EXHIBIT 10.01
SCHEDULE 4.02-1 TO THE
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP OF
WINDROSE MEDICAL PROPERTIES, L.P.
DESIGNATION OF 7.5% SERIES A
CUMULATIVE CONVERTIBLE PREFERRED UNITS
JUNE 30, 2005
Pursuant to Section 4.02 and Article XI of the First Amended and Restated
Agreement of Limited Partnership of Windrose Medical Properties, L.P., the
General Partner hereby amends the Partnership Agreement as follows in connection
with the issuance of 2,100,000 shares of 7.5% Series A Cumulative Convertible
Preferred Shares of Beneficial Interest by Windrose Medical Properties Trust:
1. Designation and Number. A series of Preferred Units (as defined below),
designated the "7.5% Series A Cumulative Convertible Preferred Units" (the
"Series A Preferred Units"), is hereby established. The number of authorized
Series A Preferred Units shall be 2,100,000.
2. Defined Terms. Capitalized terms used herein and not otherwise defined shall
have the meanings given to such terms in the Partnership Agreement. The
following defined terms used in this Schedule 4.02-1 to the Partnership
Agreement shall have the meanings specified below:
"Articles Supplementary" means the Articles Supplementary of the General
Partner filed with the State Department of Assessments and Taxation of the State
of Maryland on June 28, 2005, designating the terms, rights and preferences of
the 7.5% Series A Cumulative Convertible Preferred Shares of Beneficial
Interest, $0.01 par value per share.
"Common Units" means all Partnership Units that are not specifically
designated as Preferred Units pursuant to Section 4.02 of the Partnership
Agreement.
"Preferred Units" means all Partnership Interests designated as preferred
units by the General Partner from time to time in accordance with Section 4.02
of the Partnership Agreement.
"Series A Preferred Return" shall have the meaning provided in Section
5(a).
"Series A Preferred Shares" means the 7.5% Series A Cumulative Convertible
Preferred Shares of Beneficial Interest, $0.01 par value per share, of the
General Partner.
3. Maturity. The Series A Preferred Units have no stated maturity and will not
be subject to any sinking fund or mandatory redemption.
4. Rank. The Series A Preferred Units will, with respect to distribution rights
and rights upon liquidation, dissolution or winding up of the Partnership, rank
(a) prior or senior to all classes or series of Common Units of the Partnership
and to all classes or series of Preferred Units ranking junior to the Series A
Preferred Units with respect to distribution rights or rights upon liquidation,
dissolution or winding up of the Partnership (the "Junior Preferred Units"); (b)
on a parity with all classes or series of Preferred Units issued by the
Partnership, the terms of
which specifically provide that such Preferred Units rank on a parity with the
Series A Preferred Units with respect to distribution rights and rights upon
liquidation, dissolution or winding up of the Partnership (the "Parity Preferred
Units"); (c) junior to all classes or series of Preferred Units issued by the
Partnership, the terms of which specifically provide that such Preferred Units
rank senior to the Series A Preferred Units with respect to distribution rights
or rights upon liquidation, dissolution or winding up of the Partnership (the
"Senior Preferred Units"); and (d) junior to all existing and future
indebtedness of the Partnership. The term "Preferred Units" does not include
convertible debt securities of the Partnership, which shall rank senior to the
Series A Preferred Units prior to conversion.
5. Distributions.
(a) Holders of the Series A Preferred Units shall be entitled to receive,
when and as authorized by the General Partner, and declared by the Partnership
out of funds of the Partnership legally available for payment, preferential
cumulative cash distributions at the rate of 7.5% per annum of the Base
Liquidation Preference (as defined below) per share (equivalent to a fixed
annual amount of $1.875 per share) (the "Series A Preferred Return"). Such
distributions shall be cumulative from the date of original issue and shall be
payable quarterly on or before the 20th day of February, May, August and
November of each year (or, if not a business day, the next succeeding business
day, each a "Distribution Payment Date") for the period ending on such
Distribution Payment Date, commencing on the date of issue. "Business day" shall
mean any day other than a Saturday, Sunday or other day on which commercial
banks in the City of New York are authorized or required to close. The first
distribution will be paid on August 20, 2005 with respect to the period
beginning on the date of issue and ending on August 5, 2005. Any quarterly
distribution payable on the Series A Preferred Units for any partial
distribution period will be computed on the basis of twelve 30-day months and a
360-day year. Distributions will be payable in arrears to holders of record of
the Series A Preferred Units as they appear on the records of the Partnership at
the close of business on the applicable record date, which shall be the fifth
day of the calendar month in which the Distribution Payment Date occurs or such
other date designated by the General Partner of the Partnership for the payment
of distributions that is not more than 30 nor less than 10 days prior to such
Distribution Payment Date (each, a "Record Date").
(b) No distributions on Series A Preferred Units shall be authorized by the
General Partner or declared or paid or set apart for payment by the Partnership
at such time as the terms and provisions of any agreement of the General Partner
or the Partnership, including any agreement relating to the indebtedness of
either of them, prohibits such declaration, payment or setting apart for payment
or provides that such declaration, payment or setting apart for payment would
constitute a breach thereof or a default thereunder, or if such declaration or
payment shall be restricted or prohibited by law.
(c) Notwithstanding the foregoing, distributions on the Series A Preferred
Units will accrue whether or not the Partnership has earnings, whether or not
there are funds legally available for the payment of such distributions and
whether or not such distributions are declared and whether or not such is
prohibited by agreement. Accrued but unpaid distributions on the Series A
Preferred Units will not bear interest and holders of the Series A Preferred
Units will not be entitled to any distributions in excess of full cumulative
distributions described above. Except as set forth in the next sentence, no
distributions will be declared or paid or set apart for
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payment on any Common Units of the Partnership or any other series of Preferred
Units ranking, as to distributions, on a parity with or junior to the Series A
Preferred Units (other than a distribution in Common Units of the Partnership or
in any other Preferred Units ranking junior to the Series A Preferred Units as
to distributions and upon liquidation) for any period unless full cumulative
distributions have been or contemporaneously are declared and paid or declared
and a sum sufficient for the payment thereof is set apart for such payment on
the Series A Preferred Units for all past distribution periods and the then
current distribution period. When distributions are not paid in full (or a sum
sufficient for such full payment is not so set apart) upon the Series A
Preferred Units and any other series of Preferred Units ranking on a parity as
to distributions with the Series A Preferred Units, all distributions declared
upon the Series A Preferred Units and any other series of Preferred Units
ranking on a parity as to distributions with the Series A Preferred Units shall
be declared pro rata so that the amount of distributions declared per Series A
Preferred Unit and such other series of Preferred Units shall in all cases bear
to each other the same ratio that accrued distributions per Series A Preferred
Unit and such other series of Preferred Units (which shall not include any
accrual in respect of unpaid distributions for prior distribution periods if
such Preferred Units do not have a cumulative distribution) bear to each other.
(d) Except as provided in the immediately preceding paragraph, unless full
cumulative distributions on the Series A Preferred Units have been or
contemporaneously are declared and paid or declared and a sum sufficient for the
payment thereof is set apart for payment for all past distribution periods and
the then current distribution period, no distributions (other than in Common
Units of the Partnership or in any other Preferred Units ranking junior to the
Series A Preferred Units as to distributions and upon liquidation) shall be
declared or paid or set aside for payment nor shall any other distribution be
declared or made upon the Common Units or any other Preferred Units of the
Partnership ranking junior to or on a parity with the Series A Preferred Units
as to distributions or upon liquidation, nor shall any Common Units or any other
Preferred Units of the Partnership ranking junior to or on a parity with the
Series A Preferred Units as to distributions or upon liquidation be redeemed,
purchased or otherwise acquired for any consideration (or any moneys be paid to
or made available for a sinking fund for the redemption of any such shares) by
the Partnership (except by conversion into or exchange for Common Units or other
Preferred Units of the Partnership ranking junior to the Series A Preferred
Units as to distributions). Holders of Series A Preferred Units shall not be
entitled to any distribution, whether payable in cash, property or stock, in
excess of full cumulative distributions on the Series A Preferred Units as
provided above. Any distribution made on the Series A Preferred Units shall
first be credited against the earliest accrued but unpaid distribution due with
respect to such shares which remains payable.
6. Liquidation Preference.
(a) Upon any voluntary or involuntary liquidation, dissolution or winding
up of the affairs of the Partnership, the holders of the Series A Preferred
Units are entitled to be paid out of the assets of the Partnership legally
available for distribution to its Partners a liquidation preference of (x) $25
per Series A Preferred Unit (the "Base Liquidation Preference") in cash or
property at its fair market value as determined by the General Partner, or (y)
in the event the Partnership shall be a party to a Transaction, as defined in
subparagraph 8(e) of the Articles Supplementary of the General Partner, prior to
June 30, 2010 in which a majority of the
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Common Units of the Partnership are converted into the right to receive cash,
property or other consideration at a price, or having a fair market value, as
determined by the General Partner, per Series A Preferred Unit, of less than
105% of the Conversion Price as defined in, and determined in accordance with,
the Articles Supplementary of the General Partner in effect at the time of any
such Transaction, $26.25 per share in cash or property at its fair market value,
as determined by the General Partner (the "Stepped Up Liquidation Preference"),
plus in each case, an amount equal to any accrued and unpaid distributions to
the date of payment, but without interest, before any distribution of assets is
made to holders of the Common Units of the Partnership or any other Preferred
Units of the Partnership that rank junior to the Series A Preferred Units as to
liquidation rights. Notwithstanding the foregoing, unless the Partnership is a
party to a Transaction prior to June 30, 2010, the liquidation preference on or
after June 30, 2010 shall be the Base Liquidation Preference plus an amount
equal to any accrued and unpaid distributions to the date of payment, but
without interest, before any distribution of assets is made to holders of the
Common Units or any other Preferred Units of the Partnership that rank junior to
the Series A Preferred Units as to liquidation rights. After payment of the full
amount of the Liquidation Preference, plus any accrued and unpaid distributions
to which they are entitled, the holders of the Series A Preferred Units will
have no right or claim to any of the remaining assets of the Partnership. The
consolidation or merger of the Partnership with or into any other corporation,
trust or entity or of any other corporation with or into the Partnership, or the
sale, lease or conveyance of all or substantially all of the property or
business of the Partnership, shall not be deemed to constitute a liquidation,
dissolution or winding up of the Partnership, unless a liquidation, dissolution
or winding up of the Partnership is effected in connection with, or as a step in
a series of transactions by which, a consolidation or merger of the Partnership
is effected.
In determining whether a distribution (other than upon voluntary or
involuntary liquidation) by distribution, redemption or other acquisition of
Partnership Units or otherwise is permitted under Virginia law, no effect shall
be given to amounts that would be needed, if the Partnership were to be
dissolved at the time of the distribution, to satisfy the preferential rights
upon distribution of holders of Partnership Units whose preferential rights upon
distribution are superior to those receiving the distribution.
(b) If upon any liquidation, dissolution or winding up of the Partnership,
the assets of the Partnership, or proceeds thereof, distributable among the
holders of Series A Preferred Units shall be insufficient to pay in full the
above described preferential amount and liquidating payments on any other class
or series of Parity Preferred Units, then such assets, or the proceeds thereof,
shall be distributed among the holders of Series A Preferred Units and any such
other Parity Preferred Units ratably in the same proportion as the respective
amounts that would be payable on such Series A Preferred Units and any such
other Parity Preferred Units if all amounts payable thereon were paid in full.
(c) Upon any liquidation, dissolution or winding up of the Partnership,
after payment shall have been made in full to the holders of the Series A
Preferred Units and any Parity Preferred Units, any other series or class or
classes of Junior Preferred Units shall be entitled to receive any and all
assets remaining to be paid or distributed, and the holders of the Series A
Preferred Units and any Parity Preferred Units shall not be entitled to share
therein.
7. Redemption.
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(a) The Series A Preferred Units are not redeemable prior to June 30, 2010.
On and after, June 30, 2010, the Partnership, at its option, upon not less than
30 nor more than 60 days' written notice, may redeem the Series A Preferred
Units, in whole or in part, at any time or from time to time, for cash at a
redemption price equal to the Base Liquidation Preference, per Series A
Preferred Unit, plus all accrued and unpaid distributions thereon to the date
fixed for redemption (the "Redemption Date"), without interest. No Series A
Preferred Units may be redeemed except with assets legally available for the
payment of the redemption price.
Holders of Series A Preferred Units to be redeemed shall surrender such
Series A Preferred Units at the place designated in such notice and shall be
entitled to the redemption price and any accrued and unpaid distributions
payable upon such redemption following such surrender. If notice of redemption
of any of the Series A Preferred Units has been given and if the funds necessary
for such redemption have been set aside, separate and apart from other funds, by
the Partnership in trust for the pro rata benefit of the holders of any Series A
Preferred Units so called for redemption, then from and after the redemption
date distributions will cease to accrue on such Series A Preferred Units, such
Series A Preferred Units shall no longer be deemed outstanding and all rights of
the holders of such Series A Preferred Units will terminate, except the right to
receive the redemption price. If less than all of the outstanding Series A
Preferred Units are to be redeemed, the Series A Preferred Units to be redeemed
shall be selected pro rata (as nearly as may be practicable without creating
fractional shares) or by any other equitable method determined by the
Partnership.
(b) Unless full cumulative distributions on all Series A Preferred Units
shall have been or contemporaneously are declared and paid or declared and a sum
sufficient for the payment thereof set apart for payment for all past
distribution periods and the then current distribution period, no Series A
Preferred Units shall be redeemed unless all outstanding Series A Preferred
Units are simultaneously redeemed and the Partnership shall not purchase or
otherwise acquire directly or indirectly any Series A Preferred Units (except by
exchange for Common Units or Preferred Units of the Partnership ranking junior
to the Series A Preferred Units as to distributions and upon liquidation);
provided, however, that the foregoing shall not prevent the purchase or
acquisition of Series A Preferred Units pursuant to a purchase or exchange offer
made on the same terms to holders of all outstanding Series A Preferred Units.
(c) Notice of redemption of the Series A Preferred Units shall be mailed by
the Partnership to each holder of record of the Series A Preferred Units to be
redeemed by first class mail, postage prepaid at such holder's address as the
same appears on the share records of the Partnership. No failure to give such
notice or any defect therein or in the mailing thereof shall affect the validity
of the proceedings for the redemption of any Series A Preferred Units except as
to the holder to whom notice was defective or not given. Each notice shall
state: (i) the Redemption Date; (ii) the redemption price; (iii) the number of
Series A Preferred Units to be redeemed; and (iv) the place or places where the
Series A Preferred Units are to be surrendered for payment of the redemption
price.
(d) Immediately prior to any redemption of Series A Preferred Units, the
Partnership shall pay, in cash, any accumulated and unpaid distributions through
the Redemption Date,
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unless a Redemption date falls after a Record Date and prior to the
corresponding Distribution Payment Date, in which case each holder of Series A
Preferred Units at the close of business on such Record Date shall be entitled
to the distribution payable on such shares on the corresponding Distribution
Payment Date notwithstanding the redemption of such shares before such
Distribution Payment Date.
(e) All Series A Preferred Units redeemed, purchased or otherwise acquired
by the Partnership in any manner whatsoever shall be retired and reclassified as
authorized but unissued Preferred Units, without designation as to class or
series, and may thereafter be reissued as any class or series of Preferred Units
in accordance with the applicable provisions of the Partnership Agreement.
8. Voting Rights. Holders of the Series A Preferred Units will not have any
voting rights.
9. Conversion.
(a) In the event that a holder of Series A Preferred Shares of the General
Partner exercises its right to convert the Series A Preferred Shares into Common
Shares of the General Partner in accordance with the terms of the Articles
Supplementary of the General Partner, then, concurrently therewith, an
equivalent number of Series A Preferred Units of the Partnership held by the
General Partner shall be automatically converted into a number of Common Units
of the Partnership equal to the number of Common Shares issued upon conversion
of such Series A Preferred Shares; provided, however, that if a holder of Series
A Preferred Shares of the General Partner receives cash or other consideration
in addition to or in lieu of Common Shares in connection with such conversion,
then the General Partner, as the holder of the Series A Preferred Units, shall
be entitled to receive cash or such other consideration equal (in amount and
form) to the cash or other consideration to be paid by the General Partner to
such holder of the Series A Preferred Shares. Any such conversion will be
effective at the same time the conversion of Series A Preferred Shares into
Common Shares is effective.
(b) Holders of Series A Preferred Units at the close of business on a
Record Date will be entitled to receive the distribution payable on such Series
A Preferred Units on the corresponding Distribution Payment Date notwithstanding
the conversion of such Series A Preferred Units following such Record Date and
prior to such Distribution Payment Date. However, Series A Preferred Units
surrendered for conversion during the period between the close of business on
any Record Date and ending with the opening of business on the corresponding
Distribution Payment Date (except Series A Preferred Units converted after the
issuance of a notice of redemption with respect to a Redemption Date during such
period or coinciding with such Distribution Payment Date, which will be entitled
to such distribution on the Distribution Payment Date) must be accompanied by
payment of an amount equal to the distribution payable on such Series A
Preferred Units on such Distribution Payment Date. A holder of Series A
Preferred Units on a Record Date who tenders any such shares for conversion into
Common Units on such Distribution Payment Date will receive the distribution
payable by the Partnership on such Series A Preferred Units on such date, and
the converting holder need not include payment of the amount of such
distribution upon surrender of Series A Preferred Units for conversion.
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(c) No fractional units will be issued in connection with the conversion of
Series A Preferred Units into Common Units. In lieu of fractional Common Units,
the General Partner shall be entitled to receive a cash payment in respect of
any fractional unit in an amount equal to the fractional interest multiplied by
the closing price of a share of Common Stock on the date the Series A Preferred
Shares are surrendered for conversion by a holder thereof.
10. Allocation of Profit and Loss.
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Article V, Section 5.01 of the Partnership Agreement is hereby deleted
in its entirety and the following new Section 5.01 is inserted in its place:
(a) Profit. After giving effect to the special allocations set forth in
Section 5.01(c), (d), and (e) hereof, and subject to Section 5.01(f), Profit of
the Partnership for each fiscal year of the Partnership shall be allocated to
the Partners in accordance with their respective Percentage Interests.
(b) Loss. After giving effect to the special allocations set forth in
Section 5.01(c), (d), and (e) hereof, and subject to Section 5.01(f), Loss of
the Partnership for each fiscal year of the Partnership shall be allocated to
the Partners in accordance with their respective Percentage Interests.
(c) Minimum Gain Chargeback. Notwithstanding any provision to the
contrary, (i) any expense of the Partnership that is a "nonrecourse deduction"
within the meaning of Regulations Section 1.704-2(b)(1) shall be allocated in
accordance with the Partners' respective Percentage Interests, (ii) any expense
of the Partnership that is a "partner nonrecourse deduction" within the meaning
of Regulations Section 1.704-2(i)(2) shall be allocated to the Partner that
bears the "economic risk of loss" of such deduction in accordance with
Regulations Section 1.704-2(i)(1), (iii) if there is a net decrease in
Partnership Minimum Gain within the meaning of Regulations Section 1.704-2(f)(1)
for any Partnership taxable year, then, subject to the exceptions set forth in
Regulations Section 1.704-2(f)(2),(3), (4) and (5), items of gain and income
shall be allocated among the Partners in accordance with Regulations Section
1.704-2(f) and the ordering rules contained in Regulations Section 1.704-2(j),
and (iv) if there is a net decrease in Partner Nonrecourse Debt Minimum Gain
within the meaning of Regulations Section 1.704-2(i)(4) for any Partnership
taxable year, then, subject to the exceptions set forth in Regulations Section
1.704(2)(g), items of gain and income shall be allocated among the Partners in
accordance with Regulations Section 1.704-2(i)(4) and the ordering rules
contained in Regulations Section 1.704-2(j). A Partner's "interest in
partnership profits" for purposes of determining its share of the nonrecourse
liabilities of the Partnership within the meaning of Regulations Section
1.752-3(a)(3) shall be such Partner's Percentage Interest.
(d) Qualified Income Offset. If a Partner receives in any taxable year
an adjustment, allocation or distribution described in subparagraphs (4), (5) or
(6) of Regulations Section 1.704-1(b)(2)(ii)(d) that causes or increases a
deficit balance in such Partner's Capital Account that exceeds the sum of such
Partner's shares of Partnership Minimum Gain and Partner Nonrecourse Debt
Minimum Gain, as determined in accordance with Regulations Sections 1.704-2(g)
and 1.704-2(i), such Partner shall be allocated specially for such taxable year
(and, if necessary, later taxable years) items of income and gain in an amount
and manner sufficient to eliminate such deficit Capital Account balance as
quickly as possible as provided in Regulations Section 1.704-1(b)(2)(ii)(d).
After the occurrence of an allocation of income or gain to a Partner in
accordance with this Section 5.01(d), to the extent permitted by Regulations
Section 1.704-1(b), items of expense or loss shall be allocated to such Partner
in an amount necessary to offset the income or gain previously allocated to such
Partner under this Section 5.01(d).
(e) Capital Account Deficits. Loss shall not be allocated to a Limited
Partner to the extent that such allocation would cause a deficit in such
Partner's Capital Account (after reduction to reflect the items described in
Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6)) to exceed the sum of
such Partner's shares of Partnership Minimum Gain and Partner Nonrecourse Debt
Minimum Gain. Any Loss in excess of that limitation shall be allocated to the
General Partner. After the occurrence of an allocation of Loss to the General
Partner in accordance with this Section 5.01(e), to the extent permitted by
Regulations Section 1.704-1(b), Profit shall be allocated to such Partner in an
amount necessary to offset the Loss previously allocated to each Partner under
this Section 5.01(e).
(f) Priority Allocations With Respect To Series A Preferred Units.
After giving effect to the allocations set forth in Sections 5.01(c), (d), and
(e) hereof, but before giving effect to the allocations set forth in Sections
5.01(a) and 5.01(b), Net Operating Income shall be allocated to the General
Partner until the aggregate amount of Net Operating Income allocated to the
General Partner under this Section 5.01(f) for the current and all prior years
equals the aggregate amount of the Series A Preferred Return paid to the General
Partner pursuant to Section 5 of Schedule 4.02-1 hereof for the current and all
prior years. For purposes of this Section 5.01(f), "Net Operating Income" means
the excess, if any, of the Partnership's gross income over its expenses (but not
taking into account depreciation, amortization, or any other noncash expenses of
the Partnership), calculated in accordance with the principles of Section
5.01(h) hereof.
(g) Allocations Between Transferor and Transferee. If a Partner
transfers any part or all of its Partnership Interest, the distributive shares
of the various items of Profit and Loss allocable among the Partners during such
fiscal year of the Partnership shall be allocated between the transferor and the
transferee Partner either (i) as if the Partnership's fiscal year had ended on
the date of the transfer, or (ii) based on the number of days of such fiscal
year that each was a Partner without regard to the results of Partnership
activities in the respective portions of such fiscal year in which the
transferor and the transferee were Partners. The General Partner, in its sole
and absolute discretion, shall determine which method shall be used to allocate
the distributive shares of the various items of Profit and Loss between the
transferor and the transferee Partner.
(h) Definition of Profit and Loss. "Profit" and "Loss" and any items of
income, gain, expense or loss referred to in this Agreement shall be determined
in accordance with federal income tax accounting principles, as modified by
Regulations Section 1.704-1(b)(2)(iv), except that Profit and Loss shall not
include items of income, gain and expense that are specially allocated pursuant
to Sections 5.01(c), 5.01(d), 5.01(e), or 5.01(f). All allocations of income,
Profit, gain, Loss and expense (and all items contained therein) for federal
income tax purposes shall be identical to all allocations of such items set
forth in this Section 5.01(h), except as otherwise required by Section 704(c) of
the Code and Regulations Section 1.704-1(b)(4). The Partnership shall use the
traditional method for allocating items of income, gain and expense as required
by Section 704(c) of the Code with respect to the properties acquired by the
Partnership in connection with the Offering. With respect to other properties
acquired by the Partnership, the General Partner shall have the authority to
elect the method to be used by the Partnership for allocating items of income,
gain and expense as required by Section 704(c) of the Code with respect to such
properties, and such election shall be binding on all Partners.
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