
(i) the making of any expenditures, the lending or borrowing of money or selling of assets (including, without limitation, making prepayments on loans and borrowing money to permit the Company to make distributions to the Holders in such amounts as will permit the Managing Member to make distributions to Lineage REIT as will permit Lineage REIT to prevent the imposition of any federal income tax on Lineage REIT (including, for this purpose, any excise tax pursuant to Code Section 4981), to make distributions to its stockholders and payments to any taxing authority sufficient to permit Lineage REIT to maintain REIT status or otherwise to satisfy the REIT Requirements), the assumption or guarantee of, or other contracting for, indebtedness and other liabilities, the issuance of evidences of indebtedness (including the securing of same by deed to secure debt, mortgage, deed of trust or other lien or encumbrance on the Company’s assets) and the incurring of any obligations to conduct the activities of the Company;
(ii) the making of tax, regulatory and other filings, or rendering of periodic or other reports to governmental or other agencies having jurisdiction over the business or assets of the Company;
(iii) the taking of any and all acts to ensure that the Company will not be classified as a “publicly traded partnership” under Code Section 7704;
(iv) subject to Section 11.2 hereof, the acquisition, sale, transfer, exchange or other disposition of any, all or substantially all of the assets (including the goodwill) of the Company (including, but not limited to, the exercise or grant of any conversion, option, privilege or subscription right or any other right available in connection with any assets at any time held by the Company) or the merger, consolidation, reorganization or other combination of the Company with or into another entity;
(v) the mortgage, pledge, encumbrance or hypothecation of any assets of the Company, the assignment of any assets of the Company in trust for creditors or on the promise of the assignee to pay the debts of the Company, the use of the assets of the Company (including, without limitation, cash on hand) for any purpose consistent with the terms of this Agreement and on any terms that the Managing Member sees fit, including, without limitation, the financing of the operations and activities of the Managing Member, the Company or any of the Company’s Subsidiaries, the lending of funds to other Persons (including, without limitation, the Managing Member and/or the Company’s Subsidiaries) and the repayment of obligations of the Company, its Subsidiaries and any other Person in which the Company has an equity investment, and the making of capital contributions to and equity investments in the Company’s Subsidiaries;
(vi) the management, operation, leasing, landscaping, repair, alteration, demolition, replacement or improvement of any Property;
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(vii) the negotiation, execution and performance of any contracts, including leases (including ground leases), easements, management agreements, rights of way and other property-related agreements, conveyances or other instruments to conduct the Company’s operations or implement the Managing Member’s powers under this Agreement, including contracting with contractors, developers, consultants, governmental authorities, accountants, legal counsel, other professional advisors and other agents and the payment of their expenses and compensation, as applicable, out of the Company’s assets;
(viii) the distribution of Company cash or other Company assets in accordance with this Agreement, the holding, management, investment and reinvestment of cash and other assets of the Company, and the collection and receipt of revenues, rents and income of the Company;
(ix) the selection and dismissal of employees of the Company (if any) (including, without limitation, employees having titles or offices such as “president,” “vice president,” “secretary” and “treasurer”), and agents, outside attorneys, accountants, consultants and contractors of the Company and the determination of their compensation and other terms of employment or hiring;
(x) the maintenance of insurance (including, without limitation, directors and officers insurance) for the benefit of the Company and the Members (including, without limitation, the Managing Member);
(xi) the formation of, or acquisition of an interest in, and the contribution of property to, any further limited or general partnerships, limited liability companies, joint ventures or other relationships that it deems desirable (including, without limitation, the acquisition of interests in, and the contributions of property to, any Subsidiary and any other Person in which the Managing Member has an equity investment from time to time);
(xii) the control of any matters affecting the rights and obligations of the Company, including the settlement, compromise, submission to arbitration or any other form of dispute resolution, or abandonment, of any claim, cause of action, liability, debt or damages, due or owing to or from the Company, the commencement or defense of suits, legal proceedings, administrative proceedings, arbitrations or other forms of dispute resolution, and the representation of the Company in all suits or legal proceedings, administrative proceedings, arbitrations or other forms of dispute resolution, the incurring of legal expense, and the indemnification of any Person against liabilities and contingencies to the extent permitted by law;
(xiii) the undertaking of any action in connection with the Company’s direct or indirect investment in any Subsidiary or any other Person (including, without limitation, the contribution or loan of funds by the Company to such Persons);
(xiv) the determination of the fair market value of any Company property distributed in kind using such reasonable method of valuation as the Managing Member may adopt; provided, however, that such methods are otherwise consistent with the requirements of this Agreement;
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(xv) the enforcement of any rights against any Member pursuant to representations, warranties, covenants and indemnities relating to such Member’s contribution of property or assets to the Company;
(xvi) the exercise, directly or indirectly, through any attorney-in-fact acting under a general or limited power of attorney, of any right, including the right to vote, appurtenant to any asset or investment held by the Company;
(xvii) the exercise of any of the powers of the Managing Member enumerated in this Agreement on behalf of or in connection with any Subsidiary of the Company or any other Person in which the Company has a direct or indirect interest, or jointly with any such Subsidiary or other Person;
(xviii) the exercise of any of the powers of the Managing Member enumerated in this Agreement on behalf of any Person in which the Company does not have an interest, pursuant to contractual or other arrangements with such Person;
(xix) the making, execution and delivery of any and all deeds, leases, notes, deeds to secure debt, mortgages, deeds of trust, security agreements, conveyances, contracts, guarantees, warranties, indemnities, waivers, releases, confessions of judgment or any other legal instruments or agreements in writing;
(xx) the issuance of additional Company Units in connection with Capital Contributions by Additional Members and additional Capital Contributions by Members pursuant to Article 4 hereof;
(xxi) an election to dissolve the Company pursuant to Section 13.1(b) hereof;
(xxii) the maintenance of the Register from time to time to reflect accurately at all times the Capital Contributions and Percentage Interests of the Members as the same are adjusted from time to time to reflect redemptions, Capital Contributions, the issuance of Company Units, the admission of any Additional Member or any Substituted Member or otherwise, which shall not be deemed an amendment to this Agreement, as long as the matter or event being reflected in the Register otherwise is authorized by this Agreement; and
(xxiii) the registration of any class of securities of the Company under the Securities Act or the Exchange Act, and the listing of any debt securities of the Company on any exchange.
(b) Each of the Members agrees that, except as provided in Section 7.3 hereof and subject to the rights of any Holder of any LLC Interest set forth in a Unit Designation, the Managing Member is authorized to execute and deliver any affidavit, agreement, certificate, consent, instrument, notice, power of attorney, waiver or other writing or document in the name and on behalf of the Company and to otherwise exercise any power of the Managing Member under this Agreement and the Act on behalf of the Company without any further act, approval or vote of the Members or any other Persons, notwithstanding any other provision of the Act or any applicable law, rule or regulation and, in the absence of any specific corporate action on the part
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of the Managing Member to the contrary, the taking of any action or the execution of any such document or writing by an officer of the Managing Member, in the name and on behalf of the Managing Member, in its capacity as the managing member of the Company, shall conclusively evidence (i) the approval thereof by the Managing Member, in its capacity as the managing member of the Company, (ii) the Managing Member’s determination that such action, document or writing is necessary, advisable, appropriate, desirable or prudent to conduct the business and affairs of the Company, exercise the powers of the Company under this Agreement and the Act or effectuate the purposes of the Company, or any other determination by the Managing Member required by this Agreement in connection with the taking of such action or execution of such document or writing, and (iii) the authority of such officer with respect thereto.
(c) At all times from and after the date hereof, the Managing Member may cause the Company to obtain and maintain (i) casualty, liability and other insurance on the Properties and (ii) liability insurance for the Indemnitees hereunder.
(d) At all times from and after the date hereof, the Managing Member may cause the Company to establish and maintain working capital and other reserves in such amounts as the Managing Member, in its sole and absolute discretion, determines from time to time.
(e) The determination as to any of the following matters, made by or at the direction of the Managing Member consistent with this Agreement and the Act, shall be final and conclusive and shall be binding upon the Company and every Member: the amount of assets at any time available for distribution or the redemption of Company Common Units; the amount and timing of any distribution; the amount, purpose, time of creation, increase or decrease, alteration or cancellation of any reserves or charges and the propriety thereof (whether or not any obligation or liability for which such reserves or charges shall have been created shall have been paid or discharged); the amount of any Member’s Capital Account, Adjusted Capital Account or Adjusted Capital Account Deficit; the amount of Net Income, Net Loss or Depreciation for any period; any special allocations of Net Income or Net Loss pursuant to Sections 6.2(b), 6.3, 6.4 or 6.5; the Gross Asset Value of any Company asset; the Value of any OP Unit; the timing and amount of any adjustment to the Adjustment Factor; any interpretation of the terms, preferences, conversion or other rights, voting powers or rights, restrictions, limitations as to dividends or distributions, qualifications or terms or conditions of redemption of any class or series of LLC Interest; the fair value, or any sale, bid or asked price to be applied in determining the fair value, of any asset owned or held by the Company or of any LLC Interest; the number of authorized or outstanding Company Units of any class or series; any matter relating to the acquisition, holding and disposition of any assets by the Company; or any other matter relating to the business and affairs of the Company or required or permitted by applicable law, this Agreement or otherwise to be determined by the Managing Member.
Section 7.2 Certificate of Formation. The Managing Member may file amendments to and restatements of the Certificate and do all the things to maintain the Company as a limited liability company (or an entity in which the members will have limited liability) under the laws of the State of Delaware and each other state, the District of Columbia or any other jurisdiction, in which the Company may elect to do business or own property. Subject to the terms of Section 8.5(a) hereof, the Managing Member shall not be required, before or after filing, to deliver or mail a copy of the Certificate or any amendment thereto to any Member. The Managing Member
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shall use all reasonable efforts to cause to be filed such other certificates or documents for the formation, continuation, qualification and operation of a limited liability company (or an entity in which the members will have limited liability to the extent provided by applicable law) in the State of Delaware and any other state, or the District of Columbia or other jurisdiction, in which the Company may elect to do business or own property.
Section 7.3 Restrictions on Managing Member’s Authority.
(a) The Managing Member may not take any action in contravention of an express prohibition or limitation of this Agreement without the Consent of the Members, and may not, without limitation:
(i) take any action that would make it impossible to carry on the ordinary business of the Company, except as otherwise provided in this Agreement; or
(ii) perform any act that would subject a Member to liability as a manager or to unlimited liability in any jurisdiction or any other liability except as provided herein or under the Act; or
(iii) subject to the terms set forth in any Unit Designation, enter into any contract, mortgage, loan or other agreement that expressly prohibits or restricts (A) the Managing Member or the Company from performing its specific obligations under Section 15.1 hereof in full or (B) a Member from exercising its rights under Section 15.1 hereof to effect an Exchange in full, except, in either case, with the Consent of each Member affected by the prohibition or restriction.
(b) Except as provided in Section 7.3(c) hereof, the Managing Member shall not, without the prior Consent of the Managing Member and Members, amend, modify or terminate this Agreement; provided that with respect to any Unit Designation, such Unit Designation may only be amended in the manner set forth therein and the terms of this Section 7.3(b) shall not apply.
(c) Notwithstanding Section 7.3(b) and Section 14.2 hereof but subject to the rights of any Holder of any LLC Interest set forth in a Unit Designation and subject to the rights of any Holder of any LLC Interest as set forth in Section 8.6, the Managing Member shall have the power, without the Consent of the Managing Member and Members or the consent or approval of any Member or any other Person, to amend this Agreement as may be required to facilitate or implement any of the following purposes:
(i) to add to the obligations of the Managing Member or surrender any right or power granted to the Managing Member or any Affiliate of the Managing Member for the benefit of the Members;
(ii) to reflect the admission, substitution, resignation or withdrawal of Members, the Transfer of any LLC Interest, the termination of the Company in accordance with this Agreement, and to update the Register in connection with such admission, substitution, resignation, withdrawal, Transfer or adjustment;
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(iii) to reflect a change that is of an inconsequential nature or does not adversely affect the Members in any material respect, or to cure any ambiguity, correct or supplement any provision in this Agreement not inconsistent with law or with other provisions, or make other changes with respect to matters arising under this Agreement that will not be inconsistent with law or with the provisions of this Agreement;
(iv) to set forth or amend the designations, preferences, conversion and other rights, voting powers, restrictions, limitations as to distributions, qualifications and terms and conditions of redemption of the Holders of any additional LLC Interests issued pursuant to Article 4 (including any changes contemplated by Section 5.5 above);
(v) to satisfy any requirements, conditions or guidelines contained in any order, directive, opinion, ruling or regulation of a Federal or state court or agency or contained in Federal or state law or the listing standards of any securities exchange upon which the Managing Member’s securities are then listed or admitted for trading;
(vi) (A) to reflect such changes as are reasonably necessary or appropriate for Lineage REIT to maintain its status as a REIT or to satisfy the REIT Requirements, or (B) to reflect the Transfer of all or any part of an LLC Interest among the Managing Member and any Disregarded Entity with respect to the Managing Member;
(vii) to modify either or both of the manner in which items of Net Income or Net Loss are allocated pursuant to Article 6 or the manner in which Capital Accounts are adjusted, computed, or maintained (but in each case only to the extent otherwise provided in this Agreement and as may be permitted under applicable law);
(viii) to reflect the issuance of additional LLC Interests in accordance with Section 4.2;
(ix) as contemplated by the last sentence of Section 4.4;
(x) to reflect any other modification to this Agreement as is reasonably necessary for the business or operations of the Company or the Managing Member and which does not violate Section 7.3(d); and
(xi) to effect or facilitate a Termination Transaction that, in accordance with Section 11.2(b)(i) and/or (ii), does not require the Consent of the Members and preserves the rights of Members in respect of the OPEUs pursuant to Section 15.1.
(d) Notwithstanding Sections 7.3(b), 7.3(c) (other than as set forth below in this Section 7.3(d), or, with respect to a particular class or series of Company Units, except as otherwise set forth in the Unit Designation applicable to such class or series of Company Units) and 14.2 hereof, this Agreement shall not be amended, and no action may be taken by the Managing Member, without the Consent of each Member adversely affected thereby, if such amendment or action would (i) convert a Member Interest in the Company into a Managing Member Interest (except as a result of the Managing Member acquiring such LLC Interest), (ii) adversely modify in any material respect the limited liability of a Member, (iii) alter the rights of any Member to receive the distributions to which such Member is entitled pursuant to Article 5 or
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Section 13.2(a)(iv) hereof, or alter the allocations specified in Article 6 hereof (except, in any case, as permitted pursuant to Sections 4.2, 5.5, 7.3(c) (including clause (xi) thereof) and Article 6 hereof), (iv) alter or modify the Exchange rights set forth in Section 15.1 hereof, (v) alter or modify Section 11.2 hereof (except as permitted pursuant to clause (xi) of Section 7.3(c) hereof), (vi) subject to Section 7.8(i) remove the powers and restrictions related to REIT Requirements or permitting Lineage REIT to avoid paying tax under Code Sections 857 or 4981 contained in Section 7.1 and Section 7.3, or (vii) amend this Section 7.3(d), or, in each case for all provisions referenced in this Section 7.3(d), amend or modify any related definitions or Exhibits (except as permitted pursuant to clause (viii) of Section 7.3(c) hereof). Further, no amendment may alter the restrictions on the Managing Member’s authority set forth elsewhere in this Section 7.3 without the Consent specified therein. Any such amendment or action consented to by any Member shall be effective as to that Member, notwithstanding the absence of such consent by any other Member.
Section 7.4 Reimbursement of the Managing Member.
(a) The Managing Member shall not be compensated for its services as Managing Member of the Company except as provided in this Agreement (including the provisions of Article 5 and Article 6 hereof and the provisions of any applicable Unit Designation, in each case regarding distributions, payments and allocations to which the Managing Member may be entitled in its capacity as the Managing Member).
(b) Subject to Section 7.4(c) hereof, the Company shall be responsible for and shall pay all expenses relating to the Company’s, the Managing Member’s and Lineage REIT’s organization and the ownership of each of their assets and operations. The Managing Member is hereby authorized to pay compensation for accounting, administrative, legal, technical, management and other services rendered to the Company. The Company shall be liable for, and shall reimburse the Managing Member, on a monthly basis, or such other basis as the Managing Member may determine in its sole and absolute discretion, for all sums expended in connection with the Company’s business, including, without limitation, (i) expenses relating to the ownership of interests in and management and operation of, or for the benefit of, the Company, (ii) compensation of officers and employees, including, without limitation, payments under future compensation plans, of the Managing Member, Lineage REIT, or the Company that may provide for units, stock units, or phantom stock, pursuant to which employees of the Managing Member, Lineage REIT or the Company will receive payments based upon dividends on or the value of REIT Shares, (iii) director fees and expenses of the Managing Member, Lineage REIT or their respective Affiliates, (iv) any expenses (other than the purchase price) incurred by the Managing Member in connection with the redemption or other repurchase of OP Units or the redemption or other repurchase of Capital Shares by Lineage REIT, (v) all costs and expenses of the Managing Member in connection with the preparation of reports and other distributions to its unitholders or to stockholders of Lineage REIT and any regulatory or governmental authorities or agencies and, as applicable, all costs and expenses of the Managing Member as a reporting company (including, without limitation, costs of filings with the SEC) or incurred in connection with Lineage REIT as a reporting company (including, without limitation, costs of filings with the SEC), (vi) all costs and expenses of the Managing Member in connection with Lineage REIT’s operating as a REIT, (vii) all costs and expenses of the Managing Member in connection with the offering, sale, syndication, private placement or public offering of stock, bonds, securities or other interests and financing or refinancing of any type related to the Company or its assets or activities and (viii) all
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costs and expenses, if any, of the Managing Member in connection with the entry into any reimbursement or indemnification agreement by the Managing Member or its Subsidiaries; provided, however, that the amount of any reimbursement to the Managing Member shall be reduced by any interest earned by the Managing Member with respect to bank accounts or other instruments or accounts held by it on behalf of the Company as permitted pursuant to Section 7.5 hereof. The Members acknowledge that all such expenses of the Managing Member are deemed to be for the benefit of the Company. Such reimbursements shall be in addition to any reimbursement of the Managing Member as a result of indemnification pursuant to Section 7.7 hereof. The Company and the Managing Member will also be authorized to cause any expenses that would otherwise be paid or borne by the Company to instead be paid or borne by one or more of the Company’s Subsidiaries.
(c) To the extent practicable, Company expenses and expenses of the Managing Member and Lineage REIT shall be billed directly to and paid by the Company or one or more of its Subsidiaries, and if and to the extent any reimbursements to the Managing Member, Lineage REIT or any of their respective Affiliates by the Company or any of its Subsidiaries pursuant to this Section 7.4 constitute gross income to such Person (as opposed to the repayment of advances made by such Person on behalf of the Company), such amounts shall be treated as “guaranteed payments” within the meaning of Code Section 707(c) and shall not be treated as distributions for purposes of computing the Member’s Capital Accounts.
Section 7.5 Outside Activities of the Managing Member. The Managing Member shall not directly or indirectly enter into or conduct any business, other than in connection with, (a) the ownership, acquisition and disposition of LLC Interests, (b) the management of the business and affairs of the Company, (c) the operation of the Managing Member as a reporting company with a class (or classes) of securities registered under the Exchange Act, (d) the offering, sale, syndication, private placement or public offering of stock, bonds, securities or other interests, (e) financing or refinancing of any type related to the Company or its assets or activities, and (f) such activities as are incidental thereto; provided, however, that, except as otherwise provided herein, any funds raised by the Managing Member pursuant to the preceding clauses (d) and (e) shall be made available to the Company, whether as Capital Contributions, loans or otherwise, as appropriate, and, provided, further, that the Managing Member may, in its sole and absolute discretion, from time to time hold or acquire assets in its own name or otherwise other than through the Company so long as the Managing Member takes commercially reasonable measures to ensure that the economic benefits and burdens of such Property are otherwise vested in the Company, through assignment, mortgage loan or otherwise or, if it is not commercially reasonable to vest such economic interests in the Company, the Members shall negotiate in good faith to amend this Agreement, including, without limitation, the definition of “Adjustment Factor,” to reflect such activities and the direct ownership of assets by the Managing Member. Nothing contained herein shall be deemed to prohibit the Managing Member from executing guarantees of Company debt. Any LLC Interests acquired by the Managing Member shall be automatically converted into a Managing Member Interest comprised of an identical number of Company Units with the same terms as the class or series so acquired. Any Affiliates of the Managing Member may acquire Member Interests and shall, except as expressly provided in this Agreement, be entitled to exercise all rights of a Member relating to such Member Interests.
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Section 7.6 Transactions with Affiliates.
(a) The Company may lend or contribute funds to, and borrow funds from, Persons in which the Company has an equity investment, and such Persons may borrow funds from, and lend or contribute funds to, the Company, on terms and conditions established in the sole and absolute discretion of the Managing Member. The foregoing authority shall not create any right or benefit in favor of any Person.
(b) Except as provided in Section 7.5 hereof, the Company may transfer assets to joint ventures, limited liability companies, partnerships, corporations, business trusts or other business entities in which it is or thereby becomes a participant upon such terms and subject to such conditions consistent with this Agreement and applicable law.
(c) The Managing Member and its Affiliates may sell, transfer or convey any property to, or purchase any property from, the Company, directly or indirectly, on terms and conditions established by the Managing Member in its sole and absolute discretion.
(d) The Managing Member, in its sole and absolute discretion and without the approval of the Members or any of them or any other Persons, may propose and adopt (on behalf of the Company or its Subsidiaries) employee benefit plans funded by the Company or its Subsidiaries for the benefit of employees of the Managing Member, the Company, Subsidiaries of the Company or any Affiliate of any of them in respect of services performed, directly or indirectly, for the benefit of the Managing Member, the Company or any of the Company’s Subsidiaries.
(e) Notwithstanding anything to the contrary set forth in this Agreement, any transaction entered into by and among the Managing Member, the Company and their respective Subsidiaries, as applicable, in connection with the initial public offering of the REIT Shares and related formation transactions is hereby approved by all Members.
Section 7.7 Indemnification.
(a) To the fullest extent permitted by applicable law, the Company shall indemnify each Indemnitee from and against any and all losses, claims, damages, liabilities, joint or several, expenses (including, without limitation, attorneys’ fees and other legal fees and expenses), judgments, fines, settlements and other amounts arising from any and all claims, demands, actions, suits or proceedings, civil, criminal, administrative or investigative, that relate to the operations of the Company (“Actions”) as set forth in this Agreement in which such Indemnitee may be involved, or is threatened to be involved, as a party or otherwise; provided, however, that the Company shall not indemnify an Indemnitee (i) if the act or omission of the Indemnitee was material to the matter giving rise to the Action and either was committed in bad faith or was the result of active and deliberate dishonesty; (ii) in the case of any criminal proceeding, if the Indemnitee had reasonable cause to believe that the act or omission was unlawful; or (iii) for any transaction for which such Indemnitee actually received an improper personal benefit in violation or breach of any provision of this Agreement; and provided, further, that no payments pursuant to this Agreement shall be made by the Company to indemnify or advance funds to any Indemnitee (A) with respect to any Action initiated or brought voluntarily by such Indemnitee (and not by way of defense) unless (I) approved or authorized by the Managing Member or (II) incurred to establish or enforce such Indemnitee’s right to indemnification under this Agreement, and (B) in connection with one or more Actions or claims brought by the Company or involving such Indemnitee if such Indemnitee is found liable to the Company on any portion of any claim in any such Action.
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(b) Without limitation, the foregoing indemnity shall extend to any liability of any Indemnitee, pursuant to a loan guaranty or otherwise, for any indebtedness of the Company or any Subsidiary of the Company (including, without limitation, any indebtedness which the Company or any Subsidiary of the Company has assumed or taken subject to), and the Managing Member is hereby authorized and empowered, on behalf of the Company, to enter into one or more indemnity agreements consistent with the provisions of this Section 7.7 in favor of any Indemnitee having or potentially having liability for any such indebtedness. It is the intention of this Section 7.7(b) that the Company indemnify each Indemnitee to the fullest extent permitted by law and this Agreement. The termination of any proceeding by judgment, order or settlement does not create a presumption that the Indemnitee did not meet the requisite standard of conduct set forth in this Section 7.7(b). The termination of any proceeding by conviction of an Indemnitee or upon a plea of nolo contendere or its equivalent by an Indemnitee, or an entry of an order of probation against an Indemnitee prior to judgment, does not create a presumption that such Indemnitee acted in a manner contrary to that specified in this Section 7.7(b) with respect to the subject matter of such proceeding. Any indemnification pursuant to this Section 7.7 shall be made only out of the assets of the Company, and neither the Managing Member nor any other Holder shall have any obligation to contribute to the capital of the Company or otherwise provide funds to enable the Company to fund its obligations under this Section 7.7.
(c) To the fullest extent permitted by law, expenses incurred by an Indemnitee who is a party to a proceeding or otherwise subject to or the focus of or is involved in any Action shall be paid or reimbursed by the Company as incurred by the Indemnitee in advance of the final disposition of the Action upon receipt by the Company of (i) a written affirmation by the Indemnitee of the Indemnitee’s good faith belief that the standard of conduct necessary for indemnification by the Company as authorized in Section 7.7(a) has been met, and (ii) a written undertaking by or on behalf of the Indemnitee to repay the amount if it shall ultimately be determined that the standard of conduct has not been met.
(d) The indemnification provided by this Section 7.7 shall be in addition to any other rights to which an Indemnitee or any other Person may be entitled under any agreement, pursuant to any vote of the Members, as a matter of law or otherwise, and shall continue as to an Indemnitee who has ceased to serve in such capacity and shall inure to the benefit of the heirs, successors, assigns and administrators of the Indemnitee unless otherwise provided in a written agreement with such Indemnitee or in the writing pursuant to which such Indemnitee is indemnified.
(e) The Company may, but shall not be obligated to, purchase and maintain insurance, on behalf of any of the Indemnitees and such other Persons as the Managing Member shall determine, against any liability that may be asserted against or expenses that may be incurred by such Person in connection with the Company’s activities, regardless of whether the Company would have the power to indemnify such Person against such liability under the provisions of this Agreement.
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(f) Any liabilities which an Indemnitee incurs as a result of acting on behalf of the Company or the Managing Member (whether as a fiduciary or otherwise) in connection with the operation, administration or maintenance of an employee benefit plan or any related trust or funding mechanism (whether such liabilities are in the form of excise taxes assessed by the IRS, penalties assessed by the U.S. Department of Labor, restitutions to such a plan or trust or other funding mechanism or to a participant or beneficiary of such plan, trust or other funding mechanism, or otherwise) shall be treated as liabilities or judgments or fines under this Section 7.7, unless such liabilities arise as a result of (i) an act or omission of such Indemnitee that was material to the matter giving rise to the Action and either was committed in bad faith or was the result of active and deliberate dishonesty; (ii) in the case of any criminal proceeding, an act or omission that such Indemnitee had reasonable cause to believe was unlawful, or (iii) any transaction in which such Indemnitee actually received an improper personal benefit in violation or breach of any provision of this Agreement.
(g) In no event may an Indemnitee subject any of the Holders to personal liability by reason of the indemnification provisions set forth in this Agreement.
(h) An Indemnitee shall not be denied indemnification in whole or in part under this Section 7.7 because the Indemnitee had an interest in the transaction with respect to which the indemnification applies if the transaction was otherwise permitted by the terms of this Agreement.
(i) The provisions of this Section 7.7 are for the benefit of the Indemnitees, their heirs, successors, assigns and administrators and shall not be deemed to create any rights for the benefit of any other Persons. Any amendment, modification or repeal of this Section 7.7 or any provision hereof shall be prospective only and shall not in any way affect the limitations on the Company’s liability to any Indemnitee under this Section 7.7 as in effect immediately prior to such amendment, modification or repeal with respect to claims arising from or relating to matters occurring, in whole or in part, prior to such amendment, modification or repeal, regardless of when such claims may arise or be asserted.
(j) Any obligation or liability whatsoever of the Managing Member which may arise at any time under this Agreement or any other instrument, transaction, or undertaking contemplated hereby shall be satisfied, if at all, out of the assets of the Managing Member or the Company only. No such obligation or liability shall be personally binding upon, nor shall resort for the enforcement thereof be had to, any of the Managing Member’s directors, equityholders, officers, employees, or agents, regardless of whether such obligation or liability is in the nature of contract, tort or otherwise.
(k) It is the intent of the parties that any amounts paid by the Company to the Managing Member pursuant to this Section 7.7 shall be treated as “guaranteed payments” within the meaning of Code Section 707(c) and shall not be treated as distributions for purposes of computing the Members’ Capital Accounts.
(l) Notwithstanding anything to the contrary in this Section 7.7: (i) the Company shall have the power to purchase and maintain insurance on behalf of any Indemnitee and any such other Person as the Managing Member shall determine in accordance with Section 7.7(e) and accordingly, obligations of the Company or its Affiliates shall in each case be secondary to the obligations of any of their insurers; and (ii) nothing in this Section 7.7 shall limit any right of any Person pursuant to the Expense Reimbursement and Indemnification Agreement even if inconsistent with this Section 7.7 in any respect.
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Section 7.8 Liability of the Managing Member.
(a) To the maximum extent permitted under the Act, the only duties that the Managing Member owes to the Company, any Member or any other Person (including any creditor of any Member or assignee of any LLC Interest), fiduciary or otherwise, are to perform its contractual obligations as expressly set forth in this Agreement consistently with the obligation of good faith and fair dealing. The Managing Member, in its capacity as such, shall have no other duty, fiduciary or otherwise, to the Company, any Member or any other Person (including any creditor of any Member or any assignee of an LLC Interest). The provisions of this Agreement other than this Section 7.8 shall create contractual obligations of the Managing Member only, and no such provision shall be interpreted to expand or modify the fiduciary duties of the Managing Member under the Act.
(b) The Members agree that: (i) the Managing Member is acting for the benefit of the Company, the Members and the Managing Member’s unitholders collectively; (ii) notwithstanding any duty otherwise existing at law or in equity, in the event of a conflict between the interests of the Company or any Member, on the one hand, and the separate interests of the Managing Member or its unitholders, on the other hand, the Managing Member may give priority to the separate interests of the Managing Member or the unitholders of the Managing Member (including, without limitation, with respect to tax consequences to Members, Assignees or the Managing Member’s unitholders), and, in the event of such a conflict, and any action or failure to act on the part of the Managing Member (or the Managing Member’s directors, officers or agents) that gives priority to the separate interests of the Managing Member or its unitholders that does not result in a violation of the contract rights of the Members under this Agreement does not violate the duty of loyalty or any other duty owed by the Managing Member to the Company and/or the Members or violate the obligation of good faith and fair dealing; and (iii) the Managing Member shall not be liable to the Company or to any Member for monetary damages for losses sustained, liabilities incurred or benefits not derived by the Company or any Member in connection with such decisions, except for liability for the Managing Member’s fraud, willful misconduct or gross negligence.
(c) Subject to its obligations and duties as Managing Member set forth in this Agreement and applicable law, the Managing Member may exercise any of the powers granted to it by this Agreement and perform any of the duties imposed upon it hereunder either directly or by or through its officers, employees, representatives or agents. The Managing Member shall not be responsible to the Company or any Member for any misconduct or negligence on the part of any such officer, employee, representative or agent appointed by it in good faith.
(d) Any obligation or liability whatsoever of the Managing Member which may arise at any time under this Agreement or any other instrument, transaction, or undertaking contemplated hereby shall be satisfied, if at all, out of the assets of the Managing Member or the Company only. No such obligation or liability shall be personally binding upon, nor shall resort for the enforcement thereof be had to, any of the Managing Member’s directors, unitholders,
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officers, employees, representatives or agents, regardless of whether such obligation or liability is in the nature of contract, tort or otherwise. Notwithstanding anything to the contrary set forth in this Agreement, none of the directors or officers of the Managing Member shall be liable or accountable in damages or otherwise to the Company, any Members, or any Assignees for losses sustained, liabilities incurred or benefits not derived as a result of errors in judgment or mistakes of fact or law or of any act or omission or by reason of their service as such. This Agreement is executed by the officers of the Managing Member solely as officers of the same and not in their own individual capacities.
(e) Notwithstanding anything herein to the contrary, except for liability for fraud, willful misconduct or gross negligence on the part of the Managing Member, or pursuant to any express indemnities given to the Company by the Managing Member pursuant to any other written instrument, the Managing Member shall not have any personal liability whatsoever, to the Company or to the other Members, for any action or omission taken in its capacity as the Managing Member or for the debts or liabilities of the Company or the Company’s obligations hereunder, except pursuant to Section 15.1. Without limitation of the foregoing, and except for liability for fraud, willful misconduct or gross negligence, or pursuant to Section 15.1 or any such express indemnity, no property or assets of the Managing Member, other than its interest in the Company, shall be subject to levy, execution or other enforcement procedures for the satisfaction of any judgment (or other judicial process) in favor of any other Member(s) and arising out of, or in connection with, this Agreement.
(f) To the extent that, under applicable law, the Managing Member has duties (including fiduciary duties) and liabilities relating thereto to the Company or the Members, the Managing Member shall not be liable to the Company or to any other Member for its good faith reliance on the provisions of this Agreement. The provisions of this Agreement, to the extent that they restrict or modify the duties and liabilities of the Managing Member under the Act or otherwise existing under applicable law, are agreed by the Members to operate as an express limitation of any such duties and liabilities and to replace such other duties and liabilities of such Managing Member and further acknowledged and agreed that such provisions are fundamental elements to the agreement of the Members and the Managing Member to enter into this Agreement and without such provisions the Members and the Managing Member would not have entered into this Agreement.
(g) In exercising its authority under this Agreement, the Managing Member may, but shall be under no obligation to, take into account the tax consequences to any Member of any action taken (or not taken) by it, and any action or failure to act on the part of the Managing Member that does or does not take into account any such tax consequences that does not result in a violation of the contract rights of the Members under this Agreement does not violate the duty of loyalty or any other duty owed by the Managing Member to the Company and/or the Members or violate the obligation of good faith and fair dealing. The Managing Member and the Company shall not have any liability to any Member under any circumstances as a result of any income tax liability incurred by such Member as a result of an action (or inaction) by the Managing Member pursuant to its authority under this Agreement.
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(h) Whenever in this Agreement the Managing Member (whether in its capacity as Managing Member or in any other capacity permitted under this Agreement, including, without limitation, as Liquidator) is permitted or required to make a decision (i) in its “sole and absolute discretion,” “sole discretion” or “discretion” or under a grant of similar authority or latitude, the Managing Member shall be entitled to consider only such interests and factors as it desires, including its own interests, and shall have no duty or obligation to give any consideration to any interest or factors affecting the Company or the Members or any of them, and any such decision or determination made by the Managing Member that does not consider such interests or factors affecting the Company or the Members, or any of them, and that does not result in a violation of the contract rights of the Members under this Agreement does not violate the duty of loyalty or any other duty owed by the Managing Member to the Company and/or the Members, or (ii) in its “good faith” or under another expressed standard, the Managing Member shall act under such express standard and shall not be subject to any other or different standards imposed by this Agreement or any other agreement contemplated herein or by relevant provisions of law or in equity or otherwise. If any question should arise with respect to the operation of the Company, which is not otherwise specifically provided for in this Agreement or the Act, or with respect to the interpretation of this Agreement, the Managing Member is hereby authorized to make a final determination with respect to any such question and to interpret this Agreement in such a manner as it shall deem, in its sole discretion, to be fair and equitable, and its determination and interpretations so made shall be final and binding on all parties. The Managing Member’s “sole and absolute discretion,” “sole discretion” and “discretion” under this Agreement shall be exercised consistently with good faith reliance on the provisions of this Agreement and the obligation of good faith and fair dealing (as modified by the Agreement).
(i) The Managing Member may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, bond, debenture or other paper or document believed by it in good faith to be genuine and to have been signed or presented by the proper party or parties. In performing its duties under this Agreement and the Act, the Managing Member shall be entitled to rely on the provisions of this Agreement and on any information, opinion, report or statement, including any financial statement or other financial data or the records or books of account of the Company or any subsidiary of the Company, prepared or presented by any officer, employee or agent of the Managing Member, any agent of the Company or any such subsidiary, or by any lawyer, certified public accountant, appraiser or other person engaged by the Managing Member, the Company or any such subsidiary as to any matter within such person’s professional or expert competence, and any act taken or omitted to be taken in reliance upon any such information, opinion, report or statement as to matters that the Managing Member reasonably believes to be within such Person’s professional or expert competence shall be conclusively presumed to have been done or omitted in good faith and in accordance with such information, opinion, report or statement.
(j) No director, officer or agent of the Managing Member shall have any duties directly to the Company or any Member. No director, officer or agent of the Managing Member shall be directly liable to the Company or any Member for money damages by reason of their service as such.
(k) Notwithstanding any other provision of this Agreement or the Act, any action of the Managing Member on behalf of the Company or any decision of the Managing Member to refrain from acting on behalf of the Company, undertaken in the good faith belief that such action or omission is necessary or advisable in order (i) to protect the ability of Lineage REIT to continue
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to qualify as a REIT, (ii) for Lineage REIT otherwise to satisfy the REIT Requirements, (iii) for Lineage REIT to avoid incurring any taxes under Code Section 857 or Code Section 4981, or (iv) for any Managing Member Affiliate to continue to qualify as a “qualified REIT subsidiary” (within the meaning of Code Section 856(i)(2)) or “taxable REIT subsidiary” (within the meaning of Code Section 856(l)), is expressly authorized under this Agreement and is deemed approved by all of the Members and does not violate the duty of loyalty or any other duty or obligation, fiduciary or otherwise, of the Managing Member to the Company or any other Member.
(l) Any amendment, modification or repeal of this Section 7.8 or any provision hereof shall be prospective only and shall not in any way affect the limitations on the Managing Member’s and its officers’ and directors’ liability to the Company and the Members under this Section 7.8 as in effect immediately prior to such amendment, modification or repeal with respect to claims arising from or relating to matters occurring, in whole or in part, prior to such amendment, modification or repeal, regardless of when such claims may arise or be asserted.
Section 7.9 Title to Company Assets. Title to Company assets, whether real, personal or mixed and whether tangible or intangible, shall be deemed to be owned by the Company as an entity, and no Member, individually or collectively with other Members or Persons, shall have any ownership interest in such Company assets or any portion thereof. Title to any or all of the Company assets may be held in the name of the Company, the Managing Member or one or more nominees, as the Managing Member may determine, including Affiliates of the Managing Member. The Managing Member hereby declares and warrants that any Company assets for which legal title is held in the name of the Managing Member or any nominee or Affiliate of the Managing Member shall be held by the Managing Member or such nominee or Affiliate for the use and benefit of the Company in accordance with the provisions of this Agreement. All Company assets shall be recorded as the property of the Company in its books and records, irrespective of the name in which legal title to such Company assets is held.
Section 7.10 Reliance by Third Parties. Notwithstanding anything to the contrary in this Agreement, any Person dealing with the Company shall be entitled to assume that the Managing Member has full power and authority, without the consent or approval of any other Member, or Person, to encumber, sell or otherwise use in any manner any and all assets of the Company and to enter into any contracts on behalf of the Company, and take any and all actions on behalf of the Company, and such Person shall be entitled to deal with the Managing Member as if it were the Company’s sole party in interest, both legally and beneficially. Each Member hereby waives any and all defenses or other remedies that may be available against such Person to contest, negate or disaffirm any action of the Managing Member in connection with any such dealing. In no event shall any Person dealing with the Managing Member or its representatives be obligated to ascertain that the terms of this Agreement have been complied with or to inquire into the necessity or expediency of any act or action of the Managing Member or its representatives. Each and every certificate, document or other instrument executed on behalf of the Company by the Managing Member or its representatives shall be conclusive evidence in favor of any and every Person relying thereon or claiming thereunder that (a) at the time of the execution and delivery of such certificate, document or instrument, this Agreement was in full force and effect, (b) the Person executing and delivering such certificate, document or instrument was duly authorized and empowered to do so for and on behalf of the Company and (c) such certificate, document or instrument was duly executed and delivered in accordance with the terms and provisions of this Agreement and is binding upon the Company.
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ARTICLE 8
RIGHTS AND OBLIGATIONS OF MEMBERS
Section 8.1 Limitation of Liability. No Member shall have any liability under this Agreement except for intentional harm or gross negligence on the part of such Member or as expressly provided in this Agreement (including, without limitation, Section 10.4 hereof) or under the Act.
Section 8.2 Management of Business. Subject to the rights and powers of the Managing Member hereunder, no Member or Assignee (other than the Managing Member, any of its Affiliates or any officer, director, member, employee, partner, agent or trustee of the Managing Member, the Company or any of their Affiliates, in their capacity as such) shall take part in the operations, management or control (within the meaning of the Act) of the Company’s business, transact any business in the Company’s name or have the power to sign documents for or otherwise bind the Company. The transaction of any such business by the Managing Member, any of its Affiliates or any officer, director, member, employee, partner, agent, representative, or trustee of the Managing Member, the Company or any of their Affiliates, in their capacity as such, shall not affect, impair or eliminate the limitations on the liability of the Members or Assignees under this Agreement.
Section 8.3 Outside Activities of Members. Subject to any agreements entered into pursuant to Section 7.6 hereof and any other agreements entered into by a Member or any of its Affiliates with the Managing Member, the Company or a Subsidiary (including, without limitation, any employment agreement), any Member and any Assignee, officer, director, employee, agent, trustee, Affiliate, member or stockholder of any Member shall be entitled to and may have business interests and engage in business activities in addition to those relating to the Company, including business interests and activities that are in direct or indirect competition with the Company or that are enhanced by the activities of the Company. Neither the Company nor any Member shall have any rights by virtue of this Agreement in any business ventures of any Member or Assignee. Subject to such agreements, none of the Members nor any other Person shall have any rights by virtue of this Agreement or the partnership relationship established hereby in any business ventures of any other Person (other than the Managing Member), and such Person shall have no obligation pursuant to this Agreement, subject to Section 7.6 hereof and any other agreements entered into by a Member or its Affiliates with the Managing Member, the Company or a Subsidiary, to offer any interest in any such business ventures to the Company, any Member, or any such other Person, even if such opportunity is of a character that, if presented to the Company, any Member or such other Person, could be taken by such Person. In deciding whether to take any actions in such capacity, the Members and their respective Affiliates shall be under no obligation to consider the separate interests of the Company or its subsidiaries and to the maximum extent permitted by applicable law shall have no fiduciary duties or similar obligations to the Company or any other Members, or to any subsidiary of the Company, and shall not be liable for monetary damages for losses sustained, liabilities incurred or benefits not derived by the other Members in connection with such acts except for liability for fraud, willful misconduct or gross negligence.
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Section 8.4 Return of Capital. Except pursuant to any Unit Designation, no Member shall be entitled to the withdrawal or return of its Capital Contribution, except to the extent of distributions made pursuant to this Agreement or upon dissolution of the Company as provided herein. Except to the extent provided in Article 5 and Article 6 hereof or otherwise expressly provided in this Agreement or in any Unit Designation, no Member or Assignee shall have priority over any other Member or Assignee either as to the return of Capital Contributions or as to profits, losses or distributions.
Section 8.5 Rights of Members Relating to the Company.
(a) In addition to other rights provided by this Agreement or by the Act, and except as limited by Section 8.5(c) hereof, the Managing Member shall deliver to each Member a copy of any information mailed or electronically delivered to all of the common stockholders of Lineage REIT as soon as practicable after such mailing.
(b) The Company shall notify any Member that is a Qualifying Party, on request, of the then current Adjustment Factor and any change made to the Adjustment Factor shall be set forth in the quarterly report required by Section 9.3(b) hereof immediately following the date such change becomes effective.
(c) Notwithstanding any other provision of this Section 8.5, the Managing Member may keep confidential from the Members (or any of them), for such period of time as the Managing Member determines in its sole and absolute discretion to be reasonable, any information that (i) the Managing Member believes to be in the nature of trade secrets or other information the disclosure of which the Managing Member in good faith believes is not in the best interests of the Company or the Managing Member or (ii) the Company or the Managing Member is required by law or by agreement to keep confidential.
Section 8.6 Company Right to Call Company Common Units. Subject to the other provisions of this Section 8.6 but otherwise notwithstanding any other provision of this Agreement, if at any time any Member that is not the Managing Member holds Company Common Units: (a) on and after the date on which the aggregate Percentage Interests of the Company Common Units held by such Members are less than one percent (1%) of the outstanding Company Common Units, the Company shall have the right, but not the obligation, from time to time and at any time to redeem any and all outstanding Company Common Units held by such Members and (b) at any time a Holder holds less than fifty thousand (50,000) Company Common Units (as adjusted, if applicable, by the Adjustment Factor then in effect), the Company shall have the right in its sole discretion, but not the obligation to such Holders or Holder, from time to time and at any time to require that all or any portion of the outstanding Company Common Units held by such Holders or Holder be exchanged for an equal number of OP Common Units, by notice to such Holder that the Company has elected to exercise its rights under this Section 8.6. For the avoidance of doubt, the foregoing provisions of this Section 8.6 do not permit the Company to redeem any OPEUs without the consent of the Holder thereof.
Section 8.7 Rights as Objecting Member. No Member and no Holder of an LLC Interest shall be entitled to exercise any of the rights of an objecting stockholder provided for under Subchapter 9, Section 262 of the Delaware General Corporation Law or any successor statute in connection with a merger of the Company.
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ARTICLE 9
BOOKS, RECORDS, ACCOUNTING AND REPORTS
Section 9.1 Records and Accounting.
(a) The Managing Member shall keep or cause to be kept at the principal place of business of the Company those records and documents, if any, required to be maintained by the Act and any other books and records deemed by the Managing Member to be appropriate with respect to the Company’s business, including, without limitation, all books and records necessary to provide to the Members any information, lists and copies of documents required to be provided pursuant to Section 8.5(a), Section 9.3 or Article 13 hereof. Any records maintained by or on behalf of the Company in the regular course of its business may be kept on any information storage device, provided that the records so maintained are convertible into clearly legible written form within a reasonable period of time.
(b) The books of the Company shall be maintained, for financial and tax reporting purposes, on an accrual basis in accordance with generally accepted accounting principles, or on such other basis as the Managing Member determines to be necessary or appropriate. To the extent permitted by sound accounting practices and principles, the Company and the Managing Member may operate with integrated or consolidated accounting records, operations and principles.
Section 9.2 Company Year. For purposes of this Agreement, “Company Year” means the fiscal year of the Company, which shall be the same as the tax year of the Company. The tax year shall be the calendar year unless otherwise required by the Code.
Section 9.3 Reports.
(a) After the close of each Company Year, the Managing Member shall use commercially reasonable efforts to cause to be mailed to each Member of record as of the close of the Company Year, financial statements of the Company, or of the Managing Member or Lineage REIT if such statements are prepared solely on a consolidated basis with the Managing Member or Lineage REIT, for such Company Year, presented in accordance with generally accepted accounting principles, such statements to be audited by a nationally recognized firm of independent public accountants selected by the Managing Member.
(b) After the close of each calendar quarter (except the last calendar quarter of each year), the Managing Member shall use commercially reasonable efforts to cause to be mailed to each Member of record as of the last day of the calendar quarter, a report containing unaudited financial statements of the Company for such calendar quarter, or of the Managing Member or Lineage REIT if such statements are prepared solely on a consolidated basis with the Managing Member or Lineage REIT, and such other information as may be required by applicable law or regulation or as the Managing Member determines to be appropriate.
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(c) The Managing Member shall have satisfied its obligations under Section 9.3(a) and Section 9.3(b) by posting or making available the reports required by this Section 9.3 on the website maintained from time to time by the Company, the Managing Member or Lineage REIT, provided that such reports are able to be printed or downloaded from such website, or by the filing with the SEC for public availability by Lineage REIT of any Annual Report on Form 10-K, Quarterly Report on Form 10-Q or Current Report on Form 8-K, containing the required information with respect to the Company, the Managing Member or Lineage REIT.
ARTICLE 10
TAX MATTERS
Section 10.1 Preparation of Tax Returns. The Managing Member shall arrange for the preparation and timely filing of all returns with respect to Company income, gains, deductions, losses and other items required of the Company for Federal and state income tax purposes and shall use all reasonable efforts to furnish, within ninety (90) days of the close of each taxable year, the tax information reasonably required by Members for Federal and state income tax and any other tax reporting purposes. The Members shall promptly provide the Managing Member with such information relating to the Contributed Properties as is readily available to the Members, including tax basis and other relevant information, as may be reasonably requested by the Managing Member from time to time.
Section 10.2 Tax Elections. Except as otherwise provided herein, the Managing Member shall, in its sole and absolute discretion, determine whether to make any available election pursuant to the Code, including, but not limited to, the election under Code Section 754. The Managing Member shall have the right to seek to revoke any such election (including, without limitation, any election under Code Section 754) upon the Managing Member’s determination in its sole and absolute discretion that such revocation is in the best interests of the Members.
Section 10.3 Partnership Representative.
(a) The Managing Member shall be the “partnership representative” of the Company under Code Section 6223 for federal income tax purposes (the “Partnership Representative”). The Partnership Representative shall receive no compensation for its services. All third-party costs and expenses incurred by the Partnership Representative in performing its duties as such (including legal and accounting fees and expenses) shall be borne by the Company in addition to any reimbursement pursuant to Section 7.4 hereof. Nothing herein shall be construed to restrict the Company from engaging an accounting firm to assist the Partnership Representative in discharging its duties hereunder The Managing Member shall appoint an individual (the “Designated Individual”) through whom the Partnership Representative will act in accordance with Regulations Section 301.6223-1 and any other applicable IRS guidance. The Designated Individual is authorized to take any action the Partnership Representative is authorized to take under this Agreement. The Members shall promptly provide the Partnership Representative with such information as is readily available to the Members as may be reasonably requested by the Partnership Representative from time to time in connection with any tax audit or judicial review proceeding.
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(b) The Partnership Representative is authorized, but not required:
(i) to enter into any settlement with the IRS with respect to any administrative or judicial proceedings for the adjustment of Company items required to be taken into account by a Member for income tax purposes (such administrative proceedings being referred to as a “tax audit” and such judicial proceedings being referred to as “judicial review”), and in the settlement agreement the Partnership Representative may expressly state that such agreement shall bind all Members;
(ii) in the event that a notice of a final administrative adjustment at the Company level of any item required to be taken into account by a Member for tax purposes (a “Final Adjustment”) is mailed to the Partnership Representative, to seek judicial review of such Final Adjustment, including the filing of a petition for readjustment with the United States Tax Court or the United States Claims Court, or the filing of a complaint for refund with the District Court of the United States for the district in which the Company’s principal place of business is located;
(iii) to intervene in any action brought by any other Member for judicial review of a Final Adjustment;
(iv) to file a request for an administrative adjustment with the IRS at any time and, if any part of such request is not allowed by the IRS, to file an appropriate pleading (petition or complaint) for judicial review with respect to such request;
(v) to enter into an agreement with the IRS to extend the period for assessing any tax that is attributable to any item required to be taken into account by a Member for tax purposes, or an item affected by such item;
(vi) to make an election under Code Section 6226; and
(vii) to take any other action on behalf of the Members or any of them in connection with any tax audit or judicial review proceeding to the extent permitted by applicable law or regulations.
The taking of any action and the incurring of any expense by the Partnership Representative in connection with any such proceeding, except to the extent required by law, is a matter in the sole and absolute discretion of the Partnership Representative and the provisions relating to indemnification of the Managing Member set forth in Section 7.7 hereof shall be fully applicable to the Partnership Representative and the Designated Individual in their capacities as such.
(c) For tax years beginning before December 31, 2017, a “Tax Matters Partner,” as such term is defined in Section 6231(a)(7) of the Code (as in effect prior to the enactment of the Bipartisan Budget Act of 2015) and in any similar capacity under the tax laws of any state or other jurisdiction having taxing jurisdiction over the Company, was appointed by the Managing Member. The Tax Matters Partner is the Managing Member. Except as otherwise provided in this Agreement, the Tax Matters Partner shall have all the rights, duties, powers and obligations of a “tax matters partner” under the Code (as in effect prior to the enactment of the Bipartisan Budget Act of 2015). The Tax Matters Partner shall not take any actions or make any elections contrary to the requirements of this Agreement without the Consent of the Managing Member and Members.
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Section 10.4 Withholding. Each Member hereby authorizes the Company to withhold from or pay on behalf of or with respect to such Member any amount of Federal, state, local or foreign taxes that the Managing Member determines the Company is required to withhold or pay with respect to any amount distributable or allocable to such Member pursuant to this Agreement, including, without limitation, any taxes required to be withheld or paid by the Company pursuant to Code Section 1441, Code Section 1442, Code Section 1445, Code Section 1446, Code Section 1471, Code Section 1472, Code Section 6225 or Code Section 6232. Any amount withheld with respect to a Member pursuant to this Section 10.4 shall be treated as paid or distributed, as applicable, to such Member for all purposes under this Agreement. Any amount paid on behalf of or with respect to a Member, in excess of any amount actually withheld from a Member’s distributions, shall constitute a loan by the Company to such Member, which loan shall be repaid by such Member within thirty (30) days after the affected Member receives written notice from the Managing Member that such payment must be made, provided that the Member shall not be required to repay such deemed loan if either (a) the Company withholds such payment from a distribution that would otherwise be made to the Member or (b) the Managing Member determines, in its sole and absolute discretion, that such payment may be satisfied out of the Available Cash of the Company that would, but for such payment, be distributed to the Member. Any amounts payable by a Member hereunder shall bear interest at the base rate on corporate loans at large United States money center commercial banks, as published from time to time in the Wall Street Journal (but not higher than the maximum lawful rate) from the date such amount is due (i.e., thirty (30) days after the Member receives written notice of such amount) until such amount is paid in full.
Section 10.5 Organizational Expenses. The Managing Member may cause the Company to elect to deduct expenses, if any, incurred by it in organizing the Company ratably over a 180-month period as provided in Section 709 of the Code.
Section 10.6 Survival. Each Member’s obligations and the Company’s rights under this Article 10 shall survive the dissolution, liquidation, and winding up of the Company and, unless otherwise agreed by the Managing Member in its sole discretion, the Transfer of any LLC Interest.
ARTICLE 11
MEMBER TRANSFERS AND WITHDRAWALS
Section 11.1 Transfer.
(a) No part of the interest of a Member shall be subject to the claims of any creditor, to any spouse for alimony or support, or to legal process, and may not be voluntarily or involuntarily alienated or encumbered except as may be specifically provided for in this Agreement.
(b) No LLC Interest shall be Transferred, in whole or in part, except in accordance with the terms and conditions set forth in this Article 11 and, if any additional terms and conditions are set forth in a Unit Designation applicable to such LLC Interest, in accordance with the terms and conditions set forth in this Article 11 and such additional terms and conditions set forth in the applicable Unit Designation. Any Transfer or purported Transfer of an LLC Interest not made in accordance with this Article 11 shall be null and void ab initio.
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(c) No Transfer of any LLC Interest may be made to a lender to the Company or any Person who is related (within the meaning of Section 1.752-4(b) of the Regulations) to any lender to the Company whose loan constitutes a Nonrecourse Liability, without the Consent of the Managing Member; provided, however, that, as a condition to such Consent, the lender may be required to enter into an arrangement with the Company and the Managing Member to redeem or exchange for the OP Units Amount any Company Units in which a security interest is held by such lender simultaneously with the time at which such lender would be deemed to be a partner in the Company for purposes of allocating liabilities to such lender under Section 752 of the Code (provided that, for purpose of calculating the OP Units Amount in this Section 11.1(c), “Company Units” shall mean all such Company Units in which a security interest is held by such lender).
Section 11.2 Transfer of Managing Member’s LLC Interest.
(a) Except as provided in this Section 11.2 or in a Unit Designation, and subject to the rights of any Holder of any LLC Interest set forth in a Unit Designation, the Managing Member shall not voluntarily withdraw from the Company and shall not Transfer its Managing Member Interest (whether by sale, disposition, statutory merger or consolidation, liquidation or otherwise) other than solely an economic interest as a Member or Assignee without the Consent of the Members, which may be given or withheld by each such Member in its sole and absolute discretion. It is a condition to any Transfer of a Managing Member Interest otherwise permitted hereunder (including any Transfer permitted pursuant to Section 11.2(b) and Section 11.2(c), but excluding any Transfer of solely an economic interest as a Member or Assignee) that: (i) coincident with such Transfer, the transferee is admitted as a Managing Member pursuant to Section 12.1 hereof; (ii) the transferee assumes, by operation of law or express agreement, all of the obligations of the transferor Managing Member under this Agreement with respect to such Transferred LLC Interest; and (iii) the transferee has executed such instruments as may be necessary to effectuate such admission and to confirm the agreement of such transferee to be bound by all the terms and provisions of this Agreement with respect to the LLC Interest so acquired and the admission of such transferee as a Managing Member.
(b) Certain Transactions of the Managing Member. Subject to the rights of any Holder of any LLC Interest set forth in a Unit Designation and except as necessary or appropriate to give effect to those rights, the Managing Member may not (x) merge, consolidate or otherwise combine its assets with another entity, (y) sell all or substantially all of its assets not in the ordinary course of the Company’s business or (z) reclassify, recapitalize, repurchase or change any outstanding units of the Managing Member or other outstanding equity interests (in case of each of the foregoing clauses (x) through (z), other than in connection with a stock split, reverse stock split, stock dividend change in par value, increase in authorized shares, designation or issuance of new classes of equity securities or any event that does not require the approval of the Lineage REIT’s stockholders) (each, a “Termination Transaction”) unless:
(i) the Termination Transaction has been approved by the Consent of the Managing Member and Members and, in connection with such Termination Transaction,
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all of the Members will receive, or will have the right to elect to receive (and shall be provided the opportunity to make such an election if the holders of REIT Shares generally are also provided such an opportunity), for each Company Common Unit or OPEU an amount of cash, securities and/or other property equal to the product of the Adjustment Factor and the greatest amount of cash, securities or other property paid to a holder of one REIT Share in consideration of one REIT Share pursuant to the terms of such Termination Transaction; provided, that if, in connection with such Termination Transaction, a purchase, tender or exchange offer shall have been made to and accepted by the holders of the outstanding OP Units, each holder of Company Common Units or OPEUs shall receive, or shall have the right to elect to receive, the greatest amount of cash, securities or other property which such holder of Company Common Units or OPEUs would have received had its Company Common Units or OPEUs been exchanged for OP Units (and such OP Units been redeemed for REIT Shares pursuant to the OP Agreement) immediately prior to the expiration of such purchase, tender or exchange offer and had thereupon accepted such purchase, tender or exchange offer and then such Termination Transaction shall have been consummated; or
(ii) all of the following conditions are met: (A) substantially all of the assets directly or indirectly owned by the surviving entity are owned directly or indirectly by the Company or another limited partnership or limited liability company which is the survivor of a merger, consolidation or combination of assets with the Company (in each case, the “Surviving Company”); (B) Members that held Company Common Units or OPEUs immediately prior to the consummation of such Termination Transaction own a percentage interest of the Surviving Company based on the relative fair market value of the net assets of the Company and the other net assets of the Surviving Company immediately prior to the consummation of such transaction; (C) the rights, preferences and privileges in the Surviving Company of such Members are at least as favorable as those in effect with respect to the Company Common Units and OPEUs immediately prior to the consummation of such transaction and as those applicable to any other members or non-managing members of the Surviving Company; and (D) the rights of such Members include at least one of the following: (I) the right to redeem their interests in the Surviving Company for the consideration available to such persons pursuant to Section 11.2(b)(i) or (II) the right to redeem their interests in the Surviving Company for cash on terms substantially equivalent to those in effect with respect to their Company Common Units or OPEUs immediately prior to the consummation of such transaction, or, if the ultimate controlling person of the Surviving Company has publicly traded common equity securities, such common equity securities, with an exchange ratio based on the determination of relative fair market value of such securities and the OP Units.
(c) Notwithstanding the other provisions of this Article 11 (other than Section 11.6(d) hereof), the Managing Member may Transfer all or any of its LLC Interests at any time to any Person that is, at the time of such Transfer an Affiliate of the Managing Member, including any “qualified REIT subsidiary” (within the meaning of Code Section 856(i)(2)), without the Consent of any Members. The provisions of Sections 11.2(b), 11.3, 11.4(a) and 11.5 hereof shall not apply to any Transfer permitted by this Section 11.2(d).
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(d) In connection with any transaction permitted by Section 11.2(b) hereof, the relative fair market values shall be reasonably determined by the Managing Member as of the time of such transaction and, to the extent applicable, shall be no less favorable to the Members than the relative values reflected in the terms of such transaction.
(e) The Managing Member may not consummate (x) a Termination Transaction, (y) a merger, consolidation or other combination of the assets of the Company with another entity or (z) a sale of all or substantially all of the assets of the Company, in each case which transaction (a “Stockholder Vote Transaction”) is submitted for the approval of the holders of REIT Shares of Lineage REIT (a “Stockholder Vote”) unless: (i) the Managing Member first provides the Members with advance notice at least equal in time to the advance notice given to holders of REIT Shares in connection with such Stockholder Vote, (ii) in connection with such advance notice, the Managing Member provides the Members with written materials describing the proposed Stockholder Vote Transaction (which may consist of the proxy statement or registration statement used in connection with the Stockholder Vote) and (iii) the Stockholder Vote Transaction is approved by the holders of the Company Common Units and OPEUs (the “Company Vote”) at the same level of approval as required for the Stockholder Vote (for example, (x) if the approval of holders of outstanding REIT Shares entitled to cast a majority of the votes entitled to be cast on the matter is required to approve the Stockholder Vote Transaction in the Stockholder Vote, then the approval of holders of outstanding Company Common Units and OPEUs (including votes deemed to be cast by the Managing Member) entitled to cast a majority of votes entitled to be cast on the matter will be required to approve the Stockholder Vote Transaction in the Company Vote or (y) if the approval of a majority of the votes cast by holders of outstanding REIT Shares present at a meeting of such holders at which a quorum is present is required to approve the Stockholder Vote Transaction in the Stockholder Vote, then the approval of a majority of the votes cast (including votes deemed to be cast by the Managing Member) by holders of outstanding Company Common Units and OPEUs present at a meeting of such holders at which a quorum is present will be required to approve the Stockholder Vote Transaction in the Company Vote). For purposes of the Company Vote, (i) each Member holding Company Common Units or OPEUs (other than the Managing Member or any of its Subsidiaries) shall be entitled to cast a number of votes equal to the total number of Company Common Units and OPEUs held by such Member as of the record date for the Stockholder Meeting, and (ii) the Managing Member and its Subsidiaries shall not be entitled to vote thereon and shall instead be deemed to have cast a number of votes equal to the sum of (x) the total number of Company Common Units and OPEUs held by the Managing Member as of the record date for the Stockholder Meeting divided by the Adjustment Factor then in effect plus (y) the total number of shares of unvested restricted REIT Shares with respect to which the Managing Member does not hold back-to-back Company Common Units and OPEUs as of the record date for the Stockholder Meeting, in proportion to the manner in which all outstanding REIT Shares were voted in the Stockholder Vote (for example, “For,” “Against,” “Abstain” and “Not Present”). Any such Company Vote will be taken in accordance with Section 14.3 below (including Section 14.3(b) thereof permitting actions to be taken by written consent without a meeting), mutatis mutandis to give effect to the foregoing provisions of this Section 11.2(e), except that, solely for purposes of determining whether a quorum is present at any meeting of the Members at which a Company Vote will occur, the Managing Member shall be considered to be entitled to cast at such meeting all votes that the Managing Member will be deemed to have cast in such Company Vote as provided in this Section 11.2(e).
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Section 11.3 Members’ Rights to Transfer.
(a) General. Subject to any additional or contrary terms and conditions applicable to any LLC Interest pursuant to a Unit Designation, each Member, and each transferee of Company Units or Assignee pursuant to a Permitted Transfer, shall have the right to Transfer all or any portion of its LLC Interest to any Person, without the Consent of the Managing Member but subject to the provisions of Section 11.4 hereof, either (1) pursuant to a Permitted Transfer or (2) subject to satisfaction of each of the following conditions:
(i) Managing Member Right of First Refusal. The transferor Member (or the Member’s estate in the event of the Member’s death) shall give written notice of the proposed Transfer to the Managing Member, which notice shall state (A) the identity and address of the proposed transferee and (B) the amount and type of consideration proposed to be received for the Transferred Company Units. The Managing Member shall have ten (10) Business Days upon which to give the transferor Member notice of its election to acquire the Company Units on the terms set forth in such notice. If it so elects, it shall purchase the Company Units on such terms within ten (10) Business Days after giving notice of such election; provided, however, that in the event that the proposed terms involve a purchase for cash, the Managing Member may at its election deliver in lieu of all or any portion of such cash a note from the Managing Member payable to the transferor Member at a date as soon as reasonably practicable, but in no event later than one hundred eighty (180) days after such purchase, and bearing interest at an annual rate equal to the total distributions declared with respect to one (1) OP Unit for the four (4) preceding fiscal quarters of the Managing Member, divided by the Value as of the closing of such purchase; and provided, further, that such closing may be deferred to the extent necessary to effect compliance with the Hart-Scott-Rodino Act, if applicable, and any other applicable requirements of law. If it does not so elect, the transferor Member may Transfer such Company Units to a third party, on terms no more favorable to the transferee than the proposed terms, subject to the other conditions of this Section 11.3.
(ii) Qualified Transferee. Unless otherwise approved by the Managing Member in its sole discretion in writing, any Transfer of an LLC Interest shall be made only to a single Qualified Transferee; provided, however, that, for such purposes, all Qualified Transferees that are Affiliates, or that comprise investment accounts or funds managed by a single Qualified Transferee and its Affiliates, shall be considered together to be a single Qualified Transferee; and provided, further, that each Transfer meeting the minimum Transfer restriction of Section 11.3(a)(iv) hereof may be to a separate Qualified Transferee.
(iii) Opinion of Counsel. The transferor Member shall deliver or cause to be delivered to the Managing Member an opinion of counsel reasonably satisfactory to it to the effect that the proposed Transfer may be effected without registration under the Securities Act and will not otherwise violate the registration provisions of the Securities Act and the regulations promulgated thereunder or violate any state securities laws or regulations applicable to the Company or the LLC Interests Transferred; provided, however, that the Managing Member may, in its sole discretion, waive this condition upon the request of the transferor Member. If, in the opinion of such counsel, such Transfer would require the filing of a registration statement under the Securities Act or would otherwise violate any Federal or state securities laws or regulations applicable to the Company or the Company Units, the Managing Member may prohibit any Transfer otherwise permitted under this Section 11.3 by a Member of LLC Interests.
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(iv) Minimum Transfer Restriction. Any Transferring Member must Transfer not less than the lesser of (A) five hundred (500) Company Units or (B) all of the remaining Company Units owned by such Transferring Member, without, in each case, the Consent of the Managing Member; provided, however, that, for purposes of determining compliance with the foregoing restriction, all Company Units owned by Affiliates of a Member shall be considered to be owned by such Member.
(v) Exception for Permitted Transfers. The conditions of Section 11.3(a)(i) through Section 11.3(a)(iv) hereof shall not apply in the case of a Permitted Transfer.
It is a condition to any Transfer otherwise permitted hereunder that the transferee assumes by operation of law or express agreement all of the obligations of the transferor Member under this Agreement with respect to such Transferred LLC Interest, and no such Transfer (other than pursuant to a statutory merger or consolidation wherein all obligations and liabilities of the transferor Member are assumed by a successor corporation by operation of law) shall relieve the transferor Member of its obligations under this Agreement without the Consent of the Managing Member. Any transferee, whether or not admitted as a Substituted Member, shall take subject to the obligations of the transferor hereunder. Unless admitted as a Substituted Member, no transferee, whether by a voluntary Transfer, by operation of law or otherwise, shall have any rights hereunder, other than the rights of an Assignee as provided in Section 11.5 hereof.
(b) Incapacity. If a Member is subject to Incapacity, the executor, administrator, trustee, committee, guardian, conservator or receiver of such Member’s estate shall have all the rights of a Member, but not more rights than those enjoyed by other Members, for the purpose of settling or managing the estate, and such power as the Incapacitated Member possessed to Transfer all or any part of its interest in the Company. The Incapacity of a Member, in and of itself, shall not dissolve or terminate the Company.
(c) Adverse Tax Consequences. Notwithstanding anything to the contrary in this Agreement, the Managing Member shall have the authority (but shall not be required) to take any steps it determines are necessary or appropriate in its sole and absolute discretion to prevent the Company from being taxable as a corporation for Federal income tax purposes. In furtherance of the foregoing, except with the Consent of the Managing Member, no Transfer by a Member of its LLC Interests (including any other acquisition of Company Units by the Managing Member or any acquisition of Company Units by the Company) may be made to or by any Person if such Transfer could (i) result in the Company being treated as an association taxable as a corporation; (ii) result in a termination of the Company under Code Section 708; (iii) be treated as effectuated through an “established securities market” or a “secondary market (or the substantial equivalent thereof)” within the meaning of Code Section 7704 and the Regulations promulgated thereunder, (iv) result in the Company being unable to qualify for at least one of the “safe harbors” set forth in Regulations Section 1.7704-1 (or such other guidance subsequently published by the IRS setting forth safe harbors under which interests will not be treated as “readily tradable on a secondary market (or the substantial equivalent thereof)” within the meaning of Section 7704 of the Code) (the “Safe Harbors”) or (v) based on the advice of counsel to the Company or the Managing Member, adversely affect the ability of Lineage REIT to continue to qualify as a REIT or subject Lineage REIT to any additional taxes under Code Section 857 or Code Section 4981.
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Section 11.4 Admission of Substituted Members. Except as otherwise provided in a Unit Designation:
(a) No Member shall have the right to substitute a transferee (including any transferees pursuant to Transfers permitted by Section 11.3 hereof) as a Member in its place. A transferee of a Member Interest may be admitted as a Substituted Member only with the Consent of the Managing Member. The failure or refusal by the Managing Member to permit a transferee of any such interests to become a Substituted Member shall not give rise to any cause of action against the Company or the Managing Member. Subject to the foregoing, an Assignee shall not be admitted as a Substituted Member until and unless it furnishes to the Managing Member (i) evidence of acceptance, in form and substance satisfactory to the Managing Member, of all the terms, conditions and applicable obligations of this Agreement, (ii) a counterpart signature page to this Agreement executed by such Assignee and (iii) such other documents and instruments as the Managing Member may require in its sole discretion to effect such Assignee’s admission as a Substituted Member.
(b) Concurrently with, and as evidence of, the admission of a Substituted Member, the Managing Member shall update the Register and the books and records of the Company to reflect the name, address and number and class and/or series of Company Units of such Substituted Member and to eliminate or adjust, if necessary, the name, address and number of Company Units of the predecessor of such Substituted Member.
(c) A transferee who has been admitted as a Substituted Member in accordance with this Article 11 shall have all the rights and powers and be subject to all the restrictions and liabilities of a Member under this Agreement.
(d) Notwithstanding the foregoing provisions of this Section 11.4 or any other provision of this Agreement to the contrary, any transferee of OPEUs pursuant to a Permitted Transfer shall be admitted as a Substituted Member at the request of the Member making such transfer.
Section 11.5 Assignees. If the Managing Member does not Consent to the admission of any permitted transferee under Section 11.3 hereof as a Substituted Member, as described in Section 11.4 hereof, or in the event that any LLC Interest is deemed to have been Transferred notwithstanding the restrictions set forth in this Article 11, such transferee shall be considered an Assignee for purposes of this Agreement. An Assignee shall be entitled to all the rights of an assignee of a membership interest under the Act, including the right to receive distributions from the Company and the share of Net Income, Net Losses and other items of income, gain, loss, deduction and credit of the Company attributable to the LLC Interest assigned to such transferee and the rights to Transfer the LLC Interest provided in this Article 11, but shall not be deemed to be a holder of an LLC Interest for any other purpose under this Agreement, and shall not be entitled to effect a Consent or vote with respect to such LLC Interest on any matter presented to the Members for approval (such right to Consent or vote, to the extent provided in this Agreement or under the Act, fully remaining with the transferor Member). In the event that any such transferee desires to make a further Transfer of any such LLC Interest, such transferee shall be subject to all the provisions of this Article 11 to the same extent and in the same manner as any Member desiring to make a Transfer of a Member Interest.
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Section 11.6 General Provisions.
(a) No Member may withdraw from the Company other than as a result of: (i) a permitted Transfer of all of such Member’s LLC Interest in accordance with this Article 11 with respect to which the transferee becomes a Substituted Member; (ii) pursuant to an exchange of all of its LLC Interest pursuant to an Exchange under Section 15.1 hereof and/or pursuant to any Unit Designation or (iii) the acquisition by the Managing Member of all of such Member’s LLC Interest.
(b) Any Member who shall Transfer all of its Company Units in a Transfer (i) permitted pursuant to this Article 11 where such transferee was admitted as a Substituted Member, (ii) pursuant to the exercise of its rights to Exchange all of its OPEUs under Section 15.1 hereof and/or pursuant to any Unit Designation or (iii) to the Managing Member, shall cease to be a Member.
(c) If any Company Unit is Transferred in compliance with the provisions of this Article 11, or is Exchanged by the Company pursuant to Section 15.1 hereof, on any day other than the first (1st) day of a Company Year, then Net Income, Net Losses, each item thereof and all other items of income, gain, loss, deduction and credit attributable to such Company Unit for such Company Year shall be allocated to the transferor Member and, in the case of a Transfer other than an Exchange, to the transferee Member, by taking into account their varying interests during the Company Year in accordance with Code Section 706(d), using the “interim closing of the books” method or another permissible method selected by the Managing Member in its sole and absolute discretion. The Members hereby agree that any such selection by the Managing Member is made by “agreement of the partners” within the meaning of Regulations Section 1.706-4(f). Solely for purposes of making such allocations, unless the Managing Member decides in its sole and absolute discretion to use another method permitted under the Code, each of such items for the calendar month in which a Transfer occurs shall be allocated to the transferee Member and none of such items for the calendar month in which a Transfer or Exchange occurs shall be allocated to the transferor Member if such Transfer occurs on or before the fifteenth (15th) day of the month, otherwise such items shall be allocated to the transferor. All distributions of Available Cash attributable to such Company Unit with respect to which the Company Record Date is before the date of such Transfer, assignment or Exchange shall be made to the transferor Member (as the case may be) and, in the case of a Transfer other than an Exchange, all distributions of Available Cash thereafter attributable to such Company Unit shall be made to the transferee Member.
(d) In addition to any other restrictions on Transfer herein contained, in no event may any Transfer of an LLC Interest by any Member (including any acquisition of Company Units by the Managing Member or any other acquisition of Company Units by the Company) be made: (i) to any Person who lacks the legal right, power or capacity to own an LLC Interest; (ii) in violation of applicable law; (iii) except with the Consent of the Managing Member, of any component portion of an LLC Interest, such as the Capital Account, or rights to distributions,
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separate and apart from all other components of an LLC Interest; (iv) in the event that such Transfer could cause either the Managing Member or any Managing Member Affiliate to cease to comply with the REIT Requirements or to cease to qualify as a “qualified REIT subsidiary” (within the meaning of Code Section 856(i)(2)); (v) except with the Consent of the Managing Member, if such Transfer could, based on the advice of counsel to the Company or the Managing Member, cause a termination of the Company for Federal or state income tax purposes (except as a result of the Exchange (or acquisition by the Managing Member) of all OPEUs); (vi) if such Transfer could, based on the advice of legal counsel to the Company or the Managing Member, cause the Company to cease to be classified as a partnership for federal income tax purposes (except as a result of the Exchange (or acquisition by the Managing Member) of all OPEUs); (vii) if such Transfer would cause the Company to become, with respect to any employee benefit plan subject to Title I of ERISA, a “party-in-interest” (as defined in ERISA Section 3(14)) or a “disqualified person” (as defined in Code Section 4975(c)) or result in a “prohibited transaction” (within the meaning of ERISA or the Code); (viii) if such Transfer could, based on the advice of legal counsel to the Company or the Managing Member, cause any portion of the assets of the Company to constitute assets of any employee benefit plan pursuant to Department of Labor Regulations Section 2510.3-101, as modified by Section 3(42) of ERISA; (ix) if such Transfer requires the registration of such LLC Interest pursuant to any applicable Federal or state securities laws; (x) except with the Consent of the Managing Member, if such Transfer could (A) be treated as effectuated through an “established securities market” or a “secondary market” (or the substantial equivalent thereof) within the meaning of Section 7704 of the Code and the Regulations promulgated thereunder, (B) cause the Company to become a “publicly traded partnership,” as such term is defined in Sections 469(k)(2) or 7704(b) of the Code, or (C) cause the Company to fail to qualify for at least one of the Safe Harbors; (xi) if such Transfer causes the Company (as opposed to the Managing Member) to become a reporting company under the Exchange Act; or (xii) if such Transfer subjects the Company to regulation under the Investment Company Act of 1940, the Investment Advisers Act of 1940 or ERISA, each as amended. The Managing Member shall, in its sole discretion, be permitted to take all action necessary to prevent the Company from being classified as a “publicly traded partnership” under Code Section 7704.
(e) Except as otherwise provided in a Unit Designation, Transfers pursuant to this Article 11 may only be made on the first (1st) day of a fiscal quarter of the Company, unless the Managing Member otherwise Consents.
ARTICLE 12
ADMISSION OF MEMBERS
Section 12.1 Admission of Successor Managing Member. A successor to all of the Managing Member’s Managing Member Interest pursuant to a Transfer permitted by Section 11.2 hereof who is proposed to be admitted as a successor Managing Member shall be admitted to the Company as the Managing Member, effective immediately upon such Transfer. Upon any such Transfer and the admission of any such transferee as a successor Managing Member in accordance with this Section 12.1, the transferor Managing Member shall be relieved of its obligations under this Agreement and shall cease to be a managing member of the Company without any separate Consent of the Members or the consent or approval of any other Members. Any such successor Managing Member shall carry on the business and affairs of the Company without dissolution. In each case, the admission shall be subject to the successor Managing Member executing and
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delivering to the Company an acceptance of all of the terms and conditions of this Agreement and such other documents or instruments as may be required to effect the admission of such Person as a Managing Member. Upon any such Transfer, the transferee shall become the successor Managing Member for all purposes herein, and shall be vested with the powers and rights of the transferor Managing Member, and shall be liable for all obligations and responsible for all duties of the Managing Member. Concurrently with, and as evidence of, the admission of a successor Managing Member, the Managing Member shall update the Register and the books and records of the Company to reflect the name, address and number and classes and/or series of Company Units of such successor Managing Member. In the event that the Managing Member withdraws from the Company, or transfers its entire LLC Interest, in violation of this Agreement, or otherwise dissolves or terminates or ceases to be the Managing Member of the Company, a Majority in Interest of the Members may elect to continue the Company by selecting a successor managing member in accordance with Section 13.1(a) hereof.
Section 12.2 Admission of Additional Members.
(a) A Person (other than an existing Member) who makes a Capital Contribution to the Company in exchange for Company Units after the Effective Date and in accordance with this Agreement shall be admitted to the Company as an Additional Member only upon furnishing to the Managing Member (i) evidence of acceptance, in form and substance satisfactory to the Managing Member, of all of the terms and conditions of this Agreement, including, without limitation, the power of attorney granted in Section 2.4 hereof, (ii) a counterpart signature page to this Agreement executed by such Person and (iii) such other documents or instruments as the Managing Member may require in its sole and absolute discretion in order to effect such Person’s admission as an Additional Member. Concurrently with, and as evidence of, the admission of an Additional Member, the Managing Member shall update the Register and the books and records of the Company to reflect the name, address and number and classes and/or series of Company Units of such Additional Member.
(b) Notwithstanding anything to the contrary in this Section 12.2, no Person shall be admitted as an Additional Member without the Consent of the Managing Member. The admission of any Person as an Additional Member shall become effective on the date upon which the name of such Person is recorded on the books and records of the Company, following the Consent of the Managing Member to such admission and the satisfaction of all the conditions set forth in Section 12.2(a).
(c) If any Additional Member is admitted to the Company, or if an existing Member acquires an additional LLC Interest, on any day other than the first (1st) day of a Company Year, then Net Income, Net Losses, each item thereof and all other items of income, gain, loss, deduction and credit allocable among Holders for such Company Year shall be allocated among such Member and all other Holders by taking into account their varying interests during the Company Year in accordance with Code Section 706(d), using the “interim closing of the books” method or another permissible method selected by the Managing Member. The Members hereby agree that any such selection by the Managing Member is made by “agreement of the partners” within the meaning of Regulations Section 1.706-4(f). Solely for purposes of making such allocations, each of such items for the calendar month in which an admission of any Additional Members occurs shall be allocated among all the Holders including such Additional Members, in accordance with
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the principles described in Section 11.6(c) hereof. All distributions of Available Cash with respect to which the Company Record Date is before the date of such admission shall be made solely to Members and Assignees other than the Additional Member, if any, and all distributions of Available Cash thereafter shall be made to all the Members and Assignees including such Additional Member.
(d) Any Additional Member admitted to the Company that is an Affiliate of the Managing Member shall be deemed to be a “Managing Member Affiliate” hereunder and shall be reflected as such on the Register and the books and records of the Company.
Section 12.3 Amendment of Agreement and Certificate of Formation. For the admission to the Company of any Member, the Managing Member shall take all steps necessary and appropriate under the Act to update the Register, amend the records of the Company and, if necessary, to prepare as soon as practical an amendment of this Agreement and, if required by law, shall prepare and file an amendment to the Certificate and may for this purpose exercise the power of attorney granted pursuant to Section 2.4 hereof.
Section 12.4 Limit on Number of Members. Unless otherwise permitted by the Managing Member in its sole and absolute discretion, no Person shall be admitted to the Company as an Additional Member if the effect of such admission would be to cause the Company to have a number of Members that would cause the Company to become a reporting company under the Exchange Act.
Section 12.5 Admission. A Person shall be admitted to the Company as a member of the Company or a managing member of the Company only upon strict compliance, and not upon substantial compliance, with the requirements set forth in this Agreement for admission to the Company as a Member or a Managing Member.
ARTICLE 13
DISSOLUTION, LIQUIDATION AND TERMINATION
Section 13.1 Dissolution. The Company shall not be dissolved by the admission of Substituted Members or Additional Members or by the admission of a successor Managing Member in accordance with the terms of this Agreement. Upon the withdrawal of the Managing Member, any successor Managing Member shall continue the business and affairs of the Company without dissolution. However, the Company shall dissolve, and its affairs shall be wound up, upon the first to occur of any of the following (each a “Liquidating Event”):
(a) at any time that there are no Members, unless the business of the Company is continued in accordance with the Act;
(b) an election to dissolve the Company made by the Managing Member in its sole and absolute discretion, with or without the Consent of the Managing Member and Members; or
(c) entry of a decree of judicial dissolution of the Company pursuant to Section 18-802 of the Act.
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Section 13.2 Winding Up.
(a) Upon the occurrence of a Liquidating Event, the Company shall continue solely for the purposes of winding up its affairs in an orderly manner, liquidating its assets and satisfying the claims of its creditors and the Holders. After the occurrence of a Liquidating Event, no Holder shall take any action that is inconsistent with, or not necessary to or appropriate for, the winding up of the Company’s business and affairs. The Managing Member (or, in the event that there is no remaining Managing Member or the Managing Member has dissolved, become bankrupt within the meaning of the Act or ceased to operate, any Person elected by a Majority in Interest of the Members (the Managing Member or such other Person being referred to herein as the “Liquidator”)) shall be responsible for overseeing the winding up and dissolution of the Company and shall take full account of the Company’s liabilities and property, and the Company property shall be liquidated as promptly as is consistent with obtaining the fair value thereof, and the proceeds therefrom (which may, to the extent determined by the Managing Member), include units in the Managing Member shall be applied and distributed in the following order:
(i) First, to the satisfaction of all of the Company’s debts and liabilities to creditors other than the Holders (whether by payment or the making of reasonable provision for payment thereof);
(ii) Second, to the satisfaction of all of the Company’s debts and liabilities to the Managing Member (whether by payment or the making of reasonable provision for payment thereof), including, but not limited to, amounts due as reimbursements under Section 7.4 hereof;
(iii) Third, to the satisfaction of all of the Company’s debts and liabilities to the other Holders (whether by payment or the making of reasonable provision for payment thereof); and
(iv) Fourth, to the Members in accordance with Article 5 and any Unit Designation.
The Managing Member shall not receive any additional compensation for any services performed pursuant to this Article 13 other than reimbursement of its expenses as set forth in Section 7.4.
(b) Notwithstanding the provisions of Section 13.2(a) hereof that require liquidation of the assets of the Company, but subject to the order of priorities set forth therein, if prior to or upon dissolution of the Company, the Liquidator determines that an immediate sale of part or all of the Company’s assets would be impractical or would cause undue loss to the Holders, the Liquidator may, in its sole and absolute discretion, defer for a reasonable time the liquidation of any assets except those necessary to satisfy liabilities of the Company (including to those Holders as creditors) and/or distribute to the Holders, in lieu of cash, as tenants in common and in accordance with the provisions of Section 13.2(a) hereof, undivided interests in such Company assets as the Liquidator deems not suitable for liquidation. Any such distributions in kind shall be made only if, in the good faith judgment of the Liquidator, such distributions in kind are in the best interest of the Holders, and shall be subject to such conditions relating to the disposition and management of such properties as the Liquidator deems reasonable and equitable and to any agreements governing the operation of such properties at such time. The Liquidator shall determine the fair market value of any property distributed in kind using such reasonable method of valuation as it may adopt.
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(c) If any Holder has a deficit balance in its Capital Account (after giving effect to all contributions, distributions and allocations for all taxable years, including the year during which such liquidation occurs), except as otherwise agreed to by such Holder, such Holder shall have no obligation to make any contribution to the capital of the Company with respect to such deficit, and such deficit shall not be considered a debt owed to the Company or to any other Person for any purpose whatsoever.
(d) In the sole and absolute discretion of the Managing Member or the Liquidator, a pro rata portion of the distributions that would otherwise be made to the Holders pursuant to this Article 13 may be:
(i) distributed to a trust established for the benefit of the Managing Member and the Holders for the purpose of liquidating Company assets, collecting amounts owed to the Company, and paying any contingent or unforeseen liabilities or obligations of the Company or of the Managing Member arising out of or in connection with the Company and/or Company activities. The assets of any such trust shall be distributed to the Holders, from time to time, in the discretion of the Managing Member, in the same proportions and amounts as would otherwise have been distributed to the Holders pursuant to this Agreement; or
(ii) withheld or escrowed to provide a reasonable reserve for Company liabilities (contingent or otherwise) and to reflect the unrealized portion of any installment obligations owed to the Company, provided that such withheld or escrowed amounts shall be distributed to the Holders in the manner and order of priority set forth in Section 13.2(a) hereof as soon as practicable.
(e) The provisions of Section 7.8 hereof shall apply to any Liquidator appointed pursuant to this Article 13 as though the Liquidator were the Managing Member of the Company.
Section 13.3 Deemed Contribution and Distribution. Notwithstanding any other provision of this Article 13, in the event that the Company is liquidated within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g), but no Liquidating Event has occurred, the Company’s Property shall not be liquidated, the Company’s liabilities shall not be paid or discharged and the Company’s affairs shall not be wound up. Instead, for federal income tax purposes the Company shall be deemed to have contributed all of its assets and liabilities to a new partnership in exchange for an interest in the new partnership; and immediately thereafter, distributed Company Units to the Members in the new partnership in accordance with their respective Capital Accounts in liquidation of the Company, and the new partnership is deemed to continue the business of the Company. Nothing in this Section 13.3 shall be deemed to have constituted a Transfer to an Assignee as a Substituted Member without compliance with the provisions of Section 11.4 or Section 13.3 hereof.
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Section 13.4 Rights of Holders. Except as otherwise provided in this Agreement and subject to the rights of any Holder of any LLC Interest set forth in a Unit Designation, (a) each Holder shall look solely to the assets of the Company for the return of its Capital Contribution, (b) no Holder shall have the right or power to demand or receive property other than cash from the Company and (c) no Holder shall have priority over any other Holder as to the return of its Capital Contributions, distributions or allocations.
Section 13.5 Notice of Dissolution. In the event that a Liquidating Event occurs or an event occurs that would, but for an election or objection by one or more Members pursuant to Section 13.1 hereof, result in a dissolution of the Company, the Managing Member or Liquidator shall, within thirty (30) days thereafter, provide written notice thereof to each Holder and, in the Managing Member’s or Liquidator’s sole and absolute discretion or as required by the Act, to all other parties with whom the Company regularly conducts business (as determined in the sole and absolute discretion of the Managing Member or Liquidator), and the Managing Member or Liquidator may, or, if required by the Act, shall, publish notice thereof in a newspaper of general circulation in each place in which the Company regularly conducts business (as determined in the sole and absolute discretion of the Managing Member or Liquidator).
Section 13.6 Certificate of Cancellation. Upon the completion of the liquidation of the Company cash and property as provided in Section 13.2 hereof, the Company shall be terminated, a Certificate of Cancellation shall be filed with the Office of the Secretary of State of Delaware under the Act, all qualifications of the Company as a foreign limited liability company or association in jurisdictions other than the State of Delaware shall be cancelled, and such other actions as may be necessary to terminate the Company shall be taken.
Section 13.7 Reasonable Time for Winding-Up. A reasonable time shall be allowed for the orderly winding-up of the business and affairs of the Company and the liquidation of its assets pursuant to Section 13.2 hereof, in order to minimize any losses otherwise attendant upon such winding-up, and the provisions of this Agreement shall remain in effect between and among the Members during the period of liquidation; provided, however, reasonable efforts shall be made to complete such winding-up within twenty-four (24) months after the adoption of a plan of liquidation of the Managing Member, as provided in Section 562(b)(1)(B) of the Code, if necessary, in the sole and absolute discretion of the Managing Member.
ARTICLE 14
PROCEDURES FOR ACTIONS AND CONSENTS OF MEMBERS; AMENDMENTS;
MEETINGS
Section 14.1 Procedures for Actions and Consents of Members. The actions requiring Consent of any Member or Members pursuant to this Agreement, including Section 7.3 hereof, or otherwise pursuant to applicable law, are subject to the procedures set forth in this Article 14.
Section 14.2 Amendments. Amendments to this Agreement may be proposed by the Managing Member or by Members holding twenty-five percent (25%) or more of the LLC Interests held by Members and, except as set forth in Section 7.3(b) and Section 7.3(c) and subject to Section 7.3(d) and the rights of any Holder of any LLC Interest set forth in a Unit Designation, shall be approved by the Consent of the Managing Member and Members. Amendments to a Unit
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Designation may also be proposed and approved in the manner set forth in the Unit Designation without complying with the foregoing. Following such proposal, the Managing Member shall submit to the Members entitled to vote thereon any proposed amendment that, pursuant to the terms of this Agreement, requires the consent, approval or vote of such Members. The Managing Member shall seek the consent, approval or vote of the Members entitled to vote thereon on any such proposed amendment in accordance with Section 14.3 hereof. Upon obtaining any such Consent, or any other Consent required by this Agreement, and without further action or execution by any other Person, including any Member, (a) any amendment to this Agreement may be implemented and reflected in a writing executed solely by the Managing Member, and (b) the Members shall be deemed a party to and bound by such amendment of this Agreement. For the avoidance of doubt, notwithstanding anything to the contrary in this Agreement, this Agreement may not be amended without the Consent of the Managing Member.
Section 14.3 Actions and Consents of the Members.
(a) Meetings of the Members may be called only by the Managing Member to transact any business that the Managing Member determines. The call shall state the nature of the business to be transacted. Notice of any such meeting shall be given to all Members entitled to act at the meeting not less than seven (7) days nor more than sixty (60) days prior to the date of such meeting. Members may vote in person or by proxy at such meeting. Unless approval by a different number or proportion of the Members is required by this Agreement, the affirmative vote of Members holding a majority of the Percentage Interests held by the Members entitled to act on any proposal shall be sufficient to approve such proposal at a meeting of the Members. Whenever the vote, consent or approval of Members is permitted or required under this Agreement, such vote, consent or approval may be given at a meeting of Members or in accordance with the procedure prescribed in Section 14.3(b) hereof.
(b) Any action requiring the Consent of any Member or group of Members pursuant to this Agreement or that is required or permitted to be taken at a meeting of the Members may be taken without a meeting if a consent in writing or by electronic transmission setting forth the action so taken or consented to is given by Members whose affirmative vote would be sufficient to approve such action or provide such Consent at a meeting of the Members. Such consent may be in one instrument or in several instruments, and shall have the same force and effect as the affirmative vote of such Members at a meeting of the Members. Such consent shall be filed with the Managing Member. An action so taken shall be deemed to have been taken at a meeting held on the effective date so certified. For purposes of obtaining a Consent in writing or by electronic transmission, the Managing Member may require a response within a reasonable specified time, but not less than fifteen (15) days, and failure to respond in such time period shall constitute a Consent that is consistent with the Managing Member’s recommendation with respect to the proposal; provided, however, that an action shall become effective at such time as requisite Consents are received even if prior to such specified time.
(c) Each Member entitled to act at a meeting of the Members may authorize any Person or Persons to act for it by proxy on all matters in which a Member is entitled to participate, including waiving notice of any meeting, or voting or participating at a meeting. Each proxy must be signed by the Member or its attorney-in-fact. No proxy shall be valid after the expiration of eleven (11) months from the date thereof unless otherwise provided in the proxy (or there is receipt of a proxy authorizing a later date). Every proxy shall be revocable at the pleasure of the Member executing it, such revocation to be effective upon the Company’s receipt of written notice of such revocation from the Member executing such proxy, unless such proxy states that it is irrevocable and is coupled with an interest.
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(d) The Managing Member may set, in advance, a record date for the purpose of determining the Members (i) entitled to Consent to any action, (ii) entitled to receive notice of or vote at any meeting of the Members or (iii) in order to make a determination of Members for any other proper purpose. Such date, in any case, shall not be prior to the close of business on the day the record date is fixed and shall be not more than ninety (90) days and, in the case of a meeting of the Members, not less than five (5) days, before the date on which the meeting is to be held or Consent is to be given. If no record date is fixed, the record date for the determination of Members entitled to notice of or to vote at a meeting of the Members shall be at the close of business on the day on which the notice of the meeting is sent, and the record date for any other determination of Members shall be the effective date of such Member action, distribution or other event. When a determination of the Members entitled to vote at any meeting of the Members has been made as provided in this section, such determination shall apply to any adjournment thereof.
(e) Each meeting of Members shall be conducted by the Managing Member or such other Person as the Managing Member may appoint pursuant to such rules for the conduct of the meeting as the Managing Member or such other Person deems appropriate in its sole and absolute discretion. Without limitation, meetings of Members may be conducted in the same manner as meetings of the Managing Member’s stockholders and may be held at the same time as, and as part of, the meetings of the Managing Member’s stockholders.
ARTICLE 15
GENERAL PROVISIONS
Section 15.1 Exchange of OPEUs for OP Common Units. At any time after July 24, 2026:
(a) Each holder of OPEUs shall have the right (subject to the terms and conditions set forth herein) to require the Managing Member to exchange all or any number of the OPEUs held by such holder (OPEUs that have been tendered for exchange herein referred to as “Exchanged Units”) for OP Common Units in the Managing Member (an “Exchange”). Any Exchange shall be exercised pursuant to a Notice of Exchange delivered to the Managing Member by a holder of OPEUs when exercising the Exchange right (such holder, the “Contributing Holder”). In order to effect such Exchange, the Exchanged Units shall be deemed to be contributed in-kind to the Managing Member by the Contributing Holder effective upon the Specified Exchange Date in exchange for the deemed issuance to the Contributing Holder by the Managing Member of a number of OP Common Units equal to the OP Common Units Amount; and upon the making of such contribution the Managing Member shall issue such OP Common Units to such Contributing Holder. The Managing Member may elect to cause the Specified Exchange Date to be delayed for up to fifteen (15) Business Days to the extent required for the Managing Member to cause additional OP Common Units to be issued. The Contributing Holder shall submit such written representations, investment letters, legal opinions or other instruments necessary, in the Managing Member’s view, to effect compliance with the Securities Act. A number of OP Common Units equal to the OP Common Units Amount shall be issued to the Contributing Holder by the
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Managing Member as duly authorized, validly issued, fully paid (to the extent required under this Agreement) and, to the extent applicable, non-assessable OP Common Units upon the Exchange and, if applicable, free of any pledge, lien, encumbrance or restriction, the Securities Act and relevant state securities or “blue sky” laws. Notwithstanding any delay in such issuance or the recording thereof in the Managing Member’s register, the Contributing Holder shall be deemed the owner of such OP Common Units for all purposes, including, without limitation, rights to vote or consent, receive dividends, and exercise all rights, as of the Specified Exchange Date. OP Common Units issued in any Exchange may contain such legends regarding restrictions under the Securities Act and applicable state securities laws as the Managing Member determines to be necessary or advisable in order to ensure compliance with such laws.
(b) Notwithstanding anything herein to the contrary, with respect to any Exchange pursuant to this Section 15.1:
(i) All OPEUs deemed received by the Managing Member pursuant to Section 15.1(a) hereof shall automatically, and without further action required, be reclassified into and deemed to be a Managing Member Interest comprised of the same number of Company Common Units.
(ii) If the Specified Exchange Date occurs during the period after the Company Record Date with respect to a distribution and before the record date established by the Managing Member for a distribution to its partners of some or all of its portion of such Company distribution, the Contributing Holder shall pay to the Managing Member on the Specified Exchange Date an amount in cash equal to the portion of the Company distribution in respect of the Exchange OPEUs insofar as such distribution relates to the same period for which the Contributing Holder would receive a duplicative distribution in respect of such OP Common Units.
(iii) The deemed receipt of OPEUs by the Managing Member in any Exchange shall be subject to the expiration or termination of the applicable waiting period, if any, under the Hart-Scott-Rodino Act, and if any such period would expire or terminate after the Specified Exchange Date, the Specified Exchange Date shall instead be the Business Day after the expiration or termination of such applicable waiting period.
(iv) The Contributing Holder shall continue to own all OPEUs subject to any Exchange, and be treated as a Member or an Assignee, as applicable, with respect to such OPEUs for all purposes of this Agreement, until the Specified Exchange Date. The Contributing Holder shall have no rights as a partner of the Managing Member with respect to the OP Common Units until the Specified Exchange Date.
Section 15.2 Addresses and Notice. Any notice, demand, request or report required or permitted to be given or made to a Member or Assignee under this Agreement shall be in writing and shall be deemed given or made when delivered in person or when sent by first class United States mail or by other means of written or electronic communication (including by telecopy, facsimile, electronic mail or commercial courier service) to the Member, or Assignee at the address set forth in the Register or such other address of which the Member shall notify the Managing Member in accordance with this Section 15.2.
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Section 15.3 Titles and Captions. All article or section titles or captions in this Agreement are for convenience only. They shall not be deemed part of this Agreement and in no way define, limit, extend or describe the scope or intent of any provisions hereof. Except as specifically provided otherwise, references to “Articles” or “Sections” are to Articles and Sections of this Agreement.
Section 15.4 Pronouns and Plurals. Whenever the context may require, any pronouns used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns, pronouns and verbs shall include the plural and vice versa.
Section 15.5 Further Action. The parties shall execute and deliver all documents, provide all information and take or refrain from taking action as may be necessary or appropriate to achieve the purposes of this Agreement.
Section 15.6 Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their heirs, executors, administrators, successors, legal representatives and permitted assigns.
Section 15.7 Waiver.
(a) No failure by any party to insist upon the strict performance of any covenant, duty, agreement or condition of this Agreement or to exercise any right or remedy consequent upon a breach thereof shall constitute waiver of any such breach or any other covenant, duty, agreement or condition.
(b) The restrictions, conditions and other limitations on the rights and benefits of the Members contained in this Agreement, and the duties, covenants and other requirements of performance or notice by the Members, are for the benefit of the Company and, except for an obligation to pay money to the Company, may be waived or relinquished by the Managing Member, in its sole and absolute discretion, on behalf of the Company in one or more instances from time to time and at any time; provided, however, that any such waiver or relinquishment may not be made if it would have the effect of (i) creating liability for any other Member, (ii) causing the Company to cease to qualify as a limited liability company, (iii) reducing the amount of cash otherwise distributable to the Members (other than any such reduction that affects all of the Members holding the same class or series of Company Units on a uniform or pro rata basis, if approved by a Majority in Interest of the Members holding such class or series of Company Units), (iv) resulting in the classification of the Company as an association or publicly traded partnership taxable as a corporation or (v) violating the Securities Act, the Exchange Act or any state “blue sky” or other securities laws; and provided, further, that any waiver relating to compliance with restrictions in the OP Agreement shall be made and shall be effective only as provided in the OP Agreement.
Section 15.8 Counterparts. This Agreement may be executed in counterparts, all of which together shall constitute one agreement binding on all the parties hereto, notwithstanding that all such parties are not signatories to the original or the same counterpart. Each party shall become bound by this Agreement immediately upon affixing its signature hereto.
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Section 15.9 Applicable Law; Consent to Jurisdiction; Waiver of Jury Trial.
(a) This Agreement shall be construed and enforced in accordance with and governed by the laws of the State of Delaware, without regard to the principles of conflicts of law. In the event of a conflict between any provision of this Agreement and any non-mandatory provision of the Act, the provisions of this Agreement shall control and take precedence.
(b) Each Member hereby (i) submits to the non-exclusive jurisdiction of any state or federal court sitting in the State of Delaware (collectively, the “Delaware Courts”), with respect to any dispute arising out of this Agreement or any transaction contemplated hereby to the extent such courts would have subject matter jurisdiction with respect to such dispute, (ii) irrevocably waives, and agrees not to assert by way of motion, defense, or otherwise, in any such action, any claim that it is not subject personally to the jurisdiction of any of the Delaware Courts, that its property is exempt or immune from attachment or execution, that the action is brought in an inconvenient forum, or that the venue of the action is improper, (iii) agrees that notice or the service of process in any action, suit or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby shall be properly served or delivered if delivered to such Member at such Member’s last known address as set forth in the Company’s books and records, and (iv) irrevocably waives any and all right to trial by jury in any legal proceeding arising out of or related to this Agreement or the transactions contemplated hereby.
Section 15.10 Entire Agreement. This Agreement, including the Exhibits hereto, contains all of the understandings and agreements between and among the Members with respect to the subject matter of this Agreement and the rights, interests and obligations of the Members with respect to the Company. Notwithstanding the immediately preceding sentence, the Members hereby acknowledge and agree that the Managing Member, without the approval of any Member, may enter into side letters or similar written agreements with Members that are not Affiliates of the Managing Member, executed contemporaneously with the admission of such Member to the Company, affecting the terms hereof, as negotiated with such Member and which the Managing Member in its sole discretion deems necessary, desirable or appropriate. The parties hereto agree that any terms, conditions or provisions contained in such side letters or similar written agreements with a Member shall govern with respect to such Member notwithstanding the provisions of this Agreement.
Section 15.11 Invalidity of Provisions. If any provision of this Agreement is or becomes invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not be affected thereby.
Section 15.12 No Partition. No Member nor any successor-in-interest to a Member shall have the right while this Agreement remains in effect to have any property of the Company partitioned, or to file a complaint or institute any proceeding at law or in equity to have such property of the Company partitioned, and each Member, on behalf of itself and its successors and assigns hereby waives any such right. It is the intention of the Members that the rights of the parties hereto and their successors-in-interest to Company property, as among themselves, shall be governed by the terms of this Agreement, and that the rights of the Members and their respective successors-in-interest shall be subject to the limitations and restrictions as set forth in this Agreement.
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Section 15.13 No Third-Party Rights Created Hereby. The provisions of this Agreement are solely for the purpose of defining the interests of the Holders, inter se; and no other Person (i.e., a party who is not a signatory hereto or a permitted successor to such signatory hereto) shall have any right, power, title or interest by way of subrogation or otherwise, in and to the rights, powers, title and provisions of this Agreement. No creditor or other third party having dealings with the Company (other than as expressly provided herein with respect to Indemnitees) shall have the right to enforce the right or obligation of any Member to make Capital Contributions or loans to the Company or to pursue any other right or remedy hereunder or at law or in equity. None of the rights or obligations of the Members herein set forth to make Capital Contributions or loans to the Company shall be deemed an asset of the Company for any purpose by any creditor or other third party, nor may any such rights or obligations be sold, transferred or assigned by the Company or pledged or encumbered by the Company to secure any debt or other obligation of the Company or any of the Members.
Section 15.14 No Rights as Unitholders. Nothing contained in this Agreement shall be construed as conferring upon the Holders of Company Units any rights whatsoever as unitholders of the Managing Member, including without limitation any right to receive dividends or other distributions made to unitholders of the Managing Member or to vote or to consent or receive notice as unitholders in respect of any meeting of unitholders for the election of directors of the Managing Member or any other matter.
Section 15.15 REIT Subsidiary Ownership Restrictions.
(a) Ownership Limitations. During the period commencing on the REIT Qualification Date and prior to the Restriction Termination Date:
(i) Basic Restrictions.
(A) (1) No Person, other than an Excepted Holder, shall Beneficially Own or Constructively Own LLC Interests in excess of the REIT Subsidiary Ownership Limit, and (2) No Excepted Holder shall Beneficially Own or Constructively Own LLC Interests in excess of the Excepted Holder Limit for such Excepted Holder.
(B) No Person shall Beneficially Own or Constructively Own LLC Interests to the extent that such Beneficial Ownership or Constructive Ownership would result in any REIT Subsidiary being “closely held” within the meaning of Section 856(h) of the Code (without regard to whether the ownership interest is held during the last half of a taxable year), or otherwise failing to qualify as a REIT (including Beneficial Ownership or Constructive Ownership that would result in any REIT Subsidiary actually owning or constructively owning, determined in accordance with Sections 856(d)(2)(B) and 856(d)(5) of the Code, an interest in a tenant that is described in Section 856(d)(2)(B) of the Code if the income derived by the REIT Subsidiary from such tenant would cause the REIT Subsidiary to fail to satisfy any of the gross income requirements of Section 856(c) of the Code).
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(ii) Transfer in Trust. If any event occurs or has occurred, or any transfer of LLC Interests is about to occur, which, if effective, would result in any Person Beneficially Owning or Constructively Owning LLC Interests in violation of Section 15.15(a)(i)(A) or Section 15.15(a)(i)(B):
(A) Then the LLC Interests the Beneficial Ownership or Constructive Ownership of which otherwise would cause such Person to violate Section 15.15(a)(i)(A) or Section 15.15(a)(i)(B) shall be automatically transferred to a Trust for the exclusive benefit of one or more Charitable Beneficiaries, as described in Section 15.15(i), effective as of the close of business on the Business Day immediately prior to the date of such transfer, and such Person shall acquire no rights in such LLC Interests; or
(B) If the transfer to the Trust described in Section 15.15(a)(ii)(A) would not be effective for any reason to prevent the violation of Section 15.15(a)(i)(A) or Section 15.15(a)(i)(B), then the transfer of the LLC Interests that otherwise would cause any Person to violate Section 15.15(a)(i)(A) or Section 15.15(a)(i)(B) shall be void ab initio, and the intended transferee shall acquire no rights in such LLC Interests.
(C) In determining which LLC Interests are to be transferred to a Trust in accordance with this Section 15.15(a)(ii) and Section 15.15(i) hereof, LLC Interests shall be so transferred to a Trust in such manner as minimizes the aggregate value of the LLC Interests that are transferred to the Trust (except as provided in Section 15.15(f)) and, to the extent not inconsistent therewith, on a pro rata basis.
(D) To the extent that, upon a transfer of LLC Interests pursuant to this Section 15.15(a)(ii), a violation of any provision of Section 15.15(a)(i) would nonetheless be continuing, then LLC Interests shall be transferred to that number of Trusts, each having a Trustee and a Charitable Beneficiary or Charitable Beneficiaries that are distinct from those of each other Trust, such that there is no violation of any provision of Section 15.15(a)(i) hereof.
(b) Remedies for Breach. If the Managing Member shall at any time determine in good faith that a transfer or other event has taken place that results in a violation of Section 15.15(a) or that a Person intends to acquire or has attempted to acquire Beneficial Ownership or Constructive Ownership of any LLC Interests in violation of Section 15.15(a) (whether or not such violation is intended), the Managing Member shall take such action as it deems advisable to refuse to give effect to or to prevent such transfer or other event, including refusing to give effect to such transfer pursuant to this Agreement or in the records of the Company, or instituting proceedings to enjoin such transfer or other event; provided, however, that any transfer or attempted transfer or other event in violation of Section 15.15(a) shall automatically result in the transfer to the Trust described above, and, where applicable, such transfer (or other event) shall be void ab initio as provided above irrespective of any action (or non-action) by the Managing Member.
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(c) Notice of Restricted Transfer. Any Person that acquires or attempts or intends to acquire Beneficial Ownership or Constructive Ownership of LLC Interests that will or may violate Section 15.15(a)(i) or any Person that would have owned LLC Interests that resulted in a transfer to the Trust pursuant to the provisions of Section 15.15(a)(ii) shall immediately give written notice to the Company of such event or, in the case of such a proposed or attempted transaction, give at least 15 days prior written notice, and shall provide to the Company such other information as the Company may request in order to determine the effect, if any, of such transfer on any REIT Subsidiary’s status as a REIT.
(d) Owners Required To Provide Information. From the REIT Qualification Date and prior to the Restriction Termination Date:
(i) Each Person that owns LLC Interests shall, within a reasonable time after demand, provide to the Company the name and address of such owner, the LLC Interests Beneficially Owned, a description of the manner in which such LLC Interests are held, and such additional information as the Company may request in order to determine the effect, if any, of such Beneficial Ownership on any REIT Subsidiary’s status as a REIT or Domestically Controlled Qualified Investment Entity, or to ensure compliance with the REIT Subsidiary Ownership Limit; and
(ii) Each Person that is a Beneficial Owner or Constructive Owner of LLC Interests and each Person that holds LLC Interests for a Beneficial Owner or Constructive Owner shall, within a reasonable time after demand, provide to the Company such information as the Company may request in order to determine any REIT Subsidiary’s status as a REIT or Domestically Controlled Qualified Investment Entity, to comply with the requirements of any taxing authority or governmental authority or to determine such compliance, or to ensure compliance with the REIT Subsidiary Ownership Limit.
(e) Remedies Not Limited. Nothing contained in this Section 15.15 shall limit the authority of the Managing Member to take such other action as it deems necessary or advisable to protect any REIT Subsidiary’s status as a REIT or to assist the Company, any REIT Subsidiary and their owners in preserving the REIT Subsidiary’s status as a REIT.
(f) Ambiguity. In the case of an ambiguity in the application of any of the provisions of this Section 15.15, or any definition contained in this Agreement, the Managing Member shall have the power to determine the application of the provisions of this Section 15.15 or any such definition with respect to any situation based on the facts known to it. In the event this Section 15.15 requires an action by the Managing Member and this Agreement fails to provide specific guidance with respect to such action, the Managing Member shall determine the action to be taken so long as such action is not contrary to the provisions of this Agreement. If a Person would have (but for the remedies set forth in this Section 15.15) acquired Beneficial Ownership or Constructive Ownership of LLC Interests in violation of Section 15.15(a), such remedies (as applicable) shall apply first to the LLC Interests which, but for such remedies, would have been actually owned by such Person, and second to LLC Interests which, but for such remedies, would have been Beneficially Owned or Constructively Owned (but not actually owned) by such Person, pro rata among the Persons who actually own such LLC Interests based upon the relative number of the LLC Interests held by each such Person.
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(g) Exceptions and Cooperation.
(i) The Managing Member, in its sole and absolute discretion, may exempt (prospectively or retroactively) a Person from the limits set forth in Section 15.15(a)(i)(A), or may establish or increase an Excepted Holder Limit for such Person, if the Managing Member determines, based on such representations and undertakings from such Person to the extent required by the Managing Member and as are reasonably necessary to ascertain that such exemption will not cause such Person to violate Section 15.15(a)(i)(B).
(ii) The Members, the Managing Member and the Company agree that, in the event any Member would like to modify its Excepted Holder Limit, the Members, the Managing Member and the Company shall reasonably cooperate to amend such Excepted Holder Limit; provided, however, that such cooperation shall not require the Company, the Managing Member or any Member to agree to allow any REIT Subsidiary to accrue gross income in a taxable year that does not qualify under Section 856(c)(2) of the Code in excess of 0.5% of the REIT Subsidiary’s gross income for such taxable year or take any action that could otherwise jeopardize the REIT Subsidiary’s status as a REIT.
(iii) Subject to Section 15.15(a)(i)(B) and this Section 15.15(g)(iii), the Managing Member may from time to time increase (or decrease) the REIT Subsidiary Ownership Limit for one or more Persons and decrease (or increase) the REIT Subsidiary Ownership Limit for all other Persons. No decreased REIT Subsidiary Ownership Limit will be effective for any Person whose percentage of capital or profits interest in the Company is in excess of such decreased REIT Subsidiary Ownership Limit until such time as such Person’s percentage of capital or profits interest in the Company equals or falls below the decreased REIT Subsidiary Ownership Limit; provided, however, that any further acquisition of LLC Interests by any such Person (other than a Person for whom an exemption has been granted pursuant to Section 15.15(g)(i) or an Excepted Holder) in excess of the LLC Interests owned by such Person on the date the decreased REIT Subsidiary Ownership Limit became effective will be in violation of the REIT Subsidiary Ownership Limit. No increase to the REIT Subsidiary Ownership Limit may be approved if the new REIT Subsidiary Ownership Limit (taking into account any then-existing Excepted Holder Limits to the extent appropriate as determined by the Managing Member) would allow five or fewer Individuals to Beneficially Own, in the aggregate, more than 49.0% of the capital or profits interests in the Company.
(h) Legend. Each certificate representing LLC Interests (if the LLC Interests are certificated) shall bear substantially the following legend, in addition to any other legends required by applicable law or otherwise deemed appropriate by the Managing Member in its sole discretion:
“The LLC Interests represented by this certificate are subject to restrictions on Beneficial Ownership and Constructive Ownership and transfer for the purpose of each REIT Subsidiary’s maintenance of its status as a real estate investment trust (“REIT”) under the Internal Revenue Code of 1986, as amended (the “Code”). Subject to certain further restrictions and except as expressly provided in the Company’s governing operating agreement, (i) no Person may
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Beneficially Own or Constructively Own in excess of a 9.8% capital interest or profits interest in the Company unless such Person is an Excepted Holder (in which case the Excepted Holder Limit shall be applicable) and (ii) no Person may Beneficially Own or Constructively Own LLC Interests that would result in any REIT Subsidiary being “closely held” under Section 856(h) of the Code or otherwise cause the REIT Subsidiary to fail to qualify as a REIT. Any Person that Beneficially Owns or Constructively Owns or attempts to Beneficially Own or Constructively Own LLC Interests that cause or will cause a Person to Beneficially Own or Constructively Own LLC Interests in excess or in violation of the above limitations must immediately notify the Company. If any of the restrictions on transfer or ownership are violated, the LLC Interests, or a portion thereof, represented hereby will be automatically transferred to a Trustee of a Trust for the exclusive benefit of one or more Charitable Beneficiaries. Furthermore, upon the occurrence of certain events, attempted transfers in violation of the restrictions described above may be void ab initio. All capitalized terms in this legend and not defined in this legend have the meanings set forth in the Company’s governing operating agreement, as the same may be amended from time to time, a copy of which, including the restrictions on transfer and ownership, will be furnished to each holder of LLC Interests on request and without charge. Requests for such a copy may be directed to the Company at its principal office.”
Instead of the foregoing legend, any certificate may state that the Company will furnish a full statement about certain restrictions on transferability to a Member on request and without charge
(i) Transfer of Interests in Trust.
(i) Ownership in Trust. Upon any purported transfer or other event described in Section 15.15(a)(ii) that would result in a transfer of LLC Interests to a Trust, such LLC Interests shall be deemed to have been transferred to the Trustee as trustee of a Trust for the exclusive benefit of one or more Charitable Beneficiaries. Such transfer to the Trustee shall be deemed to be effective as of the close of business on the Business Day immediately prior to the purported transfer or other event that results in the transfer to the Trust pursuant to Section 15.15(a)(ii). The Trustee shall be appointed by the Company and shall be a Person unaffiliated with the Company and any Prohibited Owner. Each Charitable Beneficiary shall be designated by the Company as provided in Section 15.15(i)(vi).
(ii) Status of LLC Interests Held by the Trustee. LLC Interests held by the Trustee shall be issued and outstanding LLC Interests of the Company. The Prohibited Owner shall have no rights in LLC Interests held by the Trustee. The Prohibited Owner shall not benefit economically from ownership of any LLC Interests held in trust by the Trustee, shall have no rights to distributions and shall not possess any rights to vote or other rights attributable to the LLC Interests held in the Trust.
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(iii) Distribution and Voting Rights. The Trustee shall have all voting rights and rights to distributions with respect to LLC Interests held in the Trust, which rights shall be exercised for the exclusive benefit of the Charitable Beneficiary. Any distribution paid prior to the discovery by the Company that the LLC Interests have been transferred to the Trustee shall be paid by the recipient of such distribution to the Trustee upon demand and any distribution authorized but unpaid shall be paid when due to the Trustee. Any distribution so paid to the Trustee shall be held in trust for the Charitable Beneficiary. The Prohibited Owner shall have no voting rights with respect to LLC Interests held in the Trust and, subject to Maryland law, effective as of the date that the LLC Interests have been transferred to the Trustee, the Trustee shall have the authority (at the Trustee’s sole discretion) (i) to rescind as void any vote cast by a Prohibited Owner prior to the discovery by the Company that the LLC Interests have been transferred to the Trustee and (ii) to recast such vote in accordance with the desires of the Trustee acting for the benefit of the Charitable Beneficiary; provided, however, that if the Company has already taken irreversible limited liability company action or other action, then the Trustee shall not have the authority to rescind and recast such vote. Notwithstanding the provisions of this Section 15.15, until the Company has received notification that LLC Interests have been transferred into a Trust, the Company shall be entitled to rely on its LLC Interest transfer and other records for purposes of determining Member entitled to vote at meetings, determining the validity and authority of proxies and otherwise conducting votes of Members.
(iv) Sale of LLC Interests by Trustee. Within twenty (20) days of receiving notice from the Company that the LLC Interests have been transferred to the Trust, the Trustee shall sell (subject to the remaining provisions of this Section 15.15) all of the LLC Interests transferred to the Trust to any other Person that is not a Prohibited Owner. Such LLC Interests shall be sold for such consideration and on such other terms as the Managing Member determines in its sole discretion. Upon such sale, the interest of the Charitable Beneficiary in the LLC Interests sold shall terminate and the Trustee shall distribute the net proceeds of the sale to the Prohibited Owner and to the Charitable Beneficiary as provided in this Section 15.15(i)(iv). The Prohibited Owner shall receive an amount equal to (1) the lesser of (x) the price paid by the Prohibited Owner for the LLC Interests or, if the Prohibited Owner did not give value for the LLC Interests in connection with the event causing the LLC Interests to be held in the Trust (e.g., in the case of a gift, devise or other such transaction), the fair market value (as determined by the Managing Member in good faith) of the LLC Interests on the day of the event causing the LLC Interests to be held in the Trust and (y) the price received by the Trustee (net of any commissions and other expenses of sale, including costs and expenses incurred by the Company, the Managing Member and their respective Affiliates) from the sale or other disposition of the LLC Interests held in the Trust, less (2) the aggregate amount of all of the Company’s expenses in connection with each of the purported transfer to the Prohibited Owner and the transfer by the Trust (including in each case, but not limited to, the legal and accounting fees incurred by the Company, the Managing Member and/or their respective Affiliates), which the Trustee will pay to the Company prior to any distribution of funds to the Prohibited
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Owner. The Trustee may also reduce the amount payable to the Prohibited Owner by the amount of distributions which have been paid to the Prohibited Owner and are owed by the Prohibited Owner to the Trustee pursuant to Section 15.15(i)(iii). Any net sales proceeds in excess of the amount payable to the Prohibited Owner shall be immediately paid to the Charitable Beneficiary. If, prior to the discovery by the Company that LLC Interests have been transferred to the Trustee, such LLC Interests are transferred by a Prohibited Owner, then (i) such LLC Interests shall be deemed to have been transferred on behalf of the Trust and (ii) to the extent that the Prohibited Owner received an amount for such LLC Interests that exceeds the amount that such Prohibited Owner was entitled to receive pursuant to this Section 15.15(i)(iv), such excess shall be paid to the Trustee upon demand.
(v) Purchase Right in LLC Interests Transferred to the Trustee. LLC Interests transferred to the Trustee shall be deemed to have been offered for sale to the Company, or its designee, at a price equal to (1) the lesser of (x) the price in the transaction that resulted in such transfer to the Trust (or, in the case of a devise or gift, the fair market value (as determined by the Managing Member in good faith) at the time of such devise or gift) and (y) the fair market value (as determined by the Managing Member in good faith) on the date the Company, or its designee, accepts such offer, less (2) the aggregate amount of all of the expenses of the Company, the Managing Member and their respective Affiliates in connection with each of the purported transfer to the Prohibited Owner and the transfer by the Trust (including in each case, but not limited to, the legal and accounting fees incurred by the Company, the Managing Member and/or their respective Affiliates), which the Trustee will pay to the Company prior to any distribution of funds to the Prohibited Owner. The Company may also reduce the amount payable to the Prohibited Owner by the amount of distributions which have been paid to the Prohibited Owner and are owed by the Prohibited Owner to the Trustee pursuant to Section 15.15(i)(iii). The Company, or its designee, shall pay the amount of any such reduction to the Trustee for the benefit of the Charitable Beneficiary. The Company, or its designee, shall have the right to accept such offer until the Trustee has sold the LLC Interests held in the Trust pursuant to Section 15.15(i)(iv). Upon such a sale to the Company or its designee, the interest of the Charitable Beneficiary in the LLC Interests sold shall terminate and the Trustee shall distribute the net proceeds of the sale, after the deductions contemplated above, to the Prohibited Owner.
(vi) Designation of Charitable Beneficiaries. By written notice to the Trustee, the Company shall designate one or more nonprofit organizations to be the Charitable Beneficiary of the interest in the Trust such that (i) the LLC Interests held in the Trust would not violate the restrictions set forth in Section 15.15(a)(i) in the hands of such Charitable Beneficiary and (ii) each such organization must be described in Section 501(c)(3) of the Code and contributions to each such organization must be eligible for deduction under each of Sections 170(b)(1)(A), 2055 and 2522 of the Code.
(vii) Facilitating Amendments at Managing Member’s Discretion. Notwithstanding anything to the contrary in this Agreement, in the event of any transfers to or by a Trust in accordance with this Section 15.15(i), the Managing Member shall be entitled, in its sole discretion and without the consent or agreement of any other Member, to make such amendments to this Agreement as it deems necessary from time to time in order to reflect that the Trust(s) or any subsequent transferees may not assume all of the obligations attaching to the subject LLC Interests, including the obligations to make Capital Contributions.
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(j) Enforcement. The Company is authorized specifically to seek equitable relief, including injunctive relief, to enforce the provisions of this Section 15.15.
[Remainder of Page Left Blank Intentionally]
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IN WITNESS WHEREOF, this Agreement has been executed as of the date first written above.
| COMPANY: | LINEAGE LOGISTICS HOLDINGS, LLC | |||||
| By: Lineage OP, LP | ||||||
| Its: Managing Member | ||||||
| By: Lineage, Inc. | ||||||
| Its: General Partner | ||||||
| By: | /s/ Adam Forste | |||||
| Name: | Adam Forste | |||||
| Its: | Co-Executive Chairman | |||||
| MEMBERS: | LINEAGE OP, LP | |||||
| By: Lineage, Inc. | ||||||
| Its: General Partner | ||||||
| By: | /s/ Adam Forste | |||||
| Name: | Adam Forste | |||||
| Its: | Co-Executive Chairman | |||||
[Lineage Logistics Holdings, LLC Ninth Amended and Restated Operating Agreement – Signature Page]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement with effect as of the Effective Date.
| MEMBERS: | BG MAVERICK, LLC | |||||
| By: | /s/ Adam Forste | |||||
| Name: | Adam Forste | |||||
| Its: | Authorized Person | |||||
[Lineage Logistics Holdings, LLC Ninth Amended and Restated Operating Agreement – Signature Page]
EXHIBIT A
EXAMPLES REGARDING ADJUSTMENT FACTOR
For purposes of the following examples, it is assumed that (a) the Adjustment Factor in effect on [ ] is 1.0 and (b) on [ ] (the “Company Record Date” for purposes of these examples), prior to the events described in the examples, there are 100 OP Units issued and outstanding.
Example 1
On the Company Record Date, the Managing Member declares a distribution on its outstanding OP Units in OP Units. The amount of the distributions is one OP Units paid in respect of each OP Units owned. Pursuant to Paragraph (a) of the definition of “Adjustment Factor,” the Adjustment Factor shall be adjusted on the Company Record Date, effective immediately after the distribution is declared, as follows:
1.0 * 200/100 = 2.0
Accordingly, the Adjustment Factor after the stock distribution is declared is 2.0.
Example 2
On the Company Record Date, the Managing Member distributes options to purchase OP Units to all holders of its OP Units. The amount of the distribution is one option to acquire one OP Unit in respect of each OP Unit owned. The strike price is $4.00 a unit. The Value of an OP Unit on the Company Record Date is $5.00 per unit. Pursuant to Paragraph (ii) of the definition of “Adjustment Factor,” the Adjustment Factor shall be adjusted on the Company Record Date, effective immediately after the options are distributed, as follows:
1.0 * (100 + 100)/(100 + [100 * $4.00/$5.00]) = 1.1111
Accordingly, the Adjustment Factor after the options are distributed is 1.1111. If the options expire or become no longer exercisable, then the retroactive adjustment specified in Paragraph (ii) of the definition of “Adjustment Factor” shall apply.
Example 3
On the Company Record Date, the Managing Member distributes assets to all holders of its OP Units. The amount of the distribution is one asset with a fair market value (as determined by the Managing Member) of $1.00 in respect of each OP Unit owned. It is also assumed that the assets do not relate to assets received by the Managing Member pursuant to a pro rata distribution by the Company. The Value of an OP Unit on the Company Record Date is $5.00 a unit. Pursuant to Paragraph (iii) of the definition of “Adjustment Factor,” the Adjustment Factor shall be adjusted on the Company Record Date, effective immediately after the assets are distributed, as follows:
1.0 * $5.00/($5.00 - $1.00) = 1.25
Accordingly, the Adjustment Factor after the assets are distributed is 1.25.
A-1
EXHIBIT B
NOTICE OF EXCHANGE
| To: | Lineage Logistics Holdings, LLC |
46500 Humboldt Drive
Novi, Michigan 48377
The undersigned Member or Assignee hereby irrevocably tenders for Exchange [insert number] OPEUs in Lineage Logistics Holdings, LLC in accordance with (1) the terms of the Ninth Amended and Restated Operating Agreement of Lineage Logistics Holdings, LLC, dated as of July 24, 2024 (the “Agreement”), and (2) the Exchange rights referred to therein. The undersigned Member or Assignee:
| (a) | agrees (i) that such uncertificated OPEUs will be deemed to have been surrendered at the closing of the Exchange and (ii) to furnish to the Managing Member, prior to the Specified Exchange Date, the documentation, instruments and information required under Section 15.1(a) of the Agreement; |
| (b) | directs that the number of OP Common Units deliverable upon the closing of such Exchange be issued to the undersigned Member or Assignee; |
| (c) | represents, warrants, certifies and agrees that: |
| (i) | the undersigned Member or Assignee is a Qualifying Party, |
| (ii) | the undersigned Member or Assignee has, and at the closing of the Exchange will have, good, marketable and unencumbered title to such OPEUs, free and clear of the rights or interests of any other person or entity, |
| (iii) | the undersigned Member or Assignee has, and at the closing of the Exchange will have, the full right, power and authority to surrender such OPEUs as provided herein, and |
| (iv) | the undersigned Member or Assignee has obtained the consent or approval of all persons and entities, if any, having the right to consent to or approve such surrender; and |
| (d) | acknowledges that it will continue to own such OPEUs until the Specified Exchange Date pursuant to Section 15.1(a) of the Agreement. |
All capitalized terms used herein and not otherwise defined shall have the same meaning ascribed to them respectively in the Agreement.
B-1
| Dated: | ||
| Name of Member or Assignee | ||
| (Signature of Member or Assignee) | ||
| (Street Address) | ||
| (City) (State) (Zip Code) | ||
B-2
EXHIBIT C
UNIT DESIGNATION – SERIES A PREFERRED UNITS
[See attached.]
C-1
Exhibit 10.4
TRANSITION SERVICES AGREEMENT
This Transition Services Agreement (this “Agreement”), dated as of July 24, 2024, is entered into by and between Lineage Logistics Holdings, LLC, a Delaware limited liability company (the “Company”), and Bay Grove Management Company, LLC, a Delaware limited liability company (“Bay Grove”). The Company and Bay Grove are each referred to herein individually as a “Party” and, collectively, as the “Parties.”
RECITALS
WHEREAS, as the founder and owner-operator of the Company and its indirect parent Lineage, Inc. (“Lineage REIT” and together with its direct and indirect subsidiaries, including the Company, “Lineage”), Bay Grove and its Affiliates (as defined below) have historically provided Lineage with services supporting capital deployment and mergers and acquisitions activity; and
WHEREAS, following the initial public offering of Lineage REIT, Bay Grove will cease to serve as owner-operator of Lineage and Bay Grove’s functions as owner-operator will be internalized into Lineage; and
WHEREAS, the Company and Bay Grove desire to provide for a three-year period of transitional support services from Bay Grove to the Company in support of Lineage’s capital deployment and mergers and acquisitions activity to ensure the successful internalization into the Company of these services historically provided by Bay Grove.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and the covenants and conditions herein set forth, the Parties hereto agree as follows:
Section 1. Appointment. The Company hereby appoints Bay Grove to render the services described in Section 2 hereof on the terms and conditions set forth in this Agreement.
Section 2. Services.
(a) Transition Services. The Company hereby engages Bay Grove to provide to the Company, by and through such of Bay Grove’s officers, employees, agents, representatives and Affiliates as Bay Grove, in its sole discretion, shall designate (the “Bay Grove Designees”), services supporting Lineage’s capital deployment and mergers and acquisitions activity (the “Transition Services”). In providing the Transition Services or otherwise, Bay Grove shall not be deemed to be acting in concert with Lineage, including, without limitation, for purposes of any Lineage entity’s compliance with any and all consent decrees to which the Company is party or may be party in the future. As used herein, the term “Affiliate” of any specified person or entity means any person or entity controlling, controlled by or under common control with such specified person or entity. Nothing herein shall require Bay Grove to engage in any activities as a broker-dealer or investment adviser under the laws of any jurisdiction in which it performs services.
(b) Additional Services. The Company may request, by written notice to Bay Grove, that Bay Grove provide additional services that are not specifically identified in this Agreement. Bay Grove is under no obligation to provide or perform any additional services requested by the Company but may elect in its sole discretion whether to perform such additional services. If Bay Grove elects in writing to perform any such additional services, such services shall be deemed to be “Transition Services” for purposes of this Agreement. It is acknowledged and agreed that if Bay Grove elects in writing to perform any such additional services, Bay Grove will be entitled to additional compensation, as set forth in Section 3(b) below.
(c) Level of Service. Bay Grove shall use commercially reasonable efforts to perform the Transition Services in the manner and at a relative level of service substantially similar to that provided by Bay Grove with respect to Lineage during the one-year prior to the initial closing of Lineage’s initial public offering (the “Closing”); provided, however, that except as it relates to temperature controlled warehousing and/or logistics outside of Latin America, nothing in this Agreement shall require Bay Grove to favor the Company or its Affiliates over Bay Grove’s own business operations or those of its Affiliates as to the provision of any Transition Service.
(d) Use of Services. The Transition Services shall be used by the Company and its Affiliates exclusively in connection with their conduct of their business and only for substantially the same purpose and in substantially the same manner as Lineage used such services immediately prior to the Closing. The Company shall not, and shall not permit its Affiliates or any of their respective employees or agents to, resell or provide any Transition Services to or for the benefit of any third party or permit the use of any Transition Services by or for the benefit of any third party.
(e) Cooperation, Access and Oversight. The Company and its Affiliates shall (i) provide Bay Grove and the Bay Grove Designees or such other person providing the Transition Services with all necessary access to the facilities in which the Company or its Affiliates operate to perform the Transition Services, (ii) make available on a timely basis to Bay Grove and the Bay Grove Designees or such other person providing the Transition Services, all information, personnel, systems, servers and materials reasonably requested by such person to enable it to provide the Transition Services and (iii) obtain and maintain all telecommunications, data and network connections, hardware and other equipment, licenses, sublicenses, leases and contracts (other than any of the foregoing that are provided to the Company or its Affiliates as Transition Services hereunder) necessary to enable Bay Grove and the Bay Grove Designees or such other person providing the Transition Services to provide the Transition Services. Each Party and its Affiliates shall (i) adhere to the policies of the other Party with respect to the protection of proprietary information and other policies regarding the use of information technology resources, to the extent relevant to the Transition Services provided and (ii) maintain reasonably appropriate technical and organizational security measures designed to ensure that the other Party’s data, including customer data and non-public personal information, is protected against loss, destruction, damage, and unauthorized access, use, modification, disclosure, and other misuse of such data. Bay Grove and the Bay Grove Designees shall be entitled to rely on any instructions or other information provided by the Company or its Affiliates and Bay Grove shall not be in breach of or in default under this Agreement as a result of any such reliance; provided that no such instructions shall expand the obligations of Bay Grove or the Bay Grove Designees hereunder. Bay Grove and the Bay Grove Designees shall be excused from their obligation to perform, or cause to be performed, a Transition Service if and to the extent that such failure to perform, or cause to be performed, such Transition Service was due to the Company’s or an Affiliate of the Company’s failure to perform its responsibilities under this Agreement.
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Section 3. Fees.
(a) Annual Fee. In consideration of the performance of the Transition Services contemplated by Section 2(a) hereof, the Company agrees to pay to Bay Grove (or its designee) a non-refundable and non-cancelable annual fee of $8,000,000 in cash (the “Annual Fee”) for a period of three years until the third anniversary of the Closing. The Annual Fee shall be payable in quarterly installments in advance on each January 1, April 1, July 1 and October 1 of each year, and in the case of the first installment, on the date of this Agreement; provided, however, that any payment for any period other than a full quarterly period (including the period covered by the first installment) shall be adjusted on a pro rata basis according to the actual number of days elapsed during such period.
(b) Fees for Additional Services. In consideration of any services, other than the Transition Services, that may be provided by Bay Grove to the Company from time to time during the term of this Agreement, Bay Grove shall be entitled to receive such additional compensation as agreed upon by the Company and Bay Grove.
(c) Taxes. Any and all payments required to be made to Bay Grove (or its designee) hereunder shall be made free and clear of, and without deduction for, any federal, state, local, foreign or other taxes, duties and assessments in the nature of a tax imposed by a governmental entity or tax authority (“Taxes”), other than any (A) Taxes imposed with respect to Bay Grove’s net income or branch profits (x) in any jurisdiction in which Bay Grove is organized or in which its principal office is located, or (y) as a result of any other present or former connection between Bay Grove and the jurisdiction imposing such Taxes, (B) property taxes and (C) employment/social security taxes (such Taxes described in clauses (A) through (C), collectively, “Excluded Taxes”); provided, however, that, if the Company shall be required by applicable law to deduct any Taxes from any payment hereunder, (i) to the extent such Taxes are not Excluded Taxes, such payment shall be increased as necessary so that, after making all required deductions (including deductions applicable to additional amounts payable under this Section 3(c)), Bay Grove receives payments equal to the amount it would have received had no such deductions been made, (ii) the Company shall make such deductions and (iii) the Company shall pay the full amount deducted to the relevant governmental authority in accordance with applicable law. Bay Grove has provided to the Company an IRS Form W-9 prior to or simultaneously with the execution of this Agreement and shall provide an IRS Form W-9 for future years at such times reasonably requested by the Company.
Section 4. Out-of-Pocket Expenses. In addition to the compensation payable to Bay Grove pursuant to Section 3 hereof, the Company shall, promptly at the request of Bay Grove, reimburse Bay Grove for, or at Bay Grove’s request, pay directly on Bay Grove’s behalf, the Out-of-Pocket Expenses. For the purposes of this Agreement, the term “Out-of-Pocket Expenses” shall mean all out-of-pocket expenses that are incurred or accrued by or on behalf of Bay Grove or its Affiliates in connection with the performance of the Transition Services or any other services provided under this Agreement, whether incurred or accrued (or, in the case of such
3
expenses that are incurred or accrued by way of allocation, that are allocated in the good faith judgment of Bay Grove) before or after the termination of this Agreement, including, without limitation, (i) costs, fees, expenses and disbursements of any counsel, consultants, investment bankers, accountants, financial advisors, tax support, appraiser, retainer, finder, adviser, custodian, depositary, transfer agent, disbursal, brokerage, registration, legal, compliance, trading, settlement, client relations, auditing, banking or other independent professionals or organizations, and other costs, fees and expenses for support services outsourced to third party service providers, (ii) costs of any outside services or independent contractors such as financial printers, couriers, business publications or similar services, (iii) costs associated with preparation of any financial reports, costs of regulatory filings and costs of reporting to authorities in any jurisdiction, (iv) telephone calls, word processing expenses or any similar third-party expense not associated with Bay Grove’s ordinary operating overhead, (v) research and software expenses, and other expenses incurred in connection with data services providing price feeds, news feeds, securities and company information, and company fundamental data and costs, fees and expenses for other third party research, news, industry information, analytics and expert networks/research resources, (vi) appraisal and valuation costs, fees and expenses, including costs, fees and expenses of independent appraisal or valuation services or third party vendor price quotations, (vii) costs, fees and expenses that are classified as extraordinary expenses under generally accepted accounting principles, (viii) costs, fees and premiums and fees for insurance (including insurance that benefits, directly or indirectly, Bay Grove or any of its shareholders, partners, members, officers, directors, employees, agents or Affiliates), including errors and omissions insurance, (ix) governmental charges, fees and duties, (x) damages and other costs, fees and expenses relating to litigation, settlements or other matters that are the subject of the indemnification rights, (xi) sales, leasing and brokerage commissions, development fees, loan servicing fees and other costs, fees and expenses incurred in connection with assets, (xii) transportation, per diem, travel, meals, entertainment and related expenses associated with any of the foregoing, which may include business or first class airfare and private air travel with third party providers not affiliated with Bay Grove and (xiii) BG Aircraft Expenses.
As used herein, “BG Aircraft Expenses” shall mean the expenses reimbursable by the Company to Bay Grove Capital LLC pursuant to the Aircraft Time Sharing Agreement, dated as of July 24, 2024, by and between Bay Grove Capital LLC and the Company.
All reimbursements for Out-of-Pocket Expenses shall be made promptly upon presentation by Bay Grove to the Company of an invoice from Bay Grove in connection therewith.
Section 5. Direction of Employees. Bay Grove shall be solely responsible for all salary, wages, bonuses, employment, payroll and other benefits of and liabilities owed to (including severance and worker’s compensation and the withholding and payment of applicable taxes relating to such employment), and compliance with immigration and visa laws and requirements in respect of, its personnel assigned to perform the Transition Services on behalf of Bay Grove. In performing their respective duties hereunder, all personnel engaged in providing Transition Services shall be under the direction, control and supervision of Bay Grove, and Bay Grove shall have the sole right to exercise all authority with respect to the employment (including termination of employment), assignment and compensation of such personnel. The employees of Bay Grove engaged in providing Transition Services shall not, by virtue thereof, become employees of the Company.
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Section 6. Term and Termination.
(a) Term. This Agreement will be effective from the date hereof and will terminate on the earlier to occur of (i) the date on which this Agreement is terminated pursuant to Section 6(b) and (ii) the third anniversary of the Closing. The date on which this Agreement is terminated is referred to herein as the “Termination Date.”
(b) Termination of Agreement.
(i) This Agreement may be terminated at any time by the mutual written consent of Bay Grove and the Company.
(ii) The Company may terminate this Agreement with immediate effect by written notice to Bay Grove at any time after Cause has occurred. “Cause” means that each of the following has occurred: (A) either (1) Adam Forste or Kevin Marchetti (each, a “Bay Grove Principal”), but only if such Bay Grove Principal then remains an active manager of Bay Grove, has been convicted of, or has made a plea of guilty or nolo contendere to, a felony involving fraud, embezzlement or a similar misappropriation of funds in each case in connection with the business of Lineage, (2) Bay Grove has been convicted of, or has made a plea of guilty or nolo contendere to, a felony involving fraud, embezzlement or a similar misappropriation of funds in which either of the Bay Grove Principals is found to have been personally culpable (but only if such Bay Grove Principal then remains an active manager of Bay Grove or otherwise in control (including joint control with the other Bay Grove Principal) of Bay Grove), (3) a court of competent jurisdiction has adjudicated in a final judgment that a Bay Grove Principal (but only if such Bay Grove Principal then remains an active manager of Bay Grove or otherwise in control (including joint control with the other Bay Grove Principal) of Bay Grove) has, in the provision of Bay Grove’s services to the Company and in the performance of his duties and obligations in connection therewith, engaged in uncured willful misconduct after written notice thereof and a minimum of 45 days to cure (if curable), and that such willful misconduct has had a sustained and continuing material adverse impact on Lineage, taken as a whole, or (4) a court of competent jurisdiction has adjudicated in a final judgment in which either of the Bay Grove Principals is found to have been personally culpable (but only if such Bay Grove Principal then remains an active manager of Bay Grove or otherwise in control (including joint control with the other Bay Grove Principal) of Bay Grove) that Bay Grove has, in the provision of Bay Grove’s services to the Company and in the performance of its duties and obligations in connection therewith, engaged in uncured willful misconduct after written notice thereof and a minimum of 45 days to cure (if curable), and that such willful misconduct has had a sustained and continuing material adverse impact on Lineage, taken as a whole; and (B) Bay Grove has not terminated such Bay Grove Principal’s involvement in the Transition Services and caused such Bay Grove Principal to no longer control (including jointly control) Bay Grove on or prior to 60 days after the date of such conviction, plea or adjudication.
(c) Effect of Termination. Upon the termination of this Agreement, all rights and obligations of each of the Company and Bay Grove shall immediately cease and terminate, and no Party shall have any further obligation to the other Party with respect to this Agreement, except that (i) the rights and obligations in Sections 5 through 17 of this Agreement shall survive termination of this Agreement with respect to matters arising before or after such termination
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without regard to the termination of this Agreement and (ii) the Company shall, on the terms set forth in Section 4 of this Agreement, remain responsible for reimbursing Bay Grove for any Out-of-Pocket Expenses incurred or accrued by or on behalf of any Bay Grove Related Party (as defined below), whether incurred or accrued prior to or after the termination of this Agreement, as a result of the provision of any Transition Services prior to the termination of this Agreement. For the avoidance of doubt, termination of this Agreement will not relieve any Party from liability for any breach of this Agreement at or prior to such termination.
Section 7. Proprietary Rights; Insurance.
(a) Intellectual Property.
(i) Any software, development tools, know-how, methodologies, processes, technologies, algorithms or other intellectual property (collectively, “Intellectual Property”) owned by Bay Grove or any of its Affiliates and which may during the term of this Agreement be operated or used by Bay Grove or its Affiliates in connection with the performance of the Transition Services hereunder or by the Company or its Affiliates in connection with the receipt of the Transition Services hereunder, shall remain Bay Grove’s or such Affiliate of Bay Grove’s property and neither the Company nor its Affiliates shall have any rights or interests therein, except as provided in the immediately following sentence. Bay Grove hereby grants to the Company and its Affiliates, solely in respect of the Transition Services and during the term of this Agreement as provided in Section 6(a), a non-exclusive, non-transferable, non-sublicensable, royalty-free license to access and use such Intellectual Property owned by Bay Grove and made available to the Company and its Affiliates hereunder, as necessary for the Company and its Affiliates to receive the Transition Services in accordance with this Agreement. Bay Grove shall not be required to grant any right in respect of Intellectual Property owned by a third party or to provide any Transition Service contemplated in connection therewith if, after using commercially reasonable efforts, Bay Grove is unable to obtain any necessary consent of the applicable third party to such grant.
(ii) Any Intellectual Property owned by the Company or any of its Affiliates and which may during the term of this Agreement be operated or used by Bay Grove or its Affiliates in connection with the performance of the Transition Services hereunder or by the Company or its Affiliates in connection with the receipt of the Transition Services hereunder, shall remain the Company’s or such Affiliate of the Company’s property and neither Bay Grove nor its Affiliates shall have any rights or interests therein, except as provided in the immediately following sentence. The Company hereby grants to Bay Grove and its Affiliates, solely in respect of the Transition Services and during the term of this Agreement as provided in Section 6(a), a non-exclusive, non-transferable, non-sublicensable, royalty-free license to access and use such Intellectual Property owned by the Company and made available to Bay Grove and its Affiliates hereunder, as necessary for Bay Grove and its Affiliates to provide the Transition Services in accordance with this Agreement. The Company shall not be required to grant any right in respect of Intellectual Property owned by a third party or to provide any Transition Service contemplated in connection therewith if, after using commercially reasonable efforts, the Company is unable to obtain any necessary consent of the applicable third party to such grant.
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(b) Insurance. During the term of this Agreement as provided in Section 6(a) and for a period of five years following the Termination Date, the Company shall, at its sole cost and expense, procure and maintain insurance customary and typical for its business and operations (inclusive of the Transition Services provided pursuant to this Agreement), including general liability, directors and officers liability, automobile liability, umbrella liability and property liability policies, and shall name Bay Grove and its Affiliates as additional insureds. The Company insurance policies shall be the insurance of first resort. The Company shall use best efforts to have each insurance policy maintained hereunder include a waiver of any rights of subrogation against Bay Grove and its Affiliates.
Section 8. Disclaimer, Limitation on Warranty and Limitation of Liability; Opportunities.
(a) Disclaimer; Standard of Care. None of Bay Grove, any Bay Grove Designee or any Bay Grove Related Party makes any representations or warranties, express or implied, in respect of the services to be provided by Bay Grove or the Bay Grove Designees hereunder. In no event will Bay Grove, any Bay Grove Designee or any of their respective former, current or future partners, members, stockholders, Affiliates, associates, officers, directors, employees, controlling persons, agents or representatives, or any former, current or future partners, members, stockholders, Affiliates, associates, officers, directors, employees, controlling persons, agents or representatives of the foregoing (together with Bay Grove and the Bay Grove Designees, the “Bay Grove Related Parties”) be liable to the Company or any of its Affiliates for any act, alleged act, omission or alleged omission that does not constitute actual fraud, gross negligence or willful misconduct of such Bay Grove Related Party, as determined by a final, non-appealable determination of a court of competent jurisdiction.
(b) Limitation on Warranty. The Company hereby acknowledges and agrees that Bay Grove Related Parties are not in the business of providing Transition Services. Bay Grove has agreed to provide the Transition Services hereunder solely as an accommodation to the Company and its Affiliates and such Transition Services are provided on an “as-is, where-is” basis and in the manner provided in this Agreement. Except as expressly set forth in this Agreement, none of the Bay Grove Related Parties makes, nor is the Company relying on, any representation or warranty of any kind whatsoever (including by omission), express or implied, written or oral, at law or in equity, with respect to the Transition Services, the subject matter of this Agreement or any information or materials provided to the Company or any of its Affiliates (including any policies and procedures of any Bay Grove Related Party), including any warranty of merchantability, fitness for any particular purpose or use, title or non-infringement, accuracy, availability, timeliness, completeness or the results to be obtained from such Transition Services, and the Bay Grove Related Parties hereby disclaim the same.
(c) Limitation of Liability.
(i) Notwithstanding any provision of this Agreement to the contrary, under no circumstances shall any Bay Grove Related Party be liable to the Company or any of its Affiliates for incidental, exemplary, special, punitive, indirect or consequential damages of any kind, including any damages arising from business interruption, diminution of value, increased insurance premiums or lost profits and losses based upon any multiplier of earnings, including
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earnings before interest, depreciation or amortization, or any other valuation metric, arising under or relating to this Agreement or the subject matter hereof, regardless of whether such damages are based in contract, breach of warranty, tort, negligence or any other theory, and regardless of whether any Bay Grove Related Party has been advised of, knew of, or should have known of the possibility of such damages.
(ii) The Company acknowledges that none of the Bay Grove Related Parties are in the business of providing services of the type contemplated by this Agreement, and that the Transition Services are to be provided on a temporary basis. Accordingly, notwithstanding anything to the contrary contained herein, Bay Grove’s maximum liability to the Company and any other Party arising under or in relation to this Agreement or any of the Transition Services provided hereunder shall be limited to an amount equal to the aggregate Annual Fees actually paid to Bay Grove during the term of this Agreement.
(d) Accuracy of Information. The Company shall furnish or cause to be furnished to Bay Grove such information as Bay Grove believes reasonably appropriate to render the services contemplated by this Agreement (all such information so furnished, the “Information”). The Company recognizes and agrees that Bay Grove (i) will use and rely primarily on the Information and on information available from generally recognized public sources in performing the services contemplated by this Agreement without having independently verified the same, (ii) does not assume responsibility for the accuracy or completeness of the Information and such other information and (iii) is entitled to rely upon the Information without independent verification.
Section 9. Indemnification.
(a) The Company agrees, and agrees to cause each subsidiary of the Company to jointly and severally indemnify, defend, exonerate and hold harmless, to the fullest extent permitted by applicable law, the Bay Grove Related Parties from and against any and all actions, causes of action, suits, proceedings, claims or threatened claims, liabilities, losses, damages, costs and expenses (including, without limitation reasonable and documented attorneys’, accountants’ and consultants’ fees, expenses and disbursements), but excluding any Excluded Taxes, incurred by the Bay Grove Related Parties or any of them before, on or after the date of this Agreement, arising out of, incurred in connection with or as a result of, or in any way relating to, (i) this Agreement, (ii) services provided by Bay Grove or any Bay Grove Designee to the Company or any of its subsidiaries from time to time pursuant to this Agreement or (iii) the exercise, enforcement or preservation of any rights or remedies under this Agreement (collectively, the “Indemnified Liabilities”); provided that the foregoing indemnification rights will not be available to the extent that a court of competent jurisdiction determines by final non-appealable judgment or order that such Indemnified Liabilities arose on account of such Bay Grove Related Party’s actual fraud, gross negligence or willful misconduct; and provided, further, that if and to the extent that the foregoing right to indemnification may be unavailable or unenforceable for any reason (other than the actual fraud, gross negligence or willful misconduct of any Bay Grove Related Party referred to above), the Company hereby agrees to make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law. The Company shall be obligated to pay in cash promptly, and in any event within fifteen (15) days, all expenses and other costs incident to any actual or threatened claim, lawsuit
8
or other proceeding, including those incurred in defending any civil or criminal action arising out of or relating to any event or circumstance to which this Section 9 shall apply, upon receipt of an undertaking by or on behalf of the Bay Grove Related Parties to repay such amount if it be later determined in accordance with this Section 9 that such Bay Grove Related Party was not entitled to indemnification (whether hereunder or otherwise).
(b) The Company will reimburse any Bay Grove Related Party for all reasonable costs and expenses (including reasonable attorneys’ fees and expenses and any other litigation-related expenses) as they are incurred in connection with investigating, preparing, pursuing, defending or assisting in the defense of any action, claim, suit, investigation or proceeding for which the Bay Grove Related Party would be entitled to indemnification under the terms of Section 9(a), or any action or proceeding arising therefrom, whether or not such Bay Grove Related Party is a formal party thereto. The Company agrees that it will not, without the prior written consent of the Bay Grove Related Party, settle, compromise or consent to the entry of any judgment in any pending or threatened claim, action or proceeding relating to the matters contemplated hereby (if any Bay Grove Related Party is a party thereto or has been threatened to be made a party thereto) unless such settlement, compromise or consent includes an unconditional release of the Bay Grove Related Party from all liability, without future obligation or prohibition on the part of the Bay Grove Related Party, arising or that may arise out of such claim, action or proceeding, and does not contain an admission of guilt or liability on the part of the Bay Grove Related Party.
(c) Notwithstanding the foregoing, the Company shall not be liable to any Bay Grove Related Party in respect of any Indemnified Liabilities (or any related costs and expenses) to a Bay Grove Related Party to the extent the same is determined, in a final non-appealable judgment by a court having jurisdiction, to have resulted solely from the actual fraud, gross negligence or willful misconduct of such Bay Grove Related Party. An adverse judgment or plea of nolo contendere shall not, of itself, create a presumption that any Bay Grove Related Party committed actual fraud, gross negligence or willful misconduct.
(d) The rights of any Bay Grove Related Party to indemnification hereunder will be in addition to any other rights any such person may have under any other agreement or instrument referenced above or any other agreement or instrument to which such Bay Grove Related Party is or becomes a party or is or otherwise becomes a beneficiary or under law or regulation. The Company hereby acknowledges that each Bay Grove Related Party may have certain rights to indemnification, advancement of expenses and/or insurance provided by one or more persons or entities with whom or which such Bay Grove Related Party may be associated (including, without limitation, any other Bay Grove Related Party). The Company hereby acknowledges and agrees that (i) the Company shall be the indemnitor of first resort with respect to any Indemnified Liability, (ii) the Company shall be primarily liable for all Indemnified Liabilities and any indemnification afforded to any Bay Grove Related Party in respect of any Indemnified Liabilities, whether created by law, organizational or constituent documents, contract (including this Agreement) or otherwise, (iii) any obligation of any other person or entity with whom or which any Bay Grove Related Party may be associated (including, without limitation, BG Lineage Holdings, LLC or any other Bay Grove Related Party) to indemnify such Bay Grove Related Party and/or advance expenses to such Bay Grove Related Party in respect of any proceeding shall be secondary to the obligations of the Company hereunder, (iv) the Company
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shall be required to indemnify each Bay Grove Related Party and advance expenses to each Bay Grove Related Party hereunder to the fullest extent provided herein without regard to any rights such Bay Grove Related Party may have against any other person or entity with whom or which such Bay Grove Related Party may be associated (including, without limitation, any other Bay Grove Related Party) or insurer of any such person or entity and (v) the Company (on behalf of itself and its insurers) irrevocably waives, relinquishes and releases any other person or entity with whom or which any Bay Grove Related Party may be associated from any claim of contribution, subrogation or any other recovery of any kind in respect of amounts paid by the Company hereunder. In the event any other person or entity with whom or which any Bay Grove Related Party may be associated (including, without limitation, any other Bay Grove Related Party) or their insurers advances or extinguishes any liability or loss which is the subject of any Indemnified Liability owed by the Company or payable under any insurance policy provided under this Agreement, the payor shall have a right of subrogation against the Company or its insurer or insurers for all amounts so paid which would otherwise be payable by the Company or its insurer or insurers under this Agreement. In no event will payment of an Indemnified Liability under this Agreement by any other person or entity with whom or which any Bay Grove Related Party may be associated (including, without limitation, other Bay Grove Related Parties) or their insurers affect the obligations of the Company hereunder or shift primary liability for any Indemnified Liability to any other person or entity with whom or which such Bay Grove Related Party may be associated (including, without limitation, any other Bay Grove Related Party).
(e) The indemnity rights provided to the Bay Grove Related Parties under this Agreement are cumulative with, and do not supersede any other indemnification rights such Bay Grove Related Parties would have at common law or under any other agreement or arrangement and shall remain in full force and effect following any termination of the services hereunder or this Agreement.
(f) If for any reason (other than the actual fraud, gross negligence or willful misconduct of a Bay Grove Related Party referred to above) the foregoing indemnification is unavailable to any Bay Grove Related Party or insufficient to hold it harmless as and to the extent contemplated by Section 9(a), then the Company shall make the maximum contribution to the payment and satisfaction of each of the liabilities of each Bay Grove Related Party which is permissible under applicable law.
Section 10. Amendments and Waivers.
No amendment or waiver of any provision of this Agreement, or consent to any departure by either Party from any such provision, shall be effective unless the same shall be in writing and signed by the Parties to this Agreement, and, in any case, such amendment, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. The waiver by any Party of any breach of this Agreement shall not operate as or be construed to be a waiver by such Party of any subsequent breach.
Section 11. Assignment; Third-Party Beneficiaries. This Agreement and the rights of the Parties hereunder may not be assigned without the prior written consent of the Parties hereto; provided, however, that Bay Grove may assign or transfer all or a portion of its rights, duties, obligations or interests hereunder to one or more of its controlling Affiliates at the sole discretion of Bay Grove. Subject to the foregoing, the provisions of this Agreement will be binding
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upon and inure to the benefit of the Parties hereto and their respective successors and assigns. Subject to the next sentence, no person or party other than the Parties hereto and their respective successors or permitted assigns is intended to be a beneficiary of this Agreement. The Parties acknowledge and agree that each of the Bay Grove Related Parties shall be third-party beneficiaries with respect to Sections 8 and 9 hereof, in each case entitled to enforce such provisions as though each such Bay Grove Related Party were a party to this Agreement.
Section 12. Notices. Any and all notices hereunder shall be deemed duly given when delivered by registered or certified mail (postage prepaid), email, overnight courier or hand delivery to the Parties at the following addresses (or such different addresses as are specified by a Party for itself by notice to the other Party in accordance with this Section 12):
| If to Bay Grove: |
Bay Grove Management Company, LLC 801 Montgomery Street, Floor 5 San Francisco, California 94133 Attention: Legal Department Email: notices@bay-grove.com | |
| If to the Company: |
Lineage, Inc. 46500 Humboldt Drive Novi, Michigan 48377 Attention: Legal Department Email: legalnotice@onelineage.com | |
Section 13. Entire Agreement. This Agreement shall constitute the entire agreement between the Parties with respect to the subject matter hereof, and shall supersede all previous oral and written (and all contemporaneous oral) negotiations, commitments, agreements and understandings relating hereto.
Section 14. Governing Law; Consent to Jurisdiction; Waiver of Jury Trial.
(a) Governing Law(a) . This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of New York.
(b) Consent to Jurisdiction(b) . EACH OF THE PARTIES HERETO CONSENTS TO THE EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE STATE OF NEW YORK AND IRREVOCABLY AGREES THAT ALL ACTIONS OR PROCEEDINGS RELATING TO THIS AGREEMENT SHALL BE LITIGATED IN SUCH COURTS. EACH OF THE PARTIES HERETO ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS RESPECTIVE PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY FINAL AND NONAPPEALABLE JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT. EACH OF THE PARTIES HERETO FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF VIA OVERNIGHT COURIER,
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TO SUCH PARTY AT THE ADDRESS SPECIFIED IN THIS AGREEMENT, SUCH SERVICE TO BECOME EFFECTIVE FOURTEEN CALENDAR DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL IN ANY WAY BE DEEMED TO LIMIT THE ABILITY OF EITHER PARTY HERETO TO SERVE ANY SUCH LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW OR TO OBTAIN JURISDICTION OVER OR TO BRING ACTIONS, SUITS OR PROCEEDINGS AGAINST THE OTHER PARTY HERETO IN SUCH OTHER JURISDICTIONS, AND IN SUCH MANNER, AS MAY BE PERMITTED BY ANY APPLICABLE LAW.
(c) Waiver of Jury Trial(c) . THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING BROUGHT TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER THIS AGREEMENT.
Section 15. Counterparts; Electronic Signatures. This Agreement may be executed in two or more counterparts, and by different Parties on separate counterparts. Each set of counterparts showing execution by all Parties shall be deemed an original, and shall constitute one and the same instrument. The words “execution,” “signed,” “signature,” and words of like import in this Agreement shall include images of manually executed signatures transmitted by electronic format (including, without limitation, “pdf”, “tif” or “jpg”) and other electronic signatures (including, without limitation, DocuSign and AdobeSign). The use of electronic signatures and electronic records (including, without limitation, any contract or other record created, generated, sent, communicated, received, or stored by electronic means) shall be of the same legal effect, validity and enforceability as a manually executed signature or use of a paper-based record-keeping system to the fullest extent permitted by applicable law, including the Federal Electronic Signatures in Global and National Commerce Act and any other applicable law, including, without limitation, any state law based on the Uniform Electronic Transactions Act or the Uniform Commercial Code.
Section 16. Severability. If any provision or provisions of this Agreement shall be held to be invalid or unenforceable, the validity, legality and enforceability of the remaining provisions hereof shall not in any way be affected or impaired thereby.
Section 17. Independent Contractor. In providing services to the Company, Bay Grove will act as an independent contractor, and it is expressly understood and agreed that this Agreement is not intended to create, and does not create, any partnership, agency, joint venture or similar relationship and that neither Bay Grove, on the one hand, nor the Company, on the other hand, has the right or ability to contract for or on behalf of the other Party respectively, or to effect any transaction for the account of the other Party, respectively.
[Signature Page Follows]
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed and delivered by their duly authorized officers or agents as of the date first referenced above.
| BAY GROVE MANAGEMENT COMPANY, LLC | ||
| By: | /s/ Adam Forste | |
| Name: | Adam Forste | |
| Title: | Authorized Person | |
| LINEAGE LOGISTICS HOLDINGS, LLC | ||
| By: | Lineage OP, LP | |
| Its: | Managing Member | |
| By: | Lineage, Inc. | |
| Its: | General Partner | |
| By: | /s/ Adam Forste | |
| Name: | Adam Forste | |
| Title: | Co-Executive Chairman | |
[Signature Page to Transition Services Agreement]
Exhibit 10.5
STOCKHOLDERS AGREEMENT
by and among
LINEAGE, INC.
and
the other parties hereto
Dated as of July 24, 2024
CONTENTS
| ARTICLE I. INTRODUCTORY MATTERS |
1 | |||||||
| 1.1 | Defined Terms |
1 | ||||||
| 1.2 | Construction |
7 | ||||||
| ARTICLE II. CORPORATE GOVERNANCE MATTERS |
8 | |||||||
| 2.1 | Election of Directors |
8 | ||||||
| 2.2 | Compensation |
11 | ||||||
| 2.3 | Other Rights of Investor Designees |
11 | ||||||
| 2.4 | Restrictions on BGLH |
11 | ||||||
| 2.5 | Restrictions on BentallGreenOak Designee |
12 | ||||||
| ARTICLE III. INFORMATION; CONFIDENTIALITY |
12 | |||||||
| 3.1 | Books and Records; Access |
12 | ||||||
| 3.2 | Certain Reports |
12 | ||||||
| 3.3 | Confidentiality |
12 | ||||||
| 3.4 | Information Sharing |
13 | ||||||
| ARTICLE IV. CERTAIN TAX PROTECTIONS |
13 | |||||||
| 4.1 | Tax Protection |
13 | ||||||
| ARTICLE V. CONSENT RIGHT |
15 | |||||||
| 5.1 | Domestically Controlled Status |
15 | ||||||
| ARTICLE VI. GENERAL PROVISIONS |
16 | |||||||
| 6.1 | Termination |
16 | ||||||
| 6.2 | Notices |
16 | ||||||
| 6.3 | Amendment; Waiver |
19 | ||||||
| 6.4 | Further Assurances |
19 | ||||||
| 6.5 | Assignment |
19 | ||||||
| 6.6 | Third Parties |
19 | ||||||
| 6.7 | Governing Law |
19 | ||||||
| 6.8 | Disputes |
20 | ||||||
| 6.9 | Specific Performance |
21 | ||||||
| 6.10 | Entire Agreement |
21 | ||||||
| 6.11 | Severability |
21 | ||||||
| 6.12 | Table of Contents, Headings and Captions |
21 | ||||||
| 6.13 | Counterparts |
22 | ||||||
| 6.14 | Effectiveness |
22 | ||||||
| 6.15 | No Recourse |
22 | ||||||
| 6.16 | Tax Gross Up |
22 | ||||||
i
STOCKHOLDERS AGREEMENT
This Stockholders Agreement is entered into as of July 24, 2024 by and among Lineage, Inc., a Maryland corporation (the “Company”), and each of the other parties from time-to-time party hereto (each, an “Investor Party” and, collectively, the “Investor Parties”).
BACKGROUND:
WHEREAS, the Company is currently contemplating an underwritten initial public offering (“IPO”) of shares of its Common Stock (as defined below); and
WHEREAS, in connection with the IPO, the Company and the Investor Parties wish to set forth certain understandings between such parties, including with respect to certain governance matters.
NOW, THEREFORE, the parties agree as follows:
ARTICLE I.
INTRODUCTORY MATTERS
1.1 Defined Terms. In addition to the terms defined elsewhere herein, the following terms have the following meanings when used herein with initial capital letters:
“Affiliates” means, with respect to any 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” means this Stockholders Agreement, as the same may be amended, supplemented, restated or otherwise modified from time to time in accordance with the terms hereof.
“Arbitration Party” has the meaning set forth in Section 6.8(a).
“Beneficially Own” has the meaning set forth in Rule 13d-3 promulgated under the Exchange Act.
“BentallGreenOak” means BGO Cold Storage Holdings II, LP.
“BentallGreenOak Designee” has the meaning set forth in Section 2.1(f).
“BentallGreenOak Entities” means, collectively, (i) BentallGreenOak, (ii) BentallGreenOak’s Affiliates that hold BGLH equity or OP Units and (iii) the entities and accounts managed or advised by BentallGreenOak or its Affiliates that hold BGLH equity or OP Units.
“BGLH” means BG Lineage Holdings, LLC, a Delaware limited liability company.
“BGLH Designee” has the meaning set forth in Section 2.1(f).
“BGLH Entities” means the entities comprising BGLH and its Affiliates.
“Board” means the board of directors of the Company.
“Business Day” means a day other than a Saturday, Sunday, federal or California holiday or other day on which commercial banks in San Francisco are authorized or required by law to close.
“Claim” has the meaning set forth in Section 6.8(b).
“Closing Date” means the date of the initial closing of the IPO.
“Common Stock” means the shares of common stock, par value $0.01 per share, of the Company, and any securities issued in respect thereof, or in substitution therefor, in connection with any stock split, dividend or combination, or any reclassification, recapitalization, merger, consolidation or similar transaction.
“Company” has the meaning set forth in the Preamble.
“Company Group” means, individually and collectively, each of the Company, the OP, LLH or all or substantially all of their Subsidiaries.
“Confidential Information” means any information concerning the Company or its Subsidiaries that is furnished after the date of this Agreement by or on behalf of the Company or its designated representatives to an Investor Party or its designated representatives, together with any notes, analyses, reports, models, compilations, studies, documents, records or extracts thereof containing, based upon or derived from such information, in whole or in part; provided, however, that Confidential Information does not include information:
| (i) | that is or has become publicly available other than as a result of a disclosure by an Investor Party or its designated representatives in violation of this Agreement; |
| (ii) | that was already known to an Investor Party or its designated representatives or was in the possession of an Investor Party or its designated representatives prior to its being furnished by or on behalf of the Company or its designated representatives; |
| (iii) | that is received by an Investor Party or its designated representatives from a source other than the Company or its designated representatives, provided that the source of such information was not actually known by such Investor Party or designated representative to be bound by a confidentiality agreement with, or other contractual obligation of confidentiality to, the Company; |
| (iv) | that was independently developed or acquired by an Investor Party or its designated representatives or on its or their behalf without the violation of the terms of this Agreement; or |
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| (v) | that an Investor Party or its designated representatives is required, in the good faith determination of such Investor Party or designated representative, to disclose by applicable law, regulation or legal process, provided that such Investor Party or designated representative take reasonable steps to minimize the extent of any such required disclosure. |
“Control” (including its correlative meanings, “Controlled by” and “under common Control with”) means possession, directly or indirectly, of the power to direct or cause the direction of management or policies (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise) of a Person.
“Controlled Affiliate” means, with respect to any specified Person, any other Person that directly, or indirectly through one or more intermediaries, is Controlled by such specified Person; provided, however, that, for the purposes of this definition, the Company and its Subsidiaries shall be deemed not Controlled by BGLH, the Forste Group or the Marchetti Group and BGLH shall be deemed not Controlled by the Forste Group or the Marchetti Group.
“Debt Maintenance Obligation” has the meaning set forth in Section 4.1(a).
“Director” means any director of the Company.
“Domestically Controlled Qualified Investment Entity” means a “domestically controlled qualified investment entity” within the meaning of Section 897(h)(4)(B) of the Internal Revenue Code of 1986, as amended.
“D1 Capital” means D1 Master Holdco II LLC or an Affiliate thereof that is designated in writing to the Company by D1 Capital Partners, L.P.
“D1 Entities” means, collectively, (i) D1 Capital, (ii) D1 Capital’s Affiliates that hold BGLH equity or OP Units and (iii) the entities and accounts managed or advised by D1 Capital Partners, L.P. or its Affiliates that hold BGLH equity or OP Units.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder, as the same may be amended from time to time.
“Exit Transaction” means any direct or indirect acquisition of all or substantially of the Company Group by means of merger, consolidation, exchange or contribution of equity, a sale, transfer or lease of all or substantially all of the Company Group’s assets, liquidation or dissolution of all or substantially of the Company Group or other form of entity reclassification, recapitalization or reorganization of the Company Group in one or a series of related transactions with or into another Person (in each case, excluding any entity that is a controlled Affiliate of the Company Group immediately prior to the entry into such merger, consolidation, exchange or contribution of equity, sale, transfer or lease, liquidation or dissolution or other form of entity reclassification, recapitalization or reorganization), in which outstanding equity interests of the Company Group are exchanged for cash, securities or other consideration, unless, immediately following such merger, consolidation, exchange or contribution of equity, or other form of entity reorganization in one or a series of related transactions, the equity holders prior to such merger, consolidation, exchange or contribution of equity, or other form of entity reorganization in one or a series of related transactions own directly or indirectly securities or other equity interests representing at least fifty percent (50%) of the voting power of the surviving Person or its direct or indirect parent holding entity.
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“Forste Designator” means Adam Forste, or at any time during which Adam Forste is not living, is unable to make decisions due to a physical or mental incapacity, or is under conservatorship, such person as has been designated to act in his place in respect of his interests in the Company pursuant to his estate planning vehicles.
“Forste Designee” has the meaning set forth in Section 2.1(f).
“Forste Group” means the Forste Parties, Adam Forste, his estate planning vehicles, family members and heirs, and each of their respective Controlled Affiliates.
“Forste Parties” means Adam Forste and any other entities comprising the Forste Group that may from time to time become parties hereto.
“Forste Threshold” means a number of Outstanding Interests equal to 1.76% of the total Outstanding Interests outstanding on the Closing Date (as adjusted to reflect the effect of any subsequent securities issued in respect thereof, or in substitution therefor, in connection with any stock split, dividend or combination, or into which it may be converted or exchanged pursuant to any reclassification, recapitalization, merger, consolidation, sale of all or any part of its assets, corporate conversion or other extraordinary transaction of the Company or the OP).
“Governmental Authority” means any nation or government, any state or other political subdivision thereof, and any entity exercising executive, legislative, judicial, regulatory, or administrative functions of or pertaining to government.
“Investor Designees” has the meaning set forth in Section 2.1(f).
“Investor Parties” has the meaning set forth in the Preamble.
“IPO” has the meaning set forth in the Background.
“JAMS Rules” has the meaning set forth in Section 6.8(a).
“Law” means any statute, law, regulation, ordinance, rule, injunction, order, decree, governmental approval, directive, requirement, or other governmental restriction or any similar form of decision of, or determination by, or any interpretation or administration of any of the foregoing by, any Governmental Authority.
“Legacy OP Units” means units of partnership interest in the OP that represent rights of legacy investors in the OP and that will be reclassified from time to time into OP Units.
“LLH” means Lineage Logistics Holdings, LLC, a Delaware limited liability company.
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“LLH Operating Agreement” means the Eighth Amended and Restated Operating Agreement of LLH, dated on or about the date hereof, among LLH and the other persons party thereto from time to time, as amended (or otherwise modified) and in effect from time to time.
“Marchetti Designator” means Kevin Marchetti, or at any time during which Kevin Marchetti is not living, is unable to make decisions due to a physical or mental incapacity, or is under conservatorship, such person as has been designated to act in his place in respect of his interests in the Company pursuant to his estate planning vehicles.
“Marchetti Designee” has the meaning set forth in Section 2.1(f).
“Marchetti Group” means the Marchetti Parties, Kevin Marchetti, his estate planning vehicles, family members and heirs, and each of their respective Controlled Affiliates.
“Marchetti Parties” means Kevin Marchetti and any other entities comprising the Marchetti Group that may from time to time become parties hereto.
“Marchetti Threshold” means a number of Outstanding Interests equal to 1.76% of the total Outstanding Interests outstanding on the Closing Date (as adjusted to reflect the effect of any subsequent securities issued in respect thereof, or in substitution therefor, in connection with any stock split, dividend or combination, or into which it may be converted or exchanged pursuant to any reclassification, recapitalization, merger, consolidation, sale of all or any part of its assets, corporate conversion or other extraordinary transaction of the Company or the OP).
“Negotiation Period” has the meaning set forth in Section 4.1(b).
“Non-Recourse Party” has the meaning set forth in Section 6.15.
“OP” means Lineage OP, LP, a Maryland limited partnership.
“OP Agreement” means the Second Amended and Restated Limited Partnership Agreement of the OP, dated on or about the date hereof, among the Company and the other persons party thereto from time to time, as amended (or otherwise modified) and in effect from time to time.
“OP Units” means the common units of partnership interest in the OP.
“OPEU Units” means common units of limited liability company interest of LLH that are intended to be economically equivalent to, and exchangeable into, OP Units.
“Outstanding Interests” means, collectively, without duplication, the outstanding (i) shares of Common Stock, (ii) OP Units held by Persons other than the Company, and (iii) OPEU Units held by Persons other than the OP, in each case with the following modifications:
(1) For purposes of calculating the number of Outstanding Interests held by either of the Forste Group or the Marchetti Group:
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(a) with respect to any shares of Common Stock attributable to either such group by virtue of their direct or indirect equity in BGLH, the number of shares of Common Stock held by either such group shall include the number of shares of Common Stock such group would receive in a total liquidation of BGLH in which all of the Common Stock held by BGLH was distributed in kind to the equity holders of BGLH in full redemption of their BGLH equity, and in turn by such equity holders to their respective indirect equity holders where applicable, in each case including amounts that would be distributed in respect of any profit share payable to any Person upon such redemption;
(b) the number of OP Units held by either such group shall include the number of OP Units such group would receive in a total settlement of all Legacy OP Units, assuming (i) the reclassification of all Legacy OP Units into OP Units in accordance with the terms of the OP Agreement, (ii) each Legacy OP Unit is reclassified into one OP Unit and (iii) the distribution of OP Units in turn by such equity holders to their respective indirect equity holders where applicable, in each case including the amounts that would be reclassified (and, where applicable, distributed) in respect of any profit share payable to any Person upon settlement of the Legacy OP Units and their reclassification into OP Units in accordance with the terms of the OP Agreement; and
(c) the number of OPEU Units held by either such group shall include the number of OPEU Units such group would receive in a distribution of all OPEU Units by their equity holders to their respective indirect equity holders where applicable.
(2) For purposes of calculating the number of Outstanding Interests held by the Stonepeak Entities, with respect to any shares of Common Stock attributable to the Stonepeak Entities by virtue of their equity in BGLH, the number of shares of Common Stock held by the Stonepeak Entities shall include the number of shares of Common Stock the Stonepeak Entities would receive in a total liquidation of BGLH in which all of the Common Stock held by BGLH was distributed in kind to the equity holders of BGLH in full redemption of their BGLH equity, disregarding amounts that would be distributed in respect of any profit share payable to any Person upon such redemption.
(3) For purposes of calculating the number of Outstanding Interests held by the BentallGreenOak Entities, with respect to any shares of Common Stock attributable to the BentallGreenOak Entities by virtue of their equity in BGLH, the number of shares of Common Stock held by the BentallGreenOak Entities shall include the number of shares of Common Stock the BentallGreenOak Entities would receive in a total liquidation of BGLH in which all of the Common Stock held by BGLH was distributed in kind to the equity holders of BGLH in full redemption of their BGLH equity, disregarding amounts that would be distributed in respect of any profit share payable to any Person upon such redemption.
For purposes of this definition, Common Stock, OP Units and OPEU Units shall be treated as having a one-for-one equivalence.
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“Person” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, or other form of business organization, whether or not regarded as a legal entity under applicable Law, or any Governmental Authority or any department, agency or political subdivision thereof.
“Pre-IPO Owners” means the BGLH Entities and any Controlled Affiliate thereof that shall become a holder of any Outstanding Interests.
“Request for Arbitration” has the meaning set forth in Section 6.8(a).
“SEC” means the Securities and Exchange Commission.
“Settlement Transaction” has the meaning set forth in Section 2.1(j).
“Stonepeak” means Stonepeak Aspen Holdings LLC, a Delaware limited liability company.
“Stonepeak Designee” has the meaning set forth in Section 2.1(f).
“Stonepeak Entities” means, collectively, (i) Stonepeak, (ii) Stonepeak’s Affiliates that hold BGLH equity or OP Units and (iii) the entities and accounts managed or advised by Stonepeak Partners LP or its Affiliates that hold BGLH equity or OP Units.
“Subsidiary” means, with respect to any Person, any corporation, limited liability company, partnership, association or other business entity of which: (i) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, representatives or trustees thereof is at the time owned or Controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof; or (ii) if a limited liability company, partnership, association or other business entity, a majority of the total voting power of stock (or equivalent ownership interest) of the limited liability company, partnership, association or other business entity is at the time owned or Controlled, directly or indirectly, by that Person or one or more Subsidiaries of that Person or a combination thereof. For purposes hereof, a Person or Persons shall be deemed to have a majority ownership interest in a limited liability company, partnership, association or other business entity if such Person or Persons shall be allocated a majority of limited liability company, partnership, association or other business entity gains or losses or shall be or Control the managing member, managing director or other governing body or general partner of such limited liability company, partnership, association or other business entity.
“Tax Deferred Structure” has the meaning set forth in Section 4.1(a).
“Total Number of Directors” means the total number of directors comprising the Board.
1.2 Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rule of strict construction will be applied against any party. Unless the context otherwise requires: (a) “or” is disjunctive but not exclusive, (b) words in the singular include the plural, and in the plural include the singular, and (c) the words “hereof”, “herein”, and “hereunder” and words of similar import when used in this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section references are to this Agreement unless otherwise specified.
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ARTICLE II.
CORPORATE GOVERNANCE MATTERS
2.1 Election of Directors.
(a) Following the Closing Date, BGLH shall have the right, but not the obligation, to designate, and the individuals nominated for election as Directors by or at the direction of the Board or a duly-authorized committee thereof shall include, a number of individuals such that, following the election of any Directors and taking into account any Director continuing to serve as such without the need for re-election, the number of BGLH Designees (as defined below) serving as Directors of the Company would be equal (if elected) to: (i) if the Pre-IPO Owners collectively Beneficially Own 50% or more of the total Outstanding Interests as of the close of business on the record date for such meeting, the lowest whole number that is greater than 50% of the Total Number of Directors; (ii) if the Pre-IPO Owners collectively Beneficially Own at least 40% (but less than 50%) of the total Outstanding Interests as of the close of business on the record date for such meeting, the lowest whole number that is greater than 40% of the Total Number of Directors; (iii) if the Pre-IPO Owners collectively Beneficially Own at least 30% (but less than 40%) of the total Outstanding Interests as of the close of business on the record date for such meeting, the lowest whole number that is greater than 30% of the Total Number of Directors; (iv) if the Pre-IPO Owners collectively Beneficially Own at least 20% (but less than 30%) of the total Outstanding Interests as of the close of business on the record date for such meeting, the lowest whole number that is greater than 20% of the Total Number of Directors; and (v) if the Pre-IPO Owners collectively Beneficially Own at least 5% (but less than 20%) of the total Outstanding Interests as of the close of business on the record date for such meeting, the lowest whole number that is greater than 10% of the Total Number of Directors.
(b) Following the date BGLH is no longer entitled to designate at least two Directors pursuant to Section 2.1(a), the Forste Designator shall have the right, but not the obligation, to designate, and the individuals nominated for election as Directors by or at the direction of the Board or a duly-authorized committee thereof shall include, one individual if, as of the close of business on the record date for such meeting, the Forste Group collectively Beneficially Owns a number of Outstanding Interests equal to or greater than the Forste Threshold.
(c) Following the date BGLH is no longer entitled to designate at least two Directors pursuant to Section 2.1(a), the Marchetti Designator shall have the right, but not the obligation, to designate, and the individuals nominated for election as Directors by or at the direction of the Board or a duly-authorized committee thereof shall include, one individual if, as of the close of business on the record date for such meeting, the Marchetti Group collectively Beneficially Owns a number of Outstanding Interests equal to or greater than the Marchetti Threshold.
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(d) Following the Closing Date, Stonepeak shall have the right, but not the obligation, to designate, and the individuals nominated for election as Directors by or at the direction of the Board or a duly-authorized committee thereof shall include, (i) two individuals if, as of the close of business on the record date for such meeting, the number of Outstanding Interests held by the Stonepeak Entities collectively represent 25% or more of the total number of shares of Common Stock outstanding on such date; and (ii) one individual if, as of the close of business on the record date for such meeting, (x) the number of Outstanding Interests held by the Stonepeak Entities collectively represent at least 10% (but less than 25%) of the total number of shares of Common Stock outstanding on such date or (y) the Stonepeak Entities Beneficially Own any BGLH equity. If at any time Stonepeak has the right to designate two individuals for election as Directors under this Agreement and there are less than two Stonepeak Designees serving on the Board, the Stonepeak Designee serving on the Board shall have in the aggregate the power to cast two votes with respect to any matters presented to the Board.
(e) Following the Closing Date, BentallGreenOak shall have the right, but not the obligation, to designate, and the individuals nominated for election as Directors by or at the direction of the Board or a duly-authorized committee thereof shall include, one individual if, as of the close of business on the record date for such meeting, (x) the number of Outstanding Interests held by the BentallGreenOak Entities collectively represent 10% or more of the total Outstanding Interests or (y) the BentallGreenOak Entities Beneficially Own any BGLH equity.
(f) If at any time BGLH, the Forste Designator, the Marchetti Designator, Stonepeak or BentallGreenOak has designated fewer than the total number of individuals that BGLH, the Forste Designator, the Marchetti Designator, Stonepeak or BentallGreenOak, as applicable, is then entitled to designate pursuant to Section 2.1(a), Section 2.1(b), Section 2.1(c), Section 2.1(d) or Section 2.1(e), as applicable, BGLH, the Forste Designator, the Marchetti Designator, Stonepeak or BentallGreenOak, as applicable, shall have the right, at any time and from time to time, to designate such additional individuals which it is entitled to so designate, in which case, any individuals nominated by or at the direction of the Board or any duly-authorized committee thereof for election as Directors to fill any vacancy on the Board shall include such designees, and the Company shall use its best efforts to (x) effect the election of such additional designees, whether by increasing the size of the Board or otherwise, and (y) cause the election of such additional designees to fill any such newly-created vacancies or to fill any other existing vacancies. Each such individual whom BGLH, the Forste Designator, the Marchetti Designator, Stonepeak or BentallGreenOak shall actually designate pursuant to this Section 2.1 and who is thereafter elected and qualifies to serve as a Director shall be referred to herein as a “BGLH Designee,” “Forste Designee,” “Marchetti Designee,” “Stonepeak Designee” and “BentallGreenOak Designee,” as applicable, and, collectively, the “Investor Designees.”
(g) In the event that a vacancy is created at any time by the death, disability, retirement, removal or resignation of any BGLH Designee, Forste Designee, Marchetti Designee, Stonepeak Designee or BentallGreenOak Designee, any individual nominated by or at the direction of the Board or any duly-authorized committee thereof to fill such vacancy shall be, and the Company shall use its best efforts to cause such vacancy to be filled, as soon as possible, by a new designee of BGLH, the Forste Designator, the Marchetti Designator, Stonepeak or BentallGreenOak, as applicable, and the Company shall take or cause to be taken, to the fullest extent permitted by law, at any time and from time to time, all actions necessary to accomplish the same.
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(h) The Company shall, to the fullest extent permitted by law, include in the slate of nominees recommended by the Board at any meeting of stockholders called for the purpose of electing directors (or consent in lieu of meeting), the persons designated pursuant to this Section 2.1 and use its best efforts to cause the election of each such designee to the Board, including nominating each such individual to be elected as a Director as provided herein, recommending such individual’s election and soliciting proxies or consents in favor thereof and otherwise supporting each Investor Designee in a manner no less rigorous and favorable than the manner in which the Company supports any other Director nominee included in the slate of nominees recommended by the Board. In the event that any BGLH Designee, Forste Designee, Marchetti Designee, Stonepeak Designee or BentallGreenOak Designee shall fail to be elected to the Board at any meeting of stockholders called for the purpose of electing directors (or consent in lieu of meeting), each of the Company and BGLH shall use its best efforts to cause such BGLH Designee, Forste Designee, Marchetti Designee, Stonepeak Designee or BentallGreenOak Designee (or a new designee of BGLH, the Forste Designator, the Marchetti Designator, Stonepeak or BentallGreenOak, as applicable), as applicable, to be elected to the Board, as soon as possible, and each of the Company and BGLH shall take or cause to be taken, to the fullest extent permitted by law, at any time and from time to time, all actions necessary to accomplish the same, including, without limitation, actions to effect an increase in the Total Number of Directors (including, in the case of BGLH, by providing any necessary consent pursuant to Section 2.1(i)) and/or filling any vacancy on the Board with such BGLH Designee, Forste Designee, Marchetti Designee, Stonepeak Designee or BentallGreenOak Designee (or a new designee of BGLH, the Forste Designator, the Marchetti Designator, Stonepeak or BentallGreenOak, as applicable), as applicable. For any meeting of stockholders called for the purpose of electing directors (or consent in lieu of meeting), the Board shall not nominate, in the aggregate, a number of nominees greater than the number of members of the Board.
(i) In addition to any vote or consent of the Board or the stockholders of the Company required by applicable Law or the charter or bylaws of the Company, and notwithstanding anything to the contrary in this Agreement, for so long as BGLH is entitled to designate a Director pursuant to Section 2.1(a), any action by the Board to increase or decrease the Total Number of Directors (other than any increase in the Total Number of Directors in connection with the election of one or more directors elected exclusively by the holders of one or more classes or series of the Company’s stock other than Common Stock or pursuant to Section 2.1(h)) shall require the prior written consent of BGLH, delivered in accordance with Section 6.2 of this Agreement.
(j) The Company shall present to the Board for approval any proposed Settlement Transaction between the Company and any of BGLH, the Forste Designator, the Marchetti Designator, any Stonepeak Entity or any BentallGreenOak Entity, for so long as any director nominated by BGLH, the Forste Designator, the Marchetti Designator, Stonepeak or BentallGreenOak (respectively) is serving on the Board, for purposes of exempting such Settlement Transaction under Rule 16b-3 of the Exchange Act to the extent applicable and permitted under Rule 16b-3 of the Exchange Act. For purposes of this Section 2.1(j), “Settlement Transaction” means a transaction pursuant to which the Company or the OP intend to acquire shares of common stock or OP Units held by such entities or persons to provide liquidity in connection with the settlement process coordinated directly or indirectly by BGLH.
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2.2 Compensation. Except to the extent BGLH, the Forste Designator, the Marchetti Designator, Stonepeak or BentallGreenOak, as applicable, may otherwise notify the Company, the applicable Investor Designees shall be entitled to compensation consistent with the compensation received by other non-employee Directors, including any fees and equity awards, provided that (x) to the extent any Director compensation is payable in the form of equity awards, at the election of an Investor Designee, in lieu of any equity award, such compensation shall be paid in an amount of cash equal to the value of the equity award as of the date of the award, with any such cash subject to the same vesting terms, if any, as the equity awarded to other Directors and (y) at the election of an Investor Designee, any Director compensation (whether cash or equity awards) shall be paid to an Investor Party or an Affiliate thereof specified by such Investor Designee rather than to such Investor Designee, provided that any such election with respect to equity awards shall be paid to the Investor Party or such Affiliate in the form of cash in lieu of equity. If the Company adopts a policy that Directors own a minimum amount of equity in the Company, Investor Designees shall not be subject to such policy.
2.3 Other Rights of Investor Designees. Except as provided in Section 2.2, each Investor Designee serving on the Board shall be entitled to the same rights and privileges applicable to all other members of the Board generally or to which all such members of the Board are entitled. In furtherance of the foregoing, the Company shall indemnify, exculpate, and reimburse fees and expenses of the Investor Designees (including by entering into an indemnification agreement in a form substantially similar to the Company’s form director indemnification agreement) and provide the Investor Designees with director and officer insurance to the same extent it indemnifies, exculpates, reimburses and provides insurance for the other members of the Board pursuant to the charter and bylaws of the Company, applicable law or otherwise.
2.4 Restrictions on BGLH. BGLH agrees that prior to the termination of this Agreement with respect to the rights and obligations of the Stonepeak Entities or the BentallGreenOak Entities pursuant to Section 2.1, without the prior consent of Stonepeak or BentallGreenOak, respectively, BGLH agrees it will not at any time, nor will it cause or permit any BGLH Entity to, directly or indirectly:
(a) (i) make, or in any way participate in, any “solicitation” of “proxies” (as such terms are used in the proxy rules of the SEC promulgated pursuant to Section 14 of the Exchange Act) to vote any securities of the Company for the election of nominees to the Board other than the Company’s nominees (if the Company’s nominees include the Investor Designees) and the Investor Designees, or deposit any securities of the Company in a voting trust or subject them to a voting agreement, pooling agreement or other agreement of similar effect (other than solely between or among the BGLH Entities or any of their Controlled Affiliates), (ii) seek to advise or influence any Person with respect to the voting of any securities of the Company for the election of a nominee to the Board other than the Company’s nominees (if the Company’s nominees include the Investor Designees) and the Investor Designees, or (iii) grant any proxy with respect to any Common Stock (other than to the Company or a Person specified by the Company in a proxy card provided to stockholders of the Company by or on behalf of the Company) or other equity securities of the Company; or
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(b) take (or omit to take) any action that runs contrary to the purposes of this Agreement solely with respect to the rights of the Stonepeak Entities and the BentallGreenOak Entities to designate their respective Investor Designees or the election or other appointment of the Stonepeak Designees and the BentallGreenOak Designee to the Board;
provided, that the restrictions set forth in this Section 2.4 shall not be deemed to restrict any actions taken by any BGLH Designee serving on the Board solely in his or her capacity as a director or any non-public, internal actions taken by any BGLH Entity to prepare any BGLH Designee to act in such capacity.
2.5 Restrictions on BentallGreenOak Designee. The parties to this Agreement agree that any BentallGreenOak Designee elected or appointed to the Board shall not be appointed or serve as (i) the chairperson of the Board or (ii) the chairperson of any committee of the Board or any subcommittee thereof.
ARTICLE III.
INFORMATION; CONFIDENTIALITY
3.1 Books and Records; Access. The Company shall, and shall cause its Subsidiaries to, permit the Investor Parties, other than the D1 Entities, and their respective designated representatives, at reasonable times and upon reasonable prior notice to the Company, to review the books and records of the Company or any of such Subsidiaries and to discuss the affairs, finances and condition of the Company or any of such Subsidiaries with the officers of the Company or any such Subsidiary; provided, however, that the Company shall not be required to disclose any privileged information of the Company so long as the Company has used commercially reasonable efforts to enter into an arrangement pursuant to which it may provide such information to the Investor Entities without the loss of any such privilege.
3.2 Certain Reports. The Company shall deliver or cause to be delivered to the Investor Parties, other than the D1 Entities, at their request:
(a) to the extent otherwise prepared by the Company, operating and capital expenditure budgets and periodic information packages relating to the operations and cash flows of the Company and its Subsidiaries; and
(b) to the extent otherwise prepared by the Company, such other reports and information as may be reasonably requested by the Investor Parties; provided, however, that the Company shall not be required to disclose any privileged information of the Company so long as the Company has used commercially reasonable efforts to enter into an arrangement pursuant to which it may provide such information to the Investor Parties without the loss of any such privilege.
3.3 Confidentiality. Each Investor Party agrees that it will, and will direct its designated representatives to, keep confidential and not disclose any Confidential Information; provided, however, that such Investor Party and its designated representatives may disclose Confidential Information to the other Investor Parties other than the D1 Entities, to the Investor Designees and to (a) its attorneys, accountants, consultants, insurers and other advisors in connection with such Investor Party’s investment in the Company, (b) any Person, including a
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prospective purchaser of Common Stock, as long as such Person has agreed to maintain the confidentiality of such Confidential Information, (c) any of such Investor Party’s or its respective Affiliates’ partners, members, stockholders, directors, officers, employees or agents in the ordinary course of business (the Persons referenced in clauses (a), (b) and (c), an Investor Party’s “designated representatives”) or (d) as the Company may otherwise consent in writing; provided, further, however, that each Investor Party agrees to be responsible for any breaches of this Section 3.3 by such Investor Party’s designated representatives.
3.4 Information Sharing. Each party hereto acknowledges and agrees that Investor Designees may share any information concerning the Company and its Subsidiaries received by them from or on behalf of the Company or its designated representatives with each Investor Party and its designated representatives (subject to such Investor Party’s obligation to maintain the confidentiality of Confidential Information in accordance with Section 3.3).
ARTICLE IV.
CERTAIN TAX PROTECTIONS
4.1 Tax Protection.
(a) The Company, on its own behalf and in its capacity as the general partner of the OP, and on behalf of each of its Subsidiaries (including LLH) shall use, and shall cause each of its Subsidiaries (including the OP and LLH) to use, commercially reasonable efforts to (i) structure any Exit Transaction in a manner that is tax-deferred to the Forste Parties and the Marchetti Parties, does not cause such parties to recognize gain for federal income tax purposes, and provides for substantially similar tax protections after the Exit Transaction as contained in this Article IV (herein, a “Tax Deferred Structure”), and (ii) cause the OP or its Subsidiaries to continuously maintain sufficient levels of indebtedness that are allocable for federal income tax purposes to the Forste Parties and the Marchetti Parties to prevent such parties from recognizing taxable income or gain as a result of any “negative tax capital account” or insufficient debt allocation to such parties; provided that such amount of indebtedness shall not be required to exceed the amount of indebtedness allocable to the Forste Parties and the Marchetti Parties (in the aggregate) immediately following the contribution of the net proceeds of and the transactions related to the IPO (the “Debt Maintenance Obligation”); provided, however, that the Debt Maintenance Obligation shall not be deemed to have been violated to the extent that such obligation is not satisfied as a result of (a) any change in law, rule, or regulation (including any notice, ruling or other guidance of the U.S. Internal Revenue Service, or any court decision) after the date of this Agreement, provided, however, that the Company will work together in good faith with the Forste Parties and Marchetti Parties to satisfy the Debt Maintenance Obligation to the extent possible under applicable law, or (b) the failure of any guarantee set forth in Section 4.1(c) to be effective (or to the extent such guarantee is ineffective) in allocating indebtedness to the Forste Parties and/or the Marchetti Parties, as applicable. In addition, if as a result of a condemnations, casualties or foreclosures of any property owned by any member of the Company Group, the Company Group has insufficient indebtedness to satisfy the Debt Maintenance Obligation (taking into account all indebtedness of the Company Group), nothing contained herein shall require the Company Group to incur other indebtedness solely to satisfy the Debt Maintenance Obligation.
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(b) Prior to entering into any definitive agreements to consummate an Exit Transaction, the Company shall notify the Forste Parties and the Marchetti Parties thereof in writing, which notice shall set forth the material terms of such proposed Exit Transaction, and if requested by either the Forste Parties or the Marchetti Parties, or both, the Company, the OP and its Subsidiaries (including LLH) and any counterparty(ies) to such proposed Exit Transaction, on the one hand, and the Forste Parties or the Marchetti Parties, or both, as applicable, on the other hand, shall thereafter and prior to entering into any such definitive agreements, negotiate in good faith for a Tax Deferred Structure for such proposed Exit Transaction that is reasonably acceptable to each of the Forste Parties and the Marchetti Parties; provided, however, that to the extent the Exit Transaction involves the taxable sale of all of the Company’s assets, the Company shall not be required to accept the terms of a Tax Deferred Structure proposed by the Forste Parties or the Marchetti Parties in such Exit Transaction with respect to their stock in the Company (but not their interests in the OP or its Subsidiaries) to the extent the terms of the proposed Tax Deferred Structure would have a material adverse impact on the economics that the Company’s stockholders (other than the Forste Parties and the Marchetti Parties) would receive absent such Tax Deferred Structure. Notwithstanding the forgoing, if the parties are unable come to a resolution after forty-five (45) days of good faith negotiation (the “Negotiation Period”) following the provision of written notice pursuant to the first sentence of this Section 4.1(b), the Forste Parties and the Marchetti Parties shall defer to the Company’s recommended Tax Deferred Structure for any such proposed Exit Transaction, and none of the Company, the OP or its Subsidiaries (including LLH) shall have any further liability under Section 4.1(c)(i); provided, however, that if the terms of such proposed Exit Transaction are changed, modified or supplemented in any material respect that affects the tax structure or tax treatment of the Forste Parties or the Marchetti Parties following the provision of written notice pursuant to the first sentence of this Section 4.1(b), the Company shall notify the Forste Parties and the Marchetti Parties thereof in writing, which notice shall set forth the material terms of such change, modification or supplement and the Negotiation Period shall be extended by an additional thirty (30) days from the date of such notice. Notwithstanding anything to the contrary set forth herein, (i) to the extent the Company otherwise satisfies the requirements of Section 4.1(a) and 4.1(b), (ii) the Forste Parties or the Marchetti Parties, as applicable, are offered a Tax Deferred Structure in an Exit Transaction, and (iii) the Forste Parties or the Marchetti Parties, as the case may be, do not elect to participate in such offered Tax Deferred Structure, the Company shall be deemed to have satisfied its obligations in Section 4.1(a)(i) and this Section 4.1(b) with respect to the applicable parties that did not elect to participate in such offered Tax Deferred Structure.
(c) In connection with the Debt Maintenance Obligation, to the extent the Company or the OP believes that under applicable federal income tax rules an insufficient amount of indebtedness may be allocated to the Forste Parties or the Marchetti Parties to avoid the recognition of income or gain absent a guarantee of such indebtedness by such party, the Company shall, and shall cause the OP and its Subsidiaries to, provide (i) written notice thereof, which notice shall be provided not less than forty-five (45) days of the date that the Company or the OP believes that the amount of such indebtedness shall become insufficient, and (ii) each of the Forste Parties and the Marchetti Parties with the opportunity to execute a guaranty of one or more indebtedness of the OP or its Subsidiaries within such forty-five (45) day period in the form (based on the good faith advice of counsel to the Forste Parties and/or the Marchetti Parties (as applicable) and the relevant U.S. federal income tax law, including applicable Treasury Regulations) and in an amount reasonably necessary to cause each of the Forste Parties and the
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Marchetti Parties, as applicable, to be allocated indebtedness under applicable U.S. federal income tax law at least equal to the Debt Maintenance Obligation. Any indebtedness offered for guarantee must be indebtedness with respect to which the lender permits a guaranty, must be secured by real property or other assets owned directly or indirectly by the OP and must be otherwise reasonably acceptable to each of the Forste Parties and the Marchetti Parties. For the avoidance of doubt, the Company and the OP (including their Subsidiaries) will be deemed to have satisfied the Debt Maintenance Obligation with respect to the Forste Parties or the Marchetti Parties to the extent that they comply with this Section 4.1(c), notwithstanding that the Forste Parties or the Marchetti Parties, as applicable, elect to not enter into the guarantees described herein.
(d) Notwithstanding anything to the contrary, the rights granted to the Forste Parties and the Marchetti Parties under this Article IV shall survive (i) with respect to the Forste Parties until such time as (A) the Forste Parties have disposed of (to Persons other than other Forste Parties) more than sixty percent (60%) of their aggregate direct and indirect equity interests in the Company and its Subsidiaries held as of the date hereof (calculated now and in the future assuming all profits interests are settled in the number of shares, units or other equity interests of the applicable entity the Forste Parties would be entitled to upon a liquidation of the Company and its Subsidiaries as of the applicable date of determination at the then current fair market value of the Company and its Subsidiaries as of such date), or (B) the Forste Parties obtain a fair market value adjusted tax basis in their direct and indirect equity interests in the Company and its Subsidiaries as a result of the death of Adam Forste, and (ii) with respect to the Marchetti Parties until such time as (A) the Marchetti Parties have disposed of (to Persons other than other Marchetti Parties) more than sixty percent (60%) of their aggregate direct and indirect equity interests in the Company and its Subsidiaries held as of the date hereof (calculated now and in the future assuming all profits interests are settled in the number of shares, units or other equity interests of the applicable entity the Marchetti Parties would be entitled to upon a liquidation of the Company and its Subsidiaries as of the applicable date of determination at the then current fair market value of the Company and its Subsidiaries as of such date), or (B) the Marchetti Parties obtain a fair market value adjusted tax basis in their direct and indirect equity interests in the Company and its Subsidiaries as a result of the death of Kevin Marchetti.
ARTICLE V.
CONSENT RIGHT
5.1 Domestically Controlled Status. The taking of any action with the purpose of, or that would have the effect of, discontinuing the qualification of the Company as a Domestically Controlled Qualified Investment Entity during the period ending on the third anniversary of the Closing Date shall require the consent of each of Stonepeak, D1 Capital and BentallGreenOak; provided that the consent of Stonepeak, D1 Capital or BentallGreenOak, as applicable, shall only be required during such time that the Stonepeak Entities, the D1 Entities or the BentallGreenOak Entities, as applicable, are entitled to receive shares of Common Stock upon a distribution in kind to the owners of BGLH in redemption of the their BGLH equity.
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ARTICLE VI.
GENERAL PROVISIONS
6.1 Termination. This Agreement shall terminate with respect to the rights and obligations of the BGLH Entities hereunder on the earlier to occur of (i) such time as BGLH is no longer entitled to designate a Director pursuant to Section 2.1(a) and (ii) the delivery of a written notice by BGLH to the Company requesting that this Agreement terminate with respect to its rights and obligations hereunder. Subject to Article IV (which shall survive in accordance with its terms), this Agreement shall terminate with respect to the rights and obligations of the Forste Group hereunder on the earlier to occur of (i) such time as the Forste Designator is no longer entitled to designate a Director pursuant to Section 2.1(b) and (ii) the delivery of a written notice by the Forste Designator to the Company requesting that this Agreement terminate with respect to its rights and obligations hereunder. Subject to Article IV (which shall survive in accordance with its terms), this Agreement shall terminate with respect to the rights and obligations of the Marchetti Group hereunder on the earlier to occur of (i) such time as the Marchetti Designator is no longer entitled to designate a Director pursuant to Section 2.1(c) and (ii) the delivery of a written notice by the Marchetti Designator to the Company requesting that this Agreement terminate with respect to its rights and obligations hereunder. This Agreement shall terminate with respect to the rights and obligations of the Stonepeak Entities hereunder on the earlier to occur of (i) such time as Stonepeak is no longer entitled to designate a Director pursuant to Section 2.1(d) and (ii) the delivery of a written notice by Stonepeak to the Company requesting that this Agreement terminate with respect to its rights and obligations hereunder. This Agreement shall terminate with respect to the rights and obligations of the D1 Entities hereunder on the earlier to occur of (i) such time as the D1 Entities cease to Beneficially Own any BGLH equity and (ii) the delivery of a written notice by D1 Capital to the Company requesting that this Agreement terminate with respect to its rights and obligations hereunder. This Agreement shall terminate with respect to the rights and obligations of the BentallGreenOak Entities hereunder on the earlier to occur of (i) such time as BentallGreenOak is no longer entitled to designate a Director pursuant to Section 2.1(e) and (ii) the delivery of a written notice by BentallGreenOak to the Company requesting that this Agreement terminate with respect to its rights and obligations hereunder.
6.2 Notices. Any notice, designation, request, request for consent or consent provided for in this Agreement shall be in writing and shall be either personally delivered, sent by e-mail or other electronic communication or sent by reputable overnight courier service (charges prepaid) to the Company at the address set forth below and to any other recipient at the address indicated on the Company’s records, or at such address or to the attention of such other Person as the recipient party has specified by prior written notice to the sending party. Notices and other such documents will be deemed to have been given or made hereunder when delivered personally, sent by e-mail or other electronic communication (receipt confirmed), and one (1) Business Day after deposit with a reputable overnight courier service.
If to the Company:
Lineage, Inc.
46500 Humboldt Drive
Novi, Michigan 48377
Attention: Legal Department
E-mail: legalnotice@onelineage.com
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with a copy (which shall not constitute notice) to:
Latham & Watkins LLP
355 South Grand Avenue
Los Angeles, California 90071
Attention: Julian Kleindorfer; Lewis Kneib
E-mail: julian.kleindorfer@lw.com; lewis.kneib@lw.com
If to the BGLH Entities:
Bay Grove Capital Group, LLC
801 Montgomery Street, Floor 5
San Francisco, California 94133
Attention: Legal Department
E-mail: notices@bay-grove.com
with a copy (which shall not constitute notice) to:
Latham & Watkins LLP
12670 High Bluff Drive
San Diego, California 92130
Attention: Nadia Sager; Amber Franklin; Lexi Santa Ana
E-mail: nadia.sager@lw.com; amber.franklin@lw.com; lexi.santaana@lw.com
If to the Forste Group:
Bay Grove Capital Group, LLC
801 Montgomery Street, Floor 5
San Francisco, California 94133
Attention: Adam Forste
E-mail: notices@bay-grove.com; adam@bay-grove.com
with a copy (which shall not constitute notice) to:
Latham & Watkins LLP
12670 High Bluff Drive
San Diego, California 92130
Attention: Nadia Sager; Amber Franklin; Lexi Santa Ana
E-mail: nadia.sager@lw.com; amber.franklin@lw.com; lexi.santaana@lw.com
If to the Marchetti Group:
Bay Grove Capital Group, LLC
801 Montgomery Street, Floor 5
San Francisco, California 94133
Attention: Kevin Marchetti
E-mail: notices@bay-grove.com; kevin@bay-grove.com
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with a copy (which shall not constitute notice) to:
Latham & Watkins LLP
12670 High Bluff Drive
San Diego, California 92130
Attention: Nadia Sager; Amber Franklin; Lexi Santa Ana
E-mail: nadia.sager@lw.com; amber.franklin@lw.com; lexi.santaana@lw.com
If to the Stonepeak Entities:
Stonepeak Aspen Holdings I-V LLC
55 Hudson Yards
550 W. 34th St. 48th Fl
New York, NY 10001
Attention: Stonepeak
E-mail: wyper@stonepeak.com; legalandcompliance@stonepeak.com
with a copy (which shall not constitute notice) to:
Sidley Austin LLP
2021 McKinney Ave #2000
Dallas, TX 75201
Attention: Ryan M. Scofield; George Vlahakos
E-mail: rscofield@sidley.com; gvlahakos@sidley.com
If to the D1 Entities:
D1 Capital Partners LP
9 West 57th Street, 36th Floor
New York, New York 10019
Attention: General Counsel
E-mail: legalnotices@d1capital.com
with a copy (which shall not constitute notice) to:
Paul, Weiss, Rifkind, Wharton & Garrison LLP
1285 Avenue of the Americas
New York, NY 10019-6064
Attention: Raphael M. Russo; Edward T. Ackerman
E-mail: rrusso@paulweiss.com; eackerman@paulweiss.com
If to the BentallGreenOak Entities:
BGO Cold Storage Holdings II, LP
399 Park Avenue, 18th Floor
New York, New York 10022
Attention: Matt Cervino
E-mail: matthew.cervino@bgo.com
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with a copy (which shall not constitute notice) to:
Fried, Frank, Harris, Shriver & Jacobson LLP
One New York Plaza
New York, New York 10004
Attention: Mark Hayek; Andrew Colosimo
E-mail: mark.hayek@friedfrank.com; andrew.colosimo@friedfrank.com
6.3 Amendment; Waiver. This Agreement may be amended, supplemented, or otherwise modified only by a written instrument executed by the Company and the other parties hereto. Neither the failure nor delay on the part of any party hereto to exercise any right, remedy, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege preclude any other or further exercise of the same or of any other right, remedy, power or privilege, nor shall any waiver of any right, remedy, power or privilege with respect to any occurrence be construed as a waiver of such right, remedy, power or privilege with respect to any other occurrence. No waiver shall be effective unless it is in writing and is signed by the party asserted to have granted such waiver.
6.4 Further Assurances. The parties hereto will sign such further documents, cause such meetings to be held, resolutions passed, exercise their votes and do and perform and cause to be done such further acts and things necessary, proper or advisable in order to give full effect to this Agreement and every provision hereof. To the fullest extent permitted by law, the Company shall not directly or indirectly take any action that is intended to, or would reasonably be expected to result in, any Investor Party being deprived of the rights contemplated by this Agreement.
6.5 Assignment. This Agreement may not be assigned without the express prior written consent of the other parties hereto, and any attempted assignment, without such consents, will be null and void; provided, however, that, without the prior written consent of any other party hereto, an Investor Party may assign its rights and obligations under this Agreement, in whole or in part, to any Affiliate, so long as such Affiliate, if not already a party to this Agreement, executes and delivers to the Company a joinder to this Agreement evidencing its agreement to be become a party to and to be bound by this Agreement as an Investor Party hereunder, whereupon such Affiliate shall be deemed an “Investor Party” hereunder. This Agreement will inure to the benefit of and be binding on the parties hereto and their respective successors and permitted assigns.
6.6 Third Parties. Except as provided for in Article II, Article III, Article IV, Article V and Article VI with respect to any Investor Party and its Affiliates and their respective successors and permitted assigns, this Agreement does not create any rights, claims or benefits inuring to any person that is not a party hereto nor create or establish any third-party beneficiary hereto.
6.7 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Maryland, without regard to principles of conflicts of laws thereof.
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6.8 Disputes.
(a) Except as otherwise specifically provided in this Agreement, any and all disputes, controversies or claims arising out of, relating to or in connection with this Agreement, including, without limitation, any dispute regarding its arbitrability, validity or termination, or the performance or breach thereof, shall be exclusively and finally settled by arbitration in Baltimore, Maryland administered by JAMS pursuant to its Comprehensive Arbitration Rules and Procedures (the “JAMS Rules”), unless otherwise specifically modified by the terms of this Agreement. Any party to this Agreement may initiate arbitration by notice (a “Request for Arbitration”) to any other party (each party, an “Arbitration Party”). The place of the arbitration shall be Baltimore, Maryland. The arbitration shall be conducted by a single arbitrator jointly chosen by the Arbitration Parties. To the extent that the Arbitration Parties fail to agree to an arbitrator within fifteen (15) days after delivery of the Request for Arbitration, the arbitrator shall be chosen using Rule 15 of the JAMS Rules. Any individual will be qualified to serve as an arbitrator if he or she shall be an individual who (i) has no personal relationship with any of the parties to this Agreement, (ii) has no direct business relationship with any of the parties to this Agreement, (iii) has no material indirect business relationship with any of the parties to this Agreement and (iv) who has at least twenty (20) years of experience in the practice of law with significant experience in each of corporate law, securities law, capital markets and corporate finance matters.
(b) The arbitrator will apply the substantive law (and the law of remedies, if applicable) of the State of Maryland without reference to its internal conflicts of laws principles, and will be without power to apply any different substantive law. The arbitrator will render an award and a written opinion in support thereof. Such award shall include the costs related to the arbitration and reasonable attorneys’ fees and expenses to the prevailing party. The arbitrator also has the authority to grant provisional remedies, including injunctive relief, and to award specific performance. The arbitrator may entertain a motion to dismiss and/or a motion for summary judgment by any party, applying the standards governing such motions under the Federal Rules of Civil Procedure, and may rule upon any claim or counterclaim, or any portion thereof (a “Claim”), without holding an evidentiary hearing, if, after affording the parties an opportunity to present written submission and documentary evidence, the arbitrator concludes that there is no material issue of fact and that the Claim may be determined as a matter of law. The parties waive, to the fullest extent permitted by law, any rights to appeal, or to review of, any arbitrator’s award by any court. The arbitrator’s award shall be final and binding, and judgment on the award may be entered in any court of competent jurisdiction, including the courts of Maryland. Notwithstanding the foregoing, any party to this Agreement may seek injunctive relief, specific performance, or other equitable remedies from a court of competent jurisdiction without first pursuing resolution of the dispute as provided above. Each party to this Agreement irrevocably submits to the non-exclusive jurisdiction and venue in the courts of the State of Maryland and of the United States sitting in Maryland in connection with any such proceeding and any proceeding to enforce, confirm, or vacate any arbitration award, and waives any objection based on forum non conveniens. In any such judicial proceeding, the parties agree
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that in addition to any method for the service of process permitted or required by such courts, to the fullest extent permitted by law, service of process may be made by delivery provided pursuant to the directions in Section 6.2. EACH PARTY TO THIS AGREEMENT IRREVOCABLY WAIVES SUCH PARTY’S RIGHT TO A TRIAL BY JURY IN CONNECTION WITH ANY ACTION TO ENFORCE AN ARBITRATOR’S DECISION OR AWARD PURSUANT TO SECTION 6.8(a) OF THIS AGREEMENT.
(c) The Arbitration Parties agree to maintain confidentiality as to all aspects of the arbitration, except as may be required by applicable law, regulations or court order, or to maintain or satisfy any suitability requirements for any license by any state, federal or other regulatory authority or body, including professional societies and organizations; provided, however, that nothing herein shall prevent a party from disclosing information regarding the arbitration for purposes of enforcing or vacating the award. In any court filings to enforce, confirm, or vacate the award, however, the Arbitration Party seeking to use any confidential information from the arbitration shall take all necessary steps to file or lodge such material under seal and provide the other Arbitration Party an opportunity to seal any such information. The Arbitration Parties further agree to obtain the arbitrator’s agreement to preserve the confidentiality of the arbitration.
6.9 Specific Performance. Each party hereto acknowledges and agrees that in the event of any breach of this Agreement by any of them, the other parties hereto would be irreparably harmed and could not be made whole by monetary damages. Each party accordingly agrees to waive the defense in any action for specific performance that a remedy at law would be adequate and agrees that the parties, in addition to any other remedy to which they may be entitled at law or in equity, shall be entitled to specific performance of this Agreement without the posting of bond.
6.10 Entire Agreement. This Agreement, together with the charter and bylaws of the Company, sets forth the entire understanding of the parties hereto with respect to the subject matter hereof. There are no agreements, representations, warranties, covenants or understandings with respect to the subject matter hereof or thereof other than those expressly set forth herein and therein. This Agreement supersedes all other prior agreements and understandings between the parties with respect to such subject matter.
6.11 Severability. If any provision of this Agreement, or the application of such provision to any Person or circumstance or in any jurisdiction, shall be held to be invalid or unenforceable to any extent, (i) the remainder of this Agreement shall not be affected thereby, and each other provision hereof shall be valid and enforceable to the fullest extent permitted by law, (ii) as to such Person or circumstance or in such jurisdiction such provision shall be reformed to be valid and enforceable to the fullest extent permitted by law and (iii) the application of such provision to other Persons or circumstances or in other jurisdictions shall not be affected thereby.
6.12 Table of Contents, Headings and Captions. The table of contents, headings, subheadings and captions contained in this Agreement are included for convenience of reference only, and in no way define, limit or describe the scope of this Agreement or the intent of any provision hereof.
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6.13 Counterparts. This Agreement and any amendment hereto may be signed in any number of separate counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one Agreement (or amendment, as applicable).
6.14 Effectiveness. This Agreement shall become effective upon the Closing Date.
6.15 No Recourse. This Agreement may only be enforced against, and any claims or cause of action that may be based upon, arise out of or relate to this Agreement, or the negotiation, execution or performance of this Agreement, the transactions contemplated hereby or the subject matter hereof may only be made against the parties hereto and no past, present or future Affiliate, director, officer, employee, incorporator, member, manager, partner, stockholder, agent, attorney or representative of any party hereto or any past, present or future Affiliate, director, officer, employee, incorporator, member, manager, partner, stockholder, agent, attorney or representative of any of the foregoing (each, a “Non-Recourse Party”) shall have any liability for any obligations or liabilities of the parties to this Agreement or for any claim based on, in respect of, or by reason of, the transactions contemplated hereby. Without limiting the rights of any party against the other parties hereto, in no event shall any party or any of its Affiliates seek to enforce this Agreement against, make any claims for breach of this Agreement against, or seek to recover monetary damages from, any Non-Recourse Party.
6.16 Tax Gross Up. Any damages, costs or expenses payable by the Company Group pursuant to this Agreement, other than with respect to Article IV, shall not include any U.S. federal, state, local or other income or other taxes paid or payable by the recipient of amounts paid or payable by the Company Group to such recipient pursuant to this Agreement
[Remainder Of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first above written.
| LINEAGE, INC. | ||
| By: | /s/ Adam Forste | |
| Name: | Adam Forste | |
| Its: | Co-Executive Chairman | |
| BG LINEAGE HOLDINGS, LLC | ||
| By: Bay Grove Management Company, LLC Its: Manager | ||
| By: | /s/ Adam Forste | |
| Name: | Adam Forste | |
| Its: | Authorized Person | |
| ADAM FORSTE |
| /s/ Adam Forste |
| KEVIN MARCHETTI |
| /s/ Kevin Marchetti |
[Signatures continue on the following page]
[Signature page to Stockholders Agreement]
| STONEPEAK | ||
| Stonepeak Aspen Holdings LLC | ||
| By: | /s/ James Wyper | |
| Name: | James Wyper | |
| Its: | Senior Managing Director | |
[Signatures continue on the following page]
[Signature page to Stockholders Agreement]
| D1 CAPITAL | ||
| D1 Master Holdco II LLC | ||
| By: | /s/ Amanda Hector | |
| Name: | Amanda Hector | |
| Its: | General Counsel / CCO | |
[Signatures continue on the following page]
[Signature page to Stockholders Agreement]
| BENTALLGREENOAK | ||
| BGO Cold Storage Holdings II, LP
By: BentallGreenOak US GP III, LP, its | ||
| general partner | ||
| By: | /s/ Christopher Neihaus | |
| Name: | Christopher Niehaus | |
| Its: | Authorized Person | |
[Signature page to Stockholders Agreement]
Exhibit 10.6
REGISTRATION RIGHTS AGREEMENT
by and among
LINEAGE, INC.
and
the other parties hereto
Dated as of July 24, 2024
TABLE OF CONTENTS
| Page | ||||||
| ARTICLE I DEFINITIONS | 1 | |||||
| Section 1.1 |
Certain Definitions | 1 | ||||
| Section 1.2 |
Other Definitional Provisions; Interpretation | 6 | ||||
| ARTICLE II REGISTRATION RIGHTS |
6 | |||||
| Section 2.1 |
Piggyback Rights | 6 | ||||
| Section 2.2 |
Demand Registration | 9 | ||||
| Section 2.3 |
Registration Procedures | 11 | ||||
| Section 2.4 |
Other Registration-Related Matters | 15 | ||||
| ARTICLE III INDEMNIFICATION |
18 | |||||
| Section 3.1 |
Indemnification by the Company | 18 | ||||
| Section 3.2 |
Indemnification by the Holders and Underwriters | 19 | ||||
| Section 3.3 |
Notices of Claims, Etc. | 20 | ||||
| Section 3.4 |
Contribution | 21 | ||||
| Section 3.5 |
Other Indemnification | 21 | ||||
| Section 3.6 |
Non-Exclusivity | 21 | ||||
| ARTICLE IV OTHER |
22 | |||||
| Section 4.1 |
Notices | 22 | ||||
| Section 4.2 |
Assignment | 22 | ||||
| Section 4.3 |
Amendments; Waiver | 23 | ||||
| Section 4.4 |
Third Parties | 23 | ||||
| Section 4.5 |
Governing Law | 23 | ||||
| Section 4.6 |
CONSENT TO JURISDICTION | 23 | ||||
| Section 4.7 |
MUTUAL WAIVER OF JURY TRIAL | 24 | ||||
| Section 4.8 |
Specific Performance | 24 | ||||
| Section 4.9 |
Entire Agreement | 24 | ||||
| Section 4.10 |
Severability | 24 | ||||
| Section 4.11 |
Counterparts | 24 | ||||
| Section 4.12 |
Effectiveness | 24 | ||||
| Section 4.13 |
No Recourse | 24 | ||||
| Section 4.14 |
Independent Nature of the Rights and Obligations of Holders | 25 | ||||
| Section 4.15 |
Termination as to a Holder | 25 | ||||
i
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the “Agreement”) is dated as of July 24, 2024 and is by and among Lineage, Inc. (the “Company”), and the Holders (as defined below) from time to time party hereto.
RECITALS
WHEREAS, the Company is effecting an underwritten initial public offering (“IPO”) of shares of its Common Stock (as defined below); and
WHEREAS, the Company desires to grant registration rights to the Holders on the terms and conditions set out in this Agreement.
NOW, THEREFORE, the parties agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Certain Definitions. As used in this Agreement:
“Advice” has the meaning set forth in Section 2.4(b).
“Affiliate” has the meaning ascribed thereto in Rule 12b-2 promulgated under the Exchange Act, as in effect on the date hereof.
“Agreement” has the meaning set forth in the preamble.
“ATM Program” means any offer and sale from time to time of the Common Stock through one or more broker-dealers acting as the Company’s sales agent or agents or, if applicable, as forward seller or sellers (herein collectively referred to as “sales agents”) in negotiated transactions, including block trades, or transactions that are deemed to be “at the market” offerings as defined in Rule 415 under the Securities Act by means of ordinary brokers’ transactions at market prices prevailing at the time of sale, including sales made directly on a securities exchange, sales made to or through a market maker and sales made through electronic communications networks.
“BGLH” means BG Lineage Holdings, LLC, a Delaware limited liability company.
“BGLH Operating Agreement” means the Eighteenth Amended and Restated Operating Agreement of BGLH, dated on or about the date hereof, among BGLH and the other parties thereto from time to time, as amended and in effect from time to time.
“BGLH Units” means the Units (as defined in the BGLH Operating Agreement) of BGLH.
“Board” means the board of directors of the Company.
“Business Day” means a day other than a Saturday, Sunday, federal or New York State holiday or other day on which commercial banks in New York City are authorized or required by law to close.
“Closing Date” means the date of the initial closing of the IPO.
“Common Stock” means the shares of common stock, par value $0.01 per share, of the Company, and any Securities issued in respect thereof, or in substitution therefor, in connection with any stock split, dividend or combination, or into which it may be converted or exchanged pursuant to any reclassification, recapitalization, merger, consolidation, sale of all or any part of its assets, corporate conversion or other extraordinary transaction of the Company.
“Company” has the meaning set forth in the preamble.
“Control” (including its correlative meanings, “Controlled by” and “under common Control with”) means possession, directly or indirectly, of the power to direct or cause the direction of management or policies (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise) of a Person.
“Custody Agreement and Power of Attorney” has the meaning set forth in Section 2.4(h).
“Demand Party” has the meaning set forth in Section 2.2(a).
“Demand Synthetic Secondary” has the meaning set forth in Section 2.2(e).
“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder, as the same may be amended from time to time.
“FINRA” means the Financial Industry Regulatory Authority, Inc.
“Governmental Authority” means any nation or government, any state or other political subdivision thereof, and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.
“Holder” means BGLH or any Transferee of such Person to whom registration rights are expressly assigned by BGLH pursuant to Section 4.2.
“Indemnified Party” and “Indemnified Parties” have the meanings set forth in Section 3.1.
“IPO” has the meaning set forth in the recitals.
“Law” means any statute, law, regulation, ordinance, rule, injunction, order, decree, governmental approval, directive, requirement, or other governmental restriction or any similar form of decision of, or determination by, or any interpretation or administration of any of the foregoing by, any Governmental Authority.
“LLH” means Lineage Logistics Holdings, LLC, a Delaware limited liability company.
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“Lockup Period” has the meaning set forth in Section 2.4(d)(i).
“OP” means Lineage OP, LP, a Maryland limited partnership.
“OP Agreement” means the Second Amended and Restated Limited Partnership Agreement of OP, dated on or about the date hereof, among the Company and the other persons parties thereto from time to time, as amended and in effect from time to time.
“OP Units” means common units of partnership interest in OP.
“OPEU Units” means common units of limited liability company interest of LLH that are intended to be economically equivalent to, and exchangeable into, OP Units.
“Person” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, a cooperative, an unincorporated organization, or other form of business organization, whether or not regarded as a legal entity under applicable Law, or any Governmental Authority or any department, agency or political subdivision thereof.
“Piggyback Synthetic Secondary” has the meaning set forth in Section 2.1(e).
“Proceeding” has the meaning set forth in Section 3.3.
“Public Offering” means a public offering, including pursuant to any ATM Program, of equity securities of the Company or any successor thereto or any Subsidiary of the Company pursuant to a registration statement declared effective under the Securities Act.
“Registrable Securities” means (i) all shares of Common Stock held by a Holder (whether now held or hereafter acquired, and including any such Common Stock received by a Holder upon the conversion or exchange of, or pursuant to such a transaction with respect to, other Securities held by such Holder) and (ii) all Securities of OP with respect to which BGLH acts as LHR (as defined in the OP Agreement), which shall be deemed Registrable Securities held by BGLH for purposes of this Agreement (whether now so held or hereafter held, and including any such Securities so held or deemed so held by BGLH upon the conversion or exchange of, or pursuant to such a transaction with respect to, other Securities so held or deemed so held by BGLH). As to any Registrable Securities, such Securities shall cease to be Registrable Securities without further act of the Company or a Holder when:
(a) a registration statement covering such Registrable Securities has been declared effective and such Registrable Securities have been disposed of pursuant to such effective registration statement;
(b) such Registrable Securities shall have been sold pursuant to Section 4(a)(1), Rule 144 or 145 (or any similar provision then in effect) under the Securities Act;
(c) such Registrable Securities shall have been Transferred in a private transaction in which the Transferor’s registration rights under this Agreement are not assigned to the Transferee of the Securities (other than in connection with a Demand Synthetic Secondary or a Piggyback Synthetic Secondary); or
(d) such Registrable Securities cease to be outstanding.
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As used herein, if the Holders elect to cause the Company to undertake a Public Offering of shares of Common Stock for the Company’s own account in connection with a Piggyback Synthetic Secondary or Demand Synthetic Secondary, the term “Registrable Securities” shall include, as applicable, the shares of Common Stock that BGLH distributes to its unit holders in connection with such Piggyback Synthetic Secondary or Demand Synthetic Secondary and the shares of Common Stock the Company issues in connection with such Piggyback Synthetic Secondary or Demand Synthetic Secondary; for avoidance of doubt, the term “Registrable Securities” shall include, as applicable, the shares of Common Stock that BGLH distributes to its unit holders in connection with a Piggyback Synthetic Secondary or Demand Synthetic Secondary that BGLH has determined (in its sole discretion) to include in such Public Offering for the account of one or more such unit holders or their respective Affiliates as selling stockholders.
“Registration Expenses” means any and all expenses incurred in connection with the performance of or compliance with this Agreement, including:
(a) all SEC, stock exchange, or FINRA registration and filing fees (including, if applicable, the fees and expenses of any “qualified independent underwriter,” as such term is defined in Rule 5121 of FINRA, and of its counsel);
(b) all fees and expenses of complying with securities or blue sky Laws (including fees and disbursements of counsel for the underwriters or sales agents in connection with blue sky qualifications of the Registrable Securities);
(c) all printing, messenger and delivery expenses;
(d) all fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange or FINRA and all rating agency fees;
(e) the reasonable fees and disbursements of counsel for the Company and of its independent public accountants, including the expenses of any special audits and/or “cold comfort” letters required by or incident to such performance and compliance;
(f) any fees and disbursements of underwriters or sales agents customarily paid by the issuers or sellers of Securities, including liability insurance if the Company so desires or if the underwriters or sales agents so require, and the reasonable fees and expenses of any special experts retained in connection with the requested registration, but excluding any underwriting discounts and commissions and sales agents commissions, as applicable, and transfer taxes, if any;
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(g) the reasonable fees and out-of-pocket expenses of not more than one law firm together with appropriate local counsel (as selected by the Holders of a majority of the Registrable Securities included in such registration) acting as counsel for all the Holders in connection with the registration;
(h) other reasonable out-of-pocket expenses of the holders of Registrable Securities incurred in connection with the registration;
(i) the costs and expenses of the Company relating to analyst and investor presentations or any “road show” undertaken in connection with the registration and/or marketing of the Registrable Securities (including the reasonable out-of-pocket expenses of the Holders); and
(j) any other fees and disbursements customarily paid by the issuers of securities.
“SEC” means the U.S. Securities and Exchange Commission or any successor agency.
“Securities” means capital stock, limited partnership interests, limited liability company interests, beneficial interests, warrants, options, notes, bonds, debentures, and other securities, equity interests, ownership interests and similar obligations of every kind and nature of any Person.
“Securities Act” means the U.S. Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder, as the same may be amended from time to time.
“Subsidiary” means, with respect to any Person, any corporation, limited liability company, partnership, association or other business entity of which: (i) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, representatives or trustees thereof is at the time owned or Controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof; or (ii) if a limited liability company, partnership, association or other business entity, a majority of the total voting power of stock (or equivalent ownership interest) of the limited liability company, partnership, association or other business entity is at the time owned or Controlled, directly or indirectly, by any Person or one or more Subsidiaries of that Person or a combination thereof. For purposes hereof, a Person or Persons shall be deemed to have a majority ownership interest in a limited liability company, partnership, association or other business entity if such Person or Persons shall be allocated a majority of limited liability company, partnership, association or other business entity gains or losses or shall be or Control the managing director or general partner of such limited liability company, partnership, association or other business entity.
“Transfer” (including its correlative meanings, “Transferor”, “Transferee” and “Transferred”) shall mean, with respect to any security, directly or indirectly, to sell, contract to sell, give, assign, hypothecate, pledge, encumber, grant a security interest in, offer, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of any economic, voting or other rights in or to such security. When used as a noun, “Transfer” shall have such correlative meaning as the context may require.
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Section 1.2 Other Definitional Provisions; Interpretation.
(a) The words “hereof,” “herein,” and “hereunder” and words of similar import when used in this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement. The word “including” and words of similar import when used in this Agreement mean “including, without limitation,” unless otherwise specified. References in this Agreement to a designated “Article” or “Section” refer to an Article or Section of this Agreement unless otherwise specified and references to clauses without a cross-reference to a Section or subsection are references to clauses within the same Section or, if more specific, subsection. The word “extent” in the phrase “to the extent” means the degree to which a subject or other thing extends and such phrase shall not mean simply “if.” References to “day” means a calendar day unless otherwise indicated as a “Business Day.”
(b) The headings in this Agreement are included for convenience of reference only and do not limit or otherwise affect the meaning or interpretation of this Agreement.
(c) The meanings given to terms defined herein are equally applicable to both the singular and plural forms of such terms.
(d) When calculating the period of time before which, within which or following which any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period is excluded. If the last day of such period is a non-Business Day, the period in question ends on the next succeeding Business Day.
ARTICLE II
REGISTRATION RIGHTS
Section 2.1 Piggyback Rights.
(a) If at any time following expiration or waiver of the Lockup Period, the Company proposes to register Securities for public sale (whether proposed to be offered for sale by the Company or by any other Person) under the Securities Act (other than a registration on Form S-4 or S-8, or any successor or other forms promulgated for similar purposes or any registration statement filed solely to cover resales of Common Stock received by Persons upon redemption or distribution in respect of outstanding BGLH Units or resales of Common Stock received by Persons upon exchange of outstanding OP Units (including OP Units received upon exchange of outstanding OPEU Units) in a manner which would permit registration of Registrable Securities for sale to the public under the Securities Act, it will give prompt written notice (which notice shall specify the intended method or methods of disposition) to the Holders of its intention to do so and of such Holder’s rights under this Section 2.1. For the avoidance of doubt, to the extent such registration is being effected pursuant to the exercise of a demand right pursuant to Sections 2.2(a) or 2.2(e), the Company shall not be obligated to provide such notice to the Demand Party or its Affiliates. Upon the written request of any Holder made within fifteen (15) days after the receipt of any such notice (which request shall specify the number of Registrable Securities intended to be disposed of by such Holder), the Company shall use its best efforts to effect the registration under the Securities Act of all Registrable Securities which the Holders have so requested to be registered; provided that: (i) any Holder shall have the right to
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withdraw such Holder’s request for inclusion of any of such Holder’s Registrable Securities in any registration statement pursuant to this Section 2.1(a) by giving written notice to the Company of such withdrawal, provided that, in the case of any underwritten offering, written notice of such withdrawal must be given to the Company prior to the time at which the offering price and underwriter’s discount or commissions is determined with the managing underwriter or underwriters; (ii) if, at any time after giving written notice of its intention to register any Securities and prior to the effective date of the registration statement filed in connection with such registration, the Company shall determine for any reason not to proceed with the proposed registration of the Securities to be sold by it, the Company may, at its election, give written notice of such determination to the Holders and, thereupon, the Company shall be relieved of its obligation to register any Registrable Securities in connection with such registration (but not from its obligation to pay the Registration Expenses incurred in connection therewith) without prejudice to the rights of the Demand Party to request that such registration be effected as a registration under Sections 2.2(a) or 2.2(e); and (iii) subject to clause (i), if such registration involves an underwritten offering, each Holder of Registrable Securities requesting to be included in the registration must, upon the written request of the Company, sell its Registrable Securities to the underwriters on the same terms and conditions as apply to the other Securities being sold through underwriters under such registration, with, in the case of a combined primary and secondary offering, only such differences, including any with respect to representations and warranties, indemnification and liability insurance, as may be customary or appropriate in combined primary and secondary offerings; provided that, in the case of Piggyback Synthetic Secondary, each Holder of Registrable Securities requesting to be included in the registration must, upon the written request of the Company, sell its Registrable Securities to the Company in accordance with Section 2.1(e).
(b) Expenses. The Company shall pay all Registration Expenses in connection with each registration of Registrable Securities requested pursuant to this Section 2.1.
(c) Priority in Piggyback Registrations. If a registration pursuant to this Section 2.1 involves an underwritten offering and the managing underwriter advises the Company in writing (a copy of which shall be provided to the Holders) that, in its opinion, the number of Registrable Securities and other Securities requested to be included in such registration exceeds the number which can be sold in such offering, so as to be likely to have a material and adverse effect on the price, timing or distribution of the Securities offered in such offering, then the Company shall include in such registration: (i) first, the Securities the Company proposes to sell for its own account (other than Securities the Company proposes to sell for its own account in connection with a Piggyback Synthetic Secondary); and (ii) second, such number of Registrable Securities requested to be included in such registration by the Holders (including for this purpose any Securities the Company proposes to sell for its own account in connection with a Piggyback Synthetic Secondary) which, in the opinion of such managing underwriter, can be sold without having the material and adverse effect referred to above, which number of Registrable Securities shall be allocated pro rata among all such requesting Holders of Registrable Securities on the basis of the relative number of Registrable Securities then held by each such Holder (provided that any Securities thereby allocated to any such Holder that exceed such Holder’s request shall be reallocated among the remaining requesting Holders in like manner). Any other selling holders of the Company’s Securities shall be included in an underwritten offering only with the consent of Holders holding a majority of the shares being sold in such offering and, if so included, such securities, at the election of the Holders, shall be subject to clause (ii) above in the same manner as the Registrable Securities held by the Holders or shall have priority after the shares of the Holders.
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(d) Excluded Transactions. The Company shall not be obligated to effect any registration of Registrable Securities under this Section 2.1 incidental to the registration of any of its Securities in connection with:
(i) the IPO;
(ii) a registration statement filed to cover solely issuances under employee benefits plans or dividend reinvestment plans;
(iii) a registration statement filed solely to cover resales of Common Stock received by Persons upon redemption or distribution in respect of outstanding BGLH Units or resales of Common Stock received by Persons upon exchange of outstanding OP Units (including OP units received upon exchange of OPEU Units);
(iv) any registration statement relating solely to the acquisition or merger after the date hereof by the Company or any of its Subsidiaries of or with any other businesses, assets or properties; or
(v) any registration related solely to an exchange by the Company of its own securities.
(e) Plan of Distribution, Underwriters, Advisors and Counsel. If a registration pursuant to this Section 2.1 involves an underwritten offering, the Holders of a majority of the Registrable Securities included in such underwritten offering shall have the right to (i) determine the plan of distribution (including a Piggyback Synthetic Secondary), (ii) select the investment banker or bankers, managers and any provider of advisory services, which may include Affiliates of the Holders and/or Persons who provide other services to the Holders or their Affiliates, to administer the offering, including the lead managing underwriter (provided that such investment banker or bankers, managers and providers of advisory services shall be reasonably satisfactory to the Company) and (iii) select counsel for the selling Holders. Notwithstanding anything to the contrary in this Section 2.1, the Holders of a majority of the Registrable Securities included in such underwritten offering may, at their election, cause the Company to undertake a Public Offering of the Company’s Securities for its own account and use the net proceeds therefrom to purchase or redeem the number of Registrable Securities requested for registration pursuant to Section 2.1 (subject to Section 2.1(c)) (a “Piggyback Synthetic Secondary”). If the Holders elect a Piggyback Synthetic Secondary, unless otherwise agreed to by the Company and BGLH, the Company shall purchase or redeem each Registrable Security selected by BGLH for such purchase or redemption, and in each case for cash in immediately available funds in an amount equal to the net proceeds from each share of Common Stock received by the Company from the Piggyback Synthetic Secondary, determined after deduction of underwriting discounts or commissions attributable to the sale of such Securities and any transfer taxes relating to the registration or sale of such Securities.
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(f) Shelf Takedowns. Subject to the expiration or waiver of any applicable lockup pursuant to Section 2.4(d), in connection with any shelf takedown (other than a shelf takedown at the request of the Demand Party, which shall be governed by Section 2.2(f)), the Holders may exercise “piggyback” rights in the manner described in this Agreement to have included in such takedown Registrable Securities held by them that are registered on such shelf registration statement.
Section 2.2 Demand Registration.
(a) General. At any time, upon the written request of any Holder (the “Demand Party”) requesting that the Company effect the registration under the Securities Act of Registrable Securities and specifying the amount and intended plan of distribution thereof (including, but not limited to, an underwritten offering, an ATM Program and a Demand Synthetic Secondary), the Company shall (x) promptly give written notice of such requested registration to Holders other than the Demand Party and its Affiliates and to other holders of Securities entitled to notice of such registration, if any, and (y) as expeditiously as possible, use its best efforts to file a registration statement to effect the registration under the Securities Act of:
(i) such Registrable Securities which the Company has been so requested to register by the Demand Party in accordance with the intended plan of distribution thereof; and
(ii) the Registrable Securities of other Holders which the Company has been requested to register by written request given to the Company within fifteen (15) days after the giving of such written notice by the Company.
Notwithstanding the foregoing, the Company shall not be obligated to file a registration statement relating to any registration request under this Section 2.2(a):
(A) prior to the expiration or waiver of the applicable lockup period, if any, in respect of a previous Public Offering; or
(B) if the amount of Registrable Securities which the Company has been so requested to register by the Demand Party is less than $100,000,000 based on the then-current public trading price at the time of such request; or
(C) if, in the good faith judgment of the Board, the Company is in possession of material non-public information the disclosure of which would be materially adverse to the Company and would not otherwise be required under Law, in which case the filing of the registration statement may be delayed until the earlier of the second Business Day after such conditions shall have ceased to exist and the 60th day after receipt by the Company of the written request from a Demand Party to register Registrable Securities under this Section 2.2(a); provided that the number of any such delays or any delay pursuant to Section 2.2(f) shall not exceed two in any twelve (12) month period.
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(b) Form. Each registration statement prepared at the request of a Demand Party shall be effected on such form as reasonably requested by the Demand Party, including by a shelf registration pursuant to Rule 415 under the Securities Act on a Form S-3 (or any successor rule or form thereto) if so requested by the Demand Party and if the Company is then eligible to effect a shelf registration and use such form for such disposition.
(c) Expenses. The Company shall pay all Registration Expenses in connection with each registration of Registrable Securities requested pursuant to this Section 2.2.
(d) Priority in Demand Registrations. If a requested registration pursuant to this Section 2.2 involves an underwritten offering and the managing underwriter advises the Company in writing (a copy of which shall be provided to each Holder that has requested that its Registrable Securities be included in such underwritten offering) that, in its opinion, the number of Registrable Securities requested to be included in such offering (including Securities of the Company which are not Registrable Securities) exceeds the number which can be sold in such offering, so as to be likely to have a material and adverse effect on the price, timing or distribution of the Securities offered in such offering, then the number of such Registrable Securities to be included in such offering shall be allocated pro rata among the Holders that have requested that their Registrable Securities be included in such offering, including pursuant to Section 2.2(a), if any, on the basis of the relative number of Registrable Securities then held by each such Holder (provided that any Securities thereby allocated to any such Holder that exceed such Holder’s request will be reallocated among all such remaining parties in like manner). Any other selling holders of the Company’s Securities shall be included in an underwritten offering only with the consent of Holders holding a majority of the Registrable Securities being sold by all Holders in such offering.
(e) Plan of Distribution, Underwriters, Advisors and Counsel. If a requested registration pursuant to this Section 2.2 involves an underwritten offering or ATM Program, the Demand Party shall have the right to (i) determine the plan of distribution (including a Demand Synthetic Secondary), (ii) select the investment banker or bankers, managers, sales agent or agents and any provider of advisory services, which may include Affiliates of the Holders and/or Persons who provide other services to the Holders or their Affiliates, to administer the offering, including the lead managing underwriter or sales agent (provided that such investment banker or bankers, managers, sales agent or agents and providers of advisory services shall be reasonably satisfactory to the Company) and (iii) select counsel for the selling Holders. Notwithstanding anything to the contrary in this Section 2.2, the Holders of a majority of the Registrable Securities included in such underwritten offering or ATM Program may, at their election, cause the Company to undertake a Public Offering of the Company’s Securities for its own account and use the net proceeds therefrom to purchase or redeem the number of Registrable Securities requested for registration pursuant to Section 2.2 (subject to Section 2.2(d)) (a “Demand Synthetic Secondary”). If the Holders elect a Demand Synthetic Secondary, unless otherwise agreed to by the Company and BGLH, the Company shall purchase or redeem each Registrable Security selected by BGLH for such purchase or redemption, and in each case for cash in immediately available funds in an amount equal to the net proceeds from each Security received by the Company from the Demand Synthetic Secondary, determined after deduction of underwriting discounts or commissions or sales agents commissions, as applicable, attributable to the sale of such Securities and any transfer taxes relating to the registration or sale of such Securities.
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(f) Shelf Takedowns. Upon the written request of the Demand Party at any time and from time to time, the Company shall facilitate in the manner described in this Agreement a “takedown” of the Demand Party’s Registrable Securities off of an effective shelf registration statement. Upon the written request of the Demand Party, the Company shall file and seek the effectiveness of a post-effective amendment to an existing shelf registration statement in order to register up to the number of the Demand Party’s Registrable Securities previously taken down off of such shelf by the Demand Party and not yet “reloaded” onto such shelf registration statement.
Notwithstanding the foregoing, the Company shall not be obligated to facilitate a “takedown” under this Section 2.2(f) if, in the good faith judgment of the Board, the Company is in possession of material non-public information the disclosure of which would be materially adverse to the Company and would not otherwise be required under Law, in which case the filing of the applicable prospectus or prospectus supplement may be delayed until the earlier of the second Business Day after such conditions shall have ceased to exist and the 60th day after receipt by the Company of the written request from a Demand Party to effect the takedown under this Section 2.2(f); provided that the number of any such delays or any delay pursuant to Section 2.2(a)(ii)(C) shall not exceed two in any twelve (12) month period.
(g) No Inconsistent Agreements; Additional Rights. The Company has not entered, and shall not hereafter enter, into any agreement with respect to its securities which is inconsistent with the rights granted to the Holders in this Agreement. If the Company has entered into or enters into a registration rights agreement with a third party, the Company shall promptly send a copy thereof to the Holders.
In the event the Company engages in a merger or consolidation in which the shares of Common Stock are converted into Securities of another company, appropriate arrangements shall be made so that the registration rights provided under this Agreement continue to be provided to Holders by the issuer of such Securities. To the extent such new issuer, or any other company acquired by the Company in a merger or consolidation, was bound by registration rights that would conflict with the provisions of this Agreement, the Company shall use its best efforts to modify any such “inherited” registration rights so as not to interfere in any material respects with the rights provided under this Agreement.
Section 2.3 Registration Procedures. If and whenever the Company is required to file a registration statement with respect to, or to use its best efforts to effect or cause the registration of, any Registrable Securities under the Securities Act as provided in this Agreement, the Company shall:
(a) promptly prepare and file with the SEC a registration statement on an appropriate form with respect to such Registrable Securities in accordance with the intended plan of distribution thereof (including a Piggyback Synthetic Secondary or Demand Synthetic Secondary) and use its best efforts to cause such registration statement to become effective as soon as practicable thereafter; provided, however, that before filing a registration statement or prospectus, or any amendments or supplements thereto (including documents that would be incorporated or deemed to be incorporated therein by reference), the Company shall (i) furnish to counsel for the Holders copies of all documents proposed to be filed, which documents will be
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subject to the review of such counsel, and such other documents reasonably requested by such counsel, including any comment letter from the SEC, (ii) fairly consider such reasonable changes in any such documents prior to or after the filing thereof as the counsel to the sellers of Registrable Securities being sold may request, and (iii) make such of the representatives of the Company as shall be reasonably requested by the sellers of the Registrable Securities being sold available for discussion of such documents;
(b) prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective for a period not in excess of two (2) years (which period shall not be applicable in the case of a shelf registration effected pursuant to a request under Section 2.2(b)) and to comply with the provisions of the Securities Act and the Exchange Act with respect to the disposition of all Securities covered by such registration statement during such period in accordance with the intended methods of disposition by the seller or sellers thereof set forth in such registration statement; provided that before filing a registration statement or prospectus, or any amendments or supplements thereto (other than any reports or other documents filed with the SEC pursuant to the Exchange Act), the Company shall (i) furnish to counsel for the sellers of Registrable Securities covered by such registration statement copies of all documents proposed to be filed, which documents will be subject to the review of such counsel, and such other documents reasonably requested by such counsel, including any comment letter from the SEC, (ii) fairly consider such reasonable changes in any such documents prior to or after the filing thereof as the counsel to the sellers of Registrable Securities being sold may request, and (iii) make such of the representatives of the Company as shall be reasonably requested by the sellers of the Registrable Securities being sold available for discussion of such documents;
(c) furnish to each seller of such Registrable Securities and the underwriters or sales agents of the securities being registered such number of copies of such registration statement and of each amendment and supplement thereto (in each case including all exhibits filed therewith, including any documents incorporated by reference), such number of copies of the prospectus included in such registration statement (including each preliminary prospectus and summary prospectus), in conformity with the requirements of the Securities Act, and such other documents as such seller, underwriters or sales agents may reasonably request, without charge, in order to facilitate the disposition of the Registrable Securities by such seller or the sale of such securities by such underwriters or sales agent (it being understood that, subject to the requirements of the Securities Act and applicable state securities laws, the Company consents to the use of the prospectus and any amendment or supplement thereto by each seller and the underwriters or sales agents in connection with the offering and sale of the Registrable Securities covered by the registration statement of which such prospectus, amendment or supplement is a part);
(d) use its best efforts to register or qualify such Registrable Securities covered by such registration in such jurisdictions as each seller shall reasonably request and to keep each such registration or qualification (or exemption therefrom) effective during the period in which the registration statement is required to be kept effective, and do any and all other acts and things which may be reasonably necessary or advisable to enable such seller to consummate the disposition in such jurisdictions of the Registrable Securities owned by such seller;
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(e) use its best efforts to cause such Registrable Securities covered by such registration statement to be registered with or approved by such other governmental agencies or authorities, including registration or qualification (or exemption from such registration or qualification) of such Registrable Securities for offer and sale under the securities or “blue sky” laws of such jurisdictions within the United States, to keep each such registration or qualification (or exemption from such registration or qualification) effective during the period such registration statement is required to be kept effective pursuant to this Agreement, to cooperate with the selling holders of such Registrable Securities, the underwriters or sales agents, if any, and their respective counsel in connection therewith, and to take any other action as may be necessary or advisable to enable the seller or sellers thereof to consummate the disposition of such Registrable Securities in such jurisdiction;
(f) promptly notify each seller (and in the case of clause (x), any underwriter or sales agent) of any such Registrable Securities covered by such registration statement, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of the Company’s becoming aware that (i) the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing, and at the request of any such seller, as promptly as practicable thereafter prepare and furnish to such seller and any underwriter or sales agent a reasonable number of copies of an amended or supplemental prospectus as may be necessary so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing and (ii) the representations and warranties of the Company contained in any agreement (including any underwriting agreement or sales agent agreement) contemplated by Section 2.3(j) below ceases to be true and correct in all material respects;
(g) comply with all applicable rules and regulations of the SEC, and make available to its Security holders, as soon as reasonably practicable after the effective date of the registration statement, an earnings statement which shall satisfy the provisions of Section 11(a) of the Securities Act no later than 45 days after the end of any 12-month period (or 90 days after the end of any 12-month period if such period is a fiscal year) commencing at the end of any fiscal quarter in which Registrable Securities are sold to underwriters in a firm commitment or best efforts underwritten offering or ATM Program;
(h) (i) list such Registrable Securities on any securities exchange on which other Securities of the Company are then listed if such Registrable Securities are not already so listed and if such listing is then permitted under the rules of such exchange, and (ii) provide a transfer agent and registrar and CUSIP number for such Registrable Securities covered by such registration statement not later than the effective date of such registration statement;
(i) enter into such customary agreements (including an underwriting agreement or sales agent agreement in customary form), which shall include (x) indemnification provisions and procedures no less favorable to the holders of Registrable Securities than those set forth in Article III hereof (or such other provisions and procedures acceptable to holders of a majority of the Registrable Securities covered by such registration statement and the underwriters or sales
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agents) and (y) such representations and warranties to the underwriters or sales agents, with respect to the business of the Company and its Subsidiaries, and such registration statement, prospectus and documents, if any, incorporated or deemed to be incorporated by reference therein, in each case, in form, substance and scope as are customarily made by issuers to underwriters in underwritten offerings or sales agents in ATM Programs, and the Company shall confirm the same if and when requested, and take such other actions as the underwriters or sales agents, if any, reasonably request in order to expedite or facilitate the disposition of such Registrable Securities;
(j) if requested by the managing underwriter(s) of an underwritten offering, sales agent(s) of an ATM Program or if reasonably requested by the seller or sellers of a majority of such Registrable Securities, use best efforts to obtain a comfort letter or letters and updates thereof from the Company’s independent certified public accountants (and, if necessary, any other independent certified public accountants of any Subsidiary of the Company or of any business acquired by the Company for which financial statements and financial data are, or are required to be, included in such registration statement) addressed to the underwriters, sales agents or seller or sellers in customary form and covering matters of the type customarily covered by comfort letters;
(k) make available for inspection by any seller of such Registrable Securities covered by such registration statement, by any underwriter or sales agent participating in any disposition to be effected pursuant to such registration statement and by any attorney, accountant or other agent retained by any such seller or any such underwriter or sales agent, all pertinent financial and other records, pertinent corporate documents and properties of the Company, and cause all of the Company’s officers, directors and employees to supply all information reasonably requested by any such seller, underwriter, sales agent, attorney, accountant or agent in connection with such registration statement;
(l) notify counsel for the Holders of Registrable Securities included in such registration statement and the managing underwriter or sales agent, immediately, and confirm the notice in writing: (i) when the registration statement, or any post-effective amendment to the registration statement, shall have become effective, or any supplement to the prospectus or any amendment to any prospectus shall have been filed; (ii) of the receipt of any comments from the SEC; (iii) of any request of the SEC to amend the registration statement or amend or supplement the prospectus or for additional information; and (iv) of the issuance by the SEC of any stop order suspending the effectiveness of the registration statement or of any order preventing or suspending the use of any preliminary prospectus, or of the suspension of the qualification of the registration statement for offering or sale in any jurisdiction, or of the institution or threatening of any proceedings for any of such purposes;
(m) provide each Holder of Registrable Securities included in such registration statement reasonable opportunity to comment on the registration statement, any post-effective amendments to the registration statement, any supplement to the prospectus or any amendment to any prospectus;
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(n) make every reasonable effort to prevent the issuance of any stop order suspending the effectiveness of the registration statement or of any order preventing or suspending the use of any preliminary prospectus and, if any such order is issued, to obtain the withdrawal of any such order at the earliest possible moment;
(o) if requested by the managing underwriter or sales agent or any Holder of Registrable Securities covered by the registration statement, promptly incorporate in a prospectus supplement or post-effective amendment such information as the managing underwriter or sales agent or such Holder reasonably requests to be included therein, including, with respect to the number of Registrable Securities being sold by such Holder to such underwriter or sales agent, the purchase price being paid therefor by such underwriter or sales agent and with respect to any other terms of the underwritten offering or ATM Program involving the Registrable Securities to be sold in such offering; and make all required filings of such prospectus supplement or post-effective amendment as soon as practicable after being notified of the matters incorporated in such prospectus supplement or post-effective amendment;
(p) cooperate with the Holders of Registrable Securities covered by the registration statement and the managing underwriter or sales agent, if any, to facilitate the timely preparation and delivery of certificates (not bearing any restrictive legends) representing Securities to be sold under the registration statement, and enable such Securities to be in such denominations and registered in such names as the managing underwriter or sales agent, if any, or the Holders may request;
(q) use its best efforts to make available the executive officers of the Company to participate with the Holders of Registrable Securities and any underwriters or sales agents in any “road shows” that may be reasonably requested by the Holders in connection with distribution of Registrable Securities;
(r) in the case of an offering that includes a provider of advisory services, enter into and perform its obligations under customary agreements (including an advisory services agreement and an indemnification agreement in customary form);
(s) obtain for delivery to the Holders of Registrable Securities being registered and to the underwriter or sales agent an opinion or opinions from counsel for the Company in customary form and in form, substance and scope reasonably satisfactory to such Holders, underwriters or sales agents and their counsel; and
(t) cooperate with each seller of Registrable Securities and each underwriter or sales agent participating in the disposition of such Registrable Securities and their respective counsel in connection with any filings required to be made with FINRA.
Section 2.4 Other Registration-Related Matters.
(a) The Company may require any Person that is Transferring Securities in a Public Offering pursuant to Sections 2.1 or 2.2 to furnish to the Company in writing such information regarding such Person and pertinent to the disclosure requirements relating to the registration and the distribution of the Registrable Securities which are included in such Public Offering as the Company may from time to time reasonably request in writing; provided that such information shall be used only in connection with such registration.
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(b) Each Holder agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 2.3(f)(i), it will forthwith discontinue disposition of Registrable Securities pursuant to the registration statement covering such Registrable Securities until its receipt of the copies of the amended or supplemented prospectus contemplated by Section 2.3(f) or until it is advised in writing (the “Advice”) by the Company that the use of the prospectus may be resumed and, if so directed by the Company, each Holder will deliver to the Company or destroy (at the Company’s expense) all copies, other than permanent file copies then in its possession, of the prospectus covering such Registrable Securities current at the time of receipt of such notice. In the event the Company gives any such notice, the period for which the Company shall be required to keep the registration statement effective shall be extended by the number of days during the period from and including the date of the giving of such notice pursuant to Section 2.3(f)(i) to and including the date when each seller of Registrable Securities covered by such registration statement has received the copies of the supplemented or amended prospectus contemplated by Section 2.3(f)(i) or the Advice. The Company shall use its best efforts and take such actions as are reasonably necessary to render the Advice as promptly as practicable.
(c) Each Holder agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 2.3(l)(iv), it shall forthwith discontinue disposition of Registrable Securities pursuant to the registration statement covering such Registrable Securities until the lifting of such stop order, other order or suspension or the termination of such proceedings and, if so directed by the Company, each Holder shall deliver to the Company or destroy (at the Company’s expense) all copies, other than permanent file copies then in its possession, of the prospectus covering such Registrable Securities current at the time of receipt of such notice. In the event the Company gives any such notice, the period for which the Company shall be required to keep the registration statement effective shall be extended by the number of days during the period from and including the date of the giving of such notice pursuant to Section 2.3(l)(iv) to and including the date when such stop order, other order or suspension is lifted or such proceedings are terminated.
(d)
(i) Each Holder (x) hereby agrees, with respect to the Registrable Securities owned by such Holder, to be bound by any and all restrictions on the sale, disposition, distribution, hedging or other Transfer of any interest in Registrable Securities imposed on such Holder and/or its Affiliates in connection with the IPO by the underwriters managing such offering for the period commencing on the date of such imposition (which shall be no earlier than 7 days prior to the expected “pricing” of such IPO), and continuing for no more than 180 days after the closing date of such IPO (or for such shorter period as to which the managing underwriter may agree, provided that such shorter period applies equally to all holders of Registrable Securities) (such period in which such sale, disposition, distribution, hedging or other Transfer of any interest is restricted, the “Lockup Period”) and (y) will, in connection with a Public Offering (other than the IPO) of the Company’s equity Securities (whether for the Company’s own account or for the account of any Holder or Holders, or both), upon the request of the Company or of the underwriters managing any underwritten offering of the Company’s equity Securities, agree in writing not to effect any sale, disposition or distribution of
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Registrable Securities (other than those included in the Public Offering) without the prior written consent of the managing underwriter for such period of time commencing seven (7) days before and ending ninety (90) days (or such earlier date as the managing underwriter shall agree) after (x) the effective date of such registration or (y) in the case of a Public Offering pursuant to Section 2.2(f), the pricing of such Public Offering.
(ii) The Company and its Subsidiaries will, in connection with an underwritten offering of the Company’s Securities in respect of which Registrable Securities are included, upon the request of the underwriters managing such offering, agree in writing not to effect any sale, disposition or distribution of equity Securities of the Company for the Company’s own account (other than those included in such Public Offering, offered on Form S-8, issuable in connection with any acquisition or merger of or with any other business, assets or properties, issuable upon conversion of Securities or upon the exercise of options, or the grant of options in the ordinary course of business pursuant to then-existing management equity plans or equity-based employee benefit plans, in each case outstanding on the date a notice is given by the Company pursuant to Section 2.1(a) or a request is made pursuant to Section 2.2(a), as the case may be, or agreed to by such managing underwriter), without the prior written consent of the managing underwriter, for such period of time commencing seven (7) days before and ending ninety (90) days (or such earlier date as the managing underwriter shall agree) after (x) the effective date of such registration or (y) in the case of a Public Offering pursuant to Section 2.2(f), the pricing of such Public Offering. The Company shall cause all directors and officers of the Company and all other Persons with registration rights with respect to the Company’s Securities (whether or not pursuant to this Agreement) to enter into agreements similar to those contained in this Section 2.4(d)(i) (without regard to this proviso).
(e) With a view to making available the benefits of certain rules and regulations of the SEC which may at any time permit the sale of Securities of the Company to the public without registration after such time as a public market exists for Registrable Securities, the Company agrees:
(i) to make and keep public information available, as those terms are understood and defined in Rule 144 under the Securities Act, at all times after the effective date of the first registration under the Securities Act filed by the Company for an offering of its Securities to the public;
(ii) to use its commercially reasonable efforts to then file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements); and
(iii) so long as a Holder owns any Registrable Securities, to furnish to such Holder promptly upon request: (A) a written statement by the Company as to its compliance with the reporting requirements of Rule 144 (at any time after ninety (90) days after the effective date of the first registration statement filed by the Company for an offering of its Securities to the public), and of the Securities Act and the Exchange
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Act (at any time after it has become subject to such reporting requirements); (B) a copy of the most recent annual or quarterly report of the Company; and (C) such other reports and documents of the Company as such Holder may reasonably request in availing itself or himself of any rule or regulation of the SEC allowing such Holder to sell any such Registrable Securities without registration.
(f) Counsel to represent Holders of Registrable Securities shall be selected by the Holders of at least a majority of the Registrable Securities held by all Holders included in the relevant registration.
(g) Each of the parties hereto agrees that the registration rights provided to the Holders herein are not intended to, and shall not be deemed to, override or limit any other restrictions on Transfer to which any such Holder may otherwise be subject.
(h) Upon delivering a request to participate in an underwritten offering or ATM Program under Section 2.1 or Section 2.2, a Holder (or its respective partners, members or stockholders) may, at its election, and shall, if requested by the Company, execute and deliver a customary custody agreement and power of attorney in form and substance reasonably satisfactory to the Company and such Holder with respect to such Holder’s Registrable Securities to be offered pursuant thereto (a “Custody Agreement and Power of Attorney”). The Custody Agreement and Power of Attorney will provide, among other things, that the Holder will deliver to and deposit in custody with the custodian and attorney-in-fact named therein a certificate or certificates representing such Registrable Securities, if such Registrable Securities are certificated, and irrevocably appoint said custodian and attorney-in-fact with full power and authority to act under the Custody Agreement and Power of Attorney on behalf of such Holder (or its respective partners, members or stockholders) with respect to the matters specified therein. Each Holder agrees to execute (or cause its respective partners, members or stockholders to execute) such other agreements as the Company may reasonably request to further evidence the provisions of this paragraph.
ARTICLE III
INDEMNIFICATION
Section 3.1 Indemnification by the Company. In the event of any registration of any Securities of the Company under the Securities Act pursuant to Section 2.1 or Section 2.2, the Company hereby indemnifies and agrees to hold harmless, to the fullest extent permitted by Law, each Holder of Registrable Securities, each Affiliate of such Holder and their respective directors, officers, employees, partners, equityholders, managers, accountants, attorneys and agents (and the directors, officers, employees, partners, equityholders, managers, accountants, attorneys, agents and controlling Persons of any of the foregoing), any financial or investment adviser, each other Person who participates as an underwriter in the offering, as a sales agent in an ATM Program or sale of such Securities and each other Person, if any, who controls such Holder or any such underwriter or sales agent within the meaning of the Securities Act (each, and “Indemnified Party” and collectively, the “Indemnified Parties”), against any and all losses, claims, damages or liabilities, joint or several, actions or proceedings (whether commenced or threatened) and reasonable and documented expenses and to which such Indemnified Party may become subject under the Securities Act, common law or otherwise, insofar as such losses,
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claims, damages or liabilities (or actions or proceedings in respect thereof, whether or not such Indemnified Party is a party thereto) arise out of or are based upon: (a) any untrue statement or alleged untrue statement of any material fact contained in any registration statement under which such Securities were registered under the Securities Act, any preliminary, final or summary prospectus contained therein, or any amendment or supplement thereto, or any document incorporated by reference therein, any other such disclosure document (including reports and other documents filed under the Exchange Act and any document incorporated by reference therein) or related document or report, or any issuer free writing prospectus (including any “road show,” whether or not required to be filed with the SEC); (b) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in the case of a prospectus or issuer free writing prospectus, in the light of the circumstances when they were made; or (c) any violation or alleged violation by the Company or any of its Subsidiaries of any federal, state, foreign or common law rule or regulation applicable to the Company or any of its Subsidiaries and relating to action or inaction in connection with any such registration, disclosure document or related document or report, and the Company shall reimburse such Indemnified Party for any legal or other expenses reasonably incurred by it in connection with investigating or defending any such loss, claim, liability, action or proceeding; provided that the Company shall not be liable to any Indemnified Party in any such case to the extent that any such loss, claim, damage, liability (or action or proceeding in respect thereof) or expense arises out of or is based upon any untrue statement or alleged untrue statement or omission or alleged omission made in such registration statement, in any such preliminary, final or summary prospectus, or any amendment or supplement thereto, or any issuer free writing prospectus, in reliance upon and in conformity with written information with respect to such Indemnified Party furnished to the Company by such Indemnified Party expressly for use in the preparation thereof. Such indemnity will remain in full force and effect regardless of any investigation made by or on behalf of such Holder or any Indemnified Party and will survive the Transfer of such Securities by such Holder or any termination of this Agreement.
Section 3.2 Indemnification by the Holders and Underwriters and Sales Agents. The Company may require, as a condition to including any Registrable Securities in any registration statement filed in accordance with Section 2.1 or 2.2, that the Company shall have received an undertaking from the Holder of such Registrable Securities, severally and not jointly, to indemnify and hold harmless (in the same manner and to the same extent as set forth in Section 3.1) the Company, all other Holders and any of their respective Affiliates, their respective directors, officers, employees, partners, equityholders, managers, accountants, attorneys and agents (and the directors, officers, employees, partners, equityholders, managers, accountants, attorneys, agents and controlling Persons of any of the foregoing) and each other Person, if any, who controls any of the foregoing Persons within the meaning of the Securities Act or Exchange Act, with respect to any untrue statement in or omission from such registration statement, any preliminary, final or summary prospectus contained therein, any amendment or supplement, or any issuer free writing prospectus, to the extent, but only to the extent, that such untrue or alleged untrue statement is contained in, or such omission or alleged omission is required to be contained in, any information which (i) relates solely to such Holder’s individual ownership of the Registrable Securities, and (ii) if such untrue statement or omission was made in reliance upon and in conformity with written information with respect to such Holder furnished to the Company by such Holder expressly for use in the preparation of such registration statement, preliminary, final or summary prospectus or amendment or supplement, a
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document incorporated by reference into any of the foregoing, or any such issuer free writing prospectus. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Company or any of the Holders, or any of their respective Affiliates, directors, officers or controlling Persons and shall survive the Transfer of such Securities by such Holder. In no event shall the liability of any selling Holder of Registrable Securities hereunder be greater in amount than the dollar amount of the proceeds actually received by such Holder upon the sale of the Registrable Securities giving rise to such indemnification obligation.
Section 3.3 Notices of Claims, Etc. Promptly after receipt by an Indemnified Party hereunder of written notice of the commencement of any action, suit, proceeding or investigation or written threat thereof with respect to which a claim for indemnification may be made pursuant to this Article III (each, a “Proceeding”), such Indemnified Party will, if a claim in respect thereof is to be made against an indemnifying party, give written notice to the latter of the commencement of such Proceeding; provided that the failure of the Indemnified Party to give notice as provided herein will not relieve the indemnifying party of its obligations under Section 3.1 or 3.2, except to the extent that the indemnifying party is actually and materially prejudiced by such failure to give notice. In case any such Proceeding is brought against an Indemnified Party, the indemnifying party shall be entitled to participate in and to assume the defense thereof, jointly with any other indemnifying party similarly notified to the extent that it may wish, with counsel selected by the indemnifying party and reasonably satisfactory to such Indemnified Party, and after notice from the indemnifying party to such Indemnified Party of its election so to assume the defense thereof, at the indemnifying party’s expense, the indemnifying party shall not be liable to such Indemnified Party for any legal or other expenses subsequently incurred by the latter in connection with the defense thereof other than reasonable costs of investigation. If, in such Indemnified Party’s reasonable judgment, having common counsel would result in a conflict of interest between the interests of such indemnified and indemnifying parties, then such Indemnified Party may employ separate counsel reasonably acceptable to the indemnifying party to represent or defend such Indemnified Party in such Proceeding, it being understood, however, that the indemnifying party shall not be liable for the reasonable fees and expenses of more than one separate firm of attorneys at any time for all such Indemnified Parties (and not more than one separate firm of local counsel at any time for all such Indemnified Parties) in such action unless (i) the indemnifying party agrees to pay such fees and expenses; (ii) the indemnifying party or parties fail promptly to assume the defense of such Proceeding or fail to employ counsel reasonably satisfactory to the indemnified party or parties; or (iii) the named parties to any such Proceeding (including any impleading parties) include both such indemnified party or parties and the indemnifying parties or an Affiliate of an indemnifying party or indemnified party, and there may be one or more defenses available to such indemnified party or parties that are different from or additional to those available to the indemnifying party or parties, in which case, if such indemnified party or parties notifies the indemnifying party or parties in writing that it elects to employ separate counsel at the expenses of the indemnifying party or parties, the indemnifying party or parties shall not have the right to assume the defense thereof and such counsel shall be at the expense of the indemnifying party or parties. No indemnifying party shall consent to entry of any judgment or enter into any settlement which (x) provides for other than monetary damages without the consent of the Indemnified Party (which consent shall not be unreasonably withheld or delayed) or (y) does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect of such claim or litigation.
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Section 3.4 Contribution. If the indemnification provided for hereunder from the indemnifying party is unavailable to an Indemnified Party hereunder in respect of any losses, claims, damages, liabilities or expenses referred to herein for reasons other than those described in the proviso in the first sentence of Section 3.1, then the indemnifying party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such losses, claims, damages, liabilities or expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying party and Indemnified Parties in connection with the actions which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative fault of such indemnifying party and Indemnified Parties shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, has been made by, or relates to information supplied by, such indemnifying party or Indemnified Parties, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action. The amount paid or payable by a party under this Section 3.4 as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include any legal or other fees or expenses reasonably incurred by such party in connection with any investigation or proceeding. In no event shall the liability of any selling Holder of Registrable Securities hereunder be greater in amount than the dollar amount of the proceeds actually received by such Holder upon the sale of the Registrable Securities giving rise to such contribution obligation. Any obligation of Holders to contribute pursuant to this Section 3.4 shall be several in the same proportion that the dollar amount of the proceeds actually received by each such Holder bears to the total dollar amount of the proceeds received by all Holders and not joint.
The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 3.4 were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.
If indemnification is available under Section 3.1, the indemnifying parties shall indemnify each Indemnified Party to the full extent provided in Section 3.1 without regard to the relative fault of said indemnifying party or Indemnified Party or any other equitable consideration provided for in this Section 3.4.
Section 3.5 Other Indemnification. Indemnification similar to that specified in this Article III (with appropriate modifications) shall be given by the Company with respect to any required registration or other qualification of Securities under any Law or with any Governmental Authority other than as required by the Securities Act.
Section 3.6 Non-Exclusivity. The obligations of the parties under this Article III shall be in addition to any liability which any party may otherwise have to any other party.
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ARTICLE IV
OTHER
Section 4.1 Notices. Any notice, request, instruction or other document to be given hereunder by any party hereto to another party hereto shall be in writing and shall be deemed given (a) when delivered personally, (b) five (5) Business Days after being sent by certified or registered mail, postage prepaid, return receipt requested, (c) one (1) Business Day after being sent by Federal Express or other nationally recognized overnight courier, or (d) if transmitted by e-mail or other electronic communication, if confirmed within 24 hours thereafter by a signed original sent in the manner provided in clause (a), (b) or (c) to parties at the following addresses (or at such other address for a party as shall be specified by prior written notice from such party).
If to the Company:
Lineage, Inc.
46500 Humboldt Drive
Novi, Michigan 48377
Attention: Legal Department
E-mail: legalnotice@onelineage.com
with a copy (which shall not constitute notice) to:
Latham & Watkins LLP
355 South Grand Avenue
Los Angeles, California 90071
Attention: Julian Kleindorfer; Lewis Kneib
E-mail: julian.kleindorfer@lw.com; lewis.kneib@lw.com
If to BGLH:
Bay Grove Capital Group, LLC
801 Montgomery Street, Floor 5
San Francisco, California 94133
Attention: Legal Department
E-mail: notices@bay-grove.com
with a copy (which shall not constitute notice) to:
Latham & Watkins LLP
12670 High Bluff Drive
San Diego, California 92130
Attention: Nadia Sager; Amber Franklin; Lexi Santa Ana
E-mail: nadia.sager@lw.com; amber.franklin@lw.com; lexi.santaana@lw.com
Section 4.2 Assignment. This Agreement may not be assigned without the express prior written consent of the other parties hereto, and any attempted assignment, without such consents, shall be null and void; provided, however, that, without the prior written consent of any other party hereto, a Holder may assign its rights and obligations under this Agreement, in whole
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or in part, to any Transferee of Registrable Securities so long as such Transferee, if not already a party to this Agreement, executes and delivers to the Company a joinder to this Agreement, substantially in the form of Exhibit A, and upon such Transfer such transferee shall be deemed a “Holder” hereunder.
Section 4.3 Amendments; Waiver. This Agreement may be amended, supplemented or otherwise modified only by a written instrument executed by the Company and the Holders holding a majority of the Registrable Securities held by all Holders; provided that no such amendment, supplement or other modification shall adversely affect the economic interests of any Holder hereunder disproportionately to other Holders without the written consent of Holders that hold a majority of the Registrable Securities held by all Holders so affected. No waiver by any party of any of the provisions hereof shall be effective unless explicitly set forth in writing and executed by the party so waiving. Except as provided in the preceding sentence, no action taken pursuant to this Agreement, including without limitation, any investigation by or on behalf of any party, shall be deemed to constitute a waiver by the party taking such action of compliance with any covenants or agreements contained herein. The waiver by any party hereto of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach.
Section 4.4 Third Parties. This Agreement does not create any rights, claims or benefits inuring to any person that is not a party hereto nor create or establish any third party beneficiary hereto.
Section 4.5 Governing Law. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of New York.
Section 4.6 CONSENT TO JURISDICTION. EACH OF THE PARTIES HERETO CONSENTS TO THE EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF NEW YORK, STATE OF NEW YORK AND IRREVOCABLY AGREES THAT ALL ACTIONS OR PROCEEDINGS RELATING TO THIS AGREEMENT SHALL BE LITIGATED IN SUCH COURTS. EACH OF THE PARTIES HERETO ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS RESPECTIVE PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY FINAL AND NONAPPEALABLE JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT. EACH OF THE PARTIES HERETO FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF VIA OVERNIGHT COURIER, TO SUCH PARTY AT THE ADDRESS SPECIFIED IN THIS AGREEMENT, SUCH SERVICE TO BECOME EFFECTIVE FOURTEEN CALENDAR DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL IN ANY WAY BE DEEMED TO LIMIT THE ABILITY OF EITHER PARTY HERETO TO SERVE ANY SUCH LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW OR TO OBTAIN JURISDICTION OVER OR TO BRING ACTIONS, SUITS OR PROCEEDINGS AGAINST THE OTHER PARTY HERETO IN SUCH OTHER JURISDICTIONS, AND IN SUCH MANNER, AS MAY BE PERMITTED BY ANY APPLICABLE LAW.
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Section 4.7 MUTUAL WAIVER OF JURY TRIAL. THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING BROUGHT TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER THIS AGREEMENT.
Section 4.8 Specific Performance. Each of the parties hereto acknowledges and agrees that in the event of any breach of this Agreement by any of them, the non-breaching party would be irreparably harmed and could not be made whole by monetary damages. Each party accordingly agrees to waive the defense in any action for specific performance that a remedy at law would be adequate and that the parties, in addition to any other remedy to which they may be entitled at law or in equity, shall be entitled to compel specific performance of this Agreement; provided, however, that the Company shall not be entitled to specific performance for any breach by the Holders of the provisions of Section 2.4(d)(i).
Section 4.9 Entire Agreement. This Agreement sets forth the entire understanding of the parties hereto with respect to the subject matter hereof. There are no agreements, representations, warranties, covenants or undertakings with respect to the subject matter hereof other than those expressly set forth herein. This Agreement supersedes all other prior agreements and understandings between the parties with respect to such subject matter.
Section 4.10 Severability. If one or more of the provisions, paragraphs, words, clauses, phrases or sentences contained herein, or the application thereof in any circumstances, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision, paragraph, word, clause, phrase or sentence in every other respect and of the remaining provisions, paragraphs, words, clauses, phrases or sentences hereof shall not be in any way impaired, it being intended that all rights, powers and privileges of the parties hereto shall be enforceable to the fullest extent permitted by Law.
Section 4.11 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which together shall be deemed to be one and the same instrument.
Section 4.12 Effectiveness. This Agreement shall become effective, as to any Holder, as of the date signed by the Company and countersigned by such Holder.
Section 4.13 No Recourse. This Agreement may only be enforced against, and any claims or cause of action that may be based upon, arise out of or relate to this Agreement, or the negotiation, execution or performance of this Agreement, the transactions contemplated hereby or the subject matter hereof may only be made against the parties hereto and no past, present or future Affiliate, director, officer, employee, incorporator, member, manager, partner, stockholder, agent, attorney or representative of any party hereto or any past, present or future Affiliate, director, officer, employee, incorporator, member, manager, partner, stockholder, agent, attorney or representative of any of the foregoing (each, a “Non-Recourse Party”) shall have any liability for any obligations or liabilities of the parties to this Agreement or for any
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claim based on, in respect of, or by reason of, the transactions contemplated hereby. Without limiting the rights of any party against the other parties hereto, in no event shall any party or any of its Affiliates seek to enforce this Agreement against, make any claims for breach of this Agreement against, or seek to recover monetary damages from, any Non-Recourse Party.
Section 4.14 Independent Nature of the Rights and Obligations of Holders. The rights and obligations of each Holder hereunder are several and not joint with the obligations of any Holder, and no Holder shall be responsible in any way for the performance of the obligations of any other Holder hereunder. The decision of each Holder to enter into this Agreement has been made by such Holder independently of any Holder. Nothing contained herein, and no action taken by any Holder pursuant hereto, shall be deemed to constitute the Holders as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Holders are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated hereby and the Company acknowledges that the Holders are not acting in concert or as a group, and the Company will not assert any such claim, with respect to such obligations or the transactions contemplated hereby.
Section 4.15 Termination as to a Holder. Any Person who ceases to hold any Registrable Securities, or who has forfeited, in writing, its rights hereunder with respect to such Registrable Securities, shall cease to be a Holder and shall have no further rights or obligations under this Agreement (except with respect to any indemnification or contribution rights or obligations under Article III, which shall survive).
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first written above.
| COMPANY | ||
| LINEAGE, INC. | ||
| By: | /s/Adam Forste | |
| Name: | Adam Forste | |
| Title: | Co-Executive Chairman | |
| BGLH | ||
| BG LINEAGE HOLDINGS, LLC | ||
| By: | Bay Grove Management Company, LLC | |
| Its: | Manager | |
| By: | /s/Adam Forste | |
| Name: | Adam Forste | |
| Title: | Authorized Person | |
[Signature page to Registration Rights Agreement]
Exhibit A
FORM OF ASSIGNMENT AND JOINDER
[___], 20[___]
Reference is made to the Registration Rights Agreement, dated as of July 24, 2024, by and among Lineage, Inc. (the “Company”) and the Holders (as defined therein) from time to time party thereto (the “Registration Rights Agreement”). Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Registration Rights Agreement.
Pursuant to Section 4.2 of the Registration Rights Agreement, [___] (the “Assignor”) in its capacity as a Holder hereby assigns [in part][or: in full] its rights and obligations under the Registration Rights Agreement to each of [___], [___] and [___] (each, an “Assignee” and collectively, the “Assignees”). [For the avoidance of doubt, the Assignor shall remain a party to the Registration Rights Agreement following the assignment in part of its rights and obligations thereunder to the undersigned Assignees.]
Each undersigned Assignee hereby agrees to and does become party to the Registration Rights Agreement as a Holder. This assignment and joinder shall serve as a counterpart signature page to the Registration Rights Agreement and by executing below each undersigned Assignee is deemed to have executed the Registration Rights Agreement with the same force and effect as if originally named a party thereto and each Assignee’s shares of Common Stock shall be included as Registrable Securities under the Registration Rights Agreement.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the undersigned have duly executed this assignment and joinder as of date first set forth above.
| ASSIGNOR: | ||
| [___] | ||
| By: |
||
| Name: |
||
| Title: |
||
| ASSIGNEES: | ||
| [___] | ||
| By: |
||
| Name: |
||
| Title: |
||
Exhibit 10.7
REGISTRATION RIGHTS AGREEMENT
by and among
LINEAGE, INC.
and
the other parties hereto
Dated as of July 24, 2024
TABLE OF CONTENTS
Page
| ARTICLE 1 DEFINITIONS |
1 | |||||||
|
|
Section 1.1 |
Certain Definitions | 1 | |||||
| Section 1.2 |
Other Definitional Provisions; Interpretation | 5 | ||||||
| ARTICLE 2 REGISTRATION RIGHTS |
6 | |||||||
| Section 2.1 |
Shelf Registration | 6 | ||||||
| Section 2.2 |
Notification and Distribution of Materials | 6 | ||||||
| Section 2.3 |
Effectiveness | 6 | ||||||
| Section 2.4 |
Registration Procedures | 6 | ||||||
| Section 2.5 |
Costs and Expenses | 8 | ||||||
| Section 2.6 |
Notice of Certain Events | 9 | ||||||
| Section 2.7 |
Covenants Relating to Rule 144 | 9 | ||||||
| Section 2.8 |
No Conflicting Agreements | 10 | ||||||
| Section 2.9 |
Holders Become Party to Agreement | 10 | ||||||
| ARTICLE 3 SUSPENSION OF REGISTRATION REQUIREMENTS; SALES RESTRICTIONS |
10 | |||||||
| Section 3.1 |
Suspension of Registration Requirements | 10 | ||||||
| Section 3.2 |
Restriction on Sales | 11 | ||||||
| ARTICLE 4 INDEMNIFICATION |
11 | |||||||
| Section 4.1 |
Indemnification by the Company | 11 | ||||||
| Section 4.2 |
Indemnification by the Holder | 12 | ||||||
| Section 4.3 |
Notices of Claims, etc. | 12 | ||||||
| Section 4.4 |
Contribution | 13 | ||||||
| Section 4.5 |
Other Indemnification | 14 | ||||||
| Section 4.6 |
Non-Exclusivity | 14 | ||||||
| ARTICLE 5 OTHER |
14 | |||||||
| Section 5.1 |
Notices | 14 | ||||||
| Section 5.2 |
Assignment | 15 | ||||||
| Section 5.3 |
Amendments; Waiver | 15 | ||||||
| Section 5.4 |
Third Parties | 16 | ||||||
| Section 5.5 |
Governing Law | 16 | ||||||
| Section 5.6 |
Consent to Jurisdiction | 16 | ||||||
| Section 5.7 |
Mutual Waiver of Jury Trial | 16 | ||||||
| Section 5.8 |
Specific Performance | 16 | ||||||
| Section 5.9 |
Entire Agreement | 17 | ||||||
| Section 5.10 |
Severability | 17 | ||||||
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| Section |
5.11 | Counterparts | 17 | |||||||||
| Section |
5.12 | Effectiveness | 17 | |||||||||
|
|
Section |
5.13 | No Recourse | 17 | ||||||||
| Section |
5.14 | Independent Nature of the Rights and Obligations of Holders | 17 | |||||||||
| Section |
5.15 | Termination as to a Holder | 18 |
ii
THIS REGISTRATION RIGHTS AGREEMENT (the “Agreement”) is dated as of July 24, 2024 and is by and among Lineage, Inc. (the “Company”), and the Holders (as defined below) from time to time party hereto.
RECITALS
WHEREAS, the Company is effecting an underwritten initial public offering (“IPO”) of shares of its Common Stock (as defined below);
WHEREAS, from time to time following the IPO, certain Holders will receive shares of Common Stock (as defined below) from BG Lineage Holdings, LLC, a Delaware limited liability company (“BGLH”), in connection with the settlement of their respective existing interests in BGLH (each such event, a “Settlement”);
WHEREAS, from time to time following the IPO, certain Holders will receive OP Units (as defined below), in connection with the reclassification of their respective existing interests in Lineage OP, LP, a Maryland limited partnership (the “OP”) (each such event, a “Reclassification”); and
WHEREAS, the Company desires to grant registration rights to the Holders on the terms and conditions set out in this Agreement.
NOW, THEREFORE, the parties agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.1 Certain Definitions. As used in this Agreement:
“Affiliate” has the meaning ascribed thereto in Rule 12b-2 promulgated under the Exchange Act, as in effect on the date hereof.
“Agreement” has the meaning set forth in the preamble.
“Automatic Shelf Registration Statement” means an “Automatic Shelf Registration Statement,” as defined in Rule 405 under the Securities Act.
“BGLH” has the meaning set forth in the recitals.
“Business Day” means a day other than a Saturday, Sunday, federal or New York State holiday or other day on which commercial banks in New York City are authorized or required by Law to close.
“Closing Date” means the initial closing date of the IPO.
“Common Stock” means the shares of common stock, par value $0.01 per share, of the Company, and any Securities issued in respect thereof, or in substitution therefor, in connection with any stock split, dividend or combination, or into which it may be converted or exchanged pursuant to any reclassification, recapitalization, merger, consolidation, sale of all or any part of its assets, corporate conversion or other extraordinary transaction of the Company.
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“Company” has the meaning set forth in the preamble.
“Company Offering” has the meaning set forth in Section 3.2(b).
“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder, as the same may be amended from time to time.
“Governmental Authority” means any nation or government, any state or other political subdivision thereof, and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.
“Holder” means the entities listed on Schedule I hereto or any Transferee of such Person to whom registration rights are assigned pursuant to Section 4.2.
“Indemnified Party” and “Indemnified Parties” have the meanings set forth in Section 4.1.
“IPO” has the meaning set forth in the recitals.
“Law” means any statute, law, regulation, ordinance, rule, injunction, order, decree, governmental approval, directive, requirement, or other governmental restriction or any similar form of decision of, or determination by, or any interpretation or administration of any of the foregoing by, any Governmental Authority.
“Non-Recourse Party” has the meaning set forth in Section 5.13.
“Notice and Questionnaire” means a written notice, substantially in the form attached as Exhibit B, delivered by a Holder to the Company (i) notifying the Company of such Holder’s desire to include Registrable Securities held by it in a Registration Statement, (ii) containing all information about such Holder required to be included in such registration statement in accordance with applicable law, including Item 507 of Regulation S-K under the Securities Act, and (iii) pursuant to which such Holder agrees to bound by the terms and conditions hereof.
“Offering Blackout Period” has the meaning set forth in Section 3.2(b).
“OP” has the meaning set forth in the recitals.
“OP Agreement” means the Second Amended and Restated Limited Partnership Agreement of OP, dated on or about the date hereof, among the Company and the other persons parties thereto from time to time, as amended and in effect from time to time.
“OP Units” means common units of partnership interest in OP.
“Person” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, a cooperative, an unincorporated organization, or other form of business organization, whether or not regarded as a legal entity under applicable Law, or any Governmental Authority or any department, agency or political subdivision thereof.
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“Proceeding” has the meaning set forth in Section 4.3.
“Prospectus” means any prospectus or prospectuses included in, or relating to, any Registration Statement (including without limitation, any prospectus subject to completion and a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A or Rule 430B promulgated under the Securities Act, as the case may be, and any term sheet filed pursuant to Rule 433 under the Securities Act), as amended or supplemented by any prospectus supplement with respect to the terms of the offering of any portion of the Registrable Securities covered by such Registration Statement and by all other amendments and supplements to the prospectus, including post-effective amendments and all material incorporated by reference or deemed to be incorporated by reference in such prospectus or prospectuses.
“Reclassification” has the meaning set forth in the recitals.
“Registrable Securities” means all shares of Common Stock held by a Holder, whether now held or hereafter received in a Settlement, and including any such Common Stock received by a Holder upon the conversion or exchange of, or pursuant to such a transaction with respect to, other Securities held by such Holder, including such Common Stock received by a Holder upon exchange of OP Units in accordance with the OP Agreement, whether now held or hereafter received in a Reclassification. As to any Registrable Securities, such Securities shall cease to be Registrable Securities without further act of the Company or a Holder when:
(a) a registration statement covering such Registrable Securities has been declared effective and such Registrable Securities have been disposed of pursuant to such effective registration statement;
(b) such Registrable Securities shall have been sold pursuant to Section 4(a)(1), Rule 144 or 145 (or any similar provision then in effect) under the Securities Act;
(c) such Registrable Securities shall have been Transferred in a private transaction in which the Transferor’s registration rights under this Agreement are not assigned to the Transferee of the Securities;
(d) such Registrable Securities cease to be outstanding; or
(e) all such Registrable Securities held by such Holder may be sold in one transaction pursuant to Rule 144 (or any similar provision then in effect) under the Securities Act without limitation thereunder on volume or manner of sale.
“Registration Expenses” means any and all expenses incurred in connection with the performance of or compliance with this Agreement, including:
(a) all SEC, stock exchange, or FINRA registration and filing fees;
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(b) all fees and expenses of complying with securities or blue sky Laws;
(c) all printing, messenger and delivery expenses;
(d) all fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange or FINRA and all rating agency fees;
(e) the reasonable fees and disbursements of counsel for the Company and of its independent public accountants; and
(f) any other fees and disbursements customarily paid by the issuers of securities;
provided, however, that “Registration Expenses” shall not include, and the Company shall not have any obligation to pay, any underwriting fees, discounts, commissions, or taxes (including transfer taxes) attributable to the sale of securities by a Holder, or any legal fees and expenses of counsel to a Holder and any underwriter engaged by a Holder or any other expenses incurred in connection with the performance by a Holder of their obligations under the terms of this Agreement.
“Registration Statement” means any registration statement of the Company filed with the SEC under the Securities Act which permits the public offering of any of the Registrable Securities pursuant to the provisions of this Agreement, including any Prospectus, amendments and supplements to such Registration Statement, including post-effective amendments, all exhibits and all materials incorporated by reference or deemed to be incorporated by reference in such Registration Statement.
“SEC” means the U.S. Securities and Exchange Commission.
“Securities” means capital stock, limited partnership interests, limited liability company interests, beneficial interests, warrants, options, notes, bonds, debentures, and other securities, equity interests, ownership interests and similar obligations of every kind and nature of any Person.
“Securities Act” means the U.S. Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder, as the same may be amended from time to time.
“Selling Holder” means a Holder who is selling Registrable Securities pursuant to a Registration Statement pursuant to the terms hereof.
“Settlement” has the meaning set forth in the recitals.
“Specified Holder” means each Person listed on the signature pages hereto under the heading “Specified Holders” and any Transferee of such Person to whom registration rights are assigned pursuant to Section 5.2.
“Subsidiary” means, with respect to any Person, any corporation, limited liability company, partnership, association or other business entity of which: (i) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, representatives or trustees thereof is at the time owned or
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Controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof; or (ii) if a limited liability company, partnership, association or other business entity, a majority of the total voting power of stock (or equivalent ownership interest) of the limited liability company, partnership, association or other business entity is at the time owned or Controlled, directly or indirectly, by any Person or one or more Subsidiaries of that Person or a combination thereof. For purposes hereof, a Person or Persons shall be deemed to have a majority ownership interest in a limited liability company, partnership, association or other business entity if such Person or Persons shall be allocated a majority of limited liability company, partnership, association or other business entity gains or losses or shall be or Control the managing director or general partner of such limited liability company, partnership, association or other business entity.
“Suspension Event” has the meaning set forth in Section 3.1(a).
“Transfer” (including its correlative meanings, “Transferor”, “Transferee” and “Transferred”) shall mean, with respect to any security, directly or indirectly, to sell, contract to sell, give, assign, hypothecate, pledge, encumber, grant a security interest in, offer, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of any economic, voting or other rights in or to such security. When used as a noun, “Transfer” shall have such correlative meaning as the context may require.
Section 1.2 Other Definitional Provisions; Interpretation.
(a) The words “hereof,” “herein,” and “hereunder” and words of similar import when used in this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement. The word “including” and words of similar import when used in this Agreement mean “including, without limitation,” unless otherwise specified. References in this Agreement to a designated “Article” or “Section” refer to an Article or Section of this Agreement unless otherwise specified and references to clauses without a cross-reference to a Section or subsection are references to clauses within the same Section or, if more specific, subsection. The word “extent” in the phrase “to the extent” means the degree to which a subject or other thing extends and such phrase shall not mean simply “if.” References to “day” means a calendar day unless otherwise indicated as a “Business Day.”
(b) The headings in this Agreement are included for convenience of reference only and do not limit or otherwise affect the meaning or interpretation of this Agreement.
(c) The meanings given to terms defined herein are equally applicable to both the singular and plural forms of such terms.
(d) When calculating the period of time before which, within which or following which any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period is excluded. If the last day of such period is a non-Business Day, the period in question ends on the next succeeding Business Day.
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ARTICLE 2
REGISTRATION RIGHTS
Section 2.1 Shelf Registration. The Company shall use its reasonable best efforts to file, as promptly as practicable on or after the date that is 365 days after the Closing Date, with the SEC a “shelf” Registration Statement on an appropriate form (which shall be, if the Company is then eligible, an Automatic Shelf Registration Statement) providing for the registration of, and the sale by each Holder of, all of the Registrable Securities held by such Holder at the time of such filing on a continuous or delayed basis by each Holder, from time to time in accordance with Rule 415 under the Securities Act or any similar rule that may be adopted by the SEC. The Company shall use its reasonable best efforts to cause the Registration Statement to be declared effective by the SEC as soon as practicable after the filing thereof. To the extent that the Company has an effective shelf registration statement on file and it is effective with the SEC at the time the Company is going to file a Registration Statement hereunder, the Company may (but will not be required to) instead file a prospectus supplement or post-effective amendment, as applicable, to include in such shelf registration statement the Registrable Securities to be registered pursuant to this Agreement (in such a case, such prospectus supplement or post-effective amendment together with the previously filed shelf registration statement will be considered the Registration Statement).
Section 2.2 Notification and Distribution of Materials. At the time the Registration Statement is declared effective, each Holder that has delivered a duly completed and executed Notice and Questionnaire to the Company on or prior to the date ten (10) Business Days prior to such time of effectiveness shall be named as a selling securityholder in the Registration Statement and the Prospectus in such a manner as to permit such Holder to deliver such Prospectus to purchasers of Registrable Securities in accordance with applicable Law.
Section 2.3 Effectiveness. The Company shall use its reasonable best efforts to keep the Registration Statement continuously effective (or in the event the Registration Statement expires pursuant to Rule 415(a)(5) under the Securities Act, file a replacement Registration Statement (or prospectus supplement or post-effective amendment, as applicable, pursuant to the last sentence of Section 2.3) and keep such replacement Registration Statement effective) for the period beginning on the date on which the Registration Statement is declared or becomes effective and ending on the date that no Registrable Securities remain as Registrable Securities.
Section 2.4 Registration Procedures. The Company shall:
(a) during the period that the Registration Statement is effective, use its reasonable best efforts to prepare and file with the SEC from time to time such amendments and supplements to the Registration Statement and Prospectus used in connection therewith as may be necessary to (i) keep such Registration Statement (or a successor Registration Statement filed with respect to such Registrable Securities) effective and to comply with the provisions of the Securities Act with respect to the disposition of the Registrable Securities covered thereby and (ii), not less than once a quarter (subject to Section 3(b)), (x) name as selling securityholders therein any Holder and (y) add Registrable Securities to the Registration Statement as a result of the receipt by any Holder of additional Registrable Securities pursuant to a Settlement or Reclassification, in either case, who provides the Company a duly completed and executed Notice and Questionnaire on or prior to the
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date ten (10) Business Days prior to such filing; provided that the Company’s obligation under clause (ii) with respect to any quarter shall be deemed satisfied with no further action of the Company if the Company does not receive a single duly completed and executed Notice and Questionnaire during such quarter; provided further that before filing a Registration Statement or Prospectus, or any amendments or supplements thereto (other than any reports or other documents filed with the SEC pursuant to the Exchange Act), the Company shall (i) furnish to counsel for the sellers of Registrable Securities covered by such Registration Statement copies of all documents proposed to be filed, which documents will be subject to the review of such counsel, and such other documents reasonably requested by such counsel, including any comment letter from the SEC, (ii) fairly and in good faith consider such changes in any such documents prior to or after the filing thereof as the counsel to the Holders of Registrable Securities being sold may reasonably request, and (iii) make such representatives of the Company as shall be reasonably requested by the Holders of the Registrable Securities being sold available for discussion of such documents; provided further that, in addition to the Notice and Questionnaire, each Holder agrees to deliver such notices, questionnaires and other information as the Company may reasonably request in writing, if any, to the Company within ten (10) Business Days after such request;
(b) furnish to each Holder of Registrable Securities being registered such number of copies of such Registration Statement and of each amendment and supplement thereto (in each case including all exhibits filed therewith, including any documents incorporated by reference), such number of copies of the Prospectus included in such Registration Statement (including each preliminary prospectus and summary prospectus), in conformity with the requirements of the Securities Act, and such other documents as such Holder may reasonably request, without charge, in order to facilitate the disposition of the Registrable Securities by such Holder (it being understood that, subject to the requirements of the Securities Act and applicable state securities laws, the Company consents to the use of the Prospectus and any amendment or supplement thereto by each Holder in connection with the offering and sale of the Registrable Securities covered by the Registration Statement of which such Prospectus, amendment or supplement is a part);
(c) use its reasonable best efforts to promptly notify each Holder of any such Registrable Securities covered by such Registration Statement, at any time when the Prospectus relating thereto is required to be delivered under the Securities Act, of the Company’s becoming aware that the Prospectus included in such Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing, and at the request of any such Holder, use its reasonable best efforts to prepare and furnish to such Holder a reasonable number of copies of an amended or supplemental Prospectus as may be necessary so that, as thereafter delivered to the purchasers of such Registrable Securities, such Prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing;
(d) use its reasonable best efforts to (i) list such Registrable Securities on any securities exchange on which other Securities of the Company are then listed if such Registrable Securities are not already so listed and if such listing is then permitted under the rules of such exchange, and (ii) provide a transfer agent and registrar and CUSIP number for such Registrable Securities covered by such Registration Statement not later than the effective date of the Registration Statement;
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(e) use its reasonable best efforts to notify counsel for the Holders of Registrable Securities included in such Registration Statement, immediately, and confirm the notice in writing: (i) when the Registration Statement, or any post-effective amendment to the Registration Statement, shall have become effective, or any supplement to the prospectus or any amendment to any prospectus shall have been filed; provided, however, that this clause (i) shall not apply to (A) an amendment or supplement relating solely to securities other than the Registrable Securities or (B) an amendment or supplement by means of an Annual Report on Form 10-K, a Quarterly Report on Form 10-Q, a Proxy Statement on Schedule 14A, a Current Report on Form 8-K or a Registration Statement on Form 8-A or any amendments thereto filed with the SEC under the Exchange Act and incorporated or deemed to be incorporated by reference into a Registration Statement or Prospectus; (ii) of the receipt of any comments from the SEC; (iii) of any request of the SEC to amend the Registration Statement or amend or supplement the prospectus or for additional information; and (iv) of the issuance by the SEC of any stop order suspending the effectiveness of the Registration Statement or of any order preventing or suspending the use of any preliminary prospectus, or of the suspension of the qualification of the Registration Statement for offering or sale in any jurisdiction, or of the institution or threatening of any proceedings for any of such purposes;
(f) take every reasonable effort to prevent the issuance of any stop order suspending the effectiveness of the Registration Statement or of any order preventing or suspending the use of any Prospectus and, if any such order is issued, to obtain the withdrawal of any such order at the earliest possible moment;
(g) use its reasonable best efforts to register and qualify (unless an exemption from the registration or qualification exists) the Registrable Securities for offer and sale under the securities or “Blue Sky” laws of such jurisdictions as shall be reasonably requested by the Holders; provided, however, that the Company shall not be required in connection therewith or as a condition thereof to (i) qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 2.4(g), (ii) subject itself to general taxation in any jurisdiction where it would not otherwise be so subject but for this Section 2.4(g), or (iii) file a general consent to service of process in any such jurisdictions;
(h) use its reasonable best efforts to cooperate with the Holders of Registrable Securities covered by the Registration Statement to facilitate the timely preparation and delivery of certificates (not bearing any restrictive legends) representing Securities to be sold under the Registration Statement, and enable such Securities to be in such denominations and registered in such names as the Holders may request; and
(i) use its reasonable best efforts to cooperate with each seller of Registrable Securities and their respective counsel in connection with any filings required to be made with FINRA.
Section 2.5 Costs and Expenses. The Company shall bear all Registration Expenses incurred in connection with the registration of the Registrable Securities pursuant to this Agreement and the Company’s performance of its other obligations under the terms of this Agreement. All other costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby will be paid by the party incurring such costs and expenses, whether or not any of the transactions contemplated hereby are consummated.
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Section 2.6 Notice of Certain Events. Each Holder agrees that, upon receipt of any notice from the Company of the occurrence of an event as set forth in clauses (ii)-(iv) of Section 2.4(e), the Holder will forthwith discontinue disposition of Registrable Securities pursuant to any Registration Statement covering such Registrable Securities until the Holder’s receipt of written notice from the Company that the use of the Registration Statement may be resumed. Each Holder also agrees that it will treat as strictly confidential the receipt of any notice from the Company of the occurrence of an event as set forth above and shall not disclose or use the information contained in such notice without the prior written consent of the Company, unless required by law or subpoena, until such time as the information contained therein is or becomes available to the public generally, other than as a result of disclosure by such Holder in breach of the terms of this Agreement.
Section 2.7 Covenants Relating to Rule 144. For so long as the Company is subject to the reporting requirements of Section 13 or 15 of the Exchange Act, the Company will use its reasonable best efforts to file the reports required to be filed by it under the Securities Act and Section 13(a) or 15(d) of the Exchange Act and the rules and regulations adopted by the SEC thereunder. If the Company ceases to be so required to file such reports, the Company will use its reasonable best efforts to, upon the request of the Holder of Registrable Securities, (a) make publicly available such information as is necessary to permit sales pursuant to Rule 144 under the Securities Act, (b) deliver such information to a prospective purchaser as is necessary to permit sales pursuant to Rule 144A under the Securities Act and it will take such further action as a Holder of Registrable Securities may reasonably request, and (c) take such further action that is reasonable in the circumstances, in each case to the extent required from time to time to enable a Holder to sell its Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by (i) Rule 144 under the Securities Act, as such rule may be amended from time to time, (ii) Rule 144A under the Securities Act, as such rule may be amended from time to time, or (iii) any similar rules or regulations hereafter adopted by the SEC. Upon the request of a Holder of Registrable Securities, the Company will use its reasonable best efforts to deliver to the Holders a written statement as to whether it has complied with such requirements of the Securities Act and the Exchange Act, a copy of the most recent annual and quarterly report(s) of the Company, and such other reports, documents or stockholder communications of the Company, and take such further actions consistent with this Section 2.8, as a Holder may reasonably request in availing itself of any rule or regulation of the SEC allowing such Holder to sell any such Registrable Securities without registration. Without limiting the generality of the foregoing, if a Holder holds Registrable Securities that are eligible to be resold without restriction under Rule 144 or pursuant to an effective Registration Statement, then, at such Holder’s request, accompanied by such additional representations and other documentation as the Company shall reasonably request, the Company shall use its reasonable best efforts to cause the Company’s transfer agent to remove any restrictive legend set forth on the Registrable Securities held by such Holder in connection with any sale of such Registrable Securities pursuant to Rule 144 or the effective Registration Statement, as applicable (including, if required by the Company’s transfer agent, by delivering to the Company’s transfer agent a direction letter and opinion of counsel).
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Section 2.8 No Conflicting Agreements. The Company hereby represents and warrants that the Company has not entered into and the Company will not after the date of this Agreement enter into any agreement that conflicts with the rights granted to the Holders of Registrable Securities pursuant to this Agreement or otherwise conflicts with the provisions of this Agreement.
Section 2.9 Holders Become Party to Agreement. Each Holder acknowledges that by participating in its registration rights pursuant to this Agreement, such Holder will be deemed a party to this Agreement and will be bound by its terms, notwithstanding such Holder’s failure to deliver a Notice and Questionnaire; provided that any Holder that has not delivered a duly completed and executed Notice and Questionnaire shall not be entitled to be named as a Selling Holder in, or have the Registrable Securities held by it covered by, a Registration Statement.
ARTICLE 3
SUSPENSION OF REGISTRATION
REQUIREMENTS; SALES RESTRICTIONS
Section 3.1 Suspension of Registration Requirements.
(a) Notwithstanding anything to the contrary set forth in this Agreement, the Company’s obligation under this Agreement to file, amend or supplement a Registration Statement, or to cause a Registration Statement, or any filings under any state securities Laws, to become or remain effective shall be suspended, as the Company may reasonably determine necessary and advisable (but in no event more than three times in any rolling 12-month period commencing on the date of this Agreement or more than 60 consecutive days, except as a result of a refusal by the SEC to declare any post-effective amendment to the Registration Statement effective after the Company has used its reasonable best efforts to cause the post-effective amendment to be declared effective by the SEC, in which case, the Company must terminate the black-out period immediately following the effective date of the post-effective amendment) (i) if such filing, amendment or supplement would render the Company unable to comply with any “lockup” or similar agreement between the managing underwriter or underwriters and the Company in an underwritten offering or (ii) in the event of pending negotiations relating to, or consummation of, a material transaction or the occurrence of a material event that would (A) require additional disclosure of material non-public information by the Company in the Registration Statement or such filing, amendment or supplement, as to which the Company has a bona fide business purpose for preserving confidentiality, and the premature disclosure of which would adversely affect the Company, or (B) render the Company unable to comply with SEC requirements (any such circumstances being hereinafter referred to as a “Suspension Event”). The Company will use its reasonable best efforts to notify the Holders of the existence of any Suspension Event by promptly delivering to the Holders a certificate signed by an executive officer of the Company stating that a Suspension Event has occurred and is continuing; provided that any such certificate shall not include details of the circumstances giving rise to the Suspension Event. Each Holder agrees that it will treat as strictly confidential the receipt of any notice from the Company of the occurrence of an event as set forth above and shall not disclose or use the information contained in such notice without the prior written consent of the Company, unless otherwise required by law or subpoena, until such time as the information contained therein is or becomes available to the public generally, other than as a result of disclosure by such Holder in breach of the terms of this Agreement.
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Section 3.2 Restriction on Sales.
(a) Each Holder agrees that, following the effectiveness of any Registration Statement relating to its Registrable Securities, the Holder will not effect any dispositions of any of its Registrable Securities pursuant to such Registration Statement or any filings under any state securities Laws at any time after the Holder has received notice from the Company to suspend dispositions as a result of the occurrence or existence of any Suspension Event or so that the Company may correct or update the Registration Statement or such filing. Each Holder will maintain the strict confidentiality of any information included in the written notice delivered by the Company unless otherwise required by Law or subpoena. Each Holder may recommence effecting dispositions of the Registrable Securities pursuant to the Registration Statement or such filings, and all other obligations which are suspended as a result of a Suspension Event shall no longer be so suspended, following further notice to such effect from the Company, which notice shall be given by the Company promptly after the conclusion of any such Suspension Event.
(b) Each Holder of Registrable Securities further agrees, if requested by the managing underwriter or underwriters in a Company-initiated underwritten offering (each, a “Company Offering”), not to effect any disposition of any of the Registrable Securities during the period (the “Offering Blackout Period”) beginning upon receipt by the Holder of written notice from the Company, but in any event no earlier than the fifteenth (15th) day preceding the anticipated date of pricing of such Company Offering, and ending no later than ninety (90) days after the closing date of such Company Offering. Such Offering Blackout Period notice shall be in writing in a form reasonably satisfactory to the Company and the managing underwriter or underwriters. Each Holder will maintain the strict confidentiality of any information included in such notice delivered by the Company unless otherwise required by Law or subpoena. Such Offering Blackout Period notice shall only be effective if (i) all executive officers subject to Section 16 of the Exchange Act and directors of the Company are similarly bound and (ii) such Offering Blackout Period notice provides that any release from such notice shall only be effective if it is granted pro rata to all Holders.
ARTICLE 4
INDEMNIFICATION
Section 4.1 Indemnification by the Company. The Company hereby indemnifies and agrees to hold harmless, to the fullest extent permitted by Law, each Holder of Registrable Securities, each Affiliate of such Holder and their respective directors, officers, employees, partners, equityholders, managers, accountants, attorneys and agents (and the directors, officers, employees, partners, equityholders, managers, accountants, attorneys, agents and controlling Persons of any of the foregoing) and each other Person, if any, who controls such Holder within the meaning of the Securities Act or the Exchange Act (each, and “Indemnified Party” and collectively, the “Indemnified Parties”), against any and all losses, claims, damages or liabilities, joint or several, actions or proceedings (whether commenced or threatened) and reasonable and documented expenses and to which such Indemnified Party may become subject under the Securities Act, common law or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings in respect thereof, whether or not such Indemnified Party is a party thereto) arise out of or are based upon: (a) any untrue statement or alleged untrue statement of any material fact contained in any Registration Statement under which such Securities were registered under
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the Securities Act, any Prospectus contained therein, or any amendment or supplement thereto, or any document incorporated by reference therein, any other such disclosure document (including reports and other documents filed under the Exchange Act and any document incorporated by reference therein) or related document or report; (b) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in the case of a Prospectus, in the light of the circumstances when they were made; or (c) any violation or alleged violation by the Company or any of its Subsidiaries of any federal, state, foreign or common law rule or regulation applicable to the Company or any of its Subsidiaries and relating to action or inaction in connection with any such registration, disclosure document or related document or report, and the Company shall reimburse such Indemnified Party for any legal or other expenses reasonably incurred by it in connection with investigating or defending any such loss, claim, liability, action or proceeding; provided that the Company shall not be liable to any Indemnified Party in any such case to the extent that any such loss, claim, damage, liability (or action or proceeding in respect thereof) or expense arises out of or is based upon any untrue statement or alleged untrue statement or omission or alleged omission made in such Registration Statement, in any such Prospectus, or any amendment or supplement thereto, in reliance upon and in conformity with written information with respect to such Indemnified Party furnished to the Company by such Indemnified Party expressly for use in the preparation thereof. Such indemnity will remain in full force and effect regardless of any investigation made by or on behalf of such Holder or any Indemnified Party and will survive the Transfer of such Securities by such Holder or any termination of this Agreement.
Section 4.2 Indemnification by the Holder. Each Holder severally, and not jointly, agrees to indemnify and hold harmless (in the same manner and to the same extent as set forth in Section 4.1) the Company, all other Holders and any of their respective Affiliates, their respective directors, officers, employees, partners, equityholders, managers, accountants, attorneys and agents (and the directors, officers, employees, partners, equityholders, managers, accountants, attorneys, agents and controlling Persons of any of the foregoing) and each other Person, if any, who controls any of the foregoing Persons within the meaning of the Securities Act or Exchange Act, with respect to any untrue statement in or omission from such Registration Statement, any Prospectus contained therein, any amendment or supplement, to the extent, but only to the extent, that such untrue or alleged untrue statement is contained in, or such omission or alleged omission is required to be contained in, any information which (i) relates solely to such Holder’s individual ownership of the Registrable Securities, and (ii) if such untrue statement or omission was made in reliance upon and in conformity with written information with respect to such Holder furnished to the Company by such Holder expressly for use in the preparation of such Registration Statement, Prospectus or amendment or supplement or a document incorporated by reference into any of the foregoing. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Company or any of the Holders, or any of their respective Affiliates, directors, officers or controlling Persons and shall survive the Transfer of such Securities by such Holder.
Section 4.3 Notices of Claims, etc. Promptly after receipt by an Indemnified Party hereunder of written notice of the commencement of any action, suit, proceeding or investigation or written threat thereof with respect to which a claim for indemnification may be made pursuant to this Article 4 (each, a “Proceeding”), such Indemnified Party will, if a claim in respect thereof is to be made against an indemnifying party, give written notice to the latter of the commencement
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of such Proceeding; provided that the failure of the Indemnified Party to give notice as provided herein will not relieve the indemnifying party of its obligations under Section 4.1 or 4.2, except to the extent that the indemnifying party is actually and materially prejudiced by such failure to give notice. In case any such Proceeding is brought against an Indemnified Party, the indemnifying party shall be entitled to participate in and to assume the defense thereof, jointly with any other indemnifying party similarly notified to the extent that it may wish, with counsel selected by the indemnifying party and reasonably satisfactory to such Indemnified Party, and after notice from the indemnifying party to such Indemnified Party of its election so to assume the defense thereof, at the indemnifying party’s expense, the indemnifying party shall not be liable to such Indemnified Party for any legal or other expenses subsequently incurred by the latter in connection with the defense thereof other than reasonable costs of investigation. If, in such Indemnified Party’s reasonable judgment, having common counsel would result in a conflict of interest between the interests of such indemnified and indemnifying parties, then such Indemnified Party may employ separate counsel reasonably acceptable to the indemnifying party to represent or defend such Indemnified Party in such Proceeding, it being understood, however, that the indemnifying party shall not be liable for the reasonable fees and expenses of more than one separate firm of attorneys at any time for all such Indemnified Parties (and not more than one separate firm of local counsel at any time for all such Indemnified Parties) in such action unless (i) the indemnifying party agrees to pay such fees and expenses; (ii) the indemnifying party or parties fail promptly to assume the defense of such Proceeding or fail to employ counsel reasonably satisfactory to the indemnified party or parties; or (iii) the named parties to any such Proceeding (including any impleading parties) include both such indemnified party or parties and the indemnifying parties or an Affiliate of an indemnifying party or indemnified party, and there may be one or more defenses available to such indemnified party or parties that are different from or additional to those available to the indemnifying party or parties, in which case, if such indemnified party or parties notifies the indemnifying party or parties in writing that it elects to employ separate counsel at the expenses of the indemnifying party or parties, the indemnifying party or parties shall not have the right to assume the defense thereof and such counsel shall be at the expense of the indemnifying party or parties. No indemnifying party shall consent to entry of any judgment or enter into any settlement which (x) provides for other than monetary damages without the consent of the Indemnified Party (which consent shall not be unreasonably withheld or delayed) or (y) does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect of such claim or litigation.
Section 4.4 Contribution. If the indemnification provided for hereunder from the indemnifying party is unavailable to an Indemnified Party hereunder in respect of any losses, claims, damages, liabilities or expenses referred to herein for reasons other than those described in the proviso in the first sentence of Section 4.1, then the indemnifying party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such losses, claims, damages, liabilities or expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying party and Indemnified Parties in connection with the actions which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative fault of such indemnifying party and Indemnified Parties shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, has been made by, or relates to information supplied by, such indemnifying party or Indemnified Parties, and the parties’
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relative intent, knowledge, access to information and opportunity to correct or prevent such action. The amount paid or payable by a party under this Section 4.4 as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include any legal or other fees or expenses reasonably incurred by such party in connection with any investigation or proceeding. In no event shall the liability of any selling Holder of Registrable Securities hereunder be greater in amount than the dollar amount of the proceeds actually received by such Holder upon the sale of the Registrable Securities giving rise to such contribution obligation. Any obligation of Holders to contribute pursuant to this Section 4.4 shall be several in the same proportion that the dollar amount of the proceeds actually received by each such Holder bears to the total dollar amount of the proceeds received by all Holders and not joint.
The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 4.4 were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.
If indemnification is available under Section 4.1, the indemnifying parties shall indemnify each Indemnified Party to the full extent provided in Section 4.1 without regard to the relative fault of said indemnifying party or Indemnified Party or any other equitable consideration provided for in this Section 4.4.
Section 4.5 Other Indemnification. Indemnification similar to that specified in this Article 4 (with appropriate modifications) shall be given by the Company with respect to any required registration or other qualification of Securities under any Law or with any Governmental Authority other than as required by the Securities Act.
Section 4.6 Non-Exclusivity. The obligations of the parties under this Article 4 shall be in addition to any liability which any party may otherwise have to any other party.
ARTICLE 5
OTHER
Section 5.1 Notices. Any notice, request, instruction or other document to be given hereunder by any party hereto to another party hereto shall be in writing and shall be deemed given (a) when delivered personally, (b) five (5) Business Days after being sent by certified or registered mail, postage prepaid, return receipt requested, (c) one (1) Business Day after being sent by Federal Express or other nationally recognized overnight courier, or (d) if transmitted by e-mail or other electronic communication, if confirmed within 24 hours thereafter by a signed original sent in the manner provided in clause (a), (b) or (c) to parties at the following addresses (or at such other address for a party as shall be specified by prior written notice from such party).
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If to the Company:
Lineage, Inc.
46500 Humboldt Drive
Novi, Michigan 48377
Attention: Legal Department
E-mail: legalnotice@onelineage.com
with a copy (which shall not constitute notice) to:
Latham & Watkins LLP
355 South Grand Avenue
Los Angeles, California 90071
Attention: Julian Kleindorfer; Lewis Kneib
E-mail: julian.kleindorfer@lw.com; lewis.kneib@lw.com
If to any Holder:
Initially to the address indicated in such Holder’s Notice and Questionnaire or, if no Notice and Questionnaire has been delivered:
c/o Lineage, Inc.
46500 Humboldt Drive
Novi, Michigan 48377
Attention: Legal Department
E-mail: legalnotice@onelineage.com
or to such other address and to such other Persons as any Holder may hereafter specify in writing.
Section 5.2 Assignment. This Agreement may not be assigned without the express prior written consent of the other parties hereto, and any attempted assignment, without such consents, shall be null and void; provided, however, that, without the prior written consent of any other party hereto, a Holder may assign its rights and obligations under this Agreement, in whole or in part, to any Transferee of Registrable Securities so long as such Transferee, if not already a party to this Agreement, executes and delivers to the Company a joinder to this Agreement, substantially in the form of Exhibit A, and upon such Transfer such transferee shall be deemed a “Holder” hereunder.
Section 5.3 Amendments; Waiver. This Agreement may be amended, supplemented or otherwise modified only by a written instrument executed by the Company and the Holders holding a majority of the Registrable Securities held by all Holders; provided that no such amendment, supplement or other modification shall materially adversely affect the rights of any Holder hereunder disproportionately to other Holders without the written consent of Holders that hold a majority of the Registrable Securities held by all Holders so affected; provided, further, that no such amendment, supplement or other modification shall materially adversely affect the rights of any Specified Holders hereunder without the written consent of Specified Holders that hold a majority of the Registrable Securities held by all Specified Holders so affected. No waiver by any party of any of the provisions hereof shall be effective unless explicitly set forth in writing and executed by the party so waiving. Except as provided in the preceding sentence, no action taken pursuant to this Agreement, including without limitation, any investigation by or on behalf of any party, shall be deemed to constitute a waiver by the party taking such action of compliance with any covenants or agreements contained herein. The waiver by any party hereto of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach.
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Section 5.4 Third Parties. This Agreement does not create any rights, claims or benefits inuring to any person that is not a party hereto nor create or establish any third party beneficiary hereto.
Section 5.5 Governing Law. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of New York.
Section 5.6 Consent to Jurisdiction. EACH OF THE PARTIES HERETO CONSENTS TO THE EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF NEW YORK, STATE OF NEW YORK AND IRREVOCABLY AGREES THAT ALL ACTIONS OR PROCEEDINGS RELATING TO THIS AGREEMENT SHALL BE LITIGATED IN SUCH COURTS. EACH OF THE PARTIES HERETO ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS RESPECTIVE PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY FINAL AND NONAPPEALABLE JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT. EACH OF THE PARTIES HERETO FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF VIA OVERNIGHT COURIER, TO SUCH PARTY AT THE ADDRESS SPECIFIED IN THIS AGREEMENT, SUCH SERVICE TO BECOME EFFECTIVE FOURTEEN CALENDAR DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL IN ANY WAY BE DEEMED TO LIMIT THE ABILITY OF EITHER PARTY HERETO TO SERVE ANY SUCH LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW OR TO OBTAIN JURISDICTION OVER OR TO BRING ACTIONS, SUITS OR PROCEEDINGS AGAINST THE OTHER PARTY HERETO IN SUCH OTHER JURISDICTIONS, AND IN SUCH MANNER, AS MAY BE PERMITTED BY ANY APPLICABLE LAW.
Section 5.7 Mutual Waiver of Jury Trial. THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING BROUGHT TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER THIS AGREEMENT.
Section 5.8 Specific Performance. Each of the parties hereto acknowledges and agrees that in the event of any breach of this Agreement by any of them, the non-breaching party would be irreparably harmed and could not be made whole by monetary damages. Each party accordingly agrees to waive the defense in any action for specific performance that a remedy at law would be adequate and that the parties, in addition to any other remedy to which they may be entitled at law or in equity, shall be entitled to compel specific performance of this Agreement; provided, however, that the Company shall not be entitled to specific performance for any breach by the Holders of the provisions of Section 3.2(b).
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Section 5.9 Entire Agreement. This Agreement sets forth the entire understanding of the parties hereto with respect to the subject matter hereof. There are no agreements, representations, warranties, covenants or undertakings with respect to the subject matter hereof other than those expressly set forth herein. This Agreement supersedes all other prior agreements and understandings between the parties with respect to such subject matter.
Section 5.10 Severability. If one or more of the provisions, paragraphs, words, clauses, phrases or sentences contained herein, or the application thereof in any circumstances, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision, paragraph, word, clause, phrase or sentence in every other respect and of the remaining provisions, paragraphs, words, clauses, phrases or sentences hereof shall not be in any way impaired, it being intended that all rights, powers and privileges of the parties hereto shall be enforceable to the fullest extent permitted by Law.
Section 5.11 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which together shall be deemed to be one and the same instrument.
Section 5.12 Effectiveness. This Agreement shall become effective, as to any Holder, as of the date signed by the Company and countersigned by such Holder.
Section 5.13 No Recourse. This Agreement may only be enforced against, and any claims or cause of action that may be based upon, arise out of or relate to this Agreement, or the negotiation, execution or performance of this Agreement, the transactions contemplated hereby or the subject matter hereof may only be made against the parties hereto and no past, present or future Affiliate, director, officer, employee, incorporator, member, manager, partner, stockholder, agent, attorney or representative of any party hereto or any past, present or future Affiliate, director, officer, employee, incorporator, member, manager, partner, stockholder, agent, attorney or representative of any of the foregoing (each, a “Non-Recourse Party”) shall have any liability for any obligations or liabilities of the parties to this Agreement or for any claim based on, in respect of, or by reason of, the transactions contemplated hereby. Without limiting the rights of any party against the other parties hereto, in no event shall any party or any of its Affiliates seek to enforce this Agreement against, make any claims for breach of this Agreement against, or seek to recover monetary damages from, any Non-Recourse Party.
Section 5.14 Independent Nature of the Rights and Obligations of Holders. The rights and obligations of each Holder hereunder are several and not joint with the obligations of any Holder, and no Holder shall be responsible in any way for the performance of the obligations of any other Holder hereunder. The decision of each Holder to enter into this Agreement has been made by such Holder independently of any Holder. Nothing contained herein, and no action taken by any Holder pursuant hereto, shall be deemed to constitute the Holders as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Holders are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated hereby and the Company acknowledges that the Holders are not acting in concert or as a group, and the Company will not assert any such claim, with respect to such obligations or the transactions contemplated hereby.
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Section 5.15 Termination as to a Holder. Any Person who ceases to hold any Registrable Securities, or who has forfeited, in writing, its rights hereunder with respect to such Registrable Securities, shall cease to be a Holder and shall have no further rights or obligations under this Agreement (except with respect to any indemnification or contribution rights or obligations under Article 4, which shall survive).
[Signature Page Follows.]
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first written above.
| COMPANY: | ||
| LINEAGE, INC., | ||
| a Maryland corporation | ||
| By: | /s/Adam Forste | |
| Name: | Adam Forste | |
| Title: | Co-Executive Chairman | |
| SPECIFIED HOLDERS: | ||
| By: | Lineage, Inc. as attorney-in-fact for the Specified Holders whose names are set forth in Schedule I | |
| By: | /s/Adam Forste | |
| Name: | Adam Forste | |
| Title: | Co-Executive Chairman | |
| HOLDERS: | ||
| By: | Lineage, Inc. as attorney-in-fact for the Holders whose names are set forth in Schedule I | |
| By: | /s/Adam Forste | |
| Name: | Adam Forste | |
| Title: | Co-Executive Chairman | |
[Signature Page to Registration Rights Agreement [REDACTED]]
Schedule I
Specified Holders
[REDACTED]
Holders
[REDACTED]
Exhibit A
FORM OF ASSIGNMENT AND JOINDER
[___], 20[___]
Reference is made to the Registration Rights Agreement, dated as of July 24, 2024, by and among Lineage, Inc. (the “Company”) and the Holders (as defined therein) from time to time party thereto (the “Registration Rights Agreement”). Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Registration Rights Agreement.
Pursuant to Section 4.2 of the Registration Rights Agreement, [___] (the “Assignor”) in its capacity as a Holder hereby assigns [in part][or: in full] its rights and obligations under the Registration Rights Agreement to each of [___], [___] and [___] (each, an “Assignee” and collectively, the “Assignees”). [For the avoidance of doubt, the Assignor shall remain a party to the Registration Rights Agreement following the assignment as part of its rights and obligations thereunder to the undersigned Assignees.]
Each undersigned Assignee hereby agrees to and does become party to the Registration Rights Agreement as a Holder. This assignment and joinder shall serve as a counterpart signature page to the Registration Rights Agreement and by executing below each undersigned Assignee is deemed to have executed the Registration Rights Agreement with the same force and effect as if originally named a party thereto and each Assignee’s shares of Common Stock shall be included as Registrable Securities under the Registration Rights Agreement.
[Remainder of Page Intentionally Left Blank.]
Exhibit A-1
IN WITNESS WHEREOF, the undersigned have duly executed this assignment and joinder as of date first set forth above.
| ASSIGNOR: | ||
| [___] |
||
| By: |
||
| Name: |
||
| Title: |
||
| ASSIGNEES: | ||
| [___] |
||
| By: |
||
| Name: |
||
Exhibit A-2
Exhibit B
LINEAGE, INC.
FORM OF NOTICE AND QUESTIONNAIRE
The undersigned beneficial holder of shares of common stock, par value $0.01 per share (“Common Stock”), of Lineage, Inc. (the “Company”) and/or common units of partnership interests (“OP Units” and, together with the Common Stock, the “Registrable Securities”) of Lineage OP, LP (the “OP”), understands that the Company has filed or intends to file with the Securities and Exchange Commission (the “SEC”) one or more registration statements (collectively, the “Registration Statement”) for the registration and resale under Rule 415 of the Securities Act of 1933, as amended (the “Securities Act”), of the Registrable Securities in accordance with the terms of the Registration Rights Agreement, dated July 24, 2024, among the Company and the Holders (as defined therein) from time to time party thereto (the “Registration Rights Agreement”). A copy of the Agreement is available from the Company upon request at the address set forth below. All capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Registration Rights Agreement.
Each beneficial owner of Registrable Securities is entitled to the benefits of the Registration Rights Agreement. In order to sell or otherwise dispose of any Registrable Securities pursuant to the Registration Statement, a beneficial owner of Registrable Securities generally will be required to be named as a selling security holder in the related Prospectus, deliver a Prospectus to purchasers of Registrable Securities and be bound by those provisions of the Registration Rights Agreement applicable to such beneficial owner (including certain indemnification provisions as described below). To be included in the Registration Statement, this Notice and Questionnaire must be completed, executed and delivered to the Company at the address set forth herein on or prior to the tenth (10th) Business Day before the effectiveness of the Registration Statement. We will give notice of the filing and effectiveness of the initial Registration Statement by issuing a press release and by mailing a notice to the holders at their addresses set forth in the register of the registrar.
Beneficial owners that do not complete this Notice and Questionnaire and deliver it to the Company as provided below will not be named as selling security holders in the Prospectus and therefore will not be permitted to sell any Registrable Securities pursuant to the Registration Statement. Beneficial owners are encouraged to complete and deliver this Notice and Questionnaire prior to the effectiveness of the initial Registration Statement so that such beneficial owners may be named as selling security holders in the related Prospectus at the time of effectiveness. Upon receipt of a completed Notice and Questionnaire from a beneficial owner following the effectiveness of the initial Registration Statement, in accordance with the Registration Rights Agreement, the Company will file such amendments to the initial Registration Statement or additional shelf registration statements or supplements to the related Prospectus as are necessary to permit such holder to deliver such Prospectus to purchasers of Registrable Securities.
Certain legal consequences arise from being named as selling security holders in the Registration Statement and the related Prospectus. Accordingly, holders and beneficial owners of Registrable Securities are advised to consult their own securities law counsel regarding the consequences of being named or not being named as a selling security holder in the Registration Statement and the related Prospectus.
Exhibit B-1
NOTICE
The undersigned beneficial owner (the “Selling Security Holder”) of Registrable Securities hereby elects to include in the Prospectus forming a part of the Registration Statement the Registrable Securities beneficially owned by it and listed below in Item 3 (unless otherwise specified under Item 3). The undersigned, by signing and returning this Notice and Questionnaire, understands that it will be bound by the terms and conditions of this Notice and Questionnaire and the Registration Rights Agreement.
Pursuant to the Registration Rights Agreement, the undersigned has agreed to indemnify and hold harmless the Company, all other Holders and any of their respective Affiliates, their respective directors, officers, employees, partners, equityholders, managers, accountants, attorneys and agents (and the directors, officers, employees, partners, equityholders, managers, accountants, attorneys, agents and controlling Persons of any of the foregoing) and each other Person, if any, who controls any of the foregoing Persons within the meaning of the Securities Act or Exchange Act, from and against certain losses arising in connection with statements concerning the undersigned made in the Registration Statement or the related Prospectus in reliance upon the information provided in this Notice and Questionnaire.
The undersigned hereby provides the following information to the Company and represents and warrants to the Company that such information is accurate and complete:
QUESTIONNAIRE
| 1. | (a) Full Legal Name of Selling Security Holder: |
| (b) | Full Legal Name of registered holder (if not the same as (a) above) through which Registrable Securities listed in Item (3) below are held: |
| (c) | Full Legal Name of DTC Participant (if applicable and if not the same as (b) above) through which Registrable Securities listed in Item (3) below are held: |
| (d) | List below the individual or individuals who exercise voting and/or dispositive powers with respect to the Registrable Securities listed in Item (3) below: |
Exhibit B-2
| 2. | Address for Notices to Selling Security Holder: |
Telephone:
Fax:
E-mail address:
Contact Person:
| 3. | Beneficial Ownership of Registrable Securities: |
Type of Registrable Securities beneficially owned, and number of shares of Common Stock and/or OP Units, as the case may be, beneficially owned:
| 4. | Beneficial Ownership of Securities of the Company Owned by the Selling Security Holder: |
Except as set forth below in this Item (4), the undersigned is not the beneficial or registered owner of any securities of the Company, other than the Registrable Securities listed above in Item (3).
Type and amount of other securities beneficially owned by the Selling Security Holder:
| 5. | Relationship with the Company |
Except as set forth below, neither the undersigned nor any of its affiliates, officers, directors or principal equity holders (5% or more) has held any position or office or has had any other material relationship with the Company (or its predecessors or affiliates) during the past three years.
State any exceptions here:
| 6. | Plan of Distribution |
Except as set forth below, the undersigned (including its donees or pledgees) intends to distribute the Registrable Securities listed above in Item (3) pursuant to the Registration Statement only as follows and will not be offering any of such Registrable Securities pursuant to an agreement, arrangement or understanding entered into with a broker or dealer prior to the effective date of the Registration Statement. Such Registrable Securities may be sold from time to time directly by the undersigned or,
Exhibit B-3
alternatively, through broker-dealers or agents. If the Registrable Securities are sold through broker-dealers, the Selling Security Holder will be responsible for broker-dealer’s discounts or commissions or agent’s commissions. Such Registrable Securities may be sold in one or more transactions at fixed prices, at prevailing market prices at the time of sale, at varying prices determined at the time of sale, or at negotiated prices. Such sales may be effected in transactions (which may involve crosses or block transactions)
(i) on any national securities exchange or quotation service on which the Registrable Securities may be listed or quoted at the time of sale;
(ii) in the over-the-counter market;
(iii) in transactions otherwise than on such exchanges or services or in the over-the-counter market; or
(iv) through the writing of options.
In connection with sales of the Registrable Securities or otherwise, the undersigned may enter into hedging transactions with broker-dealers, which may in turn engage in short sales of the Registrable Securities and deliver Registrable Securities to close out such short positions, or loan or pledge Registrable Securities to broker-dealers that in turn may sell such securities.
State any exceptions here:
| Note: | In no event may such method(s) of distribution take the form of an underwritten offering of the Registrable Securities without the prior written agreement of the Company. |
ACKNOWLEDGEMENTS
The undersigned acknowledges that it understands its obligation to comply with the provisions of the Exchange Act and the rules thereunder relating to stock manipulation, particularly Regulation M thereunder (or any successor rules or regulations), in connection with any offering of Registrable Securities pursuant to the Registration Rights Agreement. The undersigned agrees that neither it nor any person acting on its behalf will engage in any transaction in violation of such provisions.
The Selling Security Holder hereby acknowledges its obligations under the Registration Rights Agreement to indemnify and hold harmless certain persons set forth therein. Pursuant to the Registration Rights Agreement, the Company has agreed under certain circumstances to indemnify the Selling Security Holders against certain liabilities.
Exhibit B-4
In accordance with the undersigned’s obligation under the Registration Rights Agreement to provide such information as may be required by law for inclusion in the Registration Statement, the undersigned agrees to promptly notify the Company of any inaccuracies or changes in the information provided herein that may occur subsequent to the date hereof at any time while the Registration Statement remains effective. All notices hereunder and pursuant to the Registration Rights Agreement shall be made in writing at the address set forth below.
In the event that the undersigned transfers all or any portion of the Registrable Securities listed in Item 3 above after the date on which such information is provided to the Company, and such securities remain Registrable Securities following such transfer, the undersigned agrees to notify the transferee(s) at the time of transfer of its rights and obligations under this Notice and Questionnaire and the Registration Rights Agreement.
By signing this Notice and Questionnaire, the undersigned consents to the disclosure of the information contained herein in its answers to Items (1) through (6) above and the inclusion of such information in the Registration Statement and the related Prospectus. The undersigned understands that such information will be relied upon by the Company in connection with the preparation or amendment of the Registration Statement and the related Prospectus.
Once this Notice and Questionnaire is executed by the Selling Security Holder and received by the Company, the terms of this Notice and Questionnaire and the representations and warranties contained herein shall be binding on, shall insure to the benefit of and shall be enforceable by the respective successors, heirs, personal representatives and assigns of the Company and the Selling Security Holder with respect to the Registrable Securities beneficially owned by such Selling Security Holder and listed in Item 3 above.
This Notice and Questionnaire shall be governed by, and construed in accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the undersigned, by authority duly given, has caused this Notice and Questionnaire to be executed and delivered either in person or by its duly authorized agent.
| Beneficial Owner | ||
| By: | ||
| Name: | ||
| Title: | ||
Dated:
Please return the completed and executed Notice and Questionnaire to:
Lineage, Inc.
46500 Humboldt Drive
Novi, Michigan 48377
Attention: Legal Department
E-mail: legalnotice@onelineage.com
Exhibit B-5
Exhibit 10.8
AIRCRAFT TIME SHARING AGREEMENT
BETWEEN
BAY GROVE CAPITAL LLC
A DELAWARE LIMITED LIABILITY COMPANY
AND
LINEAGE, INC.,
A MARYLAND CORPORATION
DATED
JULY 24, 2024
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AIRCRAFT TIME SHARING AGREEMENT
THIS AIRCRAFT TIME SHARING AGREEMENT (this “Agreement”) is dated as of July 24, 2024, by and between Bay Grove Capital LLC, a Delaware limited liability company (“Lessor”), and Lineage, Inc., a Maryland corporation (“Lessee”). Lessor and Lessee are hereinafter sometimes referred to individually as “Party” and also collectively as “Parties.”
RECITALS
WHEREAS, Lessor rightfully possesses and is the operator of the Aircraft described and referenced in Exhibit A attached hereto;
WHEREAS, Lessor employs, or has arranged for the employment of, or has under contract, a fully qualified flight crew to operate the Aircraft;
WHEREAS, Lessee desires to use the Aircraft from time to time; and
WHEREAS, Lessor is willing to make the Aircraft available to Lessee but only in accordance with and subject to the terms and conditions of (a) this Agreement and (b) the Federal Aviation Regulations (“FAR”) including, without limitation, Subpart F, entitled “Large and Turbine-Powered Multi-Engine Airplanes” and specifically Sections 91.501(b)(6), (c)(1) and (d) relating to “time sharing agreements” (the “Applicable FAR”).
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the sufficiency of which is hereby acknowledged, the Parties hereto agree as follows:
AGREEMENT
1. LEASE OF AIRCRAFT. Lessor hereby agrees to lease the Aircraft to Lessee and Lessee hereby agrees to lease the Aircraft from Lessor from time to time, on a non-continuous and non-exclusive basis, subject to the Applicable FAR and the terms and conditions set forth herein. Each flight made under this Agreement, including delivery or redelivery of the Aircraft to the Home Base or to such other location as the Parties may otherwise agree, shall be referred to herein as a “Time Sharing Flight.”
2. TERM OF AGREEMENT
2.1 The initial term of this Agreement shall commence on the date of this Agreement and shall continue in full force and effect for one (1) year unless earlier terminated pursuant to Section 15 hereof.
2.2 Unless earlier terminated pursuant to Section 15 hereof, the initial one (1) year term of this Agreement shall be automatically renewed at the end of such initial term for successive one (1) year terms thereafter.
3. LEASE PAYMENTS
3.1 Lessee shall pay to Lessor an amount not to exceed all Time Sharing Costs (as set forth on Exhibit B attached hereto) for each Time Sharing Flight. Notwithstanding any such requirement, Lessee shall not be required to pay any amounts that are not allowed to be paid by Lessee to Lessor under the Applicable FAR. Should for any reason whatsoever Lessor receive from Lessee any amounts under this Agreement not otherwise allowed under the Applicable FAR, Lessor shall immediately refund to Lessee such disallowed amounts.
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3.2 Lessee hereby agrees to pay such Time Sharing Costs to Lessor within ten (10) days after receipt of Lessor’s written invoice therefor, which shall include supporting invoices and receipts relating to the Time Sharing Costs as reflected in Lessor’s invoices.
4. TAXES
4.1 Lessee shall be liable for and shall pay upon receipt of an invoice therefor, any sales, use or excise taxes imposed or otherwise assessed for each Time Sharing Flight. Notwithstanding the above, nothing contained herein shall be construed to require Lessee to pay or reimburse Lessor for any franchise, sales, use, personal property, business property or any other taxes, governmental charges or assessments imposed on the Aircraft or Lessor based on its ownership or possession of the Aircraft or any tax computed on the basis of Lessor’s income, generally, and/or ownership of its assets, including the Aircraft.
4.2 If any taxing authority requires that a tax required to be paid by Lessee hereunder be collected and/or paid to the taxing authority directly by Lessor, Lessee shall, within ten (10) days of its receipt of a written invoice from Lessor, pay to Lessor the amount of such tax, unless such tax is being contested pursuant to Section 4.3 hereof. In all events, Lessor shall collect the federal excise tax imposed under Internal Revenue Code Section 4261 (the “Commercial Transportation Tax”) on all amounts paid hereunder (except for separately stated and billed ground transportation or other items not taxable).
4.3 Lessee shall have the right to contest the validity or amount of any tax required to be paid by Lessee hereunder by legal proceedings promptly instituted and diligently conducted.
5. SCHEDULING AND CANCELLATIONS
5.1 Lessee may from time to time request the use of the Aircraft for a Time Sharing Flight by contacting Lessor’s “Scheduler” (as identified from time to time to Lessee by Lessor, the “Scheduler”). The Scheduler shall advise Lessee as to whether or not the Aircraft is available for Lessee’s use and schedule the Aircraft accordingly. Such determination of availability and scheduling shall be made by Scheduler, on behalf of Lessor, in the Scheduler’s sole and absolute discretion.
5.2 The Scheduler, for and on behalf of Lessor, shall arrange for flight crew, landing permits, clearances, and ground handling for all destinations and coordinate the Aircraft’s movements to support Lessee’s travel schedule. If seasonably requested by Lessee, the Scheduler, on behalf of Lessee, can arrange ground transportation, catering and hotel accommodations. Otherwise, details of each Time Sharing Flight shall be arranged to the mutual agreement of Lessee and Lessor.
5.3 Lessee shall notify the Scheduler of any desired cancellation of a Time Sharing Flight. Cancellation charges to be paid by Lessee shall be limited to Time Sharing Costs incurred by Lessor as of the time of such notification, including the return of the Aircraft to the Home Base (as set forth in Section 27, below). Lessor shall cause Scheduler to notify Lessee of any desired or required cancellation by Lessor. Lessor shall not be liable to Lessee for any damages or losses of Lessee, or any other party, incurred in connection with the cancellation by Lessor of any Time Sharing Flight.
6. MAINTENANCE AND RESPONSIBILITY. Lessor, at its own cost and expense, shall be responsible for all service, repair, inspection, maintenance and overhaul to be done to the Aircraft during the term of this Agreement. Such service, repair and maintenance shall take precedence over scheduling of the Aircraft for Time Sharing Flights, unless such can be safely deferred in accordance with applicable laws
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and regulations, as determined in Lessor’s sole discretion, subject to the final authority of the pilot-in-command, as such term is defined in 14 C.F.R. Paragraph 1.1 (the “Pilot-In-Command”), to not initiate or to terminate a Time Sharing Flight. Lessor shall maintain all records, logs and other materials required by the United States Department of Transportation or the FAA with respect to the maintenance of the Aircraft.
7. OPERATIONAL CONTROL. Lessor shall have complete and absolute operational control of the Aircraft. “Operational Control” as defined in 14 C.F.R. Paragraph 1.1 and for the purpose of this Agreement, with respect to a flight, means the exercise of authority over initiating, conducting or terminating a flight, which shall include, without limitation, providing the flight crew, selecting the Pilot-In-Command and all other physical and technical operations of the Aircraft.
8. DUTIES AND RESPONSIBILITIES OF CREW. In accordance with applicable FAR, the qualified flight crew provided or contracted for by Lessor will exercise all of its duties and responsibilities in regard to the safety of each flight conducted hereunder. Lessee specifically agrees that the flight crew, in its sole discretion, may terminate any flight, refuse to commence any flight, or take other action which in the considered judgment of the Pilot-In-Command is necessitated by considerations of safety. The Pilot-In-Command shall determine the routing, approve the payload, and otherwise decide all matters relating to the safety of each flight and shall have final and complete authority over all matters concerning the preparation of the Aircraft for flight and the flight itself, including whether to cancel any flight for any reason or condition, which in the judgment of such Pilot-In-Command would compromise the safety of the flight. No such action of the Pilot-In-Command shall create or support any liability for loss, injury, damage or delay to Lessee or any other person. Lessor’s operation of the Aircraft hereunder shall be strictly within the guidelines and policies established by Lessor and FAR Part 91. Lessee acknowledges and agrees that Lessor shall not be liable under any circumstances for delay or failure to furnish the Aircraft and the flight crew pursuant to this Agreement, except in the event of willful misconduct by Lessor.
9. LEGAL TITLE TO THE AIRCRAFT. Legal title to the Aircraft shall remain with the legal owner at all times.
10. REPRESENTATIONS AND WARRANTIES OF LESSOR. Lessor hereby represents and warrants to Lessee as follows:
10.1 Lessor has the absolute and unrestricted right, power and authority to enter into and perform its obligations under this Agreement, and the execution and delivery of this Agreement by Lessor have been duly authorized by all necessary action on the part of Lessor. This Agreement constitutes a legal, valid and binding obligation of Lessor, enforceable in accordance with its terms.
10.2 Lessor is an entity authorized to own or lease its properties and to carry on its business as presently conducted.
10.3 Lessor is a “citizen of the United States” as defined in Section 40102(a)(15) of Title 49, United States Code.
10.4 Lessor is eligible for the benefits of the Applicable FAR and Lessor’s operation of the Aircraft under this Agreement is consistent with, and permissible under, the Applicable FAR.
10.5 LESSOR MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, AS TO THE DESIGN, OPERATION, OR CONDITION OF, OR AS TO THE QUALITY OF THE AIRCRAFT. IN ADDITION, LESSOR MAKES NO WARRANTY OF MERCHANTABILITY OF FITNESS OF SUCH AIRCRAFT FOR ANY PARTICULAR PURPOSE OR ANY OTHER WARRANTY OR REPRESENTATION WHATSOEVER.
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11. REPRESENTATIONS AND WARRANTIES OF LESSEE. Lessee hereby represents and warrants to Lessor as follows:
11.1 Lessee has the absolute and unrestricted right, power and authority to enter into and perform its obligations under this Agreement, and the execution and delivery of this Agreement by Lessee have been duly authorized by all necessary action on the part of Lessee. This Agreement constitutes a legal, valid and binding obligation of Lessee, enforceable in accordance with its terms.
11.2 Lessee is a corporation duly organized, existing and in good standing under the laws of the State of Delaware and has all necessary power and authority under applicable corporate law and its organizational documents individual.
12. AIRCRAFT USE BY LESSEE. It is understood and agreed by Lessee that Lessee’s use of the Aircraft for each Time Sharing Flight shall be for Lessee’s own account and that Lessee is prohibited from providing transportation of passengers or cargo for compensation or hire under the FAR.
13. INSURANCE. Lessor will maintain, or cause to be maintained and in effect, at all times during the term of this Agreement, with insurers of recognized responsibility, (i) aircraft hull and liability insurance with respect to the Aircraft, (ii) passenger, pilot and crew voluntary settlement insurance and (iii) statutory workers compensation and employer’s liability insurance, each in such amount and type usually carried by companies similarly situated with Lessor, acting as an owner-operator, and owning and operating similar aircraft, and covering such other risks as are customarily insured against by such companies. Lessor shall cause Lessee to be named as an additional insured on the aircraft liability insurance policy and shall provide a certificate of insurance to Lessee confirming the same prior to commencement of Lessee’s first flight under this Agreement.
14. LIMITATION OF LIABILITY. Each Party to this Agreement agrees to indemnify and hold harmless the other Party and its respective officers, directors, partners, employees, shareholders, and affiliates from any claim, damage, loss, or reasonable expense, including reasonable attorney’s fees, resulting from the bodily injury or property damage caused by an occurrence and arising out of the ownership, maintenance, or use of the Aircraft, which results from the gross negligence or willful misconduct of such Party, provided that neither Party shall be liable for any such loss to the extent:
14.1 Such loss is covered by the insurance policies described in Section 13, above;
14.2 Such loss is covered by such policies but the amount of such loss exceeds the policy limits; or
14.3 Such loss consists of expenses incurred in connection with any loss covered, in whole or in part, by such policies but such expenses are not payable under such policies.
EACH PARTY AGREES THAT (A) THE PROCEEDS OF INSURANCE TO WHICH IT IS ENTITLED, (B) ITS RIGHTS TO INDEMNIFICATION FROM THE OTHER PARTY UNDER THIS SECTION 14, AND (C) ITS RIGHT TO DIRECT DAMAGES ARISING IN CONTRACT FROM A MATERIAL BREACH OF THE OTHER PARTY’S OBLIGATIONS UNDER THIS AGREEMENT ARE THE SOLE REMEDIES FOR ANY DAMAGE, LOSS, OR EXPENSE ARISING OUT OF THIS AGREEMENT OR THE SERVICES PROVIDED HEREUNDER OR CONTEMPLATED HEREBY. EXCEPT AS SET FORTH IN THIS SECTION 14 EACH PARTY WAIVES ANY RIGHT TO RECOVER ANY DAMAGE, LOSS, OR EXPENSE ARISING OUT OF THIS AGREEMENT OR THE SERVICES PROVIDED HEREUNDER OR CONTEMPLATED HEREBY. IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR OR HAVE ANY DUTY FOR INDEMNIFICATION OR
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CONTRIBUTION TO THE OTHER PARTY FOR ANY CLAIMED INDIRECT, SPECIAL, CONSEQUENTIAL, OR PUNITIVE DAMAGES, OR FOR ANY DAMAGES CONSISTING OF DAMAGES FOR LOSS OF USE OR DEPRECIATION OF VALUE OF THE AIRCRAFT, LOSS OF PROFIT OR INSURANCE DEDUCTIBLE.
The provisions of this Section 14 shall survive the termination or expiration of this Agreement.
15. TERMINATION. Either Party may terminate this Agreement at any time upon ten (10) business days prior written notice to the other Party; provided that this Agreement may be terminated on such shorter notice as may be required to comply with applicable laws, regulations, insurance requirements or in the event the insurance required hereunder is not in full force and effect.
16. ASSIGNMENT. Neither Party shall assign this Agreement or any rights or obligations hereunder at any time without the other Party’s prior written consent.
17. AMENDMENTS AND WAIVERS. No term or provision of this Agreement may be amended, modified, waived, discharged or terminated orally, but only by a written instrument signed by the Party against which enforcement of such amendment, modification, waiver, discharge or termination is sought. No delay or failure by either Party to exercise any right under this Agreement shall constitute a waiver of that or any other right hereunder and any waiver of the terms hereof shall be effective only in the specific instance and for the specific purpose given.
18. NOTICES. Unless otherwise expressly provided by law or herein, all notices, instructions, demands and other communications hereunder shall be in writing and shall be delivered personally or sent by registered or certified mail, postage prepaid and return receipt requested, or sent by facsimile or other electronic transmission (the receipt of which shall be confirmed by the Parties, either by a confirming copy sent by air mail, postage prepaid, or some other manner which confirms receipt of the facsimile or electronic transmission) and the date of personal delivery of facsimile or electronic transmission or three (3) business days after the date of mailing (other than in the case of the mailing of a confirming copy of a facsimile transmission), as the case may be, shall be the date of such notice, in each case to the address of such Party set forth on the signature page hereto (or at such other address and/or facsimile number as a Party shall have furnished to the other in writing).
19. ENTIRE AGREEMENT. This Agreement is the entire agreement between the Parties. No agreements, representations, or warranties other than those specifically set forth herein shall be binding on either Party unless in writing signed by both Parties.
20. GOVERNING LAW. This Agreement shall be construed in accordance with, and governed by, the laws of the State of California without regard to conflicts of law principles.
21. HEIRS AND SUCCESSORS. This Agreement and each of its provisions shall be binding on and shall inure to the benefit of the respective heirs, devisees, legatees, executors, administrators, trustees, successors and assigns of the Parties to this Agreement. Nothing contained in this Section 21 shall be construed as consent by such Party to any assignment of this Agreement or any interest therein by the other Party.
22. FURTHER ASSURANCES. Each Party shall execute and deliver to the other such further documents and take such further action as may be necessary to effectuate the intent and purpose of this Agreement.
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23. CAPTIONS. The captions used in this Agreement are solely for convenience of reference and do not form part of this Agreement.
24. NO THIRD-PARTY BENEFICIARY. No person, other than the Parties expressly named herein, is intended to be a beneficiary of any provisions of this Agreement.
25. SEVERABILITY. If any term or provision of this Agreement or the application thereof to any person or circumstances shall, to any extent, be prohibited or unenforceable, the remainder of this Agreement, or the application of such term or provision to persons or circumstances other than those as to which it is held prohibited or unenforceable, shall not be affected thereby, and each term and provision of this Agreement shall be valid and be enforced to the fullest extent permitted by law.
26. COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original, and such counterparts together shall constitute and be one and the same instrument.
27. HOME BASE OF AIRCRAFT. The Aircraft is based at the Oakland International Airport (KOAK), Oakland, California (the “Home Base”).
28. TRUTH IN LEASING
28.1 LESSOR HAS REVIEWED THE AIRCRAFT’S MAINTENANCE RECORDS AND OPERATING LOGS AND HAS FOUND THAT, DURING THE TWELVE MONTHS PRECEDING THE DATE OF THIS AGREEMENT, THE AIRCRAFT HAS BEEN MAINTAINED AND INSPECTED UNDER PART 91 OF THE FEDERAL AVIATION REGULATIONS. LESSOR CERTIFIES THAT THE AIRCRAFT WILL BE MAINTAINED AND INSPECTED UNDER FAR PART 91 FOR OPERATIONS TO BE CONDUCTED UNDER THIS AGREEMENT.
28.2 LESSOR AND LESSEE CERTIFY THAT LESSOR AND NOT LESSEE IS RESPONSIBLE FOR OPERATIONAL CONTROL OF THE AIRCRAFT UNDER THIS AGREEMENT DURING THE TERM OF THIS AGREEMENT. LESSOR FURTHER CERTIFIES THAT LESSOR UNDERSTANDS ITS RESPONSIBILITY FOR COMPLIANCE WITH APPLICABLE FEDERAL AVIATION REGULATIONS.
28.3 LESSOR AND LESSEE UNDERSTAND THAT AN EXPLANATION OF FACTORS BEARING ON OPERATIONAL CONTROL AND THE PERTINENT FEDERAL AVIATION REGULATIONS CAN BE OBTAINED FROM THE NEAREST FAA FLIGHT STANDARDS DISTRICT OFFICE.
28.4 LESSOR AND LESSEE CERTIFY AND AGREE THAT A TRUE COPY OF THIS AGREEMENT SHALL BE CARRIED ON THE AIRCRAFT AT ALL TIMES DURING ANY TIME SHARING FLIGHT, AND SHALL BE MADE AVAILABLE FOR INSPECTION UPON REQUEST BY AN APPROPRIATELY CONSTITUTED IDENTIFIED REPRESENTATIVE OF THE FEDERAL AVIATION ADMINISTRATION.
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INSTRUCTIONS TO COMPLY WITH TRUTH-IN-LEASING REQUIREMENTS
1. Mail a copy of the lease to the following address via certified mail, return receipt requested, immediately upon execution of the lease (14 C.F.R. 91.23 requires that the copy be sent within twenty-four hours after it is signed):
Federal Aviation Administration
Aircraft Registration Branch
ATTN: Technical Section
P.O. Box 25724
Oklahoma City, Oklahoma 73125
2. Telephone the nearest Flight Standards District Office at least forty-eight hours prior to the first flight under this lease. (Please see attached script.)
3. Carry a copy of the lease in the aircraft at all times.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the Parties have executed this Aircraft Time Sharing Agreement as of the day and year first above written.
| LESSOR: | LESSEE: | |||||||
| BAY GROVE CAPITAL LLC, a Delaware limited liability company, |
LINEAGE, INC., a Maryland corporation, | |||||||
| By: | /s/ Kevin Marchetti | By: | /s/ Adam Forste | |||||
| Name: | Kevin Marchetti | Name: | Adam Forste | |||||
| Title: | Chief Executive Officer | Title: | Co-Executive Chairman | |||||
| Address: | 801 Montgomery Street, Floor 5 | Address: | 46500 Humboldt Drive | |||||
| San Francisco, California 94133 | Novi, Michigan 48337 | |||||||
| Attn: David Brandes | Attn: Legal Department | |||||||
| Email: david@bay-grove.com | Email: nmatsler@onelineage.com | |||||||
Aircraft Time Sharing Agreement Signature Page
EXHIBIT A
AIRCRAFT
| “Aircraft” shall mean: | ||
| Make and Model: | Gulfstream Aerospace Corporation, Model GVI (G650ER) | |
| Serial No.: | 6210 | |
| U.S. Registration Number: | N559FF | |
| Make and Model of Engines: | Rolls Royce, BR725A1-12 | |
| Engine Serial Nos.: | 25449 and 25450 | |
Aircraft Time Sharing Agreement
EXHIBIT B
TIME SHARING COSTS
(Actual Costs)
| 1. | Fuel, oil, lubricants and other additives. |
| 2. | Travel expenses of the crew, including food, lodging and ground transportation. |
| 3. | Hangar and tie-down costs away from the aircraft’s base of operation. |
| 4. | Insurance obtained for the specific flight. |
| 5. | Landing fees, airport taxes and similar assessments. |
| 6. | Customs, foreign permit, and similar fees directly related to the fight. |
| 7. | In flight food and beverages. |
| 8. | Passenger ground transportation. |
| 9. | Flight planning and weather contract services. |
| 10. | An additional “time sharing charge” not to exceed the amount set forth in 1, above. |
Aircraft Time Sharing Agreement
AIRCRAFT TIME SHARING AGREEMENT
FSDO SCRIPT
Pursuant to 14 C.F.R. 91.23 (FAR 91.23) — Truth-In-Leasing – Section 91.23(c)(3) — No person may operate a large civil aircraft of U.S. registry that is subject to any lease that is subject to 91.23 (including a Time Sharing Agreement) unless the lessee or registered owner notifies by telephone or in person the FAA flight Standards district office nearest the airport where the flight will originate at least forty-eight (48) hours before takeoff, in the case of the first flight of that aircraft under the lease, of the following information:
Bay Grove Capital LLC (Lessor) and Lineage, Inc. (Lessee), have entered into an Aircraft Time Sharing Agreement dated as of July 24, 2024 (Time Sharing Agreement) relating to following Aircraft:
| Manufacturer: | Gulfstream Aerospace Corporation | |||||
| Make and Model: | GVI (G650ER) | |||||
| Serial No.: | 6210 | |||||
| FAA Registration No.: | N559FF |
The first flight of the Aircraft pursuant to the Time Sharing Agreement is scheduled to occur from ____________________________, at approximately ________.
Pursuant to FAR Section 91.23(c) 1 and 2, a copy of the Time Sharing Agreement has been mailed to the following address within twenty-four hours after it was signed:
Federal Aviation Administration
Aircraft Registration Branch
ATTN: Technical Section
P.O. Box 25724
Oklahoma City, Oklahoma 73125
A COPY OF THE TIME SHARING AGREEMENT WILL BE CARRIED ABOARD THE AIRCRAFT AT ALL TIMES WHILE SUCH IS IN EFFECT.
Please contact me should you have any questions with respect to the above.
Aircraft Time Sharing Agreement
Exhibit 10.9
Execution Version
PUT OPTION AGREEMENT
This Put Option Agreement (this “Agreement”), dated as of July 24, 2024, is entered into by and among BG Lineage Holdings, LLC, a Delaware limited liability company (“BGLH”), Lineage, Inc., a Maryland corporation (“Lineage REIT”), Lineage OP, LP, a Maryland limited partnership (“Lineage OP”), and Lineage Logistics Holdings, LLC, a Delaware limited liability company (“Lineage Holdings”). The parties to this Agreement are each referred to herein individually as a “Party” and, collectively, as the “Parties.”
RECITALS
A. BGLH is required to pay certain equityholders of BGLH specified amounts in redemption of their equity interests in BGLH or as top-ups to their equity interests in BGLH (such equityholders, the “BGLH Guarantee Holders”), and BGLH may cause such obligations to be borne by Lineage REIT, Lineage OP and Lineage Holdings (collectively, the “BGLH Guarantee Obligations”). The BGLH Guarantee Obligations are disclosed on Schedule I hereto.
B. Lineage OP is required to pay certain equityholders of Lineage OP specified amounts in redemption of their equity interests in Lineage OP or as top-ups to their equity interests in Lineage OP (such equityholders, the “Lineage OP Guarantee Holders”), and Lineage OP may cause such obligations to be borne by Lineage Holdings (collectively, the “Lineage OP Guarantee Obligations”).
C. The Parties have always intended that the BGLH Guarantee Obligations and Lineage OP Guarantee Obligations would ultimately be borne by Lineage Holdings (in the case of the BGLH Guarantee Obligations, by virtue of successive obligations of Lineage REIT, Lineage OP and Lineage Holdings); and the Parties desire to implement such obligations through this Agreement.
D. Certain capitalized terms used in this Agreement have the definitions set forth in Section 1(d) below.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and the covenants and conditions herein set forth, the Parties hereto agree as follows:
Section 1. Put Option.
(a) Right to Sell. Subject to the terms and conditions of this Agreement, during each Put Exercise Window:
| (i) | BGLH may distribute all or any portion of the REIT Shares it holds to BGLH’s owners at any time. BGLH’s owners include the BGLH Guarantee Holders. |
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| (ii) | Each of Lineage OP (after receiving notice of any exercise of rights by a Lineage OP Guarantee Holder served upon Lineage OP during the applicable Put Exercise Window) and each BGLH Guarantee Holder, as applicable to the particular Put Exercise Window, shall have the right (the “Primary Put Right”), but not the obligation, to cause Lineage REIT (in the case of a BGLH Guarantee Holder) or Lineage Holdings (in the case of Lineage OP) to: |
| a. | Purchase all or any portion of the REIT Shares held by such BGLH Guarantee Holder, or all or any portion of the Lineage Holdings Units held by Lineage OP, as applicable, in each case up to the applicable maximum number of such securities that may be sold within each Put Exercise Window as set forth on Exhibit A (the “Primary Put Securities”), for an amount equal to the Share Price applicable to such Primary Put Security (as set forth on Exhibit A) for each Primary Put Security for which the Primary Put Right is being exercised, or |
| b. | With respect to any Primary Put Securities for which the Primary Put Right is not exercised, (1) issue Top-Up Securities to BGLH (in the case of a BGLH Guarantee Holder) or to Lineage OP (in the case of Lineage OP), as applicable, (2) distribute or pay Top-Up Cash to the BGLH Guarantee Holder or to Lineage OP, as applicable, or (3) any combination of the foregoing options (without duplication) (collectively, the “Top-Up Right”), in each case in an aggregate amount equal to (or valued at, in the case of Top-Up Securities) the Top-Up Price applicable to such Primary Put Security (as set forth on Exhibit A) for each Primary Put Security for which the Top-Up Right is being exercised. |
| (iii) | In the event a BGLH Guarantee Holder exercises its rights under Section 1(a)(ii), Lineage REIT shall have the right (the “Secondary Put Right”), but not the obligation, to cause Lineage OP to (A) purchase from Lineage REIT the same number of Lineage OP Units held by Lineage REIT that corresponds to the number of Primary Put Securities purchased pursuant to Section 1(a)(ii) (the “Secondary Put Securities”) for the same price per unit as the price that was paid per share pursuant to Section 1(a)(ii) or (B) (1) issue Top-Up Securities to Lineage REIT, (2) distribute or pay Top-Up Cash to Lineage REIT, or (3) any combination thereof (without duplication), in each case in the same amounts and proportions as the Top-Up Securities and Top-Up Cash issued, distributed and/or paid pursuant to Section 1(a)(ii). |
| (iv) | In the event Lineage REIT exercises its rights under Section 1(a)(iii), Lineage OP shall have the right (the “Tertiary Put Right” and together with the Primary Put Right and Secondary Put Right, collectively, the “Put Rights”), but not the obligation, to cause Lineage Holdings to (A) purchase from Lineage OP the same number of Lineage Holdings Units held by Lineage OP that corresponds to the number of Secondary Put Securities purchased pursuant to Section 1(a)(iii) (the “Tertiary Put Securities”) for the same price per unit as the price that was paid per unit pursuant to Section 1(a)(iii) or (B) (1) issue Top-Up Securities to Lineage OP, (2) distribute or pay Top-Up Cash to Lineage OP, or (3) any combination thereof (without duplication), in each case in the same amounts and proportions as the Top-Up Securities and Top-Up Cash issued, distributed and/or paid pursuant to Section 1(a)(iii). |
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(b) Exercise of Put Right.
| (i) | The applicable Put Rights may be exercised individually by each BGLH Guarantee Holder, Lineage REIT and Lineage OP during its applicable Put Exercise Windows in accordance with Section 1(a) by delivering to Lineage REIT, Lineage OP and/or Lineage Holdings, as applicable, a notice in writing (a “Put Exercise Notice”) indicating such BGLH Guarantee Holder’s, Lineage REIT’s and/or Lineage OP’s intention to exercise the applicable Put Right and specifying the applicable Primary Put Securities, Secondary Put Securities or Tertiary Put Securities for which the Put Rights are being exercised and the amounts and forms of exercise. Notwithstanding the foregoing: (A) if BGLH has incurred any BGLH Guarantee Obligations pursuant to any exercise of rights by a BGLH Guarantee Holder served upon BGLH during the applicable Put Exercise Window, the Parties shall each have an additional 60 days after the applicable Put Exercise Window to deliver a Put Exercise Notice; (B) if Lineage OP has incurred any Lineage OP Guarantee Obligations pursuant to any exercise of rights by a Lineage OP Guarantee Holder served upon Lineage OP during the applicable Put Exercise Window, the Parties shall each have an additional 60 days after the applicable Put Exercise Window to deliver a Put Exercise Notice; and (C) the Secondary Put Right corresponding to a Primary Put Right, and the Tertiary Put Right corresponding to such Secondary Put Right, each shall be deemed to have been exercised with or without any Put Exercise Notice if the applicable Primary Put Right has been exercised. |
| (ii) | The closing of any sale of Primary Put Securities, Secondary Put Securities or Tertiary Put Securities, issuance of Top-Up Securities or distribution of Top-Up Cash pursuant to this Section 1 shall take place no later than five Business Days following receipt by Lineage REIT, Lineage OP or Lineage Holdings, as applicable, of the applicable Put Exercise Notice, or such other date as may be agreed by the applicable Parties. |
(c) Cooperation. Each Party shall take all actions as may be reasonably necessary to consummate the sale, issuance and/or distribution contemplated by this Section 1, such as delivering certificates, instruments or consents as may be deemed reasonably necessary or appropriate.
(d) Definitions. For purposes of this Agreement:
| (i) | “Business Day” shall mean any day except a Saturday, Sunday or other day on which commercial banks in the City of New York, New York are authorized by law to close. |
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| (ii) | “Current FMV” with respect to any Put Security or BGLH unit, means the fair market value of such Put Security or BGLH unit, as applicable, as determined in good faith by BGLH based on the 20-Trading-Day Trailing VWAP for the REIT Shares immediately prior to the applicable date of determination. |
| (iii) | “Daily VWAP” means, for any Trading Day or portion of a Trading Day, the per share volume-weighted average price as displayed under the heading “Bloomberg VWAP” on Bloomberg page “LINE <equity> AQR” (or its equivalent successor if such page is not available) in respect of the period from the scheduled open of trading until the scheduled close of trading of the primary trading session on such Trading Day (or if such volume-weighted average price is unavailable, the market value of one REIT Share on such Trading Day determined, using a volume-weighted average method, by a nationally recognized independent investment banking firm retained for this purpose by the BGLH or Lineage OP). The “Daily VWAP” shall be determined without regard to after-hours trading or any other trading outside of the regular trading session trading hours. |
| (iv) | “Exchange” means the Nasdaq Global Market or, if REIT Shares are not then listed on the Nasdaq Global Market, on the principal other U.S. national or regional securities exchange on which REIT Shares are then listed or, if REIT Shares are not then listed on a U.S. national or regional securities exchange, on the principal other market on which REIT Shares are then listed or admitted for trading. |
| (v) | “Lineage Holdings Units” means company common units of Lineage Holdings (and its successors and assigns). |
| (vi) | “Lineage OP Units” means partnership common units of Lineage OP (and its successors and assigns). |
| (vii) | “Market Disruption Event” means (i) a failure by the primary Exchange on which REIT Shares are listed or admitted for trading to open for trading during its regular trading session or (ii) the occurrence or existence prior to 1:00 p.m., New York City time, on any scheduled trading day for REIT Shares for more than one half-hour period in the aggregate during regular trading hours of any suspension or limitation imposed on trading (by reason of movements in price exceeding limits permitted by the relevant stock exchange or otherwise) in REIT Shares or in any options contracts or futures contracts relating to REIT Shares. |
| (viii) | “Put Exercise Window” means, with respect to any Put Securities, the applicable period of time set forth on Exhibit A as the “Put Exercise Window” for such Put Securities. |
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| (ix) | “Put Securities” means any of the Primary Put Securities, Secondary Put Securities or Tertiary Put Securities, individually, or all or any such securities collectively, as the context may indicate. |
| (x) | “REIT Shares” means shares of the common stock of Lineage REIT (and its successors and assigns), $0.01 par value per share. |
| (xi) | “Share Price” means the applicable price per Put Security set forth as the “Share Price” on Exhibit A. |
| (xii) | “Target Amount” with respect to any Put Security, means the “Target Amount” for such Put Security set forth on Exhibit A. |
| (xiii) | “Top-Up Cash” means: (i) with respect to Lineage OP, a cash distribution by Lineage Holdings to Lineage OP; (ii) with respect to Lineage REIT, a cash distribution by Lineage OP to Lineage REIT; or (iii) with respect to BGLH or any BGLH Guarantee Holder, a cash payment by Lineage REIT to the applicable BGLH Guarantee Holder. |
| (xiv) | “Top-Up Price” with respect to any Put Security, means the amount per Put Security that equals (i) the Target Amount for such Put Security less (ii) the Current FMV of such Put Security less (iii) the amount of all distributions theretofore made to the current or any former holder of such Put Security in respect of the Put Security for which the Top-Up Price is being calculated. |
| (xv) | “Top-Up Securities” means, individually or collectively, as the context may indicate: (i) with respect to Lineage OP, newly issued Lineage Holdings Units; (ii) with respect to Lineage REIT, newly issued Lineage OP Units; or (iii) with respect to BGLH or any BGLH Guarantee Holder, newly issued REIT Shares. |
| (xvi) | “Trading Day” means a day on which trading in REIT Shares generally occurs on the Exchange, except that if REIT Shares are not so listed or admitted for trading, “Trading Day” means a Business Day. |
| (xvii) | “20-Trading-Day Trailing VWAP” means the arithmetic average of the Daily VWAPs for each day in the 20 consecutive Trading Day period ending on the Trading Day prior to the applicable valuation date. For purposes of this definition, a “Trading Day” shall not include a day on which a Market Disruption Event occurs or has been deemed to have occurred. |
Section 2. Term and Termination.
(a) Term; Termination. This Agreement will be effective from the date hereof and will terminate on the date that is the later of (i) 60 days after the expiration of the latest Put Exercise Window and (ii) the satisfaction by each Party of all of its obligations in respect of any Put Right exercised in accordance with this Agreement. The first date on which this Agreement has been terminated is referred to herein as the “Termination Date.” This Agreement may also be terminated on any date approved by the mutual written consent of all Parties hereto.
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(b) Effect of Termination. Upon the Termination Date, all rights and obligations of each of the Parties shall immediately cease and terminate, and no Party shall have any further obligation to the any other Party with respect to this Agreement, except that the termination of this Agreement will not relieve any Party from liability for any breach of this Agreement at or prior to such termination.
Section 3. Tax Consequences; Withholding. Each Party agrees that such Party has not made any warranty or representation regarding the tax consequences of the transactions contemplated by this Agreement. Each of Lineage REIT, Lineage OP and Lineage Holdings shall have the right to withhold any amounts required to be withheld with respect to any payment or distribution hereunder under applicable law. Any amount that is so withheld shall be treated for all purposes of this Agreement as having been paid to the person in respect of whom such withholding was made.
Section 4. Amendments and Waivers. No amendment or waiver of any provision of this Agreement, or consent to any departure by any Party from any such provision, shall be effective unless the same shall be in writing and signed by each Party to this Agreement, and, in any case, such amendment, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. The waiver by any Party of any breach of this Agreement shall not operate as or be construed to be a waiver by such Party of any subsequent breach.
Section 5. Assignment; Third-Party Beneficiaries. This Agreement and the rights of the Parties hereunder may not be assigned without the prior written consent of each of the Parties hereto. Subject to the foregoing, the provisions of this Agreement will be binding upon and inure to the benefit of the Parties hereto and their respective successors and assigns. No person or party other than the Parties hereto and their respective successors or permitted assigns is intended to be a beneficiary of this Agreement.
Section 6. Notices. Any and all notices hereunder shall be deemed duly given when delivered by registered or certified mail (postage prepaid), email, overnight courier or hand delivery to the Parties at the following addresses (or such different addresses as are specified by a Party for itself by notice to the other Party in accordance with this Section 6):
| If to BGLH: |
BG Lineage Holdings, LLC 801 Montgomery Street, Floor 5 San Francisco, California 94133 Attention: Legal Department Email: notices@bay-grove.com | |
| If to Lineage REIT: |
Lineage, Inc. 46500 Humboldt Drive Novi, Michigan 48377 Attention: Legal Department Email: legalnotice@onelineage.com | |
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| If to Lineage OP: |
Lineage OP, LP 46500 Humboldt Drive Novi, Michigan 48377 Attention: Legal Department Email: legalnotice@onelineage.com | |
| If to Lineage Holdings: |
Lineage Logistics Holdings, LLC 46500 Humboldt Drive Novi, Michigan 48377 Attention: Legal Department Email: legalnotice@onelineage.com | |
Section 7. Entire Agreement. This Agreement shall constitute the entire agreement among the Parties with respect to the subject matter hereof, and shall supersede all previous oral and written (and all contemporaneous oral) negotiations, commitments, agreements and understandings among the Parties relating hereto.
Section 8. Governing Law; Consent to Jurisdiction; Waiver of Jury Trial.
(a) Governing Law. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of New York.
(b) Consent to Jurisdiction. Each of the Parties hereto consents to the exclusive jurisdiction of any state or federal court located within the State of New York and irrevocably agrees that all actions or proceedings relating to this Agreement shall be litigated in such courts. Each of the Parties hereto accepts for itself and in connection with its respective properties, generally and unconditionally, the exclusive jurisdiction of the aforesaid courts and waives any defense of forum non conveniens, and irrevocably agrees to be bound by any final and nonappealable judgment rendered thereby in connection with this Agreement. Each of the Parties hereto further irrevocably consents to the service of process out of any of the aforementioned courts in any such action or proceeding by the mailing of copies thereof via overnight courier, to such Party at the address specified in this Agreement, such service to become effective 14 calendar days after such mailing. Nothing herein shall in any way be deemed to limit the ability of any Party hereto to serve any such legal process, summons, notices and documents in any other manner permitted by applicable law or to obtain jurisdiction over or to bring actions, suits or proceedings against the other Party hereto in such other jurisdictions, and in such manner, as may be permitted by any applicable law.
(c) Waiver of Jury Trial . The Parties hereto waive all rights to trial by jury in any action, suit or proceeding brought to enforce or defend any rights or remedies under this Agreement.
Section 9. Counterparts; Electronic Signatures. This Agreement may be executed in two or more counterparts, and by different Parties on separate counterparts. Each set of counterparts showing execution by all Parties shall be deemed an original and shall constitute one and the same instrument. The words “execution,” “signed,” “signature,” and words of like import in this Agreement shall include images of manually executed signatures transmitted by electronic format (including, without limitation, “pdf”, “tif” or “jpg”) and other electronic signatures (including, without limitation, DocuSign and AdobeSign). The use of electronic signatures and
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electronic records (including, without limitation, any contract or other record created, generated, sent, communicated, received, or stored by electronic means) shall be of the same legal effect, validity and enforceability as a manually executed signature or use of a paper-based record-keeping system to the fullest extent permitted by applicable law, including the Federal Electronic Signatures in Global and National Commerce Act and any other applicable law, including, without limitation, any state law based on the Uniform Electronic Transactions Act or the Uniform Commercial Code.
Section 10. Severability. If any provision or provisions of this Agreement shall be held to be invalid or unenforceable, the validity, legality and enforceability of the remaining provisions hereof shall not in any way be affected or impaired thereby.
Section 11. Further Assurances. The Parties agree that, notwithstanding anything to the contrary in this Agreement, this Agreement is intended to result in all BGLH Guarantee Obligations and all Lineage OP Guarantee Obligations being economically borne in their entirety by Lineage Holdings after giving effect to all transactions in this Agreement. If any provision of this Agreement results in any BGLH Guarantee Obligations or any Lineage OP Guarantee Obligations ultimately being borne by any other Party or any other person without a full backstop of such obligations by Lineage Holdings, the Parties shall take all such actions as BGLH may request in order to cause all BGLH Guarantee Obligations and all Lineage OP Guarantee Obligations ultimately to be borne by Lineage Holdings.
[Signature Page Follows]
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed and delivered by their duly authorized officers or agents as of the date first referenced above as set forth below.
| BG LINEAGE HOLDINGS, LLC | ||
| By; | Bay Grove Management Company, LLC, | |
| its Manager | ||
| By: | /s/ Adam Forste | |
| Name: | Adam Forste | |
| Title: | Authorized Person | |
| LINEAGE, INC. | ||
| By: | /s/ Adam Forste | |
| Name: | Adam Forste | |
| Title: | Co-Executive Chairman | |
| LINEAGE OP, LP | ||
| By: | Lineage, Inc. | |
| Its: | General Partner | |
| By: | /s/ Adam Forste | |
| Name: | Adam Forste | |
| Title: | Co-Executive Chairman | |
| LINEAGE LOGISTICS HOLDINGS, LLC | ||
| By: | Lineage OP, LP | |
| Its: | Managing Member | |
| By: | Lineage, Inc. | |
| Its: | General Partner | |
| By: | /s/ Adam Forste | |
| Name: | Adam Forste | |
| Title: | Co-Executive Chairman | |
Signature Page to Put Option Agreement
EXHIBIT A
PUT EXERCISE WINDOWS AND PRICING1
| Put Exercise |
Party |
Put Securities |
Share Price |
Target Amount |
Top-Up Securities |
Top-Up Cash |
Maximum Total Liability | |||||||
| September 1, 2024 to October 16, 2024 |
1.A.
BGLH Guarantee Holders |
Up to 250,674.92 REIT Shares
(corresponds to up to 250,445.86 BGLH units as of the date of this Agreement) |
Greater of:
1. Price that BGLH determines is implied for a single REIT Share corresponding to the following: $118.07 per BGLH unit less the amount of all distributions made following the date of this Agreement in respect of the corresponding BGLH unit to the current or any former holder of such BGLH unit; and
2. Price that BGLH determines is implied for a single REIT Share corresponding to the following: Current FMV of a single BGLH unit during the Put Exercise Window prior to its exchange for REIT Shares, less such amount as BGLH determines is required to settle the distribution rights of the Class C units of BGLH corresponding to such single BGLH unit
|
$119.39 | Available for all Put Securities during this Put Exercise Window | Available for all Put Securities during this Put Exercise Window | Greater of:
1. Price that BGLH determines is implied for all REIT Shares corresponding to the following: $29,569,014 for 250,445.86 BGLH units held by BGLH Guarantee Holders, such amount for such BGLH units to be measured after settling the distribution rights of the Class C units of BGLH corresponding to such units; and
2. Price that BGLH determines is implied for all REIT Shares corresponding to the following: Current FMV during the Put Exercise Window of up to 250,445.86 BGLH units, less such amounts as BGLH determines are required to settle the distribution rights of the Class C units of BGLH corresponding to such units | |||||||
| 1.B.
Lineage REIT |
Up to 250,674.92 Lineage OP Units | Same price as that paid for 1.A. above | $119.39 | Available for all Put Securities during this Put Exercise Window
|
Available for all Put Securities during this Put Exercise Window | Same as that for 1.A. above | ||||||||
| 1.C.
Lineage OP |
Up to 250,674.92 Lineage Holdings Units | Same price as that paid for 1.A. above | $119.39 | Available for all Put Securities during this Put Exercise Window | Available for all Put Securities during this Put Exercise Window | Same as that for 1.A. above | ||||||||
| 1 | All monetary references in this Exhibit A are denominated in United States Dollars (USD) unless explicitly stated otherwise. |
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| Put Exercise |
Party |
Put Securities |
Share Price |
Target Amount |
Top-Up Securities |
Top-Up Cash |
Maximum Total Liability | |||||||
| November 1, 2024 to December 16, 2024 |
2.A.
BGLH Guarantee Holders |
551,199.34 BGLH units, which is currently equivalent to 551,703.48 REIT Shares | N/A – the Primary Put Right is not available for these securities | $113.10 | Available for all Put Securities during this Put Exercise Window | Available for all Put Securities during this Put Exercise Window | Price that BGLH determines is implied for all REIT Shares corresponding to the following: $61,610,578 for 551,199.34 BGLH units, less (i) the Current FMV during the Put Exercise Window of 551,199.34 BGLH units, less (ii) the amount of all distributions made following the date of this Agreement in respect of the corresponding BGLH units to the current or any former holders of such BGLH units
| |||||||
| 2.B.
Lineage REIT |
551,199.34 BGLH units, which is currently equivalent to 551,703.48 Lineage OP Units
|
N/A – the Secondary Put Right is not available for these securities | $113.10 | Available for all Put Securities during this Put Exercise Window | Available for all Put Securities during this Put Exercise Window | Same as that for 2.A. above | ||||||||
| 2.C.
Lineage OP |
551,199.34 BGLH units, which is currently equivalent to 551,703.48 Lineage Holdings Units | N/A – the Tertiary Put Right is not available for these securities | $113.10 | Available for all Put Securities during this Put Exercise Window | Available for all Put Securities during this Put Exercise Window | Same as that for 2.A. above | ||||||||
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| Put Exercise |
Party |
Put Securities |
Share Price |
Target Amount |
Top-Up Securities |
Top-Up Cash |
Maximum Total Liability | |||||||
| March 1, 2025 to April 15, 2025 |
3.A.
Lineage OP |
319,006.21 Lineage Holdings Units | Greater of:
1. $113.25 less the amount of all distributions made following the date of this Agreement in respect of the corresponding Legacy Class A-4 OP Unit of Lineage OP to the current or any former holder of such Legacy Class A-4 OP Unit of Lineage OP; and
2. Current FMV of REIT Shares |
$107.14 | Available for all Put Securities during this Put Exercise Window | Available for all Put Securities during this Put Exercise Window | Greater of:
1. $36,127,673; and
2. Current FMV during the Put Exercise Window of the maximum number of Put Securities | |||||||
| June 1, 2025 to June 6, 2025 |
4.A.
BGLH Guarantee Holders |
Up to 616,021.70 REIT Shares (corresponds to up to 615,458.79 BGLH units as of the date of this Agreement)
|
Price that BGLH determines is implied for a single REIT Share corresponding to the following: $129.31 per BGLH unit less the amount of all distributions made following the date of this Agreement in respect of the corresponding BGLH unit to the current or any former holder of such BGLH unit | N/A | N/A – Top-Up Securities are not available for these securities | N/A – Top-Up Cash is not available for these securities | Price that BGLH determines is implied for all REIT Shares corresponding to the following: $79,587,220 for 615,458.79 BGLH units held by BGLH Guarantee Holders, such amount for such BGLH units to be measured after settling the distribution rights of the Class C units of BGLH corresponding to such units | |||||||
| 4.B.
Lineage REIT |
Up to 616,021.70 Lineage OP Units | Same price as that paid for 4.A. above | N/A | N/A – Top-Up Securities are not available for these securities
|
N/A – Top-Up Cash is not available for these securities | Same as that for 4.A. above | ||||||||
| 4.C.
Lineage OP |
Up to 616,021.70 Lineage Holdings Units | Same price as that paid for 4.A. above | N/A | N/A – Top-Up Securities are not available for these securities | N/A – Top-Up Cash is not available for these securities | Same as that for 4.A. above | ||||||||
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| Put Exercise |
Party |
Put Securities |
Share Price |
Target Amount |
Top-Up Securities |
Top-Up Cash |
Maximum Total Liability | |||||||
| September 1, 2025 to September 8, 2025 |
5.A.
BGLH Guarantee Holders |
Up to 1,058,328.20 REIT Shares (corresponds to up to 1,057,361.11 BGLH units as of the date of this Agreement) |
Amount for which BGLH determines that the BGLH units held by such BGLH Guarantee Holder corresponding to a single REIT Share are redeemable pursuant to the BGLH Guarantee Obligations (set forth on Schedule I hereto), but in no event to exceed the price that BGLH determines is implied for a single REIT Share by the following: USD Equivalent of 165.51 Canadian Dollars per BGLH unit, less (i) prior distributions made of USD $0.55 per BGLH unit, less (ii) the amount of all distributions made following the date of this Agreement in respect of the corresponding BGLH unit to the current or any former holder of such BGLH unit2 | N/A | N/A – Top-Up Securities are not available for these securities | N/A – Top-Up Cash is not available for these securities | Amount for which BGLH determines that all BGLH units held by such BGLH Guarantee Holders corresponding to the applicable number of REIT Shares are redeemable pursuant to the BGLH Guarantee Obligations (set forth on Schedule I hereto), but in no event to exceed the price that BGLH determines is implied for all REIT Shares that are Put Securities during this Put Exercise Window by the following: USD Equivalent of 175,000,000 Canadian Dollars for 1,057,361.11 BGLH units held by BGLH Guarantee Holders, such amount for such BGLH units to be measured after settling the distribution rights of the Class C units of BGLH corresponding to such units, less (i) prior distributions made of USD $578,465, less (ii) the amount of all distributions made following the date of this Agreement in respect of the corresponding BGLH units to the current or any former holders of such BGLH units
| |||||||
| 5.B.
Lineage REIT |
Up to 1,058,328.20 Lineage OP Units | Same price as that paid for 5.A. above | N/A | N/A – Top-Up Securities are not available for these securities | N/A – Top-Up Cash is not available for these securities | Same as that for 5.A. above | ||||||||
| 2 | “USD Equivalent” references with respect to Euros herein are calculated as follows: |
The Canadian-Dollar-to-United-States-Dollar exchange rate will be deemed to equal the average Canadian-Dollar-to-United-States-Dollar closing spot exchange rate for the 30 Business Days immediately preceding the applicable date for which or as of which the calculation is made (as determined by BGLH), as reported by WM/Reuters (or, if such rate is not available, such other similar exchange rate report as BGLH selects in its sole discretion).
“Business Day” means any day except a Saturday, Sunday or other day on which commercial banks in the City of New York, New York are authorized by law to close.
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| Put Exercise |
Party |
Put Securities |
Share Price |
Target Amount |
Top-Up Securities |
Top-Up Cash |
Maximum Total Liability | |||||||
| 5.C.
Lineage OP |
Up to 1,058,328.20 Lineage Holdings Units | Same price as that paid for 5.A. above | N/A | N/A – Top-Up Securities are not available for these securities | N/A – Top-Up Cash is not available for these securities | Same as that for 5.A. above | ||||||||
| October 3, 2025 to October 10, 2025 |
6.A.
BGLH Guarantee Holders |
Up to 111,713.18 REIT Shares (corresponds to up to 111,611.10 BGLH units as of the date of this Agreement) |
Amount for which BGLH determines that the BGLH units held by such BGLH Guarantee Holder corresponding to a single REIT Share are redeemable pursuant to the BGLH Guarantee Obligations (set forth on Schedule I hereto), but in no event to exceed the price that BGLH determines is implied for a single REIT Share by the following: the USD Equivalent of €139.67 per BGLH unit, less (i) prior distributions made of USD $0.55 per BGLH unit, less (ii) the amount of all distributions made following the date of this Agreement in respect of the corresponding BGLH unit to the current or any former holder of such BGLH unit3 | N/A | N/A – Top-Up Securities are not available for these securities | N/A – Top-Up Cash is not available for these securities | Amount for which BGLH determines that all BGLH units held by such BGLH Guarantee Holders corresponding to the applicable number of REIT Shares are redeemable pursuant to the BGLH Guarantee Obligations (set forth on Schedule I hereto), but in no event to exceed the price that BGLH determines is implied for all REIT Shares that are Put Securities during this Put Exercise Window by the following: USD Equivalent of €15,588,969 for 111,611.10 BGLH units held by BGLH Guarantee Holders, such amount for such BGLH units to be measured after settling the distribution rights of the Class C units of BGLH corresponding to such units, less (i) prior distributions made of USD $61,061, less (ii) the amount of all distributions made following the date of this Agreement in respect of the corresponding BGLH units to the current or any former holders of such BGLH units
| |||||||
| 6.B.
Lineage REIT |
Up to 111,713.18 Lineage OP Units | Same price as that paid for 6.A. above | N/A | N/A – Top-Up Securities are not available for these securities
|
N/A – Top-Up Cash is not available for these securities | Same as that for 6.A. above | ||||||||
| 6.C.
Lineage OP |
Up to 111,713.18 Lineage Holdings Units | Same price as that paid for 6.A. above | N/A | N/A – Top-Up Securities are not available for these securities | N/A – Top-Up Cash is not available for these securities | Same as that for 6.A. above | ||||||||
| 3 | “USD Equivalent” references with respect to Canadian Dollars herein are calculated as follows: |
The Euro-to-United-States-Dollar exchange rate will be deemed to equal the Euro-to-United-States-Dollar closing spot exchange rate as reported by WM/Reuters (or, if such rate is not available, such other similar exchange rate report as BGLH selects in its sole discretion) on the Business Day immediately preceding October 3, 2025 (in each case as determined by BGLH).
“Business Day” means any day except a Saturday, Sunday or other day on which commercial banks in the City of New York, New York are authorized by law to close.
14
SCHEDULE I
BGLH GUARANTEE OBLIGATIONS
| Put Exercise Window |
BGLH Guarantee Obligations | |
| September 1, 2024 to October 16, 2024 |
8.08(k) Special Class A-19 Right. On September 1, 2024, if any Class A-19 Unit remains outstanding and the Class A-19 Unit FMV plus the amount of all distributions theretofore made in respect of such Class A-19 Unit to the current or any former holder of such Class A-19 Unit is not equal to at least such amount per Class A-19 Unit as would result in an aggregate value to the holder thereof of at least the Class A-19 Target Amount per Class A-19 Unit after deducting the Class C distribution amount that would be paid upon a redemption of such Class A-19 Unit as of such date, then by delivery of written notice thereof to the Managing Member not later than October 16, 2024, each holder of Class A-19 Units shall have the one-time right to provide written notice to the Managing Member (a “Class A-19 Election Notice”) requiring BGLH to either (x) purchase, in accordance with this Section 8.08(k), all or any portion of the Class A-19 Units held by such holder, at a per unit redemption price (the “Class A-19 Unit Redemption Price”) (paid as described below) equal to the greater of (i) (A) such amount per Class A-19 Unit as would result in a redemption payment per Class A-19 Unit to such holder (after deducting the Class C distribution amount that would paid upon such redemption) of the Class A-19 Target Amount less (B) the amount of all distributions theretofore made in respect of such Class A-19 Unit to the current or any former holder of such Class A-19 Unit and (ii) the Class A-19 Unit FMV as of date of the Class A-19 Election Notice (any election pursuant to this clause (x), a “Class A-19 Redemption Election”) or (y) pay, in accordance with this Section 8.08(k), to such holder an amount per Class A-19 Unit held by such holder equal to (i) the Class A-19 Target Amount less (ii) the Class A-19 Unit FMV less (iii) the amount of all distributions theretofore made in respect of such Class A-19 Unit to the current or any former holder of such Class A-19 Unit, which payment obligation shall be satisfied by, at the election of such holder, (A) a cash payment, (B) the issuance of new Class A Units (of such new or existing Sub-Class as determined by the Managing Member in its sole discretion) to such holder, with each such Class A Unit for this purposes being deemed to have a value equal to the Class A-19 Unit FMV or (C) any combination of the foregoing (i.e., part cash and part new Class A Units); provided that the issuance of any such Class A Units pursuant to this Section 8.08(k) shall be subject to the Managing Member’s determination that such holder meets requisite eligibility criteria (any election pursuant to this clause (y), a “Class A-19 Top-Up Election”). The redemption of such Class A-19 Units pursuant to a Class A-19 Redemption Election or the payment pursuant to a Class A-19 Top-Up Election, as applicable, will occur on or prior to the 60th day following the date on which BGLH has received the applicable Class A-19 Election Notice, or if such day is not a Business Day then on the first Business Day thereafter (such date, the “Class A-19 Payment Date”). Each party shall pay the fees and expenses of its own attorneys, accountants and advisors in connection with the transactions contemplated by this Section 8.08(k). At the written request of a holder of Class A-19 Units, in order to assist such holder in determining whether to exercise the rights in this Section 8.08(k), the Managing Member shall provide such holder with a calculation of the Class A-19 Unit FMV. “Class A-19 Target Amount” shall mean an amount per Class A-19 Unit equal to $119.39.
(i) Class A-19 Redemption Elections. If the Class A-19 Unit Redemption Price in respect of any Class A-19 Redemption Election is the amount set forth in the foregoing clause (x)(i), then: (1) the redemption payment to the holder of each Class A-19 Unit being redeemed in respect of such Class A-19 Redemption Election will be the full amount that would result in a redemption payment for such Class A-19 Unit to the holder thereof (after deducting the Class C distribution amount that would paid upon such redemption) of the Class A-19 Target Amount, less the amount of all distributions theretofore made in respect of such Class A-19 Unit to the current or any former holder of such Class A-19 Unit; and (2) the holder of the Class C Units will be paid by BGLH the amount that the holder of Class C Units would receive in a liquidation of BGLH if the Class A-19 Unit FMV of the Class A-19 Units on the date of the Class A-19 Election Notice constituted the entire value of the LLC and such Class A-19 Units and Class C Units constituted the only Units of BGLH (which payment may be made in cash or through the reclassification of Class C Unit capital account balance amounts into new Class B Units with equivalent value, at the option of the holder of Class C Units). If the Class A-19 Unit Redemption Price in respect of any Class A-19 Redemption Election is the amount set forth in the foregoing clause (x)(ii), then: (1) the redemption payment to the holder of each Class A-19 Unit being redeemed in respect of such Class A-19 Redemption Election will be the amount that the holder of such Class A-19 Unit would receive in respect of such Class A-19 Unit in a liquidation of BGLH if the amount equal to the product of the number of outstanding Class A-19 Units and the |
15
| Put Exercise Window |
BGLH Guarantee Obligations | |
| Class A-19 Unit FMV on the date of the Class A-19 Election Notice constituted the entire value of the LLC and such Class A-19 Units and Class C Units constituted the only Units of BGLH; and (2) the holder of the Class C Units will be paid by BGLH the amount that the holder of Class C Units would receive in a liquidation of BGLH if the amount equal to the product of the number of outstanding Class A-19 Units and the Class A-19 Unit FMV on the date of the Class A-19 Election Notice constituted the entire value of the LLC and such Class A-19 Units and Class C Units constituted the only Units of BGLH (which payment may be made in cash or through the reclassification of Class C Unit capital account balance amounts into new Class B Units with equivalent value, at the option of the holder of Class C Units). The Class A-19 Election Notice in respect of any Class A-19 Redemption Election shall set forth the number of Class A-19 Units held by the applicable holder of Class A-19 Units that such holder elects to redeem. With respect to any Class A-19 Redemption Election, BGLH shall cause the Class A-19 Unit Redemption Price to be paid (in the proportions and manner set forth above) for each redeemed Class A-19 Unit in cash and, if applicable, for the Class C Units in cash or in kind, on the Class A-19 Payment Date, provided that each holder of Class A-19 Units being redeemed has represented and warranted to BGLH and the Managing Member as of the Class A-19 Payment Date that it holds title to such Class A-19 Units free and clear of any liens and encumbrances. BGLH’s obligations pursuant to this Section 8.08(k) ultimately reside with the Lineage Entities and may be honored by any Lineage Entity or any other Person approved by a Lineage Entity and the Managing Member each in their sole discretion, but in no event shall any such change in obligor relieve BGLH of any obligation under this Section 8.08(k) to cause the Class A-19 Unit Redemption Price to be paid to the redeeming Class A-19 Unit holders on the Class A-19 Payment Date.
(ii) Class A-19 Top-Up Elections. Payments (whether paid in cash or in Units) pursuant to a Class A-19 Top-Up Election in respect of any Class A-19 Unit shall be treated as advances against, and thereby reduce by a like amount, future distributions in respect of such Class A-19 Unit.
(iii) Class A-19 Payments. Notwithstanding anything to the contrary in this Agreement, at the election of the Managing Member or BGLH, any payments in cash required under this Section 8.08(k) may be effected through: (A) Class A-19 Unit redemptions by BGLH in exchange for in-kind distributions of REIT Shares, followed by repurchases of such REIT Shares by Lineage REIT for cash in the amounts set forth in this Section 8.08(k); or (B) any other structure that the Managing Member or BGLH deems appropriate. Further, notwithstanding anything to the contrary in this Agreement, at the election of the Managing Member or BGLH, any payments in Units required under this Section 8.08(k) may be effected through the delivery of REIT Shares and in connection with any such deliveries, the amount the holder of Class C Units receives will be adjusted to account for the delivery of REIT Shares rather than Units.
“Class A-19 Unit” means BGLH units designated as Class A-19 Units.
“Class A-19 Unit FMV” means the fair market value of each Class A-19 Unit as determined in good faith by the Managing Member based on the 20-Trading-Day Trailing VWAP for the REIT Shares immediately prior to the applicable date of determination.
“Class C” or “Class C Units” means BGLH units designated as Class C Units.
“Managing Member” means Bay Grove Management Company, LLC in its capacity as managing member of BGLH.
“Class A Units” means BGLH units designated as Class A Units.
“Lineage Entity” means Lineage REIT, Lineage OP, Lineage Holdings and their respective direct and indirect subsidiaries.
“Person” means any natural person, corporation, partnership, limited liability company, firm, association, governmental authority or any other entity whether acting in an individual, fiduciary or other capacity.
“Units” means BGLH units of any class. |
16
| Put Exercise Window |
BGLH Guarantee Obligations | |
| November 1, 2024 to December 16, 2024 |
2.3 Top-Up Election. On November 1, 2024, if the Investor holds any New Unit that remains outstanding and the Class A-20 Unit FMV (as defined below) plus the amount of all distributions theretofore made in respect of such New Unit to the current or any former holder of such New Unit is not equal to at least such amount per New Unit as would result in an aggregate value to the holder thereof of at least equal to $113.10 (the “Class A-20 Target Amount”) per New Unit after deducting the Class C distribution that would be paid upon a redemption of such New Unit as of such date, then by delivery of written notice thereof to the Managing Member not later than December 16, 2024, the Investor shall have the one-time right to provide written notice to the Managing Member requiring BGLH to pay, in accordance with this Section 2.3, to the Investor an amount per New Unit held by the Investor equal to (i) the Class A-20 Target Amount less (ii) the Class A-20 Unit FMV less (iii) the amount of all distributions theretofore made in respect of such New Unit to the current or any former holder of such New Unit, which payment obligation shall be satisfied by, at the election of the Investor, (A) a cash payment, (B) the issuance of new Class A Units (of such new or existing Sub-Class as determined by the Managing Member in its sole discretion) to such holder, with each such Class A Unit for this purposes being deemed to have a value equal to the Class A-20 Unit FMV or (C) any combination of the foregoing (i.e., part cash and part new Class A Units); provided that the issuance of any such Class A Units pursuant to this Section 2.3 shall be subject to the Managing Member’s determination that the Investor meets requisite eligibility criteria (any such written notice of such election, the “Top-Up Election”). The payment pursuant to a Top-Up Election will occur on the 60th day following the date on which BGLH has received the Top-Up Election, or if such day is not a Business Day then on the first Business Day thereafter. Payments (whether paid in cash or in Units) pursuant to a Top-Up Election in respect of any New Unit shall be treated as advances against, and thereby reduce by a like amount, future distributions in respect of such New Unit. Each party shall pay the fees and expenses of its own attorneys, accountants and advisors in connection with the transactions contemplated by this Section 2.3. At the written request of the Investor, in order to assist the Investor in determining whether to exercise the rights in this Section 2.3, the Managing Member shall provide the Investor with a calculation of the Class A-20 Unit FMV. “Class A-20 Unit FMV” the fair market value of each Class A-20 Unit as determined in good faith by the Managing Member based on the 20-Trading-Day Trailing VWAP for the REIT Shares immediately prior to the applicable date of determination.
“Class A Units” means BGLH units designated as Class A Units.
“Class A-20 Unit” means BGLH units designated as Class A-20 Units.
“Class C” or “Class C Units” means BGLH units designated as Class C Units.
“Investor” means the BGLH Guarantee Holder holding the Class A-20 Units to which the rights in this provision apply.
“Managing Member” means Bay Grove Management Company, LLC in its capacity as managing member of BGLH.
“New Units” means the Class A-20 Units held by the BGLH Guarantee Holder to which the rights in this provision apply.
“Units” means BGLH units of any class. | |
| June 1, 2025 to June 6, 2025 |
8.08(m) Special Class A-22 Right.
(ii) If at any time prior to June 1, 2025 BGLH is preparing to consummate an Exit Transaction and the Class A-22 Units are not otherwise then redeemable within 45 days for cash in an amount that would result in aggregate value paid to the holders thereof (on a pro rata basis) of at least the Class A-22 Target Amount (assuming for this purpose that all Class A-22 Units issued on June 1, 2022 are still outstanding and are redeemed pursuant to this Section 8.08(m)(ii), and if less than all Class A-22 Units are still outstanding or are redeemed pursuant to this Section 8.08(m)(ii), then solely a pro rata portion of the Class A-22 Target Amount) after payment of the Class C distribution amount that would be paid upon such repurchase, then BGLH shall give notice (a “Class A-22 Unit FMV Notice”) to the holders of the Class A-22 Units of the anticipated calculation of the Class A-22 Unit FMV as of such event. Each holder of outstanding Class A-22 Units shall have until 6:00 pm Pacific time on the fifth Business Day following the date of such Class A-22 Unit FMV Notice from BGLH to deliver written notice to the Managing Member specifying which of the Class A-22 Units held by such holder such holder elects to have repurchased at a price per Class A-22 Unit as would result in aggregate value paid to the holders thereof (on a pro rata basis) of the Class A-22 Target Amount (assuming for this purpose that all Class A-22 | |
17
| Put Exercise Window |
BGLH Guarantee Obligations | |
| Units issued on June 1, 2022 are still outstanding and are redeemed pursuant to this Section 8.08(m)(ii), and if less than all Class A-22 Units are still outstanding or are redeemed pursuant to this Section 8.08(m)(ii), then solely a pro rata portion of the Class A-22 Target Amount) after payment of the Class C distribution amount that would be paid upon such repurchase; provided that in the event that any such holder fails to provide such written notice by 6:00 pm Pacific time on such fifth Business Day, such holder will be deemed for all purposes to have made a timely election to have none of such holder’s Class A-22 Units repurchased by BGLH pursuant to this Section 8.08(m)(ii). Notwithstanding anything to the contrary in this Agreement, in the event an Exit Transaction is for less than all of the Units or assets or business of BGLH, the right in this Section 8.08(m)(ii) will only be exercisable with respect to the same proportion of the Class A-22 Units as the proportion of all Units or assets or business of BGLH to be sold in such Exit Transaction. The repurchase of such Class A-22 Units pursuant to this Section 8.08(m)(ii) will occur on or prior to the 60th day after the end of such election period, or if such 60th day is not a Business Day then on or prior to the first Business Day thereafter; provided that each holder of Class A-22 Units being repurchased pursuant to this Section 8.08(m)(ii) shall, as a condition of such repurchase, represent and warrant to BGLH (or other applicable purchaser) and the Managing Member as of the date of such repurchase that such holder holds title to such Class A-22 Units free and clear of any liens and encumbrances.
(iii) If on June 1, 2025 (A) any Class A-22 Units are outstanding and (B) there is no then outstanding Class A-22 Unit FMV Notice pursuant to Section 8.08(m)(ii) with respect to all of the outstanding Class A-22 Units, then BGLH shall give notice to the holders of the Class A-22 Units of the calculation of the Class A-22 Unit FMV as of such date, and the terms of Section 8.08(m)(ii) shall apply as if BGLH had delivered a Class A-22 Unit FMV Notice to such holders with respect to 100% of the Units or assets or business of BGLH on the date of such notice.
(iv) If prior to June 1, 2025 BGLH completes any transaction (other than an Exit Transaction in connection with which all of the outstanding Class A-22 Units are subject to repurchase) pursuant to which the Class A-22 Units are exchanged, converted or otherwise transferred for interests other than Class A-22 Units, then BGLH shall afford the holders of Class A-22 Units such rights applicable to such new interests (other than any such new interests corresponding to Class A-22 Units that in the case of an Exit Transaction, were repurchased pursuant to Section 8.08(m)(ii) in connection with such Exit Transaction) as provide the holders of the Class A-22 Units with the benefit of their economic bargain pursuant to this Section 8.08(m) in respect of the exchanged, converted or transferred Class A-22 Units.
(v) Upon the repurchase of any Class A-22 Units pursuant to Section 8.08(m)(ii) or Section 8.08(m)(iii), the holder of the Class C Units will be paid by BGLH the amount that the holder of such Class C Units would receive in a liquidation of BGLH if (A) the aggregate value of such Class A-22 Units was equal to the lesser of (1) such amount as would result in aggregate current and prior distributions and payments to the holders thereof of at least the Class A-22 Target Amount (assuming for this purpose that all Class A-22 Units issued on June 1, 2022 are still outstanding and are so redeemed, and if less than all Class A-22 Units are still outstanding or are so redeemed, then solely a pro rata portion of the Class A-22 Target Amount), exclusive of any distributions to the holder of the Class C Units made in connection therewith, and (2) the Class A-22 Unit FMV per Class A-22 Unit being repurchased; (B) the aggregate value of such Class A-22 Units constituted the entire value of BGLH and (C) such Class A-22 Units and Class C Units constituted the only units of BGLH (which payment may be made in cash or through the reclassification of such Class C Unit capital account balance amounts into new Class B Units with equivalent value, at the option of the holder of Class C Units).
(vi) Subject to Section 8.08(m)(v), BGLH shall pay (or cause to be paid) the applicable purchase price for any Class A-22 Unit repurchased pursuant to this Section 8.08(m) in cash, unless otherwise agreed by BGLH and the holder of such Class A-22 Unit. BGLH’s obligations pursuant to this Section 8.08(m) ultimately reside with the Lineage Entities and may be honored by any Lineage Entity or any other Person approved by a Lineage Entity and the Managing Member each in their sole discretion, but in no event shall any such change in obligor relieve BGLH of any obligation under this Section 8.08(m) to cause the purchase price for any Class A-22 Unit repurchased pursuant to this Section 8.08(m) to be paid to the respective selling Class A-22 Unit holders and holder of the Class C Units as set forth in this Section 8.08(m) on the applicable repurchase date as provided in this Section 8.08(m). |
18
| Put Exercise Window |
BGLH Guarantee Obligations | |
| (vii) Each party shall pay the fees and expenses of its own attorneys, accountants and advisors in connection with the transactions contemplated by this Section 8.08(m).
(viii) Class A-22 Payments. Notwithstanding anything to the contrary in this Agreement, at the election of the Managing Member or BGLH, any payments in cash required under this Section 8.08(m) may be effected through: (A) Class A-22 Unit redemptions by BGLH in exchange for in-kind distributions of REIT Shares, followed by repurchases of such REIT Shares by Lineage REIT for cash in the amounts set forth in this Section 8.08(m); or (B) any other structure that the Managing Member or BGLH deems appropriate. Further, notwithstanding anything to the contrary in this Agreement, at the election of the Managing Member or BGLH, any payments in Units required under this Section 8.08(m) may be effected through the delivery of REIT Shares and in connection with any such deliveries, the amount the holder of Class C Units receives will be adjusted to account for the delivery of REIT Shares rather than Units.
The rights of the holders of Class A-22 Units pursuant to this Section 8.08(m) are personal to the original holders of such Class A-22 Units and are not transferable to (and therefore may not be exercised by) any other Person (other than a Person to whom Class A-22 Units are properly transferred pursuant to a permitted transfer) subsequently acquiring such Class A-22 Units. Upon any transfer of less than all of the Class A-22 Units, the provisions of this Section 8.08(m) shall apply solely to those Class A-22 Units then held by the original holders thereof (and to those held by any Person(s) to whom Class A-22 Units are properly transferred pursuant to a permitted transfer) and the Managing Member may interpret this Section 8.08(m) in a proportionate manner such that the Class A-22 Units remaining with their original holders (and those Class A-22 Units remaining with any Person(s) to whom Class A-22 Units are properly transferred pursuant to a permitted transfer) each individually receive the same benefit (and not more than the same benefit) they would receive absent any transfer of any other Class A-22 Units. For the purpose of any transfer of Class A-22 Units, it is agreed that the Managing Member will be deemed to be reasonable in withholding its consent to any transfer of Class A-22 Units that would cause the total number of holders of Class A-22 Units to exceed 30.
“Class A-22 Target Amount” means (1) an amount equal to a 13% per annum rate of return, compounded annually, on the aggregate initial Capital Contributions made by each Member acquiring Class A-22 Units on the initial issuance date thereof, computed from such issuance date through the earlier to occur of (i) the date of repurchase in accordance with Section 8.08(m)(ii), 8.08(m)(iii) or 8.08(m)(iv), as applicable, and (ii) June 1, 2025; less (2) the amount of all distributions and payments (including any payments upon repurchase or transfer) theretofore made in respect of all Class A-22 Units to the current or any former holders of such Class A-22 Units.
“Class A-22 Units” means BGLH units designated as Class A-22 Units.
“Class A-22 Unit FMV” means the fair market value of each Class A-22 Unit as determined in good faith by the Managing Member based on the 20-Trading-Day Trailing VWAP for the REIT Shares immediately prior to the applicable date of determination.
“Class B Units” means BGLH units designated as Class B Units.
“Class C” or “Class C Units” means BGLH units designated as Class C Units.
“Exit Transaction” means certain sale and change of control transactions that do not include the initial public offering of the common stock of Lineage REIT.
“Lineage Entities” means Lineage REIT, Lineage OP, Lineage Holdings and their respective direct and indirect subsidiaries.
“Managing Member” means Bay Grove Management Company, LLC in its capacity as managing member of BGLH.
“Person” means any natural person, corporation, partnership, limited liability company, firm, association, governmental authority or any other entity whether acting in an individual, fiduciary or other capacity. |
19
| Put Exercise Window |
BGLH Guarantee Obligations | |
| “Units” means BGLH units of any class. | ||
| September 1, 2025 to September 8, 2025 |
8.08(o) Special Class A-24 Right.
(ii) If at any time prior to September 1, 2025 BGLH is preparing to consummate an Exit Transaction and the Class A-24 Units are not otherwise then redeemable within 45 days for cash in an amount that would result in aggregate value paid to the holders thereof (on a pro rata basis) of at least the Class A-24 Target Amount (assuming for this purpose that all Class A-24 Units issued on September 1, 2022 are still outstanding and are redeemed pursuant to this Section 8.08(o)(ii), and if less than all Class A-24 Units are still outstanding or are redeemed pursuant to this Section 8.08(o)(ii), then solely a pro rata portion of the Class A-24 Target Amount) after payment of the Class C distribution amount that would be paid upon such repurchase, then BGLH shall give notice (a “Class A-24 Unit FMV Notice”) to the holders of the Class A-24 Units of the anticipated calculation of the Class A-24 Unit FMV as of such event. Each holder of outstanding Class A-24 Units shall have until 6:00 pm Pacific time on the fifth Business Day following the date of such Class A-24 Unit FMV Notice from BGLH to deliver written notice to the Managing Member specifying which of the Class A-24 Units held by such holder such holder elects to have repurchased at a price per Class A-24 Unit as would result in aggregate value paid to the holders thereof (on a pro rata basis) of the Class A-24 Target Amount (assuming for this purpose that all Class A-24 Units issued on September 1, 2022 are still outstanding and are redeemed pursuant to this Section 8.08(o)(ii), and if less than all Class A-24 Units are still outstanding or are redeemed pursuant to this Section 8.08(o)(ii), then solely a pro rata portion of the Class A-24 Target Amount) after payment of the Class C distribution amount that would be paid upon such repurchase; provided that in the event that any such holder fails to provide such written notice by 6:00 pm Pacific time on such fifth Business Day, such holder will be deemed for all purposes to have made a timely election to have none of such holder’s Class A-24 Units repurchased by BGLH pursuant to this Section 8.08(o)(ii). Notwithstanding anything to the contrary in this Agreement, in the event an Exit Transaction is for less than all of the Units or assets or business of BGLH, the right in this Section 8.08(o)(ii) will only be exercisable with respect to the same proportion of the Class A-24 Units as the proportion of all Units or assets or business of BGLH to be sold in such Exit Transaction. The repurchase of such Class A-24 Units pursuant to this Section 8.08(o)(ii) will occur on or prior to the 60th day after the end of such election period, or if such 60th day is not a Business Day then on or prior to the first Business Day thereafter; provided that each holder of Class A-24 Units being repurchased pursuant to this Section 8.08(o)(ii) shall, as a condition of such repurchase, represent and warrant to BGLH (or other applicable purchaser) and the Managing Member as of the date of such repurchase that such holder holds title to such Class A-24 Units free and clear of any liens and encumbrances.
(iii) If on September 1, 2025 (A) any Class A-24 Units are outstanding and (B) there is no then outstanding Class A-24 Unit FMV Notice pursuant to Section 8.08(o)(ii), then BGLH shall give notice to the holders of the Class A-24 Units of the calculation of the Class A-24 Unit FMV as of such date, and the terms of Section 8.08(o)(ii) shall apply as if BGLH had delivered a Class A-24 Unit FMV Notice to such holders with respect to 100% of the Units or assets or business of BGLH on the date of such notice.
(iv) If prior to September 1, 2025 BGLH completes any transaction (other than an Exit Transaction) pursuant to which the Class A-24 Units are exchanged, converted or otherwise transferred for interests other than Class A-24 Units, then BGLH shall afford the holders of Class A-24 Units such rights applicable to such new interests as provide the Class A-24 Units with the benefit of their economic bargain pursuant to this Section 8.08(o) in respect of the exchanged, converted or transferred Class A-24 Units.
(v) Upon the repurchase of any Class A-24 Units pursuant to Section 8.08(o)(ii) or Section 8.08(o)(iii), the holder of the Class C Units will be paid by BGLH the amount that the holder of such Class C Units would receive in a liquidation of BGLH if (A) the aggregate value of such Class A-24 Units was equal to the lesser of (1) such amount as would result in aggregate current and prior distributions and payments to the holders thereof of at least the Class A-24 Target Amount (assuming for this purpose that all Class A-24 Units issued on September 1, 2022 are still outstanding and are so redeemed, and if less than all Class A-24 Units are still outstanding or are so redeemed, then solely a pro rata portion of the Class | |
20
| Put Exercise Window |
BGLH Guarantee Obligations | |
| A-24 Target Amount), exclusive of any distributions to the holder of the Class C Units made in connection therewith, and (2) the Class A-24 Unit FMV per Class A-24 Unit being repurchased; (B) the aggregate value of such Class A-24 Units constituted the entire value of BGLH and (C) such Class A-24 Units and Class C Units constituted the only units of BGLH (which payment may be made in cash or through the reclassification of such Class C Unit capital account balance amounts into new Class B Units with equivalent value, at the option of the holder of Class C Units).
(vi) Subject to Section 8.08(o)(v), BGLH shall pay (or cause to be paid) the applicable purchase price for any Class A-24 Unit repurchased pursuant to this Section 8.08(o) in cash, unless otherwise agreed by BGLH and the holder of such Class A-24 Unit. BGLH’s obligations pursuant to this Section 8.08(o) ultimately reside with the Lineage Entities and may be honored by any Lineage Entity or any other Person approved by a Lineage Entity and the Managing Member each in their sole discretion, but in no event shall any such change in obligor relieve BGLH of any obligation under this Section 8.08(o) to cause the purchase price for any Class A-24 Unit repurchased pursuant to this Section 8.08(o) to be paid to the respective selling Class A-24 Unit holders and holder of the Class C Units as set forth in this Section 8.08(o) on the applicable repurchase date as provided in this Section 8.08(o).
(vii) Each party shall pay the fees and expenses of its own attorneys, accountants and advisors in connection with the transactions contemplated by this Section 8.08(o).
(viii) Class A-24 Payments. Notwithstanding anything to the contrary in this Agreement, at the election of the Managing Member or BGLH, any payments in cash required under this Section 8.08(o) may be effected through: (A) Class A-24 Unit redemptions by BGLH in exchange for in-kind distributions of REIT Shares, followed by repurchases of such REIT Shares by Lineage REIT for cash in the amounts set forth in this Section 8.08(o); or (B) any other structure that the Managing Member or BGLH deems appropriate. Further, notwithstanding anything to the contrary in this Agreement, at the election of the Managing Member or BGLH, any payments in Units required under this Section 8.08(o) may be effected through the delivery of REIT Shares and in connection with any such deliveries, the amount the holder of Class C Units receives will be adjusted to account for the delivery of REIT Shares rather than Units.
The rights of the holders of Class A-24 Units pursuant to this Section 8.08(o) are personal to the original holders of such Class A-24 Units and are not transferable to (and therefore may not be exercised by) any other Person (other than a Person to whom Class A-24 Units are properly transferred pursuant to a permitted transfer) subsequently acquiring such Class A-24 Units. Upon any transfer of less than all of the Class A-24 Units, the provisions of this Section 8.08(o) shall apply solely to those Class A-24 Units then held by the original holders thereof (and to those held by any Person(s) to whom Class A-24 Units are properly transferred pursuant to a permitted transfer) and the Managing Member may interpret this Section 8.08(o) in a proportionate manner such that the Class A-24 Units remaining with their original holders (and those Class A-24 Units remaining with any Person(s) to whom Class A-24 Units are properly transferred pursuant to a permitted transfer) each individually receive the same benefit (and not more than the same benefit) they would receive absent any transfer of any other Class A-24 Units. For the purpose of any transfer of Class A-24 Units, it is agreed that the Managing Member will be deemed to be reasonable in withholding its consent to any transfer of Class A-24 Units that would cause the total number of holders of Class A-24 Units to exceed 30.
“Class A-24 Target Amount” means (1) the United States Dollar equivalent of 175 million Canadian Dollars less (2) the amount of all distributions and payments (including any payments upon repurchase or transfer) theretofore made in respect of all Class A-24 Units to the current or any former holders of such Class A-24 Units. The Canadian-Dollar-to-United-States-Dollar exchange rate will be deemed to equal the average Canadian-Dollar-to-United-States-Dollar closing spot exchange rate for the 30 Business Days immediately preceding the applicable date for which or as of which the calculation is made (as determined by the Managing Member), as reported by WM/Reuters (or, if such rate is not available, such other similar exchange rate report as the Managing Member selects in its sole discretion).
“Class A-24 Units” means BGLH units designated as Class A-24 Units. |
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| Put Exercise Window |
BGLH Guarantee Obligations | |
| “Class A-24 Unit FMV” means the fair market value of each Class A-24 Unit as determined in good faith by the Managing Member based on the 20-Trading-Day Trailing VWAP for the REIT Shares immediately prior to the applicable date of determination.
“Class B Units” means BGLH units designated as Class B Units.
“Class C” or “Class C Units” means BGLH units designated as Class C Units.
“Exit Transaction” means certain sale and change of control transactions that do not include the initial public offering of the common stock of Lineage REIT. “Lineage Entities” means Lineage REIT, Lineage OP, Lineage Holdings and their respective direct and indirect subsidiaries.
“Managing Member” means Bay Grove Management Company, LLC in its capacity as managing member of BGLH.
“Person” means any natural person, corporation, partnership, limited liability company, firm, association, governmental authority or any other entity whether acting in an individual, fiduciary or other capacity.
“Units” means BGLH units of any class. | ||
| October 3, 2025 to October 10, 2025 |
8.08(n) Special Class A-23 Right.
(ii) If at any time prior to October 3, 2025 BGLH is preparing to consummate an Exit Transaction and the Class A-23 Units are not otherwise then redeemable within 45 days for cash in an amount that would result in aggregate value paid to the holders thereof (on a pro rata basis) of at least the Class A-23 Target Amount (assuming for this purpose that (1) the Euro-to-United-States-Dollar exchange rate for the Class A-23 Target Amount was determined on the date on which BGLH approved the Exit Transaction and (2) all Class A-23 Units issued on October 3, 2022 are still outstanding and are redeemed pursuant to this Section 8.08(n)(ii), and if less than all Class A-23 Units are still outstanding or are redeemed pursuant to this Section 8.08(n)(ii), then solely a pro rata portion of the Class A-23 Target Amount) after payment of the Class C distribution amount that would be paid upon such repurchase, then BGLH shall give notice (a “Class A-23 Unit FMV Notice”) to the holders of the Class A-23 Units of the anticipated calculation of the Class A-23 Unit FMV as of such event. Each holder of outstanding Class A-23 Units shall have until 6:00 pm Pacific time on the fifth Business Day following the date of such Class A-23 Unit FMV Notice from BGLH to deliver written notice to the Managing Member specifying which of the Class A-23 Units held by such holder such holder elects to have repurchased at a price per Class A-23 Unit as would result in aggregate value paid to the holders thereof (on a pro rata basis) of the Class A-23 Target Amount (assuming for this purpose that all Class A-23 Units issued on October 3, 2022 are still outstanding and are redeemed pursuant to this Section 8.08(n)(ii), and if less than all Class A-23 Units are still outstanding or are redeemed pursuant to this Section 8.08(n)(ii), then solely a pro rata portion of the Class A-23 Target Amount) after payment of the Class C distribution amount that would be paid upon such repurchase; provided that in the event that any such holder fails to provide such written notice by 6:00 pm Pacific time on such fifth Business Day, such holder will be deemed for all purposes to have made a timely election to have none of such holder’s Class A-23 Units repurchased by BGLH pursuant to this Section 8.08(n)(ii). Notwithstanding anything to the contrary in this Agreement, in the event an Exit Transaction is for less than all of the Units or assets or business of BGLH, the right in this Section 8.08(n)(ii) will only be exercisable with respect to the same proportion of the Class A-23 Units as the proportion of all Units or assets or business of BGLH to be sold in such Exit Transaction. The repurchase of such Class A-23 Units pursuant to this Section 8.08(n)(ii) will occur on or prior to the 60th day after the end of such election period, or if such 60th day is not a Business Day then on or prior to the first Business Day thereafter; provided that each holder of Class A-23 Units being repurchased pursuant to this Section 8.08(n)(ii) shall, as a condition of such repurchase, represent and warrant to BGLH (or other applicable purchaser) and the Managing Member as of the date of such repurchase that such holder holds title to such Class A-23 Units free and clear of any liens and encumbrances.
(iii) If on October 3, 2025 (A) any Class A-23 Units are outstanding and (B) there is no then outstanding Class A-23 Unit FMV Notice pursuant to Section 8.08(n)(ii) with respect to all of the outstanding Class A-23 Units, then BGLH shall give notice to the holders of the Class A-23 Units of the calculation of the Class A-23 Unit FMV as of such date, and the terms of Section 8.08(n)(ii) shall apply as if BGLH had delivered a Class A-23 Unit FMV Notice to such holders with respect to 100% of the Units or assets or business of BGLH on the date of such notice. | |
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| Put Exercise Window |
BGLH Guarantee Obligations | |
| (iv) If prior to October 3, 2025 BGLH completes any transaction (other than an Exit Transaction in connection with which all of the outstanding Class A-23 Units are subject to repurchase) pursuant to which the Class A-23 Units are exchanged, converted or otherwise transferred for interests other than Class A-23 Units, then BGLH shall afford the holders of Class A-23 Units such rights applicable to such new interests (other than any such new interests corresponding to Class A-23 Units that in the case of an Exit Transaction, were repurchased pursuant to Section 8.08(n)(ii) in connection with such Exit Transaction) as provide the holders of the Class A-23 Units with the benefit of their economic bargain pursuant to this Section 8.08(n) in respect of the exchanged, converted or transferred Class A-23 Units.
(v) Upon the repurchase of any Class A-23 Units pursuant to Section 8.08(n)(ii) or Section 8.08(n)(iii), the holder of the Class C Units will be paid by BGLH the amount that the holder of such Class C Units would receive in a liquidation of BGLH if (A) the aggregate value of such Class A-23 Units was equal to the lesser of (1) such amount as would result in aggregate current and prior distributions and payments to the holders thereof of at least the Class A-23 Target Amount (assuming for this purpose that all Class A-23 Units issued on October 3, 2022 are still outstanding and are so redeemed, and if less than all Class A-23 Units are still outstanding or are so redeemed, then solely a pro rata portion of the Class A-23 Target Amount), exclusive of any distributions to the holder of the Class C Units made in connection therewith, and (2) the Class A-23 Unit FMV per Class A-23 Unit being repurchased; (B) the aggregate value of such Class A-23 Units constituted the entire value of BGLH and (C) such Class A-23 Units and Class C Units constituted the only units of BGLH (which payment may be made in cash or through the reclassification of such Class C Unit capital account balance amounts into new Class B Units with equivalent value, at the option of the holder of Class C Units).
(vi) Subject to Section 8.08(n)(v), BGLH shall pay (or cause to be paid) the applicable purchase price for any Class A-23 Unit repurchased pursuant to this Section 8.08(n) in cash, unless otherwise agreed by BGLH and the holder of such Class A-23 Unit. BGLH’s obligations pursuant to this Section 8.08(n) ultimately reside with the Lineage Entities and may be honored by any Lineage Entity or any other Person approved by a Lineage Entity and the Managing Member each in their sole discretion, but in no event shall any such change in obligor relieve BGLH of any obligation under this Section 8.08(n) to cause the purchase price for any Class A-23 Unit repurchased pursuant to this Section 8.08(n) to be paid to the respective selling Class A-23 Unit holders and holder of the Class C Units as set forth in this Section 8.08(n) on the applicable repurchase date as provided in this Section 8.08(n).
(vii) Each party shall pay the fees and expenses of its own attorneys, accountants and advisors in connection with the transactions contemplated by this Section 8.08(n).
(viii) Class A-23 Payments. Notwithstanding anything to the contrary in this Agreement, at the election of the Managing Member or BGLH, any payments in cash required under this Section 8.08(n) may be effected through: (A) Class A-23 Unit redemptions by BGLH in exchange for in-kind distributions of REIT Shares, followed by repurchases of such REIT Shares by Lineage REIT for cash in the amounts set forth in this Section 8.08(n); or (B) any other structure that the Managing Member or BGLH deems appropriate. Further, notwithstanding anything to the contrary in this Agreement, at the election of the Managing Member or BGLH, any payments in Units required under this Section 8.08(n) may be effected through the delivery of REIT Shares and in connection with any such deliveries, the amount the holder of Class C Units receives will be adjusted to account for the delivery of REIT Shares rather than Units.
The rights of the holders of Class A-23 Units pursuant to this Section 8.08(n) are personal to the original holders of such Class A-23 Units and are not transferable to (and therefore may not be exercised by) any other Person (other than a Person to whom Class A-23 Units are properly transferred pursuant to a permitted transfer) subsequently acquiring such Class A-23 Units. Upon any transfer of less than all of the Class A-23 Units, the provisions of this Section 8.08(n) shall apply solely to those Class A-23 Units then held by the original holders thereof (and to those held by any Person(s) to whom Class A-23 Units are properly transferred pursuant to a permitted transfer) and the Managing Member may interpret this Section 8.08(n) in a proportionate manner such that the |
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| Put Exercise Window |
BGLH Guarantee Obligations | |
| Class A-23 Units remaining with their original holders (and those Class A-23 Units remaining with any Person(s) to whom Class A-23 Units are properly transferred pursuant to a permitted transfer) each individually receive the same benefit (and not more than the same benefit) they would receive absent any transfer of any other Class A-23 Units. For the purpose of any transfer of Class A-23 Units, it is agreed that the Managing Member will be deemed to be reasonable in withholding its consent to any transfer of Class A-23 Units that would cause the total number of holders of Class A-23 Units to exceed 30.
Notwithstanding anything to the contrary in this Section 8.08(n), the rights afforded to the holders of Class A-23 Units pursuant to this Section 8.08(n) are contingent on such holder’s continued employment by Lineage Holdings or its subsidiaries, including continued employment pursuant to a management agreement or consulting agreement between such holder and Lineage Holdings or its subsidiaries, and all rights pursuant to this Section 8.08(n) will automatically terminate and be of no force or effect (without further act or notice) upon any event that causes such employment to terminate, in each case other than a termination of such holder’s employment by Lineage Holdings or its subsidiaries without cause (as cause is defined in any employment or other service agreement between the holder of a Class A-23 Unit and Lineage Holdings or its subsidiaries or, if no such agreement exists or no such defined term exists then as determined by Lineage Holdings) or due to death or disability (as disability is defined in any employment agreement or other service agreement between the holder of a Class A-23 Unit and Lineage Holdings or its subsidiaries or, if no such agreement exists or no such defined term exists then as determined by Lineage Holdings).
“Class A-23 Target Amount” means (1) the United States Dollar equivalent of 15,588,969 Euros less (2) the amount of all distributions and payments (including any payments upon repurchase or transfer) theretofore made in respect of all Class A-23 Units to the current or any former holders of such Class A-23 Units. The Euro-to-United-States-Dollar exchange rate will be deemed to equal the Euro-to-United-States-Dollar closing spot exchange rate as reported by WM/Reuters (or, if such rate is not available, such other similar exchange rate report as the Managing Member selects in its sole discretion) (x) in the case of Section 8.08(n)(ii), on the Business Day immediately preceding the date on which the applicable Class A-23 Unit FMV Notice is delivered and (y) in the case of Section 8.08(n)(iii), on the Business Day immediately preceding October 3, 2025 (in each of the foregoing cases as determined by the Managing Member).
“Class A-23 Units” means BGLH units designated as Class A-23 Units.
“Class A-23 Unit FMV” means the fair market value of each Class A-23 Unit as determined in good faith by the Managing Member based on the 20-Trading-Day Trailing VWAP for the REIT Shares immediately prior to the applicable date of determination.
“Class B Units” means BGLH units designated as Class B Units.
“Class C” or “Class C Units” means BGLH units designated as Class C Units.
“Exit Transaction” means certain sale and change of control transactions that do not include the initial public offering of the common stock of Lineage REIT.
“Lineage Entities” means Lineage REIT, Lineage OP, Lineage Holdings and their respective direct and indirect subsidiaries.
“Managing Member” means Bay Grove Management Company, LLC in its capacity as managing member of BGLH.
“Person” means any natural person, corporation, partnership, limited liability company, firm, association, governmental authority or any other entity whether acting in an individual, fiduciary or other capacity.
“Units” means BGLH units of any class. |
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Exhibit 10.10
EXPENSE REIMBURSEMENT AND INDEMNIFICATION AGREEMENT
This Expense Reimbursement and Indemnification Agreement (this “Agreement”), dated as of July 24, 2024, is entered into by and among Lineage Logistics Holdings, LLC, a Delaware limited liability company (“Lineage”), on the one hand, and BG Lineage Holdings, LLC, a Delaware limited liability company (“BGLH”), BG Lineage Holdings LHR, LLC, a Delaware limited liability company (“LHR”), and Bay Grove Management Company, LLC, a Delaware limited liability company (“BGMC” and, together with BGLH and LHR, the “BG Parties”), on the other. Lineage, BGLH, LHR and BGMC are each referred to herein individually as a “Party” and, collectively, as the “Parties.”
RECITALS
WHEREAS, in connection with and as a condition to consummating the initial public offering of Lineage, Inc. (“Lineage REIT”), the Parties have agreed that Lineage will assume the obligations set forth in this Agreement for the benefit of the BG Persons (as defined below) and the BG Indemnitees (as defined below) in relation to Lineage REIT and any of its direct and indirect subsidiaries (each, a “Lineage Entity” and collectively, the “Lineage Entities”).
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and the covenants and conditions herein set forth, the Parties hereto agree as follows:
Section 1. Reimbursement of Lineage Expenses.
(a) As between Lineage, on the one hand, and any BG Person on the other hand, Lineage shall be solely responsible for and shall bear all Lineage Expenses. Lineage shall promptly upon the written request of any BG Person, reimburse the BG Persons for, pay directly on a BG Person’s behalf, or advance to a BG Person the amounts necessary to pay, all Lineage Expenses. Certain BG Persons have other obligations as among them in respect of Lineage Expenses, which obligations, solely as among the BG Persons, are not altered by this Agreement; however, if any BG Person bears Lineage Expenses on behalf of, for the benefit of or incurred by any other BG Person, Lineage shall in any event remain responsible for all such Lineage Expenses borne by any BG Person, and Lineage shall reimburse the applicable BG Person that has actually paid or borne such Lineage Expenses.
(b) For purposes of this Agreement:
(i) “Affiliate” of any person or entity means a person or entity that directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with the first mentioned person or entity. A person or entity shall be deemed to control another person or entity if such first person or entity possesses directly or indirectly the power to direct, or cause the direction of, the management and policies of the second person or entity, whether through the ownership of voting securities, by contract or otherwise. Notwithstanding the foregoing, none of BGLH, LHR or any Lineage Entity shall be deemed an Affiliate of any Bay Grove Person or of any Bay Grove Person’s Affiliates, or vice versa.
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(ii) “Bay Grove Expenses” means the costs and expenses incurred by BGMC and its Affiliates in providing for their normal operating overhead, such as salaries and bonuses of their employees, and rent and other expenses incurred by BGMC and its Affiliates in maintaining their places of business, but not including costs, fees, expenses and liabilities that in the good faith judgment of BGMC are attributable to the operation or activities of BGLH or any Lineage Entity or are incurred by or arise out of the operation and activities of or otherwise are related to BGLH or any Lineage Entity (including those incurred by any BG Persons on behalf of or allocable to BGLH, LHR or any Lineage Entity).
(iii) “Bay Grove Persons” means BGMC, each entity within the Bay Grove brand, any of the ultimate owners of Bay Grove Capital Group, LLC, and each other Affiliate of any of the foregoing (but excluding BGLH, LHR, Lineage REIT and Lineage REIT’s direct and indirect subsidiaries).
(iv) “BG Persons” means each BG Party, each Bay Grove Person and each other Affiliate of any of the foregoing (but excluding Lineage REIT and its direct and indirect subsidiaries). For the avoidance of doubt, BG Persons do not include the members of BGLH that are not Bay Grove Persons.
(v) “LHR Indemnified Taxes” means any taxes, fees or similar charges incurred by LHR, including any taxes, fees or similar charges incurred as a result of payments made hereunder.
(vi) “Lineage Expenses” means:
(A) All obligations, costs, fees, expenses and liabilities of any kind whatsoever that are incurred or paid by BGLH or LHR to any person or entity at any time (whether incurred and/or paid prior to, on or at any time after the date of this Agreement, and including any LHR Indemnified Taxes), other than Excluded Taxes (as defined below) of BGLH and obligations of BGLH to make distributions to its members (including redemption distributions, where applicable) from the assets of BGLH; and
(B) All obligations, costs, fees, expenses and liabilities of any kind whatsoever that are incurred or paid by any Bay Grove Person at any time (whether incurred and/or paid prior to, on or at any time after the date of this Agreement) in connection with or in any way relating to (1) any Lineage Entity, (2) BGLH or LHR, (3) any BG Person’s provision of any services to any Lineage Entity or to BGLH or LHR, (4) the conduct of business by any Lineage Entity or by BGLH or LHR, (5) the initial public offering of Lineage REIT or any subsequent offering of interests in Lineage REIT or in any other Lineage Entity, (6) any restructuring transactions relating to any Lineage Entity or to BGLH or LHR in contemplation of, or in order to effect, the initial public offering of Lineage REIT or any subsequent offering of interests in Lineage REIT or in any other Lineage Entity, (7) the creation and maintenance of LHR and the maintenance of BGLH, and any taxes imposed on BGLH or LHR, (8) any settlement, sale, distribution or other
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disposition of any interests in BGLH, LHR or any Lineage Entity, or (9) any dissolution, winding up, termination or post-termination liability in respect of BGLH, LHR or any Lineage Entity; in case of each of the foregoing clauses (1) through (9), other than obligations, costs, fees, expenses and liabilities that are (I) Bay Grove Expenses, (II) separately reimbursed or covered pursuant to the Transition Services Agreement between Lineage and BGMC, dated as of July 24, 2024 (the “TSA”), (III) Excluded Taxes, or (IV) the result of any act, alleged act, omission or alleged omission that constitutes actual fraud, gross negligence or willful misconduct of a Bay Grove Person, as determined by a final, non-appealable determination of a court of competent jurisdiction.
(c) All reimbursements for, payments of, or advances for Lineage Expenses shall be made promptly upon presentation by any BG Person to Lineage of an invoice in connection therewith.
(d) No BG Person is obligated to make any advance to, or for the account of, any Lineage Entity, nor to pay any sums to any person or entity other than from amounts provided by a Lineage Entity.
(e) No BG Person is obligated to incur any liability or obligation for the account of any Lineage Entity without the assurance that the necessary funds for the discharge of the liability or obligation will be provided by a Lineage Entity.
Section 2. Indemnification of BG Persons.
(a) Lineage agrees to indemnify, defend, exonerate and hold harmless, to the fullest extent permitted by applicable law, (1) each BG Person and (2) each Bay Grove Person’s respective former, current or future partners, members, stockholders, Affiliates, associates, officers, directors, employees, controlling persons, agents or representatives, or any former, current or future partners, members, stockholders, Affiliates, associates, officers, directors, employees, controlling persons, agents or representatives of the foregoing (together with the BG Persons, the “BG Indemnitees”) from and against any and all actions, causes of action, suits, proceedings, claims or threatened claims, liabilities, losses, damages, costs and expenses (including, without limitation, reasonable and documented attorneys’, accountants’ and consultants’ fees, expenses and disbursements), but excluding any Excluded Taxes, incurred by the BG Indemnitees or any of them before, on or after the date of this Agreement, arising out of, incurred in connection with or as a result of, or in any way relating to, (i) this Agreement, any transaction to which Lineage REIT, any of its direct or indirect subsidiaries, BGLH or LHR is a party or any other circumstances with respect to Lineage REIT, any of its direct or indirect subsidiaries, BGLH, LHR or the conduct of the business of Lineage REIT, any of its direct or indirect subsidiaries, BGLH or LHR, (ii) any Lineage Expenses or any matter that gives rise to any obligations, costs, fees, expenses or liabilities of any kind that would constitute Lineage Expenses, or (iii) the exercise, enforcement or preservation of any rights or remedies under this Agreement (collectively, the “Indemnified Liabilities”); provided that the foregoing indemnification rights will not be available to the extent that a court of competent jurisdiction determines by final non-appealable judgment or order that such Indemnified Liabilities arose on account of such BG Indemnitee’s actual fraud, gross negligence or willful misconduct; and
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provided, further, that if and to the extent that the foregoing right to indemnification may be unavailable or unenforceable for any reason (other than the actual fraud, gross negligence or willful misconduct of the applicable BG Indemnitee), Lineage hereby agrees to make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law. Lineage shall be obligated to pay in cash promptly, and in any event within fifteen (15) days, all expenses and other costs incident to any actual or threatened claim, lawsuit or other proceeding, including those incurred in defending any civil or criminal action arising out of or relating to any event or circumstance to which this Section 2 shall apply, upon receipt of an undertaking by or on behalf of the applicable BG Indemnitee to repay such amount if it be later determined in accordance with this Section 2 that such BG Indemnitee was not entitled to indemnification (whether hereunder or otherwise).
(b) Lineage will reimburse each BG Indemnitee for all reasonable costs and expenses (including reasonable attorneys’ fees and expenses and any other litigation-related expenses) as they are incurred in connection with investigating, preparing, pursuing, defending or assisting in the defense of any action, claim, suit, investigation or proceeding for which the BG Indemnitee would be entitled to indemnification under the terms of Section 2(a), or any action or proceeding arising therefrom, whether or not such BG Indemnitee is a formal party thereto. Lineage agrees that it will not, without the prior written consent of the BG Indemnitee, settle, compromise or consent to the entry of any judgment in any pending or threatened claim, action or proceeding relating to the matters contemplated hereby (if any BG Indemnitee is a party thereto or has been threatened to be made a party thereto) unless such settlement, compromise or consent includes an unconditional release of the BG Indemnitee from all liability, without future obligation or prohibition on the part of the BG Indemnitee, arising or that may arise out of such claim, action or proceeding, and does not contain an admission of guilt or liability on the part of the BG Indemnitee.
(c) Notwithstanding the foregoing, Lineage shall not be liable to any BG Indemnitee in respect of any Indemnified Liabilities (or any related costs and expenses) to a BG Indemnitee to the extent the same is determined, in a final non-appealable judgment by a court having jurisdiction, to have resulted from the actual fraud, gross negligence or willful misconduct of such BG Indemnitee. An adverse judgment or plea of nolo contendere shall not, of itself, create a presumption that any BG Indemnitee committed actual fraud, gross negligence or willful misconduct.
(d) The rights of any BG Indemnitee to indemnification hereunder will be in addition to any other rights any such person may have under any other agreement or instrument referenced above or any other agreement or instrument to which such BG Indemnitee is or becomes a party or is or otherwise becomes a beneficiary or under law or regulation. Lineage hereby acknowledges that each BG Indemnitee may have certain rights to indemnification, advancement of expenses and/or insurance provided by one or more persons or entities with whom or which such BG Indemnitee may be associated (including, without limitation, any other BG Indemnitee). Lineage hereby acknowledges and agrees that (i) Lineage shall be the indemnitor of first resort with respect to any Indemnified Liability, (ii) Lineage shall be primarily liable for all Indemnified Liabilities and any indemnification afforded to any BG Indemnitee in respect of any Indemnified Liabilities, whether created by law, organizational or constituent documents, contract (including this Agreement) or otherwise, (iii) any obligation of any other person or entity with whom or which any BG Indemnitee may be associated (including, without limitation, or any BG Indemnitee) to
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indemnify such BG Indemnitee and/or advance expenses to such BG Indemnitee in respect of any proceeding shall be secondary to the obligations of Lineage hereunder, (iv) Lineage shall be required to indemnify each BG Indemnitee and advance expenses to each BG Indemnitee hereunder to the fullest extent provided herein without regard to any rights such BG Indemnitee may have against any other person or entity with whom or which such BG Indemnitee may be associated (including, without limitation, any other BG Indemnitee) or insurer of any such person or entity and (v) Lineage (on behalf of itself and its insurers) irrevocably waives, relinquishes and releases any other person or entity with whom or which any BG Indemnitee may be associated from any claim of contribution, subrogation or any other recovery of any kind in respect of amounts paid by Lineage hereunder. In the event any other person or entity with whom or which any BG Indemnitee may be associated (including, without limitation, any other BG Indemnitee) or their insurers advances or extinguishes any liability or loss which is the subject of any Indemnified Liability owed by Lineage or payable under any insurance policy provided under this Agreement, the payor shall have a right of subrogation against Lineage or its insurer or insurers for all amounts so paid which would otherwise be payable by Lineage or its insurer or insurers under this Agreement. In no event will payment of an Indemnified Liability under this Agreement by any other person or entity with whom or which any BG Indemnitee may be associated (including, without limitation, other BG Indemnitees) or their insurers affect the obligations of Lineage hereunder or shift primary liability for any Indemnified Liability to any other person or entity with whom or which such BG Indemnitee may be associated (including, without limitation, any other BG Indemnitee).
(e) The indemnity rights provided to the BG Indemnitees under this Agreement are cumulative with, and do not supersede any other indemnification rights such BG Indemnitees would have at common law or under any other agreement or arrangement and shall remain in full force and effect following any termination of this Agreement.
(f) If for any reason (other than the actual fraud, gross negligence or willful misconduct of a BG Indemnitee referred to above) the foregoing indemnification is unavailable to any BG Indemnitee or insufficient to hold it harmless as and to the extent contemplated by Section 2(a), then Lineage shall make the maximum contribution to the payment and satisfaction of each of the liabilities of each BG Indemnitee which is permissible under applicable law.
Section 3. Term and Termination.
(a) Term. This Agreement will be effective from the date hereof and will terminate on the date on which this Agreement is terminated pursuant to Section 3(b). The first date on which this Agreement has been terminated is referred to herein as the “Termination Date.”
(b) Termination of Agreement. This Agreement may be terminated at any time only by the mutual written consent of each BG Party and Lineage.
(c) Effect of Termination. Upon the Termination Date, all rights and obligations of each of Lineage and the BG Persons shall immediately cease and terminate, and no Party shall have any further obligation to the other Party with respect to this Agreement, except that (i) the rights and obligations in Section 2 of this Agreement shall survive termination of this Agreement with respect to matters arising before or after such termination without regard to the termination of this Agreement; and (ii) the termination of this Agreement will not relieve any Party from liability for any breach of this Agreement at or prior to such termination.
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Section 4. Taxes. Any and all payments required to be made to any BG Person or any BG Indemnitee (each, a “Recipient”) hereunder shall be made free and clear of, and without deduction for, any federal, state, local, foreign or other taxes, duties and assessments in the nature of a tax imposed by a governmental entity or tax authority (“Taxes”), other than any (A) Taxes imposed with respect to the Recipient’s net income or branch profits (x) in any jurisdiction in which the Recipient is organized or in which its principal office is located, or (y) as a result of any other present or former connection between the Recipient and the jurisdiction imposing such Taxes, (B) property taxes and (C) employment/social security taxes (such Taxes described in clauses (A) through (C), collectively, “Excluded Taxes”); provided, however, that, if Lineage shall be required by applicable law to deduct any Taxes from any payment hereunder, (i) to the extent such Taxes are not Excluded Taxes, such payment shall be increased as necessary so that, after making all required deductions (including deductions applicable to additional amounts payable under this Section 4), the Recipient receives payments equal to the amount it would have received had no such deductions been made, (ii) Lineage shall make such deductions and (iii) Lineage shall pay the full amount deducted to the relevant governmental authority in accordance with applicable law. Each Recipient shall provide to Lineage an IRS Form W-9 or applicable IRS Form W-8 prior to or simultaneously with any payments to be made hereunder and at such other times reasonably requested by Lineage.
Section 5. Amendments and Waivers. No amendment or waiver of any provision of this Agreement, or consent to any departure by either Party from any such provision, shall be effective unless the same shall be in writing and signed by each Party to this Agreement, and, in any case, such amendment, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. The waiver by any Party of any breach of this Agreement shall not operate as or be construed to be a waiver by such Party of any subsequent breach.
Section 6. Assignment; Third-Party Beneficiaries. This Agreement and the rights of the Parties hereunder may not be assigned without the prior written consent of each of the Parties hereto. Subject to the foregoing, the provisions of this Agreement will be binding upon and inure to the benefit of the Parties hereto and their respective successors and assigns. Subject to the next sentence, no person or party other than the Parties hereto and their respective successors or permitted assigns is intended to be a beneficiary of this Agreement. The Parties acknowledge and agree that each of the BG Persons and BG Indemnitees shall be third-party beneficiaries of this Agreement, in each case entitled to enforce this Agreement as though each such BG Person and BG Indemnitee were a party to this Agreement.
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Section 7. Notices. Any and all notices hereunder shall be deemed duly given when delivered by registered or certified mail (postage prepaid), email, overnight courier or hand delivery to the Parties at the following addresses (or such different addresses as are specified by a Party for itself by notice to the other Party in accordance with this Section 7):
| If to BGMC: | Bay Grove Management Company, LLC | |||
| 801 Montgomery Street, Floor 5 | ||||
| San Francisco, California 94133 | ||||
| Attention: Legal Department | ||||
| Email: notices@bay-grove.com | ||||
| If to BGLH or LHR: | BG Lineage Holdings, LLC | |||
| c/o Bay Grove Management Company, LLC 801 Montgomery Street, Floor 5 | ||||
| San Francisco, California 94133 | ||||
| Attention: Legal Department | ||||
| Email: notices@bay-grove.com | ||||
| If to Lineage: | Lineage Logistics Holdings, LLC | |||
| 46500 Humboldt Drive | ||||
| Novi, Michigan 48377 | ||||
| Attention: Legal Department | ||||
| Email: legalnotice@onelineage.com | ||||
Section 8. Entire Agreement. This Agreement shall constitute the entire agreement among the Parties with respect to the subject matter hereof, and shall supersede all previous oral and written (and all contemporaneous oral) negotiations, commitments, agreements and understandings among the Parties relating hereto, but expressly excluding the TSA, which shall remain in full force and effect in its entirety in accordance with its terms.
Section 9. Governing Law; Consent to Jurisdiction; Waiver of Jury Trial.
(a) Governing Law(a) . This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of New York.
(b) Consent to Jurisdiction(b) . Each of the Parties hereto consents to the exclusive jurisdiction of any state or federal court located within the State of New York and irrevocably agrees that all actions or proceedings relating to this Agreement shall be litigated in such courts. Each of the Parties hereto accepts for itself and in connection with its respective properties, generally and unconditionally, the exclusive jurisdiction of the aforesaid courts and waives any defense of forum non conveniens, and irrevocably agrees to be bound by any final and nonappealable judgment rendered thereby in connection with this Agreement. Each of the Parties hereto further irrevocably consents to the service of process out of any of the aforementioned courts in any such action or proceeding by the mailing of copies thereof via overnight courier, to such Party at the address specified in this Agreement, such service to become effective fourteen calendar days after such mailing. Nothing herein shall in any way be deemed to limit the ability of any Party hereto to serve any such legal process, summons, notices and documents in any other manner permitted by applicable law or to obtain jurisdiction over or to bring actions, suits or proceedings against the other Party hereto in such other jurisdictions, and in such manner, as may be permitted by any applicable law.
(c) Waiver of Jury Trial(c) . The Parties hereto waive all rights to trial by jury in any action, suit or proceeding brought to enforce or defend any rights or remedies under this Agreement.
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Section 10. Counterparts; Electronic Signatures. This Agreement may be executed in two or more counterparts, and by different Parties on separate counterparts. Each set of counterparts showing execution by all Parties shall be deemed an original, and shall constitute one and the same instrument. The words “execution,” “signed,” “signature,” and words of like import in this Agreement shall include images of manually executed signatures transmitted by electronic format (including, without limitation, “pdf”, “tif” or “jpg”) and other electronic signatures (including, without limitation, DocuSign and AdobeSign). The use of electronic signatures and electronic records (including, without limitation, any contract or other record created, generated, sent, communicated, received, or stored by electronic means) shall be of the same legal effect, validity and enforceability as a manually executed signature or use of a paper-based record-keeping system to the fullest extent permitted by applicable law, including the Federal Electronic Signatures in Global and National Commerce Act and any other applicable law, including, without limitation, any state law based on the Uniform Electronic Transactions Act or the Uniform Commercial Code.
Section 11. Severability. If any provision or provisions of this Agreement shall be held to be invalid or unenforceable, the validity, legality and enforceability of the remaining provisions hereof shall not in any way be affected or impaired thereby.
[Signature Page Follows]
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed and delivered by their duly authorized officers or agents as of the date first referenced above as set forth below.
| BAY GROVE MANAGEMENT COMPANY, LLC | ||
| By: | /s/ Adam Forste | |
| Name: | Adam Forste | |
| Title: | Authorized Person | |
| BG LINEAGE HOLDINGS, LLC | ||
| By: | Bay Grove Management Company, LLC, | |
| its Manager | ||
| By: | /s/ Adam Forste | |
| Name: | Adam Forste | |
| Title: | Authorized Person | |
| BG LINEAGE HOLDINGS LHR, LLC | ||
| By: | BG Lineage Holdings, LLC, | |
| its Managing Member | ||
| By: | Bay Grove Management Company, LLC, | |
| its Manager | ||
| By: | /s/ Adam Forste | |
| Name: | Adam Forste | |
| Title: | Authorized Person | |
| LINEAGE LOGISTICS HOLDINGS, LLC | ||
| By: | Lineage OP, LP | |
| Its: | Managing Member | |
| By: | Lineage, Inc. | |
| Its: | General Partner | |
| By: | /s/ Adam Forste | |
| Name: | Adam Forste | |
| Title: | Authorized Person | |
Signature Page to Expense Reimbursement and Indemnification Agreement
Exhibit 10.11
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (“Agreement”) is made and entered into as of the _____ day of _________, 2024, by and between Lineage, Inc., a Maryland corporation (the “Company”), and ________________________ (“Indemnitee”).
WHEREAS, at the request of the Company, Indemnitee currently serves as [a director] [and] [an officer] of the Company and may in the future serve in other positions or capacities for the Company or its affiliated entities, and may, therefore, be subjected to claims, suits or proceedings arising as a result of such service;
WHEREAS, as an inducement to Indemnitee to serve or continue to serve in such capacity, the Company has agreed to indemnify Indemnitee and to advance expenses, fees, and costs incurred by Indemnitee in connection with any such claims, suits or proceedings, to the maximum extent permitted by law; and
WHEREAS, the parties by this Agreement desire to set forth their agreement regarding indemnification and advancement of expenses, fees, and costs.
NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the Company and Indemnitee do hereby covenant and agree as follows:
Section 1. Definitions. For purposes of this Agreement:
(a) “Change in Control” means a change in control of the Company occurring after the Effective Date of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or in response to any similar item on any similar schedule or form) promulgated under the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”), whether or not the Company is then subject to such reporting requirement; provided, however, that, without limitation, such a Change in Control shall be deemed to have occurred if, after the Effective Date, (i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 15% or more of the combined voting power of all of the Company’s then-outstanding securities entitled to vote generally in the election of directors without the prior approval of at least two-thirds of the members of the Board of Directors in office immediately prior to such person’s attaining such percentage interest; (ii) the Company is a party to a merger, consolidation, sale of assets, plan of liquidation or other reorganization not approved by at least two-thirds of the members of the Board of Directors then in office, as a consequence of which members of the Board of Directors in office immediately prior to such transaction or event constitute less than a majority of the Board of Directors thereafter; or (iii) at any time, a majority of the members of the Board of Directors are not individuals (A) who were directors as of the Effective Date or (B) whose election by the Board of Directors or nomination for election by the Company’s stockholders was approved by the affirmative vote of at least two-thirds of the directors then in office who were directors as of the Effective Date or whose election or nomination for election was previously so approved.
(b) “Corporate Status” means the status of a person as a present or former director, officer, employee or agent of the Company or as a present or former director, trustee, officer, partner, manager, managing member, fiduciary, employee or agent of any other foreign or domestic corporation, real estate investment trust, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise at which such person is or was serving in such capacity at the request of the Company. As a clarification and without limiting the circumstances in which Indemnitee may be serving at the request of the Company, service by Indemnitee shall be deemed to be at the request of the Company: (i) if Indemnitee serves or served as a director, trustee, officer, partner, manager, managing member, fiduciary, employee or agent of any corporation, partnership, limited liability company, joint venture, trust or other enterprise (1) of which a majority of the voting power or equity interest is or was owned directly or indirectly by the Company or (2) if the management of such corporation, partnership, limited liability company, joint venture, trust or other enterprise is controlled directly or indirectly by the Company and (ii) if, as a result of Indemnitee’s service to the Company or any of its affiliated entities, Indemnitee is subject to duties to, or required to perform services for, an employee benefit plan or its participants or beneficiaries, including as a deemed fiduciary thereof.
(c) “Disinterested Director” means a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification and/or advancement of Expenses is sought by Indemnitee.
(d) “Effective Date” means the date set forth in the first paragraph of this Agreement.
(e) “Expenses” means: any and all reasonable and out-of-pocket attorneys’ fees and costs; retainers; court costs; arbitration and mediation costs; transcript costs; fees of experts; witness fees; travel expenses; duplicating costs; printing and binding costs; telephone charges; postage; delivery service fees; federal, state, local or foreign taxes imposed on Indemnitee as a result of the actual or deemed receipt of any payments under this Agreement; ERISA excise taxes and penalties; and any other disbursements, fees, costs, or expenses incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in or otherwise participating in a Proceeding. Expenses shall also include Expenses incurred in connection with any appeal resulting from any Proceeding, including, without limitation, the premium for, security for and other costs relating to any cost bond, supersedeas bond or other appeal bond or its equivalent.
(f) “Independent Counsel” means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither is, nor in the past five years has been, retained to represent: (i) the Company or Indemnitee in any matter material to either such party (other than with respect to matters concerning Indemnitee under this Agreement or of other indemnitees under similar indemnification agreements with the Company), or (ii) any other party to or participant or witness in the Proceeding giving rise to a claim for indemnification or advancement of Expenses hereunder. Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement.
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(g) “Proceeding” means any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing, claim, cross claim, demand or discovery request or any other actual, threatened or completed proceeding, whether brought by or in the right of the Company or otherwise and whether of a civil (including intentional or unintentional tort claims), criminal, administrative or investigative (formal or informal) nature, including any appeal therefrom, except one completed on or before the Effective Date, unless otherwise specifically agreed in writing by the Company and Indemnitee. If Indemnitee reasonably believes that a given situation may lead to or culminate in the institution of a Proceeding, such situation shall also be considered a Proceeding.
Section 2. Services by Indemnitee. Indemnitee serves or will serve in the capacity or capacities set forth in the first WHEREAS clause above. However, this Agreement shall not impose any independent obligation on Indemnitee or the Company to continue Indemnitee’s service to the Company. This Agreement shall not be deemed an employment contract between the Company (or any other entity) and Indemnitee.
Section 3. General. The Company shall indemnify, and advance Expenses to, Indemnitee (a) as provided in this Agreement and (b) otherwise to the maximum extent permitted by Maryland law in effect on the Effective Date and as amended from time to time; provided, however, that no change in Maryland law shall have the effect of reducing the benefits available to Indemnitee hereunder based on Maryland law as in effect on the Effective Date. The rights of Indemnitee provided in this Section 3 shall include, without limitation, the rights set forth in the other sections of this Agreement, including any additional indemnification or advancement of expenses permitted by the Maryland General Corporation Law (the “MGCL”), including, without limitation, Section 2-418 of the MGCL.
Section 4. Standard for Indemnification. If, by reason of Indemnitee’s Corporate Status, Indemnitee is, or is threatened to be, made a party to any Proceeding, the Company shall indemnify Indemnitee against all judgments, penalties, fines and amounts paid in settlement and all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with any such Proceeding unless it is established that (a) the act or omission of Indemnitee was material to the matter giving rise to the Proceeding and (i) was committed in bad faith or (ii) was the result of active and deliberate dishonesty, (b) Indemnitee actually received an improper personal benefit in money, property or services or (c) in the case of any criminal Proceeding, Indemnitee had reasonable cause to believe that Indemnitee’s conduct was unlawful.
Section 5. Certain Limits on Indemnification. Notwithstanding any other provision of this Agreement (other than Section 6), Indemnitee shall not be entitled to:
(a) indemnification hereunder if the Proceeding was one by or in the right of the Company and Indemnitee is adjudged, in a final adjudication of the Proceeding not subject to further appeal, to be liable to the Company;
(b) indemnification hereunder if Indemnitee is adjudged, in a final adjudication of the Proceeding not subject to further appeal, to be liable on the basis that personal benefit in money, property or services was improperly received in any Proceeding charging improper personal benefit to Indemnitee, whether or not involving action in Indemnitee’s Corporate Status; or
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(c) indemnification or advancement of Expenses hereunder if the Proceeding was brought by Indemnitee against the Company, unless: (i) the Proceeding was brought to enforce indemnification under this Agreement, and then only to the extent in accordance with and as authorized by Section 12 of this Agreement, or (ii) the Company’s charter or Bylaws, a resolution of the stockholders entitled to vote generally in the election of directors or of the Board of Directors, or an agreement approved by the Board of Directors to which the Company is a party expressly provide otherwise.
Section 6. Court-Ordered Indemnification. Notwithstanding any other provision of this Agreement, a court of appropriate jurisdiction, upon application of Indemnitee and such notice as the court shall require, may order indemnification of Indemnitee by the Company in the following circumstances:
(a) if such court determines that Indemnitee is entitled to reimbursement under Section 2-418(d)(1) of the MGCL, the court shall order indemnification, in which case Indemnitee shall be entitled to such reimbursement and to recover the Expenses of securing such reimbursement; or
(b) if such court determines that Indemnitee is fairly and reasonably entitled to indemnification in view of all the relevant circumstances, whether or not Indemnitee (i) has met the standards of conduct set forth in Section 2-418(b) of the MGCL or (ii) has been adjudged liable for receipt of an improper personal benefit under Section 2-418(c) of the MGCL, the court may order such indemnification as the court shall deem proper without regard to any limitation on such court-ordered indemnification contemplated by Section 2-418(d)(2)(ii) of the MGCL.
Section 7. Indemnification for Expenses of an Indemnitee Who is Wholly or Partially Successful. Notwithstanding any other provision of this Agreement, and without limiting any such provision, to the extent that Indemnitee was or is, by reason of Indemnitee’s Corporate Status, made a party to (or otherwise becomes a participant in) any Proceeding and is successful, on the merits or otherwise, in the defense of such Proceeding, the Company shall indemnify Indemnitee for all Expenses actually incurred by Indemnitee or on Indemnitee’s behalf in connection therewith. If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee under this Section 7 for all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with each such claim, issue or matter, allocated on a reasonable and proportionate basis. For purposes of this Section 7 and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.
Section 8. Advancement of Expenses for Indemnitee. If, by reason of Indemnitee’s Corporate Status, Indemnitee is, or is threatened to be, made a party to any Proceeding, the Company shall, without requiring a preliminary determination of Indemnitee’s ultimate entitlement to indemnification hereunder, advance all Expenses incurred by or on behalf of Indemnitee in connection with such Proceeding. The Company shall make such advancement of incurred Expenses within ten days after the receipt by the Company of a statement or statements requesting such advancement from time to time, whether prior to or after final disposition of
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such Proceeding, which advancement may be in the form of, in the reasonable discretion of Indemnitee (but without duplication), (a) payment of such Expenses directly to third parties on behalf of Indemnitee, (b) advancement of funds to Indemnitee in an amount sufficient to pay such Expenses or (c) reimbursement to Indemnitee for Indemnitee’s payment of such Expenses. Such statement or statements shall reasonably evidence the Expenses incurred by Indemnitee and shall include or be preceded or accompanied by a written affirmation by Indemnitee and a written undertaking by or on behalf of Indemnitee, in substantially the form attached hereto as Exhibit A or in such other form as may be required under applicable law as in effect at the time of the execution thereof. To the extent that Expenses advanced to Indemnitee do not relate to a specific claim, issue or matter in the Proceeding, such Expenses shall be allocated on a reasonable and proportionate basis. The undertaking required by this Section 8 shall be an unlimited general obligation by or on behalf of Indemnitee and shall be accepted without reference to Indemnitee’s financial ability to repay such advanced Expenses and without any requirement to post security therefor.
Section 9. Indemnification and Advancement of Expenses as a Witness or Other Participant. Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is or may be, by reason of Indemnitee’s Corporate Status, made a witness or otherwise asked to participate in any Proceeding, whether instituted by the Company or any other person, and to which Indemnitee is not a party, Indemnitee shall be advanced and indemnified against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection therewith within ten days after the receipt by the Company of a statement or statements requesting any such advancement or indemnification from time to time, whether prior to or after final disposition of such Proceeding. Such statement or statements shall reasonably evidence the Expenses incurred by Indemnitee. In connection with any such advancement of Expenses, the Company may require Indemnitee to provide an undertaking and affirmation substantially in the form attached hereto as Exhibit A or in such other form as may be required under applicable law as in effect at the time of execution thereof.
Section 10. Procedure for Determination of Entitlement to Indemnification.
(a) To obtain indemnification under this Agreement, Indemnitee shall submit to the Company a written request, including therein or therewith such documentation and information as is reasonably available to Indemnitee and is reasonably necessary or appropriate to determine whether and to what extent Indemnitee is entitled to indemnification. Indemnitee may submit one or more such requests from time to time and at such time(s) as Indemnitee deems appropriate in Indemnitee’s sole discretion. The officer of the Company receiving any such request from Indemnitee shall, promptly upon receipt of such a request for indemnification, advise the Board of Directors in writing that Indemnitee has requested indemnification.
(b) Upon written request by Indemnitee for indemnification pursuant to Section 10(a) above, a determination, if required by applicable law, with respect to Indemnitee’s entitlement thereto shall promptly be made in the specific case: (i) if a Change in Control has occurred, by Independent Counsel, in a written opinion to the Board of Directors, a copy of which shall be delivered to Indemnitee, which Independent Counsel shall be selected by Indemnitee and approved by the Board of Directors in accordance with Section 2-418(e)(2)(ii) of the MGCL, which approval shall not be unreasonably withheld; or (ii) if a Change in Control has not
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occurred, (A) by a majority vote of the Disinterested Directors or by the majority vote of a group of Disinterested Directors designated by the Disinterested Directors to make the determination, (B) if Independent Counsel has been selected by the Board of Directors in accordance with Section 2-418(e)(2)(ii) of the MGCL and approved by Indemnitee, which approval shall not be unreasonably withheld or delayed, by Independent Counsel, in a written opinion to the Board of Directors, a copy of which shall be delivered to Indemnitee or (C) if so directed by the Board of Directors, by the stockholders of the Company, other than directors or officers who are parties to the Proceeding. If it is so determined that Indemnitee is entitled to indemnification, the Company shall make payment to Indemnitee within ten days after such determination. Indemnitee shall cooperate with the person, persons or entity making such determination with respect to Indemnitee’s entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary or appropriate to such determination in the discretion of the Board of Directors or Independent Counsel if retained pursuant to clause (ii)(B) of this Section 10(b). Any Expenses incurred by Indemnitee in so cooperating with the person, persons or entity making such determination shall be borne by the Company (irrespective of the determination as to Indemnitee’s entitlement to indemnification) and the Company shall indemnify and hold Indemnitee harmless therefrom.
(c) The Company shall pay the reasonable fees and expenses of Independent Counsel, if one is appointed.
Section 11. Presumptions and Effect of Certain Proceedings.
(a) In making any determination with respect to entitlement to indemnification hereunder, the person or persons (including any court having jurisdiction over the matter) making such determination shall presume that Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted a request for indemnification in accordance with Section 10(a) of this Agreement, and the Company shall have the burden of overcoming that presumption in connection with the making of any determination contrary to that presumption.
(b) The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, upon a plea of nolo contendere or its equivalent, or entry of an order of probation prior to judgment, does not create a presumption that Indemnitee did not meet the requisite standard of conduct described herein for indemnification.
(c) The knowledge and/or actions, or failure to act, of any other director, officer, employee or agent of the Company or any other director, trustee, officer, partner, manager, managing member, fiduciary, employee or agent of any other foreign or domestic corporation, real estate investment trust, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise shall not be imputed to Indemnitee for purposes of determining any other right to indemnification under this Agreement.
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Section 12. Remedies of Indemnitee.
(a) If (i) a determination is made pursuant to Section 10(b) of this Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii) advancement of Expenses is not timely made pursuant to Sections 8 or 9 of this Agreement, (iii) no determination of entitlement to indemnification shall have been made pursuant to Section 10(b) of this Agreement within 60 days after receipt by the Company of the request for indemnification, (iv) payment of indemnification is not made pursuant to Sections 7 or 9 of this Agreement within ten days after receipt by the Company of a written request therefor, or (v) payment of indemnification pursuant to any other section of this Agreement or the charter or Bylaws of the Company is not made within ten days after a determination has been made that Indemnitee is entitled to indemnification, Indemnitee shall be entitled, at Indemnitee’s option, to an adjudication in an appropriate court located in the State of Maryland, or in any other court of competent jurisdiction, or in an arbitration conducted by a single arbitrator pursuant to the Commercial Arbitration Rules of the American Arbitration Association, of Indemnitee’s entitlement to indemnification or advancement of Expenses. Indemnitee shall commence a proceeding seeking an adjudication or an award in arbitration within 180 days following the date on which Indemnitee first has the right to commence such proceeding pursuant to this Section 12(a); provided, however, that the foregoing clause shall not apply to a proceeding brought by Indemnitee to enforce Indemnitee’s rights under Section 7 of this Agreement. Except as set forth herein, the provisions of Maryland law (without regard to its conflicts of laws rules) shall apply to any such proceeding. The Company shall not oppose Indemnitee’s right to seek any such adjudication or award in arbitration.
(b) In any judicial proceeding or arbitration commenced pursuant to this Section 12, Indemnitee shall be presumed to be entitled to indemnification or advancement of Expenses, as the case may be, under this Agreement and the Company shall have the burden of proving that Indemnitee is not entitled to indemnification or advancement of Expenses, as the case may be. If Indemnitee commences a judicial proceeding or arbitration pursuant to this Section 12, Indemnitee shall not be required to reimburse the Company for any advancements pursuant to Section 8 of this Agreement until a final determination is made with respect to Indemnitee’s entitlement to indemnification and advancement (as to which all rights of appeal have been exhausted or lapsed). The Company shall, to the fullest extent not prohibited by law, be precluded from asserting in any judicial proceeding or arbitration commenced pursuant to this Section 12 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such judicial proceeding or arbitration that the Company is bound by all of the provisions of this Agreement.
(c) If a determination shall have been made pursuant to Section 10(b) of this Agreement that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Section 12, absent a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification that was not disclosed in connection with the determination.
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(d) In the event that Indemnitee is successful in seeking, pursuant to this Section 12, a judicial adjudication of or an award in arbitration to enforce Indemnitee’s rights under, or to recover damages for breach of, this Agreement, Indemnitee shall be entitled to recover from the Company, and shall be indemnified by the Company for, any and all Expenses actually and reasonably incurred by Indemnitee in such judicial proceeding or arbitration. If it shall be determined in such judicial adjudication or arbitration that Indemnitee is entitled to receive part but not all of the indemnification or advancement of Expenses sought, the Expenses incurred by Indemnitee in connection with such judicial proceeding or arbitration shall be appropriately prorated.
(e) Interest shall be paid by the Company to Indemnitee at the maximum rate allowed to be charged for judgments under the Courts and Judicial Proceedings Article of the Annotated Code of Maryland for amounts which the Company pays or is obligated to pay for the period (i) commencing with either the eleventh day after the date on which the Company was requested to advance Expenses in accordance with Sections 8 or 9 of this Agreement or the 61st day after the date on which the Company was requested to make the determination of entitlement to indemnification under Section 10(b) of this Agreement, as applicable, and (ii) ending on the date such payment is made to Indemnitee by the Company.
Section 13. Defense of the Underlying Proceeding.
(a) Indemnitee shall notify the Company promptly in writing upon being served with any summons, citation, subpoena, complaint, indictment, request or other document relating to any Proceeding which may result in the right to indemnification or the advancement of Expenses hereunder and shall include with such notice either (a) a copy of such document relating to a Proceeding or (b) a description of the nature of the Proceeding and a summary of the facts underlying the Proceeding. The failure to give any such notice shall not disqualify Indemnitee from the right, or otherwise affect in any manner any right of Indemnitee, to indemnification or the advancement of Expenses under this Agreement unless the Company’s ability to defend in such Proceeding or to obtain proceeds under any insurance policy is materially and adversely prejudiced thereby, and then only to the extent the Company is thereby actually so prejudiced.
(b) Subject to the provisions of the last sentence of this Section 13(b) and of Section 13(c) below, the Company shall have the right to defend Indemnitee in any Proceeding which may give rise to indemnification hereunder; provided, however, that the Company shall notify Indemnitee of any such decision to defend within 15 days following receipt of notice of any such Proceeding under Section 13(a) above. The Company shall not, without the prior written consent of Indemnitee, which shall not be unreasonably withheld or delayed, consent to the entry of any judgment against Indemnitee or enter into any settlement or compromise with respect to Indemnitee which (i) includes an admission of fault of Indemnitee, (ii) does not include, as an unconditional term thereof, the full release of Indemnitee from all liability in respect of such Proceeding, which release shall be in form and substance reasonably satisfactory to Indemnitee, or (iii) would impose any liability, Expense, judgment, fine, penalty or limitation on Indemnitee. This Section 13(b) shall not apply to a Proceeding brought by Indemnitee under Section 12 of this Agreement.
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(c) Notwithstanding the provisions of Section 13(b) above, if in a Proceeding to which Indemnitee is a party by reason of Indemnitee’s Corporate Status, (i) Indemnitee reasonably concludes, based on consultation with legal counsel, that Indemnitee may have separate defenses or counterclaims to assert with respect to any issue which may not be consistent with other defendants’ positions in such Proceeding, (ii) Indemnitee reasonably concludes, based upon an opinion of counsel approved by the Company, which approval shall not be unreasonably withheld or delayed, that an actual or apparent conflict of interest or potential conflict of interest exists between Indemnitee and the Company or other Company indemnitees in such Proceeding, or (iii) if the Company fails to assume the defense of such Proceeding in a timely manner, Indemnitee shall be entitled to be represented by separate legal counsel of Indemnitee’s choice, subject to the prior approval of the Company, which approval shall not be unreasonably withheld or delayed, at the expense of the Company. In addition, if the Company fails to comply with any of its obligations under this Agreement or in the event that the Company or any other person takes any action to declare this Agreement void or unenforceable, or institutes any Proceeding to deny or to recover from Indemnitee the benefits intended to be provided to Indemnitee hereunder, Indemnitee shall have the right to retain counsel of Indemnitee’s choice, subject to the prior approval of the Company, which approval shall not be unreasonably withheld or delayed, at the expense of the Company (subject to Section 12(d) of this Agreement), to represent Indemnitee in connection with any such matter.
Section 14. Non-Exclusivity; Survival of Rights; Subrogation.
(a) The rights of indemnification and advancement of Expenses as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the charter or Bylaws of the Company, any agreement or a resolution of the stockholders entitled to vote generally in the election of directors or of the Board of Directors, or otherwise. Unless consented to in writing by Indemnitee, no amendment, alteration or repeal of the charter or Bylaws of the Company, this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee in Indemnitee’s Corporate Status prior to such amendment, alteration or repeal, regardless of whether a claim with respect to such action or inaction is raised prior or subsequent to such amendment, alteration or repeal. No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right or remedy shall be cumulative and in addition to every other right or remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion of any right or remedy hereunder, or otherwise, shall not prohibit the concurrent assertion or employment of any other right or remedy.
(b) In the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.
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Section 15. Insurance.
(a) The Company will use its reasonable best efforts to acquire directors and officers liability insurance, on terms and conditions deemed consistent with industry standards by the Board of Directors, with the advice of counsel, covering Indemnitee or any claim made against Indemnitee by reason of Indemnitee’s Corporate Status and covering the Company for any indemnification or advancement of Expenses made by the Company to Indemnitee for any claims made against Indemnitee by reason of Indemnitee’s Corporate Status. In the event of a Change in Control, the Company shall maintain in force any and all directors and officers liability insurance policies that were maintained by the Company immediately prior to the Change in Control for a period of six years with the insurance carrier or carriers and through the insurance broker in place at the time of the Change in Control; provided, however, (i) if the carriers will not offer the same policy and an expiring policy needs to be replaced, a policy substantially comparable in scope and amount shall be obtained and (ii) if any replacement insurance carrier is necessary to obtain a policy substantially comparable in scope and amount, such insurance carrier shall have an AM Best or S&P rating that is the same or better than the AM Best or S&P rating of the existing insurance carrier; provided, further, however, in no event shall the Company be required to expend in the aggregate in excess of 250% of the annual premium or premiums paid by the Company for directors and officers liability insurance in effect on the date of the Change in Control. In the event that 250% of the annual premium paid by the Company for such existing directors and officers liability insurance is insufficient for such coverage, the Company shall spend up to that amount to purchase such lesser coverage as may be obtained with such amount. Notwithstanding anything contained herein to the contrary, the Company is the primary indemnitor, and any indemnification or advancement obligation of any other person is secondary.
(b) Without in any way limiting any other obligation under this Agreement, the Company shall indemnify Indemnitee for any payment by Indemnitee which would otherwise be indemnifiable hereunder arising out of the amount of any deductible or retention and the amount of any excess of the aggregate of all judgments, penalties, fines, settlements and Expenses incurred by Indemnitee in connection with a Proceeding over the coverage of any insurance referred to in Section 15(a). The purchase, establishment and maintenance of any such insurance shall not in any way limit or affect the rights or obligations of the Company or Indemnitee under this Agreement except as expressly provided herein, and the execution and delivery of this Agreement by the Company and Indemnitee shall not in any way limit or affect the rights or obligations of the Company under any such insurance policies. If, at the time the Company receives notice from any source of a Proceeding to which Indemnitee is a party or a participant (as a witness or otherwise) and for which the Company has director and officer liability insurance in effect, the Company shall give prompt notice of such Proceeding to the insurers in accordance with the procedures set forth in the respective policies.
(c) The Indemnitee shall reasonably cooperate with the Company or any insurance carrier of the Company with respect to any Proceeding.
Section 16. Coordination of Payments. The Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable or payable or reimbursable as Expenses hereunder if and to the extent that Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.
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Section 17. Contribution. If the indemnification provided in this Agreement is unavailable in whole or in part and may not be paid to Indemnitee for any reason, other than for failure to satisfy the standard of conduct set forth in Section 4 or due to the provisions of Section 5, then, with respect to any Proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such Proceeding), to the fullest extent permissible under applicable law, the Company, in lieu of indemnifying and holding harmless Indemnitee, shall pay, in the first instance, the entire amount incurred by Indemnitee, whether for Expenses, judgments, penalties, and/or amounts paid or to be paid in settlement, in connection with any Proceeding without requiring Indemnitee to contribute to such payment, and the Company hereby waives and relinquishes any right of indemnification or contribution it may have at any time against Indemnitee.
Section 18. Reports to Stockholders. To the extent required by the MGCL, the Company shall report in writing to its stockholders the payment of any amounts for indemnification of, or advancement of Expenses to, Indemnitee under this Agreement arising out of a Proceeding by or in the right of the Company with the notice of the meeting of stockholders of the Company next following the date of the payment of any such indemnification or advancement of Expenses or prior to such meeting.
Section 19. Duration of Agreement; Binding Effect.
(a) This Agreement shall continue until and terminate on the later of (i) the date that Indemnitee shall have ceased to serve as a director, officer, employee or agent of the Company or as a director, trustee, officer, partner, manager, managing member, fiduciary, employee or agent of any other foreign or domestic corporation, real estate investment trust, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise that such person is or was serving in such capacity at the request of the Company and (ii) the date that Indemnitee is no longer subject to any actual or possible Proceeding (including any rights of appeal thereto and any Proceeding commenced by Indemnitee pursuant to Section 12 of this Agreement).
(b) The indemnification and advancement of Expenses provided by, or granted pursuant to, this Agreement shall be binding upon and be enforceable by the parties hereto and their respective successors and assigns (including any direct or indirect successor by purchase, merger, consolidation or otherwise of all or substantially all of the business or assets of the Company), shall continue as to an Indemnitee who has ceased to be a director, officer, employee or agent of the Company or a director, trustee, officer, partner, manager, managing member, fiduciary, employee or agent of any other foreign or domestic corporation, real estate investment trust, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise that such person is or was serving in such capacity at the request of the Company, and shall inure to the benefit of Indemnitee and Indemnitee’s spouse, trusts and other estate planning vehicles, assigns, heirs, devisees, executors and administrators and other legal representatives.
(c) The Company shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Company, by written agreement in form and substance satisfactory to Indemnitee, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place.
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(d) The Company and Indemnitee agree that a monetary remedy for breach of this Agreement, at some later date, may be inadequate, impracticable and difficult to ascertain, and further agree that such breach may cause Indemnitee irreparable harm. Accordingly, the parties hereto agree that Indemnitee may enforce this Agreement by seeking injunctive relief and/or specific performance hereof, without any necessity of showing actual damage or irreparable harm and that by seeking injunctive relief and/or specific performance, Indemnitee shall not be precluded from seeking or obtaining any other relief to which Indemnitee may be entitled. Indemnitee shall further be entitled to such specific performance and injunctive relief, including temporary restraining orders, preliminary injunctions and permanent injunctions, without the necessity of posting bonds or other undertakings in connection therewith. The Company acknowledges that, in the absence of a waiver, a bond or undertaking may be required of Indemnitee by a court, and the Company hereby waives any such requirement of such a bond or undertaking.
Section 20. Severability. If any provision or provisions of this Agreement shall be held to be invalid, void, illegal or otherwise unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Agreement (including, without limitation, each portion of any Section, paragraph or sentence of this Agreement containing any such provision held to be invalid, void, illegal or otherwise unenforceable that is not itself invalid, void, illegal or otherwise unenforceable) shall not in any way be affected or impaired thereby and shall remain enforceable to the fullest extent permitted by law; (b) such provision or provisions shall be deemed reformed to the extent necessary to conform to applicable law and to give the maximum effect to the intent of the parties hereto; and (c) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any Section, paragraph or sentence of this Agreement containing any such provision held to be invalid, void, illegal or otherwise unenforceable, that is not itself invalid, void, illegal or otherwise unenforceable) shall be construed so as to give effect to the intent manifested thereby.
Section 21. Counterparts. This Agreement may be executed in one or more counterparts, (delivery of which may be by facsimile, or via e-mail as a portable document format (.pdf) or other electronic format), each of which will be deemed to be an original, and it will not be necessary in making proof of this Agreement or the terms of this Agreement to produce or account for more than one such counterpart. One such counterpart signed by the party against whom enforceability is sought shall be sufficient to evidence the existence of this Agreement.
Section 22. Headings. The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.
Section 23. Modification and Waiver. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor, unless otherwise expressly stated, shall such waiver constitute a continuing waiver.
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Section 24. Notices. All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given if (i) delivered by hand and receipted for by the party to whom said notice or other communication shall have been directed, on the day of such delivery, (ii) mailed by certified or registered mail with postage prepaid, on the third business day after the date on which it is so mailed or (iii) sent by e-mail, on the day such e-mail is so sent:
| (a) | If to Indemnitee, to the address set forth on the signature page hereto. |
| (b) | If to the Company, to: |
Lineage, Inc.
46500 Humboldt Drive
Novi, MI 48377
Attention: [•]
E-mail: [•]
or to such other address as may have been furnished in writing to Indemnitee by the Company or to the Company by Indemnitee, as the case may be.
Section 25. Governing Law. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Maryland, without regard to its conflicts of laws rules.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.
| COMPANY: | ||
| LINEAGE, INC. | ||
| By: |
| |
| Name: | ||
| Title: | ||
| INDEMNITEE: | ||
|
| ||
| Name: | ||
| Address: | ||
| E-mail: | ||
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EXHIBIT A
AFFIRMATION AND UNDERTAKING TO REPAY EXPENSES ADVANCED
To: The Board of Directors of Lineage, Inc.
Re: Affirmation and Undertaking
Ladies and Gentlemen:
This Affirmation and Undertaking is being provided pursuant to that certain Indemnification Agreement dated the _____ day of ______________, 2024, by and between Lineage, Inc., a Maryland corporation (the “Company”), and the undersigned Indemnitee (the “Indemnification Agreement”), pursuant to which I am entitled to advancement of Expenses in connection with [Description of Proceeding] (the “Proceeding”).
Terms used herein and not otherwise defined shall have the meanings specified in the Indemnification Agreement.
I am subject to the Proceeding by reason of my Corporate Status or by reason of alleged actions or omissions by me in such capacity. I hereby affirm my good faith belief that at all times, insofar as I was involved as [a director] [and] [an officer] of the Company or any of its affiliated entities, in any of the facts or events giving rise to the Proceeding, I (1) did not act with bad faith or active or deliberate dishonesty, (2) did not receive any improper personal benefit in money, property or services and (3) in the case of any criminal proceeding, had no reasonable cause to believe that any act or omission by me was unlawful.
In consideration of the advancement by the Company for Expenses incurred by me in connection with the Proceeding (the “Advanced Expenses”), I hereby agree that if, in connection with the Proceeding, it is established that (1) an act or omission by me was material to the matter giving rise to the Proceeding and (a) was committed in bad faith or (b) was the result of active and deliberate dishonesty or (2) I actually received an improper personal benefit in money, property or services or (3) in the case of any criminal proceeding, I had reasonable cause to believe that the act or omission was unlawful, then I shall promptly reimburse the portion of the Advanced Expenses relating to the claims, issues or matters in the Proceeding as to which the foregoing findings have been established.
IN WITNESS WHEREOF, I have executed this Affirmation and Undertaking on this ___ day of ____________________, 20___.
| Name: _____________________________ |
Document and Entity Information |
Jul. 24, 2024 |
|---|---|
| Cover [Abstract] | |
| Amendment Flag | false |
| Entity Central Index Key | 0001868159 |
| Current Fiscal Year End Date | --12-31 |
| Document Type | 8-K |
| Document Period End Date | Jul. 24, 2024 |
| Entity Registrant Name | Lineage, Inc. |
| Entity Incorporation State Country Code | MD |
| Entity File Number | 001-42191 |
| Entity Tax Identification Number | 82-1271188 |
| Entity Address, Address Line One | 46500 Humboldt Drive |
| Entity Address, City or Town | Novi |
| Entity Address, State or Province | MI |
| Entity Address, Postal Zip Code | 48377 |
| City Area Code | (800) |
| Local Phone Number | 678-7271 |
| Security 12b Title | Common stock $0.01 par value per share |
| Trading Symbol | LINE |
| Security Exchange Name | NASDAQ |
| Written Communications | false |
| Soliciting Material | false |
| Pre Commencement Tender Offer | false |
| Pre Commencement Issuer Tender Offer | false |
| Entity Emerging Growth Company | false |
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