AGREEMENT OF LIMITED PARTNERSHIP
OF
COLONY-KW PARTNERS, L.P.
AGREEMENT dated as of June 5, 1998 by and among COLONY-KW GENPAR LTD., a
British Virgin Islands limited company having an office at 1999 Avenue of the
Stars, Suite 1200, Xxx Xxxxxxx, Xxxxxxxxxx 00000, and any successor and assign
permitted pursuant to this Agreement (hereinafter called "Colony General
Partner"), COLONY-KW, L.P., a Delaware limited partnership having an office at
1999 Avenue of the Stars, Suite 1200, Xxx Xxxxxxx, Xxxxxxxxxx 00000, and any
successor and assign permitted pursuant to this Agreement (hereinafter called
"Colony Limited Partner" and, collectively with Colony General Partner, the
"Colony Partners"), KW JAPAN INVESTMENTS, INC., a Delaware corporation having an
office at c/o The United States Corporation Company, CSC-Wilmington, 0000 Xxxxxx
Xxxx, Xxxxxxxxxx, Xxxxxxxx 00000, and any successor and assign permitted
pursuant to this Agreement (hereinafter called "KWI Limited Partner") and EBISU
INVESTORS I, LLC, a Delaware limited liability company having an office at c/o
The United States Corporation Company, CSC-Wilmington, 0000 Xxxxxx Xxxx,
Xxxxxxxxxx, Xxxxxxxx 00000 (hereinafter called "KWI Special Limited Partner"
and, collectively with KWI Limited Partner, the "KWI Partners").
RECITALS
A. The Partners wish to form the Partnership pursuant to the terms of the
Uniform Act for the purposes set forth in Section 2.2 below.
B. In accordance with the terms and conditions of this Agreement, KWJ
Management (as hereinafter defined), a Related Entity of the KWI Partners, will
source opportunities to acquire Japanese loans and real estate investments (the
"Investments") and will present such opportunities to Colony General Partner for
Colony General Partner's review and approval. Upon Colony General Partner's
approval, in its sole discretion, of a proposed Investment, the Partnership will
underwrite, finance, own and dispose of such Investments and KWJ Management
under the direction of the Partnership will be responsible for the day-to-day
management of the Investments, all in accordance with this Agreement and the
approved Partnership Budget and Operating Plan and the applicable Investment
Budgets, Investment Plans and the Management Agreement (as such terms are
hereinafter defined).
C. In accordance with the terms and conditions of this Agreement, the
Partners will commit to provide equity or loans to fund all or a portion of the
costs and expenses in connection with sourcing, underwriting, financing, owning
and disposing of the Investments.
D. The Partners wish to enter into this Agreement to set forth their
agreements with respect to the Partnership and the matters set forth herein.
E. Capitalized terms used herein but not otherwise defined above shall have
the meaning ascribed to them in Article 1 below.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and in consideration of the mutual
covenants herein contained, the Partners hereby agree as follows:
ARTICLE 1
CERTAIN DEFINITIONS
Unless the context otherwise specifies or requires, the terms defined in
this Article 1 shall, for the purposes of this Agreement, have the meanings
herein specified. Unless otherwise specified, all references herein to Articles
or Sections are to Articles or Sections of this Agreement.
"Accountant" - As defined in Section 13.3.
"Acquisition Fee" - The acquisition fees payable by the Partnership and/or
the Investment Entities, as the case may be, in connection with the acquisition
management services to be provided by KWJ Management pursuant to the Management
Agreements. [*]
"Adjusted Capital Account Deficit" - With respect to any Partner, the
[*] = redacted text
deficit balance, if any, in such Partner's Capital Account as of the end of the
relevant Fiscal Year, after giving effect to the following adjustments:
(i)Credit to such Capital Account any amounts which such Partner is
obligated to restore pursuant to this Agreement or is deemed to be
obligated to restore to the Partnership pursuant to the penultimate
sentences of Regulations Section 1.704-2(g)(1) and 1.704-2(i)(5).
(ii)Debit to such Capital Account the items described in Regulations
Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
Except as otherwise modified herein, the foregoing definition of Adjusted
Capital Account Deficit is intended to comply with the provisions of Regulations
Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
"Agreement" - This Agreement of Limited Partnership of "Colony-KW Partners,
L.P.", as amended or otherwise modified from time to time.
"Alternative Investment" - As defined in Section 7.6.
"Asset Management Fee" - The asset management fees payable by the
Partnership and/or the Investment Entities, as the case may be, in connection
with the asset management services to be provided by KWJ Management pursuant to
the Management Agreements. [*]
"Assets" - The Investment Entity Assets and, to the extent not duplicative,
the Partnership Assets.
"Business Day" - Any day except a Saturday, a Sunday, or a legal holiday on
which banks are required or permitted to be closed in Los Angeles, California or
New York, New York.
"Capital Account" - The Capital Account maintained for each Partner
pursuant to Section 5.4.
"Capital Contributions" - With respect to any Partner, the amount of cash
and the initial Gross Asset Value of any other property or contract rights
contributed or deemed contributed to the capital of the Partnership by or on
behalf of such Partner reduced by the amount of any liability assumed by the
Partnership relating to such property and any liability to which such property
is subject (including, without limitation, Investment Contributions), provided
that in no event shall Capital Contributions include or be deemed to include any
In Lieu Of Loan.
"Cash Available for Distribution" - For each Fiscal Year or other period,
(a) all cash received by the Partnership from any source (including borrowings
by the Partnership, Capital Contributions and proceeds of the sale, exchange or
other disposition of the Partnership Assets) less (b) cash expended or then
required for debts and expenses (including amounts due under Investment Loans
and under any Partner Default Loans made by, or fees owed to, Partners and their
Related Entities, but subject to any deferral of the repayment of the principal
of such items), interest and principal payments on any indebtedness, capital
expenditures, taxes, fees, Reserves or other requirements of the Partnership, in
each case as determined by Colony General Partner pursuant to this Agreement.
"Closing Date" - As defined in Article 11.
"Code" - The Internal Revenue Code of 1986, as amended from time to time
(or any corresponding provisions of succeeding law) together with the
Regulations promulgated thereunder.
"Colony General Partner" - As defined in the Preamble.
"Colony Limited Partner" - As defined in the Preamble.
"Colony Partners" - As defined in the Preamble.
"Contributing Partner" - As defined in Section 5.3(a).
"Contribution Percentages" - The percentages set forth in Schedule 2
hereto.
"Control" - The ability (subject to the provisions of any applicable law)
and the authority to take action and make decisions on behalf of a corporation,
partnership, limited liability company or other entity or person.
"Defaulting Partner" - As defined in Section 5.3(a).
"Depreciation" - For each Fiscal Year or other period, an amount equal to
the depreciation, amortization or other cost recovery deduction allowable for
Federal income tax purposes with respect to an asset for such Fiscal Year or
other period; provided, however, that if the Gross Asset Value of an asset
differs from its adjusted basis for Federal income tax purposes at the beginning
of such Fiscal Year or other period, Depreciation shall be an amount which bears
the same ratio to such beginning Gross Asset Value as the Federal income tax
[*] = redacted text
depreciation, amortization, or other cost recovery deduction for such Fiscal
Year or other period bears to such beginning adjusted tax basis; provided,
further, that if the Federal income tax depreciation, amortization, or other
cost recovery deduction for such Fiscal Year is zero, Depreciation shall be
determined with reference to such beginning Gross Asset Value using any
reasonable method selected by the General Partner.
"ERISA" - The Employee Retirement Income Security Act of 1974, as amended
from time to time. A reference to a section of ERISA shall be deemed to include
a reference to any amendatory or successor provision thereto.
"Fiscal Year" - With respect to the Partnership, the taxable year of the
Partnership for Federal income tax purposes.
"Foreign Person" - Any person or entity that is not a "United States
person" within the meaning of Code Section 7701(a)(30).
"General Partner" - As defined in Section 4.1.
"Gross Asset Value" - With respect to any asset, the asset's adjusted basis
for Federal income tax purposes, except as follows:
(i)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 at
the time of contribution, as determined by the contributing Partner and the
General Partner; provided, however, that if the contributing Partner is the
General Partner, the determination of the fair market value of a
contributed asset shall require the consent of KWI Limited Partner;
(ii)The Gross Asset Values of all Partnership Assets shall be adjusted
to equal their respective gross fair market values, as reasonably
determined by the General Partner, as of the following times: (a) the
acquisition of more than a de minimis additional interest in the
Partnership by any new or existing Partner; (b) the distribution by the
Partnership to a Partner of more than a de minimis amount of property of
the Partnership; and (c) the liquidation of the Partnership within the
meaning of Regulations Section 1.704-1(b)(2)(ii)(g); provided, however,
that adjustments pursuant to clauses (a) and (b) above shall be made only
if the General Partner reasonably determines that such adjustments are
necessary or appropriate to reflect the relative economic interests of the
Partners in the Partnership;
(iii)The Gross Asset Value of any Partnership Asset distributed to any
Partner shall be adjusted to equal the gross fair market value of such
asset on the date of distribution as determined by the distributee and the
General Partner, provided that, if the distributee is the General Partner,
the determination of the fair market value of the distributed asset shall
require the consent of KWI Limited Partner; and
(iv)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 the Gross Asset Values of Partnership Assets shall
not be so adjusted to the extent that such Gross Asset Values were adjusted
in connection with a transaction described in clause (ii) of this
definition of Gross Asset Values.
If the Gross Asset Value of an asset has been determined or adjusted
pursuant to this provision, such Gross Asset Value shall thereafter be adjusted
by the Depreciation taken into account with respect to such asset for purposes
of computing Profits and Losses.
[*]
"In Lieu Of Loan" - Any loan made by a Partner to the Partnership in lieu
of a portion of such Partner's Capital Contribution or an Investment
Contribution by such Partner in accordance with Section 5.2(e).
"Investment Amount" - With respect to each Investment, the amount invested
in such Investment, on an Investment Asset by Investment Asset basis, by the
Partnership or an Investment Entity, as the case may be, as determined by Colony
General Partner pursuant to Section 7.5(b).
"Investment Asset" - With respect to each Investment, each individual
Japanese loan or real estate investment to be included as part of an overall
Investment.
"Investment Budget" - With respect to each Investment, the budget, as may
be amended from time to time, prepared by KWJ Management on an annual basis, and
which will be subject to the approval of Colony General Partner pursuant to
Section 7.5. Each Investment Budget will set forth, among other things, the
[*] = redacted text
anticipated Pre-Acquisition Costs for each Investment Asset included as part of
such Investment and for the Investment as a whole, as well as the anticipated
income to be derived from each such Investment Asset and from the Investment as
a whole. Each Investment Budget will be reviewed on a quarterly basis to
determine the accuracy of the budgeted amounts.
"Investment CAD" - As defined in Section 9.1.
"Investment Contributions" - With respect to any Partner, the amounts, if
any, of Capital Contributions made to the Partnership by or on behalf of such
Partner subsequent to the date hereof pursuant to Section 5.2 hereof.
"Investment Entity" - Each limited liability company, limited partnership,
corporation or other entity hereafter formed or created, if any, by the
Partnership or the Partners for the purpose of pursuing an Investment, as
provided in Sections 7.3 and 7.5(c).
"Investment Entity Agreement" - For each Investment Entity, its agreement
of limited partnership, operating agreement or other formation agreement, as
applicable.
"Investment Entity Assets" - The assets and property, whether tangible or
intangible and whether real, personal, or mixed, at any time owned by or held
for the benefit of any Investment Entity, including, without limitation, the
applicable Investment.
"Investment Loan" - With respect to each Investment, any financing obtained
by the Partnership, pursuant to Section 5.2(b) for the acquisition of such
Investment, in the form of acquisition and/or non-recourse and/or non-guaranteed
financings, from a lender suitable to Colony General Partner, in amounts and on
market terms and conditions which are reasonably acceptable to Colony General
Partner, in its sole and absolute discretion, all in accordance with the
approved Partnership Budget and applicable Investment Budget.
"Investment Plan" - With respect to each Investment, the investment plan
for such Investment setting forth, among other things, the plan for the
underwriting, financing, owning and disposing of each Investment Asset included
as part of such Investment and for the Investment as a whole. Each Investment
Plan will be prepared by KWJ Management on an annual basis and will be subject
to the approval of Colony General Partner pursuant to Section 7.5.
"Investments" - As defined in Recital "B".
"IRR" - Internal rate of return based on quarterly compounding.
"IRS" - The Internal Revenue Service or such other governmental agency
which performs the functions that are performed as of the date of this Agreement
by the Internal Revenue Service.
"KWI Limited Partner" - As defined in the Preamble.
"KWI Maximum Amount" - As defined in Section 5.2(a).
"KWI Partners" - As defined in the Preamble.
[*]
"KWI Special Limited Partner" - As defined in the Preamble.
"KWJ Management" - Xxxxxxx-Xxxxxx Japan K.K., a Japanese affiliate of
Xxxxxxx-Xxxxxx, Inc. and the KWI Partners, together with its wholly-owned
subsidiaries.
"Limited Partners" - As defined in Section 4.2.
"Liquidating Partner" - As defined in Section 17.2(c).
"Losses" - As defined in the definition of Profits.
"Management Agreement" - A management agreement, in the form annexed hereto
as Exhibit A, as amended from time to time, to be entered into by the
Partnership and/or the Investment Entities, as the case may be, and KWJ
Management, pursuant to which KWJ Management will perform, or will delegate
(without relieving KWJ Management of any of its obligations or responsibilities
under the Management Agreement) to others that, under KWJ Management's
supervision, will perform, among other things, management, leasing and sales
agent duties and obligations in connection with the Investments, pursuant to,
and in accordance with, the applicable Investment Plan and Investment Budget and
this Agreement.
"Management Fees" - The Acquisition Fees, the Asset Management Fees and the
Incentive Fee, and all other fees payable to KWJ Management by the Partnership
and/or the Investment Entities, as the case may be, pursuant to the Management
Agreements.
"Measuring Group" - As defined in Section 20.8.
"Net Profits" - All revenues from all sources received by the Partnership
[*] = redacted text
less any and all fees (other than Incentive Fees), costs and expenses incurred
by the Partnership in generating such revenues.
"Nonrecourse Deductions" - As defined in Regulations Section 1.704-2(b)(1).
The amount of Nonrecourse Deductions for a Fiscal Year equals the net increase,
if any, in the amount of Partnership Minimum Gain during such Fiscal Year
reduced by any distributions during such Fiscal Year of proceeds of a
Nonrecourse Liability that are allocable to an increase in Partnership Minimum
Gain, determined according to the provisions of Regulations Section 1.704-2(c)
and 1.704-2(h).
"Nonrecourse Liability" - As defined in Regulations Section 1.704-2(b)(3).
"Notice" - As defined in Section 20.2.
"Offer Notice" - As defined in Section 11(a).
"Offer Price" - As defined in Section 11(a).
"Offer Terms" - As defined in Section 11(a).
"Offeree" - As defined in Section 11(a).
"Offeror" - As defined in Section 11(a).
"Offered Assets" - As defined in Section 11(a).
"Operating Plan" - The operating plan of the Partnership setting forth,
among other things, the plans for the acquisition, financing, managing and
disposition of the Investments and other operating guidelines of the
Partnership. The Operating Plan will be prepared by KWJ Management on an annual
basis and will be subject to the approval of Colony General Partner pursuant to
Section 7.4. A copy of the Initial Operating Plan is annexed hereto as Exhibit
C-1.
"Original Partner Lender" - As defined in Section 5.2(e).
"Partner Default Loan" - As defined in Section 5.3.
"Partner Minimum Gain" - 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" - As defined in Regulations
Section 1.704-2(b)(4).
"Partner Nonrecourse Deductions" - As defined in Regulations
Section 1.704-2(i)(2). The amount of Partner Nonrecourse Deductions with respect
to a Partner Nonrecourse Debt for a Fiscal Year equals the net increase, if any,
in the amount of Partner Minimum Gain during such Fiscal Year attributable to
such Partner Nonrecourse Debt, reduced by any distributions during that Fiscal
Year to the Partner that bears the economic risk of loss for such Partner
Nonrecourse Debt to the extent that such distributions are from the proceeds of
such Partner Nonrecourse Debt and are allocable to an increase in Partner
Minimum Gain attributable to such Partner Nonrecourse Debt, determined according
to the provisions of Regulations Section 1.704-2(h) and 1.704-2(i).
"Partners" - The Limited Partners and General Partners of the Partnership.
"Partnership" - Colony-KW Partners, L.P., the Delaware limited partnership
governed by this Agreement.
"Partnership Assets" - The assets and property, whether tangible or
intangible and whether real, personal, or mixed, at any time owned by or held
for the benefit of the Partnership, including, without limitation, the
Partnership's interest in each Investment and in the Investment Entities, if
any, and all right, title, and interest, if any, held and owned by the
Partnership in other entities.
"Partnership Budget" - The Partnership operating budget for each Fiscal
Year of the Partnership, as may be amended from time to time, to be prepared by
KWJ Management on an annual basis, and which will be subject to the approval of
Colony General Partner pursuant to Section 7.4. The Partnership Budget will set
forth, among other things, all anticipated income, operating expenses and
capital and other costs and expenses of the Partnership. A copy of the Initial
Partnership Budget is annexed hereto as Exhibit C-2.
"Partnership Interest" - As to any Partner, all of the interest of that
Partner in the Partnership including, without limitation, such Partner's (i)
right to an allocable share of the Profits and Losses of the Partnership and a
distributive share of Cash Available for Distribution in accordance with Article
9 hereof, (ii) right to a distributive share of Partnership Assets and (iii)
right to participate in the management of the business and affairs of the
Partnership as provided for in this Agreement, provided that in no event shall
the Partnership Interest of any Limited Partner include the right to participate
in the control of the Partnership or the Partnership's business within the
meaning of Section 17-303 of the Uniform Act.
"Partnership Minimum Gain" - As defined in Regulations Section 1.704-2(d).
"Percentage Interest" - With respect to any Partner and any Investment, the
ratio of such Partner's Capital Contributions made in respect of such Investment
to the aggregate Capital Contributions of all Partners made in respect of such
Investment.
"Person" - Any individual, partnership, corporation, limited liability
company, trust or other entity.
"Plan Assets Regulations" - As defined in Section 19.1.
"Pooling Agreement" - As defined in Section 9.3.
"Pre-Acquisition Costs" - With respect to any potential Investment, all
third-party costs, fees, and expenses incurred in the review and consideration
of such potential Investment, as approved by Colony General Partner.
"Profits" and "Losses" - For each Fiscal Year or other period, an amount
equal to the Partnership's taxable income or loss for such Fiscal Year or
period, determined in accordance with Code Section 703(a) (for this purpose, all
items of income, gain, loss, deduction, or expenditure required to be stated
separately pursuant to Code Section 703(a)(1) shall be included in taxable
income or loss), with the following adjustments:
(i)Any income of the Partnership that is exempt from Federal income
tax or excluded from Federal gross income and not otherwise taken into
account in computing Profits or Losses pursuant to this definition of
Profits and Losses shall be added to such taxable income or loss;
(ii)Any expenditures of the Partnership described in Code
Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures
pursuant to Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise
taken into account in computing Profits or Losses pursuant to this
definition of Profits and Losses, shall be subtracted from such taxable
income or loss;
(iii)In the event the Gross Asset Value of any Partnership Asset is
adjusted pursuant to any provision of this Agreement in accordance with 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 Profits or Losses;
(iv)Gain or loss resulting from any disposition of any Partnership
Asset with respect to which gain or loss is recognized for Federal income
tax purposes shall be computed by reference to the Gross Asset Value of the
property disposed of, notwithstanding that the adjusted tax basis of such
Asset differs from its Gross Asset Value;
(v)In lieu of the depreciation, amortization, and other cost recovery
deductions taken into account in computing such taxable income or loss,
there shall be taken into account Depreciation for such Fiscal Year or
other period, computed in accordance with the definition of Depreciation;
(vi)To the extent 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 Treasury 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 complete liquidation of a Partner's interest,
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 Profits or Losses;
(vii)Notwithstanding any other provision of this Section, any items
which are allocated pursuant to Section 8.2 shall not be taken into account
in computing Profits or Losses; and
(viii)Profits and Losses will be calculated separately for each
Investment.
"Promote Distributions" - With respect to any Investment, the amount of
Investment CAD to be distributed to the KWI Partners pursuant to Section 9.1 in
excess of the amounts that would be distributed to the KWI Partners pursuant to
such Section if such distributions were to be made in accordance with the
Percentage Interests of the KWI Partners.
"Reasonable Consultation" or "Consult Reasonably" - A written or oral
solicitation and consideration by one Person (the "First Person") of the
position, views and opinions of another Person regarding a particular matter or
topic; provided that the obligation of any First Person to consult with such
other Person shall not require such First Person to obtain the consent of such
other Person or to follow the directions or desires expressed by such other
Person during any such consultation regarding such particular matter or topic;
provided, further that the First Person shall not be liable in any way
whatsoever for not following the directions or desires expressed by such other
Person.
"Regulations" - The income tax regulations promulgated under the Code as
such regulations may be amended from time to time (including temporary
regulations).
"Related Entity" - With respect to any Partner, any other Partner,
corporation, partnership, limited liability company, entity or person directly
or indirectly Controlled by, Controlling or under common Control with such
Partner and any director, officer, manager, executive employee, shareholder or
partner of such Partner or other entity or person, which (i) in the case of the
Colony Partners, on the date hereof includes Colony Capital, Inc., Colony
Advisors, Inc., Colony Investors II, L.P. and Colony Investors III, L.P.;
provided, however, that for purposes of this Agreement, the limited partners of
Colony Investors II, L.P. or Colony Investors III, L.P. or of other funds formed
by affiliates of the Colony Partners shall not be deemed to be Related Entities
of the Colony Partners, and (ii) in the case of the KWI Partners, includes KWJ
Management.
"Reserves" - Amounts held by the Partnership in anticipation of future
debts, expenses, capital expenditures, taxes, fees or other requirements of the
Partnership, in each case as set forth in the then currently approved
Partnership Budget for the Partnership or as otherwise determined by Colony
General Partner.
"Residual Percentages" - As defined in Section 5.7.
"Responsible Partner" - As defined in Section 10.4.1(a).
"Tax Liability" - With respect to each Partner, for each Fiscal Year
commencing with the Year ending on December 31, 1998, an amount equal to the
product of (i) the net income of the Partnership allocated to such Partner for
such Fiscal Year pursuant to Article 8 hereof, after accounting for any
cumulative net losses allocated to such Partner pursuant to Article 8 hereof for
prior Fiscal Years that previously were not taken into account in determining a
Partner's Tax Liability, and (ii) the lesser of such Partner's then-current
combined federal, state and local income tax rate, which combined rate shall
include state and local income taxes on an after-tax basis (or if such Partner
is taxed as a "flow through entity" for income tax purposes, the weighted
average of the then-current income tax rate of the owners of such entity) or
forty percent (40%).
"Total Capitalization" - With respect to any Investment for purposes of
calculating the Acquisition Fee and the Asset Management Fee in respect of such
Investment, the total investment in such Investment and the cost of making such
Investment, including, without limitation, the Investment Amount, Investment
Loan, any and all costs, expenses and fees incurred or payable pursuant to the
terms of this Agreement in connection with the closing of the Investment and any
closing or other taxes, fees, assessments, levies or similar amounts or charges
payable pursuant to the terms of this Agreement in connection with such closing.
"Transfer" - As defined in Section 10.1(a).
"Uniform Act" - The Delaware Revised Uniform Limited Partnership Act, 6
Del.C. Section 17-101, et seq., as amended, and any successor statute. A
reference to a section of the Uniform Act shall be deemed to include a reference
to any amendatory or successor provision thereto.
"Unreturned Capital Contributions" - With respect to any Partner, the
amount equal to the Capital Contributions made by such Partner hereunder less
the Capital Contributions that have been returned to such Partner, if any, in
the form of distributions made to such Partner pursuant to Article 9 or
otherwise pursuant to the terms of this Agreement.
"Withholding Funds" - As defined in Section 20.9.
ARTICLE 2
NAME, PRINCIPAL OFFICE, PURPOSE
Section 2.1. Name and Principal Office
The name of the partnership formed pursuant to this Agreement is Colony-KW
Partners, L.P. The Partnership shall have its principal office at 1999 Avenue of
the Stars, Suite 1200, Xxx Xxxxxxx, Xxxxxxxxxx 00000 or at such other place as
Colony General Partner shall select upon ten (10) Business Days notice to the
Limited Partners. The Registered Agent (as defined in the Uniform Act) for the
Partnership shall be Corporation Service Company. The Registered Office (as
defined in the Uniform Act) of the Partnership shall be 0000 Xxxxxx Xxxx,
Xxxxxxxxxx, Xxx Xxxxxx Xxxxxx, Xxxxxxxx 00000-0000.
Section 2.2. Purpose
Subject to and in accordance with this Agreement, the purposes of the
Partnership shall be as follows:
(i)Following the sourcing of Investments by KWJ Management, pursuant
to Section 7.5(a), meeting the criteria set forth in the Partnership Budget
and the Operating Plan, and upon approval of any Investment by the Colony
General Partner pursuant to Section 7.5, to pursue, either directly or
through the creation of an Investment Entity with respect to such
Investment, through the provision of Investment Contributions and the
proceeds of Investment Loans, the underwriting, financing, acquisition,
owning, management and disposing of the applicable Investment in accordance
with the Partnership Budget and the Operating Plan and the applicable
Investment Budgets and Investment Plans;
(ii)Acting either directly or through the Investment Entities, as the
case may be, and pursuant to Section 5.2(b), to obtain any and all
Investment Loans and to incur other indebtedness deemed necessary or
desirable in the furtherance of such purposes;
(iii)To enter into, either directly or through the Investment
Entities, as the case may be, the Management Agreement(s) and such other
agreements relating to the Investments as are consistent with this
Agreement;
(iv)To make distributions to the Partners; and
(v)To conduct such other activities consistent with this Agreement as
may be necessary or appropriate in connection with or in furtherance of the
foregoing.
Section 2.3. Statutory Compliance
The Partnership shall exist under and be governed by the Uniform Act. The
Partnership shall qualify to do business as a foreign limited partnership in
each jurisdiction in which the conduct of its business so requires. The General
Partner and the Limited Partners, as the case may be, shall execute, if required
under governing law, and the General Partner shall file and/or publish on behalf
and at the expense of the Partnership, all appropriate certificates required by
law to be filed and/or published in connection with the matters described in
this Article 2. Prior to the time that all such certificates have been filed, no
Person shall represent to third parties the existence of the Partnership or hold
itself out as a Partner.
ARTICLE 3
TERM
The term of the Partnership shall commence on the date the certificate of
limited partnership described in Section 201 of the Uniform Act (the
"Certificate") is filed in the office of the Secretary of State of Delaware in
accordance with the Act and shall continue until December 31, 2015, on which
date the Partnership shall dissolve, unless sooner dissolved upon the occurrence
of any of the events specified in Article 11 or Section 17.1.
ARTICLE 4
GENERAL AND LIMITED PARTNERS
Section 4.1. General Partner
The General Partner is Colony General Partner, any permitted successors and
assigns who are admitted as a General Partner pursuant to this Agreement and
such additional or substitute persons or entities that become General Partners
from time to time in accordance with the provisions of this Agreement (each, a
"General Partner" and collectively, the "General Partners"). No General Partner
may withdraw from the Partnership or assign or transfer its Partnership
Interest, in whole or in part, except as provided in Article 10 and Article 11.
Section 4.2. Limited Partners
The Limited Partners are Colony Limited Partner, KWI Limited Partner and
KWI Special Limited Partner, any permitted successors and assigns who are
admitted as a Limited Partner pursuant to this Agreement and such additional or
substitute persons or entities who are admitted as Limited Partners from time to
time in accordance with the provisions of this Agreement (each, a "Limited
Partner" and collectively, the "Limited Partners"). No Limited Partner may
withdraw from the Partnership or assign or transfer its Partnership Interest, in
whole or in part, except as provided in Article 10 and Article 11.
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ARTICLE 5
CAPITAL CONTRIBUTIONS AND FINANCINGS
Section 5.1. Capital Contributions of the Partners
Except as provided in Section 5.2, unless a Partner otherwise agrees, no
Partner shall be required to make a Capital Contribution or loan to the
Partnership.
Section 5.2. Investment Contributions
(a) (i) Upon a determination by Colony General Partner (x) pursuant to
Section 7.5, that the Partnership will acquire an Investment and that the
Partnership will require funds for such Investment or (y) that the Partnership
requires funds to protect the Partners' investment in the Partnership in
addition to any Investment Contributions and/or any Investment Loans (other than
to provide funds to make a distribution to the Partners), the Colony Partners
and, subject to clause (ii) of this Section 5.2(a), the KWI Partners will make
Investment Contributions to fund such Investment pro rata in accordance with
each of their respective Contribution Percentages and subject to the following
provisions; provided, however, that, subject to clause (ii) of this Section
5.2(a), in the event KWI Special Limited Partner fails to make its share of such
Additional Investment Contribution, KWI Limited Partner will make an Additional
Investment Contribution in an amount equal to KWI Special Limited Partner's
required share.
(ii) The amount and timing of such Investment Contributions shall be
determined by Colony General Partner in its sole and absolute discretion. In the
event Colony General Partner determines that Investment Contributions are
required, Colony General Partner will provide written notice of such requirement
to the other Partners. [*] In the event KWI Limited Partner elects to provide
Capital Contributions in excess of the KWI Maximum Amount, KWI Limited Partner
shall notify Colony General Partner of such election within ten (10) Business
Days of KWI Limited Partner's receipt of the notice provided by Colony General
Partner pursuant to this Section 5.2 in respect of the Additional Investment
Contribution. If KWI Limited Partner does not provide such notice within such
ten (10) Business Day period, it shall be deemed that KWI Limited Partner has
elected not to make any Investment Contributions in excess of the KWI Maximum
Amount.
(b) The Partnership, or the applicable Investment Entity, as the case may
be, may seek to obtain Investment Loans for each approved Investment as deemed
necessary or appropriate by Colony General Partner.
[*](c) Notwithstanding the foregoing, to the extent that any portion of
the Capital Contributions provided hereunder or committed to be provided
hereunder is not invested in an Investment at the end of each six month period
commencing with the period ending December 6, 1998, or is not committed to be
invested within ninety (90) days of the last Business Day of such six (6) month
period, in either case in an Investment that has been sourced by KWJ Management
pursuant to Section 7.5(a) and which Colony General Partner has decided to
acquire pursuant to Section 7.5(a), (i) one hundred (100%) percent of such
funded but non-invested Capital Contributions shall be returned to the Partners,
and (ii) the Partners' respective committed Capital Contribution amounts will be
reduced pro rata in accordance with their relative Contribution Percentages by
an amount equal to $25 million (or such lesser amount as determined by Colony
General Partner) less the amount of such funded but non-invested Capital
Contributions to be returned to the Partners pursuant to clause (i) above. In
the event the aggregate total of Unreturned Capital Contributions plus committed
Capital Contributions is equal to $0 as a result of such return of funded but
non-invested Capital Contributions and/or of such reduction of the committed
Capital Contributions, the Colony Partners shall have the right, in their sole
and absolute discretion, to seek to cause the sale of the Partnership Assets
pursuant to Article 11 and to terminate this Agreement and any Investment Entity
agreement(s). Further, in such event, the provisions of Section 4.3 in respect
of the Partners' obligations thereunder shall terminate at such time as such
sale of the Partnership Assets is consummated (i.e., closed).
(d) In the event an Investment Entity is formed with respect to a
particular Investment, the Investment Amount for such Investment shall be funded
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at the Investment Entity level in accordance with the applicable Investment
Budget (i) by Investment Contributions made by the Partners to the Partnership
pursuant to Sections 5.2(a) and 5.2(c), and/or (ii) by Investment Loans as
provided in Section 5.2(b).
(e) Notwithstanding anything to the contrary in this Section 5.2 or
elsewhere in this Agreement (other than as set forth in Section 5.3), if Colony
General Partner determines that a Partner (the "Original Partner Lender") may
make an In Lieu Of Loan to the Partnership in lieu of a portion of such Original
Partner Lender's Capital Contribution or an Investment Contribution by such
Partner, (i) each other Partner shall have the right to make an In Lieu Of Loan
in an amount up to an amount equal to the product obtained by multiplying (x)
the Capital Contribution to be made by such other Partner times (y) a fraction,
the numerator of which is the amount of the In Lieu Of Loan being made by the
Original Partner Lender and the denominator of which is the sum of (1) the
Capital Contribution to be made by the Original Partner Lender and (2) the In
Lieu Of Loan to be made by the Original Partner Lender and (ii) such In Lieu Of
Loan shall bear interest at a rate per annum that will result in such Partner
receiving interest equal to the return such Partner would have earned had such
Partner made only a Capital Contribution. For purposes of clarity, in no event
shall the foregoing apply to Partner Default Loans.
Section 5.3. Default Contributions; Adjustments to Residual Percentages
(a) In the event that any Partner shall fail to timely make an Investment
Contribution which such Partner elected to make or was obligated to make
pursuant to Section 5.2(a) (such Partner is hereinafter referred to as a
"Defaulting Partner") and such default shall continue for five (5) Business Days
following notice from Colony General Partner in the event the Defaulting Partner
is a KWI Partner, or from KWI Limited Partner in the event the Defaulting
Partner is a Colony Partner, then the Partners which did not default with
respect to the making of such Additional Investment Contribution (a
"Contributing Partner") may, within thirty (30) days of the end of such five (5)
Business Day period make Investment Contributions to the Partnership which in
the aggregate equal such defaulted amount in proportion to their respective
Contribution Percentages (or in such other proportions as they mutually agree).
Such Investment Contributions in respect of such default together with the
corresponding Investment Contributions of the Contributing Partner may be made
in the form of equity or loans, as determined by the Contributing Partner, as
set forth in Section 5.3(b); provided that portion of any Additional Investment
Contribution that is in the form of a loan shall not affect the Partners'
Capital Accounts.
(b) Subject to Section 5.3(c), in the event the non-Defaulting Partners
make Investment Contributions in the form, either in whole or in part, of equity
pursuant to Section 5.3(a), the then-current Residual Percentage of each
Defaulting Partner shall be reduced automatically by the number of percentage
points equal to the product of (I) one hundred (100), multiplied by (II) a
fraction, the numerator of which is equal to the product of (A) one and
three-tenths (1.3) multiplied by (B) the amount of the Investment Contribution
which the Defaulting Partner did not provide and the denominator of which is the
aggregate amount of the Capital Contributions made by all of the Partners
(including those made in connection with the subject default) less all
distributions made pursuant to Article 9 hereof which serve to return the
Capital Contributions of the Partners. If such a reduction occurs pursuant to
the above clause, the Residual Percentage of each Contributing Partner shall be
increased by its proportionate share of any such reduction based on the
Investment Contributions provided by the Contributing Partners in respect of the
then-current defaulted amount. [*]
(c) In addition to the foregoing, in the event KWI Special Limited Partner
fails to timely make an Investment Contribution which KWI Special Limited
Partner was obligated to make pursuant to Section 5.2(a) and KWI Limited Partner
does not make such Investment Contribution in lieu of KWI Special Limited
Partner's required Capital Contribution amount pursuant to Section 5.2(a), the
Colony Partners' Residual Percentage shall increase by two (2) percentage points
and KWI Special Limited Partner's Residual Percentage shall decrease by two (2)
percentage points.
(d) The provisions of this Section 5.3 are intended to comply with the
provisions of Section 17-502(c) of the Uniform Act. The Partners, each for
itself and its Related Entities, mutually acknowledge that the Investment
Contributions are critical to the Partnership's business; that the interest of
the Partners may be at risk by reason of the failure of the Partners to make
required or agreed upon Investment Contributions; that the Partners may be
forced to borrow funds or invade other assets to fund the shortfall created by
[*] = redacted text
the default of a Defaulting Partner; that the extent of the risk and the damage
and loss to the Partners resulting from such default by a Defaulting Partner is
impossible to foresee or predict at this time, but that such risk, damage and
loss could imperil the Partnership; and that in view of the serious consequences
that could arise from a default in making any required or agreed upon Investment
Contributions, the provisions of this Section 5.3 relating to such a default are
reasonable.
Section 5.4. Capital Accounts
(a) The Partnership shall establish and maintain a separate Capital Account
for each Partner in accordance with the following provisions:
(i)To each Partner's Capital Account there shall be credited such
Partner's Capital Contributions, such Partner's distributive share of
Profits and any items in the nature of income or gain which are allocated
to such Partner pursuant to Section 8.2, and the amount of any Partnership
liabilities that are assumed by such Partner or which are secured by any
Partnership Asset distributed to such Partner.
(ii)To each Partner's Capital Account there shall be debited the
amount of cash and the Gross Asset Value of any Partnership Asset
distributed to such Partner pursuant to any provision of this Agreement,
such Partner's distributive share of Losses and any items in the nature of
expenses or losses which are allocated to such Partner pursuant to Section
8.2, and the amount of any liabilities of such Partner that are assumed by
the Partnership or which are secured by any property contributed to the
Partnership by such Partner (except to the extent already reflected in the
amount of such Partner's Capital Contributions).
The foregoing provisions and the other provisions of this Agreement
relating to the maintenance of Capital Accounts are intended to comply with Code
Section 704(b) and Code Section 514(c)(9) and the Regulations thereunder, and
shall be interpreted and applied in a manner consistent with such Regulations.
In the event Colony General Partner shall determine that it is prudent to modify
the manner in which the Capital Accounts, or any debits or credits thereto, are
computed in order to comply with such Regulations, Colony General Partner may
make such modification, provided that it is not likely to have a material effect
on the amounts distributable to any Partner pursuant to Section 17.2 upon the
dissolution of the Partnership.
(b) Any transferee of a Partnership Interest or a portion thereof shall
succeed to the Capital Account relating to the Partnership Interest transferred
or the corresponding portion thereof.
Section 5.5. Negative Capital Accounts
No Partner shall be required to pay to the Partnership or to any other
Partner any deficit or negative balance which may exist from time to time in
such Partner's Capital Account.
Section 5.6. Return of Capital; No Interest on Amounts in Capital Account
Except upon dissolution of the Partnership or as may be expressly set forth
in this Agreement, no Partner shall have the right to demand or receive the
return of its Capital Contributions or any part of its Capital Account or be
entitled to receive any interest on its outstanding Capital Account balance.
Section 5.7. Residual Interests
"Residual Percentages" of the Partners as of the date of this Agreement are
as set forth in annexed Schedule 1. Any change in the Residual Percentages of
the Partners shall be made in accordance with the terms of this Agreement and
shall be reflected in an amendment to such Schedule 1, approved and executed by
Colony General Partner.
Section 5.8. Management Fees and Reimbursements; Partnership General and
Administrative Costs and Expenses; Pre-Acquisition Costs
(a) The Partnership or the applicable Investment Entity, as the case may
be, shall pay KWJ Management and the Person designated in writing by Colony
General Partner the Management Fees and shall reimburse KWJ Management and
Colony General Partner for out-of-pocket third-party costs and expenses on
commercially reasonable market terms incurred in connection with each
Investment, in the manner and as set forth in the applicable Management
Agreements and this Partnership Agreement; provided that such out-of-pocket
costs and expenses are within the then approved Partnership Budget and
applicable Investment Budget or are otherwise incurred with the express written
consent of all Partners. Notwithstanding the foregoing or anything contained in
the Management Agreements to the contrary, in no event shall the amounts payable
to KWJ Management in respect of Asset Management Fees and Acquisition Fees (but
not Incentive Fees) hereunder and thereunder exceed $3.5 million annually in the
aggregate.
(b) Pre-Acquisition Costs approved by Colony General Partner for each
potential Investment shall be paid by the Colony Partners and KWI Limited
Partner pursuant to Section 7.5(b). Upon the acquisition of such Investment by
the Partnership or Investment Entity, as the case may be, the applicable
Pre-Acquisition Costs shall be deemed to be Capital Contributions of the Colony
Partners and KWI Limited Partner, as applicable, and the Colony Partners and KWI
Limited Partner, as applicable, shall be reimbursed for such Pre-Acquisition
Costs pro rata in the form of distributions made to the Colony Partners and KWI
Limited Partner, as applicable, pursuant to Article 9. Pre-Acquisition Costs
which are incurred in connection with a potential Investment which is not
acquired by the Partnership, or an Investment Entity, as the case may be, will
be accumulated and will be deemed to be Capital Contributions in respect of the
next acquired Investment; provided, however, that the Colony Partners shall
retain the right to reallocate such Pre-Acquisition Costs in a reasonable manner
so that such Pre-Acquisition Costs may be more evenly allocated among one or
more subsequent Investments acquired by the Partnership, and/or the Investment
Entities, as the case may be.
(c) In the event an Investment Entity is formed for an Investment, at the
time of such formation all Management Fees, Pre-Acquisition Costs and all
approved third-party out-of-pocket costs and expenses and approved general and
administrative costs incurred to date for such Investment but not previously
allocated to such Investment, and all approved costs incurred in forming such
Investment Entity, will be charged to such Investment Entity in accordance with
the applicable Investment Budget and thereafter an allocable portion of the cost
of providing Investment management services and general and administrative
services to such Investment Entity shall be charged to such Investment Entity in
accordance with the Partnership Budget.
ARTICLE 6
LIMITATION OF LIABILITY
(a) Except as provided by applicable law, this Agreement, in agreements
entered into by the Limited Partners, or in the Investment Entity agreements, no
Limited Partner shall be liable for any debts, liabilities or obligations of the
Partnership and no Limited Partner shall have to make any contributions or
deliver any other property to the Partnership.
(b) No Related Entity of any Partner shall have personal liability for the
obligations of such Partner hereunder, except as provided in a written guaranty
executed by such Related Entity.
ARTICLE 7
GENERAL PARTNER AND MANAGEMENT OF THE PARTNERSHIP
Section 7.1. Power and Authority of the General Partner
(a) Except as expressly provided otherwise in this Agreement, the right to
manage, control and conduct the business and affairs of the Partnership shall be
vested completely and exclusively in Colony General Partner, who shall have all
of the powers of a general partner under the Uniform Act, including all
necessary power to carry out the purposes of the Partnership, pursuant to and in
accordance with the terms of this Agreement, including the express rights of the
KWI Partners under this Agreement. All documents and instruments to be executed
by the Partnership shall be signed by Colony General Partner unless otherwise
approved by it or as otherwise permitted under this Agreement. Except as
expressly provided for in this Agreement, the KWI Partners shall not take part
in the management of the business or affairs of the Partnership or conduct or
control the Partnership business and the KWI Partners may not under any
circumstances sign for or bind the Partnership. Colony General Partner shall
have the exclusive authority to act for and on behalf of the Partnership, and no
third party shall ever be required to inquire into the authority of Colony
General Partner to take such action on behalf of the Partnership. Without
limiting the generality of the foregoing, Colony General Partner shall be
authorized to cause the Partnership to take any and all actions it determines
necessary in furtherance of the provisions of Section 2.2 hereof.
(b) Notwithstanding the foregoing, and in addition to the limitations set
forth elsewhere in this Agreement, no General Partner may, without the consent
of each other Partner:
(i)do any act in contravention of this Agreement or any applicable law
or regulation (except Colony General Partner may rely on advice of counsel
with respect to whether any action violates applicable law or regulation);
(ii)do any act which would make it impossible to carry on the ordinary
business of the Partnership (other than in connection with the exercise of
their rights pursuant to Section 10.6 or Articles 11 or 17 hereof);
(iii)possess Partnership Assets other than in the name of the
Partnership or Investment Entities; or
(iv)commingle the funds of the Partnership with those of any other
person or entity.
(c) Except as expressly provided otherwise in this Agreement, no Limited
Partner in its capacity as such shall participate in making the decisions of the
Partnership, and in no event shall any Limited Partner in such capacity have the
power to manage or transact any Partnership business or act for or in the name
of, or otherwise bind, the Partnership.
(d) In connection with any actions under this Agreement requiring the
consent of the Limited Partners, the KWI Partners will act in a unified fashion,
and the Colony Partners will be entitled to rely upon the decision of KWI
Limited Partner as being the binding joint decision of each of the KWI Partners.
Section 7.2. Management of the Partnership Assets
(a) KWJ Management shall be responsible for the day-to-day management of
the Investments pursuant to, and in accordance with this Agreement and the
approved Operating Plan and Partnership Budget and the applicable Investment
Budgets, Investment Plans and Management Agreements. In connection therewith,
KWJ Management shall carry out the decisions of the General Partner made in
accordance with this Agreement.
(b) KWI Limited Partner shall cause KWJ Management to exercise its
management functions under the Management Agreements in such manner as it
believes in good faith to be in the best interests of the Partnership and each
Investment Entity, as applicable, and shall cause KWJ Management to, subject to
the terms of this Agreement, the Management Agreements and in accordance with
the approved Operating Plan and Partnership Budget, Investment Budgets and
Investment Plans, at all times, on behalf of, in the name of and at the expense
of the Partnership and each Investment Entity, as applicable (provided
Partnership funds or Investment Entity funds, as applicable, for such purposes
are available, it being the understanding of the Partners that the KWI Partners
are not required to contribute or lend to the Partnership or any Investment
Entity any funds other than pursuant to the terms of this Agreement or as they
otherwise may agree in writing):
(i)Use all reasonable efforts under the circumstances to protect the
interests of the Partnership and each Investment Entity, as applicable, in
the Investments and the related Partnership Assets.
(ii)Use all reasonable efforts under the circumstances to source and
investigate the Investments and function as the management, leasing and
sales agent thereof.
(iii)Comply with the Operating Plan and Partnership Budget for the
Partnership and the Investment Budgets and Investment Plans as are then in
effect (without the requirement of expending its own funds, unless
otherwise agreed in writing).
(c) In furtherance of the provisions of Section 7.1(a), Colony General
Partner shall, subject to the provisions of this Agreement and after Reasonable
Consultation with KWI Limited Partner, make all major decisions on behalf of the
Partnership, including, but not limited to:
(i) All decisions regarding acquisitions, financings and refinancings
of each Investment;
(ii) All capital expenditures plans, leasing and other decisions
relating to the Partnership or any Investment Entity;
(iii) All decisions regarding the sale or other transfer of the
Partnership Assets or any portion thereof (including without limitation the
sale of any Investment in accordance with the applicable Investment Plan)
at any time during the term of the Partnership;
(iv) All decisions regarding the sale, merger, financing,
recapitalization or business combination of the Partnership or any
Investment Entity;
(v) The approval of the annual Partnership Budget and Operating Plan
and each Investment Budget and Investment Plan;
(vi) All decisions regarding distributions to the Partners of Cash
Available for Distribution;
(vii) The making of any expenditure or the incurring of any obligation
that exceeds any expenditure line item in the approved Partnership Budget
or any Investment Budget by more than five percent (5%);
(viii) All decisions regarding the hiring and/or termination of
employees, consultants, accountants, auditors, custodians, investment
advisers, attorneys and any and all other agents and assistants, both
professional and nonprofessional, for the Partnership or any Investment
Entity, and all decisions regarding compensation thereof, provided that, so
long as the KWI Partners and KWJ Management are not in default under this
Agreement or the applicable Management Agreement, the applicable Management
Agreement has not otherwise been terminated in accordance with its terms
and KWJ Management has not terminated the applicable Management Agreement
pursuant to Section 19.1, Colony General Partner shall not hire, or cause
the Partnership, the applicable Investment Entity or Entities or the
applicable Investment(s) to hire, any Person other than KWJ Management to
manage the applicable Investment(s), or terminate, or cause the
Partnership, the applicable Investment Entity or Entities or Investment(s)
to terminate, the applicable Management Agreement(s) with KWJ Management
other than as provided for hereunder and/or in the applicable Management
Agreement(s);
(ix) The institution of any legal proceedings in the name of the
Partnership or any Investment Entity, settlement of any legal proceedings
against the Partnership or any Investment Entity and confession of any
judgment against the Partnership, any Partnership Assets, any Investment
Entity or any Investment Entity Assets; and
(x) The filing of any voluntary petition in bankruptcy on behalf of
the Partnership or any Investment Entity, the consenting to the filing of
any involuntary petition in bankruptcy against the Partnership or any
Investment Entity, the filing of any petition seeking, or the consenting
to, reorganization or relief under any applicable federal or state law
relating to bankruptcy or insolvency, the consenting to the appointment of
a receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of the Partnership or a substantial part of the Partnership
Assets or of any Investment Entity or a substantial part of any Investment
Entity Assets, the making of any assignment for the benefit of creditors,
the admission in writing of the Partnership's or any Investment Entity's
inability to pay its debts generally as they become due or the taking of
any action by the Partnership or any Investment Entity in furtherance of
any such action.
Section 7.3. Investment Entities.
(a) Colony General Partner shall be authorized to cause the formation of
one or more Investment Entities to acquire or own some or all of the Investments
under Section 7.5(c). In determining budgets, the need for additional funds,
business plans and other similar matters and in making any other decisions
hereunder, the needs of the Investment Entities shall be taken into
consideration as if they were direct needs of the Partnership. It is further
intended that Capital Contributions to the Partnership shall be further
contributed or loaned to the Investment Entities as necessary or appropriate to
meet the needs of the Investment Entities in accordance with this Agreement.
Each Investment Entity shall be formed upon generally the same terms and
conditions as are contained herein, and otherwise so as to preserve to the
Colony Partners on the one hand, and the KWI Partners on the other, the overall
economic benefits and risks provided in this Agreement, including, without
limitation, Article 9 hereof, with respect to all Investments undertaken by the
Partnership and/or the Investment Entities, as applicable, while reasonably
seeking to achieve the most efficient tax structure with respect to each
Investment, and, if so required by the Colony Partners, to permit the Investment
Entities or Investments, as applicable, to constitute qualifying investments for
a "venture capital operating company" under the "Plan Assets Regulations" (as
defined in Section 19.1). The Partnership in exercising its rights in respect of
the Investment Entities shall act in accordance with, or consistent with, the
applicable terms of this Agreement. In connection with the formation of any
Investment Entity or the making of any Investment, Colony General Partner shall
Consult Reasonably with KWI Limited Partner and with experienced international
tax and ERISA counsel regarding the international tax and ERISA objectives in
connection with the organization, financing, operation and disposition of the
Investment Entity and/or Investment and the manner in which such objectives may
be achieved and Colony General Partner shall prepare a tax and ERISA plan
reflecting such consultations (the "Tax and ERISA Plan"), which shall contain
measures intended (in light of the structure and intended operations of the
relevant Investment) (i) to minimize inclusions of income under Sections 951 and
956 of the Code and (ii) to avoid the imposition of tax under Sections 882 or
884 of the Code (other than as a result of the receipt by the Partnership or an
Investment Entity of fee income otherwise permitted under this Agreement).
Colony General Partner and KWJ Management shall use their respective reasonable
best efforts to comply with the Tax and ERISA Plan, provided that Colony General
Partner shall have no obligation to comply with the Tax and ERISA Plan for an
Investment in which KWI Limited Partner and KWI Special Limited Partner do not
participate pursuant to Section 7.3(b).
(b) Notwithstanding anything to the contrary contained in Section 7.3(a),
KWI Limited Partner shall have the right, on behalf of itself and KWI Special
Limited Partner, to elect not to participate in a particular Investment if KWI
Limited Partner concludes, in its reasonable judgment, that the structure of the
Investment and/or the applicable Investment Entity, or any aspect of such
structure, will be adverse to either or both the KWI Partners or KWJ Management.
In the event KWI Limited Partner makes such an election, the Colony Partners
shall have the sole and exclusive right to cause any of its Related Entities to
invest in such investment and the KWI Partners shall have no rights in respect
of such investment or the applicable investment entity, if any.
Section 7.4. Operating Plan and Partnership Budget
A copy of the initial Operating Plan and the initial Partnership Budget are
attached hereto as Exhibits C-1 and C-2, respectively. KWI Limited Partner
shall, not less than sixty (60) days prior to the commencement of each Fiscal
Year, commencing with the Fiscal Year commencing January 1, 1999, cause KWJ
Management to prepare and present to Colony General Partner for its approval a
revised Operating Plan (if there are any amendments to the then-current
Operating Plan) and a revised Partnership Budget (if there are any amendments to
the then-current Partnership Budget) for such Fiscal Year. Not less than thirty
(30) days prior to the commencement of each Fiscal Year, the Colony General
Partner shall determine whether it approves the revised Operating Plan (if any)
and the revised Partnership Budget (if any) for such Fiscal Year. If Colony
General Partner does not approve the revised Operating Plan, then either, as
determined by Colony General Partner in its sole and absolute discretion and
after Reasonable Consultation with KWI Limited Partner, the current Operating
Plan or an Operating Plan provided by Colony General Partner shall be placed in
effect. If Colony General Partner does not approve the revised Partnership
Budget, then (i) with respect to any disputed line items, the amount set forth
in the Partnership Budget for the previous Fiscal Year shall be controlling
until Colony General Partner provides, after Reasonable Consultation with KWI
Limited Partner, a revised Budget, in its sole and absolute discretion, for such
disputed line items, and (ii) with respect to any line items which are not in
dispute, the undisputed amount shall be controlling. Colony General Partner and
KWI Limited Partner will review the then approved Budget on a quarterly basis to
determine whether the Partnership is operating within such Budget. Amendments to
the then approved Operating Plan and Partnership Budget may be made only upon
the approval of Colony General Partner after Reasonable Consultation with KWI
Limited Partner.
Section 7.5. Services of Related Entities of the KWI Partners to the
Partnership; Services of Related Entities of the KWI Partners to the Investment
Entities
(a) The KWI Partners will cause KWJ Management to use its reasonable best
efforts to source potential Investments satisfying the general criteria set
forth in the Operating Plan, and to present such potential Investments to Colony
General Partner for its approval. Such presentation shall include all
information as may be necessary, including without limitation a preliminary
Investment Budget and preliminary Investment Plan, for Colony General Partner to
determine whether the Partnership should acquire such Investment, which
determination shall be made by Colony General Partner in its sole and absolute
discretion.
(b) Colony General Partner shall review the preliminary Investment Budget
and Investment Plan as prepared and submitted by KWJ Management, and such other
information, reports, studies and data as Colony General Partner may deem
necessary or desirable. [*] The Colony Partners and KWI Limited Partner will
be reimbursed for such approved Pre-Acquisition Costs in accordance with
Section 5.8. Notwithstanding that KWI Limited Partner and/or the Colony Partners
may have funded Pre-Acquisition Costs with respect to a prospective Investment,
Colony General Partner has the right, at any time prior to the actual investment
by the Partnership in the Investment, to determine, in its sole and absolute
discretion, that such prospective Investment should not be acquired or invested
in by the Partnership or an Investment Entity, as the case may be. In the event
Colony General Partner determines that the Partnership should acquire such
prospective Investment, Colony General Partner shall then determine, subject
always to Section 7.3(b) hereof, the capital structure and the other terms of
the Investment, including, without limitation, the amount that the Partnership
should invest in such Investment, and shall have the right to approve or
disapprove the Investment Budget and/or Investment Plan prepared by KWJ
Management. [*]
(c) If Colony General Partner elects to invest in a proposed Investment as
provided in Section 7.5(a) above, the Partnership shall either acquire the
Investment itself or shall create an Investment Entity to acquire the
Investment. In the event an Investment Entity is formed, the Partnership will
assign any contracts for the acquisition of the respective Investment to such
Investment Entity. To the extent KWI Limited Partner, KWJ Management or any of
their respective Related Entities receives, or is entitled to receive, any
commissions and/or other fees whatsoever in connection with the acquisition of
such Investment, KWI Limited Partner will pay, or assign the right to receive,
as the case may be, or will cause KWJ Management or such Related Entity, as the
case may be, to pay, or assign the right to receive, as the case may be, such
commissions and/or other fees to the Partnership or the applicable Investment
Entity, as the case may be. The Partnership, or the Investment Entity, as the
case may be, will enter into a Management Agreement with KWJ Management for the
provision of day-to-day management services, including, without limitation,
management, leasing and sales agent services, for such Investment in accordance
with the applicable Management Agreement and the applicable Investment Budget
and Investment Plan.
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Section 7.7. Related Entities
In addition to any rights Colony General Partner has pursuant to Section
10.6 hereof, Colony General Partner shall have the right to cause the
Partnership and any Investment Entity to enter into contracts, amend or modify
such contracts, or otherwise deal with any Related Entities of any Partner in
any capacity, including, without limitation, in connection with the business and
operations of the Partnership or such Investment Entity, as applicable, except
that the terms of any such arrangement shall be commercially reasonable and
competitive with amounts that would be paid to third parties on an "arms-length"
basis and any payments to be made to such Related Entity shall be set forth in
the approved applicable Operating Plan or then applicable Partnership Budget.
Section 7.8. Compensation to the Partners
(a) No fees shall be payable to any Partner or any Related Entity of a
Partner for performance of services to or on behalf of the Partnership, except
as may be set forth in or approved pursuant to this Agreement and the Management
Agreements (including fees paid pursuant to any transaction or agreement
permitted by Section 7.7 hereof).
(b) The Partnership shall reimburse each Partner and its Related Entities
on a current basis for its out-of-pocket expenditures made on behalf of the
Partnership in accordance with the approved applicable Operating Plan and then
applicable Partnership Budget upon submission to the Partnership of reasonably
detailed evidence of such expenditures. All reimbursements for out-of-pocket
expenditures shall be in the advancement of Partnership purposes, which purposes
are, to the maximum extent possible, not duplicative of other parties' or
persons' efforts or in furtherance of interests or concerns particular to one or
more individual Partners rather than the Partnership as a whole. Any
out-of-pocket expenditure made by a Partner or its Related Entity and eligible
for reimbursement pursuant to this Section 7.8(b) shall not be treated as a
Capital Contribution or otherwise result in a credit to such Partner's Capital
Account and any reimbursement of such expenditure shall not be treated as a
Partnership distribution to such Partner or otherwise result in a debit to such
Partner's Capital Account.
Section 7.9. Exculpation and Indemnification
(a) Neither (i) the General Partner, (ii) any Related Entity of such
General Partner, nor (iii) any director, officer, manager, partner, shareholder,
employee or agent of a General Partner or such Related Entity, acting on behalf
of the Partnership or any Investment Entity in connection with any business or
activity of the Partnership or any Investment Entity shall be liable to the
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Partnership or such Investment Entity or to any Partner for any loss arising out
of or in connection with the management, operation or conduct of the
Partnership's or such Investment Entity's business and affairs, except by reason
of willful misconduct, fraud or gross negligence, a material breach of this
Agreement or any other agreements contemplated hereunder or the payment to or
receipt of benefits in violation of this Agreement or any other agreements
contemplated hereunder; provided that the foregoing shall not apply to any
Related Entity's actions in connection with providing services to the
Partnership or to such Investment Entity pursuant to the Management Agreements
or any other agreements between such Related Entity and the Partnership, which
include indemnification provisions, the indemnification for which shall be as
provided in the Management Agreements or such other agreements between such
Related Entity and the Partnership. Subject to the provisions of the immediately
preceding sentence, the Partnership and/or such Investment Entity, as the case
may be, shall indemnify and hold harmless each General Partner, any Related
Entity of them and their respective officers, managers, directors, shareholders,
agents, employees, successors, heirs and personal representatives (each, an
"indemnified person") from and against any and all claims, costs, losses,
damages, expenses (including, without limitation, the expense of defending,
investigating or preparing to defend any claim) or liabilities (including, but
not limited to, reasonable attorneys' fees) suffered or sustained by them by
reason of any acts performed or omitted to be performed by the General Partner
or its agents, employees or independent contractors or on behalf of the
Partnership or such Investment Entity or in furtherance of the interest of the
Partnership or such Investment Entity, provided that the indemnified person's
actions (or failure to act) in respect of the matter on which the claim is based
did not constitute willful misconduct, fraud, or gross negligence, a material
breach of this Agreement or any other agreements contemplated hereunder or the
payment to or receipt of benefits in violation of this Agreement or any other
agreements contemplated hereunder. The obligation of the Partnership and/or such
Investment Entity, as the case may be, to provide such indemnification shall be
satisfied solely from the assets of the Partnership and/or such Investment
Entity, as the case may be, and the Partnership Interests of the Partners. In
the event that any indemnified person becomes involved in any capacity in any
suit, action, proceeding or investigation in connection with any matter arising
out of or in connection with the Partnership's or such Investment Entity's
operations or affairs, the Partnership or such Investment Entity, as the case
may be, will periodically reimburse such indemnified person for its reasonable
legal and other expenses (including the cost of any investigation and
preparation) incurred in connection therewith.
(b) Each General Partner shall indemnify and hold harmless the Partnership
from and against any and all claims, costs, losses, damages, expenses
(including, without limitation, the expense of defending, investigating or
preparing to defend any claim) or liabilities (including, but not limited to,
reasonable attorneys' fees) suffered or sustained by it by reason of any willful
misconduct, fraud, or gross negligence by, or a material breach of this
Agreement or any other agreements contemplated hereunder caused by, or the
payment to or receipt of benefits in violation of this Agreement or any other
agreements contemplated hereunder by, such General Partner.
(c) No claim, action or proceeding, or any appeal therefrom which is
subject to the provisions of this Section 7.9 shall be settled on behalf of the
indemnifying party without the consent of the indemnified person affected
thereby, unless the settlement of such claim, action or proceeding requires
solely the payment of money, but if the indemnifying party is also a defendant
in any such claim, action, proceeding or appeal, the indemnifying party may
enter into any settlement for itself without the consent of any other defendant.
(d) No (i) Limited Partner, (ii) Related Entity of any Limited Partner, or
(iii) director, officer, manager, partner, shareholder, employee or agent of any
Limited Partner or any such Related Entity, acting in their capacity as or on
behalf of any such Limited Partner, shall be liable to the Partnership or to any
Partner for any loss arising out of or in connection with the actions of such
Limited Partner or such other party as or on behalf of such Limited Partner in
the Partnership, except by reason of any individual's own willful misconduct,
fraud or gross negligence, a material breach of this Agreement or any other
agreements contemplated hereunder or the payment to or receipt of benefits in
violation of this Agreement or any other agreements contemplated hereunder.
ARTICLE 8
ALLOCATIONS OF PROFITS AND LOSSES
Section 8.1. Profits and Losses
After giving effect to the mandatory allocations set forth in Section 8.2,
Profits or Losses for any Fiscal Year or other applicable period realized from
an Investment shall be allocated among the Partners pro rata in accordance with
their Percentage Interests in such Investment (the "Preliminary Allocations"),
except that if the KWI Partners receive a distribution of Promote Distributions
with respect to such Investment, then Profits in an amount equal to such Promote
Distributions shall be reallocated from the Colony Partners to the KWI Partners,
and if there are insufficient Profits, the balance shall be carried forward and
subject to allocation in the next succeeding Fiscal Year.
Section 8.2. Mandatory Allocations
(a) The following mandatory allocations shall be made in the following
order:
(i) Minimum Gain Chargeback. Notwithstanding any other provision of
this Article 8, if there is a net decrease in Partnership Minimum Gain
during any Fiscal Year or other applicable period, then, subject to the
exceptions set forth in Regulations Section 1.704-2(f)(2), (3), (4) and
(5), each Partner shall be specially allocated items of Partnership income
and gain for such Fiscal Year (and, if necessary, subsequent Fiscal Years)
in an amount equal to such Partner's share of the net decrease in
Partnership Minimum Gain, as determined in accordance with Regulations
Section 1.704-2(g). Allocations pursuant to the previous sentence shall be
determined in accordance with Regulations Section 1.704-2(f). This Section
8.2(a)(i) is intended to comply with the minimum gain chargeback
requirement in Regulations Section 1.704-2(f) and the safe-harbor for such
chargebacks and offsets contained in Regulations Section
1.514(c)-2(e)(1)(ii) and shall be interpreted consistently therewith.
(ii) Partner Minimum Gain Chargeback. Notwithstanding any other
provision of this Article 8 except Section 8.2(a)(i), if there is a net
decrease in Partner Minimum Gain attributable to a Partner Nonrecourse Debt
during any Fiscal Year or other applicable period, then, subject to the
exceptions set forth in Regulations Section 1.704-2(i)(4), each Partner 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 Fiscal Year (and, if necessary, subsequent Fiscal Years) in
an amount equal to such Partner'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 Partner pursuant thereto. The items to be
so allocated shall be determined in accordance with Regulations Section
1.704-2(i)(4). This Section 8.2(a)(ii) is intended to comply with the
minimum gain chargeback requirement in Regulations Section 1.704-2(i)(4)
and the safe-harbor for such chargebacks and offsets contained in
Regulations Section 1.514(c)-2(e)(1)(iii) and shall be interpreted
consistently therewith.
(b) Qualified Income Offset. Notwithstanding any provision of this Article
8, except Section 8.2(a), in the event any Partner receives any adjustments,
allocations, or distributions described in Regulations
Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), that cause or increase an Adjusted
Capital Account Deficit of such Partner, items of Partnership income and gain
shall be specially allocated to such Partner in an amount and manner sufficient
to eliminate, to the extent required by the Regulations, the Adjusted Capital
Account Deficit of such Partner as quickly as possible. This Section 8.2(b) is
intended to comply with the qualified income offset provision of Regulations
Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
(c) No Excess Deficit. Although not considered as likely to occur based
upon all of the information now available to the Partners, to the extent that
any Partner has or would have, as a result of an allocation of Loss (or item
thereof), an Adjusted Capital Account Deficit, such amount of Loss (or item
thereof) shall be allocated to the other Partners in accordance with Section
8.1, but in a manner which will not produce an Adjusted Capital Account Deficit
as to such Partner. To the extent such allocation would result in all Partners
having Adjusted Capital Account Deficits, such Loss shall be allocated equally
to the General Partners.
(d) Nonrecourse Deductions. Nonrecourse Deductions for any Fiscal Year or
other applicable period shall be allocated to the Partners pro rata in
accordance with their relative Residual Percentages as of the end of the Fiscal
Year.
(e) Partner Nonrecourse Deductions. Any Partner Nonrecourse Deductions for
any Fiscal Year or other applicable period shall be specially allocated to the
Partner 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)(1).
(f) Code Section 754 Adjustments. To the extent 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), to be taken into account in determining Capital
Accounts, the amount of such adjustment to the Capital Accounts shall be treated
as an item of gain (if the adjustment increases the basis of the asset) or loss
(if the adjustment decreases such basis) and such gain or loss shall be
specially allocated to the Partners in a manner consistent with the manner in
which their Capital Accounts are required to be adjusted pursuant to such
section of the Regulations.
(g) Curative Allocations. Any mandatory allocations of items of income,
gain, loss or deduction pursuant to Sections 8.2(a), (b), (c) and (e) above
shall be taken into account for the purpose of equitably adjusting subsequent
allocations of income, gain, loss or deduction so that the net allocations, in
the aggregate, allocated to each Partner pursuant to this Article 8, and the
Capital Accounts of each Partner, shall as quickly as possible and to the extent
possible, be the same as if no mandatory allocations had been made.
(h) Code Section 514(c) (9) (B) (vi) Limitation. Notwithstanding the
foregoing, if any mandatory allocation otherwise required pursuant to this
Section 8.2 would cause the Partnership's allocations to violate Code Section
514(c)(9)(B)(vi) (taking into account its incorporation by reference of the
"substantial economic effect" requirement of Code Section 704(b)(2)) and the
applicable Regulations, then such mandatory allocation or deduction shall not be
made, provided that in complying with the foregoing, it is the intent of the
Partners that allocations of Profits and Losses comply with the requirements of
Code Section 514(c)(9)(E) and the Regulations issued thereunder to the extent
the cumulative results of such allocations permit the Capital Accounts of the
Partners to be in proportion to distributions that would occur if liquidating
distributions were made in accordance with Article 9 of this Agreement.
Section 8.3. Other Allocation Rules
(a) For purposes of determining the Profits, Losses, or any other items
allocable to any period, Profits, Losses, and any such other items shall be
determined on a daily, monthly, or other basis, as determined by Colony General
Partner using any permissible method under Code Section 706 and the Regulations
thereunder.
(b) The Partners are aware of the income tax consequences of the
allocations made by this Article 8 and hereby agree to be bound by the
provisions thereof in reporting their shares of Partnership income and loss for
income tax purposes.
Section 8.4. Tax Allocations
(a) Except as otherwise provided for in this Section 8.4, for Federal
income tax purposes, each item of income, gain, loss and deduction shall be
allocated among the Partners so as to take account of any variation between the
adjusted basis of such property to the Partnership for Federal income tax
purposes and its initial Gross Asset Value (computed in accordance with the
definition of Gross Asset Value).
(b) In the event the Gross Asset Value of any Partnership Asset is adjusted
as described in the definition of Gross Asset Value, subsequent allocations of
income, gain, loss and deduction with respect to such Partnership Asset shall
take into account any variation between the adjusted basis of such Partnership
Asset for Federal income tax purposes and its Gross Asset Value in the same
manner as under Code Section 704(c) and the Regulations thereunder using a
method selected by Colony General Partner which complies with Code
Section 514(c)(9) and the Regulations thereunder.
Any elections or other decisions relating to such allocations shall be made
by Colony General Partner in a manner that reasonably reflects the purpose and
intention of this Agreement. Allocations pursuant to this Section 8.4 are solely
for purposes of Federal, state, and local taxes and shall not affect, or in any
way be taken into account in computing, any Partner's Capital Account or share
of Profits, Losses, other items, or distributions pursuant to any provision of
this Agreement.
ARTICLE 9
DISTRIBUTIONS OF CASH
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Section 9.2. Partner Default Loans; Unreturned Capital Contributions
In the event that any Partner Default Loan made by a Partner to the
Partnership hereunder, or any portion thereof, is outstanding, no amounts shall
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be distributable to any other Partner pursuant to Section 9.1 until all interest
and principal on the outstanding Partner Default Loan, or such outstanding
portion, have been repaid in full. Further, to the extent any Partner has
Unreturned Capital Contributions, or to the extent a Partner has made a Partner
Default Loan to the Partnership, or the applicable Investment Entity, as the
case may be, Colony General Partner shall have the right to cause the
Partnership to obtain additional financing or refinance an existing Investment
Loan; provided, however, that such additional financing may be obtained by the
Partnership upon Colony General Partner's request without the approval of any
other Partner. The proceeds of such additional financing will be used to pay off
the remaining principal balance, and any interest accrued thereon, of any
Partner Default Loan made by a Partner to the Partnership hereunder and to
reimburse the Partners for any Unreturned Capital Contributions, with any
remainder being used for Partnership purposes or distributed to the Partners, as
determined by Colony General Partner subject to Section 9.4.
Section 9.3. Pooled Investments
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Section 9.4. Partners' Tax Liability
Notwithstanding anything to the contrary contained herein, the Partnership
shall make distributions to the Partners on a quarterly basis in an amount at
least equal to each Partners' respective Tax Liability for the applicable
quarter from the Cash Available for Distribution, if any; provided, however,
that if the total amount available for distribution from Cash Available for
Distribution, if any, is less than the aggregate amount of such Tax Liabilities,
then such distribution will be made pro rata based on the respective amount of
each Partner's Tax Liability. Such distributions shall be made not later than
five (5) days prior to the date on which estimated tax payments are required to
be made by the Partners for the applicable quarter. In the event Colony General
Partner elects to make distributions pursuant to Section 9.1, the amount of any
Tax Liability distributions made pursuant to this Section 9.4 shall be reduced
by the amount of the distributions made during such Fiscal Year pursuant to
Section 9.1. Any Tax Liability distributions made pursuant to this Section 9.4
shall be applied toward the amount of the distributions required to be made to
the Partners pursuant to Section 9.1.
ARTICLE 10
TRANSFER OF PARTNER INTERESTS
Section 10.1. Prohibited Transfers
(a) Except in accordance with, and as permitted by, Section 10.2, a Partner
may not, directly or indirectly, sell, assign, transfer, pledge, hypothecate,
collaterally assign, or otherwise dispose of (collectively, "Transfer") all or
any part of its Partnership Interest, whether voluntarily or by foreclosure,
assignment in lieu thereof or other enforcement of a pledge, hypothecation or
collateral assignment, without the prior written consent of the General Partner,
which the General Partner may withhold in its sole and absolute discretion.
(b) For purposes of this Agreement, any direct or indirect sale,
assignment, transfer, pledge, hypothecation, collateral assignment, or other
disposition of the capital stock or other equity interest in any Partner shall
constitute a Transfer unless (i) the capital stock or other equity interest so
sold, assigned, transferred, pledged, hypothecated, collaterally assigned or
otherwise disposed of consists only of a class of stock then publicly traded, or
(ii) after giving effect to such sale, assignment, transfer, pledge,
hypothecation, collateral assignment or other disposition, there has been no
change in Control of such Partner, or (iii) such direct or indirect sale,
assignment, transfer, pledge, hypothecation, collateral assignment or other
disposition (1) relates solely to the limited partnership interests in Colony
Investors II, L.P. or Colony Investors III, L.P., or the transfer of the assets
of Colony Investors II, L.P. or Colony Investors III, L.P. to its or their
respective partners or (2) relates solely to the direct or indirect Transfer of
the Partnership Interests held by the Colony Partners to an investment fund
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managed by substantially the same principals who manage Colony Investors II,
L.P. or Colony Investors III, L.P., or (3) was made in a manner which would
otherwise be permitted under Section 10.2 below, or (4) was designated by will,
intestacy or other disposition in the nature of a testamentary disposition.
Section 10.2. Permitted Transfers by All Partners
(a) Subject to the other provisions of this Article 10, a Partner may,
without the consent of the other Partners, Transfer its Partnership Interest or
any portion thereof (i) to a Related Entity (provided that the majority of the
ownership interests in such Related Entity are held by the same persons who hold
the majority of the ownership interests in the Transferring Partner), (ii) as a
pledge of its Partnership Interest to the maker of the Investment Loan, (iii) in
accordance with the Pooling Agreement or any pledge agreement entered into
pursuant to the terms of this Agreement, (iv) with respect to the Colony
Partners, to The Chase Manhattan Bank, N.A., as administrative agent, to Bankers
Trust Company, as documentation agent, and to Chase Securities and BT Xxxx Xxxxx
Incorporated, as arrangers, pursuant to the revolving credit agreement among
them or to any successor lender in connection with a replacement revolving
credit agreement or similar financing and (v) with respect to either KWI
Partner, in the form of a pledge to any bank, financial institution or similar
Person for the purpose of securing any debt, loan, credit, credit facility,
financing, guarantee or similar arrangement.
(b) Notwithstanding any other provision of this Article 10, in the event of
the death, permanent incapacity, bankruptcy or dissolution of any Limited
Partner, the legal representatives or successors of such Limited Partner shall
succeed to such Limited Partner's Partnership Interest and be admitted as a
substitute Limited Partner. Any admission of additional Limited Partners in
accordance with the provisions of Article 10 of this Agreement shall be
reflected in an amendment to Schedule 1.
Section 10.3. Effective Date of Transfers
For financial and tax reporting purposes, every voluntary Transfer (as
distinguished from the original issuance) of any Partnership Interest or portion
thereof shall be deemed to have occurred as of the close of business on the day
on which such Transfer shall have in fact occurred and shall have no effect
prior to the close of business on such day, and every involuntary Transfer
(whether by bequest, operation of law or any other method) of any Partnership
Interest shall be deemed to have occurred as of the close of business on the day
on which the Partnership shall have received evidence of such Transfer and shall
have no effect prior to the close of business on such day.
Section 10.4. Conditions Applicable to Transfers
1. Compliance with Laws, etc.
(a) Notwithstanding anything to the contrary contained in this Agreement,
any Transfer of any Partner's interest permitted by this Section 10 shall be
made in full compliance with (i) all applicable statutes, laws, ordinances,
rules and regulations (x) of all United States, Japanese and other Federal,
state and local governmental bodies, agencies and subdivisions having
jurisdiction over the Partnership and the Partnership Assets, and (y) of the
jurisdiction in which any Investment Entity, or any Person organized by any
Partner for the purpose of investing in any Investment, is organized, and (ii)
the terms and conditions of the Investment Loans and each other contract or
agreement affecting the Partnership and the Partnership Assets which such
Partner consented to (the General Partner agrees to notify the Limited Partners,
prior to the execution thereof, of any terms and conditions thereof which would
be applicable), so that the operation of the Partnership can continue without
interruption and without violation of any applicable law, or if any approval or
consent is required in connection with any such Transfer, the "Responsible
Partner" (hereinafter defined) shall promptly make such filing or application or
obtain such approval or consent at its sole expense, and shall reimburse the
Partnership for any costs or expenses (including attorneys' fees) incurred by
the Partnership in connection with any filing, application, approval or consent.
The "Responsible Partner" shall be the Partner transferring its interest in
the Partnership; provided, however, that should the transferring Partner fail or
refuse to perform hereunder, the General Partner, at the cost and expense of the
transferring Partner, shall act as "Responsible Partner" hereunder.
(b) Notwithstanding anything to the contrary contained in this Agreement,
each Partner and each transferee of all or any part of its Partnership Interest
shall at all times maintain an office or agent for the service of process in the
State of New York.
(c) Notwithstanding any provision hereof to the contrary, unless otherwise
approved by the General Partner:
(i) no Transfer of a Partnership Interest may be made to an entity
exempt from Federal income tax under Code Section 501(a); and
(ii) no Transfer of a Partnership Interest shall be permitted if it
would impose fiduciary responsibility on any Partner or Related Entity
under ERISA.
Neither a Partner's request for such consent to a proposed Transfer nor the
giving of such consent shall obviate the necessity of complying with the other
provisions contained in this Article 10.
(d) As a condition to any Transfer by a Partner permitted by this Article
10, the transferring Partner, at its expense, shall obtain all consents that may
be required from third parties (including lenders and mortgagees), if any, or
waivers thereof. At no expense to the other Partners, the other Partners shall
cooperate with the transferring Partner in obtaining all such consents or
waivers if they have consented to the Transfer or if their consent is not
required.
(e) Notwithstanding any provision hereof to the contrary, no Transfer shall
be made pursuant to this Article 10 to any Foreign Person unless and until the
transferee agrees in writing in advance of the Transfer that (i) the transferee
and the Partnership shall comply with all applicable Federal, state and local
laws pertaining to the acquisition, ownership or disposition of United States
real property (or of directly or indirectly held interests therein) by any
Foreign Person and with all Federal, state and local laws of similar import
pertaining to Foreign Persons; (ii) the Partnership may comply with any and all
income and other withholding obligations that may be imposed on the Partnership
without regard to other provisions of this Agreement that may otherwise govern
the transferee's rights to its share of Partnership income and loss and to
receive distributions from the Partnership; and (iii) the transferee shall
indemnify and hold the Partnership and the non-transferring Partners harmless
from and against any and all expense or liability that is or may be imposed on
the Partnership or the non-transferring Partners attributable to or arising out
of such Transfer because of such status of the transferee. Any agreement of a
transferee Partner required by this Section 10.4.1(e) shall be in such form and
shall contain such additional provisions as the General Partner in the exercise
of its reasonable discretion shall request as a condition precedent to such
Transfer.
2. Instruments of Transfer
Notwithstanding anything to the contrary contained in this Agreement, no
change in ownership of the Partnership Interest of any Partner shall be binding
upon the other Partners or the Partnership unless and until (i) true copies of
the instruments of transfer executed and delivered pursuant to or in connection
with such Transfer shall have been delivered to the General Partner, (ii) the
transferee shall have delivered to the General Partner an executed and
acknowledged assumption agreement, in form and substance reasonably satisfactory
to counsel to the Partnership, pursuant to which the transferee assumes from and
after the date of the Transfer all the obligations of the transferor hereunder
thereafter accruing, makes all representations, warranties and covenants as were
made pursuant to Article 15 by the transferor, and agrees to be bound by all the
provisions of this Agreement, (iii) the transferee shall have executed,
acknowledged and delivered any instruments required under the Uniform Act or the
laws of any State in which the Partnership is authorized to do business to
effect such Transfer and its admission to the Partnership, and (iv) the
Partnership shall have received an opinion of counsel as provided in Section
10.4.3 if the Transfer is to any person or entity that is not at the time a
Partner or a Related Entity. Upon compliance with the foregoing, the transferor
shall have no further obligation hereunder thereafter accruing except that the
transferor shall remain primarily liable for all accrued obligations (as of the
date of Transfer) of the transferor under this Agreement notwithstanding any
Transfer pursuant to this Article 10.
3. Opinion of Counsel
(a) If a Transfer is proposed to any person or entity that is not at the
time a Partner or a Related Entity, then, prior to any such Transfer, the
transferor shall give a notice to the Partnership setting forth the material
terms and conditions of such Transfer, the name of the proposed transferee and
the name of its and/or the transferee's counsel (which counsel shall be
reasonably satisfactory to counsel for the Partnership), and the following
provisions shall apply:
(i) Within ten (10) days after receipt of such notice, the General
Partner shall submit to such counsel a copy of each document governing the
terms of any mortgage on any portion of the Partnership Assets or any
Investment Entity's Assets, or other document which the General Partner
believes might be violated by the proposed Transfer. The Partnership shall
cooperate with any reasonable request of such proposed transferee, the
transferor or counsel to either of them, to obtain any third party consent
or approval necessary to the Transfer, provided any cost or expense related
thereto is paid by the transferor or the transferee.
(ii) The General Partner shall furnish to counsel for the transferor,
at the transferor's expense, such documents, information and cooperation as
such counsel may reasonably request in connection with the preparation of
the opinion referred to in clause (iii) below.
(iii) There shall be delivered to the Partnership an opinion of counsel
to the transferor or transferee, reasonably satisfactory in form and
substance to counsel for the Partnership (but which may be limited to the
information disclosed in the documents furnished to such counsel as
hereinabove provided), to the effect that the proposed Transfer shall not:
(A) result in the violation of the Securities Act of 1933, as amended, or
any other applicable Federal or state laws or the order of any court having
jurisdiction over the Partnership or require registration of the
Partnership Interest to be transferred under the Securities Act of 1933, as
amended, as then in force or the taking of any similar action under any
similar Federal or state law then in force; (B) be a breach, violation or
default under, or give rise to an unwaived right to accelerate any
indebtedness of the Partnership, including without limitation any
indebtedness under any Financing; (C) result in or create a prohibited
transaction under ERISA, or cause the Partnership to become a "party in
interest" as defined in Section 3(14) of ERISA, or otherwise result in the
holder of any interest in the Partnership or the Assets of the Partnership
or any Investment Entity being subject to the provisions of such statute;
(D) cause the Partnership to become "publicly traded" for purposes of Code
Section 7704; (E) cause the allocations in this Agreement to cease to be
"qualified allocations" under Code Section 514(c)(9) and the Regulations
thereunder; or (F) cause the Partnership to become an investment company
under the Investment Company Act of 1940, as amended.
(b) The transferring Partner and the transferee shall pay to the
Partnership and the other Partners all reasonable costs incurred by the
Partnership or the other Partners as a result of such Transfer, and shall
indemnify the Partnership and the other Partners (in a manner which is
reasonably satisfactory to the Partnership and the other Partners) for any such
costs which are or may be incurred by them thereafter as a result of such
Transfer.
4. Cooperation. The Partners and the Partnership shall cooperate with any
Partner wishing to satisfy the conditions for a Transfer set forth in this
Article 10 by providing to the transferor and its counsel all information in
their possession or readily obtainable by them reasonably requested by the
transferor.
5. Transferees by Operation of Law. If any party or entity acquires all or
any part of a Partnership Interest in violation of this Article 10 by operation
of law or judicial proceeding, the holder(s) of the affected interest shall have
no right to take action under this Agreement, and the Partner whose interest was
affected shall be subject to the restrictions provided in Section 10.5.
Section 10.5. Transfers Void
Any attempted withdrawal, sale, assignment, pledge, hypothecation,
collateral assignment, transfer, encumbrance, mortgage or other disposition by,
or substitution of a Partner made in violation of this Agreement shall be
automatically void ab initio. Without limiting the foregoing, any direct or
indirect sale, assignment, pledge, hypothecation, collateral assignment,
transfer, encumbrance, mortgage or other disposition of the capital stock or
other equity interest in any Partner in violation of this Agreement shall result
in the Partnership Interest of such Partner (including, without limitation, its
Residual Percentages), being reduced by fifty percent (50%), and the Partnership
Interests of the other Partners being increased pro rata in accordance with
their Residual Percentages in the aggregate by the amount of such reduction,
after such Partner is given written notice of such violation by a General
Partner and has not cured such violation within thirty (30) days (or such longer
period as may be required to cure such violation if such Partner is using its
best efforts to cure such violation) of receipt of such notice.
Section 10.6. Sale Approved by the General Partners
Notwithstanding anything to the contrary contained in this Agreement, the
Partners irrevocably agree that if all or substantially all of the Partnership
Assets are to be transferred pursuant to this Agreement or as the General
Partner otherwise agrees, and the General Partner determines in its reasonable
discretion, after Reasonable Consultation with KWI Limited Partner, to cause the
transaction to be structured as a transfer of Partnership Interests, then each
of the Partners shall take all action determined necessary by the General
Partner to transfer to the purchaser its Partnership Interest free and clear of
all liens and encumbrances, and shall make all representations and deliver all
covenants, undertakings and instruments in connection therewith as the General
Partner, shall reasonably determine for transactions of such type, provided that
no Limited Partner shall be required to make any representations and warranties
or deliver any covenants, undertakings or instruments other than with respect to
itself and its Partnership Interest. In furtherance of the foregoing, pursuant
to Article 18, each Partner irrevocably constitutes and appoints the General
Partner as its attorney-in-fact to execute all instruments necessary to
consummate the foregoing.
Section 10.7. Pledge of Partnership Interests
If required by an institutional lender of an Investment Loan or any other
loans made to the Partnership, the Partners shall pledge their Partnership
Interests as security for such Investment Loan and/or each such other loan.
ARTICLE 11
SALE OF PARTNERSHIP INTERESTS AND/OR
PARTNERSHIP AND/OR INVESTMENT ENTITY ASSETS
[*]
[*] = redacted text
(b) The purchase price for the Offered Assets (or, in the case of the sale
of all or substantially all of the Partnership Assets, the Partnership Interests
of the Offeror) shall equal (x) if the Offeree is purchasing the Offered Assets,
the Offer Price or (y) if the Offeree is purchasing the Partnership Interests of
the Offeror, the amount the Offeror would have been entitled to receive if the
Partnership had sold the Partnership Assets for the Offer Price, and the
Partnership had immediately paid all of its liabilities (including any loans
made by the Partners to the Partnership, but excluding prepayment of any
outstanding Investment Loans only if the Offer Terms contemplate that such
Investment Loans would remain in place after such purchase and the terms of such
Investment Loans would permit them to remain in place), allocated any Profits or
Losses resulting from such sale and distributed the net proceeds pursuant to the
provisions of Article 17 hereof. Any election to purchase the Offered Assets or
the Partnership Interests of the Offeror, as the case may be, shall be made upon
the Offer Terms, and shall be made in writing and accompanied by a good faith
deposit to be held in escrow with an escrow agent selected by the Offeror in an
amount equal to two percent (2%) of the price to be paid by the Offeree pursuant
to this Section 11(b). The deposit will not be treated as a capital contribution
in any respect. Notwithstanding the foregoing, if the Offeree has made Partner
Default Loans to the Partnership which are then outstanding and/or Capital
Contributions which have not been repaid pursuant to Article 9, and the
outstanding aggregate amount of such Partner Default Loans (together with
accrued interest) and Capital Contributions (including the unpaid return
thereon) which have not been repaid, if any, is greater than the deposits
described above, then in lieu of making such deposits, such Offeree may issue a
promissory note to the Offeror in the amount of the deposits, which promissory
note would be secured by their right to receive payments from the Partnership
with respect to such loans and/or distributions from the Partnership with
respect to such Capital Contributions. If the Offeree defaults in its obligation
to purchase the Offered Assets or the Partnership Interests of the Offeror, as
applicable, then the deposit made by the Offeree will be distributed to the
Offeror as a special distribution. If the Offeree (i) does not so elect to
purchase the Offered Assets or such Partnership Interests of the Offeror, as
applicable, within the foregoing period or (ii) defaults in its obligation to
purchase the Offered Assets, or the Partnership Interests of the Offeror, as
applicable, Colony General Partner and KWI Limited Partner shall seek to cause
the Partnership to sell all or substantially all of the Partnership Assets
pursuant to Section 11(f) below.
(c) If the Offeree elects to purchase the Offered Assets or the Partnership
Interests of the Offeror, as applicable, and make the deposits as provided in
clause (b) above, the closing of the purchase of the Offered Assets or such
Partnership Interests, as applicable, shall take place on a date to be agreed
upon by the parties (the "Closing Date"), which Closing Date shall not be more
than the later of (i) one hundred twenty (120) days from the date of the Offer
Notice or (ii) thirty (30) days after the closing date set forth in the Offer
Terms.
(d) On the Closing Date, the Offeror and/or the Partnership shall execute
and deliver to the Offeree assignments of interest, bills of sale, instruments
of conveyance, and other instruments as the Offeree may reasonably require, to
give the Offeree good and clear title to all of the Offeror's right, title and
interest in and to the Partnership, Partnership Interests and the Offered
Assets, as applicable (provided that the Partners shall only be obligated to
make representations and warranties relating to itself and its Partnership
Interest), and the Offeror hereby irrevocably constitutes and appoints the
Offeree its attorney-in-fact to execute, acknowledge and deliver such
instruments as may be necessary or appropriate to carry out and enforce the
provisions of this Article 11. On the Closing Date, the Offeree shall transfer
to the Offeror in immediately available funds the amount which the Offeror is
entitled to pursuant to clause (b) (which shall include all amounts necessary to
repay principal and interest in full for any loans made by the Offeror to the
Partnership).
(e) In the event the Colony Partners purchase all or substantially all of
the Partnership Assets or the Partnership Interests of the Offeror, as
applicable, then on the closing date of such purchase, some or all rights of the
KWI Partners and their Related Entities under any agreement with the Partnership
may be terminated at Colony General Partner's option at no cost or expense to
the Partnership or the other Partners (other than the payment of fees and
reimbursement of expenses which are theretofore earned or accrued but are not
yet paid or payable on such closing date in accordance with the terms of such
agreements). In the event the KWI Partners purchase all or substantially all of
the Partnership Assets or the Partnership Interests of the Offeror, as
applicable, then on the closing date of such purchase, some or all rights of the
Colony Partners and their Related Entities under any agreement with the
Partnership may be terminated at KWI Limited Partner's option at no cost or
expense to the Partnership or the other Partners (other than the payment of fees
and reimbursement of expenses which are theretofore earned or accrued but are
not yet paid or payable on such closing date in accordance with the terms of
such agreements).
(f) If the Colony Partners are the Offeree and they do not purchase the
Offered Assets or the Partnership Interests of the Offeror, as applicable,
within the period set forth in Section 11(b), Colony General Partner, on behalf
of and at the expense of the Partnership, shall engage the services of an
Investment Banking firm as Colony General Partner shall reasonably determine and
shall allow one or more purchasers to make an offer for the Partnership Assets
and, for a period of at least sixty (60) days following the listing of the
Partnership Assets for sale, Colony General Partner shall neither accept nor
reject any offers. Following the expiration of such sixty (60) day period, or
such longer period as Colony General Partner and KWI Limited Partner may
determine (but not to exceed one hundred eighty (180) days), Colony General
Partner and KWI Limited Partner shall evaluate any and all offers to purchase
the Partnership Assets and will mutually agree in good faith upon which offer(s)
to accept. In the event Colony General Partner and KWI Limited Partner are
unable to reach such an agreement in good faith, Colony General Partner may
select the offer(s) which in Colony General Partner's reasonable judgment shall
maximize the net cash proceeds to which the Partners may be entitled as compared
to the other offers.
(g) If the KWI Partners are the Offeree and they do not purchase the
Offered Assets or the Partnership Interests of the Offeror, as applicable, in
accordance with this Article 11, Colony General Partner may elect to seek to
cause the Partnership to sell all or substantially all of the Partnership Assets
to a third party pursuant to Section 11(a).
ARTICLE 12
[INTENTIONALLY OMITTED]
ARTICLE 13
ACCOUNTS AND RECORDS; ACCOUNTANTS
Section 13.1. Fiscal Year
The taxable year of the Partnership for Federal income tax purposes shall
be the calendar year or such other year as may be selected by Colony General
Partner in accordance with the rules of the Code.
Section 13.2. Records
(a) Subject to Colony General Partner's receipt of all relevant information
from KWJ Management, Colony General Partner shall maintain, or cause to be
maintained, complete and accurate records of all transactions of the
Partnership. Colony General Partner shall provide KWI Limited Partner with
copies of such records and such other data, information and reports in such a
format as KWI Limited Partner may reasonably request.
(b) The primary books, records and accounts of the Partnership, together
with an executed copy of this Partnership Agreement and any amendments hereto
shall, at all times, be kept at the principal office of the Partnership and
shall be open for the inspection and examination (and making copies) by the
Partners or their authorized representatives during regular business hours.
Section 13.3. Accountants; Income Tax Returns
The accountant for the Partnership (the "Accountant") shall be chosen by
Colony General Partner from among the six largest accounting firms in the United
States of America on the date hereof or a successor to any thereof. The initial
Accountant shall be Ernst & Young. The Accountant shall annually audit the
Partnership's books and records and prepare all applicable tax returns,
including any schedules or additional information reasonably required by any
Partner in order to file its tax returns, all of the foregoing at the expense of
the Partnership. Subject to Colony General Partner's receipt of all relevant
information from KWJ Management, Colony General Partner shall provide the
Accountant such information as is reasonably necessary to permit the Accountant
to prepare such tax returns within seventy-five (75) days of the end of each
Fiscal Year, and Colony General Partner shall timely file such tax returns,
subject to its right to so file an extension. Notwithstanding the foregoing, if
the KWI Partners do not agree with any item in the tax return at the time that
the tax return is initially required to be filed, Colony General Partner shall
file one extension to permit Colony General Partner and the KWI Partners to
resolve such matter, and if Colony General Partner and the KWI Partners do not
agree on such matter reasonably prior to the expiration of such extension
period, after good faith efforts to so agree, then such matters shall be
resolved by an accounting firm mutually agreeable to each of Colony General
Partner and the KWI Partners (the "Arbitrator"). The Arbitrator shall be one of
the six largest accounting firms in the United States of America on the date
hereof or a successor to any thereof and shall not be the Accountant or the
accounting firm regularly retained by either Colony General Partner or the KWI
Partners. The reasonable costs and expenses of the Arbitrator shall be borne by
the Partnership in accordance with the terms of this Agreement.
ARTICLE 14
STATEMENTS, INFORMATION AND TAX MATTERS
Section 14.1. Reporting
(a) Subject to Colony General Partner's receipt of all relevant information
from KWJ Management, Colony General Partner shall deliver to each Partner within
seventy-five (75) days after the end of each Fiscal Year a statement with
respect to the Partnership prepared or reported on by the Accountant, which
statement shall include, as of the end of and for such Fiscal Year, the
following:
(i) financial statements prepared in accordance with generally accepted
accounting principles, together with the Accountant's audit report thereon;
(ii) an analysis of the Capital Contributions and the distributions and
payments under Articles 5, 9 and 17; and
(iii) the then current balances in the Capital Accounts of each
Partner.
(b) Subject to Colony General Partner's receipt of all relevant information
from KWJ Management, Colony General Partner shall deliver to each Partner within
sixty (60) days after the end of each Fiscal Year, unaudited financial
statements for the Partnership prepared in accordance with generally accepted
accounting principles.
(c) Subject to Colony General Partner's receipt of all relevant information
from KWJ Management, Colony General Partner shall deliver to the Partners within
ninety (90) days from the end of each Fiscal Year any information relating to
the Partnership necessary for the preparation by the Partners of their Federal
and state and local income or other tax returns and shall deliver to the
Partners any other information (i) promptly upon the request therefor by KWI
Limited Partner or (ii) required to be furnished to the Partners by law within
the time period for furnishing such information.
(d) The cost of all such reporting shall be paid by the Partnership as a
Partnership expense. Any Partner may, at any time, and at its sole expense,
cause an audit of the Partnership books to be made by a certified public
accountant of such Partner's own selection.
Section 14.2. Tax Matters
(a) Colony General Partner shall be the Tax Matters Partner, as that term
is defined in Code Section 6321(a)(7), but each Partner shall otherwise be
considered to have retained such rights (and obligations, if any) as are
provided for under the Code with respect to any examination, proposed adjustment
or proceeding relating to Partnership items. The Tax Matters Partner will give
prompt notice to all Partners of any audit or other proceeding involving income
tax liability of the Partnership of which the Tax Matters Partner is notified or
becomes aware and shall not settle or otherwise compromise any such audit or
other proceeding without the written consent of the KWI Partners.
(b) The Tax Matters Partner shall, in its sole and absolute discretion,
determine whether to make any available election pursuant to the Code, provided
that the Tax Matters Partner shall consult with the other General Partner prior
to making any such election and the Tax Matters Partner shall make an election
under Section 754 of the Code upon the request of any Partner that is a
transferee of an Interest in the Partnership.
(c) The Partnership will reimburse the Tax Matters Partner for all expenses
reasonably incurred by it in connection with any administrative or judicial
proceeding with respect to the tax liabilities of the Partners.
ARTICLE 15
REPRESENTATIONS, WARRANTIES AND COVENANTS BY THE PARTNERS
Section 15.1. Representations, Warranties and Covenants by Each Partner
Each Partner represents and warrants to, and covenants and agrees with, the
other Partners as follows:
(a) Its Partnership Interest has been acquired under this Agreement
for its own account, for investment, and not with a view to, or for sale in
connection with, any distribution thereof, nor with any present intention
of distributing or selling such Partnership Interest, and that it will not
make or offer to make a transfer of its Partnership Interest in violation
of the Securities Act of 1933, as amended, or any other applicable United
States, Japanese, or other Federal or state law or the laws of any
jurisdiction in which the Investment Entity, or any Person organized by any
Partner for the purpose of investing in any Investment, is organized.
(b) (i) It is not acquiring its Partnership Interest with funds of a
pension plan subject to ERISA, and (ii) its acquisition of its Partnership
Interest pursuant to this Agreement does not result in or create a
prohibited transaction under, or result in the Partnership becoming a
"party in interest" as defined in Section 3(14) of ERISA, or otherwise
result in any other holder of a Partnership Interest or the Partnership
Assets being subject to such statute.
(c) (i) It is a corporation, partnership, limited liability company,
trustee or individual, as indicated on the first pages of this Agreement,
duly organized, validly existing and in good standing under the laws of the
state of its organization, as also indicated on the first page of this
Agreement, (ii) the execution, delivery, and performance of this Agreement
and the consummation of the transactions provided for in this Agreement
have been duly authorized and upon its execution and delivery will
constitute its valid and binding agreement, enforceable in accordance with
its terms and (iii) its execution and delivery of this Agreement and its
performance hereunder will not conflict with, or breach or result in a
default under, any laws or any agreement to which it is bound.
(d) No consent, approval or other authorization, except for such as
have been obtained or waived on or prior to the date hereof, is required in
connection with the execution and delivery by such Partner of this
Agreement or the performance by such Partner of its obligations hereunder.
(e) It will be liable to the General Partner and the Limited Partners
in the event that (i) it ever claims or interposes a defense, or causes the
Partnership to claim or interpose a defense, that the General Partner or
any of the Limited Partners, directly or indirectly, or in whole or in
part, is not a Partner of, or does not possess a Partnership Interest in,
the Partnership, but is a creditor of the Partnership, or (ii) it fails, or
causes the Partnership to fail, to fully and completely cooperate with (or
interposes a defense or seeks to avail itself of any injunction, stay or
moratorium against) the General Partner or any of the Limited Partners in
connection with the exercise of any remedies pursuant to this Agreement.
Section 15.2. Additional Representations, Warranties and Covenants by the
KWI Partners
KWI Limited Partner hereby further represents and warrants to the Colony
Partners that the management and other personnel of KWJ Management have the
necessary skill and qualifications to perform all underwriting, acquisition,
asset management, servicing and related functions in respect of the Investments
in performance of their obligations and responsibilities under and pursuant to
this Agreement and the Management Agreements.
ARTICLE 16
BANK ACCOUNTS
The Capital Contributions of the Partners and other funds of the
Partnership shall be deposited in a segregated bank account or accounts in the
name of the Partnership, which bank account or accounts shall be controlled
solely by Colony General Partner. All withdrawals from any such accounts may be
made only upon the signature of Colony General Partner by its executive officers
or such other persons designated by Colony General Partner in its sole
discretion. KWI Limited Partner shall cause KWJ Management to provide Colony
General Partner with all support documentation required by Colony General
Partner for all draws to be made on such account(s) for a particular Investment,
which draws shall be subject to the prior approval of Colony General Partner.
Approval of such draws shall be deemed approval of any disbursements from such
account made in accordance with such draw.
ARTICLE 17
DISSOLUTION
Section 17.1. Events of Dissolution
The Partnership shall be dissolved upon the occurrence of any of the
following events:
(a) the expiration of the term of the Partnership as provided in
Article 3;
(b) a sale or other disposition of all or substantially all of the
Partnership Assets and the collection of all proceeds resulting from such
sale or other disposition;
(c) (i) the filing by the Partnership of a voluntary petition for
relief under Title 11 of the United States Code or any successor or
amendatory provisions thereto, or (ii) ninety (90) days after the filing of
an involuntary petition against the Partnership for relief under Title 11
of the United States Code or any successor or amendatory provisions
thereto, or (iii) ninety (90) days after the appointment of a trustee or
receiver of the Partnership or the assignment of the Partnership or any
material part of the Partnership's Assets for the benefit of creditors by,
of, or with respect to the Partnership, unless any such event referred to
in this subsection (c)(ii) or (c)(iii) is remedied within ninety (90) days
of its occurrence or unless within ninety (90) days after the occurrence of
an event referred to in subsection (c)(i) or the expiration of the ninety
(90)-day period referred to in subsection (c)(ii) or (c)(iii) Colony
General Partner determines to continue the Partnership; or
(d) the determination of Colony General Partner to dissolve the
Partnership.
Section 17.2. Liquidation of Partnership
(a) In the event of the dissolution of the Partnership, the affairs of the
Partnership shall be wound up and there shall be an orderly liquidation of the
Partnership Assets, unless the Colony General Partner determines that an
immediate sale of all or part of the Partnership Assets would cause undue loss
to the Partners, in which event (i) the liquidation may be deferred for a
reasonable time, except as to those Assets necessary to satisfy the Partnership
debts, and the Partners shall be deemed to have elected to reconstitute the
Partnership for such period, or (ii) all or part of the Partnership Assets may
be distributed in kind, pro rata to each of the Partners, provided that each
Partnership Asset which is distributed in kind shall be distributed subject to
the provisions of and in the same manner as cash under the applicable provisions
of this Section 17.2. If Partnership Assets are distributed in kind, the Capital
Accounts of the Partners shall be adjusted to reflect the gain or loss that
would have been recognized by the Partnership if those Assets had been sold for
an amount equal to their fair market value at the time of distribution.
(b) Upon any dissolution of the Partnership, the Accountants shall prepare
a statement setting forth the Assets and liabilities of the Partnership as of
the date of dissolution, and such statement shall be furnished to all Partners.
(c) In the event of liquidation of the Partnership Assets, they shall be
liquidated as promptly as possible, and Colony General Partner shall designate
one or more of the Partners to supervise such liquidation ("Liquidating
Partner"), which shall be conducted in an orderly and business-like manner so as
not to involve undue sacrifice, as the Liquidating Partner shall determine in
its reasonable discretion. The proceeds thereof shall be applied and distributed
in the following order of priority:
(i) for the payment of the debts and liabilities of the Partnership (in
the order of priority as described in this Agreement) and any other debts
and liabilities owed to the Partners and their Related Entities and the
expenses of liquidation;
(ii) to the setting up of any reserves which Colony General Partner
reasonably may deem necessary for any contingent or unforeseen liabilities
or obligations of the Partnership arising out of or in connection with the
Partnership. Said reserves may be paid over by the Liquidating Partner to
an attorney-at-law, as escrowee, to be held by him for the purpose of
disbursing such reserves in payment of any of the aforementioned
contingencies and, at the expiration of such period as the Liquidating
Partner shall deem advisable, to distribute the balance of such reserves to
the Partners in proportion to the positive balances of their respective
Capital Accounts; and
(iii) thereafter, to the Partners and their successors in proportion to
the positive balances of their respective Capital Accounts (after giving
effect to all contributions, distributions and allocations for all
periods).
(d) No dissolution of the Partnership shall release or relieve any of the
Partners of their obligations under this Agreement.
ARTICLE 18
POWER OF ATTORNEY; RESTRICTIONS
Each Partner hereby irrevocably constitutes and appoints Colony General
Partner (or such person as Colony General Partner shall designate to act in the
capacity as each Partner's trustee) as its true and lawful attorney to make,
execute, acknowledge and file with respect to, for and on behalf of the
Partnership:
(a) Such Certificates of Limited Partnership, Applications for
Authority and, where applicable, Certificates of Cancellation or
Certificates of Dissolution as may be required by the laws of the State of
Delaware or any other jurisdiction where the same are required to be filed.
(b) Such amendments of the certificates referred to in subsection (a)
as may be required by law or otherwise pursuant to the provisions of this
Agreement.
(c) Such amendments to this Agreement and such other instruments as
may be necessary or desirable pursuant to Section 10.6 hereof.
The grant of this power of attorney is irrevocable and is coupled with an
interest by reason of the fact, among others, that Colony General Partner is
relying and will be relying on this power as contemplated by these provisions,
and will not be affected by the subsequent death, legal incompetency,
disability, incapacity, bankruptcy or withdrawal of any Partner.
ARTICLE 19
CERTAIN ERISA MATTERS
Section 19.1. Operating Company
Unless otherwise consented to by Colony Limited Partner, each of Colony
General Partner and the KWI Partners shall use its best efforts to conduct the
affairs of the Partnership in compliance with the exception for "real estate
operating companies" under, or otherwise with the exception for other "operating
companies" under the first sentence of paragraph (c) of, the regulations
contained in 29 CFR Section 2510.3-101 or successor regulations (the "Plan
Assets Regulations"). The Colony Partners agree to notify the KWI Partners
promptly in the event that the Colony Partners conclude that, for purposes of
the Plan Assets Regulations, any of the assets of the Colony Partners constitute
or in the immediately foreseeable future will constitute the assets of any
"plan" as defined in and subject to ERISA or Section 4975 of the Code. In the
event of such notice, and if at or after the time of such notice the assets of
the Partnership or the affected Investment Entity are likely to be deemed (then
or in the immediately foreseeable future) to be the assets of such a plan, KWI
Limited Partner may, in its reasonable discretion, elect to cause KWJ Management
to terminate the affected Management Agreement(s), in which case KWJ Management
shall be relieved of its management obligations under Article 7 in respect of
the affected Investment(s).
Section 19.2. ERISA Opinion
If Colony Limited Partner provides to the Partnership, Colony General
Partner and the KWI Partners an opinion of counsel to the effect that there is a
material likelihood that the Partnership will cease to be a "real estate
operating company" under, or otherwise be an "operating company" under the first
sentence of paragraph (c) of, the Plan Assets Regulations, then each of Colony
General Partner and the KWI Partners shall take such actions as may be necessary
to cause the Partnership not to be adversely affected with respect to its status
as a "real estate operating company" or otherwise as such an "operating
company."
ARTICLE 20
MISCELLANEOUS
Section 20.1. Recipient of Distributions
All distributions of cash or property to be made to the Partners pursuant
to the provisions of this Agreement shall be made directly to the parties
entitled thereto at the addresses set forth on the first page of this Agreement,
or at such other address as shall have been set forth in a notice sent pursuant
the provisions of Section 20.2.
Section 20.2. Notices, Etc.
Any offer, acceptance, election, approval, consent, request, waiver, notice
or other document (collectively, "Notice") required or permitted to be given
pursuant to any provisions of this Agreement, shall be deemed duly given only
when in writing, signed by or on behalf of the person giving the same, and
either (i) personally delivered (with receipt acknowledged), (ii) sent by
telefax (with appropriate confirmation of receipt), (iii) sent by registered or
certified mail, return receipt requested, postage prepaid, or (iv) sent by
overnight courier, addressed to the person or persons to whom such Notice is to
be given, in each case at the address, telephone number and/or facsimile number
set forth for such party in annexed Schedule 3, or at such other address as
shall have been set forth in a Notice sent pursuant to the provisions of this
Article. Notwithstanding any provision herein to the contrary, any routine
reports required by this Agreement to be submitted to the Partners at specified
times may be sent by first-class mail. All Notices shall be deemed given
(i) when received or receipt is refused, (ii) if delivery is by facsimile, upon
confirmation of transmission, or (iii) upon failure of delivery because notice
of such Partner's change of address has not been given in accordance with the
terms of this Section 20.2. Any Partner may change its address and/or telephone
number for the receipt of Notices at any time by giving Notice thereof to all
other Partners; but no such Notice of change of address and telephone number
shall be effective until received by the Partners, and any Partner which is
prevented from giving any Notice pursuant hereto to any Partner on account of
such Partner changing its address and/or telephone number without having given
Notice thereof to all the other Partners shall nevertheless be deemed to have
given such Notice in accordance with this Section 20.2 to such Partner, provided
such Notice is sent to the most recent address of such Partner of which Notice
has been given pursuant hereto. A copy of any Notice shall be delivered to the
respective attorneys for the parties as indicated in Schedule 3 hereto, as
amended from time to time.
Section 20.3. Binding Effect
The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective personal representatives,
heirs, successors and permitted assigns.
Section 20.4. Modification, Waiver or Termination
No amendment, modification, waiver or termination of this Agreement, or any
part hereof, shall be effective unless made in writing and signed by each party
hereto, and no failure to pursue or elect any remedy or waiver with respect to
any default under or breach of any provision of this Agreement shall be deemed
to be a waiver of any other subsequent similar or different default, breach or
provision, or of any election of remedies available in connection therewith.
Receipt by any party of any money or other consideration due under this
Agreement shall not constitute a waiver of any provision of this Agreement.
Section 20.5. Counterparts
This Agreement may be executed in any number of counterparts, all of which
shall for all purposes constitute one Agreement binding on all of the parties
hereto, notwithstanding that all of the other parties did not execute the same
counterpart.
Section 20.6. Applicable Laws; Venue
(a) This Agreement shall be governed by and construed and enforced in
accordance with the internal laws of the State of Delaware without reference to
any conflict of law or choice of law principles of such State that might apply
the law of another jurisdiction. The Partners desire that such internal laws of
the State of Delaware be applied to all matters regarding the relationship among
the Partners and the interpretation of this Agreement, regardless of the
location in which there is sitting a court, arbitrator or other tribunal before
which a dispute is pending.
(b) Each of the Partners for itself and each of its Related Entities hereby
irrevocably agrees that the courts of the State of California and the Federal
Courts for the Central District in the State of California shall have exclusive
jurisdiction in connection with any actions or proceedings arising between the
Partners and/or their Related Entities under, relating to, arising out of or in
connection with this Agreement. Each of the Partners for itself and each of its
Related Entities hereby irrevocably consents and submits to the jurisdiction of
said courts for any such action or proceeding. Each of the Partners for itself
and each of its Related Entities hereby waives the defense of an inconvenient
forum to the maintenance of any such action or proceeding in said courts. In the
event of any action or proceeding arising between the Partners and/or their
Related Entities under, relating to, arising out of or in connection with this
Agreement, the non-prevailing party or parties in such action or proceeding
shall be responsible for any and all legal fees, expenses and court costs
incurred by the prevailing party or parties in connection with such action or
proceeding.
Section 20.7. Captions; Exhibits
Article, section and other titles or captions contained in this Agreement
are inserted only as a matter of convenience and for reference, and shall not be
construed in any way to define, limit, extend or describe the scope of this
Agreement or the intention of the provisions thereof. All schedules and exhibits
annexed hereto are herewith expressly made a part of this Agreement, as fully as
though completely set forth herein.
Section 20.8. Prohibition Re Partition
The Partners each hereby waive and relinquish any and all rights they may
have to cause any Partnership Assets now existing or hereafter acquired to be
partitioned, it being the intention of each of the Partners to prohibit any
Partner from bringing a suit for partition against the other Partners so long as
the Partnership Assets are held by the Partnership. The effect of this Section
20.8 shall be limited to a period of time measured by the life of the person
last surviving all of the persons in the "Measuring Group" (hereinafter
defined), plus twenty-one (21) years. The "Measuring Group" shall mean, for
purposes of this Section 20.8 the partners, and all of the presently living
lawful issue of the partners, as of the date hereof, of the law firm of Xxxxxx &
Xxxxx LLP.
Section 20.9. Certain IRS Withholding Requirements
In the event any Partner is a Foreign Person, the Partnership and any such
Partner shall comply with the terms and provisions of all Code Sections relating
to the status of the Partner as a Foreign Person and shall execute and deliver
to the IRS such information, returns, and statements as may be required pursuant
thereto. In the event withholding is required pursuant to any Section of the
Code on account of any Partner resulting from or in connection with allocations
of Profits and Losses, distributions of cash flow or the disposition of the
Investments or any portion thereof or any other Partnership Assets or pursuant
to Code Section 1446 with respect to any Partner's share of Partnership income,
(a) any and all amounts so withheld and paid to the IRS shall be treated as a
cash distribution to the Partner from whom such amounts were withheld, and (b)
if the amount required to be withheld in respect of such Partner exceeds the
amount of such Partner's share of, in the case of Code Section 1445, all amounts
distributed from such disposition of the Investments or any portion thereof, or,
in the case of Code Section 1446, any Cash Available for Distribution that is
distributed to such Partner with respect to the year in question, such Partner
shall promptly fund the difference between the amount of such Partner's
distributive share pursuant to Article 9 and the withholding requirement (the
"Withholding Funds") to the Partnership or in the event the Partnership shall
fund the Withholding Funds, such Partner shall promptly reimburse the
Partnership therefor.
Section 20.10. Limitation on Rights of Others
No person or entity other than a Partner is, nor is it intended that any
such other person or entity be treated as, a direct, indirect, intended or
incidental third party beneficiary of this Agreement for any purpose whatsoever,
nor shall any other person or entity have any legal or equitable right, remedy
or claim under or in respect of this Agreement.
Section 20.11. Gender; Number
As used in this Agreement, the masculine, feminine or neuter gender, and
the singular or plural number, shall be deemed to be or include the other
genders or number, as the case may be, whenever the context so indicates or
requires.
Section 20.12. Partnership Votes
Any reference in this Agreement to a decision to be made by the Partners
shall be made by the Partners entitled, pursuant to this Agreement at the time
of such decision, to participate therein in accordance with the provisions
hereof.
Section 20.13. No Broker
KWI Limited Partner represents and warrants that it has not dealt with any
broker in connection with this Agreement or the transactions contemplated hereby
in such a manner as would result in a payment being owed to any person as a fee
or commission in connection therewith. KWI Limited Partner agrees to indemnify,
defend and hold harmless each Colony Partner and its Related Entities from all
claims or damages as a result of this representation and warranty being false.
Section 20.14. Services to Partners
Each Partner hereby acknowledges and recognizes that the Partnership has
retained, and may in the future retain, the services of various professionals,
including, without limitation, general and special legal counsel, accountants,
architects and engineers, for the purposes of representing and providing
services to the Partnership in the investigation, analysis, acquisition,
renovation, development, renting, marketing and operation of the Partnership
Assets or otherwise. Each Partner hereby acknowledges that such persons or
entities may have in the past represented and performed and currently and/or may
in the future represent or perform services for certain of the Partners or their
Related Entities. Accordingly, each Partner and the Partnership consents to the
performance by such persons or entities of services for the Partnership and
waives any right to claim a conflict of interest based on such past, present or
future representation or services to any of the Partners or their Related
Entities.
Section 20.15. Costs
Except as otherwise provided herein, each Partner shall bear its own costs
and expenses relating to this Agreement. Notwithstanding the foregoing, each
Partner's reasonable costs and expenses for negotiating and entering into this
Agreement and in connection with (i) the formation of the Partnership and (ii)
the preparation, review, negotiation and entering into of the Management
Agreements, the Pooling Agreement, any Investment Entity Agreements and any
pledge agreements, including legal fees and expenses and due diligence expenses
shall be deemed to be Capital Contributions of the Partners and the Partners
shall be reimbursed for such costs and expenses pro rata on an
Investment-by-Investment basis in the form of distributions made to the Partners
pursuant to Article 9; provided, however, that any such costs and expenses which
are incurred prior to the Partnership acquiring its first Investment shall be
allocated to the first Investment.
Section 20.16. Partnership's Right of Withholding
Colony General Partner is hereby authorized on behalf of the Partnership at
any time and from time to time, to the fullest extent permitted by law, to
withhold and set aside until resolved any and all amounts owing from or payable
by the Partnership to any Partner or its Related Entities against any and all
obligations of such Partner or its Related Entities to the Partnership which
have matured, whether now existing or hereafter arising, irrespective of whether
the Partnership or its Related Entities shall have made demand on such Partner
for payment of such outstanding obligation.
Section 20.17. No KWI Partner or KWJ Management Employee Solicitation
During the term of this Partnership and for a period of one (1) year
thereafter, no Colony Partner, and no Related Entity of any Colony Partner, may
directly or indirectly through another Person, without the express consent of
KWI Limited Partner and KWJ Management, (i) solicit, encourage or entice any
director, officer or employee (a "KWI Employee") of any KWI Partner or KWJ
Management, or any Related Entity of any KWI Partner or KWJ Management (the "KWI
Employer") to leave the employ of the KWI Employer, (ii) offer any position of
employment to any KWI Employee or (iii) have any discussions with any KWI
Employee in furtherance of any of the foregoing.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement of
Limited Partnership of Colony-KW Partners, L.P. as of the day and year first
above written.
GENERAL PARTNER
COLONY-KW GENPAR LTD.
By: Colony Investors III, L.P.,
its beneficial owner
By: Colony Capital III, L.P.,
its general partner
By: ColonyGP III, Inc.,
its general partner
By: ______________________
Name:
Title:
LIMITED PARTNERS:
COLONY-KW, L.P. EBISU INVESTORS I, LLC
By: Colony-KW Genpar Ltd.,
its general partner
By: Colony Investors By:_____________________________
III, L.P., its Name:
beneficial owner Title:
By: Colony Capital III,
L.P., its general partner
By: ColonyGP III, Inc.,
its general partner
By: _______________________
Name:
Title:
KW JAPAN INVESTMENTS, INC.
By:__________________________________
Name:
Title:
SCHEDULE 1
THE PARTNERS' RESIDUAL PERCENTAGES
[*]
[*] = redacted text
SCHEDULE 2
CONTRIBUTION PERCENTAGES
[*]
[*] = redacted text
SCHEDULE 3
NAMES AND ADDRESSES FOR NOTICES
All notices and other communications required or permitted hereunder shall be
deemed duly given only when in writing, signed by or on behalf of the person
giving the same, and either (1) personally delivered (with receipt
acknowledged), (ii) sent by telefax (with appropriate automatic confirmation of
receipt), (iii) sent by registered or certified mail, return receipt requested,
postage prepaid, or (iv) sent by overnight next business day courier, to the
following addresses:
Any notice to the KWI Partners shall be sent to:
Xxxxxxx Xxxxxx International
1270 Avenue of the Americas
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Telefax: (000) 000-0000
Attention: Mr. Xxxxxxx Xxxxxx
With a copy to:
Xxxxxxx-Xxxxxx Japan
Kojimachi X Xxxxxxxx 0X
0-00-00 Xxxxxxxxx
Xxxxxxx-xx, Xxxxx 000, Xxxxx
Telefax: (03) 3262, 8857
Attention: Xx. Xxxxxxx Xxxxx
Any notice to the Colony Partners shall be sent to:
Colony Capital
0000 Xxxxxx xx xxx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telefax: (000) 000-0000
Attention: Xxxx X. Xxxxx
Xxxx X. Xxxxxxxx
With a copies to:
Colony Capital, Inc.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000
Telefax: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxxx, Esq.
Xxxxxx & Xxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telefax: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx, Esq.
or such other address as any party hereto shall have specified by notice in
writing to the other parties hereto. All such notices and communications shall
be deemed given, (i) when received or receipt refused, (ii) if given by telefax,
when transmitted to the telefax number specified above and confirmation of
transmission is received, or (iii) upon failure of delivery because notice of
such Partner's change of address has not been given in accordance with the terms
of Section 20.2 of the Agreement.
EXHIBIT A
FORM OF MANAGEMENT AGREEMENT
EXHIBIT B
FORM OF MASTER POOLING AGREEMENT
EXHIBIT C-1
[*]
[*] = redacted text
EXHIBIT C-2
[*]
[*] = redacted text
TABLE OF CONTENTS
Article and Section Number Page
RECITALS 2
ARTICLE 1.....................................................................
ARTICLE 2.....................................................................
2.1. Name and Principal Office.......................................
2.2. Purpose.........................................................
2.3. Statutory Compliance............................................
ARTICLE 3.....................................................................
ARTICLE 4.....................................................................
4.1. General Partner.................................................
4.2. Limited Partners................................................
4.3. Other Business Ventures of the Partners.........................
ARTICLE 5.....................................................................
5.1. Capital Contributions of the Partners...........................
5.2. Investment Contributions........................................
5.3. Default Contributions; Adjustments..............................
5.4. Capital Accounts................................................
5.5. Negative Capital Accounts.......................................
5.6. Return of Capital; No Interest..................................
5.7. Residual Interests..............................................
5.8. Management Fees and Reimbursements;.............................
ARTICLE 6.....................................................................
ARTICLE 7.....................................................................
7.1. Power and Authority of the General Partner......................
7.2. Management of the Partnership...................................
7.3. Investment Entities.............................................
7.4. Operating Plan and Partnership Budget...........................
7.5. Services of Related Entities of the KWI.........................
7.6. Exclusivity; Alternative Investments............................
7.7. Related Entities................................................
7.8. Compensation to the Partners....................................
7.9. Exculpation and Indemnification.................................
ARTICLE 8.....................................................................
8.1. Profits and Losses..............................................
8.2. Mandatory Allocations...........................................
8.3. Other Allocation Rules..........................................
8.4. Tax Allocations.................................................
ARTICLE 9.....................................................................
9.1. Distributions from Cash Flow....................................
9.2. Partner Default Loans; Unreturned...............................
9.3. Pooled Investments..............................................
9.4. Partners' Tax Liability.........................................
ARTICLE 10....................................................................
10.1. Prohibited Transfers...........................................
10.2. Permitted Transfers by All Partners............................
10.3. Effective Date of Transfers....................................
10.4. Conditions Applicable to Transfers.............................
10.5. Transfers Void.................................................
10.6. Sale Approved by the General Partners..........................
10.7. Pledge of Partnership Interests................................
ARTICLE 11....................................................................
ARTICLE 12....................................................................
ARTICLE 13....................................................................
13.1. Fiscal Year....................................................
13.2. Records........................................................
13.3. Accountants; Income Tax Returns................................
ARTICLE 14....................................................................
14.1. Reporting......................................................
14.2. Tax Matters....................................................
ARTICLE 15....................................................................
15.1. Representations, Warranties and................................
15.2. Additional Representations, Warranties and.....................
ARTICLE 16....................................................................
ARTICLE 17....................................................................
17.1. Events of Dissolution..........................................
17.2. Liquidation of Partnership.....................................
ARTICLE 18....................................................................
ARTICLE 19....................................................................
19.1. Operating Company..............................................
19.2. ERISA Opinion..................................................
ARTICLE 20....................................................................
20.1. Recipient of Distributions.....................................
20.2. Notices, Etc...................................................
20.3. Binding Effect.................................................
20.4. Modification, Waiver or Termination............................
20.5. Counterparts...................................................
20.6. Applicable Laws; Venue.........................................
20.7. Captions; Exhibits.............................................
20.8. Prohibition Re Partition.......................................
20.9. Certain IRS Withholding Requirements...........................
20.10. Limitation on Rights of Others................................
20.11. Gender; Number................................................
20.12. Partnership Votes.............................................
20.13. No Broker.....................................................
20.14. Services to Partners..........................................
20.15. Costs.........................................................
20.16. Partnership's Right of Withholding............................
20.17. No KWI Partner or KWJ Management Employee Solicitation........
Exhibits
A. Form of Management Agreement
B. Form of Master Pooling Agreement
C-1. Initial Operating Plan
C-2. Initial Partnership Budget
Schedules
1. The Partners' Residual Percentages
2. Contribution Percentages
3. Names and Addresses for Notices
