Cantor Fitzgerald Income Trust, Inc 8-K, filed Aug 14, 2020
Cantor Fitzgerald Income Trust, Inc. (CFTR-PA)
About this 8-K
Cantor Fitzgerald Income Trust, Inc filed this 8-K on August 14, 2020, reporting on events of August 10, 2020.
Items reported
- Item 1.01: Entered into a material agreement
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 10, 2020
Cantor Fitzgerald Income Trust, Inc.
(Exact name of registrant as specified in its charter)
| Maryland | 000-56043 | 81-1310268 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Numbers) |
(IRS Employer Identification No.) |
110 E. 59th Street, New York, NY 10022
(Address of principal executive offices)
Registrant’s telephone number, including area code: (212) 938-5000
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
| None | N/A | N/A |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
☒ Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒
Item 1.01. Entry into a Material Definitive Agreement.
Dealer Manager Agreement
On March 20, 2020, Cantor Fitzgerald Income Trust, Inc. (the “Company”) filed a registration statement on Form S-11 (Reg. No. 333-237327) with the Securities and Exchange Commission (the “SEC”) for a proposed second public offering (the “Follow-On Offering”). On August 10, 2020, the SEC declared the Registration Statement for the Follow-On Offering effective. In the Follow-On Offering, the Company is offering up to $1 billion in shares of common stock in a primary offering on a best efforts basis and $250 million in shares of common stock to be issued pursued to a distribution reinvestment plan. As previously disclosed in the Company’s filings with the SEC, on July 30, 2020, the Company (i) redesignated its issued and outstanding shares of Class A common stock, Class T common stock and Class I common stock as “Class AX Shares,” “Class TX Shares” and “Class IX Shares,” respectively, and (ii) reclassified the authorized but unissued portion of its common stock into four additional classes of shares of common stock: “Class T Shares,” “Class S Shares,” “Class D Shares,” and “Class I Shares.”
In connection with the Follow-On Offering, on August 10, 2020, the Company and Cantor Fitzgerald & Co. (the “Dealer Manager”) entered into a Dealer Manager Agreement (the “Dealer Manager Agreement”), pursuant to which the Dealer Manager was designated as the dealer manager for the Follow-On Offering. Under the Dealer Manager Agreement, the Company has agreed to pay the Dealer Manager (i) (a) with respect to the Class T Shares, a selling commission in the amount of up to 3.0% of the transaction price (as described below) of the Class T Shares sold in the primary offering, plus a dealer manager fee in the amount of up to 0.5% of the transaction price of the Class T Shares sold in the primary offering and (b) with respect to Class S Shares, a selling commission in the amount of up to 3.5% of the transaction price of the Class S Shares sold in the primary offering, and (ii) (a) with respect to the Class T Shares and Class S Shares, a distribution fee in an annual amount equal to 0.85% of the aggregate net asset value (“NAV”) of the outstanding Class T Shares and Class S Shares, as applicable, and (b) with respect to the Class D Shares, a distribution fee in an annual amount equal to 0.25% of the aggregate NAV of the outstanding Class D Shares.
The Company will cease paying distribution fees with respect to any Class T Share, Class S Share or Class D Share at the end of the month in which the transfer agent in conjunction with the Dealer Manager determines that the total upfront selling commissions, dealer manager fees and distribution fees paid with respect to Class T Shares, Class S Shares or Class D Shares, as applicable, held by a stockholder within his or her particular account equals 8.75% (or, in the case of shares sold through certain participating broker dealers, a lower limit as set forth in any applicable agreement between the Dealer Manager and a participating broker dealer) of the gross proceeds from the sale of such Class T Shares, Class S Shares or Class D Shares (including the gross proceeds of any shares issued under the distribution reinvestment plan with respect thereto). At the end of such month, such Class T Share, Class S Share or Class D Share (and any shares issued under the distribution reinvestment plan with respect thereto) will convert into a number of Class I Shares (including any fractional shares) with an equivalent aggregate NAV as such share.
In addition, the Company will cease paying distribution fees with respect to Class T Shares, Class S Shares and Class D Shares on the earlier to occur of the following: (i) a listing of the Company’s share of common stock, (ii) merger or consolidation of the Company with and into another entity, or the sale or other disposition of all or substantially all of the Company’s assets or (iii) the date following the completion of the primary portion of the Follow-On Offering on which, in the aggregate, underwriting compensation from all sources in connection with the Follow-On Offering, including upfront selling commissions, dealer manager fees, distribution fees and other underwriting compensation, is equal to 10% of the gross proceeds from the primary shares sold in the Follow-On Offering. Upon the earlier to occur of such events, the Class T Shares, Class S Shares and Class D Shares will convert into a number of Class I Shares (including any fractional shares) with an equivalent NAV as such shares. The Company will further cease paying the distribution fee on any Class T Share, Class S Share or Class D Share that is repurchased, as well as upon the Company’s dissolution, liquidation or the winding up of its affairs, or a merger or other extraordinary transaction to which the Company is a party and in which the Class T Shares, Class S Shares or Class D Shares, each as a class, are exchanged for cash or other securities.
No selling commissions or dealer manager fees will be paid to the Dealer Manager with respect to the sale of Class D Shares and Class I Shares or with respect to any shares sold pursuant to the Company’s distribution reinvestment
plan. No distribution fees will be paid to the Dealer Manager with respect to Class I Shares. The Dealer Manager Agreement provides that all or a portion of the distribution fees may be reallowed or advanced by the Dealer Manager to participating broker dealers or broker dealers servicing accounts of investors who own Class T Shares, Class S Shares and Class D Shares.
The Class T Shares, Class S Shares, Class D Shares and Class I Shares will each be sold in the Follow-On Offering at the then-current transaction price, which will generally be the most recently determined NAV per share for such class, plus applicable upfront selling commissions and dealer manager fees. The Company may offer shares at a price that the Company believes reflects the NAV per share of such stock more appropriately than the prior month’s NAV per share, including by updating a previously disclosed transaction price, in cases where the Company believes there has been a material change (positive or negative) to the Company’s NAV per share since the end of the prior month.
Pursuant to the Dealer Manager Agreement, the Company has agreed to indemnify the Dealer Manager and participating broker dealers and the Dealer Manager and participating broker dealers have agreed to severally indemnify the Company, its officers and its directors against certain damages, claims and liabilities in connection with the Follow-On Offering, including those arising under the Securities Act of 1933, as amended. The Dealer Manager Agreement may be terminated by any party (i) immediately upon notice to the other parties in the event that the non-terminating party shall have materially failed to comply with any of the material provisions of the Dealer Manager Agreement or if any of the representations, warranties, covenants or agreements of such party contained in the Dealer Manager Agreement shall not have been materially complied with or satisfied within the times specified in the Dealer Manager Agreement or (b) on 60 days’ written notice.
Amended Advisory Agreement
On August 10, 2020, in connection with the Follow-On Offering, the Company entered into Second Amended and Restated Advisory Agreement (the “Amended Advisory Agreement”) with Cantor Fitzgerald Income Advisors, LLC (the “Advisor”), Cantor Fitzgerald Income Trust Operating Partnership, L.P. (the “Operating Partnership”) and Cantor Fitzgerald Investors, LLC (“CFI”). Under the Amended Advisory Agreement, acquisition and disposition fees, including specified property management and oversight fees and refinancing coordination fees, previously payable to the Advisor under the prior advisory agreement were eliminated, although the Advisor continues to be entitled to reimbursement for acquisition and disposition expenses. In addition, under the Amended Advisory Agreement, the Advisor will continue to be paid a fixed asset management fee equal to 1.20% of NAV per annum payable monthly.
The Advisor has agreed to pay all the Company’s organization and offering expenses in connection with the initial public offering (other than selling commissions, dealer manager fees and distribution fees) through May 18, 2018. The Company began reimbursing the Advisor for such expenses ratably over the 36 months following May 18, 2018; provided that, under the prior advisory agreement, the Company was not obligated to pay any amounts that as a result of such payment would cause the aggregate payments for organization and offering expenses paid by the Advisor to exceed 1% of gross offering proceeds as of such payment date. After May 18, 2018, the Advisor, in its sole discretion, may pay some or all of the additional organization and offering expenses incurred, but is not required to do so. To the extent the Advisor pays such additional organization and offering expenses, the Company will be obligated to reimburse the Advisor subject to the 1% cap described above. The Amended Advisory provides that the 1% cap for reimbursement will be calculated based on 1% of gross offering proceeds from all the Company’s public offerings (rather than just the Company’s initial public offering) as of such payment date.
Amended Operating Partnership Agreement
On August 10, 2020, in connection with the Follow-On Offering, the Company entered into the Amended and Restated Limited Partnership Agreement of the Operating Partnership (the “Amended Operating Partnership Agreement”), between the Company, as general partner, and Cantor Fitzgerald Income Trust OP Holdings, LLC (the “Special Unitholder”), in order to reflect: (i) that the operating partnership units have been redesignated and reclassified to correspond to the classes of the Company’s common stock, consisting of Class AX, Class D, Class I, Class IX, Class S, Class T and Class TX operating partnership units (the “OP Units”); (ii) the elimination of the incentive fee payable to the Special Unitholder in connection with a liquidity event or certain other events; and (iii)
that, so long as the Amended Advisory Agreement has not been terminated, the Special Unitholder will be entitled to a performance participation interest in the Operating Partnership, that entitles it to receive an allocation from the Operating Partnership equal to 12.5% of the Total Return, subject to a 5% Hurdle Amount, with a Catch-Up (each term as defined below). Such allocation will be made annually and accrue monthly.
Pursuant to the Amended Operating Partnership Agreement, the Special Unitholder will be allocated a performance participation in an amount equal to:
| • | First, if the Total Return for the applicable period exceeds the sum of (i) the Hurdle Amount for that period and (ii) the Loss Carryforward Amount (any such excess, “Excess Profits”), 100% of such annual Excess Profits until the total amount allocated to the Special Unitholder equals 12.5% of the sum of (x) the Hurdle Amount for that period and (y) any amount allocated to the Special Unitholder pursuant to this clause (this is commonly referred to as a “Catch-Up”); and |
| • | Second, to the extent there are remaining Excess Profits 12.5% of such remaining Excess Profits. |
Total Return for any period since the end of the prior calendar year will equal the sum of: (i) all distributions accrued or paid (without duplication) on the OP Units outstanding at the end of such period since the beginning of the then-current calendar year, plus (ii) the change in aggregate NAV of such units since the beginning of the year, before giving effect to (x) changes resulting solely from the proceeds of issuances of the OP Units, (y) any allocation/accrual to the performance participation interest and (z) applicable distribution fee expenses (including any payments made to the Company for payment of such expenses).
For the avoidance of doubt, the calculation of Total Return will (i) include any appreciation or depreciation in the NAV of units issued during the then-current calendar year but (ii) exclude the proceeds from the initial issuance of such units. In addition, with respect to a year in which the Company completes a liquidity event, for purposes of determining the Total Return, any change in the aggregate NAV of the OP Units will be deemed to equal the difference between the aggregate NAV of the OP Units outstanding at the beginning of the year and the aggregate value of such units determined in connection with such liquidity event. With respect to the first year in which the Amended Advisory Agreement is in effect, for purposes of determining Total Return, any change in the aggregate NAV will be deemed to equal the difference between the aggregate NAV of the operating partnership units as of July 31, 2020 and the aggregate NAV of such units at the end of such calendar year.
Hurdle Amount for any period during a calendar year means that amount that results in a 5% annualized internal rate of return on the NAV of the OP Units outstanding at the beginning of the then-current calendar year and all OP Units issued since the beginning of the then-current calendar year, taking into account the timing and amount of all distributions accrued or paid (without duplication) on all such units and all issuances of OP Units over the period. The ending NAV of the OP Units used in calculating the internal rate of return will be calculated before giving effect to any allocation/accrual to the performance participation interest and applicable distribution fee expenses, provided that the calculation of the Hurdle Amount for any period will exclude any OP Units repurchased during such period, which units will be subject to the performance participation allocation upon repurchase as described below. With respect to the first year in which the Amended Advisory Agreement is in effect, the beginning NAV of the OP Units used in calculating the internal rate of return will be deemed to equal the aggregate NAV of the OP Units as of July 31, 2020. Except as described in Loss Carryforward below, any amount by which Total Return falls below the Hurdle Amount will not be carried forward to subsequent periods.
Loss Carryforward Amount will initially equal zero and will cumulatively increase by the absolute value of any negative annual Total Return and decrease by any positive annual Total Return, provided that the Loss Carryforward Amount will at no time be less than zero and provided further that the calculation of the Loss Carryforward Amount will exclude the Total Return related to any OP Units repurchased during such year, which units will be subject to the performance participation allocation upon repurchase as described below. The effect of the Loss Carryforward Amount is that the recoupment of past annual Total Return losses will offset the positive annual Total Return for purposes of the calculation of the performance participation allocation. This is referred to as a High Water Mark. The Special Unitholder will also be allocated a performance participation with respect to all OP Units that are repurchased at the end of any month (in connection with repurchases of the Company’s shares in the Company’s share repurchase program) in an amount calculated as described above with the relevant period being the portion of the year for which such unit was outstanding, and proceeds for any such unit repurchase will be reduced by the amount of any such performance participation.
Distributions on the performance participation interest may be payable in cash or Class I OP Units at the election of the Special Unitholder. If the Special Unitholder elects to receive such distributions in Class I OP Units, the Special Unitholder may request the Operating Partnership to repurchase such Class I OP Units from the Special Unitholder at a later date. Any such repurchase requests will not be subject to the 5% holding discount under the Company’s share repurchase program but will be subject to the monthly and quarterly volume limitations of the share repurchase program. The Operating Partnership will repurchase any such OP Units for cash in an amount determined in accordance with the Amended Operating Partnership Agreement, which generally will equal the aggregate NAV of such OP Units, unless the Company’s board of directors determines that any such repurchase for cash would be prohibited by applicable law or the Company’s charter, in which case such OP Units will be repurchased for shares of the Company’s common stock with an equivalent aggregate NAV.
Amended Distribution Support Agreement
On August 10, 2020, the Company and CFI entered into Second Amended and Restated Distribution Support Agreement (the “Amended Distribution Support Agreement”) to ensure that the Company has a sufficient amount of funds to pay cash distributions to stockholders during the Follow-On Offering. Pursuant to the Amended Distribution Support Agreement, in the event that cash distributions exceed MFFO, CFI will purchase Class I shares from the Company in the Follow-On Offering in an amount equal to the distribution shortfall, up to $5 million (less the $2.0 million of shares purchased by CFI in order to satisfy the minimum offering requirement for the initial public offering and any shares purchased by CFI pursuant to the distribution support agreement in the initial public offering). As of August 10, 2020, CFI’s remaining obligation pursuant to the Amended Distribution Support Agreement was limited to $1,867,720.
The preceding summaries of the Dealer Manager Agreement, the Amended Advisory Agreement, the Amended Operating Partnership Agreement and the Amended Distribution Support Agreement do not purport to be complete and are qualified in their entirety by reference to the Dealer Manager Agreement, the Amended Advisory Agreement, the Amended Operating Partnership Agreement and the Amended Distribution Support Agreement, copies of which are filed herewith as Exhibits 1.1, Exhibit 10.1, Exhibit 10.2 and Exhibit 10.3, respectively, and are incorporated by reference herein.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits:
The following exhibits are being filed herewith:
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| CANTOR FITZGERALD INCOME TRUST, INC. | ||||||
| Date: August 14, 2020 | By: | /s/ PAUL PION | ||||
| Name: | Paul Pion | |||||
| Title: | Chief Financial Officer | |||||
Exhibit 1.1
EXECUTION COPY
CANTOR FITZGERALD INCOME TRUST, INC.
Up to $1,250,000,000 in Shares of Common Stock
DEALER MANAGER AGREEMENT
This Dealer Manager Agreement (the “Agreement”) is made and entered into as of the 10th day of August, 2020 between Cantor Fitzgerald Income Trust, Inc., a Maryland corporation (the “Company”), and Cantor Fitzgerald & Co., a New York general partnership (the “Dealer Manager”).
Whereas, on March 20, 2020, the Company filed a registration statement on Form S-11 (such registration statement and any prospectus contained therein, as they may be amended, including any pre-effective amendments, post-effective amendments or other supplements to such registration statement or such prospectus after the effective date of registration, being respectively referred to herein as the “Registration Statement” and the “Prospectus,” respectively, as more fully defined below) with the Securities and Exchange Commission (the “SEC”) for the registration under the Securities Act of 1933, as amended (the “Securities Act”) of an offering (the “Offering”) of up to $1,250,000,000 in any combination of Class T shares (the “Class T Shares”), Class S shares (the “Class S Shares”), Class D shares (the “Class D Shares”) and Class I shares (the “Class I Shares”) of its common stock, $0.01 par value per share (the Class T Shares, the Class S Shares, Class D Shares and Class I Shares collectively, the “Shares”);
Whereas, the Offering is comprised of$1,000,000,000 of Shares that will be issued and sold to the public (the “Primary Offering”) and $250,000,000 of Shares that will be offered pursuant to the Company’s distribution reinvestment plan (the “DRP”) (subject to the Company’s right to reallocate such Share amounts, as described in the Prospectus);
Whereas, in connection with the Offering, the minimum initial purchase by any one person shall be $2,500 in Shares, other than Class I Shares where the minimum initial purchase shall be $1,000,000, in each case except as otherwise indicated in the Prospectus; and
Whereas, the Company desires to retain the Dealer Manager to use its best efforts to sell the Shares and to manage the sale by other participating broker dealers (the “Dealers”) of the Shares and Dealer Manager desires to serve as the Dealer Manager for the Company for the sale of the Shares upon the terms and conditions set forth in this Agreement and in the Registration Statement.
Now, therefore, in consideration of the terms and conditions hereinafter set forth and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, it is agreed between the Company and the Dealer Manager as follows:
1. Representations and Warranties of the Company:
The Company represents and warrants to the Dealer Manager that:
a. Registration Statement and Prospectus. The Company has filed a Registration Statement on Form S-11 (Registration Statement No. 333-237327) and the related Prospectus with the SEC in accordance with applicable requirements of the Securities Act and the applicable rules and regulations (the “Rules and Regulations”) of the SEC promulgated thereunder, covering the Shares. Said Registration Statement, which includes a preliminary prospectus, was initially filed with the SEC on March 20, 2020. Copies of such Registration Statement and each amendment thereto have been or will be delivered to the Dealer Manager. The Registration Statement (including financial statements, exhibits and all other documents related thereto that are filed as a part thereof or incorporated therein) and Prospectus contained therein, as finally amended and revised at the effective date of the Registration Statement (including at the effective date of any post-effective amendment thereto), are respectively referred to herein as the “Registration Statement” and the “Prospectus,” except that if the Prospectus filed by the Company pursuant to Rule 424(b) under the Securities Act shall differ from the Prospectus, the term “Prospectus” shall also include the Prospectus filed pursuant to Rule 424(b). Every contract or document required by the Securities Act or Rules and Regulations to be filed as an exhibit to the Registration Statement has been and will be so filed with the SEC.
b. The Company. The Company is and will be at all times during the Offering duly and validly organized and formed as a corporation under the laws of the state of Maryland, with the power and authority to conduct its business as described in the Prospectus.
c. Compliance with the Securities Act. At the time the Registration Statement becomes effective and at the time that any post-effective amendment thereto becomes effective, the Registration Statement and Prospectus will comply with the Securities Act and the Rules and Regulations and at the time the Registration Statement becomes effective and at the time that any post-effective amendment thereto becomes effective and during the Offering the Registration Statement and Prospectus will not contain any untrue statements of material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein not misleading; provided, however, that the foregoing provisions of this Section 1(c) will not apply to statements contained in or omitted from the Registration Statement or Prospectus that are made in reliance upon and in conformity with information furnished to the Company in writing by the Dealer Manager or any of the Dealers specifically for inclusion in the Registration Statement or Prospectus.
d. Use of Proceeds. The Company intends to use the funds received from the sale of the Shares as set forth in the Prospectus.
e. Absence of Further Consents and Approvals. No consent, approval, authorization or other order of any governmental authority is required in connection with the execution or delivery by the Company of this Agreement or the issuance and sale by the Company of the Shares, except such as may be required under the Securities Act or applicable state securities laws.
f. No Order of Suspension. No order preventing or suspending the use of a Prospectus has been issued and no proceedings for that purpose are pending, threatened or, to the knowledge of the Company, contemplated by the SEC; and to the knowledge of the Company, no order suspending the offering of the Shares in any jurisdiction has been issued and no proceedings for that purpose have been instituted or threatened or are contemplated.
g. No Pending Actions. There are no actions, suits or proceedings pending or to the knowledge of the Company, threatened against the Company at law or in equity or before or by any Federal or state commission, regulatory body or administrative agency or other governmental body, domestic or foreign, which will have a material adverse effect on the business or property of the Company.
h. Absence of Conflict or Default. The execution and delivery of this Agreement, the consummation of the transactions herein contemplated and compliance with the terms of this Agreement by the Company will not conflict with or constitute a default under (i) any of its organizational documents, (ii) any, indenture, mortgage, deed of trust, or lease to which the Company is a party or by which it may be bound, or to which any of the property or assets of the Company is subject, or (iii) any rule, regulation, writ, injunction or decree of any government, governmental instrumentality or court, domestic or foreign, having jurisdiction over the Company or any of its assets, properties or operations, except in the case of clause (ii) and (iii) for such conflicts or defaults that would not individually or in the aggregate have a material adverse effect on the condition (financial or otherwise), business, properties or results of operations of the Company.
i. Requisite Authority. The Company has all necessary power and authority to enter into this Agreement and to perform the transactions contemplated hereby, except to the extent that the enforceability of the indemnity and/or contribution provisions contained in Section 6 of this Agreement may be limited under applicable securities laws and to the extent that the enforceability of this Agreement may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws that affect creditors’ rights generally or by equitable principles relating to the availability of remedies.
j. Authorization of Agreement. This Agreement has been duly authorized, executed and delivered by the Company, and assuming due authorization, execution and delivery of this Agreement by the Dealer Manager, will constitute a valid and legally binding agreement of the Company enforceable against the Company in accordance with its terms, except to the extent that the enforceability of the indemnity and/or contribution provisions contained in Section 6 of this Agreement may be limited under applicable securities laws and to the extent that the enforceability of this Agreement may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws that affect creditors’ rights generally or by equitable principles relating to the availability of remedies.
k. Authorization of Shares. At the time of the issuance of the Shares, the Shares will have been duly authorized and
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validly issued, and upon payment therefor, will be fully paid and nonassessable and will conform to the description thereof contained in the Prospectus; no holder thereof will be subject to personal liability for the obligations of the Company solely by reason of being such a holder; such Shares are not subject to the preemptive rights of any shareholder of the Company; and all action required to be taken for the authorization, issue and sale of such Shares has been validly and sufficiently taken.
1. Taxes. The Company has filed all Federal, state and foreign income tax returns, which have been required to be filed, on or before the due date (taking into account all extensions of time to file) and has paid or provided for the payment of all taxes indicated by said returns and all assessments received by the Company to the extent that such taxes or assessments have become due.
m. Financial Statements. The financial statements of the Company included in the Prospectus present fairly in all material respects the financial position of the Company as of the date indicated and the results of its operations for the periods specified; said financial statements have been prepared in conformity with generally accepted accounting principles applied on a consistent basis.
n. Investment Company Act. The Company does not intend to conduct its business so as to be an “investment company” as that term is defined in the Investment Company Act of 1940, as amended, and the rules and regulations thereunder, and it will exercise reasonable diligence to ensure that it does not become an “investment company” within the meaning of the Investment Company Act of 1940, as amended.
o. Qualification as a Real Estate Investment Trust. The Company intends to satisfy the requirements of the Internal Revenue Code of 1986, as amended (the “Code”), for qualification of the Company as a real estate investment trust and, to the knowledge of the Company, there currently exists no circumstance that will prevent the Company from complying with such requirements as contemplated in the Prospectus. The Company intends to operate the business of the Company so as to comply with such requirements to elect status as a real estate investment trust at such time as it so qualifies.
p. Due Diligence Materials. To the knowledge of the Company, all materials provided by the Company or any of its affiliates to the Dealer, including materials provided to the Dealer in connection with its due diligence investigation relating to the Offering, were materially accurate as of the date provided.
q. Authorized Sales Materials. Any and all supplemental sales materials, sales literature, advertising and other material as shall have been previously approved by the Company or an authorized agent of the Company in writing and all appropriate regulatory agencies (the “Authorized Sales Materials”) prepared by the Company and any of its affiliates (excluding the Dealer Manager) specifically for use in connection with the Offering, when used in conjunction with the Prospectus, did not at the time provided for use, and, as to later provided materials, will not at the time provided for use, include any untrue statement of a material fact nor did they at the time provided for use, or, as to later provided materials, will they, omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made and when read in conjunction with the Prospectus, not misleading. If at any time any event occurs which is known to the Company as a result of which such Authorized Sales Materials when used in conjunction with the Prospectus would include an untrue statement of a material fact or, in view of the circumstances under which they were made, omit to state any material fact necessary to make the statements therein not misleading, the Company will promptly notify the Dealer Manager thereof.
2. Covenants of the Company.
The Company covenants and agrees with the Dealer Manager during the full term of this Agreement that:
a. Furnishing Materials. It will, at no expense to the Dealer Manager, furnish the Dealer Manager with such number of printed copies of the Registration Statement, including all amendments and exhibits thereto, as the Dealer Manager may reasonably request. It will similarly furnish to the Dealer Manager and others designated by the Dealer Manager as many copies of the following documents as the Dealer Manager may reasonably request: (i) the Prospectus in final form and every form of supplemental or amended prospectus; (ii) this Agreement; and (iii) any other Authorized Sales Materials.
b. Qualification of Shares. It will furnish such proper information and execute and file such documents as may be necessary for the Company to qualify the Shares for offer and sale under the securities laws of such jurisdictions as
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the Dealer Manager may reasonably designate and will file and make in each year such statements and reports as may be required. The Company will furnish to the Dealer Manager a copy of such papers filed by the Company in connection with any such qualification.
c. Effectiveness of Registration; Stop Orders. It will: (i) use its best efforts to cause the Registration Statement to become effective; (ii) furnish copies of any proposed amendment or supplement of the Registration Statement or Prospectus to the Dealer Manager; (iii) file every amendment or supplement to the Registration Statement or the Prospectus that may be required by the SEC; (iv) use its best efforts to prevent the issuance of any order by the SEC, any state regulatory authority or any other regulatory authority which suspends the effectiveness of the Registration Statement, prevents the use of the Prospectus, or otherwise prevents or suspends the Offering; and (v) if at any time the SEC, any state regulatory authority or any other regulatory authority shall issue any stop order suspending the effectiveness of the Registration Statement, it will use its best efforts to obtain the lifting of such order at the earliest possible time. The Company has complied and will comply with all applicable state and federal laws, rules and regulations applicable to the Offering and the sale of Shares, as well as the laws of any other applicable jurisdiction.
d. Amendments and Supplements. If at any time when a Prospectus is required to be delivered under the Securities Act any event occurs as a result of which, in the opinion of either the Company or the Dealer Manager, the Prospectus or any other prospectus then in effect would include an untrue statement of a material fact or, in view of the circumstances under which they were made, omit to state any material fact necessary to make the statements therein not misleading, the Company will promptly notify the Dealer Manager thereof (unless the information shall have been received from the Dealer Manager) and will effect the preparation of an amended or supplemental prospectus which will correct such statement or omission. The Company will then promptly prepare such amended or supplemental prospectus or prospectuses as may be necessary to comply with the requirements of Section 10 of the Securities Act.
3. Representations, Warranties and Covenants of the Dealer Manager.
The Dealer Manager represents and warrants to the Company that:
a. The Company. The Dealer Manager is a general partnership duly organized, validly existing and in good standing under the laws of New York, with all requisite power and authority to enter into this Agreement and to carry out its obligations hereunder.
b. Authorization of Agreement. This Agreement has been duly authorized, executed and delivered by the Dealer Manager, and assuming due authorization, execution and delivery of this Agreement by the Company, will constitute a valid and legally binding agreement of the Dealer Manager enforceable against the Dealer Manager in accordance with its terms, except to the extent that the enforceability of the indemnity and/or contribution provisions contained in Section 6 of this Agreement may be limited under applicable securities laws and to the extent that the enforceability of this Agreement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws that affect creditors’ rights generally or by equitable principles relating to the availability of remedies.
c. Absence of Conflict or Default. The execution and delivery of this Agreement, the consummation of the transactions herein contemplated and compliance with the terms of this Agreement by the Dealer Manager will not conflict with or constitute a default under (i) its organizational documents, (ii) any indenture, mortgage, deed of trust or lease to which the Dealer Manager is a party or by which it may be bound, or to which any of the property or assets of the Dealer Manager is subject, or (iii) any rule, regulation, writ, injunction or decree of any government, governmental instrumentality or court, domestic or foreign, having jurisdiction over the Dealer Manager or its assets, properties or operations, except in the case of clause (ii) or (iii) for such conflicts or defaults that would not individually or in the aggregate have a material adverse effect on the financial condition, business, properties or results of operations of the Dealer Manager.
d. Broker Dealer Registration; FINRA Membership. The Dealer Manager is, and during the term of this Agreement will be, duly registered as a broker-dealer pursuant to the provisions of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), a member in good standing of the Financial Industry Regulatory Authority, Inc. (“FINRA”), and a broker or dealer duly registered as such in those states and other jurisdictions where the Dealer Manager is required to be registered in order to participate in the distribution of Shares in the Offering. Moreover, the Dealer Manager’s employees and representatives that will act under this Agreement have all required licenses and registrations to act under this Agreement.
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e. Anti-Money Laundering. The Dealer Manager has, to the extent required, established and implemented anti- money laundering compliance programs in accordance with applicable law, including applicable FINRA rules, SEC rules and the USA PATRIOT Act of 2001 and will require that its Dealers establish such programs, reasonably expected to detect and cause the reporting of suspicious transactions in connection with the sale of Shares of the Company.
f. Disclosure. As of the date of this Agreement, the Dealer Manager has not furnished any information to the Company expressly for use in the Registration Statement, any preliminary prospectus, the Prospectus, or any amendment or supplement thereto. If, during the term of this Agreement, the Dealer Manager delivers any information to the Company in writing expressly for use in the Registration Statement, any preliminary prospectus, the Prospectus, or any amendment or supplement thereto, then any such information shall not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading.
4. Appointment, Obligations and Compensation of Dealer Manager.
a. Appointment of Dealer Manager; Best Efforts. The Company hereby appoints the Dealer Manager as its agent and principal distributor for the purpose of selling for cash to the public up to the maximum amount of Shares set forth in the Prospectus (subject to the Company’s right of reallocation, as described in the Prospectus) through Dealers, all of whom shall be members of FINRA, or registered investment advisers or bank trust departments who are paid no commission or as otherwise described in the Prospectus. The Dealer Manager may not sell Shares for cash directly to its own clients and customers except to institutional investors approved by the Company at the public offering price or customers of registered investment advisers or bank trust departments, subject to the terms and conditions stated in the Prospectus. The Dealer Manager hereby accepts such agency and distributorship and agrees to use its best efforts to sell the Shares on said terms and conditions. With respect to the Dealer Manager’s participation in the distribution of the Shares in the Offering, the Dealer Manager agrees to comply in all material respects with the applicable requirements of the Securities Act, the Rules and Regulations, the Exchange Act and the rules and regulations promulgated thereunder, and all other state or federal laws, rules and regulations applicable to the Offering and the sale of Shares, all applicable state securities or blue sky laws and regulations, and the rules of FINRA applicable to the Offering, from time to time in effect, including, without limitation, FINRA Rules 2090, 2111, 2310, 5110 and 5141, and Rules 2420 and 2440 of the NASD Conduct Rules (or any such rule’s successor FINRA Rule).
b. Commencement of Sales; Termination. Promptly after the effective date of the Registration Statement, the Dealer Manager and the Dealers shall commence the offering of the Shares for cash to the public in jurisdictions in which the Shares are registered or qualified for sale or in which such offering is otherwise permitted. The Dealer Manager and the Dealers will suspend or terminate offering the Shares upon request of the Company at any time and will resume offering the Shares upon subsequent request of the Company.
c. Suitability. The Dealer Manager, in its agreements with Dealers, shall require that each Dealer offer Shares only to persons who meet the financial qualifications set forth in the Prospectus or in any suitability letter or memorandum sent to it by the Company and only make offers to persons in the states in which it is advised in writing that the Shares are qualified for sale or that such qualification is not required. In offering Shares, the Dealer Manager, in its agreements with Dealers, will require that each Dealer comply, with the provisions of all applicable rules and regulations relating to suitability of investors, including, without limitation, applicable FINRA rules and the provisions of Article III.C. of the Statement of Policy Regarding Real Estate Investment Trusts of the North American Securities Administrators Association, Inc., effective May 7, 2007, as amended (the “NASAA REIT Guidelines”).
d. Offering Price. The Dealer Manager and all Dealers will offer and sell the Shares at the public offering prices per share as determined in accordance with the Prospectus and described below. Each class of Shares will be sold at the then-current “transaction price,” plus applicable upfront selling commissions and dealer manager fees, subject in certain circumstances to reductions thereof as described in the Prospectus. The “transaction price” generally will be the most recently determined net asset value (“NAV”) per share applicable to the class of Shares being purchased (as calculated in accordance with the procedures described in the Prospectus), unless the Company determines to adjust the previously-disclosed transaction price because the Company believes there has been a material change (positive or negative) to the NAV per share since the end of the prior month, as described in the Prospectus. Until the Company commences monthly valuations, the per share purchase price for Shares will be the most recently determined NAV
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per share of $25.11, plus applicable upfront selling commissions and dealer manager fees. Thereafter, the Company will determine the NAV on a monthly basis and the offering price per share for each class of Shares will vary. For stockholders who participate in the Company’s DRP, the cash distributions attributable to the class of shares that each stockholder owns will be automatically re-invested in additional shares of the same class. The Shares will be issued and sold to stockholders of the Company pursuant to the DRP at a purchase price equal to the transaction price of the applicable class of shares on the date the distribution is payable.
e. Selling Commissions and Dealer Manager Fees. Subject to volume discounts and other special circumstances described in or otherwise provided in this Agreement and under the caption “Plan of Distribution” in the Prospectus, which may be amended and restated from time to time as compensation for the services rendered by the Dealer Manager, the Company agrees that it will pay to the Dealer Manager selling commissions in the amount of up to 3.0% of the transaction price of the Class T Shares sold in the primary offering, all or a portion of which may be reallowed to Dealers. The Company further agrees that it will pay to the Dealer Manager selling commissions in the amount of up to 3.5% of the transaction price of the Class S Shares sold in the primary offering, all or a portion of which may be reallowed to Dealers. In addition, the Dealer Manager shall be paid a dealer manager fee in the amount of up to 0.50% of the transaction price of the Class T Shares sold in the primary offering. All or a portion of the dealer manager fee may be paid by the Dealer Manager to Dealers. No selling commissions or dealer manager fees shall be paid to the Dealer Manager with respect to the sale of Class D Shares and Class I Shares or with respect to Class T Shares, Class S Shares, Class D Shares and Class I Shares sold pursuant to the DRP.
f. Distribution Fees. In addition, the Company agrees that it will pay to the Dealer Manager a distribution fee in an annual amount equal to 0.85% of the aggregate NAV of the outstanding Class T Shares, 0.85% of the aggregate NAV of the outstanding Class S Shares and 0.25% of the aggregate NAV of the outstanding Class D Shares, which will accrue monthly and be payable monthly in arrears. No distribution fees will be paid to the Dealer Manager with respect to Class I Shares. The Dealer Manager may reallow or advance the distribution fees to the Dealer who sold the Class T Shares, Class S Shares or Class D Shares giving rise to such distribution fees, respectively, to the extent the Selected Dealer Agreement with such Dealer provided for such payment. Notwithstanding the foregoing, if the Dealer Manager is notified that the Dealer who sold such Class T Shares, Class S Shares or Class D Shares, respectively, is no longer the broker-dealer of record with respect to such Class T Shares, Class S Shares or Class D Shares, then such Dealer’s entitlement to the distribution fees related to such Class T Shares, Class S Shares or Class D Shares shall cease, and such Dealer shall not receive the distribution fee for any portion of the month in which such Dealer is not the broker-dealer of record on the last day of the month; provided, however, if the change in the broker-dealer of record with respect to such Class T Shares, Class S Shares or Class D Shares is made in connection with a change in the registration of record for such Class T Shares, Class S Shares or Class D Shares on the Company’s books and records (including, but not limited to, a re-registration due to a sale or a transfer or a change in the form of ownership of the account), then such Dealer shall be entitled to a pro rata portion of the distribution fees related to such Class T Shares, Class S Shares or Class D Shares, respectively, for the portion of the month for which such Dealer was the broker-dealer of record. Thereafter, such distribution fees may be reallowed by the Dealer Manager in its sole discretion to the then-current broker dealer of record of the Class T Shares, Class S Shares or Class D Shares if any such broker dealer of record has been designated (the “Servicing Broker Dealer”); provided, that, such reallowance shall only be paid to the extent such Servicing Broker Dealer has entered into a Selected Dealer Agreement or similar agreement with the Dealer Manager (the “Servicing Agreement”) and such Selected Dealer Agreement or Servicing Agreement with the Servicing Broker Dealer provides for such reallowance. The Dealer Manager may pay to such Dealers and Servicing Broker Dealers up to 100% of the aggregate Distribution Fees payable by the Company to the Dealer Manager.
The Company will cease paying distribution fees with respect to any Class T Share, Class S Share or Class D Share at the end of the month in which the Company’s transfer agent in conjunction with the Dealer Manager determines that the total selling commissions, dealer manager fees and distribution fees paid with respect to such Class T Shares, Class S Shares or Class D Shares, as applicable, held by a stockholder within his or her particular account equals 8.75% (or, in the case of shares sold through certain Dealers, a lower limit as set forth in any applicable agreement between the Dealer Manager and the Dealer) of the gross proceeds from the sale of such Class T Shares, Class S Shares or Class D Shares (including the gross proceeds of any shares issued under the DRP with respect thereto). At the end of such month, such Class T Share, Class S Share or Class D Share (and any shares issued under the DRP) will convert into a number of Class I Shares (including any fractional shares) with an equivalent aggregate NAV as such share. In addition, the Company will cease paying distribution fees with respect to each Class T Share, Class S Share and Class D Share on the earlier to
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occur of the following: (i) a listing of the Shares, (ii) the merger or consolidation of the Company with and into another entity, or the sale or other disposition of all or substantially all of the Company’s assets or (iii) the date following the completion of the Primary Offering on which, in the aggregate, underwriting compensation from all sources in connection with the Offering, including up front selling commissions, distribution fees and other underwriting compensation, is equal to 10.0% of the gross proceeds from the Offering. The Company will further cease paying the distribution fees on any Class T Share, Class S Share or Class D Share that is redeemed or repurchased, as well as upon the Company’s dissolution, liquidation or the winding up of its affairs, or a merger or other extraordinary transaction to which the Company is a party and in which the Class T Shares, Class S Shares or Class D Shares, each as a class, are exchanged for cash or other securities.
g. Reallowance. The terms of any reallowance of selling commissions, dealer manager fees and the distribution fees shall be set forth in the Selected Dealer Agreement or Servicing Agreement entered into with the Dealers or Servicing Dealers, as applicable. The Company will not be liable or responsible to any Dealer or Servicing Dealer for direct payment of commissions, or any reallowance of dealer manager fees or the Servicing Fee to such Dealer or Servicing Dealer, it being the sole and exclusive responsibility of the Dealer Manager for payment of commissions or any reallowance of dealer manager fees or the Servicing Fee to Dealers and Servicing Dealers. Notwithstanding the foregoing, at the discretion of the Company, the Company may act as agent of the Dealer Manager by making direct payment of commissions, dealer manager fees or Servicing Fees to Dealers on behalf of the Dealer Manager without incurring any liability. The Dealer Manager shall not be obligated to pay selling commissions, distribution fees or any reallowance of the dealer manager fees to Dealers and Servicing Broker Dealers until such time as the Dealer Manager is in receipt of such amounts from the Company.
h. Reimbursement. In addition to the other items of underwriting compensation set forth in this Agreement, the Company and/or Cantor Fitzgerald Income Advisors, LLC (the “Advisor”) shall reimburse the Dealer Manager for all items of underwriting compensation referenced in the Prospectus, to the extent the Prospectus indicates that they will be paid by the Company or the Advisor, as applicable, and to the extent permitted pursuant to prevailing rules and regulations of FINRA.
In addition to reimbursement as provided under this Agreement, and subject to prevailing rules and regulations of FINRA, the Company shall also pay directly or reimburse the Dealer Manager for reasonable bona fide due diligence expenses incurred by any Dealer as described in the Prospectus. The Dealer Manager shall obtain from any Dealer and provide to the Company a detailed and itemized invoice for any such due diligence expenses. Notwithstanding anything contained herein to the contrary, no payments or reimbursements made by the Company with respect to a particular Offering hereunder shall cause total organization and offering expenses, defined under NASAA Guidelines (as defined in Section 4. a. below) and FINRA rules, to exceed 15% of gross proceeds from such Offering.
i. The Dealer Manager represents and warrants to the Company and each person and Firm that signs the Registration Statement that the information under the caption “Plan of Distribution” in the Prospectus and all other information furnished to the Company by the Dealer Manager in writing expressly for use in the Registration Statement, any preliminary prospectus, the Prospectus, or any amendment or supplement thereto does not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading.
j. Permissible Materials. The Dealer Manager shall use and distribute in conjunction with the offer and sale of any Shares only the Prospectus (as it may be supplemented or amended from time-to-time) and Authorized Sales Materials.
k. Offering Jurisdictions. The Dealer Manager and the Dealers shall cause Shares to be offered and sold only in such jurisdictions where the Dealer Manager and the respective Dealer are licensed to do so. In addition, the Dealer Manager shall cause Shares to be offered and sold only in those jurisdictions specified in writing by the Company where the offering and sale of its Shares have been authorized by appropriate regulatory authorities and such list of jurisdictions shall be updated by the Company as additional states are added.
l. Submission of Orders. The Dealer Manager, in its agreements with Dealers, shall require each Dealer to:
(i) instruct subscribers to make their checks payable to or to send wire transfers for the account of “Cantor Fitzgerald Income Trust, Inc.;”
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(ii) return any check not conforming to the foregoing instructions directly to such subscriber not later than the end of the next business day following its receipt; provided that checks received by the Dealer which conform to the foregoing instructions shall be transmitted for deposit in accordance with the procedures in paragraphs (iii) and (iv) below;
(iii) where, pursuant to a Dealer’s internal supervisory procedures, internal supervisory review is conducted at the same location at which subscription documents and checks are initially received from subscribers, transmit checks by the end of the next business day following receipt of the subscription documents and the check by the Dealer to the Company or to such other account or agent as directed by the Company;
(iv) where, pursuant to a Dealer’s internal supervisory procedures, final internal supervisory review is conducted at a different location (the “Final Review Office”), transmit subscription documents and checks to the Final Review Office by the end of the next business day following receipt of the subscription documents and check by the Dealer. The Final Review Office will transmit such subscription documents and checks by the end of the next business day following receipt by the Final Review Office to the Company or to such other account or agent as directed by the Company.
m. Payment. Except as otherwise provided herein, the selling commissions specified in Section 4(e) of this Agreement for the sale of any Shares shall be payable in cash by the Company no later than seven (7) days after the investor subscribing for the Shares is admitted as a stockholder of the Company and the dealer manager fees specified in Section 4(e) of this Agreement for the sale of any Shares shall be payable in cash on a schedule mutually agreed between the Dealer Manager and the Company. Notwithstanding anything to the contrary contained herein, in the event that the Company pays any selling commissions or fees to the Dealer Manager for a sale of one or more Shares and the subscription is subsequently rescinded as to one or more of the Shares covered by such subscription, the Company shall decrease the next payment of commissions or other compensation otherwise payable to the Dealer Manager by the Company under this Agreement by an amount equal to the selling commissions or fees paid to the Dealer Manager for the sale of the Shares as to which the subscription is rescinded. In the event that no payment of selling commissions or other compensation is due to the Dealer Manager after such rescinded subscription occurs, the Dealer Manager shall pay the amount specified in the preceding sentence to the Company within seven (7) days following receipt of notice by the Dealer Manager from the Company stating the amount owed as a result of rescinded subscriptions.
5. Issuance of Confirmations to Purchasers.
The Company hereby agrees and assumes the duty to confirm on its behalf and on behalf of Dealers who sell the Shares all orders for purchase of Shares accepted by the Company. Such confirmations will comply with the rules of the SEC and FINRA, and will comply with applicable laws of such other jurisdictions to the extent the Company is advised of such laws in writing by the Dealer Manager.
6. Indemnification.
a. The Company shall indemnify and hold harmless the Dealer Manager, its officers, directors, owners, managers, members, partners, employees, agents, attorneys and accountants, and each person, if any, who controls the Dealer Manager within the meaning of Section 15 of the Securities Act (collectively, the “Dealer Manager Indemnified Persons”) and each Dealer, its officers, directors, owners, managers, members, partners, employees, agents, attorneys and accountants, and each person, if any, who controls such Dealer within the meaning of Section 15 of the Securities Act (collectively, the “Dealer Indemnified Persons” and, together with the Dealer Manager Indemnified Persons, the “Broker Dealer Indemnified Persons”) from and against any losses, claims, damages, expenses or liabilities, joint or several, to which such Broker Dealer Indemnified Persons may become subject, under the Securities Act or otherwise, insofar as such losses, claims, damages, expenses or liabilities (or actions in respect thereof) arise out of or are based upon: (a) a breach or alleged breach by the Company of any of its representations, warranties or covenants in this Agreement; (b) any untrue statement or alleged untrue statement of a material fact contained in (i) the Registration Statement (including the Prospectus as a part thereof) or any post- effective amendment thereto, (ii) the Prospectus or any amendment or supplement to the Prospectus, (iii) any Authorized Sales Materials or (iv) any blue sky application or other document executed by the Company or on its behalf specifically for the purpose of qualifying any or all of
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the Shares for sale under the securities laws of any jurisdiction or based upon written information furnished by the Company under the securities laws thereof (any such application, document or information being hereinafter called a “Blue Sky Application”); (c) the omission or alleged omission to state in (i) the Registration Statement (including the Prospectus as a part thereof) or any post-effective amendment thereto, (ii) the Prospectus or any amendment or supplement to the Prospectus, (iii) any Authorized Sales Materials or (iv) any Blue Sky Application a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading or (d) any verbal or written representation made by the Company, its representatives or agents in violation of the Securities Act or any other applicable federal or state securities law. The Company shall reimburse each Broker Dealer Indemnified Person for any legal or other expenses reasonably incurred by such Broker Dealer Indemnified Person in connection with investigating or defending such loss, claim, damage, liability or action. Notwithstanding the foregoing, the Company shall not be liable: (x) to any Dealer Manager Indemnified Person in any such case (1) to the extent that any such loss, claim, damage, expense or liability arises out of, or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in reliance upon and in conformity with written information furnished to the Company by or on behalf of the Dealer Manager specifically for use with reference to the Dealer Manager in the preparation of the Registration Statement or any such post-effective amendment thereof, the Prospectus or any such amendment thereof or supplement thereto, any Authorized Sales Materials or any such Blue Sky Application or (2) it is determined that the loss, claim, damage, expense, liability or action results directly and primarily from the willful misconduct, fraudulent act or gross negligence of the Dealer Manager; or (y) to any Dealer Indemnified Person in any such case (1) to the extent that any such loss, claim, damage, expense or liability arises out of, or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in reliance upon and in conformity with written information furnished to the Company by or on behalf of any Dealer specifically for use with reference to such Dealer in the preparation of the Registration Statement or any such post- effective amendment thereof, the Prospectus or any such amendment thereof or supplement thereto, any Authorized Sales Materials or any such Blue Sky Application or (2) it is determined that the loss, claim, damage, expense, liability or action results from the willful misconduct, fraudulent act or gross negligence of the Dealer. This indemnity agreement will be in addition to any liability which the Company may otherwise have. Notwithstanding the foregoing, the Company may not indemnify or hold harmless the Dealer Manager, any Dealer or any of their affiliates in any manner that would be inconsistent with the provisions to Article II.G of the NASAA REIT Guidelines. In particular, but without limitation, the Company may not indemnify or hold harmless the Dealer Manager, any Dealer or any of their affiliates for liabilities arising from or out of a violation by such party of state or Federal securities laws, unless one or more of the following conditions are met:
(i) There has been a successful adjudication on the merits of each count involving alleged securities law violations;
(ii) Such claims have been dismissed with prejudice on the merits by a court of competent jurisdiction; or
(iii) A court of competent jurisdiction approves a settlement of the claims against the indemnitee and finds that indemnification of the settlement and the related costs should be made, and the court considering the request for indemnification has been advised of the position of the SEC and of the published position of any state securities regulatory authority in which the securities were offered as to indemnification for violations of securities laws.
b. The Dealer Manager shall indemnify and hold harmless the Company, each officer and director of the Company, the Company’s employees, agents, attorneys and accountants, and each person or firm which has signed the Registration Statement and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act (collectively, the “Company Indemnified Persons”), from and against any losses, claims, damages, expenses or liabilities to which any of the Company Indemnified Persons may become subject, under the Securities Act or otherwise, insofar as such losses, claims, damages, expenses or liabilities (or actions in respect thereof) arise out of or are based upon: (a) a breach or alleged breach by the Dealer Manager of any of its representations, warranties or covenants in this Agreement; (b) any untrue statement of a material fact contained in (i) the Registration Statement (including the Prospectus as a part thereof) or any post-effective amendment thereto, (ii) the Prospectus or any amendment or supplement to the Prospectus, (iii) any Authorized Sales Materials or (iv) any Blue Sky Application, or (c) the omission to state in (i) the Registration Statement (including the Prospectus as a part thereof) or any post-effective amendment thereto, (ii) the Prospectus or any amendment or supplement to the Prospectus, (iii) any Authorized Sales Materials or (iv) any Blue Sky Application a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made not misleading, in each such case under clauses (b) or (c) hereof to the extent, but only to the extent, that such untrue statement or omission
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was made in reliance upon and in conformity with written information furnished to the Company by or on behalf of the Dealer Manager specifically for use with reference to the Dealer Manager in the preparation of the Registration Statement or any such post-effective amendment thereof, the Prospectus or any such amendment thereof or supplement thereto, any Authorized Sales Materials or any such Blue Sky Application and shall reimburse each Company Indemnified Person for any legal or other expenses reasonably incurred by such Company Indemnified Person in connection with investigating or defending such loss, claim, damage, liability or action. This indemnity agreement will be in addition to any liability which the Dealer Manager may otherwise have. Notwithstanding anything to the contrary contained herein, in no event shall the Dealer Manager be required or obliged to contribute or provide indemnification in excess of the net proceeds from the sale of the Shares in the Offering that have been actually received and retained by the Dealer Manager.
(i) Each Dealer severally shall indemnify and hold harmless the Company, the Dealer Manager and each of their respective directors (including any persons named in the Registration Statement with his consent, as about to become a director), each of their respective officers who has signed the Registration Statement, each of their respective managers, members, partners, employees, agents, attorneys and accountants, and each person, if any, who controls the Company or the Dealer Manager within the meaning of Section 15 of the Securities Act (collectively, the “Company Indemnified Persons”) from and against any losses, claims, damages, expenses or liabilities to which the Company Indemnified Persons may become subject, under the Securities Act or otherwise, insofar as such losses, claims, damages, expenses or liabilities (or actions in respect thereof) arise out of or are based upon: (a) a breach or alleged breach by the Dealer of any of its representations, warranties or covenants in the Selected Dealer Agreement, (b) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement (including the Prospectus as a part thereof) or any post-effective amendment thereto, the Prospectus or any amendment or supplement to the Prospectus, (iii) any Authorized Sales Materials or (iv) any Blue Sky Application, or (c) the omission to state in (i) the Registration Statement (including the Prospectus as a part thereof) or any post-effective amendment thereto, (ii) the Prospectus or any amendment or supplement to the Prospectus, (iii) any Authorized Sales Materials or (iv) any Blue Sky Application a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made not misleading, in each such case under clauses (b) or (c) hereof to the extent, but only to the extent that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Company or the Dealer Manager by or on behalf of such Dealer specifically for use with reference to such Dealer in the preparation of the Registration Statement or any such post-effective amendment thereof, the Prospectus or any such amendment thereof or supplement thereto, any Authorized Sales Materials or any such Blue Sky Application, or (c) any failure to deliver to any investor the Prospectus and all supplements thereto and any amended prospectus, or (d) any use by the Dealer its employees, representatives or agents of sales materials in connection with the Offering other than Authorized Sales Materials, (e) any verbal or written representation made by the Dealer, its employees, representatives or agents in violation of the Securities Act or any other applicable federal or state securities law, (f) any sale in violation of or failure by Dealer to perform its obligations as set forth in Section IX of the Selected Dealer Agreement, or (g) any failure to comply with applicable rules of FINRA, federal or state securities laws or the rules and regulations promulgated thereunder, the NASAA REIT Guidelines, or any other state or federal laws and regulations applicable to the Offering or the activities of the Dealer in connection with the Offering, and will reimburse each Company Indemnified Person for any legal or other expenses reasonably incurred by such Company Indemnified Person in connection with investigating or defending any such loss, claim, damage, liability or action. This indemnity agreement will be in addition to any liability which such Dealer may otherwise have.
c. Promptly after receipt by a person to whom the rights to indemnification provided for in Sections 7(a), (b) and (c) of this Agreement would by their terms be available (collectively, the “Indemnified Parties” and each, an “Indemnified Party”) under this Section 6 of notice of the commencement of any action, such Indemnified Party will, if a claim in respect thereof is to be made against the Company, the Dealer Manager or the Dealers, to the extent any of them is an indemnifying party with respect to an Indemnified Party (each to such extent, an “Indemnifying Party”) under this Section 6, notify in writing the Indemnifying Party of the commencement thereof; the omission so to notify the Indemnifying Party will relieve it from liability under this Section 6 only in the event and to the extent the failure to provide such notice actually and materially and adversely affects the ability to defend such action. In case any such action is brought against any Indemnified Party, and it notifies an Indemnifying Party of the commencement thereof, the Indemnifying Party will be entitled, to the extent it may wish, jointly with any other Indemnifying Party similarly notified, to participate in the defense thereof, with separate counsel. Such participation shall not relieve such
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Indemnifying Party of the obligation to reimburse the Indemnified Party for reasonable legal and other expenses (subject to paragraph (e) of this Section 6) incurred by such Indemnified Party in defending itself, except for such expenses incurred after the Indemnifying Party has deposited funds sufficient to effect the settlement, with prejudice, of the claim in respect of which indemnify is sought. Any such Indemnifying Party shall not be liable to any such Indemnified Party and shall not be required to contribute or provide indemnification on account of any settlement of any claim or action effected without the consent of such Indemnifying Party; provided, that, if an Indemnified Party shall have requested an Indemnifying Party to reimburse the Indemnified Party for fees and expenses of counsel pursuant to Section 6(e), any such Indemnifying Party shall be liable for any settlement of any claim or action effected without its written consent if (1) such settlement is entered into more than forty-five (45) days after receipt by such Indemnifying Party of the aforesaid request, (2) such Indemnifying Party shall have received notice of the terms of such settlement at least thirty (30) days prior to such settlement being entered into and (3) such Indemnifying Party shall not have reimbursed such Indemnified Party in accordance with such request prior to the date of such settlement.
d. The Indemnifying Party shall pay all legal fees and expenses of the Indemnified Party in the defense of such claims or actions; provided, however, that the Indemnifying Party shall not be obliged to pay legal expenses and fees to more than one law firm (as well as local counsel) in connection with the defense of similar claims arising out of the same alleged acts or omissions giving rise to such claims notwithstanding that such actions or claims are alleged or brought by one or more parties against more than one Indemnified Party. If such claims or actions are alleged or brought against more than one Indemnified Party, then the Indemnifying Party shall only be obliged to reimburse the expenses and fees of the one law firm (as well as local counsel) that has been selected by a majority of the indemnified parties against which such action is finally brought; and in the event a majority of such indemnified parties is unable to agree on which law firm for which expenses or fees will be reimbursable by the Indemnifying Party, then payment shall be made to the first law firm of record representing an Indemnified Party against the action or claim. Such law firm shall be paid only to the extent of services performed by such law firm and no reimbursement shall be payable to such law firm on account of legal services performed by another law firm.
e. No Indemnifying Party shall, without the prior written consent of each Indemnified Party, settle or compromise or consent to the entry of any judgment in any pending or threatened claim, action or proceeding relating to the matters contemplated by this Section 6 (whether or not any indemnified party is a party thereto), unless such settlement, compromise or consent (1) includes an unconditional release of each Indemnified Party, in form and substance reasonably satisfactory to such Indemnified Party, from all liability arising out of such litigation, investigation, proceeding or claim and (2) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any Indemnified Party.
f. In order to provide for just and equitable contribution in circumstances in which the indemnification provided for in the foregoing paragraphs of this Section 6 is applicable in accordance with its terms but for any reason is held to be unavailable from the Indemnifying Parties, the Indemnifying Parties will contribute to the total losses, claims, liabilities, expenses and damages (including any investigative, legal and other expenses reasonably incurred in connection with, and any amount paid in settlement of, any action, suit or proceeding or any claim asserted, but after deducting any contribution received by any Indemnified Party from persons other than the Indemnifying Parties, such as persons who control the Indemnified Party within the meaning of the Securities Act and officers and directors of the Indemnified Party, who also may be liable for contribution) to which the Indemnifying Parties may be subject in such proportion as shall be appropriate to reflect the relative benefits received by the Indemnifying Parties on the one hand and the Indemnified Parties on the other hand. The relative benefits received by the Indemnified Parties on the one hand and the Indemnifying Parties on the other hand shall be deemed to be in the same proportion as the total net proceeds from the sale of the Shares (before deducting expenses) that have been actually received and retained by such parties. If, but only if, the allocation provided by the foregoing sentence is not permitted by applicable law, the allocation of contribution shall be made in such proportion as is appropriate to reflect not only the relative benefits referred to in the foregoing sentence but also the relative fault of the Indemnified Parties, on the one hand, and the Indemnifying Parties, on the other hand, with respect to the statements or omission that resulted in such loss, claim, liability, expense or damage, or action in respect thereof, as well as any other relevant equitable considerations with respect to such offering. Such relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Indemnified Parties or the Indemnifying Parties, the intent of the parties and their relative knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company, the Dealer Manager and the Dealers agree that it would not be just and equitable if contributions pursuant to this
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Section 6(g) were to be determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to herein. The amount paid or payable by an Indemnified Party as a result of the loss, claim, liability, expense, or damage, or action in respect thereof, referred to above in this Section 6(g) shall be deemed to include, for the purpose of this Section 6(g), any legal or other expenses reasonably incurred by such Indemnified Party in connection with investigating or defending any such action or claim to the extent consistent with this Section 6. Notwithstanding the foregoing provisions of this Section 6(g), the Dealer Manager shall not be required to contribute any amount in excess of the net proceeds from the sale of the Shares in the Offering that have been actually received and retained by the Dealer Manager pursuant to this Agreement and no person found guilty of fraudulent misrepresentation (within the meaning of Section 11 (f) of the Securities Act) will be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 6(g), any person who controls a party to this Agreement within the meaning of the Securities Act, and any respective officers, directors, owners, managers, members, partners, employees, agents, attorneys and accountants of a party to this Agreement, will have the same rights to contribution as that party, subject in each case to the provisions hereof. Any party entitled to contribution, promptly after receipt of notice of commencement of any action against such party in respect of which a claim for contribution may be made under this Section 6(g), will notify any such party or parties from whom contribution may be sought, but the omission to so notify will not relieve that party or parties from whom contribution may be sought from any other obligation it or they may have under this Section 6(g) except to the extent that the failure to so notify such other party actually and materially prejudiced the substantive rights or defenses of the party from whom contribution is sought. Except for a settlement entered into pursuant to the last sentence of Section 6(d) or Section 6(f) hereof, no party will be liable for contribution with respect to any action or claim settled without its written consent if such consent is required pursuant to Section 6(d) or Section 6(f) hereof.
g. The indemnity agreements contained in this Section 6 shall remain operative and in full force and effect regardless of (1) any investigation made by or on behalf of any Dealer, or any person controlling any Dealer or by or on behalf of the Company, the Dealer Manager or any officer or director thereof, or by or on behalf of any person controlling the Company or the Dealer Manager, (2) delivery of any Shares and payment therefor, and (3) any termination of this Agreement. A successor of any Dealer or of any of the parties to this Agreement, as the case may be, shall be entitled to the benefits of the indemnity agreements contained in this Section 6.
7. Survival of Provisions.
The respective agreements, representations and warranties of the Company and the Dealer Manager set forth in this Agreement shall remain operative and in full force and effect regardless of (a) any termination of this Agreement, (b) any investigation made by or on behalf of the Dealer Manager or any Dealer or any person controlling the Dealer Manager or any Dealer or by or on behalf of the Company or any person controlling the Company, and (c) the acceptance of any payment for the Shares.
8. Applicable Law; Venue.
This Agreement was executed and delivered in, and its validity, interpretation and construction shall be governed by, the laws of the State of New York; provided, however, that causes of action for violations of Federal or state securities laws shall not be governed by this Section. Venue for any action brought hereunder shall lie exclusively in New York, New York.
9. Severability.
If any portion of this Agreement shall be held invalid or inoperative, then so far as is reasonable and possible the remainder of this Agreement shall be considered valid and operative and effect shall be given to the intent manifested by the portion held invalid or inoperative.
10. Delay Not a Waiver.
Neither the failure nor any delay on the part of any party to this Agreement to exercise any right, remedy, power, or privilege under this Agreement shall operate as a waiver thereof, nor shall a waiver of any right, remedy, power, or privilege with respect to any occurrence be construed as a waiver of such right, remedy, power, or privilege with respect to any subsequent occurrence.
11. Counterparts.
This Agreement may be executed in any number of counterparts. Each counterpart, when executed and delivered, shall be an original contract, but all counterparts, when taken together, shall constitute one and the same Agreement.
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12. Third-Party Beneficiaries; Successors; and Amendment.
a. This Agreement shall inure to the benefit of and be binding upon the Dealer Manager, the Company and their respective successors. Nothing in this Agreement is intended or shall be construed to give to any other person any right, remedy or claim, except as otherwise specifically provided herein. This Agreement shall inure to the benefit of the Dealers to the extent set forth in Section 6 hereof.
b. This Agreement may be amended by the written agreement of the Dealer Manager and the Company.
13. Term and Termination.
In any case, if not sooner terminated, this Agreement shall expire at the close of business on the effective date that the Offering is terminated. This Agreement may be terminated by either party (a) immediately upon notice to the other party in the event that the other party shall have materially failed to comply with any material provision of this Agreement or if any of the representations, warranties, covenants or agreements of such party contained herein shall not have been materially complied with and such failure to comply is not cured within ten (10) days after the date of such occurrence or (b) on 60 days’ written notice. In any event, this Agreement shall be deemed suspended during any period for which the Dealer Manager’s license or registration to act as a broker dealer shall be revoked or suspended by any federal, self-regulatory or state agency.
In addition, the Dealer Manager, upon the expiration or termination of this Agreement, shall (a) promptly deposit any and all funds in its possession which were received from investors for the sale of Shares into the appropriate account as the Company may designate; and (b) promptly deliver to the Company all records and documents in its possession which relate to the Offering which are not designated as dealer copies. The Dealer Manager, at its sole expense, may make and retain copies of all such records and documents required to be retained by the Dealer Manager pursuant to (i) Federal and state securities laws and the rules and regulations thereunder, (ii) the applicable rules of FINRA and (iii) the NASAA REIT Guidelines, but shall keep all such information confidential; provided, that, nothing contained in this Agreement shall prevent the Dealer Manager from disclosing any such information to any regulatory authority asserting jurisdiction over the Dealer Manager. The Dealer Manager shall use its reasonable best efforts to cooperate with the Company to accomplish any orderly transfer of management of the Offering to a party designated by the Company. Upon expiration or termination of this Agreement, the Company shall pay to the Dealer Manager all earned but unpaid compensation and reimbursement for all incurred, accountable compensation to which the Dealer Manager is or becomes entitled under Section 4 of this Agreement, including but not limited to any distribution fees, pursuant to the requirements of that Section 4 at such times as such amounts become payable pursuant to the terms of such Section 4 without acceleration.
14. Definitions.
Any terms used but not defined herein shall have the meanings given to them in the Prospectus.
15. Notices.
All notices, approvals, requests, and authorizations that are required hereunder to be in writing shall be duly given and deemed to be delivered when delivered in person, by courier, or by over-night delivery service, or deposited in the United States mail, properly addressed and stamped with the required postage, to the intended recipient, as set forth below.
| To the Dealer Manager: | Cantor Fitzgerald & Co. 110 E. 59th Street New York, NY 10022 Attn: General Counsel | |
| To the Company: | Cantor Fitzgerald Income Trust, Inc. 110 E. 59th Street New York, NY 10022 Attn: General Counsel | |
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| With a copy to: | ||
| Joseph Herz | ||
| Greenberg Traurig, LLP 200 Park Avenue | ||
| New York City, New York 10166 |
Any party may change its address specified above by giving the other party notice of such change in accordance with this Section.
[Signature page follows]
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IN WITNESS WHEREOF, the parties hereto have each duly executed this Dealer Manager Agreement as of the day and year set forth above.
| COMPANY: | ||
| CANTOR FITZGERALD INCOME TRUST, INC. | ||
| By: | /s/ Paul Pion | |
| Name: | Paul Pion | |
| Title: | Chief Financial Officer | |
| DEALER MANAGER: | ||
| CANTOR FITZGERALD & CO. | ||
| By: | /s/ Mark Kaplan | |
| Name: | Mark Kaplan | |
| Title: | Chief Operating Officer | |
[Signature Page – Dealer Manager Agreement]
Exhibit 10.1
EXECUTION COPY
SECOND AMENDED AND RESTATED ADVISORY AGREEMENT
BY AND AMONG
CANTOR FITZGERALD INCOME TRUST, INC.,
CANTOR FITZGERALD INCOME TRUST OPERATING PARTNERSHIP, L.P.,
CANTOR FITZGERALD INCOME ADVISORS, LLC AND
CANTOR FITZGERALD INVESTORS, LLC
TABLE OF CONTENTS
| Article 1 DEFINITIONS |
1 | |||||
| Article 2 APPOINTMENT |
5 | |||||
| Article 3 DUTIES OF THE ADVISOR |
6 | |||||
| 3.01 |
Offering Services |
6 | ||||
| 3.02 |
Acquisition Services |
6 | ||||
| 3.03 |
Asset Management Services |
7 | ||||
| 3.04 |
Accounting and Other Administrative Services |
8 | ||||
| 3.05 |
Stockholder Services |
9 | ||||
| 3.06 |
Financing Services |
9 | ||||
| 3.07 |
Disposition Services |
9 | ||||
| Article 4 AUTHORITY OF ADVISOR |
9 | |||||
| 4.01 |
Powers of the Advisor |
9 | ||||
| 4.02 |
Approval by the Board |
10 | ||||
| 4.03 |
Modification or Revocation of Authority of Advisor |
10 | ||||
| Article 5 BANK ACCOUNTS |
10 | |||||
| Article 6 RECORDS AND ACCESS |
10 | |||||
| Article 7 LIMITATION ON ACTIVITIES |
10 | |||||
| Article 8 FEES |
10 | |||||
| 8.01 |
Asset Management Fees |
10 | ||||
| 8.02 |
Disposition Fees |
11 | ||||
| 8.03 |
Refinancing Coordination Fee |
11 | ||||
| 8.04 |
Operating Partnership Interests |
11 | ||||
| 8.05 |
Changes to Fee Structure |
11 | ||||
| 8.06 |
Payment in Shares |
11 | ||||
| Article 9 EXPENSES |
11 | |||||
| 9.01 |
General |
11 | ||||
| 9.02 |
Initial Organization and Offering Expenses |
12 | ||||
| 9.03 |
Timing of and Additional Limitations on Reimbursements |
13 | ||||
| Article 10 OTHER SERVICES |
14 | |||||
| Article 11 VOTING AGREEMENT |
14 | |||||
| Article 12 RELATIONSHIP OF ADVISOR AND COMPANY; OTHER ACTIVITIES OF THE ADVISOR |
14 | |||||
| 12.01 |
Relationship |
14 | ||||
| 12.02 |
Time Commitment |
14 | ||||
| 12.03 |
Investment Opportunities and Allocation |
15 | ||||
| Article 13 THE RODIN NAME |
15 | |||||
| Article 14 TERM AND TERMINATION OF THE AGREEMENT |
16 | |||||
| 14.01 |
Term |
16 | ||||
| 14.02 |
Termination by the Parties |
16 | ||||
| 14.03 |
Payments on Termination and Survival of Certain Rights and Obligations |
16 | ||||
| Article 15 ASSIGNMENT |
17 | |||||
| Article 16 INDEMNIFICATION AND LIMITATION OF LIABILITY |
17 | |||||
| 16.01 |
Indemnification |
17 | ||||
| 16.02 |
Limitation on Indemnification |
17 | ||||
| 16.03 |
Limitation on Payment of Expenses |
18 | ||||
| 16.04 |
Indemnification by Advisor |
18 | ||||
| Article 17 NON-SOLICITATION |
18 | |||||
| Article 18 MISCELLANEOUS |
18 | |||||
| 18.01 |
Notices |
18 | ||||
| 18.02 |
Modification |
19 | ||||
| 18.03 |
Severability |
19 | ||||
| 18.04 |
Construction |
19 | ||||
| 18.05 |
Entire Agreement |
19 | ||||
| 18.06 |
Waiver |
19 | ||||
| 18.07 |
Interpretation |
19 | ||||
| 18.08 |
Headings |
19 | ||||
| 18.09 |
Counterparts |
19 | ||||
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SECOND AMENDED AND RESTATED ADVISORY AGREEMENT
THIS SECOND AMENDED AND RESTATED ADVISORY AGREEMENT (this “Agreement”), dated as of August 10, 2020 (the “Effective Date”), is entered into by and among Cantor Fitzgerald Income Trust, Inc. (f/k/a Rodin Global Property Trust, Inc.), a Maryland corporation (the “Company”). Cantor Fitzgerald Income Trust Operating Partnership, L.P. (f/k/a Rodin Global Property Trust Operating Partnership, L.P.), a Delaware limited partnership (the “Operating Partnership”), Cantor Fitzgerald Income Advisors, LLC (f/k/a Rodin Global Property Advisors, LLC), a Delaware limited liability company (the “Advisor”) and, solely with respect to Article 13 and Section 9.03, Cantor Fitzgerald Investors, LLC, a Delaware limited liability company (the “Sponsor”). Capitalized terms used herein shall have the meanings ascribed to them in Article 1 below.
WITNESSETH
WHEREAS, the Company, the Operating Partnership, and, solely with respect to Article 13 and Section 9.03 thereof, the Sponsor and, solely with respect to Section 9.03 thereof, Cantor Fitzgerald Income Trust OP Holdings, LLC (f/k/a Rodin Global Property Trust OP Holdings, LLC) and the Advisor entered into that certain amended and restated advisory agreement dated as of June 29, 2018 (the “Amended Agreement”), pursuant to which the Advisor agreed to render certain services to the Company and the Operating Partnership;
WHEREAS, the Company intends to qualify as a REIT and intends to invest its funds in investments permitted by the terms of Sections 856 through 860 of the Code;
WHEREAS, the Company is the general partner of the Operating Partnership and intends to conduct all of its business and make all or substantially all Investments through the Operating Partnership;
WHEREAS, the Company and the Operating Partnership desire to avail themselves of the knowledge, experience, sources of information, advice, assistance and certain facilities available to the Advisor and to have the Advisor undertake the duties and responsibilities set forth herein, on behalf of, and subject to the supervision of, the Board of the Company, all as provided herein;
WHEREAS, the Advisor is willing to undertake to render such services, subject to the supervision of the Board, on the terms and conditions hereinafter set forth; and
WHEREAS, the Company, the Operating Partnership, the Sponsor and the Advisor desire to amend and restate the terms of the Amended Agreement as set forth herein.
NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements contained herein, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
As used in this Agreement, the following terms shall have the meanings specified below:
Acquisition Expenses means any and all expenses incurred by the Company, the Operating Partnership, the Advisor or any of their Affiliates in connection with the selection, evaluation, acquisition, origination or development of any Investments, whether or not acquired or originated, as applicable, including, without limitation, legal fees and expenses, travel and communications expenses, costs of appraisals, surveys and environmental site assessments, nonrefundable option payments on properties or other investments not acquired, accounting fees and expenses, title insurance premiums, and the costs of performing due diligence.
Advisor means: (i) Cantor Fitzgerald Income Advisors, LLC, a Delaware limited liability company; or (ii) any successor advisor to the Company.
Affiliate or Affiliated means with respect to any Person: (i) any Person directly or indirectly owning, controlling or holding, with the power to vote, ten percent or more of the outstanding voting securities of such other Person; (ii) any Person ten percent or more of whose outstanding voting securities are directly or indirectly owned, controlled or held, with the power to vote, by such other Person; (iii) any Person directly or indirectly controlling, controlled by or under common control with such other Person; (iv) any executive officer, director, trustee or general partner of such other Person; and (v) any legal entity for which such Person acts as an executive officer, director, trustee or general partner. An entity shall not be deemed to control or be under common control with a program sponsored by the Sponsor unless (A) the entity owns ten percent or more of the voting equity interests of such program or (B) a majority of the Board (or equivalent governing body) of such program is composed of Affiliates of the entity.
Anniversary Date means the end of the quarter in which the first anniversary of the commencement of the Company’s follow-on offering of its common stock pursuant to the Registration Statement on Form S-11 (File No. 333-237327), initially filed with the U.S. Securities and Exchange Commission on March 20, 2020, occurs.
Asset Management Fee means the fees payable to the Advisor pursuant to Section 8.01.
Average Invested Assets means, for a specified period, the average of the aggregate book value of the assets of the Company invested, directly or indirectly, in Investments before reserves for depreciation or bad debts or other similar non-cash reserves, computed by taking the average of such values at the end of each month during such period.
Board means the board of directors of the Company, as of any particular time.
Bylaws means the bylaws of the Company, as amended from time to time.
Cause means with respect to the termination of this Agreement, fraud, criminal conduct, willful misconduct, gross negligence or breach of fiduciary duty by the Advisor, or a material breach of this Agreement by the Advisor, which has not been cured within thirty (30) days after written notice thereof.
Charter means the articles of incorporation of the Company, as amended from time to time.
Class AX Shares has the meaning set forth in the Charter.
Class D Shares has the meaning set forth in the Charter.
Class I Shares has the meaning set forth in the Charter.
Class IX Shares has the meaning set forth in the Charter.
Class S Shares has the meaning set forth in the Charter.
Class T Shares has the meaning set forth in the Charter.
Class TX Shares has the meaning set forth in the Charter.
Code means the Internal Revenue Code of 1986, as amended from time to time, or any successor statute thereto. Reference to any provision of the Code shall mean such provision as in effect from time to time, as the same may be amended, and any successor provision thereto, as interpreted by any applicable regulations as in effect from time to time.
Company means Cantor Fitzgerald Income Trust, Inc., a corporation organized under the laws of the State of Maryland.
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Dealer Manager means Cantor Fitzgerald & Co., a New York general partnership, or such other Person or entity selected by the Board to act as dealer manager for the Offering.
Distribution means any distributions of money or other property by the Company to Stockholders, including distributions that may constitute a return of capital for federal income tax purposes.
Distribution Fee has the meaning set forth in the Charter.
Excess Amount has the meaning set forth in Section 9.03.
Expense Year has the meaning set forth in Section 9.03.
FINRA means the Financial Industry Regulatory Authority, Inc.
GAAP means generally accepted accounting principles as in effect in the United States of America from time to time.
Good Reason means either: (i) any failure by the Company or the Operating Partnership to obtain a satisfactory agreement from any successor to the Company or the Operating Partnership to assume and agree to perform the Company’s or the Operating Partnership’s obligations under this Agreement; or (ii) any material breach of this Agreement of any nature whatsoever by the Company or the Operating Partnership.
Gross Proceeds means the aggregate purchase price of all Shares sold for the account of the Company through an Offering, without deduction for Organization and Offering Expenses, and not including Shares sold pursuant to the Company’s distribution reinvestment plan.
Independent Directors has the meaning set forth in the Charter.
Independent Appraisers has the meaning set forth in the Charter.
Initial Public Offering means the initial public offering of Shares registered on Registration Statement No. 333-214130 on Form S-11.
Investments means any investments by the Company or the Operating Partnership in Properties, Loans and all other permitted investments in which the Company or the Operating Partnership may acquire an interest, either directly or indirectly, including through ownership interests in a Joint Venture, pursuant to its Charter, Bylaws or operating partnership agreement, as applicable, and the investment objectives and policies adopted by the Board from time to time, other than short-term investments acquired for purposes of cash management.
Joint Venture means any joint venture, limited liability company, partnership or other entity arrangements in which the Company or any of its subsidiaries is a co-venturer, member or partner established to acquire or hold Investments.
Listing means the listing of the Shares on a national securities exchange. Upon such Listing, the Shares shall be deemed “Listed.”
Loans means mortgage loans and other types of debt investments made by the Company or the Operating Partnership, either directly or indirectly, including through ownership interests in a Joint Venture, including, without limitation, mezzanine loans, B-Notes, bridge loans, convertible debt, wraparound mortgage loans, construction mortgage loans, loans on leasehold interests, and participations in such loans.
NASAA REIT Guidelines means the Statement of Policy Regarding Real Estate Investment Trusts published by the North American Securities Administrators Association as in effect on the Effective Date.
3
NAV means the Company’s net asset value, calculated on a monthly basis pursuant to the Company’s Valuation Guidelines.
Net Income means, for any period, the Company’s total revenues applicable to such period, less the total expenses applicable to such period excluding additions to reserves for depreciation, bad debts or other similar non-cash reserves; provided, however, Net Income for purposes of calculating total allowable Operating Expenses (as defined herein) shall exclude the gain from the sale of the Company’s assets.
Offering means any offering of Shares that is registered with the SEC, excluding Shares offered under any employee benefit plan.
Operating Expenses means all costs and expenses paid or incurred by the Company, as determined under GAAP, that in any way are related to the operation of the Company or its business, including asset management fees paid to the Advisor, but excluding: (i) the expenses of raising capital such as Organization and Offering Expenses, legal, audit, accounting, underwriting, brokerage, listing, registration, and other fees, printing and other such expenses and taxes incurred in connection with the issuance, distribution, transfer, registration and Listing; (ii) interest payments; (iii) taxes; (iv) non-cash expenditures such as depreciation, amortization, and bad debt reserves; (v) incentive fees paid in compliance with the NASAA REIT Guidelines; and (vi) acquisition fees, Acquisition Expenses, disposition fees on the sale of real property and other fees and expenses connected with the acquisition, financing, origination, disposition and ownership of real estate interests, loans or other property (other than disposition fees on the sale of assets other than real property), including the costs of foreclosure, insurance premiums, legal services, maintenance, repair, and improvement of property. The definition of “Operating Expenses” set forth above is intended to encompass only those expenses which are required to be treated as “Total Operating Expenses” under the NASAA REIT Guidelines. As a result, and notwithstanding the definition set forth above, any expense of the Company which is not part of Total Operating Expenses under the NASAA REIT Guidelines shall not be treated as part of “Operating Expenses” for purposes hereof.
Operating Partnership means Cantor Fitzgerald Income Trust Operating Partnership, LP, a Delaware limited partnership formed to own and operate Investments on behalf of the Company.
Operating Partnership Agreement means the limited partnership agreement by and among the Company, the Sponsor and Cantor Fitzgerald Income Trust OP Holdings, LLC, as amended.
OP Units means the units of limited partnership interest in the Operating Partnership.
Organization and Offering Expenses means any and all costs and expenses incurred by or on behalf of the Company and to be paid from the assets of the Company in connection with the formation of the Company and the qualification and registration of an Offering, and the marketing and distribution of Shares, including, without limitation, total underwriting and brokerage discounts and commissions (including fees of the underwriters’ attorneys), expenses for printing, preparing and amending registration statements or supplementing prospectuses, mailing and distributing costs, salaries of employees while engaged in sales activities, telephone and other telecommunications costs, all advertising and marketing expenses, charges of transfer agents, registrars, trustees, escrow holders, depositories and experts and fees, expenses and taxes related to the filing, registration and qualification of the sale of the Shares under federal and state laws, including taxes and fees and accountants’ and attorneys’ fees, bona-fide due diligence expenses of broker-dealers and expenses incurred by the Advisor for administrative services related to the issuance of the Shares.
Performance Participation has the meaning set forth in the Operating Partnership Agreement.
Person means an individual, corporation, partnership, estate, trust (including a trust qualified under Section 401(a) or 501(c)(17) of the Code), a portion of a trust permanently set aside for or to be used exclusively for the purposes described in Section 642(c) of the Code, association, private foundation within the meaning of Section 509(a) of the Code, joint stock company or other entity, or any government or any agency or political subdivision thereof, and also includes a group as that term is used for purposes of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended.
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Property means any real property or properties transferred or conveyed to the Company or the Operating Partnership, either directly or indirectly, including through ownership interests in a Joint Venture.
Property Manager means an entity that has been retained to perform and carry out property management services at one or more of the Properties, excluding persons, entities or independent contractors retained or hired to perform facility management or other services or tasks at a particular Property, the costs for which are passed through to and ultimately paid by the tenant at such Property.
Prospectus means the Company’s final prospectus for any public offering within the meaning of Section 2(10) of the Securities Act of 1933, as amended.
Quarterly Statement has the meaning set forth in Section 9.03.
Registration Statement means the registration statement filed by the Company with the SEC on Form S-11 (Reg. No. 333-214130), as amended from time to time, in connection with the Initial Public Offering.
REIT means a “real estate investment trust” under Sections 856 through 860 of the Code.
SEC means the United States Securities and Exchange Commission.
Securities means any Shares, any other stock, shares or other evidences of equity or beneficial or other interests, voting trust certificates, bonds, debentures, notes or other evidences of indebtedness, secured or unsecured, convertible, subordinated or otherwise, or in general any instruments commonly known as “securities” or any certificates of interest, shares or participations in, temporary or interim certificates for, receipts for, guarantees of, or warrants, options or rights to subscribe to, purchase or acquire, any of the foregoing.
Selling Commissions has the meaning set forth in the Charter.
Shares means collectively, the Class AX Shares, Class D Shares, Class I Shares, Class IX Shares, Class S Shares, Class T Shares and Class TX Shares.
Sponsor means Cantor Fitzgerald Investors, LLC, a Delaware limited liability company.
Stockholders means the registered holders of the Shares.
Termination Date means the date of termination of the Agreement determined in accordance with Article 14 hereof.
Unreimbursed Operating Expenses has the meaning set forth in Section 9.03.
Valuation Guidelines means the valuation guidelines adopted by the Board, as amended from time to time.
2%/25% Guidelines means the requirement pursuant to the NASAA REIT Guidelines that, in any period of four consecutive fiscal quarters, total Operating Expenses not exceed the greater of 2.0% of the Company’s Average Invested Assets during such 12-month period or 25.0% of the Company’s Net Income over the same 12- month period.
ARTICLE 2
APPOINTMENT
The Company and the Operating Partnership hereby appoint the Advisor to serve as their advisor and asset manager subject to the terms and upon the conditions set forth in this Agreement, and the Advisor hereby accepts such appointment.
5
ARTICLE 3
DUTIES OF THE ADVISOR
The Advisor is responsible for managing, operating, directing and supervising the operations and administration of the Company and its assets. The Advisor undertakes to use its commercially reasonable efforts to present to the Company and the Operating Partnership potential investment opportunities, to make investment decisions on behalf of the Company subject to the limitations in the Company’s Charter, the direction and oversight of the Board and Section 4.03 hereof, and to provide the Company with a continuing and suitable investment program consistent with the investment objectives and policies of the Company as determined and adopted from time to time by the Board. Subject to the limitations set forth in this Agreement, including Article 4 hereof, and the continuing and exclusive authority of the Board over the management of the Company, the Advisor shall, either directly or by engaging an Affiliate or third party, perform the following duties at the request of the Company and the Operating Partnership:
3.01 Offering Services. The Advisor shall manage and supervise:
(i) Development of the Initial Public Offering and any subsequent or simultaneous Offering approved by the Board, including the determination of the specific terms of the securities to be offered by the Company, preparation of all offering and related documents, and obtaining all required regulatory approvals of such documents;
(ii) Along with the Dealer Manager, approval of the participating broker-dealers and negotiation of the related selling agreements;
(iii) Coordination of the due diligence process relating to participating broker-dealers and their review of the Registration Statement and other Offering and Company documents;
(iv) Preparation and approval of all marketing materials contemplated to be used by the Dealer Manager or others relating to the Offering;
(v) Along with the Dealer Manager, negotiation and coordination with the transfer agent for the receipt, collection, processing and acceptance of subscription agreements, commissions, and other administrative support functions;
(vi) Creation and implementation of various technology and electronic communications related to the Offering; and
(vii) All other services related to the Offering, other than services that (a) are to be performed by the Dealer Manager, (b) the Company elects to perform directly or (c) would require the Advisor to register as a broker-dealer with the SEC, FINRA or any state.
3.02 Acquisition Services.
The Advisor shall:
(i) Serve as the Company’s investment and financial advisor and obtain certain market research and economic and statistical data in connection with the Company’s Investments and investment objectives and policies;
(ii) Subject to Article 4 hereof and the investment objectives and policies of the Company: (a) locate, analyze and select potential Investments; (b) structure and negotiate the terms and conditions of transactions pursuant to which the Investments will be made; and (c) acquire Investments on behalf of the Company;
(iii) Oversee the due diligence process related to prospective investments;
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(iv) Prepare reports regarding prospective investments which include recommendations and supporting documentation necessary for the Board to evaluate the prospective investments;
(v) Obtain reports (which may be prepared by the Advisor or its Affiliates), where appropriate, concerning the value of prospective investments of the Company; and
(vi) Negotiate and execute approved Investments and other transactions.
3.03 Asset Management Services.
The Advisor shall:
(i) Investigate, select, and, on behalf of the Company and the Operating Partnership, engage and conduct business with such Persons as the Advisor deems necessary to the proper performance of its obligations hereunder, including but not limited to consultants, accountants, lenders, technical advisors, attorneys, brokers, underwriters, corporate fiduciaries, escrow agents, depositaries, custodians, agents for collection, insurers, insurance agents, developers, construction companies, Property Managers and any and all Persons acting in any other capacity deemed by the Advisor necessary or desirable for the performance of any of the foregoing services;
(ii) Monitor applicable markets and obtain reports (which may be prepared by the Advisor or its Affiliates) where appropriate, concerning the value of Investments of the Company and the Operating Partnership;
(iii) Monitor and evaluate the performance of Investments of the Company, provide daily management services to the Company and perform and supervise the various management and operational functions related to the Company’s Investments;
(iv) Formulate and oversee the implementation of strategies for the administration, promotion, management, operation, maintenance, improvement, financing and refinancing, marketing, leasing and disposition of Investments on an overall portfolio basis;
(v) Oversee the performance by the Property Managers of their duties, including collection and proper deposits of rental payments and payment of Property expenses and maintenance;
(vi) Conduct periodic on-site property visits to some or all (as the Advisor deems reasonably necessary) of the Properties to inspect the physical condition of the Properties and to evaluate the performance of the Property Managers;
(vii) Review, analyze and comment upon the operating budgets, capital budgets and leasing plans prepared and submitted by each Property Manager and aggregate these property budgets into the Company’s overall budget;
(viii) Coordinate and manage relationships between the Company, the Operating Partnership and any Joint Venture partners;
(ix) Provide financial and operational planning services and investment portfolio management functions;
(x) Assist the Board in the development, oversight, implementation and coordination of the Company’s NAV procedures;
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(xi) Provide information in connection with the Company’s Properties and Investments to the Independent Appraisers and other parties involved in determining the NAV and obtain market quotations or conduct fair valuation determinations concerning the value of Investments; and
(xii) Monitor each Independent Appraiser’s valuation process to ensure that it complies with the Valuation Guidelines.
3.04 Accounting and Other Administrative Services.
The Advisor shall:
(i) Manage and perform the various administrative functions necessary for the management of the day- to-day operations of the Company;
(ii) From time-to-time, or at any time reasonably requested by the Board, make reports to the Board on the Advisor’s performance of services to the Company under this Agreement;
(iii) Make reports to the Board, at least annually, of the allocation of Investments that have been allocated by the Sponsor to the Company and any other programs advised, sponsored or organized by the Sponsor or its Affiliates;
(iv) Coordinate with the Company’s independent auditors to prepare and deliver to the Company’s audit committee an annual report covering the Advisor’s compliance with certain material aspects of this Agreement;
(v) Provide or arrange for administrative services and items, legal and other services, office space, office furnishings, personnel and other overhead items necessary and incidental to the Company’s business and operations;
(vi) Provide financial and operational planning services and portfolio management functions;
(vii) Maintain accounting data and any other information concerning the activities of the Company as shall be needed to prepare and file all periodic financial reports and returns required to be filed with the SEC and any other regulatory agency, including annual financial statements;
(viii) Maintain all appropriate books and records of the Company;
(ix) Oversee tax and compliance services and risk management services and coordinate with appropriate third parties, including independent accountants and other consultants, on related tax matters;
(x) Supervise the performance of such ministerial and administrative functions as may be necessary in connection with the daily operations of the Company;
(xi) Provide the Company with all necessary cash management services;
(xii) Manage and coordinate with the transfer agent the distribution process and payments to Stockholders;
(xiii) Consult with the officers of the Company and the Board, and assist in evaluating and obtaining adequate insurance coverage based upon risk management determinations;
(xiv) Provide the officers of the Company and the Board with timely updates related to the overall regulatory environment affecting the Company, as well as managing compliance with such matters;
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(xv) Consult with the officers of the Company and the Board relating to the corporate governance structure and appropriate policies and procedures related thereto; and
(xvi) Oversee all reporting, record keeping, internal controls and similar matters in a manner to allow the Company to comply with applicable law including the Sarbanes-Oxley Act of 2002.
3.05 Stockholder Services.
The Advisor shall:
(i) Manage communications with Stockholders, including answering phone calls, preparing and sending written and electronic reports and other communications; and
(ii) Establish technology infrastructure to assist in providing Stockholder support and service.
3.06 Financing Services.
The Advisor shall:
(i) Identify and evaluate potential financing and refinancing sources, engaging a third-party broker if necessary;
(ii) Negotiate terms, arrange and execute financing agreements;
(iii) Manage relationships between the Company and its lenders; and
(iv) Monitor and oversee the service of the Company’s debt facilities and other borrowings.
3.07 Disposition Services.
The Advisor shall:
(i) Consult with the Board and provide assistance with the evaluation and approval of potential asset dispositions, sales or other liquidity events; and
(ii) Structure and negotiate the terms and conditions of transactions pursuant to which Investments may be sold.
ARTICLE 4
AUTHORITY OF ADVISOR
4.01 Powers of the Advisor. Subject to the express limitations set forth in this Agreement, any restrictions imposed by law, rule or regulation and the continuing and exclusive authority of the Board over the management of the Company, the power to direct the management, operation and policies of the Company, including making, financing and disposing of Investments, and the performance of those services described in Article 3 hereof, shall be vested in the Advisor, which shall have the power by itself and shall be authorized and empowered on behalf and in the name of the Company to carry out any and all of the objectives and purposes of the Company and to perform all acts and enter into and perform all contracts and other undertakings that it may in its sole discretion deem necessary, advisable or incidental thereto to perform its obligations under this Agreement. The Advisor shall have the power to delegate all or any part of its rights and powers to manage and control the business and affairs of the Company to such officers, employees, Affiliates, agents and representatives of the Advisor or the Company as it may deem appropriate. Any authority delegated by the Advisor to any other Person shall be subject to the limitations on the rights and powers of the Advisor specifically set forth in this Agreement or the Charter.
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4.02 Approval by the Board. Notwithstanding the foregoing, the Advisor may not take any action on behalf of the Company without the prior approval of the Board or duly authorized committees thereof if the Charter or Maryland General Corporation Law require the prior approval of the Board. If the Board or a committee of the Board must approve a proposed investment, financing or disposition or chooses to do so, the Advisor will deliver to the Board or committee, as applicable, all documents required by it to evaluate such investment, financing or disposition.
4.03 Modification or Revocation of Authority of Advisor. The Board may, at any time upon the giving of notice to the Advisor, modify or revoke the authority or approvals set forth in Article 3 and this Article 4; provided, however, that such modification or revocation shall be effective upon receipt by the Advisor and shall not be applicable to investment transactions to which the Advisor has committed the Company prior to the date of receipt by the Advisor of such notification.
ARTICLE 5
BANK ACCOUNTS
The Advisor may establish and maintain one or more bank accounts in the name of the Company and the Operating Partnership and may collect and deposit into any such account or accounts, and disburse from any such account or accounts, any money on behalf of the Company or the Operating Partnership, under such terms and conditions as the Board may approve, provided that no funds shall be commingled with the funds of the Advisor. The Advisor shall from time to time render appropriate accountings of such collections and payments to the Board and the independent auditors of the Company.
ARTICLE 6
RECORDS AND ACCESS
The Advisor, in the conduct of its responsibilities to the Company, shall maintain, or cause to be maintained, adequate and separate books and records for the Company’s operations in accordance with GAAP, which shall be supported by sufficient documentation to ascertain that such books and records are properly and accurately recorded. Such books and records shall be the property of the Company and shall be available for inspection by the Board and by counsel, auditors and other authorized agents of the Company, at any time or from time to time during normal business hours. The Advisor shall at all reasonable times have access to the books and records of the Company and the Operating Partnership.
ARTICLE 7
LIMITATION ON ACTIVITIES
Notwithstanding any provision in this Agreement to the contrary, the Advisor shall not take any action that, in its sole judgment made in good faith, would: (i) adversely affect the ability of the Company to qualify or continue to qualify as a REIT under the Code unless the Board has determined that the Company will not seek or maintain REIT qualification for the Company; (ii) subject the Company to regulation under the Investment Company Act of 1940, as amended; (iii) violate any law, rule, regulation or statement of policy of any governmental body or agency having jurisdiction over the Company, its Shares or its other securities; (iv) require the Advisor to register as a broker-dealer with the SEC, FINRA or any state; or (v) violate the Charter or Bylaws. In the event an action that would violate (i) through (v) of the preceding sentence but such action has been ordered by the Board, the Advisor shall notify the Board of the Advisor’s judgment of the potential impact of such action and shall refrain from taking such action until it receives further clarification or instructions from the Board. In such event, the Advisor shall have no liability for acting in accordance with the specific instructions of the Board so given.
ARTICLES 8
FEES
8.01 Asset Management Fees. The Company shall pay the Advisor or its Affiliates as compensation for the services described in Section 3.03 hereof a monthly fee (the “Asset Management Fee”) in an amount equal to one-twelfth of 1.20% of NAV per annum, before giving effect to any accruals for the Asset Management Fees,
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Distribution Fees, the Performance Participation or any Distributions. The Advisor shall submit a monthly invoice to the Company, accompanied by a computation of the Asset Management Fee for the applicable month. The Asset Management Fee shall generally be payable on the last day of the month that immediately follows the month in which such Asset Management Fee was earned, or the first business day following the last day of such month. However, payment of the Asset Management Fee may be deferred or waived, in whole or in part (or received in Shares) as to any transaction in the sole discretion of the Advisor. Any such deferred or waived Asset Management Fees shall be paid to the Advisor or its Affiliates without interest at such subsequent date as the Advisor shall request.
8.02 Payment in Shares or Units of Operating Partnership. The Asset Management Fee may be paid, at the Advisor’s election, in cash or cash equivalent aggregate NAV amounts of Class I Shares or Class I units of the Operating Partnership. If the Advisor elects to receive any portion of its Asset Management Fee in Class I Shares or Class I units of the Operating Partnership, the Advisor may elect to have the Company repurchase such Class I Shares or Class I units of the Operating Partnership from the Advisor at a later date. Class I Shares and Class I units of the Operating Partnership obtained by the Advisor will not be subject to the repurchase limits of the Company’s share repurchase plan or any reduction or penalty for an early repurchase. The Operating Partnership will repurchase any such Class I units of the Operating Partnership for cash based on the then current NAV unless the Board determines that any such repurchase for cash would be prohibited by applicable law or the Charter, in which case such Operating Partnership units will be repurchased for the Company’s Class I Shares with an equivalent aggregate NAV as of such date. The Advisor will have the option of exchanging Class I Shares for an equivalent aggregate NAV amount of Class D Shares, Class S Shares or Class T Shares as of such date and will have registration rights with respect to shares of the Company’s common stock.
8.03 Operating Partnership Interests. An Affiliate of the Advisor has made a capital contribution of $1,000 to the Operating Partnership in exchange for Special OP Units. The Special OP Units shall be entitled to the distributions provided for, and shall be subject to redemption by the Operating Partnership, in accordance with the terms of the Operating Partnership Agreement. To the extent distributions to the Special OP Units are not paid from net sales proceeds, such amounts will count against the limit on Operating Expenses. In the event of termination of this Agreement by the Company for Cause, the Company shall redeem the Special OP Units in exchange for a one-time cash payment to the Advisor’s Affiliate of $1.00.
8.04 Changes to Fee Structure. In the event of Listing, the Company and the Advisor shall negotiate in good faith to establish a fee structure appropriate for a perpetual-life entity.
ARTICLE 9
EXPENSES
9.01 General. In addition to the compensation paid to the Advisor pursuant to Article 8 hereof, the Company shall pay directly or reimburse the Advisor or its Affiliates for all of the expenses paid or incurred by the Advisor or its Affiliates on behalf of the Company or in connection with the services provided to the Company pursuant to this Agreement, including, but not limited to:
(i) All Organization and Offering Expenses; provided, however, that the Advisor, or an Affiliate of the Advisor, shall be responsible for the payment of the Company’s Organizational and Offering Expenses to the extent the total amount of such expenses exceeds 15.0% of Gross Proceeds from the Company’s offering; provided that within 60 days after the end of the month in which an Offering terminates, the Advisor shall reimburse the Company to the extent the Company incurred Organization and Offering Expenses exceeding 15.0% of the Gross Proceeds raised in the completed Offering;
(ii) Acquisition Expenses incurred in connection with the selection and acquisition of Investments, including such expenses incurred related to assets pursued or considered but not ultimately acquired by the Company, provided that, notwithstanding anything herein to the contrary, the payment of Acquisition Expenses by the Company shall be subject to the limitations contained in the Company’s Charter;
(iii) The actual out-of-pocket cost of goods and services used by the Company and obtained from entities not Affiliated with the Advisor;
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(iv) Interest and other costs for borrowed money or securitization transactions, including discounts, points and other similar fees;
(v) Taxes and assessments on income or Properties, taxes as an expense of doing business and any other taxes otherwise imposed on the Company and its business, assets or income;
(vi) Out-of-pocket costs associated with insurance required in connection with the business of the Company or by its officers and Board;
(vii) Expenses of managing, improving, developing, operating and selling Investments owned, directly or indirectly, by the Company, as well as expenses of other transactions relating to such Investments, including but not limited to prepayments, maturities, workouts and other settlements of Loans and other Investments;
(viii) All out-of-pocket expenses in connection with payments to the Board and meetings of the Board and Stockholders;
(ix) Personnel and related employment costs incurred by the Advisor or its Affiliates in performing the services described in Article 3 hereof, including but not limited to reasonable salaries and wages, benefits and overhead of all employees directly involved in the performance of such services, provided that no reimbursement shall be made for costs of such employees of the Advisor or its Affiliates to the extent that such employees (A) perform services for which the Advisor receives acquisition fees or Disposition Fees or (B) serve as executive officers of the Company;
(x) Out-of-pocket expenses of providing services for and maintaining communications with Stockholders, including the cost of preparation, printing, and mailing annual reports and other Stockholder reports, proxy statements and other reports required by governmental entities;
(xi) Audit, accounting and legal fees, and other fees for professional services relating to the operations of the Company and all such fees incurred at the request, or on behalf of, the Board or any other committee of the Board;
(xii) Out-of-pocket costs for the Company to comply with all applicable laws, regulations and ordinances;
(xiii) Expenses connected with payments of Distributions made or caused to be made by the Company to the Stockholders;
(xiv) Expenses of organizing, redomesticating, merging, liquidating or dissolving the Company or of amending the Charter or the Bylaws; and
(xv) All other out-of-pocket costs and expenses incurred by the Advisor or its Affiliates in performing the Advisor’s duties hereunder.
9.02 Initial Organization and Offering Expenses.
(i) The Advisor has agreed to pay, on behalf of the Company, all Organization and Offering Expenses (less Selling Commissions and Distribution Fees) (the “Initial O&O Costs”) through the first anniversary of the date on which the Company satisfies the minimum offering requirement for the Initial Public Offering (the “Escrow Break Anniversary”).
(ii) The Company shall not be required to reimburse the Advisor for payment of the Initial O&O Costs prior to the Escrow Break Anniversary. Following the Escrow Break Anniversary, the Company will reimburse the Advisor for payment of the Initial O&O Costs ratably over a 36-month period; provided, however, that the Company shall not be obligated to pay any amounts that as a result of such payment would
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cause the aggregate payments for Organization and Offering Expenses (less Selling Commissions and Distribution Fees) paid to the Advisor to exceed 1% of gross offering proceeds of the Company’s Offerings as of such payment date (the “1% Cap”). Any amounts not reimbursed in any period shall be included in determining any reimbursement for a subsequent period. The Company may, in its sole discretion, pay amounts to the Advisor in excess of the ratable amount for the Initial O&O Costs; provided that the payment of such amounts is not in excess of the 1% Cap.
(iii) After the Escrow Break Anniversary, the Advisor, in its sole discretion, may pay some or all of the Organization and Offering Expenses but is not required to do so. To the extent the Advisor pays such additional Organization and Offering Expenses, the Company will be obligated to reimburse the Advisor subject to the 1% Cap.
9.03 Timing of and Additional Limitations on Reimbursements.
(i) Operating Expenses incurred by the Advisor on behalf of the Company and reimbursable pursuant to this Article 9 shall be reimbursed to the Advisor as set forth herein. The Advisor shall prepare a statement documenting the Operating Expenses of the Company during each quarter (the “Quarterly Statement”) and shall deliver the Quarterly Statement to the Company within 45 days after the end of each quarter upon receipt of which the Company shall remit payment within 30 days.
(ii) Commencing upon the earlier of the fourth fiscal quarter after (i) the Company makes an initial Investment or (ii) six months after commencement of the Initial Public Offering, the following limitation on Operating Expenses shall apply: the Company shall not reimburse the Advisor at the end of any fiscal quarter for Operating Expenses that in the four consecutive fiscal quarters then ended (the “Expense Year”) exceed (the “Excess Amount”) the greater of 2.0% of Average Invested Assets or 25.0% of Net Income (the “2%/25% Guidelines”) for such year unless the Board determines that such excess was justified, based on unusual and nonrecurring factors that the Board deems sufficient. If the Board does not approve such excess as being so justified, any Excess Amount paid to the Advisor during a fiscal quarter shall be repaid to the Company. If the Board determines such excess was justified, then, within 60 days after the end of any fiscal quarter of the Company for which total reimbursed Operating Expenses for the Expense Year exceed the 2%/25% Guidelines, the Advisor, at the direction of the Board, shall cause such fact to be disclosed to the Stockholders in writing (or the Company shall disclose such fact to the Stockholders in the next quarterly report of the Company or by filing a Current Report on Form 8-K with the SEC within 60 days of such quarter end), together with an explanation of the factors the Board considered in determining that such excess expenses were justified. The Company will ensure that such determination will be reflected in the minutes of the meetings of the Board. All figures used in the foregoing computation shall be determined in accordance with GAAP applied on a consistent basis. Based on the date that the Company has made its initial Investment, the limitation set forth in this Section 9.03(ii) shall become applicable commencing October 1, 2018.
(iii) In addition to limitation set forth in Section 9.03(ii) above and subject to Section 9.03(iv) below, any Operating Expenses paid by the Advisor, incurred by the Company, or otherwise not invoiced to the Company, shall not be reimbursement obligations of the Company if such obligation would directly result in the Company’s NAV per share for any class of Shares for such quarter to be less than $25.00; provided, that the Company may incur and record such obligation to reimburse the Advisor, even if it would result in the Company’s NAV per share for any class of Shares for such quarter to be less than $25.00, if the Board determines that the reasons for the Company’s NAV to be less than $25.00 were unrelated to the Company’s obligation to reimburse the Advisor for certain Operating Expenses.
(iv) Notwithstanding anything to the contrary, all or a portion of the Operating Expenses that have not been invoiced to the Company in any Quarterly Statement or reimbursed by the Company for any given quarter (“Unreimbursed Operating Expenses”) may be, in the sole discretion of the Advisor, (a) waived by the Advisor, (b) subject to Section 9.03(ii) and (iii) above, reimbursed to the Advisor in any subsequent quarter, or (c) reimbursed to the Advisor in connection with a liquidity event or termination of this Agreement. Any Operating Expenses reimbursed to the Advisor under this Section 9.03(iv) shall be subject to, among other things, the Board approval requirements of Section 9.03(ii).
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In the event of a liquidity event or termination of this Agreement, the Company will reimburse Unreimbursed Operating Expenses (i) immediately prior to or upon the occurrence of a liquidity event, including (A) a Listing or (B) a merger, consolidation or a sale of substantially all of the Company’s assets or any similar transaction or any transaction pursuant to which a majority of the Company’s board of directors then in office are replaced or removed, or (ii) upon the termination of this Agreement by the Company or by the Advisor. In each such case, the Company will reimburse the Advisor after the Company has fully invested the proceeds from the Offering and the Stockholders have received, or are deemed to have received, in the aggregate, cumulative distributions equal to their invested capital plus a 6.0% cumulative, non-compounded annual pre-tax return on such invested capital.
The Sponsor and the Advisor hereby agree that any reimbursement of the Unreimbursed Operating Expenses to the Advisor pursuant to this Section 9.03(iv) will be made on a pro rata basis with the reimbursements made pursuant to Section 1.02 of the Reimbursement Agreement between the Company and the Sponsor, dated as of August 10, 2020, as amended.
ARTICLE 10
OTHER SERVICES
Should: (i) the Operating Partnership request that the Advisor or any Affiliate or any manager, officer or employee of the Advisor or Affiliate render services for the Company other than as set forth in this Agreement; or (ii) there be changes to the regulatory environment in which the Advisor or Company operates that would increase significantly the level of services performed such that the costs and expenses borne by the Advisor for which the Advisor is not entitled to separate reimbursement for personnel and related employment direct costs and overhead under Article 9 of this Agreement would increase significantly, such services shall be separately compensated at such rates and in such amounts as are agreed by the Advisor and the Independent Directors, subject to the limitations contained in the Charter, and shall not be deemed to be services pursuant to the terms of this Agreement.
ARTICLE 11
VOTING AGREEMENT
The Advisor agrees that, with respect to any Shares now or hereinafter owned by it or its Affiliates, none of them will vote or consent on matters submitted to the Stockholders of the Company regarding: (i) the removal of the Advisor or any of its Affiliates as the Advisor; or (ii) any transaction between the Company and the Advisor or any of its Affiliates. This voting restriction shall survive until such time that the Advisor or any of its Affiliates is no longer serving as the Advisor.
ARTICLE 12
RELATIONSHIP OF ADVISOR AND COMPANY;
OTHER ACTIVITIES OF THE ADVISOR
12.01 Relationship. The Company and the Advisor are not partners or joint venturers with each other, and nothing in this Agreement shall be construed to make them such partners or joint venturers. Nothing herein contained shall prevent the Advisor from engaging in other activities, including, without limitation, the rendering of advice to other Persons (including other REITs) and the management of other programs advised, sponsored or organized by the Advisor or its Affiliates. Nor shall this Agreement limit or restrict the right of any manager, director, officer, employee or equityholder of the Advisor or its Affiliates to engage in any other business or to render services of any kind to any other Person. The Advisor may, with respect to any investment in which the Company is a participant, also render advice and service to each and every other participant therein. The Advisor shall promptly disclose to the Board the existence of any condition or circumstance, existing or anticipated, of which it has knowledge, that creates or could create a conflict of interest between the Advisor’s obligations to the Company and its obligations to or its interest in any other Person.
12.02 Time Commitment. The Advisor shall, and shall cause its Affiliates and their respective employees, officers and agents to, devote to the Company such time as shall be reasonably necessary to
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conduct the business and affairs of the Company in an appropriate manner consistent with the terms of this Agreement. The Company acknowledges that the Advisor and its Affiliates and their respective employees, officers and agents may also engage in activities unrelated to the Company and may provide services to Persons other than the Company or any of its Affiliates.
12.03 Investment Opportunities and Allocation. The Advisor shall be required to use commercially reasonable efforts to present a continuing and suitable investment program to the Company that is consistent with the investment policies and objectives of the Company, but neither the Advisor nor any Affiliate of the Advisor shall be obligated to present any particular Investment opportunity to the Company even if the opportunity is of a character that, if presented to the Company, could be taken by the Company. In the event an Investment opportunity is identified, the allocation procedures set forth under the caption “Conflicts of Interest—Allocation of Investment Opportunities” in any Prospectus (as may be amended from time to time) shall govern the allocation of the opportunity among the Company, any of its Affiliates and any investment vehicles sponsored or managed by the Sponsor or any of their Affiliates.
ARTICLE 13
THE CANTOR NAME
The Company acknowledges and agrees that the Sponsor and its Affiliates have a proprietary interest in the name “Cantor.” Except upon the express prior written consent of Sponsor, on a case by case basis, which if given, may be withdrawn at any time in the sole discretion of Sponsor, the Company shall not (and shall cause its Affiliates and each of its and their partners, officers, directors, employees and agents, whether present or future (collectively, “Personnel”) not to): (i) use, apply for or register in any manner, form or jurisdiction whatsoever any of Sponsor’s or any of Sponsor’s Affiliates’ name(s), trade name(s), logo(s), trademark(s), service mark(s), business, trade or corporate name(s), Internet domain name(s), social media/username domain(s), or sub-domain name(s), in each case, whether registered or unregistered, or any variations, translations, or transliterations thereof, or any terms confusingly similar to any of the foregoing, including without limitation, the name “Cantor” (collectively, the “Names and Marks”), or (ii) sublicense the Names and Marks to any third party or grant any third party the right to use the Names and Marks.
The Company acknowledges and agrees (and shall cause its Personnel to acknowledge and agree) that: (i) Sponsor is and shall remain at all times the sole and exclusive owner of all right, title and interest in and to the Names and Marks and any and all proprietary rights therein and thereto, (ii) nothing contained herein creates, shall create, nor shall be construed as a grant of, any right, title or interest in or to any Names and Marks or any proprietary rights therein or thereto, (iii) all right, title and interest in and to the Names and Marks is expressly reserved by Sponsor, and (iv) the Company and its Personnel shall keep the Names and Marks free from all liens, mortgages, or other encumbrances.
The Company recognizes the value of the goodwill associated with the Names and Marks and the proprietary rights therein and thereto. Should Sponsor provide its written consent to use the Names and Marks, the Company agrees that (i) any use of the Names and Marks and any goodwill arising therefrom, shall inure solely to the benefit of Sponsor, (ii) it will use the Names and Marks only in accordance with and subject to Sponsor’s specification, direction and information, and (iii) it shall fully cooperate (and shall ensure that its Personnel fully cooperate) with Sponsor as reasonably required from time to time by Sponsor to perfect or otherwise secure all rights, title and interest in any and all Names and Marks.
Upon expiration or termination of this Agreement, or upon Sponsor’s withdrawal of any written consent by Sponsor to use the Names and Marks, or if at any time the Company ceases to retain the Advisor or one of its Affiliates to perform advisory services for the Company: (i) all rights granted to the Company under this Agreement shall immediately terminate and revert to Sponsor, (ii) the Company will immediately and permanently cease all use of the Names and Marks, (iii) the Company shall immediately change its name and the names of any of its subsidiaries to a name that does not contain the name “Cantor” or any other word or words that might, in the sole discretion of the Sponsor, be susceptible of indication of some form of relationship between the Company and the Sponsor or any of Sponsor’s Affiliates, and (iv) the Company shall promptly return to Sponsor or, at Sponsor’s option, destroy, at the Company’s expense, all records and copies of technical, marketing, advertising, sales, and
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promotional material in its possession bearing the Names and Marks. Consistent with the foregoing, it is specifically recognized that the Sponsor or one or more of its Affiliates has in the past and may in the future organize, sponsor or otherwise permit to exist other investment vehicles (including vehicles for investment in real estate loans, real estate-related debt securities and other real estate assets) and financial and service organizations having “Cantor” as a part of their name, all without the need for any consent (and without the right to object thereto) by the Company. The Sponsor shall govern the Company’s use of the name “Cantor” and the Company’s use of the “Cantor” name will be in strict accordance with any quality standards and specifications that may be established by the Advisor and communicated to Company from time to time.
ARTICLE 14
TERM AND TERMINATION OF THE AGREEMENT
14.01 Term. This Agreement shall have an initial term of one year from the Effective Date and may be renewed for an unlimited number of successive one-year terms upon mutual consent of the parties. The Company (acting through the Independent Directors) will evaluate the performance of the Advisor annually before renewing this Agreement, and each such renewal shall be for a term of no more than one year. Any such renewal must be approved by the Independent Directors.
14.02 Termination by the Parties. This Agreement may be terminated:
(i) immediately by the Company or the Operating Partnership for Cause or upon the bankruptcy of the Advisor;
(ii) upon 60 days written notice without Cause and without penalty by a majority of the Independent Directors of the Company or the Advisor; or
(iii) upon 60 days written notice with Good Reason by the Advisor.
The provisions of Article 13, Section 14.03 and Articles 16 through 18 of this Agreement shall survive termination of this Agreement.
14.03 Payments on Termination and Survival of Certain Rights and Obligations. Payments to the Advisor pursuant to this Section 14.03 shall be subject to the 2%/25% Guidelines to the extent applicable.
(i) After the Termination Date, the Advisor shall not be entitled to compensation for further services hereunder except it shall be entitled to receive from the Company or the Operating Partnership within 30 days after the effective date of such termination all unpaid reimbursements of expenses and all earned but unpaid fees payable to the Advisor prior to termination of this Agreement, subject to the 2%/25% Guidelines to the extent applicable.
(ii) The Advisor shall promptly upon termination:
(a) pay over to the Company and the Operating Partnership all money collected and held for the account of the Company and the Operating Partnership pursuant to this Agreement, if any, after deducting any accrued compensation and reimbursement for its expenses to which it is then entitled;
(b) deliver to the Board a full accounting, including a statement showing all payments collected by it and a statement of all money held by it, covering the period following the date of the last accounting furnished to the Board;
(c) deliver to the Board all assets and documents of the Company then in the custody of the Advisor; and
16
(d) cooperate with the Company to provide an orderly transition of advisory functions.
ARTICLE 15
ASSIGNMENT
This Agreement may be assigned by the Advisor with the prior approval of a majority of the Board (and with respect to any assignment to an Affiliate, also with the prior approval of a majority of the Independent Directors). The Advisor may assign any rights to receive fees or other payments under this Agreement without obtaining the approval of the Board. This Agreement shall not be assigned by the Company or the Operating Partnership without the consent of the Advisor, except in the case of an assignment by the Company or the Operating Partnership to a corporation or other organization that is a successor to all of the assets, rights and obligations of the Company or the Operating Partnership, in which case such successor organization shall be bound hereunder and by the terms of said assignment in the same manner as the Company and the Operating Partnership are bound by this Agreement. Nothing herein shall be deemed to prohibit or otherwise restrict any transfers or additional issuances of equity interests in the Advisor nor shall any such transfer or issuance be deemed an assignment for purposes of this Article 15.
ARTICLE 16
INDEMNIFICATION AND LIMITATION OF LIABILITY
16.01 Indemnification. Except as prohibited by the restrictions provided in this Section 16.01, Section 16.02 and Section 16.03, the Company and the Operating Partnership shall indemnify, defend and hold harmless the Advisor and its Affiliates, including their respective officers, directors, equity holders, partners and employees, from all liability, claims, damages or losses arising in the performance of their duties hereunder, and related expenses, including reasonable attorneys’ fees, to the extent such liability, claims, damages or losses and related expenses are not fully reimbursed by insurance. Any indemnification of the Advisor may be made only out of the net assets of the Company and not from Stockholders.
Notwithstanding the foregoing, the Company shall not indemnify the Advisors or its Affiliates for any loss, liability or expense arising from or out of an alleged violation of federal or state securities laws by such party unless one or more of the following conditions are met: (i) there has been a successful adjudication on the merits of each count involving alleged securities law violations as to the particular indemnitee; (ii) such claims have been dismissed with prejudice on the merits by a court of competent jurisdiction as to the particular indemnitee; or (iii) a court of competent jurisdiction approves a settlement of the claims against a particular indemnitee and finds that indemnification of the settlement and the related costs should be made, and the court considering the request for indemnification has been advised of the position of the SEC and of the published position of any state securities regulatory authority in which securities of the Company were offered or sold as to indemnification for violations of securities laws.
16.02 Limitation on Indemnification. Notwithstanding the foregoing, the Company and the Operating Partnership shall not provide for indemnification of the Advisor or its Affiliates for any liability or loss suffered by any of them, nor shall any of them be held harmless for any loss or liability suffered by the Company, unless all of the following conditions are met:
(i) The Advisor or its Affiliates have determined, in good faith, that the course of conduct that caused the loss or liability was in the best interests of the Company and the Operating Partnership.
(ii) The Advisor or its Affiliates were acting on behalf of or performing services for the Company or the Operating Partnership.
(iii) Such liability or loss was not the result of negligence or misconduct by the Advisor or its Affiliates.
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(iv) Such indemnification or agreement to hold harmless is recoverable only out of the Company’s net assets and not from the Stockholders.
16.03 Limitation on Payment of Expenses. The Company shall pay or reimburse reasonable legal expenses and other costs incurred by the Advisors or its Affiliates in advance of the final disposition of a proceeding only if (in addition to the procedures required by the Maryland General Corporation Law, as amended from time to time) all of the following are satisfied: (a) the proceeding relates to acts or omissions with respect to the performance of duties or services on behalf of the Company or the Operating Partnership, (b) the legal proceeding was initiated by a third party who is not a Stockholder or, if by a Stockholder acting in his or her capacity as such, a court of competent jurisdiction approves such advancement and (c) the Advisor or its Affiliates undertake to repay the amount paid or reimbursed by the Company or the Operating Partnership, together with the applicable legal rate of interest thereon, if it is ultimately determined that the particular indemnitee is not entitled to indemnification.
16.04 Indemnification by Advisor. The Advisor shall indemnify and hold harmless the Company and the Operating Partnership from contract or other liability, claims, damages, taxes or losses and related expenses including attorneys’ fees, to the extent that such liability, claims, damages, taxes or losses and related expenses are not fully reimbursed by insurance and are incurred by reason of the Advisor’s bad faith, fraud, willful misconduct or gross negligence; provided, however, that the Advisor shall not be held responsible for any action of the Board in following or declining to follow any advice or recommendation given by the Advisor.
ARTICLE 17
NON-SOLICITATION
During the period commencing on the Effective Date and ending two years following the Termination Date, the Company shall not, without the Advisor’s prior written consent, directly or indirectly; (i) solicit or encourage any person to leave the employment or other service of the Advisor or its Affiliates; or (ii) hire, on behalf of the Company or any other person or entity, any person who has left the employment within the one year period following the termination of that person’s employment with the Advisor or its Affiliates. During the period commencing on the date hereof through and ending two years following the Termination Date, the Company will not, whether for its own account or for the account of any other Person, intentionally interfere with the relationship of the Advisor or its Affiliates with, or endeavor to entice away from the Advisor or its Affiliates, any person who during the term of the Agreement is, or during the preceding two-year period, was a tenant, co-investor, co-developer, joint venturer or other customer of the Advisor or its Affiliates.
ARTICLE 18
MISCELLANEOUS
18.01 Notices. Any notice, report or other communication required or permitted to be given hereunder shall be in writing unless some other method of giving such notice, report or other communication is required by the Charter, the Bylaws or is accepted by the party to whom it is given, and shall be given by being delivered by hand or by overnight mail or other overnight delivery service to the addresses set forth herein:
| To the Board, the Company or the Operating Partnership: |
Cantor Fitzgerald Income Trust, Inc. 110 East 59th Street New York, New York 10022 Attn: General Counsel | |
| To the Advisor: | Cantor Fitzgerald Income Advisors, LLC 110 East 59th Street New York, New York 10022 Attn: General Counsel | |
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Either party may at any time give notice in writing to the other party of a change in its address for the purposes of this Section 18.01.
18.02 Modification. This Agreement shall not be changed, modified, terminated or discharged, in whole or in part, except by an instrument in writing signed by both parties hereto, or their respective successors or permitted assigns.
18.03 Severability. The provisions of this Agreement are independent of and severable from each other, and no provision shall be affected or rendered invalid or unenforceable by virtue of the fact that for any reason any other or others of them may be invalid or unenforceable in whole or in part.
18.04 Construction. The provisions of this Agreement shall be construed and interpreted in accordance with the laws of the State of New York.
18.05 Entire Agreement. This Agreement contains the entire agreement and understanding between the parties hereto with respect to the subject matter hereof, and supersedes all prior and contemporaneous agreements, understandings, inducements and conditions, express or implied, oral or written, of any nature whatsoever with respect to the subject matter hereof. The express terms hereof control and supersede any course of performance and/or usage of the trade inconsistent with any of the terms hereof. This Agreement may not be modified or amended other than by an agreement in writing.
18.06 Waiver. Neither the failure nor any delay on the part of a party to exercise any right, remedy, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege preclude any other or further exercise of the same or of any other right, remedy, power or privilege, nor shall any waiver of any right, remedy, power or privilege with respect to any occurrence be construed as a waiver of such right, remedy, power or privilege with respect to any other occurrence. No waiver shall be effective unless it is in writing and is signed by the party asserted to have granted such waiver.
18.07 Interpretation. Words used herein regardless of the number and gender specifically used, shall be deemed and construed to include any other number, singular or plural, and any other gender, masculine, feminine or neuter, as the context requires.
18.08 Headings. The titles of Articles and Sections contained in this Agreement are for convenience only, and they neither form a part of this Agreement nor are they to be used in the construction or interpretation hereof.
18.09 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original as against any party whose signature appears thereon, and all of which shall together constitute one and the same instrument. This Agreement shall become binding when one or more counterparts hereof, individually or taken together, shall bear the signatures of all of the parties reflected hereon as the signatories.
[Signature page follows.]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year first above written.
| CANTOR FITZGERALD INCOME TRUST, INC. | ||
| By: | /s/ Christopher Milner | |
| Name: | Christopher Milner | |
| Title: | President | |
| CANTOR FITZGERALD INCOME TRUST OPERATING PARTNERSHIP, L.P. | ||
| By: | Cantor Fitzgerald Income Trust, Inc., | |
| its General Partner | ||
| By: | /s/ Christopher Milner | |
| Name: | Christopher Milner | |
| Title: | President | |
| CANTOR FITZGERALD INCOME ADVISORS, LLC | ||
| By: | /s/ Paul Pion | |
| Name: | Paul Pion | |
| Title: | Chief Administrative Officer | |
| Solely with respect to Article 13 and Section 9.03: | ||
| CANTOR FITZGERALD INVESTORS, LLC | ||
| By: | /s/ Christopher Milner | |
| Name: | Christopher Milner | |
| Title: | President | |
[Signature Page to Advisory Agreement]
Exhibit 10.2
EXECUTION COPY
AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT
OF
CANTOR FITZGERALD INCOME TRUST OPERATING PARTNERSHIP, LP
A DELAWARE LIMITED PARTNERSHIP
August 10, 2020
TABLE OF CONTENTS
| AGREEMENT | 4 | |||||
| ARTICLE 1 DEFINED TERMS | 4 | |||||
| ARTICLE 2 PARTNERSHIP FORMATION AND IDENTIFICATION | 14 | |||||
| 2.1 |
Formation |
14 | ||||
| 2.2 |
Name, Office and Registered Agent |
14 | ||||
| 2.3 |
Term and Dissolution |
15 | ||||
| 2.4 |
Filing of Certificate and Perfection of Limited Partnership |
15 | ||||
| ARTICLE 3 BUSINESS OF THE PARTNERSHIP | 15 | |||||
| ARTICLE 4 CAPITAL CONTRIBUTIONS AND ACCOUNTS | 16 | |||||
| 4.1 |
Capital Contributions |
16 | ||||
| 4.2 |
Additional Capital Contributions and Issuances of Additional Partnership Units |
16 | ||||
| 4.3 |
Additional Funding |
17 | ||||
| 4.4 |
LTIP Units |
17 | ||||
| 4.5 |
Conversion of LTIP Units |
18 | ||||
| 4.6 |
Capital Accounts |
20 | ||||
| 4.7 |
No Interest on Contributions |
20 | ||||
| 4.8 |
Return of Capital Contributions |
20 | ||||
| 4.9 |
No Third Party Beneficiary |
20 | ||||
| 4.10 |
Redemption and Exchanges of REIT Shares |
21 | ||||
| ARTICLE 5 PROFITS AND LOSSES; DISTRIBUTIONS | 21 | |||||
| 5.1 |
Allocation of Profit and Loss |
21 | ||||
| 5.2 |
Distribution of Cash |
23 | ||||
| 5.3 |
REIT Distribution Requirements |
25 | ||||
| 5.4 |
No Right to Distributions in Kind |
25 | ||||
| 5.5 |
Limitations on Return of Capital Contributions |
25 | ||||
| 5.6 |
Distributions Upon Liquidation |
25 | ||||
| 5.7 |
Substantial Economic Effect |
25 | ||||
| ARTICLE 6 RIGHTS, OBLIGATIONS AND POWERS OF THE GENERAL PARTNER | 25 | |||||
| 6.1 |
Management of the Partnership |
25 | ||||
| 6.2 |
Delegation of Authority |
27 | ||||
| 6.3 |
Indemnification and Exculpation of Indemnitees |
27 | ||||
| 6.4 |
Liability of the General Partner |
28 | ||||
| 6.5 |
Reimbursement of General Partner |
29 | ||||
| 6.6 |
Outside Activities |
29 | ||||
| 6.7 |
Employment or Retention of Affiliates |
29 | ||||
| 6.8 |
General Partner Participation |
29 | ||||
| 6.9 |
Title to Partnership Assets |
30 | ||||
| 6.10 |
No Duplication of Fees or Expenses |
30 | ||||
| ARTICLE 7 CHANGES IN GENERAL PARTNER | 30 | |||||
| 7.1 |
Transfer of the General Partner’s Units |
30 | ||||
| 7.2 |
Admission of a Substitute or Additional General Partner |
30 | ||||
| 7.3 |
Effect of Bankruptcy, Withdrawal, Death or Dissolution of a General Partner |
31 | ||||
| 7.4 |
Removal of a General Partner |
31 | ||||
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| ARTICLE 8 RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNERS | 31 | |||||
| 8.1 |
Management of the Partnership |
31 | ||||
| 8.2 |
Power of Attorney |
32 | ||||
| 8.3 |
Limitation on Liability of Limited Partners |
32 | ||||
| 8.4 |
Ownership by Limited Partner of Corporate General Partner or Affiliate |
32 | ||||
| 8.5 |
Limited Partner Right of Redemption |
32 | ||||
| 8.6 |
Redemption of Special Limited Partnership Units |
|||||
| ARTICLE 9 TRANSFERS OF LIMITED PARTNERSHIP UNITS | 33 | |||||
| 9.1 |
Purchase for Investment |
33 | ||||
| 9.2 |
Restrictions on Transfer of Limited Partnership Units |
34 | ||||
| 9.3 |
Admission of Substitute Limited Partner |
34 | ||||
| 9.4 |
Rights of Assignees of Partnership Units |
35 | ||||
| 9.5 |
Effect of Bankruptcy, Death, Incompetence or Termination of a Limited Partner |
35 | ||||
| 9.6 |
Joint Ownership of Units |
35 | ||||
| ARTICLE 10 BOOKS AND RECORDS; ACCOUNTING; TAX MATTERS | 36 | |||||
| 10.1 |
Books and Records |
36 | ||||
| 10.2 |
Custody of Partnership Funds; Bank Accounts |
36 | ||||
| 10.3 |
Fiscal and Taxable Year |
36 | ||||
| 10.4 |
Annual Tax Information and Report |
36 | ||||
| 10.5 |
Tax Matters Partner; Tax Elections; Special Basis Adjustments |
36 | ||||
| 10.6 |
Reports to Limited Partners |
37 | ||||
| ARTICLE 11 AMENDMENT OF AGREEMENT | 37 | |||||
| ARTICLE 12 GENERAL PROVISIONS | 37 | |||||
| 12.1 |
Notices |
37 | ||||
| 12.2 |
Survival of Rights |
37 | ||||
| 12.3 |
Additional Documents |
38 | ||||
| 12.4 |
Severability |
38 | ||||
| 12.5 |
Entire Agreement |
38 | ||||
| 12.6 |
Pronouns and Plurals |
38 | ||||
| 12.7 |
Headings |
38 | ||||
| 12.8 |
Counterparts |
38 | ||||
| 12.9 |
Governing Law |
38 | ||||
| EXHIBIT A CONTRIBUTIONS & INTERESTS | A-1 | |||||
| EXHIBIT B NOTICE OF EXERCISE OF REDEMPTION RIGHT | B-1 | |||||
| EXHIBIT C NOTICE OF ELECTION BY PARTNER TO CONVERT LTIP UNITS INTO LIMITED PARTNERSHIP UNITS |
C-1 | |||||
| EXHIBIT D NOTICE OF ELECTION BY PARTNERSHIP TO FORCE CONVERSION OF LTIP UNITS INTO LIMITED PARTNERSHIP UNITS |
D-1 | |||||
3
AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT
OF
CANTOR FITZGERALD INCOME TRUST OPERATING PARTNERSHIP, LP
This Amended and Restated Limited Partnership Agreement (this “Agreement”) is entered into this 10th day of August, 2020 between Cantor Fitzgerald Income Trust, Inc. (f/k/a Rodin Global Property Trust, Inc.), a Maryland corporation (the “General Partner”), and the Limited Partners set forth on Exhibit A attached hereto, as amended from time to time. Capitalized terms used herein but not otherwise defined shall have the meanings given to such terms in Article 1.
AGREEMENT
WHEREAS, the parties hereto entered into a Limited Partnership Agreement on March 23, 2017 (the “Original Agreement”);
WHEREAS, the parties hereto now desire to amend and restate the Original Agreement;
WHEREAS, the General Partner intends to qualify as a real estate investment trust under the Internal Revenue Code of 1986, as amended;
WHEREAS, Cantor Fitzgerald Income Trust Operating Partnership L.P. (f/k/a Rodin Global Property Trust Operating Partnership, L.P.) (the “Partnership”), was formed on February 10, 2016 as a limited partnership under the laws of the State of Delaware, pursuant to a Certificate of Limited Partnership filed with the Office of the Secretary of State of the State of Delaware on February 11, 2016; and
WHEREAS, the General Partner desires to conduct its current and future business through the Partnership.
NOW, THEREFORE, in consideration of the foregoing, of the mutual covenants between the parties hereto, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree that the Agreement is hereby entered into and adopted in its entirety as follows:
ARTICLE 1
DEFINED TERMS
The following defined terms used in this Agreement shall have the meanings specified below:
“Act” means the Delaware Revised Uniform Limited Partnership Act, as it may be amended from time to time.
“Additional Funds” has the meaning provided in Section 4.3 hereof.
“Adjusted Capital Account” means, with respect to any Partner, the Capital Account of such Partner as of the end of each Partnership Year (i) increased by any amounts which such Partner is obligated to restore pursuant to any provision of this Agreement or is deemed to be obligated to restore pursuant to Regulations Section 1.704-l(b)(2)(ii)(c) and the penultimate sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(g)(5) and (ii) decreased by the items described in Regulations Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and 1.704-1(b)(2)(ii) (d)(6). The foregoing definition of Adjusted Capital Account is intended to comply with the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
“Adjusted Capital Account Deficit” means, with respect to any Partner, the deficit balance, if any, in such Partner’s Adjusted Capital Account as of the end of the relevant Partnership Year.
“Adjustment Event” has the meaning provided in Section 4.4(b) hereof.
“Administrative Expenses” means (i) all administrative and operating costs and expenses incurred by the Partnership, (ii) those administrative costs and expenses of the General Partner, including any salaries or other payments to directors, officers or employees of the General Partner, and any accounting and legal expenses of the General Partner, which expenses, the Partners have agreed, are expenses of the Partnership and not the General Partner, and (iii) to the extent not included in clause (ii) above, REIT Expenses; provided, however, that Administrative Expenses shall not include any administrative costs and expenses incurred by the General Partner that are attributable to Properties or partnership interests in a Subsidiary Partnership that are owned by the General Partner directly.
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“Advisor” or “Advisors” means the Person or Persons, if any, appointed, employed or contracted with by the Partnership and responsible for directing or performing the day-to-day business affairs of the Partnership, including any Person to whom such Advisor subcontracts substantially all of such functions.
“Advisory Agreement” means the agreement between the General Partner, the Advisor and the other parties named therein pursuant to which the Advisor will direct or perform the day-to-day business affairs of the General Partner.
“Affiliate” or “Affiliated” means, with respect to any Person, (i) any Person directly or indirectly owning, controlling or holding, with the power to vote, ten percent or more of the outstanding voting securities of such other Person; (ii) any Person ten percent or more of whose outstanding voting securities are directly or indirectly owned, controlled or held, with the power to vote, by such other Person; (iii) any Person directly or indirectly controlling, controlled by or under common control with such other Person; (iv) any executive officer, director, trustee or general partner of such other Person; and (v) any legal entity for which such Person acts as an executive officer, director, trustee or general partner. An entity shall not be deemed to control or be under common control with a program sponsored by the Sponsor unless (A) the entity owns ten percent or more of the voting equity interests of such program or (B) a majority of the board of directors of the General Partner (or equivalent governing body) of such program is composed of Affiliates of the entity.
“Aggregate Share Ownership Limit” has the meaning provided in the Articles of Incorporation.
“Agreed Value” means (i) in the case of any Contributed Property, the fair market value of such property as of the time of its contribution to the Partnership, reduced by any liabilities either assumed by the Partnership upon such contribution or to which such property is subject when contributed; and (ii) in the case of any property distributed to a Partner by the Partnership, the Partnership’s Carrying Value of such property at the time such property is distributed, reduced by any indebtedness either assumed by such Partner upon such distribution or to which such property is subject at the time of distribution as determined under Section 752 of the Code and the Regulations thereunder.
“Agreement” means this Limited Partnership Agreement, as amended, modified supplemented or restated from time to time, as the context requires.
“Applicable Percentage” has the meaning provided in Section 8.5(b) hereof.
“Articles of Incorporation” means the Articles of Incorporation of the General Partner, as amended or restated from time to time, filed with the Maryland State Department of Assessments and Taxation.
“Capital Account” has the meaning provided in Section 4.6 hereof.
“Capital Account Limitation” has the meaning provided in Section 4.5(b) hereof.
“Capital Contribution” means, with respect to any Partner, the amount of money and the Agreed Value of Contributed Property which such Partner contributes or is deemed to contribute to the Partnership pursuant to Section 4.1 or 4.2 hereof. Any reference to the Capital Contribution of a Partner shall include the Capital Contribution made by a predecessor holder of the Partnership Unit of such Partner.
“Carrying Value” means, with respect to any asset, the asset’s adjusted basis for federal income tax purposes, except as follows:
(i) The initial Carrying Value of any asset contributed to the Partnership shall be the gross fair market value of such asset, as agreed by the Contributing Partner and the General Partner.
(ii) The Carrying Values of all Partnership assets shall be adjusted to equal their respective gross fair market values, as determined by the General Partner using such reasonable method of valuation as it may adopt immediately prior to the following events:
(a) the acquisition of an additional interest in the Partnership by any new or existing Partner in exchange for more than a de minimis Capital Contribution or the provision of services to or for the benefit of the Partnership, if the General Partner reasonably determines that such adjustment is necessary or appropriate to reflect the relative economic interests of the Partners in the Partnership;
5
(b) the distribution by the Partnership to a Partner of more than a de minimis amount of property as consideration for an interest in the Partnership, if the General Partner reasonably determines that such adjustment is necessary or appropriate to reflect the relative economic interests of the Partners in the Partnership;
(c) the liquidation of the Partnership within the meaning of Regulations Section 1.704- l(b)(2)(ii)(g);
(d) the grant of an interest in the Partnership (other than a de minimis interest) as consideration for the provision of services to or for the benefit of the Partnership by an existing Partner acting in a partner capacity, or by a new Partner acting in a partner capacity or in anticipation of becoming a Partner of the Partnership, if the General Partner reasonably determines that such adjustment is necessary or appropriate to reflect the relative economic interests of the Partners in the Partnership; and
(e) at such other times as the General Partner shall reasonably deem necessary or advisable if permitted by, or required to comply with, Regulations Sections 1.704-1(b) and 1.704-2.
(iii) The Carrying Value of a Partnership asset distributed to a Partner shall be the gross fair market value of such asset on the date of distribution, as agreed by the distributee and the General Partner.
(iv) The Carrying Values of Partnership assets shall be adjusted to reflect any adjustments to the adjusted basis of such assets pursuant to Code Section 734(b) or 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 Carrying Values shall not be adjusted pursuant to this clause (iv) to the extent that the General Partner reasonably determines that an adjustment pursuant to clause (ii) above is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment pursuant to this clause (iv).
(v) If the Carrying Values of a Partnership asset has been determined or adjusted pursuant to clause (i), (ii), or (iv) above, such Carrying Values shall thereafter be adjusted by Depreciation.
“Cash Amount” means an amount of cash equal to the applicable Redemption Price determined by the General Partner.
“Certificate” means any instrument or document that is required under the laws of the State of Delaware, or any other jurisdiction in which the Partnership conducts business, to be signed and sworn to by the Partners of the Partnership (either by themselves or pursuant to the power-of-attorney granted to the General Partner in Section 8.2 hereof) and filed for recording in the appropriate public offices within the State of Delaware or such other jurisdiction to perfect or maintain the Partnership as a limited partnership, to effect the admission, withdrawal, or substitution of any Partner of the Partnership, or to protect the limited liability of the Limited Partners as limited partners under the laws of the State of Delaware or such other jurisdiction.
“Class” means a class of REIT Shares or Partnership Units, as the context may require.
“Class AX REIT Shares” means the REIT Shares classified as “Class AX” shares in the Articles of Incorporation.
“Class AX Unit” means a Common Unit entitling the holder thereof to the rights of a holder of a Class AX Unit as provided in this Agreement.
“Class D Conversion Rate” means the fraction, the numerator of which is the NAV Per Unit for each Class D Unit and the denominator of which is the NAV Per Unit for each Class I Unit.
“Class D REIT Shares” means the REIT Shares classified as Class D common stock in the Articles of Incorporation.
“Class D Unit” means a Common Unit entitling the holder thereof to the rights of a holder of a Class D Unit as provided in this Agreement.
“Class I REIT Shares” means the REIT Shares classified as “Class I” shares in the Articles of Incorporation.
“Class I Unit” means a Common Unit entitling the holder thereof to the rights of a holder of a Class IX Unit as provided in this Agreement.
“Class IX REIT Shares” means the REIT Shares classified as “Class IX” shares in the Articles of Incorporation.
“Class IX Unit” means a Common Unit entitling the holder thereof to the rights of a holder of a Class IX Unit as provided in this Agreement.
6
“Class TX REIT Shares” means the REIT Shares classified as “Class TX” shares in the Articles of Incorporation.
“Class TX Unit” means a Common Unit entitling the holder thereof to the rights of a holder of a Class TX Unit as provided in this Agreement.
“Class S Conversion Rate” means the fraction, the numerator of which is the NAV Per Unit for each Class S Unit and the denominator of which is the NAV Per Unit for each Class I Unit.
“Class S REIT Shares” means the REIT Shares classified as Class S common stock in the Articles of Incorporation.
“Class S Unit” means a Common Unit entitling the holder thereof to the rights of a holder of a Class S Unit as provided in this Agreement.
“Class T Conversion Rate” means the fraction, the numerator of which is the NAV Per Unit for each Class T Unit and the denominator of which is the NAV Per Unit for each Class I Unit.
“Class T REIT Shares” means the REIT Shares classified as Class T common stock in the Articles of Incorporation.
“Class T Unit” means a Common Unit entitling the holder thereof to the rights of a holder of a Class T Unit as provided in this Agreement.
“Class TX Conversion Rate” means the fraction, the numerator of which is the NAV Per Unit for each Class TX Unit and the denominator of which is the NAV Per Unit for each Class AX Unit.
“Class TX REIT Shares” means the REIT Shares classified as Class TX common stock in the Articles of Incorporation.
“Class TX Unit” means a Common Unit entitling the holder thereof to the rights of a holder of a Class TX Unit as provided in this Agreement.
“Code” means the Internal Revenue Code of 1986, as amended from time to time, or any successor statute thereto. Reference to any particular provision of the Code shall mean such provision as in effect from time to time, as the same may be amended, and any successor provision thereto, as interpreted by any applicable regulations as in effect from time to time.
“Commission” means the U.S. Securities and Exchange Commission.
“Common Share Ownership Limit” has the meaning provided in the Articles of Incorporation.
“Common Unit” means a fractional, undivided share of the Partnership Interests of all Partners issued pursuant to Article 4 hereof, including Class AX Units, Class D Units, Class I Units, Class IX Units, Class S Units, Class T Units and Class TX Units, but does not include, unless otherwise provided herein for specific purposes, any Preferred Unit, Special Limited Partnership Unit, or any other Partnership Unit specified in a Partnership Unit Designation as being other than a Common Unit; provided, however, that the General Partner Interest and the Limited Partner Interests shall have the differences in rights and privileges as specified in this Agreement.
“Constituent Person” has the meaning provided in Section 4.5 hereof.
“Contributed Property” means each property or other asset contributed to the Partnership, in such form as may be permitted by the Act, but excluding cash contributed or deemed contributed to the Partnership.
“Conversion Date” has the meaning provided in Section 4.5(c) hereof.
“Conversion Factor” means 1.0, provided that in the event that the General Partner (i) declares or pays a dividend on its outstanding REIT Shares wholly or partly in REIT Shares or makes a distribution to all holders of its outstanding REIT Shares wholly or partly in REIT Shares, (ii) subdivides its outstanding REIT Shares, or (iii) combines its outstanding REIT Shares into a smaller number of REIT Shares, the Conversion Factor shall be adjusted by multiplying the Conversion Factor by a fraction, the numerator of which shall be the number of REIT Shares issued and outstanding on the record date for such dividend, distribution, subdivision or
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combination (assuming for such purposes that such dividend, distribution, subdivision or combination has occurred as of such time), and the denominator of which shall be the actual number of REIT Shares (determined without the above assumption) issued and outstanding on such date and, provided further, that in the event that an entity other than an Affiliate of the General Partner shall become General Partner pursuant to any merger, consolidation or combination of the General Partner with or into another entity (the “Successor Entity”), the Conversion Factor shall be adjusted by multiplying the Conversion Factor by the number of shares of the Successor Entity into which one REIT Share is converted pursuant to such merger, consolidation or combination, determined as of the date of such merger, consolidation or combination. Any adjustment to the Conversion Factor shall become effective immediately after the effective date of such event retroactive to the record date, if any, for such event; provided, however, that if the General Partner receives a Notice of Redemption after the record date, but prior to the effective date of such dividend, distribution, subdivision or combination, the Conversion Factor shall be determined as if the General Partner had received the Notice of Redemption immediately prior to the record date for such dividend, distribution, subdivision or combination.
“Conversion Notice” means the Notice of Election by Partner to Convert LTIP Units into Limited Partnership Units substantially in the form attached as Exhibit C hereto.
“Conversion Right” has the meaning provided in Section 4.5(a) hereof.
“Defaulting Limited Partner” has the meaning provided in Section 5.2(c) hereof.
“Depreciation” means, for each fiscal year, an amount equal to the federal income tax depreciation, amortization, or other cost recovery deduction allowable with respect to an asset for such year, except that if the Carrying Value of an asset differs from its adjusted basis for federal income tax purposes at the beginning of such year or other period, Depreciation shall be an amount which bears the same ratio to such beginning Carrying Value as the federal income tax depreciation, amortization, or other cost recovery deduction for such year bears to such beginning adjusted tax basis; provided, however, that if the federal income tax depreciation, amortization, or other cost recovery deduction for such year is zero, Depreciation shall be determined with reference to such beginning Carrying Value using any reasonable method selected by the General Partner.
“Director” means a member of the board of directors of the General Partner.
“Distribution Fees” shall have the meaning provided in the Company’s Prospectus.
“Economic Capital Account Balance” has the meaning provided in Section 5.1(e) hereof.
“Event of Bankruptcy” as to any Person, means the filing of a petition for relief as to such Person as debtor or bankrupt under the Bankruptcy Code of 1978 or similar provision of law of any jurisdiction (except if such petition is contested by such Person and has been dismissed within 90 days); insolvency or bankruptcy of such Person as finally determined by a court proceeding; filing by such Person of a petition or application to accomplish the same or for the appointment of a receiver or a trustee for such Person or a substantial part of its assets; commencement of any proceedings relating to such Person as a debtor under any other reorganization, arrangement, insolvency, adjustment of debt or liquidation law of any jurisdiction, whether now in existence or hereinafter in effect, either by such Person or by another, provided that if such proceeding is commenced by another, such Person indicates its approval of such proceeding, consents thereto or acquiesces therein, or such proceeding is contested by such Person and has not been finally dismissed within 90 days.
“Excepted Holder Limit” has the meaning provided in the Articles of Incorporation.
“Exchanged REIT Shares” has the meaning provided in Section 4.10(b) hereof.
“Forced Conversion” has the meaning provided in Section 4.5(d) hereof.
“Forced Conversion Notice” means the Notice of Election by Partnership to Force Conversion of LTIP Units Into Limited Partnership Units substantially in the form attached as Exhibit D hereto.
“General Partner” means Cantor Fitzgerald Income Trust, Inc., a Maryland corporation, and any Person who becomes a substitute or additional General Partner as provided herein, and any of their successors as General Partner.
“General Partner Loan” has the meaning provided in Section 5.2(c) hereof.
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“General Partner Interest” means the entire Partnership Interest held by a General Partner hereof, which Partnership Interest may be expressed as a number of Common Units, Preferred Units or any other Partnership Units.
“Hurdle Amount” means, for any period during a calendar year, that amount that results in a 5% annualized internal rate of return on the NAV of the Partnership Units outstanding at the beginning of the then-current calendar year and all Partnership Units issued since the beginning of the then-current calendar year, taking into account the timing and amount of all distributions accrued or paid (without duplication) on all such Partnership Units and all issuances of Partnership Units over the period. The ending NAV of the Partnership Units used in calculating the internal rate of return will be calculated before giving effect to any allocation or accrual to the Performance Participation and any applicable Distribution Fees expenses, provided that the calculation of the Hurdle Amount for any period will exclude any Partnership Units repurchased during such period, which Partnership Units will be subject to the Performance Participation upon such repurchase as described in Section 5.2(b) hereof. With respect to the first year in which the Second Amended and Restated Advisory Agreement is in effect, the beginning NAV of the Partnership Units used in calculating the internal rate of return will be deemed to equal the aggregate NAV of the Common Units as of July 31, 2020.
“Indemnitee” means (i) any Person made a party to a proceeding by reason of its status as the General Partner or a director, officer or employee of the General Partner or the Partnership, and (ii) such other Persons (including Affiliates of the General Partner or the Partnership) as the General Partner may designate from time to time, in its sole and absolute discretion.
“Independent Directors” means a Director who is not on the date of determination, and within the last two years from the date of determination has not been, directly or indirectly associated and has not been associated with the Sponsor of the General Partner or the Advisor by virtue of (i) ownership of an interest in the Sponsor, the Advisor or any of their Affiliates, other than the General Partner,
(ii) employment by the Sponsor, the Advisor or any of their Affiliates, (iii) service as an officer or director of the Sponsor, the Advisor or any of their Affiliates, (iv) performance of services, other than as a Director, for the General Partner, (v) service as a director or trustee of more than REITs organized by the Sponsor or advised by the Advisor, or (vi) maintenance of a material business or professional relationship with the Sponsor, the Advisor or any of their Affiliates. A business or professional relationship is considered “material” if the aggregate gross income derived by the Director from the Sponsor, the Advisor and their Affiliates exceeds five percent of either the Director’s annual gross income during either of the last two years or the Director’s net worth on a fair market value basis. An indirect association with the Sponsor of the General Partner or the Advisor shall include circumstances in which a Director’s spouse, parent, child, sibling, mother- or father-in-law, son- or daughter-in-law or brother- or sister-in-law is or has been associated with the Sponsor, the Advisor, any of their Affiliates or the General Partner.
“Investments” means all investments by the Partnership in Properties, Loans and all other investments (other than short-term investments acquired for purposes of cash management) in which the Partnership may acquire an interest, either directly or indirectly, including through ownership interests in a Joint Venture, pursuant to the Articles of Incorporation, the bylaws of the General Partner or the investment objectives and policies adopted by the board of directors of the General Partner from time to time.
“Joint Venture” means those joint venture, limited liability company, partnership or other entity arrangements in which the Partnership is a co-venturer or general partner established to acquire or hold one or more Investments.
“Junior Share” means a share of capital stock of the General Partner now or hereafter authorized or reclassified that has dividend rights, or rights upon liquidation, winding up and dissolution, that are inferior or junior to the REIT Shares.
“Limited Partner” means any Person named as a Limited Partner on Exhibit A attached hereto (including, as applicable, the General Partner), as such exhibit may be amended and restated from time to time, and any Person who becomes a Substitute Limited Partner, in such Person’s capacity as a Limited Partner in the Partnership.
“Limited Partner Interest” means a Partnership Interest of a Limited Partner in the Partnership representing a fractional part of the Partnership Interests of all Limited Partners and includes any and all benefits to which the holder of such a Partnership Interest may be entitled as provided in this Agreement, together with all obligations of such Person to comply with the terms and provisions of this Agreement. A Limited Partner Interest may be expressed as a number of Common Units, Preferred Units or other Partnership Units.
“Limited Partnership Unit” means a Limited Partnership Interest designated as a Common Unit.
“Liquidating Capital Gains” has the meaning provided in Section 5.1(e) hereof.
“Listing” means the listing of the REIT Shares on a national securities exchange. Upon such Listing, the REIT Shares shall be deemed “Listed.”
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“Liquidity Event” shall include, but shall not be limited to, (i) a Listing, (ii) a sale, merger or other transaction in which the holders of REIT Shares either receive, or have the option to receive, cash, securities redeemable for cash, and/or securities of a publicly traded company, and (iii) the sale of all or substantially all of the Assets where holders of REIT Shares either receive, or have the option to receive, cash or other consideration.
“Loans” means mortgage loans and other types of debt financing investments made by the Partnership, either directly or indirectly, including through ownership interests in a Joint Venture, including, without limitation, mezzanine loans, B-notes, bridge loans, convertible debt, wraparound mortgage loans, construction mortgage loans, loans on leasehold interests, and participations in such loans.
“Loss Caryforward Amount” shall initially equal zero and shall cumulatively increase by the absolute value of any negative annual Total Return and decrease by any positive annual Total Return, provided that the Loss Carryforward Amount shall at no time be less than zero and provided further that the calculation of the Loss Carryforward Amount will exclude the Total Return related to any Partnership Units repurchased during such year, which Partnership Units will be subject to the Performance Participation upon such repurchase as described in Section 5.2(b).
“LTIP Unit” means a Limited Partnership Interest which is designated as an LTIP Unit and which has the rights, preferences and other privileges designated in Section 4.4 hereof and elsewhere in this Agreement in respect of holders of LTIP Units. The allocation of LTIP Units among the Partners shall be set forth on Exhibit A, as may be amended from time to time.
“LTIP Holder” means a Partner that holds LTIP Units.
“NAV” means net asset value, calculated pursuant to the Valuation Policy.
“NAV per Unit” means, for each Class of Common Unit, the NAV per unit of such Class of Common Unit, determined as of the last business day of each month as described in the Prospectus.
“New Securities” means (i) any rights, options, warrants, or convertible or exchangeable securities having the right to subscribe for or purchase REIT Shares or Preferred Shares, excluding Preferred Shares and Junior Shares or (ii) any debt issued by the General Partner that provides any of the rights described in (i).
“Nonrecourse Deductions” has the meaning provided in Regulations Section 1.704-2(b)(1), and the amount of Nonrecourse Deductions for a Partnership Year shall be determined in accordance with the rules of Regulations Section 1.704-2(c).
“Nonrecourse Liability” has the meaning provided in Regulations Section 1.704-2(b)(3).
“Notice” has the meaning provided in Section 10.5(d) hereof.
“Notice of Redemption” means the Notice of Exercise of Redemption Right substantially in the form attached as Exhibit B hereto.
“Offering” means any offering and sale of REIT Shares registered for sale to the public in accordance with applicable federal and state securities laws.
“Partner” means any General Partner or Limited Partner.
“Partner Minimum Gain” means an amount, with respect to each Partner Nonrecourse Debt, equal to the Partnership Minimum Gain that would result if such Partner Nonrecourse Debt were treated as a Nonrecourse Liability, determined in accordance with Regulations Section 1.704-2(i)(3).
“Partner Nonrecourse Debt” has the meaning provided in Regulations Section 1.704-2(b)(4).
“Partner Nonrecourse Debt Minimum Gain” means an amount, with respect to each Partner Nonrecourse Debt, equal to the Partnership Minimum Gain that would result if such Partner Nonrecourse Debt were treated as a Nonrecourse Liability, determined in accordance with Regulations Section 1.704-2(i)(3).
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“Partner Nonrecourse Deductions” has the meaning provided in Regulations Sections 1.704-2(i)(l) and 1.704-2(i)(2), and the amount of Partner Nonrecourse Deductions with respect to a Partner Nonrecourse Debt for a Partnership Year shall be determined in accordance with Regulations Sections 1.704-2(i)(2).
“Partnership” means Cantor Fitzgerald Income Trust Operating Partnership, L.P., a Delaware limited partnership.
“Partnership Interest” means an ownership interest in the Partnership held by either a Limited Partner or a General Partner and includes any and all benefits to which the holder of such a Partnership Interest may be entitled as provided in this Agreement, together with all obligations of such Person to comply with the terms and provisions of this Agreement. There may be one or more classes or series of Partnership Interests. A Partnership Interest may be expressed as a number of Common Units, Preferred Units or other Partnership Units.
“Partnership Loan” has the meaning provided in Section 5.2(d) hereof.
“Partnership Minimum Gain” has the meaning provided in Regulations Sections 1.704-2(b)(2) and 1.704-2(d), and the amount of Partnership Minimum Gain, as well as any net increase or decrease in Partnership Minimum Gain, for a Partnership Year shall be determined in accordance with the rules of Regulations Section 1.704-2(d).
“Partnership Record Date” means the record date established by the General Partner for the distribution of cash pursuant to Section 5.2 hereof, which record date generally shall be the same as the record date established by the General Partner for a distribution to its stockholders of some or all of its portion of the distribution.
“Partnership Unit” means a Common Unit, a Preferred Unit, a Special Limited Partnership Unit, an LTIP Unit or any other unit of a fractional, undivided share of the Partnership Interests that the General Partner has authorized pursuant to Article 4 hereof, including Class AX Units, Class D Units, Class I Units, Class IX units, Class S Units, Class T Units and Class TX Units; provided, however, that Partnership Units comprising a General Partner Interest or a Limited Partner Interest shall have the differences in rights and privileges as specified in this Agreement.
“Partnership Unit Economic Balance” has the meaning provided in Section 5.1(e) hereof.
“Partnership Year” means the fiscal year of the Partnership, which shall be the calendar year.
“Percentage Interest” means the percentage determined by dividing the number of Common Units of a Partner by the sum of the Common Units of all Partners.
“Performance Participation” has the meaning provided in Section 5.2(c) hereof.
“Person” means any individual, corporation, partnership, estate, trust (including a trust qualified under Sections 401(a) or 501(c) (17) of the Code), a portion of a trust permanently set aside for or to be used exclusively for the purposes described in Section 642(c) of the Code, association, private foundation within the meaning of Section 509(a) of the Code, joint stock company or other entity and also includes a group as that term is used for purposes of Section 13(d)(3) of the Exchange Act and a group to which an Excepted Holder Limit applies.
“Preferred Shares” means a share of capital stock of the General Partner now or hereafter authorized or reclassified that has dividend rights, or rights upon liquidation, winding up and dissolution, that are superior or prior to REIT Shares.
“Preferred Unit” means a fractional, undivided share of the Partnership Interests that has distribution rights, or rights upon liquidation, winding up and dissolution, that are superior or prior to the Common Units that the General Partner has authorized pursuant to Section 4.2 hereof.
“Profit” and “Loss” means, for each Partnership Year or other applicable period, an amount equal to the Partnership’s taxable income or loss for such Partnership Year, determined in accordance with Code Section 703(a) (for this purpose, all items of income, gain, loss, or deduction required to be stated separately pursuant to Code Section 703(a)(1) shall be included in taxable income or loss), with the following adjustments:
(i) Any income of the Partnership that is exempt from federal income tax and not otherwise taken into account in computing Profit and Loss pursuant to this definition of “Profit” and “Loss” shall be added to such taxable income or loss;
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(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 Profit or Loss pursuant to this definition of “Profit” and “Loss” shall be subtracted from such taxable income or loss;
(iii) In the event the Carrying Value of any Partnership asset is adjusted pursuant to subparagraphs (ii) or (iii) of the definition of Carrying 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 Profit and Loss;
(iv) Gain or loss resulting from any disposition of Partnership Property with respect to which gain or loss is recognized for federal income tax purposes shall be computed by reference to the Carrying Value of the property disposed of, notwithstanding that the adjusted tax basis of such property differs from its Carrying 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 Partnership Year or other period;
(vi) To the extent an adjustment to the adjusted tax basis of any Partnership asset pursuant to Code Section 734(b) or Section 743(b) is required pursuant to Regulations Section 1.704-1(b)(2)(iv) to be taken into account in determining Capital Accounts as a result of a distribution other than in liquidation of a Partner’s interest in the Partnership, the amount of such adjustment shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases the basis of the asset) from the disposition of the asset and shall be taken into account for purposes of computing Profit or Loss; and
(vii) Notwithstanding any other provision of this definition of “Profit” and “Loss”, any items that are specially allocated pursuant to Section 5.1(c), 5.1(d), or 5.1(e) hereof shall not be taken into account in computing Profits or Losses. The amounts of the items of Partnership income, gain, loss, or deduction available to be specially allocated pursuant to Sections 5.1(c) and 5.1(d) hereof shall be determined by applying rules analogous to those set forth in subparagraphs (i) through (vi) above.
“Property” or “Properties” means, as the context requires, any or all Real Property or properties acquired by the Partnership, either directly or indirectly, through Joint Venture arrangements or other partnership or investment interests.
“Prospectus” means the most recent prospectus relating to an Offering as such prospectus may be amended or supplemented from time to time.
“Qualifying Party” means (a) a Person who is admitted to the Partnership pursuant to Section 4.2 or Section 4.4 and who is shown as such on the books and records of the Partnership, (b) a transferee in a permitted Transfer or (c) a Substitute Limited Partner succeeding to all or part of the Limited Partnership Unit of a Person that meets one of the foregoing criteria in (a) or (b).
“Real Property” means land, rights in land (including leasehold interests) and any buildings, structures improvements, furnishings fixtures and equipment located on or used in connection with land and rights in interests in land.
“Recapture Income” means any gain recognized by the Partnership (computed without regard to any adjustment required by Section 743 of the Code) upon the disposition of any property or asset of the Partnership, which gain is characterized as ordinary income because it represents the recapture of deductions previously taken with respect to such property or asset.
“Received REIT Shares” has the meaning provided in Section 4.10(b) hereof.
“Redemption” has the meaning provided in Section 8.5(a) hereof.
“Redemption Price” means the Value of the REIT Shares Amount as of the end of the Specified Redemption Date.
“Redemption Right” has the meaning provided in Section 8.5(a) hereof.
“Regulations” means the Federal income tax regulations promulgated under the Code, as amended and as hereafter amended from time to time. Reference to any particular provision of the Regulations shall mean that provision of the Regulations on the date hereof and any successor provision of the Regulations.
“REIT” means a “real estate investment trust” under Sections 856 through 860 of the Code.
“REIT Expenses” means (i) costs and expenses relating to the formation and continuity of existence and operation of the General Partner and any Subsidiaries thereof (which Subsidiaries shall, for purposes hereof, be included within the definition of General Partner), including taxes, fees and assessments associated therewith, any and all costs, expenses or fees payable to any director, officer, or employee of the General Partner, (ii) costs and expenses relating to any public offering and registration of
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securities by the General Partner and all statements, reports, fees and expenses incidental thereto, including, without limitation, underwriting discounts and selling commissions applicable to any such offering of securities, and any costs and expenses associated with any claims made by any holders of such securities or any underwriters or placement agents thereof, (iii) costs and expenses associated with any repurchase of any securities by the General Partner, (iv) costs and expenses associated with the preparation and filing of any periodic or other reports and communications by the General Partner under federal, state or local laws or regulations, including filings with the Commission, (v) costs and expenses associated with compliance by the General Partner with laws, rules and regulations promulgated by any regulatory body, including the Commission and any securities exchange, (vi) costs and expenses associated with any 401(k) plan, incentive plan, bonus plan or other plan providing for compensation for the employees of the General Partner, (vii) costs and expenses incurred by the General Partner relating to any issuing or redemption of Partnership Units, and (viii) all other operating or administrative costs of the General Partner incurred in the ordinary course of its business on behalf of or in connection with the Partnership.
“REIT Share” means a common share of beneficial ownership in the General Partner (or successor entity, as the case may be), including Class A REIT Shares, Class AX REIT Shares, Class D REIT Shares, Class I REIT Shares, Class IX REIT Shares, Class S REIT Shares, Class T REIT Shares and Class TX REIT Shares.
“REIT Shares Amount” means, with respect to Tendered Units of a Class, a number of REIT Shares of the corresponding REIT Share Class equal to the product of the number of Partnership Units of such Class offered for exchange by a Tendering Party, multiplied by the Conversion Factor as adjusted to and including the Specified Redemption Date; provided that in the event the General Partner issues to all holders of REIT Shares rights, options, warrants or convertible or exchangeable securities entitling the stockholders to subscribe for or purchase REIT Shares, or any other securities or property (collectively, the “rights”), and the rights have not expired at the Specified Redemption Date, then the REIT Shares Amount shall also include the rights issuable to a holder of the REIT Shares.
“REIT Transaction” has the meaning provided in Section 7.1(b) hereof.
“Related Party” means, with respect to any Person, any other Person whose ownership of shares of the General Partner’s capital stock would be attributed to the first such Person under Code Section 544 (as modified by Code Section 856(h)(1)(B)).
“Securities Act” means the Securities Act of 1933, as amended from time to time, or any successor statute thereto. Reference to any provision of the Securities Act shall mean such provision as in effect from time to time, as the same may be amended, and any successor provision thereto, as interpreted by any applicable regulations as in effect from time to time.
“Special Limited Partner” means the holder of Special Limited Partnership Units.
“Special Limited Partnership Unit” means Partnership Units designated as Special Limited Partnership Units issued pursuant to Section 4.2(d) with the rights and obligations provided under this Agreement.
“Specified Redemption Date” means the first business day of the month that is at least sixty (60) business days after the receipt by the General Partner of a Notice of Redemption.
“Sponsor” means any Person which (i) is directly or indirectly instrumental in organizing, wholly or in part, the General Partner, (ii) will control, manage or participate in the management of the General Partner, (iii) takes the initiative, directly or indirectly, in founding or organizing the General Partner, either alone or in conjunction with one or more other Persons, (iv) receives a material participation in the General Partner in connection with the founding or organizing of the business of the General Partner, in consideration of services or property, or both services and property, (v) has a substantial number of relationships and contacts with the General Partner, (vi) possesses significant rights to control Properties, (vii) receives fees for providing services to the General Partner which are paid on a basis that is not customary in the industry or (vii) provides goods or services to the General Partner on a basis which was not negotiated at arm’s-length with the General Partner. “Sponsor” does not include any Person whose only relationship with the General Partner is that of an independent property manager and whose only compensation is as such, or wholly independent third parties such as attorneys, accountants and underwriters whose only compensation is for professional services.
“Sponsor Support Reimbursement” shall have the meaning set forth in the Company’s Prospectus.
“Subsidiary” means, with respect to any Person, any corporation or other entity of which a majority of (i) the voting power of the voting equity securities or (ii) the outstanding equity interests is owned, directly or indirectly, by such Person.
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“Subsidiary Partnership” means any partnership of which the partnership interests therein are owned by the General Partner or a direct or indirect subsidiary of the General Partner.
“Substitute Limited Partner” means any Person admitted to the Partnership as a Limited Partner pursuant to Section 9.3 hereof.
“Tax Matters Partner” has the meaning provided in Section 10.5(a) hereof.
“Tendered Units” has the meaning provided in Section 8.5(a) hereof.
“Tendering Party” has the meaning provided in Section 8.5(a) hereof.
“Total Return” means, for any period since the end of the prior calendar year the sum of: (i) all distributions accrued or paid (without duplication) on the Partnership Units outstanding at the end of such period since the beginning of the then-current calendar year plus (ii) the change in aggregate NAV of such Partnership Units since the beginning of such year, before giving effect to (x) changes resulting solely from the proceeds of issuances of Partnership Units, (y) any distribution or accrual to the Performance Participation and (z) any applicable Distribution Fees expenses (including any payments made to the General Partner for payment of such expenses). For the avoidance of doubt, the calculation of Total Return will (i) include any appreciation or depreciation in the NAV of Partnership Units issued during the then-current calendar year but (ii) exclude the proceeds from the initial issuance of such Partnership Units. In addition, with respect to a year in which a Liquidity Event occurs, the change in the aggregate NAV of the Partnership Units outstanding will be deemed to equal the difference between the aggregate NAV of such Partnership Units at the beginning of the year and the aggregate value of such Partnership Units determined in connection with such Liquidity Event. With respect to the first year in which the Second Amended and Restated Advisory Agreement is in effect, for purposes of determining Total Return, any change in the aggregate NAV will be deemed to equal the difference between the aggregate NAV of the Partnership Units as of July 31, 2020 and the aggregate NAV of such units at the end of such calendar year.
“Transaction” has the meaning provided in Section 4.5(g) hereof.
“Transfer” has the meaning provided in Section 9.2(a) hereof.
“Unvested LTIP Units” has the meaning provided in Section 4.4(d) hereof.
“Value” means, for any Class of REIT Shares: (i) if such Class of REIT Shares are Listed, the average closing price per share for the previous 30 trading days, or (ii) if such Class of REIT Shares are not Listed, the NAV per REIT Share for REIT Shares of that Class.
“Valuation Policy” means the valuation policy adopted by the valuation committee of the board of directors of the General Partner, as amended from time to time.
“Vested LTIP Units” has the meaning provided in Section 4.4(d) hereof.
“Vesting Agreement” means each or any, as the context implies, Long Term Incentive Plan (LTIP) Vesting Agreement entered into by a LTIP Holder upon acceptance of an award of LTIP Units.
ARTICLE 2
PARTNERSHIP FORMATION AND IDENTIFICATION
2.1 Formation.
The Partnership was formed as a limited partnership pursuant to the Act, and all other pertinent laws of the State of Delaware, for the purposes and upon the terms and conditions set forth in this Agreement.
2.2 Name, Office and Registered Agent.
The name of the Partnership is Cantor Fitzgerald Income Trust Operating Partnership, L.P. The specified office and place of business of the Partnership shall be 110 East 59th Street, New York, NY 10022. The General Partner may at any time change the location of such office, provided the General Partner gives notice to the Partners of any such change. The name and address of the Partnership’s registered agent is 2711 Centerville Rd, Suite 400, Wilmington, DE 19808. The sole duty of the registered agent as such is to forward to the Partnership any notice that is served on it as registered agent.
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2.3 Term and Dissolution.
(a) The term of the Partnership shall continue in full force and effect until dissolved upon the first to occur of any of the following events:
(i) the occurrence of an Event of Bankruptcy as to a General Partner or the dissolution, death, removal or withdrawal of a General Partner unless the business of the Partnership is continued pursuant to Section 7.3(b) hereof; provided that if a General Partner is on the date of such occurrence a partnership, the dissolution of such General Partner as a result of the dissolution, death, withdrawal, removal or Event of Bankruptcy of a partner in such partnership shall not be an event of dissolution of the Partnership if the business of such General Partner is continued by the remaining partner or partners, either alone or with additional partners, and such General Partner and such partners comply with any other applicable requirements of this Agreement;
(ii) the passage of ninety (90) days after the sale or other disposition of all or substantially all of the assets of the Partnership (provided that if the Partnership receives an installment obligation as consideration for such sale or other disposition, the Partnership shall continue, unless sooner dissolved under the provisions of this Agreement, until such time as such note or notes are paid in full); or
(iii) the election by the General Partner that the Partnership should be dissolved.
(b) Upon dissolution of the Partnership (unless the business of the Partnership is continued pursuant to Section 7.3(b) hereof), the General Partner (or its trustee, receiver, successor or legal representative) shall amend or cancel any Certificate(s) and liquidate the Partnership’s assets and apply and distribute the proceeds thereof in accordance with Section 5.6 hereof. Notwithstanding the foregoing, the liquidating General Partner may either (i) defer liquidation of, or withhold from distribution for a reasonable time, any assets of the Partnership (including those necessary to satisfy the Partnership’s debts and obligations), or (ii) distribute the assets to the Partners in kind.
2.4 Filing of Certificate and Perfection of Limited Partnership.
The General Partner shall execute, acknowledge, record and file at the expense of the Partnership, any and all amendments to the Certificate(s) and all requisite fictitious name statements and notices in such places and jurisdictions as may be necessary to cause the Partnership to be treated as a limited partnership under, and otherwise to comply with, the laws of each state or other jurisdiction in which the Partnership conducts business.
ARTICLE 3
BUSINESS OF THE PARTNERSHIP
The purpose and nature of the business to be conducted by the Partnership is (i) to conduct any business that may be lawfully conducted by a limited partnership organized pursuant to the Act, provided, however, that such business shall be limited to and conducted in such a manner as to permit the General Partner at all times to qualify as a REIT, unless the General Partner otherwise ceases to qualify as a REIT, and in a manner such that the General Partner will not be subject to any taxes under Section 857 (except with regards to capital gains that the Partnership retains) or 4981 of the Code, or taxation as a corporation as a result of being classified as a “publicly traded partnership” pursuant to Section 7704 of the Code, (ii) to enter into any partnership, joint venture or other similar arrangement to engage in any of the foregoing or the ownership of interests in any entity engaged in any of the foregoing and (iii) to do anything necessary or incidental to the foregoing. In connection with the foregoing, and without limiting the General Partner’s right in its sole and absolute discretion to qualify or cease qualifying as a REIT, the Partners acknowledge that the General Partner intends to qualify as a REIT for federal income tax purposes and that such qualification and the avoidance of income and excise taxes on the General Partner inures to the benefit of all the Partners and not solely to the General Partner. Notwithstanding the foregoing, the Limited Partners agree that the General Partner may terminate its status as a REIT under the Code at any time to the full extent permitted under the Articles of Incorporation. The General Partner on behalf of the Partnership shall also be empowered to do any and all acts and things necessary or prudent to ensure that the Partnership will not be classified as a “publicly traded partnership” that is taxable as a corporation under Section 7704 of the Code.
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ARTICLE 4
CAPITAL CONTRIBUTIONS AND ACCOUNTS
4.1 Capital Contributions.
The Partners have heretofore made Capital Contributions to the Partnership. In addition, the Special Limited Partner made a Capital Contribution to the Partnership in exchange for Special Limited Partnership Units. Each Partner owns Partnership Units in the amount set forth for such Partner on Exhibit A and shall have a Percentage Interest in the Partnership as set forth in Exhibit A, as the same may be amended from time to time by the General Partner to the extent necessary to reflect accurately sales, exchanges or other Transfers, redemptions, Capital Contributions, the issuance of additional Partnership Units, or similar events having an effect on a Partner’s ownership of Partnership Units.
4.2 Additional Capital Contributions and Issuances of Additional Partnership Units.
Except as provided in this Section 4.2 or in Section 4.3 or applicable law, the Partners shall have no right or obligation to make any additional Capital Contributions or loans to the Partnership.
(a) The General Partner is hereby authorized to cause the Partnership to issue additional Partnership Units for any Partnership purpose at any time or from time to time to the Partners (including the General Partner) or to other Persons for such consideration and on such terms and conditions as shall be established by the General Partner in its sole and absolute discretion, all without the approval of any Limited Partner, including but not limited to Partnership Units issued in connection with the issuance of REIT Shares or other interests in the General Partner, Class I Units issued to the Special Limited Partner in lieu of payments or distributions of the Performance Participation, Class I Units issued to the Advisor in lieu of cash asset management fees pursuant to the Advisory Agreement and Partnership Units in connection with acquisitions of properties. Any additional Partnership Units issued thereby may be issued in one or more Classes (including the Classes specified in this Agreement), or one or more series of any of such Classes, with such designations, preferences and relative, participating, optional or other special rights, powers and duties, all as shall be determined by the General Partner in its sole and absolute discretion and without the approval of any Limited Partner, subject to Delaware law, including, without limitation, (i) the allocations of items of Partnership income, gain, loss, deduction and credit to each such Class or series of Partnership Units; (ii) the right of each such Class or series of Partnership Units to share in Partnership distributions; and (iii) the rights of each such Class or series of Partnership Units upon dissolution and liquidation of the Partnership. Without limiting the foregoing, the General Partner is expressly authorized to cause the Partnership to issue Partnership Units for less than fair market value, so long as the General Partner concludes in good faith that such issuance is in the best interests of the General Partner and the Partnership. In the event that the Partnership issues additional Partnership Units pursuant to this Section 4.2(a), the General Partner shall make such revisions to this Agreement as it deems necessary to reflect the issuance of such additional Partnership Units.
(b) No additional Partnership Units shall be issued to the General Partner unless (i) the additional Partnership Units are issued to all Partners in proportion to their respective Percentage Interests with respect to the class of Partnership Units so issued; (ii) (a) the additional Partnership Units are (x) Partnership Units so issued in connection with an issuance of REIT Shares, or (y) Partnership Units issued in connection with an issuance of Preferred Shares, New Securities or other interests in the General Partner (other than REIT Shares), which Preferred Shares, New Securities or other interests have designations, preferences and other rights, terms and provisions that are substantially the same as the designations, preferences and other rights, terms and provisions of the additional Partnership Units issued to the General Partner (without limiting the foregoing, for example, the Partnership shall issue Partnership Interests consisting of Class AX Units to the General Partner in connection with the issuance of Class AX REIT Shares, shall issue Partnership Interests consisting of Class D Units to the General Partner in connection with the issuance of Class D REIT Shares, shall issue Partnership Interests consisting of Class I Units to the General Partner in connection with the issuance of Class I REIT Shares, shall issue Partnership Interests consisting of Class IX Units to the General Partner in connection with the issuance of Class IX REIT Shares, shall issue Partnership Interests consisting of Class S Units to the General Partner in connection with the issuance of Class S REIT Shares, shall issue Partnership Interests consisting of Class T Units to the General Partner in connection with the issuance of Class T REIT Shares and shall issue Partnership Interests consisting of Class TX Units to the General Partner in connection with the issuance of Class TX REIT Shares), and (b) the General Partner contributes to the Partnership the cash proceeds or other consideration received in connection with the issuance of such REIT Shares, Preferred Shares, New Securities or other interests in the General Partner, or (iii) the Additional Partnership Units are issued upon the conversion, redemption or exchange of debt, Partnership Units or other securities issued by the Partnership.
(c) The General Partner shall not issue any additional REIT Shares, Preferred Shares, Junior Shares or New Securities unless the General Partner contributes the cash proceeds or other consideration received from the issuance of such additional REIT Shares, Preferred Shares, Junior Shares or New Securities, as the case may be, and from the exercise of the rights contained in any such additional New Securities, to the Partnership in exchange for (x) in the case of an issuance of REIT Shares, Partnership Units (without limiting the foregoing, for example, the Partnership shall issue Partnership Interests consisting of Class AX Units to the General Partner in connection with the issuance of Class AX REIT Shares, shall issue Partnership Interests consisting of Class D Units to the General Partner in connection with the issuance of Class D REIT Shares, shall issue Partnership Interests consisting of Class I Units to the General Partner in connection with the issuance of Class I REIT Shares, shall issue Partnership Interests consisting of Class IX Units to the General Partner in connection with the issuance of Class IX REIT Shares, shall issue Partnership Interests
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consisting of Class IS Units to the General Partner in connection with the issuance of Class S REIT Shares, shall issue Partnership Interests consisting of Class T Units to the General Partner in connection with the issuance of Class T REIT Shares and shall issue Partnership Interests consisting of Class TX Units to the General Partner in connection with the issuance of Class TX REIT Shares), or (y) in the case of an issuance of Preferred Shares, Junior Shares or New Securities, Partnership Units with designations, preferences and other rights, terms and provisions that are substantially the same as the designations, preferences and other rights, terms and provisions of such Preferred Shares, Junior Shares or New Securities; provided, however, that notwithstanding the foregoing, the General Partner may issue REIT Shares, Preferred Shares, Junior Shares or New Securities (a) pursuant to Section 8.5(b) hereof, (b) pursuant to a dividend or distribution (including any stock split) of REIT Shares, Preferred Shares, Junior Shares, or New Securities to all of the holders of REIT Shares, Preferred Shares, Junior Shares or New Securities, as the case may be, (c) upon a conversion, redemption or exchange of Preferred Shares, (d) upon a conversion of Junior Shares into REIT Shares, (e) upon a conversion, redemption, exchange or exercise of New Securities, or (f) in connection with an acquisition of a property or other asset to be owned, directly or indirectly, by the General Partner if the General Partner determines that such acquisition is in the best interest of the Partnership. In the event of any issuance of additional REIT Shares, Preferred Shares, Junior Shares, or New Securities by the General Partner, and the contribution to the Partnership, by the General Partner, of the cash proceeds or other consideration received from such issuance, if the cash proceeds actually received by the General Partner are less than the gross proceeds of such issuance as a result of any underwriter’s discount or other expenses paid or incurred in connection with such issuance, then the General Partner shall be deemed to have made a Capital Contribution to the Partnership in the amount equal to the sum of the cash proceeds of such issuance plus the amount of such underwriter’s discount and other expenses paid by the General Partner (which discount and expense shall be treated as an expense for the benefit of the Partnership), and any such expenses shall be allocable solely to the Class of Partnership Units issued to the General Partner at such time.
(d) The Partnership issued Special Limited Partnership Units to an Affiliate of the Advisor in exchange for the cash contribution reflected on Exhibit A hereto and for services performed or to be performed for the Partnership and its Subsidiaries, and admitted such Person as the Special Limited Partner. The Special Limited Partner shall be entitled to certain distributions as provided in Section 5.2 and certain preferential allocations of items of income and gain under Section 5.1. The Special Limited Partnership Units will be subject to the transfer restrictions set forth in Article 9 and will be subject to redemption pursuant to Section 8.6.
4.3 Additional Funding.
If the General Partner determines that it is in the best interests of the Partnership to provide for additional Partnership funds (“Additional Funds”) for any Partnership purpose, the General Partner may (i) cause the Partnership to obtain such funds from outside borrowings or (ii) elect to have the General Partner or any of its Affiliates provide such Additional Funds to the Partnership through loans or otherwise, provided, however, that the Partnership may not borrow money from its Affiliates, unless a majority of the Directors of the General Partner (including a majority of Independent Directors) not otherwise interested in such transaction approve the transaction as being fair, competitive, and commercially reasonable and no less favorable to the Partnership than loans between unaffiliated parties under the same circumstances.
4.4 LTIP Units.
(a) The General Partner may from time to time issue LTIP Units to Persons who provide services to the Partnership, for such consideration as the General Partner may determine to be appropriate, and admit such Persons as Limited Partners. Subject to the following provisions of this Section and the special provisions of Sections 4.5, 5.1(e), and 8.6, LTIP Units shall be treated as Limited Partnership Units, with all of the rights, privileges and obligations attendant thereto. For purposes of computing the Partners’ Percentage Interests, LTIP Units shall be treated as Common Units.
(b) The Partnership shall maintain at all times a one-to-one correspondence between LTIP Units and Limited Partnership Units for conversion, distribution and other purposes, including without limitation complying with the following procedures: If an Adjustment Event (as defined below) occurs, then the General Partner shall make a corresponding adjustment to the LTIP Units to maintain a one-for-one conversion and economic equivalence ratio between Limited Partnership Units and LTIP Units. The following shall be “Adjustment Events:” (A) the Partnership makes a distribution on all outstanding Limited Partnership Units, (B) the Partnership subdivides the outstanding Limited Partnership Units into a greater number of interests or combines the outstanding Limited Partnership Units into a smaller number of interests, or (C) the Partnership issues any Limited Partnership Units or General Partnership Units in exchange for its outstanding Limited Partnership Units by way or reclassification or recapitalization of its Limited Partnership Units. If more than one Adjustment Event occurs, the adjustment to the LTIP Units need be made only once using a single formula that takes into account each and every Adjustment Event as if all Adjustment Events occurred simultaneously. For the avoidance of doubt, the following shall not be Adjustment Events: (x) the issuance of Limited Partnership Units or General Partnership Units in a financing, reorganization, acquisition or other similar business transaction, (y) the issuance of Limited Partnership Units or General Partnership Units to any employee benefit or compensation plan or distribution reinvestment plan, or (z) the issuance of any Limited Partnership Units or General Partnership Units to the General Partner in respect of a capital contribution to the Partnership of proceeds from the sale of securities by the General Partner. If the Partnership takes an action affecting the
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Limited Partnership Units other than actions specifically described above as Adjustment Events and in the opinion of the General Partner such action would require an adjustment to the LTIP Units to maintain the one-to-one correspondence described above, the General Partner shall have the right to make such adjustment to the LTIP Units, to the extent permitted by law, in such manner and at such time as the General Partner, in its sole discretion, may determine to be appropriate under the circumstances. If an adjustment is made to the LTIP Units as herein provided the Partnership shall promptly file in the books and records of the Partnership an officer’s certificate setting forth such adjustment and a brief statement of the facts requiring such adjustment, which certificate shall be conclusive evidence of the correctness of such adjustment absent manifest error. Promptly after filing of such certificate, the Partnership shall mail a notice to each LTIP Holder setting forth the adjustment to its LTIP Units and the effective date of such adjustment.
(c) The LTIP Units shall rank pari passu with the Limited Partnership Units as to (i) the payment of regular and special periodic or other distributions and, (ii) provided that the Capital Accounts of the LTIP Units have been equalized with those of the Limited Partnership Units pursuant to the special allocations contemplated by Section 5.1(e), distributions of assets upon liquidation, dissolution or winding up. As to the payment of distributions and as to distribution of assets upon liquidation, dissolution or winding up, any class or series of Partnership Units which by its terms specifies that it shall rank junior to, on parity with, or senior to the Limited Partnership Units shall also rank junior to, or pari passu with, or senior to, as the case may be, the LTIP Units.
(d) LTIP Units shall be subject to the following special provisions:
(i) LTIP Units may, in the sole discretion of the General Partner, be issued subject to vesting, forfeiture and additional restrictions on transfer pursuant to the terms of a Vesting Agreement. The terms of any Vesting Agreement may be modified by the General Partner from time to time in its sole discretion, subject to any restrictions on amendment imposed by the relevant Vesting Agreement, if applicable. LTIP Units that have vested under the terms of a Vesting Agreement are referred to as “Vested LTIP Units;” all other LTIP Units shall be treated as “Unvested LTIP Units.” Subject to the terms of any Vesting Agreement, a LTIP Holder shall be entitled to Transfer its LTIP Units to the same extent, and subject to the same restrictions as holders of Limited Partnership Units are entitled to Transfer their Limited Partnership Units pursuant to Article 9.
(ii) Unless otherwise specified in the Vesting Agreement, upon the occurrence of any event specified in a Vesting Agreement as resulting in either the right of the Partnership or the General Partner to repurchase LTIP Units at a specified purchase price or some other forfeiture of any LTIP Units, then if the Partnership or the General Partner exercises such right to repurchase or forfeiture in accordance with the applicable Vesting Agreement, then the relevant LTIP Units shall immediately, and without further action, be treated as cancelled and no longer outstanding for any purpose. Unless otherwise specified in the Vesting Agreement, no consideration or other payment shall be due with respect to any LTIP Units that have been forfeited, other than any distributions declared with respect to a Partnership Record Date prior to the effective date of the forfeiture. In connection with any repurchase or forfeiture of LTIP Units, the balance of the portion of the Capital Account of the holder that is attributable to all of its LTIP Units shall be reduced by the amount, if any, by which it exceeds the target balance contemplated by Section 5.1(e), calculated with respect to the holder’s remaining LTIP Units, if any.
(iii) LTIP Units shall generally be treated as Limited Partnership Units for purposes of Article 5, but shall also be entitled to certain special allocations of gain under Section 5.1(e).
(iv) The Redemption Right provided to Limited Partners under Section 8.5 shall not apply with respect to LTIP Units unless and until they are converted to Limited Partnership Units as provided in Section 4.5.
(v) Any certificate evidencing an LTIP Unit shall bear an appropriate legend indicating that additional terms, conditions and restrictions on Transfer, including without limitation any Vesting Agreement, apply to the LTIP Unit.
(vi) Vested LTIP Units are eligible to be converted into Limited Partnership Units under Section 4.5.
4.5 Conversion of LTIP Units.
(a) An LTIP Holder shall have the right (the “Conversion Right”), at its option, at any time to convert all or a portion of its Vested LTIP Units into Limited Partnership Units; provided, however, that an LTIP Holder may not exercise the Conversion Right for fewer than one thousand (1,000) Vested LTIP Units or, if such LTIP Holder holds fewer than one thousand (1,000) Vested LTIP Units, all of the LTIP Holder’s Vested LTIP Units. LTIP Holders shall not have the right to convert Unvested LTIP Units into Limited Partnership Units until they become Vested LTIP Units; provided, however, that when a LTIP Holder is notified of the expected occurrence of an event that will cause its Unvested LTIP Units to become Vested LTIP Units, such Person may give the Partnership a Conversion Notice conditioned upon and effective as of the time of vesting, and such Conversion Notice, unless subsequently revoked by the LTIP Holder, shall be accepted by the Partnership subject to such condition. The General Partner shall have the right at any time to cause a conversion of Vested LTIP Units into Limited Partnership Units. In all cases, the conversion of any LTIP Units into Limited Partnership Units shall be subject to the conditions and procedures set forth in this Section 4.5.
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(b) A holder of Vested LTIP Units may convert such interests into an equal number of fully paid and non-assessable Limited Partnership Units, giving effect to all adjustments (if any) made pursuant to Section 4.4(b). Notwithstanding the foregoing, in no event may a holder of Vested LTIP Units convert an amount of Vested LTIP Units that exceeds (x) the Economic Capital Account Balance of such holder, to the extent attributable to its ownership of LTIP Units, divided by (y) the Partnership Unit Economic Balance, in each case as determined as of the effective date of conversion (the “Capital Account Limitation”).
(c) In order to exercise its Conversion Right, a LTIP Holder shall deliver a notice (a “Conversion Notice”) to the Partnership (with a copy to the General Partner) not less than 10 nor more than 60 days prior to a date (the “Conversion Date”) specified in such Conversion Notice; provided, however, that if the General Partner has not given to the LTIP Holders notice of a proposed or upcoming Transaction (as defined below) at least thirty (30) days prior to the effective date of such Transaction, then the LTIP Holders shall have the right to deliver a Conversion Notice until the earlier of (x) the tenth (10th) day after such notice from the General Partner of a Transaction or (y) the third business day immediately preceding the effective date of such Transaction. A Conversion Notice shall be provided in the manner provided in Section 12.1. Each LTIP Holder covenants and agrees with the Partnership that all Vested LTIP Units to be converted pursuant to this Section 4.5 shall be free and clear of all liens. Notwithstanding anything herein to the contrary, a LTIP Holder may deliver a Redemption Notice pursuant to Section 8.5 relating to those Limited Partnership Units that will be issued to such holder upon conversion of such LTIP Units into Limited Partnership Units in advance of the Conversion Date; provided, however, that the redemption of such Limited Partnership Units by the Partnership shall in no event take place until after the Conversion Date. For clarity, it is noted that the objective of this paragraph is to put an LTIP Holder in a position where, if he or she so wishes, the Limited Partnership Units into which its Vested LTIP Units will be converted can be redeemed by the Partnership simultaneously with such conversion, with the further consequence that, if the General Partner elects to assume the Partnership’s redemption obligation with respect to such Limited Partnership Units under Section 8.5 by delivering to such holder REIT Shares rather than cash, then such holder can have REIT Shares issued to it simultaneously with the conversion of its Vested LTIP Units into Limited Partnership Units. The General Partner shall cooperate with an LTIP Holder to coordinate the timing of the different events described in the foregoing sentence.
(d) The Partnership, at any time at the election of the General Partner, may cause any number of Vested LTIP Units held by an LTIP Holder to be converted (a “Forced Conversion”) into an equal number of Limited Partnership Units, giving effect to all adjustments (if any) made pursuant to Section 4.4(b); provided, that the Partnership may not cause a Forced Conversion of any LTIP Units that would not at the time be eligible for conversion at the option of such LTIP Holder pursuant to paragraph (b) above. In order to exercise its right of Forced Conversion, the Partnership shall deliver a notice (a “Forced Conversion Notice”) to the applicable holder not less than 10 nor more than 60 days prior to the Conversion Date specified in such Forced Conversion Notice. A Forced Conversion Notice shall be provided in the manner provided in Section 12.1.
(e) A conversion of Vested LTIP Units for which a holder has given a Conversion Notice or the Partnership has given a Forced Conversion Notice shall occur automatically after the close of business on the applicable Conversion Date without any action on the part of such LTIP Holder, as of which time such LTIP Holder shall be credited on the books and records of the Partnership with the issuance as of the opening of business on the next day of an equal number of Limited Partnership Units issuable upon such conversion. After the conversion of LTIP Units as aforesaid, the Partnership shall deliver to such LTIP Holder, upon its written request, a certificate of the General Partner certifying its Limited Partnership Units and remaining LTIP Units, if any, immediately after such conversion.
(f) For purposes of making future allocations under Section 5.1(e) and applying the Capital Account Limitation, the portion of the Economic Capital Account balance of the applicable holder that is treated as attributable to its LTIP Units shall be reduced, as of the date of conversion, by the product of the number of LTIP Units converted and the Limited Partnership Unit Economic Balance.
(g) If the Partnership or the General Partner shall be a party to any transaction (including without limitation a merger, consolidation, interest exchange, self tender offer for all or substantially all Limited Partnership Units or other business combination or reorganization, or sale of all or substantially all of the Partnership’s assets, but excluding any transaction which constitutes an Adjustment Event), in each case as a result of which Limited Partnership Units shall be exchanged for or converted into the right, or the holders of such interests shall otherwise be entitled, to receive cash, securities or other property or any combination thereof (each of the foregoing being referred to herein as a “Transaction”), then the General Partner shall, immediately prior to the Transaction, exercise its right to cause a Forced Conversion with respect to the LTIP Units then eligible for conversion, taking into account any allocations that occur in connection with the Transaction or that would occur in connection with the Transaction if the assets of the Partnership were sold at the Transaction price or, if applicable, at a value determined by the General Partner in good faith using the value attributed to the Partnership Units in the context of the Transaction (in which case the Conversion Date shall be the effective date of the Transaction).
In anticipation of such Forced Conversion and the consummation of the Transaction, the Partnership shall use commercially reasonable efforts to cause each LTIP Holder to be afforded the right to receive in connection with such Transaction in consideration for the Limited Partnership Units into which its LTIP Units will be converted into the same kind and amount of cash,
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securities, and other property (or any combination thereof) receivable upon the consummation of such transaction by a holder of the same number of Limited Partnership Units, assuming such holder of Limited Partnership Units is not a Person with which the Partnership consolidated or into with the Partnership merged or which merged into the Partnership or to which such sale or transfer was made, as the case may be (a “Constituent Person”), or an affiliate of a Constituent Person. In the event that holders of Limited Partnership Units have the opportunity to elect the form or type of consideration to be received upon consummation of the Transaction, prior to such Transaction the General Partner shall give prompt written notice to each LTIP Holder of such election and shall use commercially reasonable efforts to afford such holders the right to elect, by written notice to the General Partner, the form or type of consideration to be received upon conversion of the LTIP Units held by such holder into Limited Partnership Units in connection with such Transaction. If an LTIP Holder fails to make such an election, such LTIP Holder (and any of its transferees) shall receive upon conversion of the LTIP Units held by it (or by any of its transferees) the same kind and amount of consideration that a holder of Limited Partnership Units would receive if such holder of Limited Partnership Units failed to make such an election.
Subject to the rights of the Partnership and the General Partner under any Vesting Agreement, the Partnership shall use commercially reasonable efforts to cause the terms of the Transaction to be consistent with the provisions of this Section 4.5 and to enter into an agreement with the successor or purchasing entity, as the case may be, for the benefit of any LTIP Holders whose LTIP Units will not be converted into Limited Partnership Units in connection with the Transaction that will (i) contain provisions enabling the LTIP Holders with outstanding LTIP Units after such Transaction to convert their LTIP Units into securities as comparable as reasonably possible under the circumstances to Limited Partnership Units and (ii) preserve as far as reasonably possible under the circumstances the distribution, special allocation, conversion, and other rights set forth in the Agreement for the benefit of LTIP Holders.
4.6 Capital Accounts.
(a) The Partnership shall maintain for each Partner a separate Capital Account in accordance with the rules of Regulations Section 1.704-1(b)(2)(iv). Each Partner’s Capital Account shall be increased by (i) the amount of such Partner’s Capital Contributions and (ii) Profit allocated to such Partner and all items of Partnership income and gain allocated to such Partner pursuant to Sections 5.1(c), 5.1(d) and 5.1(e) and decreased by (x) the amount of cash or Agreed Value of all actual and deemed distributions of cash or property made to such Partner pursuant to this Agreement and (y) Loss allocated to such Partner and all items of Partnership deduction and loss allocated to such Partner pursuant to Section 5.1(c).
(b) In the event any interest in the Partnership is Transferred in accordance with the terms of this Agreement, the transferee shall succeed to the Capital Account of the transferor to the extent it relates to the transferred interest.
(c) The provisions of the Agreement relating to the maintenance of Capital Accounts are intended to comply with Regulations Section 1.704-1(b), and shall be interpreted and applied in a manner consistent with such Regulations. In the event the General Partner shall determine that it is prudent to modify the manner in which the Capital Accounts, or any debits or credits thereto (including, without limitation, debits or credits relating to liabilities which are secured by contributed or distributed property or which are assumed by the Partnership, the General Partner, or the Limited Partners) are computed in order to comply with such Regulations, the General Partner may make such modification, provided that it is not likely to have a material effect on the amounts distributable to any Person upon the dissolution of the Partnership. The General Partner also shall (i) make any adjustments that are necessary or appropriate to maintain equality between the Capital Accounts of the Partners and the amount of Partnership capital reflected on the Partnership’s balance sheet, as computed for book purposes, in accordance with Regulations Section 1.704-1(b)(2)(iv)(g) and (ii) make appropriate modifications in the event that unanticipated events might otherwise cause this Agreement not to comply with Regulations Section 1.704-1(b) or 1.704-2.
4.7 No Interest on Contributions.
No Partner shall be entitled to interest on its Capital Contribution.
4.8 Return of Capital Contributions.
No Partner shall be entitled to withdraw any part of its Capital Contribution or its Capital Account or to receive any distribution from the Partnership, except as specifically provided in this Agreement. Except as otherwise provided herein, there shall be no obligation to return to any Partner or withdrawn Partner any part of such Partner’s Capital Contribution for so long as the Partnership continues in existence.
4.9 No Third Party Beneficiary.
No creditor or other third party having dealings with the Partnership shall have the right to enforce the right or obligation of any Partner to make Capital Contributions or loans or to pursue any other right or remedy hereunder or at law or in equity, it being
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understood and agreed that the provisions of this Agreement shall be solely for the benefit of, and may be enforced solely by, the parties hereto and their respective successors and assigns. None of the rights or obligations of the Partners herein set forth to make Capital Contributions or loans to the Partnership shall be deemed an asset of the Partnership for any purpose by any creditor or other third party, nor may such rights or obligations be sold, transferred or assigned by the Partnership or pledged or encumbered by the Partnership to secure any debt or other obligation of the Partnership or of any of the Partners. In addition, it is the intent of the parties hereto that no distribution to any Limited Partner shall be deemed a return of money or other Property in violation of the Act. However, if any court of competent jurisdiction holds that, notwithstanding the provisions of this Agreement, any Limited Partner is obligated to return such money or Property, such obligation shall be the obligation of such Limited Partner and not of the General Partner. Without limiting the generality of the foregoing, a deficit Capital Account of a Partner shall not be deemed to be a liability of such Partner nor an asset or Property of the Partnership.
4.10 Redemption and Exchanges of REIT Shares.
(a) Redemptions. If, at any time, any shares of capital stock of the General Partner are redeemed by the General Partner for cash, the Partnership shall, immediately prior to such redemption, redeem an equal number of equivalent Partnership Units (taking into account any relevant Conversion Factor for that Class of Partnership Units) held by the General Partner that have the same Class designation as the redeemed REIT Shares upon the same terms and for the same price per Partnership Unit as such Capital Shares are redeemed.
(b) Exchanges. If the General Partner exchanges any REIT Shares of any Class (“Exchanged REIT Shares”) for REIT Shares of a different Class (“Received REIT Shares”), then the General Partner shall, and shall cause the Partnership to, exchange a number of Partnership Units having the same Class designation as the Exchanged REIT Shares, as determined based on the application of the Conversion Factor for that Class of Partnership Units, for Partnership Units having the same Class designation as the Received REIT Shares on the same terms that the General Partner exchanged the Exchanged REIT Shares. The exchange of Partnership Units shall occur automatically after the close of business on the applicable date of the exchange of REIT Shares, as of which time the holder of Class of Partnership Units having the same designation as the Exchanged REIT Shares shall be credited on the books and records of the Partnership with the issuance, as of the opening of business on the next day, of the applicable number of Partnership Units having the same designation as the Received REIT Shares.
ARTICLE 5
PROFITS AND LOSSES; DISTRIBUTIONS
5.1 Allocation of Profit and Loss.
Profit and Loss of the Partnership shall be determined and allocated with respect to each Partnership Year as of the end of each such year, provided that the General Partner may in its discretion allocate Profit and Loss for a shorter period as of the end of such period (and, for purposes of this Article 5, references to the term “Partnership Year” may include such shorter periods).
(a) Profit.
After giving effect to the special allocations in Sections 5.1(c), 5.1(d) and 5.1(e), Profit of the Partnership for each Partnership Year or other applicable period of the Partnership shall be allocated to the Partners in the following order and priority:
(i) Profit shall be allocated fist to the General Partner, including, as applicable, with respect to Limited Partner Interests held by the General Partner, until the cumulative Profit allocated to the General Partner pursuant to this Section 5.1(a)(i) equals the cumulative Loss allocated to the General Partner pursuant to Section 5.1(b)(ii); and, thereafter
(ii) Profit shall be allocated to the Partners (other than the Special Limited Partner) in accordance with their Percentage Interests.
(b) Loss.
After giving effect to the special allocations in Sections 5.1(c), 5.1(d), 5.1(e) and 5.1(h), Loss of the Partnership for each Partnership Year or other applicable period of the Partnership shall be allocated to the Partners in the following order and priority:
(i) Loss shall be allocated first to the Partners (other than the Special Limited Partner) in accordance with their Percentage Interests, provided that Loss shall not be allocated to a Partner pursuant to this Section 5.1(b)(i) to the extent that such allocation would cause or increase an Adjusted Capital Account Deficit at the end of any fiscal year; and, therefater
(ii) Loss shall be allocated to the General Partner.
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(c) Special Allocations. The following regulatory allocations shall be made in the following order and priority:
(i) Minimum Gain Chargeback. Notwithstanding the provisions of Section 5.1 of the Agreement, if there is a net decrease in Partnership Minimum Gain during any Partnership Year, each Partner shall be specially allocated items of Partnership income and gain for such year (and, if necessary, subsequent years) in an amount equal to such Partner’s share of the net decrease in Partnership Minimum Gain, as determined under Regulations Section 1.704-2(g). Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Partner pursuant thereto. The items to be so allocated shall be determined in accordance with Regulations Section 1.704-2(f)(6). This Section 5.1(c)(i) is intended to comply with the minimum gain chargeback requirements in Regulations Section 1.704-2(f) and shall be interpreted consistently therewith.
(ii) Partner Minimum Gain Chargeback. Notwithstanding any other provision of Section 5.1 of this Agreement, if there is a net decrease in Partner Minimum Gain attributable to a Partner Nonrecourse Debt during any Partnership Year, 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 year (and, if necessary, subsequent 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)(5). 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 5.1(c)(ii) is intended to comply with the minimum gain chargeback requirement in Regulations Section 1.704-2(i) and shall be interpreted consistently therewith.
(iii) Qualified Income Offset. In the event any Partner unexpectedly receives any adjustments, allocations or distributions described in Regulations Sections 1.704-l(b)(2)(ii)(d)(4), 1.704-l(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6) and such Partner has an Adjusted Capital Account Deficit, items of Partnership income and gain (consisting of a pro rata portion of each item of Partnership income, including gross income and gain for the Partnership Year) shall be specially allocated to such Partner in an amount and manner sufficient to eliminate, to the extent required by the Regulations, its Adjusted Capital Account Deficit created by such adjustments, allocations or distributions as quickly as possible. This Section 5.1(c)(iii) is intended to constitute a “qualified income offset” under Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
(iv) No Excess Deficit. To the extent that any Partner has or would have, as a result of an allocation of Net Loss (or item thereof), an Adjusted Capital Account Deficit, such amount of Net Loss (or item thereof) shall be allocated to the other Partners in accordance with Section 5.1(b), but in a manner which will not produce an Adjusted Capital Account Deficit as to such Partners. To the extent such allocation would result in all Partners having Adjusted Capital Account Deficits, such Net Loss (or item thereof) shall be allocated to the General Partner.
(v) Nonrecourse Deductions. Nonrecourse Deductions for any Partnership Year shall be allocated to the Partners (other than the Special Limited Partner) in accordance with their respective Percentage Interests. If the General Partner determines in its good faith discretion that the Partnership’s Nonrecourse Deductions must be allocated in a different ratio to satisfy the safe harbor requirements of the Regulations promulgated under Section 704(b) of the Code, the General Partner is authorized, upon notice to the Limited Partners, to revise the prescribed ratio for such Partnership Year to the numerically closest ratio which would satisfy such requirements.
(vi) Partner Nonrecourse Deductions. Any Partner Nonrecourse Deductions for any Partnership Year 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 Sections 1.704-2(b)(4) and 1.704-2(i).
(vii) Code Section 754 Adjustments. To the extent an adjustment to the adjusted tax basis of any Partnership asset pursuant to Section 734(b) or 743(b) of the Code is required, pursuant to Regulations Section 1.704-l(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 item of 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.
(d) Priority Allocations to the Special Limited Partner. Notwithstanding the provisions of Sections 5.1(a) and 5.1(b) above, the Special Limited Partner shall be allocated on a priority basis items of income or gain, including, without limitation, items of gain from a Sale (including but not limited to net capital gain realized in connection with the adjustment to the Carrying Value of Partnership assets under Section 704(b) of the Code) on a cumulative basis pursuant to this Section 5.1(d) in an amount equal to the amount of distributions made (or in connection with a Sale or winding up or liquidation of the Partnership, to be made) to such Partner.
(e) Special Allocations Regarding LTIP Units. Subject to the terms of any Partnership Units ranking senior to the LTIP Units with respect to return of capital or any preferential or priority return, any Liquidating Capital Gains shall first be allocated to the LTIP Holders until the Economic Capital Account Balances of such holders, to the extent attributable to their ownership of LTIP Units, are equal to (i) the Partnership Unit Economic Balance, multiplied by (ii) the number of LTIP Units; provided that no such
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Liquidating Capital Gains will be allocated with respect to any particular LTIP Unit unless and to the extent that the Partnership Unit Economic Balance exceeds the Partnership Unit Economic Balance in existence at the time such LTIP Unit was issued. For this purpose, “Liquidating Capital Gains” means net capital gains realized in connection with the actual or hypothetical sale of all or substantially all of the assets of the Partnership, including but not limited to net capital gain realized in connection with an adjustment to the Carrying Value of the Partnership assets under Section 704(b) of the Code. The “Economic Capital Account Balances” of the LTIP Holders will be equal to their Capital Account balances, plus the amount of their shares of any Partner Nonrecourse Debt Minimum Gain or Partnership Minimum Gain, in either case to the extent attributable to their ownership of LTIP Units. Similarly, the “Partnership Unit Economic Balance” shall mean (i) the Capital Account Balance of the General Partner, plus the amount of the General Partner’s share of any Partner Nonrecourse Debt Minimum Gain or Partnership Minimum Gain, in either case to the extent attributable to the General Partner’s ownership of Partnership Units and computed on a hypothetical basis after taking into account all allocations through the date on which any allocation is made under this Section 5.1(e), divided by (ii) the number of General Partner’s Partnership Units. Any such allocations shall be made among the LTIP Holders in proportion to the amounts required to be allocated to each under this Section 5.1(e). The parties agree that the intent of this Section 5.1(e) is to make the Capital Account balance associated with each LTIP Unit to be economically equivalent to the Capital Account balance associated with the Partnership Units (on a per-Unit basis), but only if and to the extent the Capital Account balance associated with the General Partner’s Partnership Units has increased on a per-Unit basis since the issuance of the relevant LTIP Unit.
(f) Recapture Income. Any gain allocated to the Partners upon the sale or other taxable disposition of any Partnership asset shall, to the extent possible after taking into account other required allocations of gain pursuant to Section 5.1(c), be characterized as Recapture Income in the same proportions and to the same extent as such Partners have been allocated any deductions directly or indirectly giving rise to the treatment of such gains as Recapture Income.
(g) Allocations Between Transferor and Transferee. If a Partner transfers any part or all of its Partnership Unit or if Percentage Interests vary during a Partnership Year, the General Partner, in its sole and absolute discretion, shall determine which method authorized under the Code and the Regulations shall be used to allocate the distributive shares.
(h) Special Allocations of Class-Specific Items. To the extent that any items of income, gain, loss or deduction of the General Partner are allocable to a specific Class or Classes of REIT Shares as provided in the Prospectus, including, without limitation, the Distribution Fees and Sponsor Support Reimbursement, and such items, or an amount equal thereto, shall be specially allocated to the Class or Classes of Partnership Units corresponding to such Class or Classes of REIT Shares.
(i) Allocations for Tax Purposes. All allocations for federal income tax purposes shall be consistent with all allocations in this Section 5.1, except as otherwise required by Section 704(c) of the Code and Regulations Section 1.704-1(b)(4). The General Partner shall have the authority to elect the method to be used by the Partnership for allocating items of income, gain, and expense as required by Section 704(c) of the Code including a method that may result in a Partner receiving a disproportionately larger share of the Partnership tax depreciation deductions, and such election shall be binding on all Partners.
(j) Revisions to Allocations to Reflect Issuance of Additional Partnership Units. In the event that the Partnership issues additional Partnership Units to the General Partner or any Additional Limited Partner pursuant to Article 4 hereof, the General Partner shall make such revisions to this Section 5.1 as it deems necessary to reflect the terms of the issuance of such additional Partnership Units, including making preferential allocations to classes of Partnership Units that are entitled thereto. Such revisions shall not require the consent or approval of any other Partner.
5.2 Distribution of Cash.
(a) The Partnership shall distribute cash on a monthly (or, at the election of the General Partner, more frequent) basis, in an amount determined by the General Partner in its sole and absolute discretion, to the Partners who are Partners on the Partnership Record Date with respect to such month (or other distribution period) in accordance with Section 5.2(b).
(b) Except for distributions pursuant to Section 5.6 in connection with the dissolution and liquidation of the Partnership and subject to the provisions of Sections 5.2(c), 5.2(d), 5.3 and 5.5, all distributions of cash shall be made to the Partners in amounts proportionate to the aggregate NAV of the Partnership Units held by the respective Partners on the Partnership Record Date, notwithstanding the amount distributed per Partnership Unit of any Class may differ from the amount per Partnership Unit of another Class on account of differences in Class-specific expense allocations with respect to REIT Shares as described in the Prospectus (and of corresponding special allocation among Classes of Partnership Units in accordance with Section 5.1(h) hereof) or for other reasons as determined by the board of directors of the General Partner. Any such differences shall correspond to differences in the amount of distributions per REIT Share for REIT Shares of different Classes, with the same adjustments being made to the amount of distributions per Partnership Unit for Partnership Units of a particular Class as are made to the distributions per REIT Share by the General Partner with respect to REIT Shares having the same Class designation.
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(c) Notwithstanding the foregoing, so long as the Advisory Agreement has not been terminated (including by means of non-renewal), the Special Limited Partner shall be entitled to a distribution (the “Performance Participation”), promptly following the end of each year (which shall accrue on a monthly basis) in an amount equal to:
(i) First, if the Total Return for the applicable period exceeds the sum of (i) the Hurdle Amount for that period and (ii) the Loss Carryforward Amount (any such excess, “Excess Profits”), 100% of such Excess Profits until the total amount allocated to the Special Limited Partner equals 12.5% of the sum of (x) the Hurdle Amount for that period and (y) any amount distributed to the Special Limited Partner pursuant to this clause; and
(ii) Second, to the extent there are remaining Excess Profits, 12.5% of such remaining Excess Profits.
Any amount by which Total Return falls below the Hurdle Amount and that does not constitute Loss Carryforward Amount will not be carried forward to subsequent periods.
With respect to all Partnership Units that are repurchased at the end of any month in connection with repurchases of REIT Shares pursuant to the General Partner’s share redemption program, the Special Limited Partner shall be entitled to such Performance Participation in an amount calculated as described above calculated in respect of the portion of the year for which such Partnership Units were outstanding, and proceeds for any such Partnership Unit repurchase will be reduced by the amount of any such Performance Participation.
Distributions on the Performance Participation may be payable in cash or Class I Units at the election of the Special Limited Partner. If the Special Limited Partner elects to receive such distributions in Class I Units, the Special Limited Partner will receive the number of Class I Units that results from dividing the Performance Participation by the NAV per Class I Unit at the time of such distribution. If the Special Limited Partner elects to receive such distributions in Class I Units, the Special Limited Partner may request the Partnership to redeem such Class I Units from the Special Limited Partner at any time thereafter pursuant to Section 8.5; subject to any monthly and quarterly volume limitations of the General Partner’s share redemption program described in the Prospectus.
The measurement of the change in NAV Per Unit for the purpose of calculating the Total Return is subject to adjustment by the board of directors of the General Partner to account for any dividend, split, recapitalization or any other similar change in the Partnership’s capital structure or any distributions that the board of directors of the General Partner deems to be a return of capital if such changes are not already reflected in the Partnership’s net assets.
The Special Limited Partner will not be obligated to return any portion of the Performance Participation previously distributed due to the subsequent performance of the Partnership.
In the event the Advisory Agreement is terminated (including by means of non-renewal), the Special Limited Partner will be distributed an amount equal to any accrued Performance Participation with respect to all Partnership Units as of the date of such termination.
(d) Notwithstanding any other provision of this Agreement, the General Partner is authorized to take any action that it determines to be necessary or appropriate to cause the Partnership to comply with any withholding requirements established under the Code or any other federal, state or local law including, without limitation, pursuant to Sections 1441, 1442, 1445, 1446, 1471, 1472 and 3406 of the Code. To the extent that the Partnership is required to withhold and pay over to any taxing authority any amount resulting from the allocation or distribution of income to any Partner or assignee (including by reason of Section 1446 of the Code), either (i) if the actual amount to be distributed to the Partner equals or exceeds the amount required to be withheld by the Partnership, the amount withheld shall be treated as a distribution of cash in the amount of such withholding to such Partner, or (ii) if the actual amount to be distributed to the Partner is less than the amount required to be withheld by the Partnership, the actual amount shall be treated as a distribution of cash in the amount of such withholding and the additional amount required to be withheld shall be treated as a loan (a “Partnership Loan”) from the Partnership to the Partner on the day the Partnership pays over such amount to a taxing authority. A Partnership Loan shall be repaid through withholding by the Partnership with respect to subsequent distributions to the applicable Partner or assignee. In the event that a Limited Partner (a “Defaulting Limited Partner”) fails to pay any amount owed to the Partnership with respect to the Partnership Loan within fifteen (15) days after demand for payment thereof is made by the Partnership on the Limited Partner, the General Partner, in its sole and absolute discretion, may elect to make the payment to the Partnership on behalf of such Defaulting Limited Partner. In such event, on the date of payment, the General Partner shall be deemed to have extended a loan (a “General Partner Loan”) to the Defaulting Limited Partner in the amount of the payment made by the General Partner and shall succeed to all rights and remedies of the Partnership against the Defaulting Limited Partner as to that amount. Without limitation, the General Partner shall have the right to receive any distributions that otherwise would be made by the Partnership to the Defaulting Limited Partner until such time as the General Partner Loan has been paid in full, and any such distributions so received by the General Partner shall be treated as having been received by the Defaulting Limited Partner and immediately paid to the General Partner.
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Any amounts treated as a Partnership Loan or a General Partner Loan pursuant to this Section 5.2(c) shall bear interest at the lesser of (i) the base rate on corporate loans at large United States money center commercial banks, as published from time to time in The Wall Street Journal, or (ii) the maximum lawful rate of interest on such obligation, such interest to accrue from the date the Partnership or the General Partner, as applicable, is deemed to extend the loan until such loan is repaid in full.
(e) In the event that the Partnership issues additional Partnership Units to the General Partner or any Additional Limited Partner pursuant to Article 4 hereof, the General Partner shall make such revisions to this Section 5.2 as it deems necessary to reflect the issuance of such additional Partnership Units.
5.3 REIT Distribution Requirements.
The General Partner shall use its commercially reasonable efforts to cause the Partnership to distribute amounts sufficient to enable the General Partner to make stockholder distributions that will allow the General Partner to (i) meet its distribution requirement for qualification as a REIT as set forth in Section 857 of the Code and (ii) avoid any federal income or excise tax liability imposed by the Code.
5.4 No Right to Distributions in Kind.
No Partner shall be entitled to demand Property other than cash in connection with any distributions by the Partnership.
5.5 Limitations on Return of Capital Contributions.
Notwithstanding any of the provisions of this Article 5, no Partner shall have the right to receive, and the General Partner shall not have the right to make, a distribution that includes a return of all or part of a Partner’s Capital Contributions, unless after giving effect to the return of a Capital Contribution, the sum of all Partnership liabilities, other than the liabilities to a Partner for the return of its Capital Contribution, does not exceed the fair market value of the Partnership’s assets.
5.6 Distributions Upon Liquidation.
Immediately before liquidation of the Partnership, Class D Units will automatically convert to Class I Units at the Class D Conversion Rate, Class S Units will automatically convert to Class I Units at the Class S Conversion Rate, Class T Units will automatically convert to Class I Units at the Class T Conversion Rate, and Class TX Units will automatically convert into Class AX Units at the Class TX Conversion Rate. Upon liquidation of the Partnership, after payment of, or adequate provision for, debts and obligations of the Partnership, including any Partner loans, any remaining assets of the Partnership shall be distributed to all Partners in accordance with their Capital Accounts. To the extent deemed advisable by the General Partner, appropriate arrangements (including the use of a liquidating trust) may be made to assure that adequate funds are available to pay any contingent debts or obligations.
5.7 Substantial Economic Effect.
It is the intent of the Partners that the allocations of Profit and Loss under this Agreement have substantial economic effect (or be consistent with the Partners’ interests in the Partnership in the case of the allocation of losses attributable to nonrecourse debt) within the meaning of Section 704(b) of the Code as interpreted by the Regulations promulgated pursuant thereto. Article 5 and other relevant provisions of this Agreement shall be interpreted in a manner consistent with such intent.
ARTICLE 6
RIGHTS, OBLIGATIONS AND
POWERS OF THE GENERAL PARTNER
6.1 Management of the Partnership.
(a) Except as otherwise expressly provided in this Agreement, the General Partner shall have full, complete and exclusive discretion to manage and control the business of the Partnership for the purposes herein stated, and shall make all decisions affecting
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the business and assets of the Partnership. Subject to the restrictions specifically contained in this Agreement, the powers of the General Partner shall include, without limitation, the authority to take the following actions on behalf of the Partnership:
(i) to acquire, purchase, own, operate, lease and dispose of any Investments that the General Partner determines are necessary or appropriate or in the best interests of the business of the Partnership;
(ii) to construct buildings and make other improvements on any owned or leased Properties that the General Partner determines necessary or appropriate or in the best interests of the business of the Partnership;
(iii) to authorize, issue, sell, redeem or otherwise purchase any Partnership Units or any securities (including secured and unsecured debt obligations of the Partnership, debt obligations of the Partnership convertible into any Class or series of Partnership Units, or options, rights, warrants or appreciation rights relating to any Partnership Units) of the Partnership;
(iv) to borrow or lend money for the Partnership, issue or receive evidences of indebtedness in connection therewith, refinance, increase the amount of, modify, amend or change the terms of, or extend the time for the payment of, any such indebtedness, and secure such indebtedness by mortgage, deed of trust, pledge or other lien on the Partnership’s assets;
(v) to pay, either directly or by reimbursement, for all operating costs and general administrative expenses of the Partnership to third parties or to the General Partner or its Affiliates as set forth in this Agreement;
(vi) to guarantee or become a co-maker of indebtedness of the General Partner or any Subsidiary thereof, refinance, increase the amount of, modify, amend or change the terms of, or extend the time for the payment of, any such guarantee or indebtedness, and secure such guarantee or indebtedness by mortgage, deed of trust, pledge or other lien on the Partnership’s assets;
(vii) to use assets of the Partnership (including, without limitation, cash on hand) for any purpose consistent with this Agreement, including, without limitation, payment, either directly or by reimbursement, of all operating costs and general administrative expenses of the General Partner, the Partnership or any Subsidiary of either, to third parties or to the General Partner as set forth in this Agreement;
(viii) to lease all or any portion of any of the Partnership’s assets, whether or not the terms of such leases extend beyond the termination date of the Partnership and whether or not any portion of the Partnership’s assets so leased are to be occupied by the lessee, or, in turn, subleased in whole or in part to others, for such consideration and on such terms as the General Partner may determine;
(ix) to prosecute, defend, arbitrate, or compromise any and all claims or liabilities in favor of or against the Partnership, on such terms and in such manner as the General Partner may reasonably determine, and similarly to prosecute, settle or defend litigation with respect to the Partners, the Partnership, or the Partnership’s assets;
(x) to file applications, communicate, and otherwise deal with any and all governmental agencies having jurisdiction over, or in any way affecting, the Partnership’s assets or any other aspect of the Partnership business;
(xi) to make or revoke any election permitted or required of the Partnership by any taxing authority;
(xii) to maintain such insurance coverage for public liability, fire and casualty, and any and all other insurance for the protection of the Partnership, for the conservation of Partnership assets, or for any other purpose convenient or beneficial to the Partnership, in such amounts and such types, as it shall determine from time to time;
(xiii) to determine whether or not to apply any insurance proceeds for any Property to the restoration of such Property or to distribute the same;
(xiv) to establish one or more divisions of the Partnership, to hire and dismiss employees of the Partnership or any division of the Partnership, and to retain legal counsel, accountants, consultants, real estate brokers, and such other persons, as the General Partner may deem necessary or appropriate in connection with the Partnership business and to pay therefor such remuneration as the General Partner may deem reasonable and proper;
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(xv) to retain other services of any kind or nature in connection with the Partnership business, and to pay therefor such remuneration as the General Partner may deem reasonable and proper;
(xvi) to negotiate and conclude agreements on behalf of the Partnership with respect to any of the rights, powers and authority conferred upon the General Partner;
(xvii) to maintain accurate accounting records and to file promptly all federal, state and local income tax returns on behalf of the Partnership;
(xviii) to distribute Partnership cash or other Partnership assets in accordance with this Agreement;
(xix) to form or acquire an interest in, and contribute Property to, any further limited or general partnerships, joint ventures or other relationships that it deems desirable (including, without limitation, the acquisition of interests in, and the contributions of Property to, its Subsidiaries and any other Person in which it has an equity interest from time to time);
(xx) to establish Partnership reserves for working capital, capital expenditures, contingent liabilities, or any other valid Partnership purpose;
(xxi) to merge, consolidate or combine the Partnership with or into another Person;
(xxii) to do any and all acts and things necessary or prudent to ensure that the Partnership will not be classified as a “publicly traded partnership” that is taxable as a corporation under Section 7704 of the Code; and
(xxiii) to take such other action, execute, acknowledge, swear to or deliver such other documents and instruments, and perform any and all other acts that the General Partner deems necessary or appropriate for the formation, continuation and conduct of the business and affairs of the Partnership (including, without limitation, all actions consistent with allowing the General Partner at all times to qualify as a REIT unless the General Partner voluntarily terminates its REIT status) and to possess and enjoy all of the rights and powers of a general partner as provided by the Act.
(b) Except as otherwise provided herein, to the extent the duties of the General Partner require expenditures of funds to be paid to third parties, the General Partner shall not have any obligations hereunder except to the extent that Partnership funds are reasonably available to it for the performance of such duties, and nothing herein contained shall be deemed to authorize or require the General Partner, in its capacity as such, to expend its individual funds for payment to third parties or to undertake any individual liability or obligation on behalf of the Partnership.
6.2 Delegation of Authority.
The General Partner may delegate any or all of its powers, rights and obligations hereunder, and may appoint, employ, contract or otherwise deal with any Person for the transaction of the business of the Partnership, which Person may, under supervision of the General Partner, perform any acts or services for the Partnership as the General Partner may approve.
6.3 Indemnification and Exculpation of Indemnitees.
(a) The Partnership shall indemnify an Indemnitee from and against any and all losses, claims, damages, liabilities, joint or several, expenses (including reasonable legal fees and expenses), judgments, fines, settlements, and other amounts arising from any and all claims, demands, actions, suits or proceedings, civil, criminal, administrative or investigative, that relate to the operations of the Partnership as set forth in this Agreement in which any Indemnitee may be involved, or is threatened to be involved, as a party or otherwise, unless it is established that: (i) the act or omission of the Indemnitee was material to the matter giving rise to the proceeding and either was committed in bad faith or was the result of active and deliberate dishonesty; (ii) the Indemnitee actually received an improper personal benefit in money, Property or services; or (iii) in the case of any criminal proceeding, the Indemnitee had reasonable cause to believe that the act or omission was unlawful. Any indemnification pursuant to this Section 6.3 shall be made only out of the assets of the Partnership.
(b) The Partnership shall reimburse an Indemnitee for reasonable expenses incurred by an Indemnitee who is a party to a proceeding in advance of the final disposition of the proceeding upon receipt by the Partnership of (i) a written affirmation by the Indemnitee of the Indemnitee’s good faith belief that the standard of conduct necessary for indemnification by the Partnership as authorized in this Section 6.3 has been met, and (ii) a written undertaking by or on behalf of the Indemnitee to repay the amount if it shall ultimately be determined that the standard of conduct has not been met.
(c) The indemnification provided by this Section 6.3 shall be in addition to any other rights to which an Indemnitee or any other Person may be entitled under any agreement, pursuant to any vote of the Partners, as a matter of law or otherwise, and shall continue as to an Indemnitee who has ceased to serve in such capacity.
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(d) The Partnership may purchase and maintain insurance, on behalf of the Indemnitees and such other Persons as the General Partner shall determine, against any liability that may be asserted against or expenses that may be incurred by such Person in connection with the Partnership’s activities, regardless of whether the Partnership would have the power to indemnify such Person against such liability under the provisions of this Agreement.
(e) For purposes of this Section 6.3, the Partnership shall be deemed to have requested an Indemnitee to serve as fiduciary of an employee benefit plan whenever the performance by it of its duties to the Partnership also imposes duties on, or otherwise involves services by, it to the plan or participants or beneficiaries of the plan; excise taxes assessed on an Indemnitee with respect to an employee benefit plan pursuant to applicable law shall constitute fines within the meaning of this Section 6.3; and actions taken or omitted by the Indemnitee with respect to an employee benefit plan in the performance of its duties for a purpose reasonably believed by it to be in the interest of the participants and beneficiaries of the plan shall be deemed to be for a purpose which is not opposed to the best interests of the Partnership.
(f) In no event may an Indemnitee subject the Limited Partners to personal liability by reason of the indemnification provisions set forth in this Agreement.
(g) An Indemnitee shall not be denied indemnification in whole or in part under this Section 6.3 because the Indemnitee had an interest in the transaction with respect to which the indemnification applies if the transaction was otherwise permitted by the terms of this Agreement.
(h) The provisions of this Section 6.3 are for the benefit of the Indemnitees, their heirs, successors, assigns and administrators and shall not be deemed to create any rights for the benefit of any other Persons.
(i) Notwithstanding the foregoing, the Partnership may not indemnify or hold harmless an Indemnitee for any liability or loss unless all of the following conditions are met: (i) the Indemnitee has determined, in good faith, that the course of conduct that caused the loss or liability was in the best interests of the Partnership; (ii) the Indemnitee was acting on behalf of or performing services for the Partnership; (iii) the liability or loss was not the result of (A) negligence or misconduct, in the case that the Indemnitee is a director of the General Partner (other than an Independent Director), the Advisor or an Affiliate of the Advisor or (B) gross negligence or willful misconduct, in the case that the Indemnitee is an Independent Director; and (iv) the indemnification or agreement to hold harmless is recoverable only out of net assets of the Partnership. In addition, the Partnership shall not provide indemnification for any loss, liability or expense arising from or out of an alleged violation of federal or state securities laws by such party unless one or more of the following conditions are met: (i) there has been a successful adjudication on the merits of each count involving alleged securities law violations as to the Indemnitee; (ii) such claims have been dismissed with prejudice on the merits by a court of competent jurisdiction as to the Indemnitee; or (iii) a court of competent jurisdiction approves a settlement of the claims against the Indemnitee and finds that indemnification of the settlement and the related costs should be made, and the court considering the request for indemnification has been advised of the position of the Commission and of the published position of any state securities regulatory authority in which securities of the General Partner or the Partnership were offered or sold as to indemnification for violations of securities laws.
6.4 Liability of the General Partner.
(a) Notwithstanding anything to the contrary set forth in this Agreement, the General Partner shall not be liable for monetary damages to the Partnership or any Partners for losses sustained or liabilities incurred as a result of errors in judgment or of any act or omission if the General Partner acted in good faith. The General Partner shall not be in breach of any duty that the General Partner may owe to the Limited Partners or the Partnership or any other Persons under this Agreement or of any duty stated or implied by law or equity provided the General Partner, acting in good faith, abides by the terms of this Agreement.
The Limited Partners expressly acknowledge that the General Partner is acting on behalf of the Partnership, itself and its stockholders collectively, that the General Partner is under no obligation to consider the separate interests of the Limited Partners (including, without limitation, the tax consequences to Limited Partners or the tax consequences of some, but not all, of the Limited Partners) in deciding whether to cause the Partnership to take (or decline to take) any actions. In the event of a conflict between the interests of its stockholders on one hand and the Limited Partners on the other, the General Partner shall endeavor in good faith to resolve the conflict in a manner not adverse to either its stockholders or the Limited Partners; provided, however, that for so long as the General Partner directly owns a controlling interest in the Partnership, any such conflict that the General Partner, in its sole and absolute discretion, determines cannot be resolved in a manner not adverse to either its stockholders or the Limited Partner shall be resolved in favor of the stockholders. The General Partner shall not be liable for monetary damages for losses sustained, liabilities incurred, or benefits not derived by Limited Partners in connection with such decisions, provided that the General Partner has acted in good faith.
(b) Subject to its obligations and duties as General Partner set forth in Section 6.1 hereof, the General Partner may exercise any of the powers granted to it under this Agreement and perform any of the duties imposed upon it hereunder either directly or by or through its agents. The General Partner shall not be responsible for any misconduct or negligence on the part of any such agent appointed by it in good faith.
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(c) Notwithstanding any other provisions of this Agreement or the Act, any action of the General Partner on behalf of the Partnership or any decision of the General Partner to refrain from acting on behalf of the Partnership, undertaken in the good faith belief that such action or omission is necessary or advisable in order (i) to protect the ability of the General Partner to continue to qualify as a REIT or (ii) to prevent the General Partner from incurring any taxes under Section 857, Section 4981, or any other provision of the Code, is expressly authorized under this Agreement and is deemed approved by all of the Limited Partners.
(d) Any amendment, modification or repeal of this Section 6.4 or any provision hereof shall be prospective only and shall not in any way affect the limitations on the General Partner’s liability to the Partnership and the Limited Partners under this Section 6.4 as in effect immediately prior to such amendment, modification or repeal with respect to matters occurring, in whole or in part, prior to such amendment, modification or repeal, regardless of when claims relating to such matters may arise or be asserted.
6.5 Reimbursement of General Partner.
(a) Except as provided in this Section 6.5 and elsewhere in this Agreement (including the provisions of Articles 5 and 6 regarding distributions, payments, and allocations to which it may be entitled), the General Partner shall not be compensated for its services as general partner of the Partnership.
(b) The General Partner shall be reimbursed on a monthly basis, or such other basis as the General Partner may determine in its sole and absolute discretion, for all Administrative Expenses incurred by the General Partner. Reimbursement of Administrative Expenses shall be treated as an expense of the Partnership and not as distributions of allocable income.
6.6 Outside Activities.
Subject to Section 6.8 hereof, the Articles of Incorporation and any agreements entered into by the General Partner or its Affiliates with the Partnership or a Subsidiary, any officer, director, employee, agent, trustee, Affiliate or stockholder of the General Partner, the General Partner shall be entitled to and may have business interests and engage in business activities in addition to those relating to the Partnership, including business interests and activities substantially similar or identical to those of the Partnership. None of the Partnership, Limited Partners or any other Person shall have any rights by virtue of this Agreement or the partnership relationship established hereby in any such business ventures, interests or activities, and the General Partner shall have no obligation pursuant to this Agreement to offer any interest in any such business ventures, interests and activities to the Partnership or any Limited Partner, even if such opportunity is of a character which, if presented to the Partnership or any Limited Partner, could be taken by such Person.
6.7 Employment or Retention of Affiliates.
(a) Any Affiliate of the General Partner may be employed or retained by the Partnership and may otherwise deal with the Partnership (whether as a buyer, lessor, lessee, manager, furnisher of goods or services, broker, agent, lender or otherwise) and may receive from the Partnership any compensation, price, or other payment therefor which the General Partner determines to be fair and reasonable.
(b) The Partnership may lend or contribute to its Subsidiaries or other Persons in which it has an equity investment, and such Persons may borrow funds from the Partnership, on terms and conditions established in the sole and absolute discretion of the General Partner. The foregoing authority shall not create any right or benefit in favor of any Subsidiary or any other Person.
(c) The Partnership may transfer assets to joint ventures, other partnerships, corporations or other business entities in which it is or thereby becomes a participant upon such terms and subject to such conditions as the General Partner deems are consistent with this Agreement, applicable law and the REIT status of the General Partner.
(d) Except as expressly permitted by this Agreement, neither the General Partner nor any of its Affiliates shall sell, transfer or convey any Property to, or purchase any Property from, the Partnership, directly or indirectly, except pursuant to transactions that are, in the General Partner’s sole discretion, on terms that are fair and reasonable to the Partnership.
6.8 General Partner Participation.
The General Partner agrees that all business activities of the General Partner, including activities pertaining to the acquisition, development or ownership of any Investment, shall be conducted through the Partnership, a Subsidiary, a Subsidiary Partnership or a taxable REIT subsidiary (within the meaning of Section 856(1) of the Code); provided, however, that the General Partner is allowed to hold cash and liquid investments to fund its expenses, including redemptions of shares of common stock of the General Partner.
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6.9 Title to Partnership Assets.
Title to Partnership assets, whether real, personal or mixed and whether tangible or intangible, shall be deemed to be owned by the Partnership as an entity, and no Partner, individually or collectively, shall have any ownership interest in such Partnership assets or any portion thereof. Title to any or all of the Partnership assets may be held in the name of the Partnership, the General Partner or one or more nominees, as the General Partner may determine, including Affiliates of the General Partner. The General Partner hereby declares and warrants that any Partnership assets for which legal title is held in the name of the General Partner or any nominee or Affiliate of the General Partner shall be held by the General Partner for the use and benefit of the Partnership in accordance with the provisions of this Agreement; provided, however, that the General Partner shall use its best efforts to cause beneficial and record title to such assets to be vested in the Partnership as soon as reasonably practicable. All Partnership assets shall be recorded as the Property of the Partnership in its books and records, irrespective of the name in which legal title to such Partnership assets is held.
6.10 No Duplication of Fees or Expenses.
The Partnership may not incur or be responsible for any fee or expense (in connection with the Offering or otherwise) that would be duplicative of fees and expenses paid by the General Partner.
ARTICLE 7
CHANGES IN GENERAL PARTNER
7.1 Transfer of the General Partner’s Units.
(a) The General Partner shall not transfer all or any portion of its Units or withdraw as General Partner except as provided in, or in connection with a transaction contemplated by, Section 7.1(b) or Section 7.1(c).
(b) Except as otherwise provided in Section 7.1(c) hereof, the General Partner shall not engage in any merger, consolidation or other combination with or into another Person or the sale of all or substantially all of its assets (other than in connection with a change in the General Partner’s state of incorporation or organizational form), in each case which results in a change of control of the General Partner (a “REIT Transaction”), unless the consent of Limited Partners holding more than 50% of the Percentage Interests of the Limited Partners (including, as applicable, Limited Partner Interests held by the General Partner) is obtained.
(c) Notwithstanding Section 7.1(a) or 7.1(b),
(i) a General Partner may transfer all or any portion of its General Partnership Units to (A) a wholly owned Subsidiary of such General Partner or (B) the owner of all of the ownership interests of such General Partner, and following a transfer of all of its General Partnership Units, may withdraw as General Partner; and
(ii) the General Partner may engage in a transaction not required to be submitted to the vote of the holders of its capital stock by law or by the rules of any national securities exchange on which any of the General Partner’s capital stock is listed.
7.2 Admission of a Substitute or Additional General Partner.
A Person shall be admitted as a substitute or additional General Partner of the Partnership only if the following terms and conditions are satisfied:
(a) the Person to be admitted as a substitute or additional General Partner shall have accepted and agreed to be bound by all the terms and provisions of this Agreement by executing a counterpart thereof and such other documents or instruments as may be required or appropriate in order to effect the admission of such Person as a General Partner, and a certificate evidencing the admission of such Person as a General Partner shall have been filed for recordation and all other actions required by Section 2.4 hereof in connection with such admission shall have been performed;
(b) if the Person to be admitted as a substitute or additional General Partner is a corporation or a partnership it shall have provided the Partnership with evidence satisfactory to counsel for the Partnership of such Person’s authority to become a General Partner and to be bound by the terms and provisions of this Agreement; and
(c) counsel for the Partnership shall have rendered an opinion (relying on such opinions from other counsel as may be necessary) that (x) the admission of the Person to be admitted as a substitute or additional General Partner is in conformity with the Act and (y) none of the actions taken in connection with the admission of such Person as a substitute or additional General Partner will cause (i) the Partnership to be classified other than as a partnership for federal tax purposes, or (ii) the loss of any Limited Partner’s limited liability.
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7.3 Effect of Bankruptcy, Withdrawal, Death or Dissolution of a General Partner.
(a) Upon the occurrence of an Event of Bankruptcy as to the sole remaining General Partner (and its removal pursuant to Section 7.4(a) hereof) or the death, withdrawal, removal or dissolution of the sole remaining General Partner (except that, if the sole remaining General Partner is on the date of such occurrence a partnership, the withdrawal, death, dissolution, Event of Bankruptcy as to, or removal of a partner in, such partnership shall be deemed not to be a dissolution of such General Partner if the business of such General Partner is continued by the remaining partner or partners), the Partnership shall be dissolved and terminated unless the Partnership is continued pursuant to Section 7.3(b) hereof. The merger of the General Partner with or into any entity that is admitted as a substitute or successor General Partner pursuant to Section 7.2 hereof shall not be deemed to be the withdrawal, dissolution or removal of the General Partner.
(b) Following the occurrence of an Event of Bankruptcy as to the sole remaining General Partner (and its removal pursuant to Section 7.4(a) hereof) or the death, withdrawal, removal or dissolution of the sole remaining General Partner, the Limited Partners, within ninety (90) days after such occurrence, may elect to continue the business of the Partnership for the balance of the term specified in Section 2.3 hereof by selecting, subject to Section 7.2 hereof and any other provisions of this Agreement, a substitute General Partner by consent of a majority in interest of the Limited Partners. If the Limited Partners elect to continue the business of the Partnership and admit a substitute General Partner, the relationship with the Partners and of any Person who has acquired an interest of a Partner in the Partnership shall be governed by this Agreement.
7.4 Removal of a General Partner.
(a) Upon the occurrence of an Event of Bankruptcy as to, or the dissolution of, a General Partner, such General Partner shall be deemed to be removed automatically. The Limited Partners may not remove the General Partner, with or without cause.
(b) If a General Partner has been removed pursuant to this Section 7.4 and the Partnership is continued pursuant to Section 7.3 hereof, such General Partner shall promptly transfer and assign its General Partnership Units in the Partnership to the substitute General Partner approved by a majority in interest of the Limited Partners in accordance with Section 7.3(b) hereof and otherwise be admitted to the Partnership in accordance with Section 7.2 hereof. At the time of assignment, the removed General Partner shall be entitled to receive from the substitute General Partner the fair market value of the General Partnership Units of such removed General Partner as reduced by any damages caused to the Partnership by such General Partner. Such fair market value shall be determined by an appraiser mutually agreed upon by the General Partner and a majority in interest of the Limited Partners within ten (10) days following the removal of the General Partner. In the event that the parties are unable to agree upon an appraiser, the removed General Partner and a majority in interest of the Limited Partners each shall select an appraiser. Each such appraiser shall complete an appraisal of the fair market value of the removed General Partner’s General Partnership Units within thirty (30) days of the General Partner’s removal, and the fair market value of the removed General Partner’s General Partnership Unit shall be the average of the two appraisals; provided, however, that if the higher appraisal exceeds the lower appraisal by more than 20% of the amount of the lower appraisal, the two appraisers, no later than forty (40) days after the removal of the General Partner, shall select a third appraiser who shall complete an appraisal of the fair market value of the removed General Partner’s General Partnership Units no later than sixty (60) days after the removal of the General Partner. In such case, the fair market value of the removed General Partner’s General Partnership Units shall be the average of the two appraisals closest in value.
(c) The General Partnership Units of a removed General Partner, during the time after default until transfer under Section 7.4(b), shall be converted to that of a Limited Partner; provided, however, such removed General Partner shall not have any rights to participate in the management and affairs of the Partnership, and shall not be entitled to any portion of the income, expense, profit, gain or loss allocations or cash distributions allocable or payable, as the case may be, to the Limited Partners. Instead, such removed General Partner shall receive and be entitled only to retain distributions or allocations of such items that it would have been entitled to receive in its capacity as General Partner, until the transfer is effective pursuant to Section 7.4(b).
(d) All Partners shall have given and hereby do give such consents, shall take such actions and shall execute such documents as shall be legally necessary, desirable and sufficient to effect all the foregoing provisions of this Section.
ARTICLE 8
RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNERS
8.1 Management of the Partnership.
The Limited Partners shall not participate in the management or control of Partnership business nor shall they transact any business for the Partnership, nor shall they have the power to sign for or bind the Partnership, such powers being vested solely and exclusively in the General Partner.
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8.2 Power of Attorney.
Each Limited Partner hereby irrevocably appoints the General Partner its true and lawful attorney-in-fact, who may act for each Limited Partner and in its name, place and stead, and for its use and benefit, to sign, acknowledge, swear to, deliver, file or record, at the appropriate public offices, any and all documents, certificates, and instruments as may be deemed necessary or desirable by the General Partner to carry out fully the provisions of this Agreement and the Act in accordance with their terms, which power of attorney is coupled with an interest and shall survive the death, dissolution or legal incapacity of the Limited Partner, or the transfer by the Limited Partner of any part or all of its Partnership Units.
8.3 Limitation on Liability of Limited Partners.
No Limited Partner shall be liable for any debts, liabilities, contracts or obligations of the Partnership. A Limited Partner shall be liable to the Partnership only to make payments of its Capital Contribution, if any, as and when due hereunder. After its Capital Contribution is fully paid, no Limited Partner shall, except as otherwise required by the Act, be required to make any further Capital Contributions or other payments or lend any funds to the Partnership.
8.4 Ownership by Limited Partner of Corporate General Partner or Affiliate.
No Limited Partner shall at any time, either directly or indirectly, own any stock or other interest in the General Partner or in any Affiliate thereof, if such ownership by itself or in conjunction with other stock or other interests owned by other Limited Partners would, in the opinion of counsel for the Partnership, jeopardize the classification of the Partnership as a partnership for federal tax purposes. The General Partner shall be entitled to make such reasonable inquiry of the Limited Partners as is required to establish compliance by the Limited Partners with the provisions of this Section.
8.5 Limited Partner Right of Redemption.
(a) Subject to Sections 8.5(b), 8.5(c), 8.5(d), 8.5(e) and 8.5(f) and the provisions of any agreements between the Partnership and one or more Limited Partners with respect to the Limited Partnership Units held by them, a Qualifying Party, but no other Limited Partner or Assignee, shall, after holding their Limited Partnership Units for at least one year, have the right (subject to the terms and conditions set forth herein) to require the Partnership to redeem (a “Redemption”) all or a portion of such Limited Partnership Units (the “Tendered Units”) held by such Limited Partner (a “Redemption Right”) in exchange for REIT Shares having the same Class designation as the Partnership Units subject to the Redemption Right, issuable on, or the Cash Amount payable on, or a combination thereof having an equivalent value to the REIT Shares issuable on, or the Cash Amount payable on, the Specified Redemption Date, as determined by the General Partner in its sole discretion. Any Redemption Right shall be exercised pursuant to a Notice of Redemption delivered to the Partnership (with a copy to the General Partner) by the Limited Partner exercising the Redemption Right (the “Tendering Party”). No Limited Partner may deliver more than two Notices of Redemption during each calendar year. A Limited Partner may not exercise the Redemption Right for less than 1,000 Limited Partnership Units or, if such Limited Partner holds less than 1,000 Limited Partnership Units, all of the Limited Partnership Units held by such Partner. The Tendering Party shall have no right, with respect to any Limited Partnership Units so redeemed, to receive any distribution paid with respect to Limited Partnership Units if the record date for such distribution is on or after the Specified Redemption Date. Notwithstanding the foregoing, the Special Limited Partner, the Advisor and their Affiliates will be entitled to have all or a portion of their Partnership Units redeemed pursuant to this Section 8.5 at any time irrespective of the period the Partnership Units have been held by such Partner. The Partnership shall redeem any such Partnership Units held by the Special Limited Partner, the Advisor or their Affiliates for the Cash Amount unless the Board of Directors of the General Partner determines that any such redemption for cash would be prohibited by applicable law or this Agreement, in which case such Partnership Units will be redeemed for an amount of REIT Shares having the same Class designation as the Tendered Units with an aggregate NAV equivalent to the aggregate NAV of such Partnership Units. If the Tendering Party is the Special Limited Partner, the Advisor or one of their Affiliates, and the Tendered Units were not issued by the Partnership in lieu of payments or distributions of the Performance Participation or in lieu of cash asset management fees pursuant to the Advisory Agreement, then the redemption of such Tendered Units shall not be subject to the monthly and quarterly limitations of the General Partner’s share redemption program described in the Prospectus.
(b) If the General Partner elects to redeem Tendered Units for REIT Shares having the same Class designation as the Tendered Units rather than cash, then the Partnership shall direct the General Partner to issue and deliver such REIT Shares to the Tendering Party pursuant to the terms set forth in this Section 8.5(b), in which case, (i) the General Partner, acting as a distinct legal entity, shall assume directly the obligation with respect thereto and shall satisfy the Tendering Party’s exercise of its Redemption Right, and (ii) such transaction shall be treated, for federal income tax purposes, as a transfer by the Tendering Party of such Tendered Units to the General Partner in exchange for REIT Shares. The percentage of the Tendered Units tendered for Redemption by the Tendering Party for which the General Partner elects to issue REIT Shares (rather than cash) is referred to as the “Applicable Percentage.” In making such election to acquire Tendered Units, the Partnership shall act in a fair, equitable and reasonable manner that neither prefers one group or class of Limited Partners over another nor discriminates against a group or class of Limited Partners. If the Partnership elects to redeem any number of Tendered Units for REIT Shares having the same Class designation as the Tendered Units, rather than cash, on the Specified Redemption Date, the Tendering Party shall sell such number of the Tendered Units
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to the General Partner in exchange for a number of REIT Shares equal to the product of the REIT Shares Amount and the Applicable Percentage. The product of the Applicable Percentage and the REIT Shares Amount, if applicable, shall be delivered by the General Partner as duly authorized, validly issued, fully paid and accessible REIT Shares having the same Class designation as the Tendered Units, free of any pledge, lien, encumbrance or restriction, other than the Aggregate Share Ownership Limit and other restrictions provided in the Article of Incorporation, the bylaws of the General Partner, the Securities Act and relevant state securities or “blue sky” laws. Notwithstanding the provisions of Section 8.5(a) and this Section 8.5(b), the Tendering Parties shall have no rights under this Agreement that would otherwise be prohibited under the Articles of Incorporation.
(c) In connection with an exercise of Redemption Rights pursuant to this Section 8.5, the Tendering Party shall submit the following to the General Partner, in addition to the Notice of Redemption:
(i) A written affidavit, dated the same date as the Notice of Redemption, (a) disclosing the actual and constructive ownership, as determined for purposes of Code Sections 856(a)(6) and 856(h), of REIT Shares by (i) such Tendering Party and
(ii) any Related Party and (b) representing that, after giving effect to the Redemption and assuming that the General Partner elects to exchange REIT Shares for all Tendered Units, neither the Tendering Party nor any Related Party will own REIT Shares in excess of the Aggregate Share Ownership Limit (or, if applicable the Excepted Holder Limit);
(ii) A written representation that neither the Tendering Party nor any Related Party has any intention to acquire any additional REIT Shares prior to the closing of the Redemption on the Specified Redemption Date;
(iii) An undertaking to certify, at and as a condition to the closing of the Redemption on the Specified Redemption Date, that either (a) the actual and constructive ownership of REIT Shares by the Tendering Party and any Related Party remain unchanged from that disclosed in the affidavit required by Section 8.5(c)(1) or (b) after giving effect to the Redemption, neither the Tendering Party nor any Related Party shall own REIT Shares in violation of the Aggregate Share Ownership Limit (or, if applicable, the Excepted Holder Limit); and
(iv) Any other documents as the General Partner may reasonably require in connection with the issuance of REIT Shares upon the exercise of the Redemption Right.
(d) Any Cash Amount to be paid to a Tendering Party pursuant to this Section 8.5 shall be paid on the Specified Redemption Date; provided, however, that the General Partner may elect to cause the Specified Redemption Date to be delayed for up to an additional 180 days to the extent required for the General Partner to cause additional REIT Shares to be issued to provide financing to be used to make such payment of the Cash Amount. Notwithstanding the foregoing, the General Partner agrees to use its best efforts to cause the closing of the acquisition of Tendered Units hereunder to occur as quickly as reasonably possible.
(e) Notwithstanding any other provision of this Agreement, the General Partner shall restrict the ability of the Limited Partners to exercise their Redemption Rights to prevent, among other things, (a) any person from owning shares in excess of the Common Share Ownership Limit, the Aggregate Share Ownership Limit and the Excepted Holder Limit, (b) the General Partner’s common stock from being owned by less than 100 persons, (c) the General Partner from being “closely held” within the meaning of section 856(h) of the Code, and (c) to ensure that the Partnership does not constitute a “publicly traded partnership” under section 7704 of the Code. If and when the General Partner determines that imposing such restrictions is necessary, the General Partner shall give prompt written notice thereof (a “Restriction Notice”) to each of the Limited Partners holding Partnership Units, which notice shall be accompanied by a copy of an opinion of counsel to the Partnership which states that, in the opinion of such counsel, restrictions are necessary in order to avoid having the Partnership be treated as a “publicly traded partnership” taxable as a corporation under section 7704 of the Code.
(f) A redemption fee may be charged (other than to the Advisor, Special Limited Partner and their Affiliates) in connection with an exercise of Redemption Rights pursuant to this Section 8.5.
ARTICLE 9
TRANSFERS OF LIMITED PARTNERSHIP UNITS
9.1 Purchase for Investment.
(a) Each Limited Partner hereby represents and warrants to the General Partner and to the Partnership that the acquisition of its Partnership Units is made as a principal for its account for investment purposes only and not with a view to the resale or distribution of such Partnership Units.
(b) Each Limited Partner agrees that he will not sell, assign or otherwise transfer its Partnership Units or any fraction thereof, whether voluntarily or by operation of law or at judicial sale or otherwise, to any Person who does not make the representations and warranties to the General Partner set forth in Section 9.1(a) above and similarly agree not to sell, assign or transfer such Partnership Units or fraction thereof to any Person who does not similarly represent, warrant and agree.
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9.2 Restrictions on Transfer of Limited Partnership Units.
(a) Subject to the provisions of 9.2(b) and (c), no Limited Partner may offer, sell, assign, hypothecate, pledge or otherwise transfer all or any portion of its Limited Partnership Units, or any of such Limited Partner’s economic rights as a Limited Partner, whether voluntarily or by operation of law or at judicial sale or otherwise (collectively, a “Transfer”) without the consent of the General Partner, which consent may be granted or withheld in its sole and absolute discretion; provided that each of the Special Limited Partner, the Advisor and their Affiliates may transfer all or any portion of its respective Partnership Units, or any of its economic rights as a Limited Partner, to any of its Affiliates without the consent of the General Partner. Any such purported transfer undertaken without such consent shall be considered to be null and void ab initio and shall not be given effect. The General Partner may require, as a condition of any Transfer to which it consents, that the transferor assume all costs incurred by the Partnership in connection therewith.
(b) No Limited Partner may withdraw from the Partnership other than as a result of a permitted transfer (i.e., a Transfer consented to as contemplated by clause (a) above or clause (c) below or a Transfer pursuant to Section 9.5 below) of all of its Partnership Units pursuant to this Article 9 or pursuant to a redemption of all of its Partnership Units pursuant to Section 8.5. Upon the permitted transfer or redemption of all of a Limited Partner’s Partnership Units, such Limited Partner shall cease to be a Limited Partner.
(c) Notwithstanding Section 9.2(a) and subject to Sections 9.2(d), (e) and (f) below, a Limited Partner may Transfer, without the consent of the General Partner, all or a portion of its Partnership Units to (i) a parent or parent’s spouse, natural or adopted descendant or descendants, spouse of such descendant, or brother or sister, or a trust created by such Limited Partner for the benefit of such Limited Partner and/or any such person(s), of which trust such Limited Partner or any such person(s) is a trustee, (ii) a corporation controlled by a Person or Persons named in (i) above, or (iii) if the Limited Partner is an entity, its beneficial owners.
(d) No Limited Partner may effect a Transfer of its Limited Partnership Units, in whole or in part, if, in the opinion of legal counsel for the Partnership, such proposed Transfer would require the registration of the Limited Partnership Units under the Securities Act or would otherwise violate any applicable federal or state securities or blue sky law (including investment suitability standards).
(e) No Transfer by a Limited Partner of its Partnership Units, in whole or in part, may be made to any Person if (i) in the opinion of the General Partner based on the advice of legal counsel for the Partnership, if appropriate, the transfer would result in the Partnership’s being treated as an association taxable as a corporation (other than a qualified REIT subsidiary within the meaning of Section 856(i) of the Code), (ii) in the opinion of the General Partner based on the advice of legal counsel for the Partnership, if appropriate, it would adversely affect the ability of the General Partner to continue to qualify as a REIT or subject the General Partner to any additional taxes under Section 857 or Section 4981 of the Code, and (iii) such transfer is effectuated through an “established securities market” or a “secondary market (or the substantial equivalent thereof)” within the meaning of Section 7704 of the Code.
(f) No transfer by a Limited Partner of any Partnership Units may be made to a lender to the Partnership or any Person who is related (within the meaning of Regulations Section 1.752-4(b)) to any lender to the Partnership whose loan constitutes a Nonrecourse Liability, without the consent of the General Partner, which may be withheld in its sole and absolute discretion, provided that as a condition to such consent the lender will be required to enter into an arrangement with the Partnership and the General Partner to exchange or redeem any Partnership Units in which a security interest is held for cash in an amount equal to such Partner’s Capital Account allocable (in the reasonable determination of the General Partner) to such exchanged or redeemed Partnership Units, simultaneously with the time at which such lender would be deemed to be a Partner in the Partnership for purposes of allocating liabilities to such lender under Section 752 of the Code.
(g) Any Transfer in contravention of any of the provisions of this Article 9 shall be void and ineffectual and shall not be binding upon, or recognized by, the Partnership.
(h) Prior to the consummation of any Transfer under this Article 9, the transferor and/or the transferee shall deliver to the General Partner such opinions, certificates and other documents as the General Partner shall request in connection with such Transfer.
9.3 Admission of Substitute Limited Partner.
(a) Subject to the other provisions of this Article 9, an assignee of the Limited Partnership Units of a Limited Partner (which shall be understood to include any purchaser, transferee, donee, or other recipient of any disposition of such Limited Partnership Units) shall be deemed admitted as a Limited Partner of the Partnership only with the consent of the General Partner and upon the satisfactory completion of the following:
(i) The assignee shall have accepted and agreed to be bound by the terms and provisions of this Agreement by executing a counterpart or an amendment thereof, including a revised Exhibit A, and such other documents or instruments as the General Partner may require in order to effect the admission of such Person as a Limited Partner.
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(ii) To the extent required, an amended Certificate evidencing the admission of such Person as a Limited Partner shall have been signed, acknowledged and filed for record in accordance with the Act.
(iii) The assignee shall have delivered a letter containing the representation set forth in Section 9.1(a) hereof and the agreement set forth in Section 9.1(b) hereof.
(iv) If the assignee is a corporation, partnership or trust, the assignee shall have provided the General Partner with evidence satisfactory to counsel for the Partnership of the assignee’s authority to become a Limited Partner under the terms and provisions of this Agreement.
(v) The assignee shall have executed a power of attorney containing the terms and provisions set forth in Section 8.2 hereof.
(vi) The assignee shall have paid all legal fees and other expenses of the Partnership and the General Partner and filing and publication costs in connection with its substitution as a Limited Partner.
(vii) The assignee has obtained the prior written consent of the General Partner to its admission as a Substitute Limited Partner, which consent may be given or denied in the exercise of the General Partner’s sole and absolute discretion.
(b) For the purpose of allocating Profits and Losses and distributing cash received by the Partnership, a Substitute Limited Partner shall be treated as having become, and appearing in the records of the Partnership as, a Partner upon the filing of the Certificate described in Section 9.3(a)(ii) hereof or, if no such filing is required, the later of the date specified in the transfer documents or the date on which the General Partner has received all necessary instruments of transfer and substitution.
(c) The General Partner shall cooperate with the Person seeking to become a Substitute Limited Partner by preparing the documentation required by this Section and making all official filings and publications. The Partnership shall take all such action as promptly as practicable after the satisfaction of the conditions in this Article 9 to the admission of such Person as a Limited Partner of the Partnership.
9.4 Rights of Assignees of Partnership Units.
(a) Subject to the provisions of Sections 9.1 and 9.2 hereof, except as required by operation of law, the Partnership shall not be obligated for any purposes whatsoever to recognize the assignment by any Limited Partner of its Partnership Units until the Partnership has received notice thereof.
(b) Any Person who is the assignee of all or any portion of a Limited Partner’s Limited Partnership Units, but does not become a Substitute Limited Partner and desires to make a further assignment of such Limited Partnership Units shall be subject to all the provisions of this Article 9 to the same extent and in the same manner as any Limited Partner desiring to make an assignment of its Limited Partnership Units.
9.5 Effect of Bankruptcy, Death, Incompetence or Termination of a Limited Partner.
The occurrence of an Event of Bankruptcy as to a Limited Partner, the death of a Limited Partner or a final adjudication that a Limited Partner is incompetent (which term shall include, but not be limited to, insanity) shall not cause the termination or dissolution of the Partnership, and the business of the Partnership shall continue if an order for relief in a bankruptcy proceeding is entered against a Limited Partner, the trustee or receiver of his estate or, if he dies, his executor, administrator or trustee, or, if he is finally adjudicated incompetent, his committee, guardian or conservator, shall have the rights of such Limited Partner for the purpose of settling or managing his estate property and such power as the bankrupt, deceased or incompetent Limited Partner possessed to assign all or any part of its Partnership Units and to join with the assignee in satisfying conditions precedent to the admission of the assignee as a Substitute Limited Partner.
9.6 Joint Ownership of Units.
A Partnership Unit may be acquired by two individuals as joint tenants with right of survivorship, provided that such individuals either are married or are related and share the same home as tenants in common. The written consent or vote of both owners of any such jointly held Partnership Unit shall be required to constitute the action of the owners of such Partnership Unit; provided, however, that the written consent of only one joint owner will be required if the Partnership has been provided with evidence satisfactory to the counsel for the Partnership that the actions of a single joint owner can bind both owners under the applicable laws of the state of residence of such joint owners. Upon the death of one owner of a Partnership Unit held in a joint tenancy with a right of survivorship, the Partnership Unit shall become owned solely by the survivor as a Limited Partner and not as an assignee. The Partnership need not recognize the death of one of the owners of a jointly-held Partnership Unit until it shall have received notice of such death. Upon notice to the General Partner from either owner, the General Partner shall cause the Partnership Unit to be divided into two equal Partnership Units, which shall thereafter be owned separately by each of the former owners.
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ARTICLE 10
BOOKS AND RECORDS; ACCOUNTING; TAX MATTERS
10.1 Books and Records.
At all times during the continuance of the Partnership, the Partners shall keep or cause to be kept at the Partnership’s specified office true and complete books of account in accordance with generally accepted accounting principles, including: (a) a current list of the full name and last known business address of each Partner, (b) a copy of the Certificate of Limited Partnership and all Certificates of amendment thereto, (c) copies of the Partnership’s federal, state and local income tax returns and reports, (d) copies of this Agreement and amendments thereto and any financial statements of the Partnership for the three most recent years and (e) all documents and information required under the Act. Any Partner or its duly authorized representative, upon paying the costs of collection, duplication and mailing, shall be entitled to inspect or copy such records during ordinary business hours.
10.2 Custody of Partnership Funds; Bank Accounts.
(a) All funds of the Partnership not otherwise invested shall be deposited in one or more accounts maintained in such banking or brokerage institutions as the General Partner shall determine, and withdrawals shall be made only on such signature or signatures as the General Partner may, from time to time, determine.
(b) All deposits and other funds not needed in the operation of the business of the Partnership may be invested by the General Partner in investment grade instruments (or investment companies whose portfolio consists primarily thereof), government obligations, certificates of deposit, bankers’ acceptances and municipal notes and bonds. The funds of the Partnership shall not be commingled with the funds of any other Person except for such commingling as may necessarily result from an investment in those investment companies permitted by this Section 10.2(b).
10.3 Fiscal and Taxable Year.
The fiscal and taxable year of the Partnership shall be the calendar year.
10.4 Annual Tax Information and Report.
Within seventy-five (75) days after the end of each fiscal year of the Partnership, the General Partner shall furnish to each person who was a Limited Partner at any time during such year the tax information necessary to file such Limited Partner’s individual tax returns as shall be reasonably required by law.
10.5 Tax Matters Partner; Tax Elections; Special Basis Adjustments.
(a) The General Partner shall be the Tax Matters Partner of the Partnership within the meaning of Section 6231(a)(7) of the Code. As Tax Matters Partner, the General Partner shall have the right and obligation to take all actions authorized and required, respectively, by the Code for the Tax Matters Partner. The General Partner shall have the right to retain professional assistance in respect of any audit of the Partnership by the Internal Revenue Service and all out-of-pocket expenses and fees incurred by the General Partner on behalf of the Partnership as Tax Matters Partner shall constitute Partnership expenses. In the event the General Partner receives notice of a final Partnership adjustment under Section 6223(a)(2) of the Code, the General Partner shall either (i) file a court petition for judicial review of such final adjustment within the period provided under Section 6226(a) of the Code, a copy of which petition shall be mailed to all Limited Partners on the date such petition is filed, or (ii) mail a written notice to all Limited Partners, within such period, that describes the General Partner’s reasons for determining not to file such a petition.
(b) All elections required or permitted to be made by the Partnership under the Code or any applicable state or local tax law shall be made by the General Partner in its sole and absolute discretion.
(c) In the event of a transfer of all or any part of the Partnership Units of any Partner, the Partnership, at the option of the General Partner, may elect pursuant to Section 754 of the Code to adjust the basis of the Partnership’s assets. Each Partner will furnish the Partnership with all information necessary to give effect to such election.
(d) By executing this Agreement, each Partner authorizes and directs the Partnership to elect to have the “Safe Harbor” described in the proposed Revenue Procedure set forth in Internal Revenue Service Notice 2005-43 (the “Notice”) apply to any interest in the Partnership transferred to a service provider by the Partnership on or after the effective date of such Revenue Procedure in connection with services provided to the Partnership. For purposes of making such Safe harbor election, the General Partner is hereby designated as the “partner who has responsibility for federal income tax reporting” by the Partnership and, accordingly, execution of such Safe Harbor election by the General Partner constitutes execution of a “Safe Harbor Election” in accordance with Section 3.03(1) of the Notice. The partnership and each Partner hereby agrees to comply with all requirements of the Safe Harbor
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described in the Notice, including the requirement that each Partner shall prepare and file all U.S. federal income tax returns reporting the income tax effects of each Safe Harbor Partnership Unit issued by the Partnership in a manner consistent with the requirements of the Notice. A Partner’s obligations to comply with the requirements of this Section 10.5(d) shall survive such Partner’s ceasing to be a Partner of the Partnership and/or the termination, dissolution, liquidation and winding up of the Partnership, and, for purposes of this Section 10.5(d), the Partnership shall be treated as continuing in existence. Each partner authorizes the General Partner to amend this Section 10.5(d) to the extent necessary to achieve substantially the same tax treatment with respect to any interest in the Partnership transferred to a service provider by the Partnership in connection with services provided to the Partnership as set forth in Section 4 of the Notice (e.g., to reflect changes from the rules set forth in the Notice in subsequent Internal Revenue Service guidance); provided that such amendment is not materially adverse to such Partner (as compared with the after-tax consequences that would result if the provisions of the Notice applied to all interests in the Partnership transferred to a service provider by the Partnership in connection with services provided to the Partnership). Each Limited Partner further agrees to execute any forms or documents reasonably necessary to effectuate any of the foregoing provisions of this Section 10.5(d).
10.6 Reports to Limited Partners.
(a) As soon as practicable after the close of each fiscal year, the General Partner shall cause to be mailed to each Limited Partner an annual report containing financial statements of the Partnership, or of the General Partner if such statements are prepared solely on a consolidated basis with the General Partner, for such fiscal year, presented in accordance with generally accepted accounting principles. The annual financial statements shall be audited by accountants selected by the General Partner.
(b) Any Partner shall further have the right to a private audit of the books and records of the Partnership at the expense of such Partner, provided such audit is made for Partnership purposes and is made during normal business hours.
ARTICLE 11
AMENDMENT OF AGREEMENT
The General Partner’s consent shall be required for any amendment to this Agreement. The General Partner, without the consent of the Limited Partners, may amend this Agreement in any respect; provided, however, that the following amendments shall require the consent of Limited Partners holding more than 50% of the Percentage Interests of the Limited Partners:
(a) any amendment affecting the operation of the redemption right or conversion right set forth in Section 8.5 in a manner adverse to the Limited Partners;
(b) any amendment that would adversely affect the rights of the Limited Partners to receive the distributions payable to them hereunder, other than with respect to the issuance of additional Partnership Units pursuant to Section 4.2 hereof;
(c) any amendment that would alter the Partnership’s allocations of Profit and Loss to the Limited Partners, other than with respect to the issuance of additional Partnership Units pursuant to Section 4.2 hereof; or
(d) any amendment that would impose on the Limited Partners any obligation to make additional Capital Contributions to the Partnership.
ARTICLE 12
GENERAL PROVISIONS
12.1 Notices.
All communications required or permitted under this Agreement shall be in writing and shall be deemed to have been given when delivered personally or upon deposit in the United States mail, registered, postage prepaid return receipt requested, to the Partners at the addresses set forth in Exhibit A attached hereto; provided, however, that any Partner may specify a different address by notifying the General Partner in writing of such different address. Notices to the Partnership shall be delivered at or mailed to its specified office.
12.2 Survival of Rights.
Subject to the provisions hereof limiting transfers, this Agreement shall be binding upon and inure to the benefit of the Partners and the Partnership and their respective legal representatives, successors, transferees and assigns.
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12.3 Additional Documents.
Each Partner agrees to perform all further acts and execute, swear to, acknowledge and deliver all further documents which may be reasonable, necessary, appropriate or desirable to carry out the provisions of this Agreement or the Act.
12.4 Severability.
If any provision of this Agreement shall be declared illegal, invalid, or unenforceable in any jurisdiction, then such provision shall be deemed to be severable from this Agreement (to the extent permitted by law) and in any event such illegality, invalidity or unenforceability shall not affect the remainder hereof.
12.5 Entire Agreement.
This Agreement and exhibits attached hereto constitute the entire Agreement of the Partners and supersede all prior written agreements and prior and contemporaneous oral agreements, understandings and negotiations with respect to the subject matter hereof.
12.6 Pronouns and Plurals.
When the context in which words are used in the Agreement indicates that such is the intent, words in the singular number shall include the plural and the masculine gender shall include the neuter or female gender as the context may require.
12.7 Headings.
The Article headings or sections in this Agreement are for convenience only and shall not be used in construing the scope of this Agreement or any particular Article.
12.8 Counterparts.
This Agreement may be executed in several counterparts, each of which shall be deemed to be an original copy and all of which together shall constitute one and the same instrument binding on all parties hereto, notwithstanding that all parties shall not have signed the same counterpart.
12.9 Governing Law.
This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware; provided, however, that any cause of action for violation of federal or state securities laws shall not be governed by this Section 12.9.
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IN WITNESS WHEREOF, the parties hereto have hereunder affixed their signatures to this Amended and Restated Limited Partnership Agreement, all as of August 10, 2020
| GENERAL PARTNER: | ||
| Cantor Fitzgerald Income Trust, Inc. | ||
| By: | /s/ Christopher Milner | |
| Name: | Christopher Milner | |
| Title: | President | |
| LIMITED PARTNER: | ||
| Cantor Fitzgerald Income Trust, Inc. | ||
| By: | /s/ Christopher Milner | |
| Name: | Christopher Milner | |
| Title: | President | |
| SPECIAL LIMITED PARTNER | ||
| Cantor Fitzgerald Income Trust OP Holdings, LLC | ||
| By: | Cantor Fitzgerald Investors, LLC | |
| By: | /s/ Mark Kaplan | |
| Name: | Mark Kaplan | |
| Title: | Chief Operating Officer | |
Exhibit 10.3
EXECUTION COPY
CANTOR FITZGERALD INCOME TRUST, INC.
SECOND AMENDED AND RESTATED DISTRIBUTION
SUPPORT AGREEMENT
This Second Amended and Restated Distribution Support Agreement (the “Agreement”) dated August 10, 2020, by and between Cantor Fitzgerald Investors, LLC (the “Sponsor”) and Cantor Fitzgerald Income Trust, Inc. (f/k/a Rodin Global Property Trust, Inc.) (the “Company”), amends and restates the Amended and Restated Distribution Support Agreement dated March 21, 2019, by and between the Sponsor and Company.
WHEREAS, the Company had registered for public sale on Registration Statement No. 333-214130 on Form S-11, as amended (the “Initial Offering”) a maximum of $1,250,000,000 in shares of its common stock, $0.01 par value per share (the “Shares”), of which amount: (a) up to $1,000,000,000 in Shares are being offered to the public pursuant to the Company’s primary offering; and (b) up to $250,000,000 in Shares are being offered to stockholders of the Company (the “Stockholders”) pursuant to the Company’s distribution reinvestment plan;
WHEREAS, to ensure that the Company has a sufficient amount of funds to cover cash distributions authorized and declared to Stockholders during the Initial Offering, the Company and the Sponsor had entered into the Amended and Restated Distribution Support Agreement dated March 21, 2019 (the “Amended Agreement”) pursuant to which the Sponsor agreed to purchase up to $5,000,000 in Shares in accordance with the terms set forth therein;
WHEREAS, the Company has registered for public sale on Registration Statement No. 33-237327 on Form S-11, as amended (the “Follow-On Offering”) a maximum of $1,250,000,000 in Shares of which amount: (a) up to $1,000,000,000 in Shares are being offered to the public pursuant to the Company’s primary offering (the “Primary Offering”); and (b) up to $250,000,000 in Shares are being offered to Stockholders pursuant to the Company’s distribution reinvestment plan; and
WHEREAS, the board of directors of the Company has determined to amend and restate the Amended Agreement to ensure that the Company has a sufficient amount of funds to pay cash distributions to Stockholders during the Follow-On Offering.
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Definitions. The following terms, when used herein, shall have the following meanings:
“Advisor” means Cantor Fitzgerald Income Advisors, LLC (f/k/a Rodin Global Property Advisors, LLC), the Company’s advisor, or any affiliated successor.
“Affiliate” means with respect to any Person: (i) any Person directly or indirectly
owning, controlling or holding, with the power to vote, ten percent or more of the outstanding voting securities of such other Person; (ii) any Person ten percent or more of whose outstanding voting securities are directly or indirectly owned, controlled or held, with the power to vote, by such other Person; (iii) any Person directly or indirectly controlling, controlled by or under common control with such other Person; (iv) any executive officer, director, trustee or general partner of such other Person; and (v) any legal entity for which such Person acts as an executive officer, director, trustee or general partner. An entity shall not be deemed to control or be under common control with a program sponsored by the Sponsor unless (A) the entity owns ten percent or more of the voting equity interests of such program or (B) a majority of the board of directors (or equivalent governing body) of such program is composed of Affiliates of the entity.
“Agreement” has the meaning set forth in the recitals.
“Business Day” means any day, other than a Saturday or Sunday, that is neither a legal holiday nor a day on which banking institutions in New York City are authorized or required by law, regulation or executive order to close.
“Class I Shares” means the Class I shares of the Company’s common stock, par value $0.01 per share, offered pursuant to the Follow-On Offering.
“Code” means the Internal Revenue Code of 1986, as amended from time to time, or any successor statute thereto. Reference to any provision of the Code shall mean such provision as in effect from time to time, as the same may be amended, and any successor provision thereto, as interpreted by any applicable regulations as in effect from time to time.
“Company” has the meaning set forth in the recitals.
“Distribution Shortfall” means, with respect to any calendar quarter during the Tenn, the amount by which Quarterly Distributions exceed MFFO for such quarter or, in the event MFFO is negative, the amount of the Quarterly Distributions for such quarter.
“Follow-On Offering” has the meaning set forth in the recitals.
“Initial Offering” has the meaning set forth in the recitals.
“Issue Date” has the meaning set forth in Section 3(b) hereof.
“MFFO” means the Company’s modified funds from operations as disclosed in the Company’s Periodic Report filed with respect to the applicable period.
“Periodic Report” means the Company’s quarterly report on Form 10-Q or annual report on Form 10-K, as applicable.
“Person” means an individual, corporation, partnership, estate, trust (including a trust qualified under Section 401(a) or 501(c) (17) of the Code), a portion of a trust permanently set aside for or to be used exclusively for the purposes described in Section 642(c) of the Internal Revenue Code, association, private foundation within the meaning of Section 509(a) of the Code, joint stock company or other entity, or any government or any agency or political subdivision thereof, and also includes a group as that term is used for purposes of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended.
“Purchase Price” means, as of any given date, the per share price of the Shares in the Follow-On Offering.
“Quarterly Distributions” means the aggregate amount of cash distributions paid to Stockholders during a calendar quarter.
“SEC” means the United States Securities and Exchange Commission.
“Shares” has the meaning set forth in the recitals.
“Sponsor” has the meaning set forth in the recitals.
“Stockholders” has the meaning set forth in the recitals.
“Term” has the meaning set forth in Section 4 hereof.
| 2. | Share Purchase Commitment. In the event of a Distribution Shortfall for any calendar quarter during the Term, the Sponsor shall purchase Class I Shares from the Company in an aggregate amount equal to the Distribution Shortfall; provided, however, that the Sponsor’s obligation to purchase Shares pursuant to this Agreement, shall be limited to an aggregate of $5,000,000 (when aggregated with Shares the Sponsor or its Affiliates purchased in order to satisfy the minimum offering requirements in the Initial Offering as well as other Shares purchased in the Initial Offering pursuant to the Amended Agreement). Any Shares purchased by the Sponsor pursuant to this Section 2 shall be purchased pursuant to the Follow-On Offering and at the Purchase Price in effect as of the date of purchase of the Class I Shares. |
| 3. | Procedure for Purchase of Class I Shares. |
| a. | In the event of a Distribution Shortfall, the Company shall deliver to the Sponsor a written notice within ten (10) Business Days following the Company’s filing with the SEC of its Periodic Report for such calendar quarter or year, as the case may be, specifying the number of Class I Shares to be purchased by the Sponsor pursuant to Section 2 above and the Company’s calculation of the Distribution Shortfall. |
| b. | On the fifth Business Day following the delivery of such notice (the “Issue Date”), the Company shall issue to the Sponsor the Class I Shares being sold against the Sponsor’s delivery of its executed subscription for the Offering and payment of the Purchase Price for such Class I Shares by wire transfer of immediately available funds. |
| 4. | Term. This Agreement shall be in effect until the earlier of (a) the termination of the primary portion of the Follow-On Offering or (b) the date upon which neither Cantor Fitzgerald Income Advisors, LLC nor any of its Affiliates is serving as the Company’s Advisor (the “Term”). |
| 5. | Notices. All notices shall be in writing and shall be given or made, by delivery in person or by guaranteed delivery overnight courier to each party at the addresses set forth below: |
Cantor Fitzgerald Income Trust, Inc.
110 East 59th Street
New York, New York 10022
Attention: General Counsel
Cantor Fitzgerald Investors,
LLC 110 East 59th Street
New York, New York 10022
Attention: General Counsel
or to such other addresses as each party may designate at any time by giving notice in writing to the other party. Notices shall be effective upon receipt in the case of personal delivery or one Business Day after being sent in the case of delivery by overnight courier.
| 6. | Voting Agreement. The Sponsor agrees and shall cause any of its Affiliates to whom it may transfer Shares to agree on behalf of the Sponsor and to require any subsequent transferees that are Affiliates to agree that, with respect to any Shares purchased pursuant to this Agreement or otherwise acquired, the Sponsor will not vote or consent on matters submitted to the Stockholders regarding any transaction between the Company and the Advisor or a transaction between the Company and any Affiliate of the Sponsor, including, without limitation, the removal of the Advisor or any of its Affiliates as the Company’s Advisor. These voting restrictions shall survive with respect to the Sponsor until such time that the Advisor or its Affiliates are no longer serving as the Company’s Advisor. |
| 7. | Assignment; Third Party Beneficiaries. This Agreement may not be assigned by any of the parties; provided, however, that the Sponsor may assign its obligations under this Agreement to any one or more of its Affiliates, but no such assignments shall relieve the Sponsor of its obligations hereunder. This Agreement shall inure to the benefit of and shall be binding upon the heirs, executors, administrators, legal representatives, successors and assigns of the parties hereto. |
| 8. | Governing Law. This Agreement shall be governed by and interpreted in accordance with the laws of the State of New York without reference to conflict of laws provisions. |
| 9. | Amendment. No amendment, modification or waiver of this Agreement will be valid unless made in writing and duly executed by each party hereto. |
| 10. | Entire Agreement. This agreement constitutes the entire understanding among the parties with respect to the subject matter hereof. This agreement may be executed in one or more counterparts. |
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year first above written.
| CANTOR FITZGERALD | ||
| INCOME TRUST, INC. | ||
| By: | /s/ Christopher Milner | |
| Name: | Christopher Milner | |
| Title: | President | |
| CANTOR FITZGERALD | ||
| INVESTORS, LLC | ||
| By: | /s/ Mark Kaplan | |
| Name: | Mark Kaplan | |
| Title: | Chief Operating Officer | |
[Signature Page to Distribution Support Agreement- Cantor Fitzgerald Income Trust, Inc.]