MEDICAL PROPERTIES TRUST, INC.
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): July 31,
2007
MEDICAL PROPERTIES TRUST, INC.
(Exact Name of Registrant as Specified in Charter)
Commission File Number 001-32559
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Maryland
(State or other jurisdiction
of incorporation or organization)
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20-0191742
(I. R. S. Employer
Identification No.) |
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1000 Urban Center Drive, Suite 501
Birmingham, AL
(Address of principal executive offices)
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35242
(Zip Code) |
Registrants telephone number, including area code
(205) 969-3755
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:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c)) |
Item 1.01. Entry into a Material Definitive Agreement.
On July 31, 2007, the Board of Directors (the Board) of Medical Properties Trust, Inc. (the
Company), in its capacity as the sole member of the sole general partner of MPT Operating
Partnership, L.P. (the Operating Partnership), approved the entering into of a Second Amended and
Restated Agreement of Limited Partnership of the Operating Partnership. The primary purpose of
the amendment is to establish the terms of a new class of partnership units (LTIP units), which are structured to
qualify as profits interests for federal income tax purposes. Participants in the Companys 2007
Multi-Year Incentive Plan will be eligible to receive awards in the form of LTIP units, as further
described in Item 5.02 below.
LTIP units initially will not have full parity, on a per unit basis, with the Operating
Partnerships common units with respect to liquidating distributions. Upon the occurrence of
specified events, the LTIP units can over time achieve full parity with common units, at which time
the LTIP units that have been earned and vested under the terms of the applicable award, may be
converted into common units on a one-for-one basis. LTIP units that have been converted into
common units are redeemable by the holder for, at the Companys election, either shares of common
stock of the Company on a one-for-one basis or their equivalent in cash. Regular and other
non-liquidating distributions will be made with respect to the LTIP units, both vested and
unvested, from the date of their issuance, subject to the terms of the applicable award.
Distributions will be in the same amount and at the same time as those made with respect to common
units, which is equal to the regular dividends and other distributions paid on an equal number of
common shares of the Company.
The foregoing summary is qualified in its entirety by reference to the Second Amended and Restated
Agreement of Limited Partnership of the Operating Partnership which is attached hereto as
Exhibit 10.1 and incorporated herein by reference.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of
Certain Officers; Compensatory Arrangements of Certain Officers.
On July 31, 2007, the Company approved the form of award agreement to be used to grant awards under
the Companys 2007 Multi-Year Incentive Plan (the 2007 Plan). As previously reported, the 2007
Plan is a new long-term incentive compensation program approved by the Compensation Committee of
the Board (the Committee) and is designed to motivate, retain and reward the Companys senior
executive officers based on the achievement of key business objectives while maintaining alignment
of their interests with those of the Companys shareholders. The 2007 Plan consists of three basic
components:
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time-based restricted equity awards; |
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core performance restricted equity awards; and |
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superior performance restricted equity awards. |
Each of these awards will be granted under the Companys Second Amended and Restated 2004 Equity
Incentive Plan and, at the election of the recipient, may be granted either in the form of
restricted shares of the Companys common stock or partnership profits interest units in the
Companys operating partnership, as described in Item 1.01 above.
Time-based awards. The time-based awards vest annually and ratably over a seven-year period
(beginning March 1, 2007 through December 31, 2013) and provide for payment of dividends and other
non-liquidating distributions on all vested and unvested awards.
Core performance awards. The core performance awards also vests annually and ratably over a
seven-year period (beginning March 1, 2007 through December 31, 2013) contingent upon the Companys
achievement of a simple 9% annual total return to shareholders (pro-rated to 7.5% for the first
vesting period from March 1, 2007 through December 31, 2007). Core performance awards (in the case
of LTIP units) are granted prior to the determination of performance-based vesting and are thus
subject to forfeiture to the extent that less than the full award becomes vested over the
seven-year performance measurement period. At the end of each calendar year, the Committee will
determine the Companys pro-rated annual
total return to shareholders and the Companys cumulative total return to shareholders from March
1, 2007 through the end of such calendar year. Vesting of the core performance awards will occur
as of the end of such calendar year, as follows:
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Total Return to Shareholders |
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Vesting |
(pro-rated for March 1, 2007 through December 31, 2007) |
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Annual Return and Cumulative Return per year both less than a simple 9%
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0% |
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Annual Return or Cumulative Return per year equal to or greater than a simple 9%
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14.286% |
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Cumulative Return per year equal to or greater than a simple 9%
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Any portion that
failed to vest in
prior years |
Core performance awards also provide for payment of dividends and other non-liquidating
distributions on all vested and unvested awards.
Superior performance awards. The superior performance awards will be awarded based on achievement
of specified share price thresholds during the period beginning March 1, 2007 through December 31,
2010, and will then vest annually and ratably over the subsequent three-year period (2011-2013).
Superior performance awards (in the case of LTIP units) will be granted in the maximum number of
units that could be earned based on the full achievement of the performance criteria over the
measurement period and are thus subject to forfeiture to the extent that less than the full award
is earned. If the 30-day average stock price is at or above $26.00 on each trading day of a 30-day period
between January 1, 2009 and December 31, 2010, 100% superior performance awards will be earned as
of the last day in such 30-trading day period. Otherwise, awards will be earned as of December 31,
2010 based on the 30-day average stock price measured on December 31, 2010, as follows:
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Average Stock Price |
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Percentage Earned |
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Less than $20.00 |
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0.000 |
% |
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Equal to or greater than $20.00 and less than $22.00
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33.334 |
% |
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Equal to or greater than $22.00 and less than $24.00
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58.334 |
% |
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Equal to or greater than $24.00 and less than $26.00
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75.000 |
% |
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Equal to or greater than $26.00
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100.000 |
% |
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In the event that at the end of the measurement period, no superior performance awards have been
earned based on the criteria set forth above but the Company has performed at or above the
50th percentile of all real estate investment trusts included in the Morgan Stanley REIT
Index in terms of total return to shareholders over the same period, 33.334% of the superior
performance awards will be earned as of December 31, 2010.
Superior performance awards provide for only limited payment of dividends and other non-liquidating
distributions during the measurement period. After the portion of the award that has been earned
is determined, all vested and unvested awards will participate in full in dividends and other
non-liquidating distributions.
In the case of all awards under the 2007 Plan, vesting is also conditioned upon the recipient
remaining an employee of the Company through the applicable vesting dates. The vesting of all
awards will be accelerated in the event of a change of control of the Company or termination of the
recipients service
relationship with the Company under specified circumstances, including death, disability and
termination by the Company without cause or by the recipient with good reason.
The foregoing summary is qualified in its entirety by reference to the forms of award agreement
under the 2007 Plan which are attached hereto as Exhibit 10.2 and Exhibit 10.3 and
incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
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10.1 |
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Second Amended and Restated Agreement of Limited Partnership of MPT Operating
Partnership, L.P., dated as of July 31, 2007 |
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10.2 |
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Form of Medical Properties Trust, Inc. 2007 Multi-Year Incentive Plan Award Agreement
(LTIP Units) |
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10.3 |
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Form of Medical Properties Trust, Inc. 2007 Multi-Year Incentive Plan Award Agreement
(Restricted Shares) |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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MEDICAL PROPERTIES TRUST, INC.
(Registrant)
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By: |
/s/ R. Steven Hamner
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R. Steven Hamner |
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Executive Vice President and
Chief Financial Officer
(Principal Financial and Accounting Officer) |
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Date: August 6, 2007
EX-10.1 SECOND AMENDED AND RESTATED AGREEMENT
Exhibit 10.1
SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
MPT OPERATING PARTNERSHIP, L.P.
TABLE OF CONTENTS
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ARTICLE I DEFINED TERMS |
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1 |
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ARTICLE II FORMATION OF PARTNERSHIP |
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8 |
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2.01 Continuation |
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8 |
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2.02 Name, Office and Registered Agent |
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8 |
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2.03 Partners |
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8 |
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2.04 Term and Dissolution |
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8 |
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2.05 Filing of Certificate and Perfection of Limited Partnership |
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9 |
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2.06 Certificates Describing Partnership Units |
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9 |
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ARTICLE III BUSINESS OF THE PARTNERSHIP |
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10 |
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ARTICLE IV CAPITAL CONTRIBUTIONS AND ACCOUNTS |
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10 |
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4.01 Capital Contributions |
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10 |
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4.02 Additional Capital Contributions and Issuances of Additional Partnership Interests |
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10 |
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4.03 Additional Funding |
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13 |
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4.04 Capital Accounts |
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13 |
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4.05 Percentage Interests |
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13 |
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4.06 No Interest on Contributions |
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13 |
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4.07 Return of Capital Contributions |
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14 |
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4.08 No Third Party Beneficiary |
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14 |
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ARTICLE V PROFITS AND LOSSES; DISTRIBUTIONS |
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14 |
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5.01 Allocation of Profit and Loss |
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14 |
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5.02 Distribution of Cash |
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16 |
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5.03 REIT Distribution Requirements |
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5.04 No Right to Distributions in Kind |
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5.05 Limitations on Return of Capital Contributions |
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5.06 Distributions Upon Liquidation |
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5.07 Substantial Economic Effect |
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18 |
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ARTICLE VI RIGHTS, OBLIGATIONS AND POWERS OF THE GENERAL PARTNER |
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6.01 Management of the Partnership |
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6.02 Delegation of Authority |
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21 |
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6.03 Indemnification and Exculpation of Indemnitees |
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21 |
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6.04 Liability of the General Partner |
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23 |
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6.05 Partnership Obligations |
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24 |
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6.06 Outside Activities |
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24 |
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6.07 Employment or Retention of Affiliates |
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24 |
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6.08 General Partner Activities |
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25 |
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6.09 Title to Partnership Assets |
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25 |
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6.10 Redemption of General Partner Partnership Units |
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25 |
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ARTICLE VII CHANGES IN THE COMPANY OR THE GENERAL PARTNER |
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25 |
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7.01 Transfer of the General Partners Partnership Interest |
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7.02 Admission of a Substitute or Additional General Partner |
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27 |
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7.03 Effect of Bankruptcy, Withdrawal, Death or Dissolution of a General Partner |
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7.04 Removal of a General Partner |
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ARTICLE VIII RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNERS |
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8.01 Management of the Partnership |
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8.02 Power of Attorney |
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8.03 Limitation on Liability of Limited Partners |
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30 |
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8.04 Redemption Right |
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30 |
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ARTICLE IX TRANSFERS OF PARTNERSHIP INTERESTS |
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32 |
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9.01 Purchase for Investment |
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9.02 Restrictions on Transfer of Partnership Interests |
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32 |
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9.03 Admission of Substitute Limited Partner |
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34 |
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9.04 Rights of Assignees of Partnership Interests |
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35 |
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9.05 Effect of Bankruptcy, Death, Incompetence or Termination of a Limited Partner |
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35 |
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9.06 Joint Ownership of Interests |
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35 |
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ARTICLE X BOOKS AND RECORDS; ACCOUNTING; TAX MATTERS |
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36 |
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10.01 Books and Records |
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36 |
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10.02 Custody of Partnership Funds; Bank Accounts |
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36 |
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10.03 Fiscal and Taxable Year |
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36 |
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10.04 Annual Tax Information and Report |
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36 |
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10.05 Tax Matters Partner; Tax Elections; Special Basis Adjustments |
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36 |
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10.06 Reports to Limited Partners |
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37 |
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ARTICLE XI AMENDMENT OF AGREEMENT; MERGER |
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37 |
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ARTICLE XII GENERAL PROVISIONS |
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38 |
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12.01 Notices |
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38 |
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12.02 Survival of Rights |
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38 |
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12.03 Additional Documents |
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38 |
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12.04 Severability |
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38 |
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12.05 Entire Agreement |
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38 |
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12.06 Pronouns and Plurals |
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39 |
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12.07 Headings |
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39 |
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12.08 Counterparts |
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39 |
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12.09 Governing Law |
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39 |
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EXHIBITS
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EXHIBIT A Partners, Capital Contributions and Percentage Interests |
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EXHIBIT B Notice of Exercise of Redemption Right |
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EXHIBIT C Certification of Non-Foreign Status |
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EXHIBIT D LTIP Units |
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EXHIBIT E Notice of Election by Partner to Convert LTIP Units into Common Units |
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EXHIBIT F Notice of Election by Partnership to Force Conversion of LTIP Units into Common Units |
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
MPT OPERATING PARTNERSHIP, L.P.
This Amended and Restated Agreement of Limited Partnership of MPT Operating Partnership, L.P. is
made and entered into as of the 31st day of July, 2007 by and among MPT Operating Partnership,
L.P. (the Partnership), Medical Properties Trust, LLC, a Delaware limited liability company and
currently the sole general partner of the Partnership, and Medical Properties Trust, Inc., a
Maryland corporation (the Company), as well as the other limited partners who from time to time
execute this Agreement or counterparts hereof as limited partners.
RECITALS:
WHEREAS, the Partnership was formed as a limited partnership under the laws of the State of
Delaware, pursuant to a Certificate of Limited Partnership filed with the Secretary of State of the
State of Delaware effective as of September 10, 2003 and an Agreement of Limited Partnership
entered into as of September 10, 2003;
WHEREAS, the parties desire to amend the Agreement of Limited Partnership and restate it in its
entirety as set forth in this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants of the parties hereto, and
other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree that the Agreement of Limited Partnership shall be amended
and restated as follows:
ARTICLE I
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 set forth in Section 4.03 hereof.
ADDITIONAL SECURITIES means any additional REIT Shares (other than REIT Shares issued in
connection with an exchange pursuant to Section 8.04 hereof) or rights, options, warrants or
convertible or exchangeable securities containing the right to subscribe for or purchase REIT
Shares, as set forth in Section 4.02(a)(ii).
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 or the
Company, including any salaries or other payments to directors, officers or employees of the
General Partner or the Company, and any accounting and legal expenses of the General Partner or the
Company, which expenses, the Partners have agreed, are expenses of the Partnership and not the
General Partner or the Company, and (iii) to the extent not included in
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clauses (i) or (ii) above, REIT Expenses; provided, however, that Administrative Expenses shall not
include any administrative costs and expenses incurred by the General Partner or the Company that
are attributable to Properties or partnership interests in a Subsidiary Partnership that are owned
by the General Partner or the Company or other than through its ownership interest in the
Partnership.
AFFILIATE means, (i) any Person that, directly or indirectly, controls or is controlled by or is
under common control with such Person, (ii) any other Person that owns, beneficially, directly or
indirectly, 10% or more of the outstanding capital stock, shares or equity interests of such
Person, or
(iii) any officer, director, employee, partner, member, manager or trustee of such Person or any
Person controlling, controlled by or under common control with such Person (excluding trustees and
persons serving in similar capacities who are not otherwise an Affiliate of such Person). For the
purposes of this definition, control (including the correlative meanings of the terms controlled
by and under common control with), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the direction of the management
and policies of such Person, through the ownership of voting securities or partnership interests or
otherwise.
AGREED VALUE means the fair market value of a Partners non-cash Capital Contribution (net of
assumed liabilities) as of the date of contribution as agreed to by such Partner and the General
Partner. The names and addresses of the Partners, number of Partnership Units issued to each
Partner, and the Agreed Value of non-cash Capital Contributions as of the date of contribution is
set forth on Exhibit A.
AGREEMENT means this Second Amended and Restated Agreement of Limited Partnership, as amended,
modified, supplemented or restated from time to time, as the context requires.
ARTICLES OF INCORPORATION means the Articles of Incorporation of the Company filed with the
Maryland State Department of Assessments and Taxation, as amended or restated from time to time.
BOARD OF DIRECTORS means the Board of Directors of the Company.
BOOK VALUE means, with respect to any Partnership asset, the assets adjusted basis for federal
income tax purposes, except as follows: (i) the initial Book Value of any asset contributed (or
deemed contributed) to the Partnership shall be such assets fair market value (as determined by
the General Partner, in its sole and absolute discretion, and taking into account Section 7701(g)
of the Code); (ii) the Book Value of all Partnership assets may be adjusted in the event of a
revaluation of Partnership assets in accordance with Section 4.04 hereof; (iii) any adjustments to
the adjusted basis of any asset of the Partnership pursuant to Section 734 or Section 743 of the
Code shall be taken into account in determining such assets Book Value in a manner consistent with
Treasury Regulations Section 1.704-1(b)(2)(iv)(m); and (iv) the Book Value of any Partnership asset
distributed or deemed distributed by the Partnership to any Partner shall be adjusted immediately
prior to such distribution to equal its fair market value (as determined by the General Partner, in
its sole and absolute discretion, and taking into account Section 7701(g) of the Code); and if the
Book Value of an asset has been determined pursuant to clause (i), (ii) or
(iii) of this definition, such Book Value shall thereafter be adjusted in the same manner
as would the assets adjusted basis for federal income tax purposes, except that depreciation
deductions shall be computed based on the assets Book Value as so determined, rather than on its
adjusted tax basis.
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CAPITAL ACCOUNT has the meaning provided in Section 4.04 hereof.
CAPITAL CONTRIBUTION means the total amount of cash, cash equivalents, and the Agreed Value of
any Property or other asset contributed or agreed to be contributed, as the context requires, to
the Partnership by each Partner pursuant to the terms of the Agreement. Any reference to the
Capital Contribution of a Partner shall include the Capital Contribution made by a predecessor
holder of the Partnership Interest of such Partner.
CASH AMOUNT means an amount of cash per Partnership Unit equal to the Value of the REIT Shares
Amount on the date of receipt by the Partnership and the Company of a Notice of Redemption.
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 8.02 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.
CODE means the Internal Revenue Code of 1986, as amended, and as hereafter amended from time to
time. Reference to any particular provision of the Code shall mean that provision in the Code at
the date hereof and any successor provision of the Code.
COMMISSION means the U.S. Securities and Exchange Commission.
COMMON SHARE means one share of common stock, $.01 par value, of the Company.
COMMON UNIT means a Partnership Unit other than an LTIP Unit.
COMMON UNIT ECONOMIC BALANCE means (i) the Capital Account balance of the General Partner, plus
the amount of the General Partners share of any Partner Minimum Gain or Partnership Minimum Gain,
in either case to the extent attributable to the General Partners ownership of Common Units and
computed on a hypothetical basis after taking into account all allocations through the date on
which any allocation is made under Section 5.01(j), divided by (ii) the number of the General
Partners Common Units.
COMPANY means Medical Properties Trust, Inc., a Maryland corporation electing to be taxed as a
real estate investment trust under Sections 856 through 860 of the Code.
CONSTITUENT PERSON has the meaning set forth in Section 1.13 of Exhibit D hereto.
CONVERSION FACTOR means 1.0, provided that in the event that the Company (i) declares or pays a
dividend on its outstanding REIT Shares in REIT Shares or makes a distribution to all holders of
its outstanding REIT Shares 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 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
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assumption) issued and outstanding on such date and, provided further, that in the event that an
entity other than an Affiliate of the Company shall become general partner pursuant to any merger,
consolidation or combination of the Company 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 Company and the Partnership receive 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 Company and the Partnership had received the
Notice of Redemption immediately prior to the record date for such dividend, distribution,
subdivision or combination.
DEFAULTING LIMITED PARTNER has the meaning set forth in Section 5.02(c) hereof.
DISTRIBUTABLE AMOUNT has the meaning set forth in Section 5.02(c) hereof.
ECONOMIC CAPITAL ACCOUNT BALANCE with respect to an LTIP Unit Limited Partner means an amount
equal to its Capital Account balance, plus the amount of its share of any Partner Minimum Gain or
Partnership Minimum Gain, in either case to the extent attributable to its ownership of LTIP Units.
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 his 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 his 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.
GENERAL PARTNER means Medical Properties Trust, LLC and any Person who becomes a substitute or
additional General Partner as provided herein, and any of their successors as General Partner.
GENERAL PARTNERSHIP INTEREST means a Partnership Interest held by the General Partner that is a
general partnership interest.
GENERAL PARTNER LOAN has the meaning set forth in Section 5.02(c) hereof.
INDEMNITEE means (i) any Person made a party to a proceeding by reason of its status as the
Company, the General Partner or a director, officer or employee of the Company, the Partnership or
the General Partner, and (ii) such other Persons (including Affiliates of the Company, General
Partner or the Partnership) as the General Partner may designate from time to time, in its sole and
absolute discretion.
INELIGIBLE UNIT has the meaning set forth in Section 5.01(j)(i).
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LTIP UNIT means, a Partnership Unit designated as such having the rights, powers, privileges,
restrictions, qualifications and limitations set forth in Exhibit D hereto.
LTIP UNIT ADJUSTMENT EVENTS has the meaning set forth in Section 1.7 of Exhibit D hereto.
LTIP UNIT CAPITAL means, with respect to any LTIP Unit, the amount of Capital Contributions made
with respect to such LTIP Unit.
LTIP UNIT CAPITAL ACCOUNT LIMITATION: has the meaning set forth in Section 1.9(b) of Exhibit D
hereto.
LTIP UNIT CONVERSION DATE has the meaning set forth in Section 1.9(c) of Exhibit D hereto.
LTIP UNIT CONVERSION NOTICE has the meaning set forth in Section 1.9(c) of Exhibit D hereto.
LTIP UNIT CONVERSION RIGHT has the meaning set forth in Section 1.9(a) of Exhibit D hereto.
LTIP UNIT DISTRIBUTION PAYMENT DATE has the meaning set forth in Section 1.5(a) of Exhibit D
hereto.
LTIP UNIT FORCED CONVERSION has the meaning set forth in Section 1.10 of Exhibit D hereto.
LTIP UNIT FORCED CONVERSION NOTICE has the meaning set forth in Section 1.10 of Exhibit D hereto.
LTIP UNIT LIMITED PARTNER means any Person holding LTIP Units, and named as a LTIP Unit Limited
Partner in Exhibit A attached hereto, as such Exhibit may be amended from time to time.
LIMITED PARTNER means any Person named as a Limited Partner on Exhibit A attached hereto as such
Exhibit may be amended from time to time, including any Person who becomes a Substituted Limited
Partner, an Additional Limited Partner or a LTIP Unit Limited Partner in accordance with the terms
of this Agreement, in each case, in such Persons capacity as a limited partner of the Partnership.
LIMITED PARTNERSHIP INTEREST means the ownership interest of a Limited Partner in the Partnership
at any particular time, including the right of such Limited Partner to any and all benefits to
which such Limited Partner may be entitled as provided in this Agreement and in the Act, together
with the obligations of such Limited Partner to comply with all the provisions of this Agreement
and of such Act.
LIQUIDATING GAINS means any net gain realized in connection with the actual or hypothetical sale
of all or substantially all of the assets of the Partnership (including upon the occurrence of any
event of liquidation of the Partnership), including but not limited to net gain realized in
connection with an adjustment to the Book Value of Partnership assets under Section 4.04 of this
Agreement.
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LIQUIDATING LOSSES means any net loss realized in connection with the actual or hypothetical sale
of all or substantially all of the assets of the Partnership (including upon the occurrence of any
event of liquidation of the Partnership), including but not limited to net loss realized in
connection with an adjustment to the Book Value of Partnership assets under Section 4.04 of this
Agreement.
LOSS has the meaning provided in Section 5.01(g) hereof.
MEASUREMENT DATE means the end of the measurement period as specified in the documentation
pursuant to which a Special LTIP Unit is granted.
NOTICE OF REDEMPTION means the Notice of Exercise of Redemption Right substantially in the form
attached as Exhibit B hereto.
NYSE means the New York Stock Exchange.
OFFER has the meaning set forth in Section 7.01(c) hereof.
PARTNER means any General Partner, Limited Partner (including any LTIP Unit Limited Partner).
Such term shall be deemed to include such other Persons who become Partners pursuant to the terms
of this Agreement.
PARTNER MINIMUM GAIN The gain (regardless of character) that would be recognized by the
Partnership if property of the Partnership subject to a partner nonrecourse debt (as such term is
defined in Treasury Regulations Section 1.704-2(b)(4)) were disposed of in full satisfaction of
such debt on the relevant date. The adjusted basis of property subject to more than one partner
nonrecourse debt shall be allocated in a manner consistent with the allocation of basis for
purposes of determining Partnership Minimum Gain hereunder. Partner Minimum Gain shall be computed
hereunder using the Book Value, rather than the adjusted tax basis, of the Partnership property in
accordance with Treasury Regulations Section 1.704-2(d)(3).
PARTNER NONRECOURSE DEBT MINIMUM GAIN has the meaning set forth in Regulations Section
1.704-2(i). A Partners share of Partner Nonrecourse Debt Minimum Gain shall be determined in
accordance with Regulations Section 1.704-2(i)(5).
PARTNERSHIP INTEREST means an ownership interest in the Partnership held by either a Limited
Partner or the 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.
PARTNERSHIP MINIMUM GAIN has the meaning set forth in Regulations Section 1.704-2(d). In
accordance with Regulations Section 1.704-2(d), the amount of Partnership Minimum Gain is
determined by first computing, for each Partnership nonrecourse liability, any gain the Partnership
would realize if it disposed of the property subject to that liability for no consideration other
than full satisfaction of the liability, and then aggregating the separately computed gains. A
Partners share of Partnership Minimum Gain shall be determined in accordance with Regulations
Section 1.704-2(g)(1).
PARTNERSHIP RECORD DATE means the record date established by the General Partner for the
distribution of cash pursuant to Section 5.02 hereof, which record date shall be the same as the
record date established by the Company for a distribution to its stockholders of some or all of its
portion of such distribution received through the General Partner.
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PARTNERSHIP UNIT means a Common Unit or an LTIP Unit and shall constitute a fractional,
undivided share of the Partnership Interests of all Partners issued hereunder. The allocation of
Partnership Units among the Partners shall be as set forth on Exhibit A, as may be amended from
time to time.
PERCENTAGE INTEREST means, with respect to any Partner, the percentage ownership interest of such
Partner in the Partnership from time to time, represented by a fraction (expressed as a
percentage), the numerator of which is the number of Partnership Units then owned by such Partner,
and the denominator of which is the total number of Partnership Units then owned by all of the
Partners. For purposes of calculations of Percentage Interests at any time, the Percentage
Interest of any LTIP Unit Limited Partner and the total number of Partnership Units shall exclude
any LTIP Units for which the LTIP Unit Distribution Participation Date has not occurred as of such
time.
PERSON means any individual, partnership, corporation, limited liability company, joint venture,
trust or other entity.
PROFIT has the meaning provided in Section 5.01(g) hereof.
PROPERTY means any property or other investment in which the Partnership holds an ownership
interest.
REDEMPTION AMOUNT means either the Cash Amount or the REIT Shares Amount, as selected by the
Partnership or as directed by the General Partner pursuant to Section 8.04(b) hereof.
REDEMPTION RIGHT has the meaning provided in Section 8.04(a) hereof.
REDEEMING LIMITED PARTNER has the meaning provided in Section 8.04(a) hereof.
REGULATIONS means the Federal Income Tax Regulations issued 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 Company and any Subsidiaries thereof (which Subsidiaries shall, for purposes
hereof, be included within the definition of Company), including taxes, fees and assessments
associated therewith, any and all costs, expenses or fees payable to any director, officer or
employee of the Company, (ii) costs and expenses relating to any public offering and registration,
or private offering, of securities by the Company 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 Company, (iv)
costs and expenses associated with the preparation and filing of any periodic or other reports and
communications by the Company under federal, state or local laws or regulations, including filings
with the Commission, (v) costs and expenses associated with compliance by the Company 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
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plan, bonus plan or other plan providing for compensation for the employees of the Company, (vii)
costs and expenses incurred by the Company relating to any issuing or redemption of Partnership
Interests and (viii) all other operating or administrative costs of the Company or any subsidiary,
including 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 the Company (or Successor Entity, as the case may be).
REIT SHARES AMOUNT means a number of REIT Shares equal to the product of the number of
Partnership Units offered for redemption by a Redeeming Limited Partner, multiplied by the
Conversion Factor as adjusted to and including the Specified Redemption Date; provided that in the
event the Company 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 Amount on the record date fixed for purposes of determining the holders
of REIT Shares entitled to rights.
SECURITIES ACT means the Securities Act of 1933, as amended.
SERVICE means the Internal Revenue Service.
SPECIAL LTIP UNIT means an LTIP Unit issued as a superior performance equity award and that
participates in distributions and allocations to a reduced extent until the applicable Measurement
Date for such LTIP Unit, as set forth in the documentation pursuant to which such Special LTIP Unit
is granted.
SPECIAL LTIP UNIT SHARING PERCENTAGE means twenty-percent (20%) or such other percentage as set
forth in the documentation pursuant to which such Special LTIP Unit is granted.
SPECIFIED REDEMPTION DATE means the first business day of the month that is at least 60 calendar
days after the receipt by the Partnership of a Notice of Redemption.
SUBSIDIARY means, with respect to any Person, any corporation, partnership, limited liability
company 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.
SUBSIDIARY PARTNERSHIP means any partnership or limited liability company in which the Company, a
Subsidiary of the Company or the Partnership owns a partnership interest.
SUBSTITUTE LIMITED PARTNER means any Person admitted to the Partnership as a Limited Partner
pursuant to Section 9.03 hereof.
SUCCESSOR ENTITY has the meaning provided in the definition of Conversion Factor contained
herein.
SURVIVING GENERAL PARTNER has the meaning set forth in Section 7.01(d) hereof.
TRADING DAY means a day on which the principal national securities exchange on which a security
is listed or admitted to trading is open for the transaction of business or, if a security is not
listed or admitted to trading on any national securities exchange, shall mean any day other
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than a Saturday, a Sunday or a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close.
TRANSACTION has the meaning set forth in Section 1.13(a) of Exhibit D hereto.
TRANSFER has the meaning set forth in Section 9.02(a) hereof.
UNVESTED LTIP UNITS has the meaning set forth in Section 1.2 of Exhibit D hereto.
VALUE means, with respect to any security, the average of the daily market price of such security
for the ten consecutive Trading Days immediately preceding the date of such valuation. The market
price for each such Trading Day shall be: (i) if the security is listed or admitted to trading on
the NYSE or any securities exchange, the last reported sale price, regular way, on such day, or if
no such sale takes place on such day, the average of the closing bid and asked prices, regular way,
on such day, (ii) if the security is not listed or admitted to trading on the NYSE or any
securities exchange, the last reported sale price on such day or, if no sale takes place on such
day, the average of the closing bid and asked prices on such day, as reported by a reliable
quotation source designated by the General Partner, or (iii) if the security is not listed or
admitted to trading on the NYSE or on any securities exchange and no such last reported sale price
or closing bid and asked prices are available, the average of the reported high bid and low asked
prices on such day, as reported by a reliable quotation source designated by the General Partner,
or if there shall be no bid and asked prices on such day, the average of the high bid and low asked
prices, as so reported, on the most recent day (not more than ten days prior to the date in
question) for which prices have been so reported; provided that if there are no bid and asked
prices reported during the ten days prior to the date in question, the value of the security shall
be determined by the General Partner acting in good faith on the basis of such quotations and other
information as it considers, in its reasonable judgment, appropriate. In the event the security
includes any additional rights, then the value of such rights shall be determined by the General
Partner acting in good faith on the basis of such quotations and other information as it considers,
in its reasonable judgment, appropriate.
VESTED LTIP UNITS has the meaning set forth in Section 1.2 of Exhibit D hereto.
VESTING AGREEMENT has the meaning set forth in Section 1.2 of Exhibit D hereto.
WITHHELD AMOUNT has the meaning set forth in Section 5.02(c) hereof.
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ARTICLE II
FORMATION OF PARTNERSHIP
2.01 CONTINUATION. The Partners hereby agree to continue the Partnership pursuant to
the Act and upon the terms and conditions set forth in this Agreement.
2.02 NAME, OFFICE AND REGISTERED AGENT. The name of the Partnership is MPT Operating
Partnership, L.P. The specified office and place of business of the Partnership shall be 1000 Urban
Center Drive, Suite 501, Birmingham, Alabama 35242. 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 of the Partnerships registered agent is National Registered Agents, Inc. whose
business address is 9 East Loocheman Street, Suite 1B, Dover, Delaware 19901. 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.
2.03 PARTNERS.
(a) The General Partner of the Partnership is Medical Properties Trust, LLC,
a Delaware limited liability company. Its principal place of business is the same as that
of the Partnership.
(b) The Limited Partners are those Persons identified as Limited Partners on
Exhibit A hereto, as amended from time to time.
2.04 TERM AND DISSOLUTION.
(a) The Partnerships existence shall be perpetual, except that the
Partnership shall be dissolved upon the first to occur of any of the following events:
(i) The occurrence of an Event of Bankruptcy as to the General Partner or
the dissolution, death, removal or withdrawal of the General Partner unless the
business of the Partnership is continued pursuant to Section 7.03(b) hereof;
provided that if the General Partner is on the date of such occurrence a
partnership, the dissolution of the 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 the General Partner is continued by the remaining partner or
partners, either alone or with additional partners, and the General Partner and
such partners comply with any other applicable requirements of this Agreement;
(ii) The passage of 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.
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(b) Upon dissolution of the Partnership (unless the business of the
Partnership is continued pursuant to Section 7.03(b) hereof), the General Partner (or its
trustee, receiver, successor or legal representative) shall amend or cancel the Certificate
and liquidate the Partnerships assets and apply and distribute the proceeds thereof in
accordance with Section 5.06 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 Partnerships
debts and obligations), or (ii) distribute the assets to the Partners in kind.
2.05 FILING OF CERTIFICATE AND PERFECTION OF LIMITED PARTNERSHIP. The General
Partner shall execute, acknowledge, record and file at the expense of the Partnership the
Certificate and any and all amendments thereto 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.
2.06 CERTIFICATES DESCRIBING PARTNERSHIP UNITS. At the request of a Limited Partner,
the General Partner, at its option, may issue a certificate summarizing the terms of such Limited
Partners interest in the Partnership, including the number of Partnership Units owned and the
Percentage Interest represented by such Partnership Units as of the date of such certificate. Any
such certificate (i) shall be in form and substance as approved by the General Partner, (ii) shall
not be negotiable and (iii) shall bear a legend to the following effect:
This certificate is not negotiable. The Partnership Units represented by this certificate are
governed by and transferable only in accordance with the provisions of the Agreement of Limited
Partnership of MPT Operating Partnership, L.P., as amended from time to time.
ARTICLE III
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 Company at all times to qualify as a REIT, unless the Company otherwise ceases to
qualify as a REIT, (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 Companys right in its sole and absolute discretion to cease
qualifying as a REIT, the Partners acknowledge that the Companys current status as a REIT and the
avoidance of income and excise taxes on the Company inures to the benefit of all the Partners and
not solely to the Company. Notwithstanding the foregoing, the Limited Partners agree that the
Company may terminate its status as a REIT under the Code at any time. The General Partner 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 taxable as a corporation for
purposes of Section 7704 of the Code.
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ARTICLE IV
CAPITAL CONTRIBUTIONS AND ACCOUNTS
4.01 CAPITAL CONTRIBUTIONS. The General Partner and the Limited Partners have made
capital contributions to the Partnership in exchange for the Partnership Interests set forth
opposite their names on Exhibit A, as amended from time to time.
4.02 ADDITIONAL CAPITAL CONTRIBUTIONS AND ISSUANCES OF ADDITIONAL PARTNERSHIP
INTERESTS. Except as provided in this Section 4.02 or in Section 4.03, the Partners shall have no
right or obligation to make any additional Capital Contributions or loans to the Partnership. The
General Partner and/or the Company may contribute additional capital to the Partnership, from time
to time, and receive additional Partnership Interests in respect thereof, in the manner
contemplated in this Section 4.02.
(a) Issuances of Additional Partnership Interests.
(i) General. The General Partner is hereby authorized to cause the
Partnership to issue such additional Partnership Interests in the form of
Partnership Units for any Partnership purpose at any time or from time to time to
the Partners (including the General Partner and the Company) 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 Partners. The General Partners determination that
consideration is adequate shall be conclusive insofar as the adequacy of
consideration relates to whether the Partnership Interests are validly issued and
fully paid. Any additional Partnership Interests issued thereby may be issued in
one or more classes, 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, including rights, powers and duties senior to Limited
Partnership Interests, 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 Interests; (ii) the right of each such class or series
of Partnership Interests to share in Partnership distributions; and (iii) the
rights of each such class or series of Partnership Interests upon dissolution and
liquidation of the Partnership; provided, however, that no additional Partnership
Interests shall be issued to the General Partner or the Company (or any direct or
indirect wholly-owned Subsidiary of the General Partner or the Company) unless:
(1) (A) the additional Partnership Interests are issued in connection
with an issuance of REIT Shares of the Company or other interests in the
Company, which shares or interests have designations, preferences and
other rights, all such that the economic interests are substantially
similar to the designations, preferences and other rights of the
additional Partnership Interests issued to the General Partner or the
Company (or any direct or indirect wholly-owned Subsidiary of the General
Partner or the Company) by the Partnership in accordance with this Section
4.02 and (B) the General Partner or the Company (or any
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direct or indirect wholly-owned Subsidiary of the General Partner or
the Company) shall make a Capital Contribution to the Partnership in an
amount equal to the cash consideration received by the General Partner or
the Company from the issuance of such shares of stock of or other
interests in the General Partner or the Company;
(2) the additional Partnership Interests are issued in exchange for
property owned by the General Partner or the Company (or any direct or
indirect wholly-owned Subsidiary of the General Partner or the Company)
with a fair market value, as determined by the General Partner, in good
faith, equal to the value of the Partnership Interests; or
(3) the additional Partnership Interests are issued to all Partners
in proportion to their respective Percentage Interests.
Without limiting the foregoing, the General Partner is expressly authorized (other than in the case
of an issuance under clause 2 above) 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.
(ii) Upon Issuance of Additional Securities. The Company shall not issue any
additional REIT Shares (other than REIT Shares issued in connection with an
exchange pursuant to Section 8.04 hereof) or rights, options, warrants or
convertible or exchangeable securities containing the right to subscribe for or
purchase REIT Shares (collectively, Additional Securities) other than to all
holders of REIT Shares, unless (A) the General Partner shall cause the
Partnership to issue to the Company or the General Partner Partnership Interests
or rights, options, warrants or convertible or exchangeable securities of the
Partnership having designations, preferences and other rights, all such that the
economic interests are substantially similar to those of the Additional
Securities, and (B) the Company contributes the proceeds from the issuance of
such Additional Securities and from any exercise of rights contained in such
Additional Securities to the Partnership; provided, however, that the Company is
allowed to issue Additional Securities in connection with an acquisition of a
property to be held directly by the Company, but if and only if, such direct
acquisition and issuance of Additional Securities have been approved and
determined to be in the best interests of the Company and the Partnership by a
majority of the Board of Directors. Without limiting the foregoing, the Company
is expressly authorized to issue Additional Securities for less than fair market
value, and to cause the Partnership to issue to the Company or the General
Partner corresponding Partnership Interests, so long as (x) the General Partner
concludes in good faith that such issuance is in the best interests of the
General Partner and the Partnership and (y) the Company contributes all proceeds
from such issuance to the Partnership, including without limitation, the issuance
of REIT Shares and corresponding Partnership Units pursuant to a share purchase
plan providing for purchases of REIT Shares at a discount from fair market value
or employee stock options that have an exercise price that is less than the fair
market value of the REIT Shares, either at the time of issuance or at the time of
exercise, or restricted or other stock awards. For example, in the event the
Company issues REIT Shares for a cash purchase price and the Company contributes
all of the proceeds of such issuance to the Partnership as required hereunder,
the Company shall be issued a number of
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additional Partnership Units equal to the product of (A) the number of such
REIT Shares issued by the Company, the proceeds of which were so contributed,
multiplied by (B) a fraction, the numerator of which is 100%, and the denominator
of which is the Conversion Factor in effect on the date of such contribution.
(iii) Notwithstanding anything to the contrary, from and after the date
hereof the Partnership shall be authorized to issue LTIP Units. From time to
time the General Partner may issue LTIP Units to Persons providing services to or
for the benefit of the Partnership.
(b) Certain Contributions of Proceeds of Issuance of REIT Shares. In
connection with any and all issuances of REIT Shares, the Company or the General Partner
shall make Capital Contributions to the Partnership of the proceeds therefrom, provided
that if the proceeds actually received and contributed by the Company are less than the
gross proceeds of such issuance as a result of any underwriters discount (or other
expenses paid or incurred in connection with such issuance, which shall be REIT Expenses
hereunder), then the Company or the General Partner shall make a Capital Contribution of
such net proceeds to the Partnership but shall receive additional Partnership Units with a
value equal to the aggregate amount of the gross proceeds of such issuance pursuant to
Section 4.02(a) hereof. Upon any such Capital Contribution by the Company, the Companys or
the General Partners Capital Account shall be increased pursuant to Section 4.04 hereof by
the amount of the gross proceeds of the issuance.
(c) If the Company shall repurchase shares of any class of the Companys
capital stock, all costs incurred in connection with such repurchase shall be reimbursed to
the Company by the Partnership pursuant to Section 6.05 hereof and the General Partner
shall cause the Partnership to redeem an equivalent number of Partnership Interests of the
appropriate class held by the Company or the General Partner (which, in the case of Common
Shares, shall be a number equal to the quotient of the number of such Common Shares divided
by the Conversion Factor) in the manner provided in Section 6.10.
4.03 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, the Company or any of their
Affiliates provide such Additional Funds to the Partnership through loans or otherwise. Subject to
the provisions of Section 6.05, no person shall have any preemptive, preferential or similar right
or rights to subscribe for or acquire any Partnership Interests except as set forth in this
Article.
4.04 CAPITAL ACCOUNTS. A separate capital account (a Capital Account) shall be
established and maintained for each Partner in accordance with Regulations Section
1.704-1(b)(2)(iv). Consistent with the provisions of Regulations Section 1.704-1(b)(2)(iv)(f), (i)
immediately prior to the acquisition of an additional Partnership Interest by any new or existing
Partner in connection with the contribution of money or other property (other than a de minimis
amount) to the Partnership, (ii) immediately prior to the distribution by the Partnership to a
Partner of Partnership property (other than a de minimis amount) as consideration for a Partnership
Interest, (iii) upon the acquisition of a more than de minimis additional interest in the
Partnership by any new or existing Partner as consideration for the provision of services to or for
the benefit of the Partnership in a partner capacity or in anticipation of becoming a Partner, (iv)
upon the grant of any LTIP Unit, and (v) immediately prior to the liquidation of the Partnership as
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defined in Regulations Section 1.704-1(b)(2)(ii)(g), the Book Value of all Partnership Assets
shall be revalued upward or downward to reflect the fair market value (as determined by the General
Partner, in its sole and absolute discretion, and taking into account Section 7701(g) of the Code)
of each such Partnership asset unless the General Partner shall determine that such revaluation is
not necessary to maintain Capital Accounts in accordance with Regulations Section
1.704-1(b)(2)(iv). When the Partnerships property is revalued by the General Partner, the Capital
Accounts of the Partners shall be adjusted in accordance with Regulations Sections
1.704-1(b)(2)(iv)(f) and (g), which generally require such Capital Accounts to be adjusted to
reflect the manner in which the unrealized gain or loss inherent in such property (that has not
been reflected in the Capital Accounts previously) would be allocated among the Partners pursuant
to Section 5.01 if there were a taxable disposition of such property for its fair market value (as
determined by the General Partner, in its sole and absolute discretion, and taking into account
Section 7701(g) of the Code) on the date of the revaluation.
4.05 PERCENTAGE INTERESTS. If the number of outstanding Partnership Units increases
or decreases during a taxable year, each Partners Percentage Interest shall be adjusted by the
General Partner effective as of the effective date of each such increase or decrease to a
percentage equal to the number of Partnership Units held by such Partner divided by the aggregate
number of Partnership Units outstanding after giving effect to such increase or decrease. If the
Partners Percentage Interests are adjusted pursuant to this Section 4.05, the Profits and Losses
for the taxable year in which the adjustment occurs shall be allocated between the part of the year
ending on the day when the Partnerships property is revalued by the General Partner and the part
of the year beginning on the following day either (i) as if the taxable year had ended on the date
of the adjustment or (ii) based on the number of days in each part. The General Partner, in its
sole and absolute discretion, shall determine which method shall be used to allocate Profits and
Losses for the taxable year in which the adjustment occurs. The allocation of Profits and Losses
for the earlier part of the year shall be based on the Percentage Interests before adjustment, and
the allocation of Profits and Losses for the later part shall be based on the adjusted Percentage
Interests. For purposes of the calculation of Percentage Interests pursuant to this Section 4.5,
the Percentage Interest of any LTIP Units for which the LTIP Unit Distribution Participation Date
has not occurred as of the relevant time shall be 0%.
4.06 NO INTEREST ON CONTRIBUTIONS. No Partner shall be entitled to interest on its
Capital Contribution.
4.07 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
Partners Capital Contribution for so long as the Partnership continues in existence.
4.08 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 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
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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.
ARTICLE V
PROFITS AND LOSSES; DISTRIBUTIONS
5.01 ALLOCATION OF PROFIT AND LOSS.
(a) Profit. After giving effect to the special allocations, if any,
provided in Section 5.01(c) and (d), Profits in each fiscal year or other period shall be
allocated in the following order of priority:
(i) First to the General Partner until the cumulative Profits allocated to
the General Partner under this Section 5.01(a) equal the cumulative Losses
allocated to such Partner under Section 5.01(b)(ii);
(ii) Second, to each holder of Common Units in proportion to the cumulative
Losses allocated to such holder under Section 5.01(b)(i), until the cumulative
Profits allocated to such holder under this Section 5.01(a)(ii) equals the
cumulative Losses allocated to such holder under Section 5.01(b)(i); and
(iii) Thereafter, to the holders of Common Units in accordance with their
respective Percentage Interests.
For purposes of determining allocations of Profits pursuant to Section 5.01(a), if the LTIP Unit
Distribution Participation Date with respect to an LTIP Unit has occurred, such LTIP Unit shall be
treated as a Common Unit; provided, however, that with respect to an issued and outstanding Special
LTIP Unit, until the applicable Measurement Date, amounts shall only be allocated with respect to
such Special LTIP Unit in an amount equal to the product of the Special LTIP Unit Sharing
Percentage and the amount otherwise allocable with respect to such Special LTIP Unit.
(b) Losses. After giving effect to the special allocations, if any,
provided in Section 5.01(c) and (d), Loss in each fiscal year or other period shall be
allocated in the following order of priority:
(i) First, to the holders of Common Units pro rata in accordance with
positive adjusted Capital Account balances until their adjusted Capital Accounts
are reduced to zero; and
(ii) Thereafter, to the General Partner.
For purposes of determining allocations of Losses pursuant to Section 5.01(b), to the extent that
the LTIP Unit Distribution Participation Date with respect to an LTIP Unit has occurred, such LTIP
Unit shall be treated as a Common Unit.
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(c) Minimum Gain Chargeback. Notwithstanding any provision to the contrary,
(i) any expense of the Partnership that is a nonrecourse deduction within the meaning of
Regulations Section 1.704-2(b)(1) shall be allocated in accordance with the Partners
respective Percentage Interests, (ii) any expense of the Partnership that is a partner
nonrecourse deduction within the meaning of Regulations Section 1.704-2(i)(2) shall be
allocated to the Partner that bears the economic risk of loss of such deduction in
accordance with Regulations Section 1.704-2(i)(1), (iii) if there is a net decrease in
Partnership Minimum Gain within the meaning of Regulations Section 1.704-2(f)(1) for any
Partnership taxable year, then, subject to the exceptions set forth in Regulations Section
1.704-2(f)(2),(3), (4) and (5), items of gain and income shall be allocated among the
Partners in accordance with Regulations Section 1.704-2(f) and the ordering rules contained
in Regulations Section 1.704-2(j), and (iv) if there is a net decrease in Partner
Nonrecourse Debt Minimum Gain within the meaning of Regulations Section 1.704-2(i)(4) for
any Partnership taxable year, then, subject to the exceptions set forth in Regulations
Section 1.704(2)(g), items of gain and income shall be allocated among the Partners in
accordance with Regulations Section 1.704-2(i)(4) and the ordering rules contained in
Regulations Section 1.704-2(j). A Partners interest in partnership profits for purposes
of determining its share of the nonrecourse liabilities of the Partnership within the
meaning of Regulations Section 1.752-3(a)(3) shall be such Partners Percentage Interest.
(d) Qualified Income Offset. If a Partner receives in any taxable year an
adjustment, allocation or distribution described in subparagraphs (4), (5) or (6) of
Regulations Section 1.704-1(b)(2)(ii)(d) that causes or increases a deficit balance in such
Partners Capital Account that exceeds the sum of such Partners shares of Partnership
Minimum Gain and Partner Nonrecourse Debt Minimum Gain, as determined in accordance with
Regulations Sections 1.704-2(g) and 1.704-2(i), such Partner shall be allocated specially
for such taxable year (and, if necessary, later taxable years) items of income and gain in
an amount and manner sufficient to eliminate such deficit Capital Account balance as
quickly as possible as provided in Regulations Section 1.704-1(b)(2)(ii)(d). After the
occurrence of an allocation of income or gain to a Partner in accordance with this Section
5.01(d), to the extent permitted by Regulations Section 1.704-1(b), items of expense or
loss shall be allocated to such Partner in an amount necessary to offset the income or gain
previously allocated to such Partner under this Section 5.01(d).
(e) Capital Account Deficits. Loss shall not be allocated to a Limited
Partner to the extent that such allocation would cause a deficit in such Partners Capital
Account (after reduction to reflect the items described in Regulations Section
1.704-1(b)(2)(ii)(d)(4), (5) and (6)) to exceed the sum of such Partners shares of
Partnership Minimum Gain and Partner Nonrecourse Debt Minimum Gain. Any Loss in excess of
that limitation shall be allocated to the General Partner. After the occurrence of an
allocation of Loss to the General Partner in accordance with this Section 5.01(e), to the
extent permitted by Regulations Section 1.704-1(b), Profit shall be allocated to such
Partner in an amount necessary to offset the Loss previously allocated to each Partner
under this Section 5.01(e).
(f) Allocations Between Transferor and Transferee. If a Partner transfers
any part or all of its Partnership Interest, the distributive shares of the various items
of Profit and Loss allocable among the Partners during such fiscal year of the Partnership
shall be allocated between the transferor and the transferee Partner either (i) as if the
Partnerships
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fiscal year had ended on the date of the transfer, or (ii) based on the number of days
of such fiscal year that each was a Partner without regard to the results of Partnership
activities in the respective portions of such fiscal year in which the transferor and the
transferee were Partners. The General Partner, in its sole and absolute discretion, shall
determine which method shall be used to allocate the distributive shares of the various
items of Profit and Loss between the transferor and the transferee Partner.
(g) Definition of Profit and Loss. Profit and Loss and any items of
income, gain, expense or loss referred to in this Agreement shall be determined in
accordance with federal income tax accounting principles, as modified by Regulations
Section 1.704-1(b)(2)(iv), except that Profit and Loss shall not include items of income,
gain and expense that are specially allocated pursuant to Sections 5.01(c), 5.01(d) or
5.01(e). All allocations of income, Profit, gain, Loss and expense (and all items contained
therein) for federal income tax purposes shall be identical to all allocations of such
items set forth in this Section 5.01, except as otherwise required by Section 704(c) of the
Code and Regulations Section 1.704-1(b)(4). The Partnership shall use the traditional
method for allocating items of income, gain and expense as required by Section 704(c) of
the Code with respect to the properties acquired by the Partnership in connection with the
private placement of the Companys securities. With respect to other properties acquired by
the Partnership, the General Partner shall have the authority to elect the method to be
used by the Partnership for allocating items of income, gain and expense as required by
Section 704(c) of the Code with respect to such properties, and such election shall be
binding on all Partners.
(h) To the extent provided for in Regulations, revenue rulings, revenue
procedures and/or other IRS guidance issued after the date hereof, the Partnership is
hereby authorized to, and at the direction of the General Partner shall, elect a safe
harbor under which the fair market value of any Partnership Interests issued after the
effective date of such Regulations (or other guidance) will be treated as equal to the
liquidation value of such Partnership Interests (i.e., a value equal to the total amount
that would be distributed with respect to such interests if the Partnership sold all of its
assets for their fair market value immediately after the issuance of such Partnership
Interests, satisfied its liabilities (excluding any non-recourse liabilities to the extent
the balance of such liabilities exceed the fair market value of the assets that secure
them) and distributed the net proceeds to the Partners under the terms of this Agreement).
In the event that the Partnership makes a safe harbor election as described in the
preceding sentence, each Partner hereby agrees to comply with all safe harbor requirements
with respect to transfers of such Partnership Interests while the safe harbor election
remains effective.
(i) Upon a forfeiture of any unvested Partnership Interest by any Partner,
gross items of income, gain, loss or deduction shall be allocated to such Partner if and to
the extent required by final Regulations promulgated after the effective date of this
Agreement to ensure that allocations made with respect to all unvested Partnership
Interests are recognized under Code Section 704(b).
(j) After giving effect to the special allocations set forth in Sections
5.01(c) and (d) hereof, and the allocations of Profit and Loss under Sections 5.01(a) and
(b) (including, for the avoidance of doubt Liquidating Gains that are a component of
Profit):
(i) any remaining Liquidating Gains shall first be allocated to the LTIP
Unit Limited Partners until the Economic Capital Account Balances of
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such Partners, to the extent attributable to their ownership of LTIP Units,
are equal to (i) the Common Unit Economic Balance, multiplied by (ii) the number
of their LTIP Units; provided, however, (A) with respect to an
issued and outstanding Special LTIP Unit, until the applicable Measurement Date,
amounts shall only be allocated in an amount equal to the product of the Special
LTIP Unit Sharing Percentage and the amount otherwise allocable with respect to
such Special LTIP Unit and (B) no such Liquidating Gains will be allocated with
respect to any particular LTIP Unit (each an Ineligible Unit) unless, and such
allocations, if any, shall be made only to the extent that, such Liquidating
Gains, when aggregated with other Liquidating Gains realized by holders of LTIP
Units since the issuance of such LTIP Unit, exceed Liquidating Losses realized
since the issuance of such LTIP Unit. If, notwithstanding the foregoing, not all
LTIP Units (including Ineligible Units) are fully booked up, with respect to
amounts allocated to a particular LTIP Unit Limited Partner, such Partner may
determine how Liquidating Gains shall be allocated among such holders LTIP
Units; provided, however, if such holder does not make such a determination,
Liquidating Gains shall generally be allocated so that the Economic Capital
Account Balance of the maximum amount of Vested LTIP Units held by such holder is
equal to the Common Unit Economic Balance on a per Unit basis; provided, further,
that such Liquidating Gains may only be allocated to LTIP Units that are held by
such holder on the date of the allocation under this Section 5.01(j). Any such
allocations shall be made among the holders of LTIP Units in proportion to the
amounts required to be allocated to each under this
Section 5.01(j)
(ii) if, due to distributions with respect to Common Units in which the LTIP
Units do not participate or otherwise, the Economic Capital Account Balance of
any present or former holder of LTIP Units, to the extent attributable to the
holders ownership of LTIP Units, exceeds the target balance specified above,
then Liquidating Losses shall be allocated to such holder to the extent necessary
to reduce or eliminate the disparity.
The parties agree that the intent of this Section 5.01(j) is to make the Capital Account balance
associated with each LTIP Unit economically equivalent to the Capital Account balance associated
with the General Partners Common Units (on a per-unit basis), but only if the Partnership has
sufficient cumulative net Liquidating Gains with respect to its assets since the issuance of the
relevant LTIP Unit.
(k) If, in connection with any forfeiture of LTIP Units, the balance of the
portion of the Capital Account of the LTIP Unit Limited Partner that is attributable to all
of his or her LTIP Units exceeds the target balance described in Section 5.01(j) above,
such portion of such Partners Capital Account shall be reduced to such target balance.
Otherwise, the Capital Account of the LTIP Unit Limited Partner that is attributable to the
forfeited LTIP Units shall be reallocated in a manner reasonably determined by the General
Partner.
5.02 DISTRIBUTION OF CASH.
(a) Subject to Section 5.02(c) hereof, the Partnership shall distribute cash
at such times and in such amounts as are determined by the General Partner in its sole and
absolute discretion, to the Partners who are Partners on the Partnership Record Date with
19
respect to such quarter (or other distribution period) in accordance with their
respective Percentage Interests on the Partnership Record Date. For purposes of the
foregoing calculations of Section 5.02(a), issued and outstanding LTIP Units with an
associated LTIP Unit Distribution Participation Date that falls on or before the
Partnership Record Date for a particular distribution shall be treated as outstanding
Common Units; provided, however, that with respect to an issued and outstanding Special
LTIP Unit, until the applicable Measurement Date, amounts shall only be distributed with
respect to such Special LTIP Unit in an amount equal to the product of the Special LTIP
Unit Sharing Percentage and the amount otherwise distributable with respect to such Special
LTIP Unit. LTIP Units for which the LTIP Unit Distribution Participation Date has not
occurred as of the Partnership Record Date for a particular distribution shall not be
entitled to any of such distribution.
(b) If a new or existing Partner acquires an additional Partnership Interest
in exchange for a Capital Contribution on any date other than a Partnership Record Date,
the cash distribution attributable to such additional Partnership Interest relating to the
Partnership Record Date next following the issuance of such additional Partnership Interest
shall be reduced in the proportion to (i) the number of days that such additional
Partnership Interest is held by such Partner bears to (ii) the number of days between such
Partnership Record Date and the immediately preceding Partnership Record Date.
(c) 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 and 1446 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 a Partner or assignee (including by reason of
Section 1446 of the Code), either (i) if the actual amount to be distributed to the Partner
(the Distributable Amount) equals or exceeds the amount required to be withheld by the
Partnership (the Withheld Amount), the entire Distributable Amount shall be treated as a
distribution of cash to such Partner, or (ii) if the Distributable Amount is less than the
Withheld Amount, the excess of the Withheld Amount over the Distributable Amount 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
upon the demand of the Partnership or, alternatively, 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 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
5.02(c) shall bear interest at the lesser of (i) 300 basis points above 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.
(d) In no event may a Partner receive a distribution of cash with respect to
a Partnership Unit if such Partner is entitled to receive a cash dividend as the holder of
record of a REIT Share for which all or part of such Partnership Unit has been or will be
redeemed.
(e) In making distributions pursuant to Section 5.02(a) of the Agreement and
allocations pursuant to Section 5.01 of the Agreement, the General Partner of the
Partnership shall take into account the provisions of Exhibit D hereto.
5.03 REIT DISTRIBUTION REQUIREMENTS. The General Partner shall use its reasonable
efforts to cause the Partnership to distribute amounts sufficient to enable the Company to pay
stockholder dividends that will allow the Company 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, other than to the extent the Company elects to retain
and pay income tax on its net capital gain.
5.04 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.
5.05 LIMITATIONS ON RETURN OF CAPITAL CONTRIBUTIONS. Notwithstanding any of the
provisions of this Article V, 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
Partners 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 his Capital Contribution, does not exceed the fair market value of the Partnerships
assets.
5.06 DISTRIBUTIONS UPON LIQUIDATION.
(a) 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 with positive
Capital Accounts in accordance with their respective positive Capital Account balances.
(b) For purposes of Section 5.06(a), the Capital Account of each Partner
shall be determined after all adjustments made in accordance with Sections 5.01 and 5.02
resulting from Partnership operations and from all sales and dispositions of all or any
part of the Partnerships assets.
(c) Any distributions pursuant to this Section 5.06 shall be made by the end
of the Partnerships taxable year in which the liquidation occurs (or, if later, within 90
days after the date of the liquidation). 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.
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5.07 SUBSTANTIAL ECONOMIC EFFECT. It is the intent of the Partners that the
allocations of Profit and Loss under the 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 V and other relevant provisions of this
Agreement shall be interpreted in a manner consistent with such intent.
ARTICLE VI
RIGHTS, OBLIGATIONS AND
POWERS OF THE GENERAL PARTNER
6.01 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 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 real
property and any other property or assets including, but not limited to, notes
and mortgages that the General Partner determines are necessary or appropriate in
the business of the Partnership;
(ii) to construct buildings and make other improvements on the properties
owned or leased by the Partnership;
(iii) to authorize, issue, sell, redeem or otherwise purchase any
Partnership Interests 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 Interests, or options, rights, warrants
or appreciation rights relating to any Partnership Interests) 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 indebtedness by mortgage, deed of trust, pledge or
other lien on the Partnerships 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;
(vi) to guarantee or become a co-maker of indebtedness of any Subsidiary of
the Company or the Partnership, 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 Partnerships assets;
22
(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 and administrative expenses of the General Partner, the Company, the
Partnership or any Subsidiary of any of them as set forth in this Agreement;
(viii) to lease all or any portion of any of the Partnerships 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 Partnerships 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 Partnerships assets;
(x) to file applications, communicate and otherwise deal with any and all
governmental agencies having jurisdiction over, or in any way affecting, the
Partnerships 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 reasonable
remuneration as the General Partner may deem reasonable and proper;
(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;
23
(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 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 Company at all times to
qualify as a REIT unless the Company 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.
Except as otherwise provided herein, each of the Limited Partners agrees that the General Partner
is authorized to execute, deliver and perform the above mentioned agreements and transactions on
behalf of the Partnership without any further act, approval or vote of the Partners,
notwithstanding any other provision of this Agreement, the Act or any applicable law. The
execution, delivery and performance by the General Partner of the above mentioned agreements and
transactions shall not constitute a breach of any duty under this Agreement or implied in law or
equity.
(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,
and neither the General Partner nor any Limited Partner shall have any obligation to contribute to
the capital of the Partnership or otherwise provide funds to enable the Partnership to fund its
obligations under this section, except to the extent otherwise expressly agreed to by such Partner
and the Partnership.
24
6.02 DELEGATION OF AUTHORITY. The General Partner may delegate any or all of its
powers, rights and obligations hereunder to any Person that the General Partner may from time to
time determine, including, without limitation, the officers and employees of the Partnership, the
General Partner, the Company and any Subsidiary of the Company and may further 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. Without limiting the generality of the foregoing,
the following officers of the Partnership, who, subject to the general supervision and control of
the General Partner, may exercise the rights and powers of the General Partner to manage the
day-to-day operations of the Partnership: Chief Executive Officer, President, one or more Vice
Presidents, Chief Financial Officer, Chief Operations Officer, Secretary and Treasurer.
6.03 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. The termination of any proceeding by
judgment, order or settlement does not create a presumption that the Indemnitee did not
meet the requisite standard of conduct set forth in this Section 6.03(a). The termination
of any proceeding by conviction or upon a plea of nolo contendere or its equivalent, or an
entry of an order of probation prior to judgment, creates a rebuttable presumption that the
Indemnitee acted in a manner contrary to that specified in this Section 6.03(a). Any
indemnification pursuant to this Section 6.03 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 Indemnitees good faith belief that the standard of conduct
necessary for indemnification by the Partnership as authorized in this Section 6.03 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 6.03 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.
(d) The Partnership may, but shall not be obligated to, 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 Partnerships activities,
regardless
25
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 6.03, 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 6.03; 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 that 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 6.03 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 6.03 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) Any amendment, modification or repeal of this Section 6.03 or any
provision hereof shall be prospective only and shall not in any way affect the
indemnification of an Indemnitee by the Partnership under this Section 6.03 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.
(j) If and to the extent any reimbursements to the General Partner pursuant
to this section constitute gross income of the General Partner (as opposed to the repayment
of advances made by the General Partner on behalf of the Partnership) such amounts shall
constitute guaranteed payments within the meaning of Section 707(c) of the Code, shall be
treated consistently therewith by the Partnership and all Partners, and shall not be
treated as distributions for purposes of computing the Partners Capital Accounts.
6.04 LIABILITY OF THE GENERAL PARTNER.
(a) Notwithstanding anything to the contrary set forth in this Agreement,
none of the General Partner, the Company, nor any of their directors, officers, agents or
employees shall be liable for monetary damages to the Partnership or any Partners for
losses sustained or liabilities incurred or benefits not derived as a result of errors in
judgment or mistakes of fact or law or of any act or omission 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
26
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.
(b) The Limited Partners expressly acknowledge that the General Partner is
acting on behalf of the Partnership and the Companys 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 to 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 the stockholders of the Company 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 the stockholders of the Company or the Limited
Partners; provided, however, that for so long as the Company 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 the
stockholders of the Company or the Limited Partners shall be resolved in favor of the
stockholders of the Company. 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.
(c) Subject to its obligations and duties as General Partner set forth in
Section 6.01 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.
(d) 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 Company to continue to qualify as a REIT or (ii) to prevent the Company 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.
(e) Any amendment, modification or repeal of this Section 6.04 or any
provision hereof shall be prospective only and shall not in any way affect the limitations
on the General Partners or any of its officers, directors, agents or employees
liability to the Partnership and the Limited Partners under this Section 6.04 as in effect
immediately prior to such amendment, modification or repeal with respect to claims arising
from or relating to matters occurring, in whole or in part, prior to such amendment,
modification or repeal, regardless of when claims relating to such matters may arise or be
asserted.
6.05 PARTNERSHIP OBLIGATIONS.
(a) Except as provided in this Section 6.05 and elsewhere in this Agreement
(including the provisions of Articles V and VI 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.
27
(b) All Administrative Expenses shall be obligations of the Partnership, and
each of the General Partner and the Company shall be entitled to reimbursement by the
Partnership for any expenditure (including Administrative Expenses) incurred by it on
behalf of the Partnership that shall be made other than out of the funds of the
Partnership.
6.06 OUTSIDE ACTIVITIES. Subject to Section 6.08 hereof, the Articles of
Incorporation and any agreements entered into by the General Partner, the Company or any of their
respective Affiliates with the Partnership, any Subsidiary or any officer, director, employee,
agent, trustee, Affiliate or stockholder of the Company, the General Partner and the Company 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, the Limited Partners nor
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
and the Company 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 that, if presented to the Partnership or any Limited Partner,
could be taken by such Person.
6.07 AFFILIATES; SUBSIDIARIES; JOINT VENTURES.
(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 that 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 and applicable law.
6.08 GENERAL PARTNER ACTIVITIES. The General Partner and the Company agree that,
generally, all business activities of the General Partner and the Company, including activities
pertaining to the acquisition, development or ownership of a healthcare property or other property,
shall be conducted through the Partnership or one or more Subsidiaries of the Partnership;
provided, however, that the General Partner or the Company may make a direct acquisition or
undertake a business activity directly if such acquisition is made in connection with the issuance
of Additional Securities and direct acquisition and issuance or the business activity has been
approved by a majority of the Board Directors.
6.09 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
28
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 REDEMPTION OF COMPANY PARTNERSHIP UNITS. In the event the Company redeems or
repurchases any REIT Shares, then the General Partner shall cause the Partnership to purchase from
the Company a number of Partnership Units as determined based on the application of the Conversion
Factor on substantially the same terms that the Company redeemed such REIT Shares. Moreover, if
the Company makes a cash tender offer or other offer to acquire REIT Shares, then the General
Partner shall cause the Partnership to make a corresponding offer to the Company to acquire an
equal number of Partnership Units held by the Company. In the event any REIT Shares are exchanged
by the Company pursuant to such offer, the Partnership shall redeem an equivalent number of the
Companys Partnership Units for an equivalent purchase price based on the application of the
Conversion Factor.
ARTICLE VII
CHANGES IN THE COMPANY OR THE GENERAL PARTNER
7.01 TRANSFER OF THE GENERAL PARTNERS PARTNERSHIP INTEREST.
(a) Except as provided in Section 4.02 or Section 6.10 hereof, neither the
General Partner nor the Company shall transfer all or any portion of its Partnership
Interest and the General Partner shall not withdraw as General Partner except as provided
in or in connection with a transaction contemplated by Section 7.01(c), (d) or (e).
(b) The General Partner agrees that its Percentage Interest will at all
times be in the aggregate at least 1%.
(c) Except as otherwise provided in Section 7.01(d) hereof, the Company
shall not engage in any merger, consolidation or other combination with or into another
Person or sale of all or substantially all of its assets (other than in connection with a
change in the Companys state of incorporation or organizational form), in each case that
results in a change of control of the Company (a Transaction), unless at least one of the
following conditions is met:
(i) the consent of the holders of Common Units (other than the General
Partner, the Company or any Subsidiary of either of them) holding more than 50%
of the percentage interests of the holders of Common Units (other than those held
by the General Partner or any Subsidiary) is obtained; or
29
(ii) as a result of such Transaction all holders of Common Units will
receive, or have the right to elect to receive, for each Common Unit an amount of
cash, securities or other property equal in value to the product of the
Conversion Factor and the greatest amount of cash, securities or other property
paid in the Transaction to a holder of one REIT Share in consideration of one
REIT Share, provided that if, in connection with the Transaction, a purchase,
tender or exchange offer (Offer) shall have been made to and accepted by the
holders of more than 50% of the outstanding REIT Shares, each holder of
Partnership Units shall be given the option to exchange its Partnership Units for
the greatest amount of cash, securities or other property that a Limited Partner
would have received had it (A) exercised its Redemption Right and (B) sold,
tendered or exchanged pursuant to the Offer the REIT Shares received upon
exercise of the Redemption Right immediately prior to the expiration of the
Offer; or
(iii) the General Partner or the Company is the surviving entity in the
Transaction and either (A) the holders of REIT Shares do not receive cash,
securities or other property in the Transaction or (B) all holders of Common
Units (other than the General Partner or any Subsidiary) receive for each Common
Unit an amount of cash, securities or other property having a value (expressed as
an amount per REIT Share) that is no less than the product of the Conversion
Factor and the greatest amount of cash, securities or other property (expressed
as an amount per REIT Share) received in the Transaction by any holder of REIT
Shares.
(d) Notwithstanding Section 7.01(c), the General Partner or the Company may
merge with or into or consolidate with another entity if immediately after such merger or
consolidation (i) substantially all of the assets of the successor or surviving entity (the
Survivor), other than Partnership Units held by the General Partner or the Company, are
contributed, directly or indirectly, to the Partnership as a Capital Contribution in
exchange for Partnership Units with a fair market value equal to the value of the assets so
contributed as determined by the Survivor in good faith and (ii) the Survivor expressly
agrees to assume all obligations of the General Partner and the Company hereunder. Upon
such contribution and assumption, the Survivor shall have the right and duty to amend this
Agreement as set forth in this Section 7.01(d). The Survivor shall in good faith arrive at
a new method for the calculation of the Cash Amount, the REIT Shares Amount and Conversion
Factor for a Partnership Unit after any such merger or consolidation so as to approximate
the existing method for such calculation as closely as reasonably possible. Such
calculation shall take into account, among other things, the kind and amount of securities,
cash and other property that was receivable upon such merger or consolidation by a holder
of REIT Shares or options, warrants or other rights relating thereto, and which a holder of
Partnership Units could have acquired had such Partnership Units been exchanged immediately
prior to such merger or consolidation. Such amendment to this Agreement shall provide for
adjustment to such method of calculation, which shall be as nearly equivalent as may be
practicable to the adjustments provided for with respect to the Conversion Factor. The
Survivor also shall in good faith modify the definition of REIT Shares and make such
amendments to Section 8.04 hereof so as to approximate the existing rights and obligations
set forth in Section 8.04 as closely as reasonably possible. The above provisions of this
Section 7.01(d) shall similarly apply to successive mergers or consolidations permitted
hereunder.
30
(e) Notwithstanding anything in this Article VII,
(i) the General Partner may transfer all or any portion of its General
Partnership Interest to (A) the Company or (B) any direct or indirect Subsidiary
of the Company and, following a transfer of all of its General Partnership
Interest, may withdraw as General Partner; and
(ii) the General Partner or the Company may engage in a transaction required
by law or by the rules of any national securities exchange on which the REIT
Shares are listed.
7.02 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 2.06 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 Persons 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 the admission of the Person to
be admitted as a substitute or additional General Partner is in conformity with the Act,
that 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 income tax purposes, or (ii) the loss of any
Limited Partners limited liability.
7.03 EFFECT OF BANKRUPTCY, WITHDRAWAL, DEATH OR DISSOLUTION OF A GENERAL PARTNER.
(a) Upon the occurrence of an Event of Bankruptcy as to a General Partner or
the death, withdrawal, removal or dissolution of a General Partner (except that, if a
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 7.03(b)
hereof. The merger of a General Partner with or into any entity that is admitted as a
substitute or successor General Partner pursuant to Section 7.02 hereof shall not be deemed
to be the withdrawal, dissolution or removal of the General Partner.
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(b) Following the occurrence of an Event of Bankruptcy as to a General Partner or
the death, withdrawal, removal or dissolution of a General Partner (except that, if a
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 Limited Partners, within 90
days after such occurrence, may elect to continue the business of the Partnership for the
balance of the term specified in Section 2.04 hereof by selecting, subject to Section 7.02
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.
7.04 REMOVAL OF A GENERAL PARTNER.
(a) If on the date of an occurrence of an Event of Bankruptcy as to, or the
dissolution of, a General Partner, such General Partner is 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 the General Partner if the business of such
General Partner is continued by the remaining partner or partners. The Limited Partners may
not remove the General Partner, with or without cause.
(b) If a General Partner has been removed pursuant to Section 7.03 and the
Partnership is continued pursuant to Section 7.03 hereof, such General Partner shall
promptly transfer and assign its General Partnership Interest in the Partnership to the
substitute General Partner approved by a majority in interest of the Limited Partners in
accordance with Section 7.03(b) hereof and otherwise admitted to the Partnership in
accordance with Section 7.02 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 Interest 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 (excluding the Company) within 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
(excluding the Company) each shall select an appraiser. Each such appraiser shall complete
an appraisal of the fair market value of the removed General Partners General Partnership
Interest within 30 days of the General Partners removal, and the fair market value of the
removed General Partners General Partnership Interest 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 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 Partners General
Partnership Interest no later than 60 days after the removal of the General Partner. In
such case, the fair market value of the removed General Partners
32
General Partnership Interest shall be the average of the two appraisals closest in
value. The cost of all such appraisals shall be borne by the Partnership.
(c) The General Partnership Interest of a removed General Partner, during
the time after removal until transfer under Section 7.04(b), shall be converted to that of
a special 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 7.04(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 and
sufficient to effect all the foregoing provisions of this Section.
ARTICLE VIII
RIGHTS AND OBLIGATIONS
OF THE LIMITED PARTNERS
8.01 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.
8.02 POWER OF ATTORNEY. Subject to Section 8.03, 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, including amendments hereto, 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 Interest.
8.03 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.
8.04 REDEMPTION RIGHT.
(a) Subject to Sections 8.04(b), 8.04(c), 8.04(d), 8.04(e) and 8.04(f) and
the provisions of any agreements between the Partnership and one or more Limited Partners
with respect to Partnership Units held by them, each Limited Partner, other than the
Company, shall have the right (the Redemption Right) to require the Partnership to redeem
on a Specified Redemption Date all or a portion of the Partnership Units held by
33
such Limited Partner at a redemption price equal to and in the form of the Redemption
Amount to be paid by the Partnership, provided that such Partnership Units shall have been
outstanding for at least one year, and subject to any restriction agreed to in writing
between the Redeeming Limited Partner and the General Partner or the Partnership. The
Redemption Right shall be exercised pursuant to a Notice of Redemption delivered to the
Partnership (with a copy to the Company) by the Limited Partner who is exercising the
Redemption Right (the Redeeming Limited Partner); provided, further, that the Partnership
shall, in its sole and absolute discretion, have the option to deliver either the Cash
Amount or the REIT Shares Amount; provided, further, that the Partnership shall not be
obligated to satisfy such Redemption Right if the Company elects to purchase the
Partnership Units subject to the Notice of Redemption; and provided, further, that no
Limited Partner may deliver more than two Notices of Redemption during each calendar year.
Subject to the immediately succeeding sentence, a Limited Partner may not, without the
consent of the General Partner, exercise the Redemption Right for less than 1,000
Partnership Units. If a Limited Partner holds less than 1,000 Partnership Units, such
Limited Partner may, without the consent of the General Partner, exercise the Redemption
Right for all of the Partnership Units held by such Partner. The Redeeming Limited Partner
shall have no right, with respect to any Partnership Units so redeemed, to receive any
distribution paid with respect to Partnership Units if the record date for such
distribution is on or after the Specified Redemption Date. LTIP Unit Limited Partners
shall not be entitled to redeem their LTIP Units provided for in Section 8.04 of this
Agreement, unless and until such LTIP Units have been converted into Common Units.
Notwithstanding the foregoing, and except as otherwise permitted by the award, plan or
other agreement pursuant to which an LTIP Unit was issued, the right to redeem shall not be
exercisable with respect to any Common Unit issued upon conversion of an LTIP Unit until
two years after the date on which the LTIP Unit was issued, provided however, that the
foregoing restriction shall not apply if the right to redeem is exercised by an LTIP Unit
holder in connection with a transaction that falls within the definition of a change of
control under the agreement or agreements pursuant to which the LTIP Units were issued to
such holder.
(b) Notwithstanding the provisions of Section 8.04(a), a Limited Partner
that exercises the Redemption Right shall be deemed to have offered to sell the Partnership
Units described in the Notice of Redemption to the Company, and the Company may, in its
sole and absolute discretion, elect to purchase directly and acquire such Partnership Units
by paying to the Redeeming Limited Partner either the Cash Amount or the REIT Shares
Amount, as elected by the Company (in its sole and absolute discretion), on the Specified
Redemption Date, whereupon the Company shall acquire the Partnership Units offered for
redemption by the Redeeming Limited Partner and shall be treated for all purposes of this
Agreement as the owner of such Partnership Units. If the Company shall elect to exercise
its right to purchase Partnership Units under this Section 8.04(b) with respect to a Notice
of Redemption, it shall so notify the Redeeming Limited Partner within five Business Days
after the receipt by the Company of such Notice of Redemption. In the event the Company
shall exercise its right to purchase Partnership Units with respect to the exercise of a
Redemption Right, the Partnership shall have no obligation to pay any amount to the
Redeeming Limited Partner with respect to such Redeeming Limited Partners exercise of such
Redemption Right, and each of the Redeeming Limited Partner, the Partnership and the
Company shall treat the transaction between the Company and the Redeeming Limited Partner
for federal income tax purposes as a sale of the Redeeming Limited Partners Partnership
Units to the Company. Each Redeeming Limited Partner agrees to execute such documents as
the Company may
34
reasonably require in connection with the issuance of REIT Shares upon exercise of the
Redemption Right.
(c) Notwithstanding the provisions of Section 8.04(a) and 8.04(b), a Limited
Partner shall not be entitled to exercise the Redemption Right if the delivery of REIT
Shares to such Partner on the Specified Redemption Date by the Company pursuant to Section
8.04(b) (regardless of whether or not the Company would in fact exercise its rights under
Section 8.04(b)) would (i) result in such Partner or any other person owning, directly or
indirectly, REIT Shares in excess of the Ownership Limitation (as defined in the Articles
of Incorporation) and calculated in accordance therewith, except as provided in the
Articles of Incorporation, (ii) result in REIT Shares being owned by fewer than 100 persons
(determined without reference to any rules of attribution), (iii) result in the Company
being closely held within the meaning of Section 856(h) of the Code, (iv) cause the
Company to own, directly or constructively, 10% or more of the ownership interests in a
tenant of the Companys, the Partnerships or a Subsidiary Partnerships real property,
within the meaning of Section 856(d)(2)(B) of the Code, or (v) cause the acquisition of
REIT Shares by such Partner to be integrated with any other distribution of REIT Shares
for purposes of complying with the registration provisions of the Securities Act of 1933,
as amended (the Securities Act). The General Partner, in its sole and absolute
discretion, may waive the restriction on redemption set forth in this Section 8.04(c).
The consummation of any redemption in exchange for REIT Shares shall be subject to the expiration
or termination of any waiting period under applicable law.
(d) Any Cash Amount to be paid to a Redeeming Limited Partner pursuant to
this Section 8.04 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 90 days to the extent required for the Company 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 redeemed Partnership Units hereunder to occur as
quickly as reasonably possible.
(e) 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 that apply upon a Redeeming Limited Partners
exercise of the Redemption Right. If a Redeeming Limited Partner believes that it is exempt
from such withholding upon the exercise of the Redemption Right, such Partner must furnish
the General Partner with a FIRPTA Certificate in the form attached hereto as Exhibit C. If
the Partnership, the Company or the General Partner is required to withhold and pay over to
any taxing authority any amount upon a Redeeming Limited Partners exercise of the
Redemption Right and if the Redemption Amount equals or exceeds the Withheld Amount, the
Withheld Amount shall be treated as an amount received by such Partner in redemption of its
Partnership Units. If, however, the Redemption Amount is less than the Withheld Amount, the
Redeeming Limited Partner shall not receive any portion of the Redemption Amount, the
Redemption Amount shall be treated as an amount received by such Partner in redemption of
its Partnership Units, and the Partner shall contribute the excess of the Withheld Amount
over the Redemption
35
Amount to the Partnership before the Partnership is required to pay over such excess
to a taxing authority.
(f) Notwithstanding any other provision of this Agreement, the General
Partner shall place appropriate restrictions on the ability of the Limited Partners to
exercise their Redemption Rights as and if deemed necessary to ensure that there is not a
material risk that the Partnership will be treated as a publicly traded partnership
taxable as a corporation 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,
which notice shall be accompanied by a copy of an opinion of counsel to the Partnership to
the effect that such restrictions should be imposed to ensure that there is not a material
risk of the Partnership being treated as a publicly traded partnership under section 7704
of the Code.
ARTICLE IX
TRANSFERS OF PARTNERSHIP INTERESTS
9.01 PURCHASE FOR INVESTMENT.
(a) Each Limited Partner hereby represents and warrants to the General
Partner and to the Partnership that (i) the acquisition of its Partnership Interests and
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 Interest or Partnership
Units, (ii) the Limited Partner understands and agrees that its acquisition of Partnership
Interests and Partnership Units are being made in reliance on an exemption from
registration under the Securities Act, and (iii) the Limited Partner is an accredited
investor as that term may be defined pursuant to the rules and regulations of the
Securities and Exchange Commission from time to time.
(b) Subject to the provisions of Section 9.02, each Limited Partner agrees
that it will not sell, assign or otherwise transfer his Partnership Interest or 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 and the Partnership set forth in Section 9.01(a) above.
9.02 RESTRICTIONS ON TRANSFER OF PARTNERSHIP INTERESTS.
(a) Subject to the provisions of Sections 9.02(b), (c) and (d), no Limited
Partner may offer, sell, assign, hypothecate, pledge or otherwise transfer all or any
portion of his Partnership Interest or Partnership Units, or any of such Limited Partners
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. 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.
36
(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 9.05 below) of all of his
Partnership Units pursuant to this Article IX or pursuant to a redemption of all of his
Partnership Units pursuant to Section 8.04. Upon the permitted Transfer or redemption of
all of a Limited Partners Partnership Units, such Limited Partner shall cease to be a
Limited Partner.
(c) Subject to Sections 9.02(d) and (e) below, a Limited Partner may
Transfer, with the consent of the General Partner, all or a portion of his Partnership
Units to (i) a parent or parents 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, partnership or
limited liability company 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 Partnership Interest or
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 Partnership
Interest or 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 Interest or
Partnership Units, in whole or in part, may be made to any Person if (i) in the opinion of
legal counsel for the Partnership, the transfer could reasonably be expected to result in a
material risk of the Partnerships being treated as a publicly traded partnership taxable
as a corporation or an association taxable as a corporation (other than a qualified REIT
subsidiary within the meaning of Section 856(i) of the Code) or (ii) in the opinion of
legal counsel for the Partnership, it could reasonably be expected to adversely affect the
ability of the Company to continue to qualify as a REIT or subject the Company to any
additional taxes under Section 857 or Section 4981 of the Code.
(f) Any purported Transfer in contravention of any of the provisions of this
Article IX shall be void ab initio and ineffectual and shall not be binding upon, or
recognized by, the General Partner or the Partnership.
(g) Prior to and as a condition of the consummation of any Transfer under
this Article IX, 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.
9.03 ADMISSION OF SUBSTITUTE LIMITED PARTNER.
(a) Subject to the other provisions of this Article IX, an assignee of the
Partnership Interest of a Limited Partner (which shall be understood to include any
purchaser, transferee, donee or other recipient of any disposition of such Partnership
Interest) or Partnership Units shall be deemed admitted as a Limited Partner of the
Partnership only with the consent of the General Partner, which consent may be given or
37
withheld by the General Partner in its sole and absolute discretion, 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.
(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 9.01(a) hereof and the agreement set forth in
Section 9.01(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 assignees 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 8.02 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 shall have 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 Partners 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 9.03(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 IX to the
admission of such Person as a Limited Partner of the Partnership.
(d) The General Partners failure or refusal to permit a transferee of any
such interests to become a Substitute Limited Partner shall not give rise to any cause of
action against the Partnership or any partner.
38
9.04 RIGHTS OF ASSIGNEES OF PARTNERSHIP INTERESTS.
(a) Subject to the provisions of Sections 9.01 and 9.02 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 Interest
or Partnership Units until the Partnership has received notice thereof.
(b) Any Person who is the assignee of all or any portion of a Limited
Partners Partnership Interest or Partnership Units, but does not become a Substitute
Limited Partner and desires to make a further assignment of such Partnership Interest or
Partnership Units, shall be subject to all the provisions of this Article IX to the same
extent and in the same manner as any Limited Partner desiring to make an assignment of its
Partnership Interest or Partnership Units.
9.05 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 his Partnership Interest and to join with the
assignee in satisfying conditions precedent to the admission of the assignee as a Substitute
Limited Partner.
9.06 JOINT OWNERSHIP OF INTERESTS. A Partnership Interest 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 Interest shall be required to constitute the
action of the owners of such Partnership Interest; 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 Interest held in a joint tenancy with a right of survivorship,
the Partnership Interest 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 Interest 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 Interest to be divided
into two equal Partnership Interests, which shall thereafter be owned separately by each of the
former owners.
ARTICLE X
BOOKS AND RECORDS; ACCOUNTING; TAX MATTERS
10.01 BOOKS AND RECORDS. At all times during the continuance of the Partnership, the
Partners shall keep or cause to be kept at the Partnerships 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
39
copy of the Certificate of Limited Partnership and all certificates of amendment thereto, (c)
copies of the Partnerships federal, state and local income tax returns and reports, (d) copies of
this Agreement 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.
10.02 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 10.02(b).
10.03 FISCAL AND TAXABLE YEAR. The fiscal and taxable year of the Partnership shall
be the calendar year.
10.04 ANNUAL TAX INFORMATION AND REPORT. Within 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 Partners
individual tax returns as shall be reasonably required by law.
10.05 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
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 Partners 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.
40
(c) In the event of a transfer of all or any part of the Partnership
Interest 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 Properties. Notwithstanding
anything contained in Article V of this Agreement, any adjustments made pursuant to Section
754 shall affect only the successor in interest to the transferring Partner and in no event
shall be taken into account in establishing, maintaining or computing Capital Accounts for
the other Partners for any purpose under this Agreement. Each Partner will furnish the
Partnership with all information necessary to give effect to such election.
10.06 REPORTS TO LIMITED PARTNERS.
(a) If the Company is required to furnish an annual report to its
stockholders containing financial statements of the Company , the Company will, at the same
time and in the same manner, furnish such annual report to each Limited Partner (other than
a Partner whose only Partnership Interests are LTIP Units). The annual financial statements
shall be audited by accountants selected by the Company.
(b) Any Partner (other than a Partner whose only Partnership Interests are
LTIP Units) shall further have the right to a private audit of the books and records of the
Partnership, provided such audit is made for Partnership purposes, at the expense of the
Partner desiring it and is made during normal business hours.
ARTICLE XI
AMENDMENT OF AGREEMENT; MERGER
The General Partners 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
(other than the Company or any Subsidiary of the Company) holding more than 50% of the Percentage
Interests of the Limited Partners (other than those held by the Company or any Subsidiary of the
Company):
(a) any amendment affecting the operation of the Conversion Factor or the
Redemption Right (except as otherwise provided herein) 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 4.02 hereof;
(c) any amendment that would alter the Partnerships allocations of Profit
and Loss to the Limited Partners, other than with respect to the issuance of additional
Partnership Units pursuant to Section 4.02 hereof;
(d) any amendment that would impose on the Limited Partners any obligation
to make additional Capital Contributions to the Partnership; or
(e) any amendment to this Article XI.
41
The General Partner, without the consent of the Limited Partners, may (i) merge or consolidate the
Partnership with or into any other domestic or foreign partnership, limited partnership, limited
liability company or corporation in a transaction pursuant to Section 7.01(c) and (d) hereof, or
(ii) sell any, all or substantially all of the assets of the Partnership and may amend this
Agreement in connection with any such transaction.
ARTICLE XII
GENERAL PROVISIONS
12.01 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.
12.02 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.
12.03 ADDITIONAL DOCUMENTS. Each Partner agrees to perform all further acts and
execute, swear to, acknowledge and deliver all further documents that may be reasonable, necessary,
appropriate or desirable to carry out the provisions of this Agreement or the Act.
12.04 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.
12.05 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.
12.06 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.
12.07 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.
12.08 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.
12.09 GOVERNING LAW. This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware.
42
IN WITNESS WHEREOF, the parties hereto have hereunder affixed their signatures to this Amended and
Restated Agreement of Limited Partnership, all as of the date first above written.
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PARTNERSHIP: |
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MPT OPERATING PARTNERSHIP, L.P. |
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BY: |
MEDICAL PROPERTIES TRUST, LLC, |
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ITS GENERAL PARTNER |
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BY: |
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MEDICAL PROPERTIES TRUST, INC. |
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ITS: SOLE MEMBER |
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BY: |
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/s/ Edward K. Aldag, Jr. |
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Name: Edward K. Aldag, Jr.
Title: President & CEO |
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GENERAL PARTNER: |
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MEDICAL PROPERTIES TRUST, LLC |
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BY: |
MEDICAL PROPERTIES TRUST, INC. |
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ITS: SOLE MEMBER |
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BY: |
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/s/ Edward K. Aldag, Jr. |
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Name: Edward K. Aldag, Jr. |
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Title: President & CEO |
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LIMITED PARTNERS: |
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MEDICAL PROPERTIES TRUST, INC. |
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BY: |
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/s/ Edward K. Aldag, Jr. |
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Name: Edward K. Aldag, Jr. |
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Title: President & CEO |
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EXHIBIT A
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Agreed Value of |
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Number of |
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Cash |
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Capital |
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Partnership |
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Percentage |
Partner |
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Contribution |
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Contribution |
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Units |
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Interest |
GENERAL PARTNER |
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Medical Properties,
LLC A Delaware
limited company |
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$ |
16.30 |
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$ |
16.30 |
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16,304.35 |
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1 |
% |
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LIMITED PARTNERS |
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$ |
1,614.14 |
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$ |
1,614.14 |
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1,614,130.65 |
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99 |
% |
Medical Properties
Trust, Inc. |
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TOTALS: |
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$ |
1,630.44 |
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$ |
1,630.44 |
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1,630,435 |
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$ |
100 |
% |
1
EXHIBIT B
NOTICE OF EXERCISE OF REDEMPTION RIGHT
In accordance with Section 8.04 of the First Amended and Restated Agreement of Limited Partnership
(the Agreement) of MPT Operating Partnership, L.P., the undersigned hereby irrevocably (i)
presents for redemption _________ Partnership Units in MPT Operating Partnership, L.P. in accordance
with the terms of the Agreement and the Redemption Right referred to in Section 8.04 thereof, (ii)
surrenders such Partnership Units and all right, title and interest therein and (iii) directs that
the Cash Amount or REIT Shares Amount (as defined in the Agreement) as determined by the General
Partner and the Company deliverable upon exercise of the Redemption Right be delivered to the
address specified below, and if REIT Shares (as defined in the Agreement) are to be delivered, such
REIT Shares be registered or placed in the name(s) and at the address(es) specified below.
Dated:
,
Name of Limited Partner:
(Signature of Limited Partner)
(Mailing Address)
(City) (State) (Zip Code)
Signature Guaranteed by:
If REIT Shares are to be issued, issue to:
Please insert social security or identifying number:
Name:
Exhibit B-1
3
EXHIBIT C
For Redeeming Limited Partners that are entities:
CERTIFICATION OF NON-FOREIGN STATUS
Under section 1445(e) of the Internal Revenue Code of 1986, as amended (the Code), in the event
of a disposition by a non-U.S. person of a partnership interest in a partnership in which (i) 50%
or more of the value of the gross assets consists of United States real property interests
(USRPIs), as defined in section 897(c) of the Code, and (ii) 90% or more of the value of the
gross assets consists of USRPIs, cash, and cash equivalents, the transferee will be required to
withhold 10% of the amount realized by the non-U.S. person upon the disposition. For purposes of
section 1445 of the Code, the owner of an entity that is treated as disregarded as separate from
such owner under U.S. Treasury regulation section 301.7701-3 and not the disregarded entity will be
treated as the transferor of the partnership interest. To inform Medical Properties Trust, Inc.
(the Company) and MPT Operating Partnership, L.P. (the Partnership) that no withholding is
required with respect to the redemption by
(Partner) of its units of partnership
interest in the Partnership, the undersigned hereby certifies the following on behalf of Partner:
1. Partner is not a foreign corporation, foreign partnership, foreign trust, or foreign estate, as
those terms are defined in the Code and the Treasury regulations thereunder.
2. Partner is not a disregarded entity as defined in Treasury regulation section
1.1445-2(b)(2)(iii).
3. The U.S. employer identification number of Partner is .
4. The principal business address of Partner is:
and Partners place of incorporation is .
5. Partner agrees to inform the Company if it becomes a foreign person at any time during the
three-year period immediately following the date of this notice.
6. Partner understands that this certification may be disclosed to the Internal Revenue Service by
the Company and that any false statement contained herein could be punished by fine, imprisonment,
or both.
PARTNER
By:
Name:
Its:
4
Under penalties of perjury, I declare that I have examined this certification and, to the best of
my knowledge and belief, it is true, correct, and complete, and I further declare that I have
authority to sign this document on behalf of Partner.
Date: [NAME]
5
Title
Exhibit C-1
For Redeeming Limited Partners that are individuals:
CERTIFICATION OF NON-FOREIGN STATUS
Under section 1445(e) of the Internal Revenue Code of 1986, as amended (the Code), in the event
of a disposition by a non-U.S. person of a partnership interest in a partnership in which (i) 50%
or more of the value of the gross assets consists of United States real property interests
(USRPIs), as defined in section 897(c) of the Code, and (ii) 90% or more of the value of the
gross assets consists of USRPIs, cash, and cash equivalents, the transferee will be required to
withhold 10% of the amount realized by the non-U.S. person upon the disposition. To inform Medical
Properties Trust, Inc. (the Company) and MPT Operating Partnership, L.P. (the Partnership) that
no withholding is required with respect to my redemption of my units of partnership interest in the
Partnership, I, , hereby certify the following:
1. I am not a nonresident alien for purposes of U.S. income taxation.
2. My U.S. taxpayer identification number (social security number) is .
3. My home address is: .
4. I agree to inform the Company promptly if I become a nonresident alien at any time during the
three-year period immediately following the date of this notice.
5. I understand that this certification may be disclosed to the Internal Revenue Service by the
Company and that any false statement contained herein could be punished by fine, imprisonment, or
both.
Name:
Under penalties of perjury, I declare that I have examined this certification and, to the best of
my knowledge and belief, it is true, correct, and complete.
Exhibit C-2
6
Exhibit D
LTIP Units
The following are the terms of the LTIP Units:
1.1 |
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Designation. A class of Partnership Units in the Partnership designated as the LTIP
Units is hereby established. LTIP Units are intended to qualify as profits interests in
the Partnership. The number of LTIP Units that may be issued shall not be limited. |
1.2 |
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Vesting. 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 an award, vesting or other similar agreement (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
or by the terms of any plan pursuant to which the LTIP Units are issued, if applicable. LTIP
Units that have vested and are no longer subject to forfeiture under the terms of a Vesting
Agreement are referred to as Vested LTIP Units; all other LTIP Units are referred to
as Unvested LTIP Units. Subject to the terms of any Vesting Agreement, a holder of
LTIP Units shall be entitled to transfer his or her LTIP Units to the same extent, and subject
to the same restrictions as holders of Common Units are entitled to transfer their Common
Units pursuant to Article IX of the Agreement. |
1.3 |
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Forfeiture or Transfer of Unvested LTIP Units. Unless otherwise specified in the
relevant Vesting Agreement, upon the occurrence of any event specified in a Vesting Agreement
as resulting in either the forfeiture of any LTIP Units, or the repurchase by the Partnership
or the General Partner of LTIP Units at a specified purchase price, then, upon the occurrence
of the circumstances resulting in such forfeiture or repurchase by the Partnership or the
General Partner, the relevant LTIP Units shall immediately, and without any further action, be
treated as cancelled and no longer outstanding for any purpose, or as transferred to the
Partnership or General Partner, as applicable. 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 a record date prior to the
effective date of the forfeiture. In connection with any forfeiture or repurchase of LTIP
Units, the balance of the portion of the Capital Account of the holder that is attributable to
all of his or her LTIP Units shall be reduced by the amount, if any, by which it exceeds the
target balance contemplated by Section 5.01(j) of the Agreement, calculated with respect to
the holders remaining LTIP Units, if any. |
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Legend. 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. |
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1.5 Distributions.
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LTIP Distribution Amount. Commencing from and after the LTIP
Unit Distribution Participation Date established for any LTIP Units, such LTIP
Units shall be entitled to receive, if, when and as authorized by the General
Partner out of funds or other property legally available for the payment of
distributions, regular, special, extraordinary or other distributions (other than
distributions representing proceeds of a sale or other disposition of all or
substantially all of the assets of the Partnership) that may be made from time to
time, in an amount per unit equal to the amount of any such distributions that
would have been payable to such holders if the LTIP Units had been Common Units
(unless otherwise specified in the Vesting Agreement or other documentation
pursuant to which the LTIP Units are issued (e.g., in the case of a Special LTIP
Unit)). LTIP Units shall also be entitled to receive, if, when and as authorized
by the General Partner out of funds or other property legally available for the
payment of distributions, distributions representing proceeds of a sale or other
disposition of all or substantially all of the assets of the Partnership in an
amount per unit equal to the amount of any such distributions payable on the
Common Units, whether made prior to, on or after the LTIP Unit Distribution
Participation Date; provided that the amount of such distributions shall
not exceed the positive balances of the Capital Accounts of the holders of such
LTIP Units to the extent attributable to the ownership of such LTIP Units.
Distributions on the LTIP Units, if authorized, shall be payable on such dates and
in such manner as may be authorized by the General Partner (any such date, a
LTIP Unit Distribution Payment Date); provided that the LTIP Unit
Distribution Payment Date shall be the same as the corresponding date relating to
the corresponding distribution on the Common Units. The record date for
determining which holders of LTIP Units are entitled to receive a distribution
shall be the Partnership Record Date for that distribution. All distributions
paid with respect to LTIP Units prior to the date on which the determination is
made with respect to events resulting in the forfeiture of such LTIP Units or the
repurchase by the Partnership or the General Partner of such LTIP Units shall be
retained by the holder of such LTIP Units and not subject to forfeiture or
restitution in the event that Unvested LTIP Units fail to become Vested LTIP
Units. Following such date of determination, no further distributions will be
paid with respect to Unvested LTIP Units that have been forfeited or are
repurchased by the Partnership or the General Partner, other than any
distributions declared with a record date prior to the effective date of the
forfeiture or repurchase. |
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LTIP Unit Distribution Participation Date. The LTIP
Unit Distribution Participation Date for each LTIP Unit will be such date as
may be specified in the Vesting Agreement or other documentation pursuant to which
such LTIP Units are issued. |
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Allocations. Commencing with the portion of the taxable year of the Partnership
that begins on the LTIP Unit Distribution Participation Date established for any LTIP Units,
such LTIP Units shall be allocated Profits and Losses in amounts per LTIP Unit equal to the
amounts allocated per Common Unit (unless otherwise specified in the Vesting Agreement or
other documentation pursuant to which the LTIP Units are issued (e.g., in the case of a
Special LTIP Unit)). The allocations provided by the preceding sentence shall be subject to
Sections 5.01(a) and (b) and, in addition, to any special allocations required by Sections
5.01(c) and (d), each as provided in the Agreement. The General Partner is authorized in its
discretion to adjust the allocations made under this Section after the LTIP Unit Distribution
Participation Date, so that the ratio of (i) the total amount of Profits or Losses allocated
with respect to each LTIP Unit in the taxable year in which that LTIP Units LTIP Unit
Distribution Participation Date falls (excluding special allocations under Section 5.01(j) and
(k) of the Agreement), to (ii) the total amount distributed to that LTIP Unit with respect to
such period, is more nearly equal to the ratio of (i) the Profits and Losses allocated with
respect to the General Partners Common Units in such taxable year to (ii) the amounts
distributed to the General Partner with respect to such Common Units and such taxable year.
Prior to the LTIP Unit Distribution Date, LTIP Units shall be allocated Profits and Losses in
amounts necessary to reflect the LTIP Unit Return Amount. |
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Adjustments. The Partnership shall maintain at all times a one-to-one correspondence
between LTIP Units and Common Units for conversion, distribution and other purposes, including
without limitation complying with the following procedures; provided that the foregoing is not
intended to alter the LTIP Unit Capital Account Limitation (as defined below), the special
allocations pursuant to Sections 5.01(i), (j) and (k) of the Agreement, differences between
distributions (other than, with respect to LTIP Units having an LTIP Unit Distribution
Participation Date determined under Section 1.5(b) above, distributions representing proceeds
of a sale or other disposition of all or substantially all of the assets of the Partnership)
to be made with respect to the LTIP Units and Common Units prior to the LTIP Unit Distribution
Participation Date for such LTIP Units, differences between distributions (other than, with
respect to LTIP Units having an LTIP Unit Distribution Participation Date determined under
Section 1.5(b) above, distributions representing proceeds of a sale or other disposition of
all or substantially all of the assets of the Partnership) to be made with respect to the LTIP
Units and Common Units pursuant to Section 5.06 of the Agreement or Section 1.5(a) hereof in
the event that the Capital Accounts attributable to the LTIP Units are less than those
attributable to the Common Units due to insufficient special allocations pursuant to Section
5.01(j) of the Agreement or related provisions. If an LTIP Unit Adjustment Event (as defined
below) occurs, then the General Partner shall make a corresponding adjustment to the LTIP
Units to maintain such one-for-one correspondence between Common Units and LTIP Units. The
following shall be LTIP Unit Adjustment Events: (A) the Partnership makes a
distribution on all outstanding Common Units in Partnership Units, (B) the Partnership
subdivides the |
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outstanding Common Units into a greater number of units or combines the outstanding Common
Units into a smaller number of units, or (C) the Partnership issues any Partnership Units in
exchange for its outstanding Common Units by way of a reclassification or recapitalization
of its Common Units. If more than one LTIP Unit 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 LTIP Unit Adjustment Event as if all LTIP Unit Adjustment Events occurred
simultaneously. For the avoidance of doubt, the following shall not be LTIP Unit Adjustment
Events: (x) the issuance of Partnership Units in a financing, reorganization, acquisition or
other similar business transaction, (y) the issuance of Partnership Units pursuant to any
employee benefit or compensation plan or distribution reinvestment plan, or (z) the issuance
of any Partnership Units to the General Partner in respect of a Capital Contribution to the
Partnership of proceeds from the sale of securities by the General Partner. If the
Partnership takes an action affecting the Common Units other than actions specifically
described above as LTIP Unit 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 make such adjustment to the LTIP
Units, to the extent permitted by law and by the terms of any plan pursuant to which the
LTIP Units have been issued, 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 officers 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 holder of LTIP
Units setting forth the adjustment to his or her LTIP Units and the effective date of such
adjustment. |
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Ranking. The LTIP Units shall rank on parity with the Common Units in all respects. |
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1.9 |
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Right to Convert LTIP Units into Common Units. |
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Conversion Right. A holder of LTIP Units shall have the right (the
LTIP Unit Conversion Right), at his or her option, at any time to convert
all or a portion of his or her Vested LTIP Units into Common Units. Holders of LTIP
Units shall not have the right to convert Unvested LTIP Units into Common Units until
they become Vested LTIP Units; provided, however, that when a holder
of LTIP Units is notified of the expected occurrence of an event that will cause his
or her Unvested LTIP Units to become Vested LTIP Units, such Person may give the
Partnership an LTIP Unit Conversion Notice conditioned upon and effective as of the
time of vesting, and such LTIP Unit Conversion Notice, unless subsequently revoked by
the holder of the LTIP Units, shall be accepted by the Partnership subject to such |
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condition. The General Partner shall have the right at any time to cause a
conversion of Vested LTIP Units into Common Units. In all cases, the
conversion of any LTIP Units into Common Units shall be subject to the
conditions and procedures set forth in this Section 1.9. |
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(b) |
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Number of Units Convertible. A holder of Vested LTIP Units may
convert such Vested LTIP Units into an equal number of fully paid and non-assessable
Common Units, giving effect to all adjustments (if any) made pursuant to Section 1.7.
Notwithstanding the foregoing, in no event may a holder of Vested LTIP Units convert a
number 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 Common Unit Economic Balance, in each case as determined as of the effective date
of conversion (the LTIP Unit Capital Account Limitation). |
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Notice. In order to exercise his or her Conversion Right, a holder
of LTIP Units shall deliver a notice (a LTIP Unit Conversion Notice) in the
form attached as Exhibit E to the Agreement not less than 10 nor more than 60
days prior to a date (the LTIP Unit Conversion Date) specified in such LTIP
Unit Conversion Notice. Each holder of LTIP Units covenants and agrees with the
Partnership that all Vested LTIP Units to be converted pursuant to this Section 1.9
shall be free and clear of all liens. Notwithstanding anything herein to the contrary
(but subject to Article VIII of the Agreement), a holder of LTIP Units may deliver a
Notice of Redemption Notice pursuant to Section 8.04(b) of the Agreement relating to
those Common Units that will be issued to such holder upon conversion of such LTIP
Units into Common Units in advance of the LTIP Unit Conversion Date; provided,
however, that the redemption of such Common Units by the Partnership shall in no event
take place until the LTIP Unit Conversion Date. For clarity, it is noted that the
objective of this paragraph is to put a holder of LTIP Units in a position where, if
he or she so wishes, the Common Units into which his or her 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
Partnerships redemption obligation with respect to such Common Units under Article
VIII of the Agreement by delivering to such holder REIT Shares rather than cash, then
such holder can have such REIT Shares issued to him or her simultaneously with the
conversion of his or her Vested LTIP Units into Common Units. The General Partner
shall cooperate with a holder of LTIP Units to coordinate the timing of the different
events described in the foregoing sentence. |
1.10 |
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Forced Conversion. The Partnership, at any time at the election of the General
Partner, may cause any number of Vested LTIP Units held by a holder of LTIP |
11
Units to be converted (a LTIP Unit Forced Conversion) into an equal number of
Common Units, giving effect to all adjustments (if any) made pursuant to Section 1.7;
provided, that the Partnership may not cause an LTIP Unit Forced Conversion of any
LTIP Units that would not at the time be eligible for conversion at the option of the holder
of such LTIP Units pursuant to Section 1.9. above (including taking into account the LTIP
Unit Capital Account Limitation). In order to exercise its right to cause an LTIP Unit
Forced Conversion, the Partnership shall deliver a notice (a LTIP Unit Forced
Conversion Notice) in the form attached as Exhibit F to the Agreement to the
applicable holder not less than 10 nor more than 60 days prior to the LTIP Unit Conversion
Date specified in such LTIP Unit Forced Conversion Notice. A Forced LTIP Unit Conversion
Notice shall be provided in the manner provided in Section 12.01 of the Agreement.
1.11 |
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Conversion Procedures. Subject to any redemption of Common Units to be received upon
the conversion of Vested LTIP Units, a conversion of Vested LTIP Units for which the holder
thereof has given an LTIP Unit Conversion Notice or the Partnership has given a Forced LTIP
Unit Conversion Notice shall occur automatically after the close of business on the applicable
LTIP Unit Conversion Date without any action on the part of such holder of LTIP Units, as of
which time such holder of LTIP Units 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 number of
Common Units issuable upon such conversion. After the conversion of LTIP Units as aforesaid,
the Partnership shall deliver to such holder of LTIP Units, upon his or her written request, a
certificate of the General Partner certifying the number of Common Units and remaining LTIP
Units, if any, held by such Person immediately after such conversion. |
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1.12 |
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Treatment of Capital Account. For purposes of making future allocations under
Section 5.01(j) of the Agreement and applying the LTIP Unit Capital Account Limitation, the
portion of the Economic Capital Account Balance of the applicable holder of LTIP Units that is
treated as attributable to his or her LTIP Units shall be reduced, as of the date of
conversion, by the product of the number of LTIP Units converted and the Common Unit Economic
Balance. |
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1.13 |
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Mandatory Conversion in Connection with a Transaction. |
(a) If the Partnership or the General Partner shall be a party to any transaction (including
without limitation a merger, consolidation, unit exchange, self tender offer for all or
substantially all Common Units or other business combination or reorganization, or sale of
all or substantially all of the Partnerships assets, but excluding any transaction which
constitutes an LTIP Unit Adjustment Event), in each case as a result of which Common Units
shall be exchanged for or converted into the right, or the holders of Common Units 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
LTIP Unit Forced Conversion with respect to the maximum number of LTIP Units then
12
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 LTIP Unit Conversion Date shall be the
effective date of the Transaction and the conversion shall occur immediately prior to the
effectiveness of the Transaction).
(b) In anticipation of such LTIP Unit Forced Conversion and the consummation of the
Transaction, the Partnership shall use commercially reasonable efforts to cause each holder
of LTIP Units to be afforded the right to receive in connection with such Transaction in
consideration for the Common Units into which his or her LTIP Units will be converted the
same kind and amount of cash, securities and other property (or any combination thereof)
receivable upon the consummation of such Transaction by a holder of the same number of Common
Units, assuming such holder of Common Units is not a Person with which the Partnership
consolidated or into which the Partnership merged or which merged into the Partnership or to
which such sale or transfer was made, as the case may be (a Constituent Person), or
an Affiliate of a Constituent Person. In the event that holders of Common Units have the
opportunity to elect the form or type of consideration to be received upon consummation of
the Transaction, prior to such Transaction the General Partner shall give prompt written
notice to each holder of LTIP Units of such 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 each LTIP Unit held by
such holder into Common Units in connection with such Transaction. If a holder of LTIP Units
fails to make such an election, such holder (and any of its transferees) shall receive upon
conversion of each LTIP Unit held by him or her (or by any of his or her transferees) the
same kind and amount of consideration that a holder of a Common Unit would receive if such
holder of Common Units failed to make such an election.
(c) Subject to the rights of the Partnership and the General Partner under any Vesting
Agreement and the terms of any plan under which LTIP Units are issued, the Partnership shall
use commercially reasonable efforts to cause the terms of any Transaction to be consistent
with the provisions of this Section 1.13 and to enter into an agreement with the successor or
purchasing entity, as the case may be, for the benefit of any holders of LTIP Units whose
LTIP Units will not be converted into Common Units in connection with the Transaction that
will (i) contain provisions enabling the holders of LTIP Units that remain outstanding after
such Transaction to convert their LTIP Units into securities as comparable as reasonably
possible under the circumstances to the Common 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 the holders of LTIP Units.
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Redemption at the Option of the Partnership. LTIP Units will not be redeemable at
the option of the Partnership; provided, however, that the foregoing shall not
prohibit the Partnership from (i) repurchasing LTIP Units from the holder thereof if and to
the extent such holder agrees to sell such LTIP Units or (ii) from exercising its LTIP Unit
Forced Conversion right. |
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1.15 |
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Voting Rights. Voting with Common Units. Holders of LTIP Units shall have
the right to vote on all matters submitted to a vote of the holders of Common Units; holders
of LTIP Units and Common Units shall vote together as a single class, together with any other
class or series of Partnership Units upon which like voting rights have been conferred. In
any matter in which the LTIP Units are entitled to vote, including an action by written
consent, each LTIP Unit shall be entitled to vote a Percentage Interest equal on a per unit
basis to the Percentage Interest represented by each Common Unit. |
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1.16 |
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Special Approval Rights. Except as provided in Section 1.15 above, holders of LTIP
Units shall only (a) have those voting rights required from time to time by non-waivable
provisions of applicable law, if any, and (b) have the additional voting rights that are
expressly set forth in this Section 1.16. The General Partner and/or the Partnership shall
not, without the affirmative vote of holders of more than 50% of the then outstanding LTIP
Units affected thereby, given in person or by proxy, either in writing or at a meeting (voting
separately as a class), take any action that would materially and adversely alter, change,
modify or amend, whether by merger, consolidation or otherwise, the rights, powers or
privileges of such LTIP Units, subject to the following exceptions: (i) no separate consent of
the holders of LTIP Units will be required if and to the extent that any such alteration,
change, modification or amendment would equally, ratably and proportionately alter, change,
modify or amend the rights, powers or privileges of the Common Units (in which event the
holders of LTIP Units shall only have such voting rights, if any, as expressly provided for in
the Agreement, in accordance with Section 1.15 above); (ii) with respect to any merger,
consolidation or other business combination or reorganization, so long as either (w) the LTIP
Units are converted into Common Units immediately prior to the effectiveness of the
transaction, (x) the holders of LTIP Units either will receive, or will have the right to
elect to receive, for each LTIP Unit an amount of cash, securities, or other property equal to
the greatest amount of cash, securities or other property paid to a holder of one Common Unit
in consideration of one Common Unit pursuant to the terms of such
transaction, (y)
the LTIP Units remain outstanding with the terms thereof materially unchanged, or (z) if the
Partnership is not the surviving entity in such transaction, the LTIP Units are exchanged for
a security of the surviving entity with terms that are materially the same with respect to
rights to allocations, distributions, redemption, conversion and voting as the LTIP Units and
without any income, gain or loss expected to be recognized by the holder upon the exchange for
federal income tax purposes (and with the terms of the Common Units or such other securities
into which the LTIP Units (or the substitute security therefor) are convertible materially the
same with respect to rights to allocations, distributions, redemption, conversion and voting),
such merger, consolidation or |
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other business combination or reorganization shall not be deemed to materially and adversely
alter, change, modify or amend the rights, powers or privileges of the LTIP Units, provided
further, that if some, but not all, of the LTIP Units are converted into Common Units
immediately prior to the effectiveness of the transaction (and neither clause (y) or (z)
above is applicable), then the consent required pursuant to this Section will be the consent
of the holders of more than 50% of the LTIP Units to be outstanding following such
conversion;(iii) any creation or issuance of Partnership Units (whether ranking junior to,
on a parity with or senior to the LTIP Units with respect to payment of distributions, right
of redemptions and the distribution of assets upon liquidation, dissolution or winding up),
which either (x) does not require the consent of the holders of Common Units or (y) does
require such consent and is authorized by a vote of the holders of Common Units and LTIP
Units voting together as a single class pursuant to Section 1.15 above, together with any
other class or series of units of limited partnership interest in the Partnership upon which
like voting rights have been conferred, shall not be deemed to materially and adversely
alter, change, modify or amend the rights, powers or privileges of the LTIP Units; and (iv)
any waiver by the Partnership of restrictions or limitations applicable to any outstanding
LTIP Units with respect to any holder or holders thereof shall not be deemed to materially
and adversely alter, change, modify or amend the rights, powers or privileges of the LTIP
Units with respect to other holders. |
The foregoing voting provisions will not apply if, as of or prior to the time when the action with
respect to which such vote would otherwise be required will be taken or be effective, all
outstanding LTIP Units shall have been converted and/or redeemed, or provision is made for such
redemption and/or conversion to occur as of or prior to such time.
[End of text]
15
EXHIBIT E
NOTICE OF ELECTION BY PARTNER TO CONVERT
LTIP UNITS INTO COMMON UNITS
The undersigned holder of LTIP Units hereby irrevocably elects to convert the number of Vested
LTIP Units in MPT Operating Partnership, L.P. (the Partnership) set forth below into
Common Units in accordance with the terms of the Second Amended and Restated Agreement of Limited
Partnership of the Partnership, as amended. The undersigned hereby represents, warrants, and
certifies that the undersigned: (a) has title to such LTIP Units, free and clear of the rights or
interests of any other person or entity other than the Partnership; (b) has the full right, power,
and authority to cause the conversion of such LTIP Units as provided herein; and (c) has obtained
the consent or approval of all persons or entities, if any, having the right to consent or approve
such conversion.
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Name of Holder: |
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(Please Print: Exact Name as Registered with Partnership) |
Number of LTIP Units to be Converted:
Conversion Date:
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(Signature of Holder: Sign Exact Name as Registered with Partnership) |
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(Street Address) |
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Signature Guaranteed by: |
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16
EXHIBIT F
NOTICE OF ELECTION BY PARTNERSHIP TO FORCE CONVERSION
OF LTIP UNITS INTO COMMON UNITS
MPT Operating Partnership, L.P. (the Partnership) hereby irrevocably elects to cause
the number of LTIP Units held by the holder of LTIP Units set forth below to be converted into
Common Units in accordance with the terms of the Second Amended and Restated Limited Partnership
Agreement of the Partnership, as amended.
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Name of Holder: |
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(Please Print: Exact Name as Registered with Partnership) |
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Number of LTIP Units to be Converted: |
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Conversion Date: |
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17
EX-10.2 FORM OF 2007 MULTI-YEAR INCENTIVE AWARD
Exhibit 10.2
MEDICAL PROPERTIES TRUST, INC.
2007 MULTI-YEAR INCENTIVE PLAN
AWARD AGREEMENT
2007 MULTI-YEAR INCENTIVE PLAN AWARD AGREEMENT made as of date set forth on Schedule A
hereto between Medical Properties Trust, Inc., a Maryland corporation (the Company), its
subsidiary MPT Operating Partnership, L.P., a Delaware limited partnership and the entity through
which the Company conducts substantially all of its operations (the Partnership), and the
party listed on Schedule A (the Grantee).
RECITALS
1. The Grantee is a key employee of the Company or one of its Subsidiaries or affiliates and
provides services to the Partnership.
2. The Company has adopted the 2007 Multi-Year Incentive Plan (the MIP) pursuant to
the Second Amended and Restated Medical Properties Trust, Inc. 2004 Equity Incentive Plan (the
2004 Plan) to provide executive officers of the Company or its Subsidiaries and
affiliates, including the Grantee, in connection with their employment with the long-term incentive
compensation described in this Award Agreement (this Agreement or Award
Agreement), and thereby provide additional incentive for them to promote the progress and
success of the business of the Company and its Subsidiaries and affiliates, including the
Partnership, while increasing the total return to the Companys
shareholders. The MIP
consists of three separate components, all covered by this Agreement, designed collectively to
reward the Grantee for his contribution to the Companys past superior performance, in terms of
both total return to shareholders and funds from operations, and to incentivize the Grantee to
contribute to superior performance for the benefit of the Companys shareholders over the next
several years as follows: (i) a time-based restricted equity award (the TBRE Award); (ii)
a core performance restricted equity award (the CPRE Award); and (iii) a superior
performance restricted equity award (the SPRE Award).
3. The MIP was adopted by the Compensation Committee (the Committee) of the Board of
Directors of the Company (the Board) pursuant to authority delegated to it by the Board
as set forth in the Committees charter, including authority to make grants of equity interests in
the Partnership which may, under certain circumstances, become exchangeable for shares of the
Companys Common Stock reserved for issuance under the 2004 Plan, or any successor equity plan (as
any such plan may be amended, modified or supplemented from time to time, collectively the
Equity Plan)). This Agreement evidences an award to the Grantee under the MIP (this
Award), which is subject to the terms and conditions set forth herein.
4. The Grantee was selected by the Committee to receive this Award as one of a select group of
highly compensated or management employees who, through the effective execution of their assigned
duties and responsibilities, are in a position to have a direct and measurable impact on the
Companys long-term financial results. Effective as of the grant date specified in Schedule
A hereto, but conditional upon the execution of this Agreement, the
1
Committee awarded to the Grantee the number of LTIP Units (as defined herein) set forth in
Schedule A .
NOW, THEREFORE, the Company, the Partnership and the Grantee agree as follows:
1. Administration. The MIP and all awards thereunder, including this Award, shall be
administered by the Committee, which in the administration of the MIP shall have all the powers and
authority it has in the administration of the Stock Plan, as set forth in the Equity Plan. The
Committee may from time to time adopt any rules or procedures it deems necessary or desirable for
the proper and efficient administration of the MIP, consistent with the terms hereof and of the
Equity Plan.
2. Definitions. Capitalized terms used herein without definitions shall have the
meanings given to those terms in the Equity Plan. In addition, as used herein:
Annual Base Price means with regard to each Annual CPRE Performance Period, the Fair
Market Value of one share of Common Stock as of the applicable Annual CPRE Vesting Date (or, if
such day is not a trading day, the most recent trading day immediately preceding such day).
Annual CPRE Performance Period means, with respect to the measurement of Total
Return and whether Award LTIP Units granted as part of the CPRE Award shall vest pursuant to
Section 4(b) hereof as of any particular Annual CPRE Vesting Date, the performance period
that begins January 1 of that Vesting Year and ends on December 31 of that Vesting Year;
provided, however, that the Annual CPRE Vesting Period ending on December 31, 2007
shall begin on the Effective Date and the Total Return hurdle for purposes of Section
4(b)(ii) shall be pro rated to 7.5% from 9%.
Annual CPRE Vesting Date means each of December 31, 2007, 2008, 2009, 2010, 2011,
2012 and 2013.
Annual SPRE Vesting Date means each of December 31, 2011, 2012 and 2013.
Annual TBRE Vesting Date means each of December 31, 2007, 2008, 2009, 2010, 2011,
2012 and 2013.
Average Stock Price means, as of any date, the average of the Fair Market Value of a
share of Common Stock over the thirty (30) consecutive trading days immediately preceding such
date.
Award LTIP Units has the meaning set forth in Section 3.
Cause for termination of the Grantees employment shall have the meaning set forth
in the Grantees Service Agreement.
Change of Control for purposes of this Award Agreement will be deemed to have taken
place upon the occurrence of any of the following events: (i) any person, entity or affiliated
2
group, excluding the Company or any employee benefit plan of the Company, acquiring more than 50%
of the then outstanding voting shares of the Company, (ii) the consummation of any merger or
consolidation of the Company into another company, such that the holders of the voting shares of
the Company immediately prior to such merger or consolidation own less than 50% of the voting power
of the securities of the surviving company or the parent of such surviving company, (iii) adoption
of a plan for complete liquidation of the Company or the sale or disposition of all or
substantially all of the Companys or the Partnerships assets, such that after the transaction,
the holders of the voting shares of the Company immediately prior to the transaction own less than
50% of the voting securities of the acquiror or the parent of the acquiror or (iv) during any
period of two (2) consecutive years, individuals who at the beginning of such period constituted
the Board (including for this purpose any new director whose election or nomination for election by
the Companys stockholders was approved by a vote of at least a majority of the directors then
still in office who were directors at the beginning of such period) cease for any reason to
constitute at least a majority of the Board.
Closing Price of a security other than the Common Stock means the closing price per
share of such security on the primary exchange or other quotation system on which the security is
traded as determined by the Committee consistently with the definition of Fair Market Value.
Code means the Internal Revenue Code of 1986, as amended.
Common Stock means shares of common stock, par value $0.001 per share, of the
Company either currently existing or authorized hereafter.
Continuous Service means the continuous service to the Company or any Subsidiary or
affiliate, without interruption or termination, in any capacity of employee, or, with the written
consent of the Committee, consultant. Continuous Service shall not be considered interrupted in
the case of (A) any approved leave of absence, (B) transfers among the Company and any Subsidiary
or affiliate, or any successor, in any capacity of employee, or with the written consent of the
Committee, consultant, or (C) any change in status as long as the individual remains in the service
of the Company and any Subsidiary or affiliate in any capacity of employee or (if the Company
specifically agrees in writing that the Continuous Service is not uninterrupted) a member of the
Board or a consultant. An approved leave of absence shall include sick leave, military leave, or
any other authorized personal leave.
Cumulative SPRE Performance Period means, with respect to the measurement of Total
Return and whether Award LTIP Units granted as part of the SPRE Award shall vest pursuant to
Section 4(c)(iv) hereof as of December 31, 2010, the performance period that begins on the
Effective Date and ends on the Superior Performance Measurement Date.
Distribution Value means, as of a particular date of determination, the aggregate
amount of distributions paid on one Unit that was outstanding as of the Effective Date between the
Effective Date and such date of determination, adjusted to take into account any distributions in
the form of additional Units or other Partnership securities as provided in Section 9
hereof.
Effective Date means March 1, 2007.
3
Exchange Act means the Securities Exchange Act of 1934, as amended.
Fair Market Value means, as of any given date, the fair market value of a share of
Common Stock as determined by the Committee using any reasonable method and in good faith (such
determination will be made in a manner that satisfies Section 409A of the Code and in good-faith as
required by Section 422(c)(1) of the Code); provided that (A) if the Common Stock is
admitted to trading on a national securities exchange, the fair market value of a share of Common
Stock on any date shall be the closing sale price reported for such share on the exchange on such
date on which a sale was reported; (B) if the Common Stock is admitted to quotation on the National
Association of Securities Dealers Automated Quotation System (NASDAQ) or a successor quotation
system and has been designated as a National Market System (NMS) security, fair market value of a
share Common Stock on any date shall be the closing sale price reported for such share on the
system on such date on which a sale was reported; and (C) if the Common Stock is admitted to
quotation on the NASDAQ but has not been designated as an NMS security, fair market value of a
share of Common Stock on any such date shall be the average of the highest bid and lowest asked
prices for such share of Common Stock on the system on such date on which both the bid and asked
prices were reported.
Good Reason for termination of the Grantees shall have the meaning set forth in the
Grantees Service Agreement.
LTIP Units means units of limited partnership interest of the Partnership designated
as LTIP Units in the Partnership Agreement awarded under the MIP, having the rights, voting
powers, restrictions, limitations as to distributions, qualifications and terms and conditions of
redemption set forth in the Partnership Agreement.
MS REIT Index means the Morgan Stanley REIT Index as published from time to time,
provided that if the MS REIT Index ceases to exist or be published during the term of this
Agreement and the Committee otherwise reasonably determines that it is no longer suitable for the
purposes of this Agreement, then the Committee in its reasonable discretion shall select an a
comparable index for purposes of making the Total Return comparison required by Section
4(c) hereof meaningful and consistent across the relevant measurement periods.
Partnership Agreement means the Second Amended and Restated Agreement of Limited
Partnership of the Partnership, dated as of July ___, 2007, among Medical Properties Trust, LLC, a
Delaware limited liability company and currently the sole general partner of the Partnership, the
Company, as limited partner, and the other limited partners who are parties thereto, as amended
from time to time.
50th Percentile is defined in accordance with standard statistical
methodology, such that for purposes of Section 4(c), if 50% of the REITs included in the MS
REIT Index had a Total Return for the applicable measurement period equal to or worse than the
Companys Total Return for the same period, then the Company would be at the 50 th
percentile. Notwithstanding the foregoing, the Committee may, upon consideration of the
statistical distribution of the REITs included in the MS REIT Index within the full range of Total
Return for the applicable measurement period, exercise its reasonable discretion to allow for
vesting of LTIP Units granted as part of the SPRE Award under Section 4(c) on a basis other
than a strict mathematical
4
calculation of the 50th Percentile. By way of illustration, if for the period the
Total Return of a number of REITs included in the MS REIT Index is clustered within a narrow range
such that the effect of the precise calculation of percentiles is that vesting would not occur, the
Committee could in its discretion conclude that vesting should nonetheless occur to the extent
appropriate in light of all the circumstances, including the Companys Total Return performance
relative to the REITs included in the MS REIT Index taken as a whole.
Permanent Disability shall have the meaning set forth in the Grantees Service
Agreement.
Person means an individual, corporation, partnership, limited liability company,
joint venture, association, trust, unincorporated organization, other entity or group (as defined
in the Exchange Act).
Qualified Termination means a termination of the Grantees employment (A) by the
Company without Cause, (B) by the Grantee with Good Reason, or (C) as a result of the Grantees
death or Permanent Disability.
Service Agreement means, as of a particular date, any employment, consulting or
similar service agreement then in effect between the Grantee, on the one hand, and the Company or
one of its affiliates, on the other hand, as amended or supplemented through such date.
Total Return means, with respect to a REIT included in the MS REIT Index or the
Company, as applicable, the total percentage return per share achieved by the common shares of such
REIT or the Companys Common Stock, as applicable, assuming contemporaneous reinvestment in such
common shares or Common Stock of all dividends and other distributions, in each case measured
following the end of each Vesting Year for the applicable Annual CPRE Performance Period or the
Cumulative SPRE Performance Period, as the case may be. The Total Return performance of the
Company relative to the Total Return performance of the REITs included in the MS REIT Index will be
determined using the Fair Market Value of the Common Stock and the Closing Price of the common
shares of such REITs for the last trading day of the applicable period from the applicable Annual
Base Price (or for the first CPRE Annual Performance Period or the Cumulative SPRE Performance
Period from the Effective Date) and from the Closing Price for the common shares of each such REIT
on the last trading day of the calendar year immediately preceding the applicable Annual CPRE
Performance Period (or for the first CPRE Annual Performance Period or the Cumulative SPRE
Performance Period, from the Effective Date).
Units means Partnership Units (as defined in the Partnership Agreement) that are
outstanding or are issuable upon the conversion, exercise, exchange or redemption of any securities
of any kind convertible, exercisable, exchangeable or redeemable for Partnership Units.
Vesting Year means each of (i) the period beginning on the Effective date and ending
on December 31, 2007 and (ii) each calendar year in the six-year period beginning January 1, 2008
and ending December 31, 2013.
5
3. Award of LTIP Units. On the terms and conditions set forth in this Agreement, as
well as the terms and conditions of the Equity Plan, the Grantee is hereby granted this Award
consisting of the number of LTIP Units set forth on Schedule A hereto, which is
incorporated herein by reference (the Award LTIP Units), divided among the TBRE Award,
the CPRE Award and the SPRE Award as provided in Schedule A. The Award LTIP Units have
been issued to the Grantee and constitute and shall be treated as the property of the Grantee in
accordance with the terms of this Agreement and the Partnership Agreement. Award LTIP Units will
be: (A) subject to forfeiture to the extent provided in Section 4; and (B) subject to
vesting as provided in Section 4 and Section 5 hereof.
4. Vesting of Award LTIP Units.
(a) TBRE Award
(i) Except as otherwise provided in Section 5 hereof, the Award LTIP
Units granted as part of the TBRE Award shall become vested in the following
amounts, provided that the Continuous Service of the Grantee continues
through and on the applicable Annual TBRE Vesting Date or the accelerated vesting
date provided in Section 5 hereof, as applicable.
|
|
|
|
|
|
|
|
|
Number of Award LTIP Units |
|
|
|
|
in TBRE Award Becoming |
|
Cumulative |
Vesting Date |
|
Vested |
|
Percentage Vested |
December 31, 2007
|
|
(14.286%)
|
|
|
14.286 |
% |
|
|
|
|
|
|
|
December 31, 2008
|
|
(14.286%)
|
|
|
28.572 |
% |
|
|
|
|
|
|
|
December 31, 2009
|
|
(14.286%)
|
|
|
42.858 |
% |
|
|
|
|
|
|
|
December 31, 2010
|
|
(14.286%)
|
|
|
57.144 |
% |
|
|
|
|
|
|
|
December 31, 2011
|
|
(14.286%)
|
|
|
71.430 |
% |
|
|
|
|
|
|
|
December 31, 2012
|
|
(14.285%)
|
|
|
85.715 |
% |
|
|
|
|
|
|
|
December 31, 2013
|
|
(14.285%)
|
|
|
100.000 |
% |
(ii) There shall be no proportionate or partial vesting of Award LTIP Units
granted as part of the TBRE Award in or during the months, days or periods prior to
each Annual TBRE Vesting
Date and, subject to Section 5 hereof, vesting of
Award LTIP Units granted as part of the TBRE Award shall occur on the applicable
Annual TBRE Vesting Date. Any Award LTIP Units granted as part of the TBRE Award
that do not become vested pursuant to this Section 4(a) or Section 5
shall, without payment of any consideration by the Partnership,
6
automatically and without notice terminate, be forfeited and be and become null
and void, and neither the Grantee nor any of his successors, heirs, assigns, or
personal representatives will thereafter have any further rights or interests in
such unvested Award LTIP Units.
(b) CPRE Award
(i) The Grantees Award LTIP Units granted as part of the CPRE Award shall be
eligible for vesting over a seven-year period, except as otherwise provided in
Section 5 hereof, based on the Companys performance in terms of Total
Return for (or on a cumulative basis through, as applicable) each Annual CPRE
Performance Period, with vesting occurring at the times, in the amounts and upon the
conditions set forth in this Section 4(b), provided that the
Continuous Service of the Grantee continues through and on the relevant Annual CPRE
Vesting Date or the accelerated vesting date provided in Section 5 hereof,
as applicable.
(ii) As soon as practicable following the end of each Vesting Year, the
Committee will determine (x) the Total Return of the Company for the applicable
Annual CPRE Performance Period and (y) for Vesting Years after the first Vesting
Year, the Total Return of the Company from the Effective Date through the applicable
Annual CPRE Vesting Date on a cumulative basis, and then perform the following
calculations with respect to the Award LTIP Units granted as part of the CPRE Award:
(A) if both (I) the Companys Total Return for the applicable Annual
CPRE Performance Period is below 9% (7.5% for the first Annual CPRE
Performance Period) and (II) the Companys Total Return from the Effective
Date through the applicable Annual CPRE Vesting Date on a cumulative basis
are below a simple 9% per year (7.5% for the first Annual CPRE Performance
Period), then none of the Grantees Award LTIP Units granted as part of the
CPRE Award will become vested as of the applicable Annual CPRE Vesting Date;
(B) if for the applicable Annual CPRE Performance Period the Companys
Total Return is 9% (7.5% for the first Annual CPRE Performance Period) or
higher, then 14.286% of the Grantees Award LTIP Units granted as part of
the CPRE Award will become vested as of the applicable Annual CPRE Vesting
Date;
(C) if the Companys Total Return from the Effective Date through the
applicable Annual CPRE Vesting Date on a cumulative basis is equal to or
greater than a simple 9% per year (7.5% for the first Annual CPRE
Performance Period), then the sum of (I) 14.286% of the Grantees Award LTIP
Units granted as part of the CPRE Award (but without duplication of the
vesting percentage set forth in Section 4(b)(ii)(B)) and (II) any
portion of the Grantees Award LTIP Units granted as part of the CPRE Award
7
that failed to vest on prior Annual CPRE Vesting Dates will become vested as
of the applicable Annual CPRE Vesting Date;
(iii) For the avoidance of doubt, the intent of the foregoing clauses (A), (B)
and (C) is to give the Grantee the benefit of a full carry-back and carry-forward
feature if the minimum 9% per year (7.5% for the first Annual CPRE Performance
Period) simple Total Return performance criterion is not achieved in any one Annual
CPRE Performance Period, such that LTIP Units granted as part of the CPRE Award that
failed to vest based on performance on an Annual CPRE Vesting Date may still become
vested on a subsequent Annual CBRE Vesting Date upon the satisfaction of the
performance criterion on a cumulative basis. If the cumulative performance
criterion is satisfied, then any LTIP Units granted as part of the CPRE Award that
failed to vest as of any of the prior Annual CPRE Vesting Dates shall become vested
as of the later Annual CPRE Vesting Date.
(iv) Any Award LTIP Units granted as part of the CPRE Award that do not become
vested pursuant to this Section 4(b) or Section 5 shall, without
payment of any consideration by the Partnership, automatically and without notice
terminate, be forfeited and be and become null and void, and neither the Grantee nor
any of his successors, heirs, assigns, or personal representatives will thereafter
have any further rights or interests in such unvested Award LTIP Units.
(c) SPRE Award
(i) The Grantees Award LTIP Units granted as part of the SPRE Award shall be
eligible for vesting over a seven-year period, except as otherwise provided in
Section 5 hereof, based on a combination of (A) the Companys performance
over a four-year period in terms of increase in the Average Stock Price as provided
in Sections 4(c)(ii), 4(c)(iii) and 4(c)(iv) and (B) the
passage of time (three years) as provided in Sections 4(c)(v). Vesting will
occur at the times, in the amounts and upon the conditions set forth in this
Section 4(c), provided that the Continuous Service of the Grantee
continues through and on the each Annual SPRE Vesting Date or the accelerated
vesting date provided in Section 5 hereof, as applicable.
(ii) If after January 1, 2009, but before December 31, 2010, the Average Stock
Price is at or above $26.00 (subject to adjustment as provided in Section 9
hereof) on each trading day in a period of thirty (30) consecutive trading days,
then 100.000% of the Award LTIP Units granted as part of the SPRE Award will be
earned based on performance (subject to time vesting as provided in Section
4(c)(v)) as of the last trading day in such 30-trading day period.
(iii) If as of December 31, 2010 the Award LTIP Units granted as part of the
SPRE Award have not been earned based on performance pursuant to Section
4(c)(ii), as soon as practicable following December 31, 2010 the Company will
calculate the Average Stock Price as of December 31, 2010 and the
8
LTIP Units granted as part of the SPRE Award will be earned based on
performance (subject to time vesting as provided in Section 4(c)(v)) as
follows:
|
|
|
|
|
Average Stock Price (Subject to adjustment as provided in Section 9 hereof ) |
|
Percentage Earned |
Less than $20.00 |
|
|
0.000 |
% |
|
|
|
|
|
Equal to or greater than $20.00 and less than $22.00 |
|
|
33.334 |
% |
|
|
|
|
|
Equal to or greater than $22.00 and less than $24.00 |
|
|
58.334 |
% |
|
|
|
|
|
Equal to or greater than $24.00 and less than $26.00 |
|
|
75.000 |
% |
|
|
|
|
|
Equal to or greater than $26.00 |
|
|
100.000 |
% |
(iv) Notwithstanding Section 4(c)(iii), if as of December 31, 2010 the
Award LTIP Units granted as part of the SPRE Award have not been earned based on
performance pursuant to Section 4(c)(ii) or Section 4(c)(iii), and
the Average Stock Price is less than $20 (subject to adjustment as provided in
Section 9 hereof), as soon as practicable following the Superior Performance
Measurement Date:
(A) the Committee will determine the Total Return of the Company for
the Cumulative SPRE Performance Period (from the Effective Date through
December 31, 2010);
(B) the Committee will determine the Total Return of the REITs included
in the MS REIT Index for the Cumulative SPRE Performance Period (from the
Effective Date through December 31, 2010); and
(C) if the Companys Total Return calculated pursuant to clause (A)
above is at or above the 50th Percentile of the Total Return of
the REITs included in the MS REIT Index calculated pursuant to clause (B)
above, then 33.334% of the Award LTIP Units granted as part of the SPRE
Award will be earned based on performance (subject to time vesting as
provided in Section 4(c)(v)) as of December 31, 2010.
(v) If any of the Award LTIP Units granted as part of the SPRE Award have been
earned based on performance as provided in Section 4(c)(ii),
4(c)(iii) or 4(c)(iv) (such LTIP Units, the Earned SPRE
Award), then subject to Section 5 hereof, the Earned SPRE Award shall
become vested in the following amounts, provided that the Continuous Service
of the Grantee continues through and on the applicable Annual SPRE Vesting Date or
the accelerated vesting date provided in Section 5 hereof, as applicable:
9
(A) thirty-three and one-third percent (33.33%) of the Earned SPRE Award
shall become vested on December 31, 2011;
(B) an additional thirty-three and one-third percent (33.33%) of the Earned
SPRE Award shall become vested on December 31, 2012; and
(C) an additional thirty-three and one-fourth percent (33.34%) of the Earned
SPRE Award shall become vested on December 31, 2013.
(vi) Any Award LTIP Units granted as part of the CPRE Award that do not become
vested pursuant to this Section 4(b) or Section 5 shall, without
payment of any consideration by the Partnership, automatically and without notice
terminate, be forfeited and be and become null and void, and neither the Grantee nor
any of his successors, heirs, assigns, or personal representatives will thereafter
have any further rights or interests in such unvested Award LTIP Units.
5. Change of Control or Termination of Grantees Service Relationship.
(a) If the Grantee is a party to a Service Agreement, the provisions of this
Section 5 shall govern the vesting of the Grantees Award LTIP Units exclusively in
the event of a Change of Control or termination of the Grantees service relationship with
the Company or any Subsidiary or affiliate, unless the Service Agreement contains
provisions that expressly refer to this Section 5 and provides that those
provisions of the Service Agreement shall instead govern the vesting of the Grantees Award
LTIP Units. The foregoing sentence will be deemed an amendment to any applicable Service
Agreement to the extent required to apply its terms consistently with this Section
5, such that, by way of illustration, any provisions of the Service Agreement with
respect to accelerated vesting or payout of the Grantees bonus or incentive compensation
awards in the event of certain types of terminations of Grantees service relationship
(such as, for example, termination at the end of the term, termination without Cause by the
employer or termination for Good Reason by the employee) shall not be interpreted as
requiring that any calculations set forth in Section 4 hereof be performed or
vesting occur with respect to this Award other than as specifically provided in this
Section 5. In the event an entity ceases to be a Subsidiary or affiliate of the
Company, such action shall be deemed to be a termination of employment of all employees of
that entity for purposes of this Agreement, provided that if vesting would not
otherwise occur upon such deemed termination pursuant to this Agreement, the Committee, in
its sole and absolute discretion, may make provision in such circumstances for accelerated
vesting of some or all of the Grantees remaining unvested Award LTIP Units that have not
previously been forfeited effective immediately prior to such event.
(b) In the event of a Change of Control or Qualified Termination, then the Grantee
shall become 100% vested in all unvested Award LTIP Units, included LTIP Units granted as
part of the TBRE Award, the CPRE Award and the SPRE Award, automatically as of the date of,
and immediately before, the Change of Control or Qualified Termination, regardless of the
calculations provided or other conditions set forth in Section 4 hereof.
10
(c) Notwithstanding the foregoing, in the event vesting pursuant to this Section
5 is determined to constitute nonqualified deferred compensation subject to Section
409A of the Code, then, to the extent the Grantee is a specified employee under Section
409A of the Code subject to the six-month delay thereunder, any such vesting or related
payments to be made during the six-month period commencing on the Grantees separation
from service (as defined in Section 409A of the Code) shall be delayed until the
expiration of such six-month period.
(d) In the event of a termination of employment or other cessation of the Grantees
Continuous Service other than a Qualified Termination, effective as of the date of such
termination or cessation all Award LTIP Units except for those that had previously become
vested pursuant to Section 4 or Section 5 hereof shall automatically and
immediately be forfeited by the Grantee and thereafter no further calculations pursuant to
Section 4 hereof shall be performed with respect to the Grantees LTIP Units
granted as part of the CPRE Award or the SPRE Award. Any such forfeited Award LTIP Units
shall, without payment of any consideration by the Partnership, automatically and without
notice be and become null and void, and neither the Grantee nor any of his successors,
heirs, assigns, or personal representatives will thereafter have any further rights or
interests in such forfeited Award LTIP Units. If the Grantees employment with the Company
or a Subsidiary or affiliate terminates as a result of his or her retirement, the Committee
may, on a case-by-case basis and in its sole discretion, provide for partial or complete
vesting prior to such retirement of all or a portion of his Award LTIP Units that have not
previously been forfeited.
(e) To the extent that the Grantees Service Agreement entitles the Grantee to receive
severance payments or other similar benefit in case of a termination of the Grantees
employment following a Change of Control or a similar event (Change of Control Benefits),
then for purposes of calculating the Grantees entitlement to such Change of Control
Benefits, Award LTIP Units shall be included as part of the Grantees bonus amount, or any
other similar term used in the Grantees Service Agreement, in the year of vesting only if
and to the extent specifically provided in such Service Agreement. If included, the value
of Award LTIP Units for purposes of determining such bonus amount shall be calculated by
multiplying the Fair Market Value of a share of the Companys Common Stock at the time of
vesting by the number of Award LTIP Units that became vested.
(f) To the extent that Schedule A provides for amounts or schedules of vesting
that conflict with the provisions of this Section 5, the provisions of Schedule
A will be controlling and determinative.
6. Payments
by Award Recipients. No amount shall be payable to the Company or the
Partnership by the Grantee at any time in respect of Award LTIP Units.
7. Distributions.
11
(a) The Grantee shall be entitled to receive distributions with respect to the Award
LTIP Units to the extent provided for in the Partnership Agreement, as modified hereby, if
applicable.
(b) The Distribution Participation Date (as defined in the Partnership Agreement) with
respect to LTIP Units granted as part of the TBRE Award and the CPRE Award shall be the
Effective Date and such LTIP Units shall be entitled to the full distribution payable on
Units outstanding as of the record dates for the first and second 2007 quarterly
distributions even though they were not outstanding for the whole period.
(c) The Distribution Participation Date (as defined in the Partnership Agreement) with
respect to LTIP Units granted as part of the SPRE Award shall be the Effective Date,
provided, however, that until the earlier of (i) the date on which such
LTIP Units have been earned based on performance as provided in Section 4(c)(ii),
4(c)(iii) or 4(c)(iv) hereof or (ii) the date on which such LTIP Units have
become fully vested upon a Change of Control or Qualified termination as provided in
Section 5 hereof, such LTIP Units shall only be entitled to per Unit distributions
equal to 20 % of the per Units distributions payable on LTIP Units awarded as part of the
TBRE Award. The Earned SPRE Award shall be entitled to the full distribution payable on
Units outstanding as of the record dates for the quarterly distribution next following the
date on which they are earned based on performance as provided in Section 4(c)(ii),
4(c)(iii) or 4(c)(iv) hereof such Participation Date even though they may
not have been outstanding for the whole period.
(d) To the extent that any LTIP Units are not issued until a date after the applicable
Participation Date, an amount equal to the Distribution Value attributable to such LTIP
Units (calculated as provided in Section 7(b) or Section 7(c), as
applicable, shall be paid to the Grantee in cash promptly following the date of such
issuance.
(e) All distributions paid with respect to Award LTIP Units, including amounts paid on
account of the Distribution Value, if any, shall be fully vested and non-forfeitable when
paid, whether or not the underlying Award LTIP Units have been earned based on performance
or have become vested based on the passage of time.
8. Restrictions on Transfer. None of the Award LTIP Units shall be sold, assigned,
transferred, pledged or otherwise disposed of or encumbered (whether voluntarily or involuntarily
or by judgment, levy, attachment, garnishment or other legal or equitable proceeding) (each such
action a Transfer), or redeemed in accordance with the Partnership Agreement (a) prior to
vesting, (b) for a period of two (2) years beginning on the Effective Date other than in connection
with a Change of Control, and (c) unless such Transfer is in compliance with all applicable
securities laws (including, without limitation, the Securities Act of 1933, as amended (the
Securities Act)), and such Transfer is in accordance with the applicable terms and
conditions of the Partnership Agreement; provided that, upon the approval of, and subject
to the terms and conditions specified by, the Committee, unvested Award LTIP Units that have been
held for a period of at least two (2) years may be Transferred to (i) the parents, siblings,
spouse, children or grandchildren of the Grantee (Immediate Family Members), (ii) a trust
or trusts for the exclusive benefit of the Grantee and such Immediate Family Members, (iii) a
12
partnership in which the Grantee and such Immediate Family Members are the only partners, or
(iv) one or more entities in which the Grantee has a 10% or greater equity interest, provided that
the Transferee agrees in writing with the Company and the Partnership to be bound by all the terms
and conditions of this Agreement and that subsequent transfers of unvested Award LTIP Units shall
be prohibited except those in accordance with this Section 8. In connection with any
Transfer of Award LTIP Units, the Partnership may require the Grantee to provide an opinion of
counsel, satisfactory to the Partnership, that such Transfer is in compliance with all federal and
state securities laws (including, without limitation, the Securities Act). Any attempted Transfer
of Award LTIP Units not in accordance with the terms and conditions of this Section 8 shall
be null and void, and the Partnership shall not reflect on its records any change in record
ownership of any LTIP Units as a result of any such Transfer, shall otherwise refuse to recognize
any such Transfer and shall not in any way give effect to any such Transfer of any LTIP Units.
This Agreement is personal to the Grantee, is non-assignable and is not transferable in any manner,
by operation of law or otherwise, other than by will or the laws of descent and distribution.
9. Changes in Capital Structure. Without duplication with the provisions of Section
12.3 of the 2004 Plan, if (a) the Company shall at any time be involved in a merger, consolidation,
dissolution, liquidation, reorganization, exchange of shares, sale of all or substantially all of
the assets or stock of the Company or other fundamental transaction similar thereto, (b) any stock
dividend, stock split, reverse stock split, stock combination, reclassification, recapitalization,
significant repurchases of stock, or other similar change in the capital structure of the Company
shall occur, (c) any extraordinary dividend or other distribution to holders of shares of Common
Stock or Units other than regular cash dividends shall be made, or (d) any other event shall occur
that in each case in the good faith judgment of the Committee necessitates action by way of
appropriate equitable adjustment in the terms of this Award, the MIP or the LTIP Units, then the
Committee shall take such action as it deems necessary to maintain the Grantees rights hereunder
so that they are substantially proportionate to the rights existing under this Award, the MIP and
the terms of the LTIP Units prior to such event, including, without limitation: (i) adjustments in
the Award LTIP Units, Distribution Value, Total Return or other pertinent terms of this Award; and
(ii) substitution of other awards under the Equity Plan or otherwise. The Grantee shall have the
right to vote the Award LTIP Units if and when voting is allowed under the Partnership Agreement,
regardless of whether vesting has occurred.
10. Miscellaneous.
(a)
Amendments; Modifications. This Agreement may be amended or modified only with
the consent of the Company and the Partnership acting through the Committee;
provided that
any such amendment or modification materially and adversely affecting the rights of the Grantee
hereunder must be consented to by the Grantee to be effective as against him; and
provided,
further, that the Grantee acknowledges that the 2004 Plan may be amended or discontinued in
accordance with its terms and that this Agreement may be amended or canceled by the Committee, on
behalf of the Company and the Partnership, for the purpose of satisfying changes in law or for any
other lawful purpose, so long as no such action shall impair the Grantees rights under this
Agreement without the Grantees written consent. Notwithstanding the foregoing, this Agreement may
be amended in writing signed only by the Company to correct any errors or ambiguities in this
Agreement and/or to make such changes
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that do not materially adversely affect the Grantees rights hereunder. No promises,
assurances, commitments, agreements, undertakings or representations, whether oral, written,
electronic or otherwise, and whether express or implied, with respect to the subject matter hereof,
have been made by the parties which are not set forth expressly in this Agreement. This grant
shall in no way affect the Grantees participation or benefits under any other plan or benefit
program maintained or provided by the Company.
(b) Incorporation of Equity Plan; Committee Determinations. The provisions of the
Equity Plan are hereby incorporated by reference as if set forth herein. In the event of a
conflict between this Agreement and the Equity Plan, this Agreement shall be controlling and
determinative. The Committee will make the determinations and certifications required by this
Award as promptly as reasonably practicable following the occurrence of the event or events
necessitating such determinations or certifications.
(c) Status as a Partner. As of the grant date set forth on Schedule A, the
Grantee shall be admitted as a partner of the Partnership with beneficial ownership of the number
of Award LTIP Units issued to the Grantee as of such date pursuant to Section 3 hereof by:
(A) signing and delivering to the Partnership a copy of this Agreement; and (B) signing, as a
Limited Partner, and delivering to the Partnership a counterpart signature page to the Partnership
Agreement (attached hereto as Exhibit A). The Partnership Agreement shall be amended from
time to time as applicable to reflect the issuance to the Grantee of Award LTIP Units pursuant to
Section 3 hereof, if any, whereupon the Grantee shall have all the rights of a Limited
Partner of the Partnership with respect to the number of LTIP Units then held by the Grantee, as
set forth in the Partnership Agreement, subject, however, to the restrictions and conditions
specified herein and in the Partnership Agreement.
(d) Status of LTIP Units under the 2004 Plan. Insofar as the LTIP has been
established as an incentive program of the Company and the Partnership, the Award LTIP Units are
both issued as equity securities of the Partnership and granted as OTHER STOCK-BASED awards under
the 2004 Plan. The Company will have the right at its option, as set forth in the Partnership
Agreement, to issue shares of Common Stock in exchange for Units into which Award LTIP Units may
have been converted pursuant to the Partnership Agreement, subject to certain limitations set forth
in the Partnership Agreement, and such shares of Common Stock, if issued, will be issued under the
Equity Plan. The Grantee must be eligible to receive the Award LTIP Units in compliance with
applicable federal and state securities laws and to that effect is required to complete, execute
and deliver certain covenants, representations and warranties (attached as Exhibit B). The
Grantee acknowledges that the Grantee will have no right to approve or disapprove such
determination by the Committee.
(e) Legend. The records of the Partnership evidencing the Award LTIP Units shall bear
an appropriate legend, as determined by the Partnership in its sole discretion, to the effect that
such LTIP Units are subject to restrictions as set forth herein, in the Equity Plan and in the
Partnership Agreement.
(f) Compliance With Securities Laws. The Partnership and the Grantee will make
reasonable efforts to comply with all applicable securities laws. In addition, notwithstanding any
provision of this Agreement to the contrary, no LTIP Units will become
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vested or be issued at a time that such vesting or issuance would result in a violation of any
such laws.
(g) Investment Representations; Registration. The Grantee hereby makes the covenants,
representations and warranties and set forth on Exhibit B attached hereto. All of such
covenants, warranties and representations shall survive the execution and delivery of this
Agreement by the Grantee. The Partnership will have no obligation to register under the Securities
Act any LTIP Units or any other securities issued pursuant to this Agreement or upon conversion or
exchange of LTIP Units. The Grantee agrees that any resale of the shares of Common Stock received
upon the exchange of Units into which LTIP Units may be converted shall not occur during the
blackout periods forbidding sales of Company securities, as set forth in the then applicable
Company employee manual or insider trading policy. In addition, any resale shall be made in
compliance with the registration requirements of the Securities Act or an applicable exemption
therefrom, including, without limitation, the exemption provided by Rule 144 promulgated thereunder
(or any successor rule).
(h) Section 83(b) Election. In connection with each separate issuance of LTIP Units
under this Award pursuant to Section 3 hereof the Grantee hereby agrees to make an election
to include in gross income in the year of transfer the applicable Award LTIP Units pursuant to
Section 83(b) of the Code substantially in the form attached hereto as Exhibit C and to
supply the necessary information in accordance with the regulations promulgated thereunder.
(i) Severability. If, for any reason, any provision of this Agreement is held
invalid, such invalidity shall not affect any other provision of this Agreement not so held
invalid, and each such other provision shall to the full extent consistent with law continue in
full force and effect. If any provision of this Agreement shall be held invalid in part, such
invalidity shall in no way affect the rest of such provision not held so invalid, and the rest of
such provision, together with all other provisions of this Agreement, shall to the full extent
consistent with law continue in full force and effect.
(j) Governing Law. This Agreement is made under, and will be construed in accordance
with, the laws of State of Delaware, without giving effect to the principles of conflict of laws of
such state.
(k) No Obligation to Continue Position as an Employee, Consultant or Advisor. Neither
the Company nor any affiliate is obligated by or as a result of this Agreement to continue to have
the Grantee as an employee, consultant or advisor and this Agreement shall not interfere in any way
with the right of the Company or any affiliate to terminate the Grantees service relationship at
any time.
(l) Notices. Any notice to be given to the Company shall be addressed to the
Secretary of the Company at its principal place of business and any notice to be given the Grantee
shall be addressed to the Grantee at the Grantees address as it appears on the employment records
of the Company, or at such other address as the Company or the Grantee may hereafter designate in
writing to the other.
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(m) Withholding and Taxes. No later than the date as of which an amount first becomes
includible in the gross income of the Grantee for income tax purposes or subject to the Federal
Insurance Contributions Act withholding with respect to this Award, the Grantee will pay to the
Company or, if appropriate, any of its affiliates, or make arrangements satisfactory to the
Committee regarding the payment of, any United States federal, state or local or foreign taxes of
any kind required by law to be withheld with respect to such amount. The obligations of the
Company under this Agreement will be conditional on such payment or arrangements, and the Company
and its affiliates shall, to the extent permitted by law, have the right to deduct any such taxes
from any payment otherwise due to the Grantee.
(n) Headings. The headings of paragraphs hereof are included solely for convenience
of reference and shall not control the meaning or interpretation of any of the provisions of this
Agreement.
(o) Counterparts. This Agreement may be executed in multiple counterparts with the
same effect as if each of the signing parties had signed the same document. All counterparts shall
be construed together and constitute the same instrument.
(p) Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and any successors to the Company and the Partnership, on the one
hand, and any successors to the Grantee, on the other hand, by will or the laws of descent and
distribution, but this Agreement shall not otherwise be assignable or otherwise subject to
hypothecation by the Grantee.
(q) 409A. This Agreement shall be construed, administered and interpreted in
accordance with a good faith interpretation of Section 409A of the Code. Any provision of this
Agreement that is inconsistent with Section 409A of the Code, or that may result in penalties under
Section 409A of the Code, shall be amended, in consultation with the Grantee and with the
reasonable cooperation of the Grantee and the Company, in the least restrictive manner necessary to
(i) exclude the Award LTIP Units from the definition of deferred compensation within the meaning
of such Section 409A or (ii) comply with the provisions of Section 409A, other applicable
provision(s) of the Code and/or any rules, regulations or other regulatory guidance issued under
such statutory provisions, in each case without diminution in the value of the benefits granted
hereby to the Grantee.
(r) Complete Agreement. This Agreement (together with those agreements and documents
expressly referred to herein, for the purposes referred to herein) embody the complete and entire
agreement and understanding between the parties with respect to the subject matter hereof, and
supersede any and all prior promises, assurances, commitments, agreements, undertakings or
representations, whether oral, written, electronic or otherwise, and whether express or implied,
which may relate to the subject matter hereof in any way.
[signature page follows]
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IN WITNESS WHEREOF, the undersigned have caused this Award Agreement to be executed as of the
day of , 2007.
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MEDICAL PROPERTIES TRUST, INC.
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By: |
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Name: |
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Title: |
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MPT OPERATING PARTNERSHIP, L.P.
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By: |
Medical Properties Trust, LLC,
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its general partner |
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By: |
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Name: |
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Title: |
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GRANTEE |
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Name: |
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EXHIBIT A
FORM OF LIMITED PARTNER SIGNATURE PAGE
The Grantee, desiring to become one of the within named Limited Partners of MPT Operating
Partnership, L.P., hereby accepts all of the terms and conditions of (including, without
limitation, the provisions related to powers of attorney), and becomes a party to, the Second
Amended and restated Agreement of Limited Partnership, dated as of July ___, 2007, of MPT Operating
Partnership, L.P., as amended (the Partnership Agreement). The Grantee agrees that this
signature page may be attached to any counterpart of the Partnership Agreement and further agrees
as follows (where the term Limited Partner refers to the Grantee:
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The Limited Partner hereby confirms that it has reviewed the terms of the Partnership
Agreement and affirms and agrees that it is bound by each of the terms and conditions of the
Partnership Agreement, including, without limitation, the provisions thereof relating to
limitations and restrictions on the transfer of Partnership Units. |
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The Limited Partner hereby confirms that it is acquiring the Partnership Units for its own
account as principal, for investment and not with a view to resale or distribution, and that
the Partnership Units may not be transferred or otherwise disposed of by the Limited Partner
otherwise than in a transaction pursuant to a registration statement filed by the Partnership
(which it has no obligation to file) or that is exempt from the registration requirements of
the Securities Act of 1933, as amended (the Securities Act), and all applicable
state and foreign securities laws, and the General Partner may refuse to transfer any
Partnership Units as to which evidence of such registration or exemption from registration
satisfactory to the General Partner is not provided to it, which evidence may include the
requirement of a legal opinion regarding the exemption from such registration. If the General
Partner delivers to the Limited Partner shares of common stock of the Medical Properties
Trust, Inc. (Common Shares) upon redemption of any Partnership Units, the Common
Shares will be acquired for the Limited Partners own account as principal, for investment and
not with a view to resale or distribution, and the Common Shares may not be transferred or
otherwise disposed of by the Limited Partner otherwise than in a transaction pursuant to a
registration statement filed by the General Partner with respect to such Common Shares (which
it has no obligation under the Partnership Agreement to file) or that is exempt from the
registration requirements of the Securities Act and all applicable state and foreign
securities laws, and the General Partner may refuse to transfer any Common Shares as to which
evidence of such registration or exemption from such registration satisfactory to the General
Partner is not provided to it, which evidence may include the requirement of a legal opinion
regarding the exemption from such registration. |
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The Limited Partner hereby affirms that it has appointed the General Partner, any liquidator
and authorized officers and attorneys-in-fact of each, and each of those acting singly, in
each case with full power of substitution, as its true and lawful agent and attorney-in-fact,
with full power and authority in its name, place and stead, in accordance with the Partnership
Agreement. The foregoing power of attorney is hereby declared to be irrevocable and a power
coupled with an interest, and it shall survive and not be |
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affected by the death, incompetency, dissolution, disability, incapacity,
bankruptcy or termination of the Limited Partner and shall extend to the
Limited Partners heirs, executors, administrators, legal representatives,
successors and assigns. |
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(a) The Limited Partner hereby irrevocably
consents in advance to any amendment to the
Partnership Agreement, as may be recommended
by the General Partner, intended to avoid
the Partnership being treated as a
publicly-traded partnership within the
meaning of Section 7704 of the Internal
Revenue Code, including, without limitation,
(x) any amendment to the provisions of
Section 8.04 (Redemption Right) of the
Partnership Agreement intended to increase
the waiting period between the delivery of a
notice of redemption and the redemption date
to up to sixty (60) days or (y) any other
amendment to the Partnership Agreement
intended to make the redemption and transfer
provisions, with respect to certain
redemptions and transfers, more similar to
the provisions described in Treasury
Regulations Section 1.7704-1(f). |
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(b) The Limited Partner hereby appoints the General Partner, any liquidator and authorized
officers and attorneys-in-fact of each, and each of those acting singly, in each case with
full power of substitution, as its true and lawful agent and attorney-in-fact, with full
power and authority in its name, place and stead, to execute and deliver any amendment
referred to in the foregoing paragraph 4(a) on the Limited Partners behalf. The foregoing
power of attorney is hereby declared to be irrevocable and a power coupled with an interest,
and it shall survive and not be affected by the death, incompetency, dissolution,
disability, incapacity, bankruptcy or termination of the Limited Partner and shall extend to
the Limited Partners heirs, executors, administrators, legal representatives, successors
and assigns. |
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The Limited Partner agrees that it will not transfer any interest in the Partnership Units
(x) through (i) a national, non-U.S., regional, local or other securities exchange, (ii)
PORTAL or (iii) an over-the-counter market (including an interdealer quotation system that
regularly disseminates firm buy or sell quotations by identified brokers or dealers by
electronic means or otherwise) or (y) to or through (a) a person, such as a broker or dealer,
that makes a market in, or regularly quotes prices for, interests in the Partnership or (b) a
person that regularly makes available to the public (including customers or subscribers) bid
or offer quotes with respect to any interests in the Partnership and stands ready to effect
transactions at the quoted prices for itself or on behalf of others. |
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The Limited Partner acknowledges that the General Partner shall be a third party beneficiary
of the representations, covenants and agreements set forth in Sections 4 and 5 hereof. The
Limited Partner agrees that it will transfer, whether by assignment or otherwise, Partnership
Units only to the General Partner or to transferees that provide the Partnership and the
General Partner with the representations and covenants set forth in Sections 4 and 5 hereof. |
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Signature Line for Limited Partner: |
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Name: |
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Date:
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, 2007 |
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Address of Limited Partner: |
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EXHIBIT B
GRANTEES COVENANTS, REPRESENTATIONS AND WARRANTIES
The Grantee hereby represents, warrants and covenants as follows:
(a) The Grantee has received and had an opportunity to review the following documents (the
Background Documents):
(i)
The Companys latest Annual Report to Stockholders;
(ii) The Companys Proxy Statement for its most recent Annual Meeting of Stockholders;
(iii) The Companys Report on Form 10-K for the year most recently ended;
(iv) The Companys Form 10-Q, if any, for the most recently ended quarter filed by the
Company with the Securities and Exchange Commission since the filing of the Form 10-K
described in clause (iii) above;
(v) Each of the Companys Current Report(s) on Form 8-K, if any, filed by the Company
with the Securities and Exchange Commission since the filing of the Form 10-K described in
clause (iii) above;
(vi) The Partnership Agreement;
(vii) The 2004 Plan; and
(viii) The Companys Articles of Incorporation, as amended.
The Grantee also acknowledges that any delivery of the Background Documents and other
information relating to the Company and the Partnership prior to the determination by the
Partnership of the suitability of the Grantee as a holder of LTIP Units shall not constitute an
offer of LTIP Units until such determination of suitability shall be made.
(b) The Grantee hereby represents and warrants that
(i) The Grantee either (A) is an accredited investor as defined in Rule 501(a) under
the Securities Act, or (B) by reason of the business and financial experience of the
Grantee, together with the business and financial experience of those persons, if any,
retained by the Grantee to represent or advise him with respect to the grant to him of LTIP
Units, the potential conversion of LTIP Units into common units of limited partnership of
the Partnership (Common Units) and the potential redemption of such Common Units
for shares the Companys common stock (REIT Shares), has such knowledge,
sophistication and experience in financial and business matters and in making investment
decisions of this type that the Grantee (I) is capable of evaluating the
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merits and risks of an investment in the Partnership and potential investment in the
Company and of making an informed investment decision, (II) is capable of protecting his
own interest or has engaged representatives or advisors to assist him in protecting his
interests, and (III) is capable of bearing the economic risk of such investment.
(ii) The Grantee understands that (A) the Grantee is responsible for consulting his
own tax advisors with respect to the application of the U.S. federal income tax laws, and
the tax laws of any state, local or other taxing jurisdiction to which the Grantee is or by
reason of the award of LTIP Units may become subject, to his particular situation; (B) the
Grantee has not received or relied upon business or tax advice from the Company, the
Partnership or any of their respective employees, agents, consultants or advisors, in their
capacity as such; (C) the Grantee provides services to the Partnership on a regular basis
and in such capacity has access to such information, and has such experience of and
involvement in the business and operations of the Partnership, as the Grantee believes to
be necessary and appropriate to make an informed decision to accept the award of LTIP
Units; and (D) an investment in the Partnership and/or the Company involves substantial
risks. The Grantee has been given the opportunity to make a thorough investigation of
matters relevant to the LTIP Units and has been furnished with, and has reviewed and
understands, materials relating to the Partnership and the Company and their respective
activities (including, but not limited to, the Background Documents). The Grantee has been
afforded the opportunity to obtain any additional information (including any exhibits to
the Background Documents) deemed necessary by the Grantee to verify the accuracy of
information conveyed to the Grantee. The Grantee confirms that all documents, records, and
books pertaining to his receipt of LTIP Units which were requested by the Grantee have been
made available or delivered to the Grantee. The Grantee has had an opportunity to ask
questions of and receive answers from the Partnership and the Company, or from a person or
persons acting on their behalf, concerning the terms and conditions of the LTIP Units. The
Grantee has relied upon, and is making its decision solely upon, the Background Documents
and other written information provided to the Grantee by the Partnership or the Company.
(iii) The LTIP Units to be issued, the Common Units issuable upon conversion of the
LTIP Units and any REIT Shares issued in connection with the redemption of any such Common
Units will be acquired for the account of the Grantee for investment only and not with a
current view to, or with any intention of, a distribution or resale thereof, in whole or in
part, or the grant of any participation therein, without prejudice, however, to the
Grantees right (subject to the terms of the LTIP Units, the Equity Plan, the agreement of
limited partnership of the Partnership, the articles of organization of the Company, as
amended, and the Award Agreement) at all times to sell or otherwise dispose of all or any
part of his LTIP Units, Common Units or REIT Shares in compliance with the Securities Act,
and applicable state securities laws, and subject, nevertheless, to the disposition of his
assets being at all times within his control.
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(iv) The Grantee acknowledges that (A) neither the LTIP Units to be issued, nor the
Common Units issuable upon conversion of the LTIP Units, have been registered under the
Securities Act or state securities laws by reason of a specific exemption or exemptions
from registration under the Securities Act and applicable state securities laws and, if
such LTIP Units or Common Units are represented by certificates, such certificates will
bear a legend to such effect, (B) the reliance by the Partnership and the Company on such
exemptions is predicated in part on the accuracy and completeness of the representations
and warranties of the Grantee contained herein, (C) such LTIP Units or Common Units,
therefore, cannot be resold unless registered under the Securities Act and applicable state
securities laws, or unless an exemption from registration is available, (D) there is no
public market for such LTIP Units and Common Units and (E) neither the Partnership nor the
Company has any obligation or intention to register such LTIP Units or the Common Units
issuable upon conversion of the LTIP Units under the Securities Act or any state securities
laws or to take any action that would make available any exemption from the registration
requirements of such laws, except, that, upon the redemption of the Common Units for REIT
Shares, the Company may issue such REIT Shares under the Equity Plan and pursuant to a
Registration Statement on Form S-8 under the Securities Act, to the extent that (I) the
Grantee is eligible to receive such REIT Shares under the Equity Plan at the time of such
issuance, (II) the Company has filed a Form S-8 Registration Statement with the Securities
and Exchange Commission registering the issuance of such REIT Shares and (III) such Form
S-8 is effective at the time of the issuance of such REIT Shares. The Grantee hereby
acknowledges that because of the restrictions on transfer or assignment of such LTIP Units
acquired hereby and the Common Units issuable upon conversion of the LTIP Units which are
set forth in the Partnership Agreement or this Agreement, the Grantee may have to bear the
economic risk of his ownership of the LTIP Units acquired hereby and the Common Units
issuable upon conversion of the LTIP Units for an indefinite period of time.
(v) The Grantee has determined that the LTIP Units are a suitable investment for the
Grantee.
(vi) No representations or warranties have been made to the Grantee by the Partnership
or the Company, or any officer, director, shareholder, agent, or affiliate of any of them,
and the Grantee has received no information relating to an investment in the Partnership or
the LTIP Units except the information specified in paragraph (b) above.
(c) So long as the Grantee holds any LTIP Units, the Grantee shall disclose to the Partnership
in writing such information as may be reasonably requested with respect to ownership of LTIP Units
as the Partnership may deem reasonably necessary to ascertain and to establish compliance with
provisions of the Code, applicable to the Partnership or to comply with requirements of any other
appropriate taxing authority.
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(d) The Grantee hereby agrees to make an election under Section 83(b) of the Code with respect
to the LTIP Units awarded hereunder, and has delivered with this Agreement a completed, executed
copy of the election form attached hereto as Exhibit C. The Grantee agrees to file the
election (or to permit the Company to file such election on the Grantees behalf) within thirty
(30) days after the award of the LTIP Units hereunder with the IRS Service Center at which such
Grantee files his personal income tax returns, and to file a copy of such election with the
Grantees U.S. federal income tax return for the taxable year in which LTIP Units are issued or
awarded to the Grantee.
(e) The address set forth on the signature page of this Agreement is the address of the
Grantees principal residence, and the Grantee has no present intention of becoming a resident of
any country, state or jurisdiction other than the country and state in which such residence is
sited.
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EXHIBIT C
ELECTION TO INCLUDE IN GROSS INCOME IN YEAR OF
TRANSFER OF PROPERTY PURSUANT TO SECTION 83(B)
OF THE INTERNAL REVENUE CODE
The undersigned hereby makes an election pursuant to Section 83(b) of the Internal Revenue
Code with respect to the property described below and supplies the following information in
accordance with the regulations promulgated thereunder:
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The name, address and taxpayer ID number of the undersigned are: |
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Name: (the Taxpayer) |
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Address:
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Social Security No./Taxpayer Identification No.: |
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Description of property with respect to which the election is being made: |
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The election is being made with respect to
LTIP Units
in MPT Operating Partnership, L.P. (the Partnership). |
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The date on which the LTIP Units were transferred is , 2007. The
taxable year to which this election relates is calendar year 2007. |
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Nature of restrictions to which the LTIP Units are subject: |
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With limited exceptions, until the LTIP Units vest, the
Taxpayer may not transfer in any manner any portion of the LTIP Units without
the consent of the Partnership. |
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The Taxpayers LTIP Units vest in accordance with the vesting
provisions described in the Schedule attached hereto. Unvested LTIP Units are
forfeited in accordance with the vesting provisions described in the Schedule
attached hereto. |
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The fair market value at time of transfer (determined without regard to any
restrictions other than restrictions which by their terms will never lapse) of the
LTIP Units with respect to which this election is being made was: (i) $0 per LTIP
Unit. |
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The amount paid by the Taxpayer for the LTIP Units was $0 per LTIP Unit. |
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A copy of this statement has been furnished to the Partnership and Medical
Properties Trust, Inc. |
Dated: , 2007
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SCHEDULE TO EXHIBIT C
Vesting Provisions of LTIP Units
The LTIP Units are subject to time based and performance-based vesting as follows:
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LTIP Units are subject to time-based vesting over a seven-year period (or
earlier in certain circumstances) (14.285% per year) based only on continuous service. |
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LTIP Units are subject to performance-based vesting over a seven-year
period (assuming continuous service). Performance-based vesting will be from 0-100% based
on Medical Properties Trust, Inc.s (the Company) per-share total return to holders of
the Companys common stock (the Total Return) for the period from March 1, 2007 to
December 31, 2013 (or earlier in certain circumstances) exceeding a simple annual Total
Return of 9%, including a carry-back and carry-forward feature over the entire seven-year
period. |
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LTIP Units are subject to a combination of performance-based and time-based
vesting over a combined seven-year period (assuming continuous service) as follows: |
(i) Performance-based vesting will be from 0-100% based on the
trading price of the Companys common stock reaching specified
levels between $20 per share and $26 per share over the period
from March 1, 2007 to December 31, 2010 (or earlier in certain
circumstances). However, if at the end of the four-year
performance period (or earlier in certain circumstances) the price
of the Companys common stock is below $20 per share, but the
Companys Total Return over the period on a cumulative basis is at
or above the 50th percentile for all REITs included in
the Morgan Stanley REIT Index, then one third of such LTIP Units
will vest based on performance.
(ii) Time-based vesting of any LTIP Units that have become vested
based on performance as provided in clause (i) above will occur
over a three-year period (or earlier in certain circumstances)
based only on continuous service as follows: one third on each of
December 31, 2011, 2012 and 2013.
The above vesting is conditioned upon the Taxpayer remaining an employee of the Company or an
affiliate through the applicable vesting dates, and subject to acceleration in the event of a
change of control of the Company or termination of the Taxpayers service relationship with the
Company under specified circumstances.
26
Unvested LTIP Units are subject to forfeiture in the event of failure to vest based on the
applicable criterion.
27
SCHEDULE A TO 2007 LTIP AWARD AGREEMENT
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Date of Award Agreement: |
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Name of Grantee: |
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Total of LTIP Units Subject to Grant (X+Y+Z): |
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X. TBRE Award: |
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Y. CPRE Award: |
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Z. SPRE Award: |
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Grant Date: |
Initials of Company representative:
Initials of Grantee:
28
EX-10.3 FORM OF 2007 MULTI-YEAR INCENTIVE PLAN
Exhibit 10.3
MEDICAL PROPERTIES TRUST, INC.
2007 MULTI-YEAR INCENTIVE PLAN
AWARD AGREEMENT FOR RESTRICTED STOCK
THIS MULTI-YEAR INCENTIVE PLAN AWARD AGREEMENT (this Agreement or Award Agreement) is made and
entered into as of ___by and between MEDICAL PROPERTIES TRUST, INC., a Maryland
corporation (the Company), and ___(the Participant) pursuant to the Second
Amended and Restated Medical Properties Trust, Inc. 2004 Equity Incentive Plan (the Plan).
Capitalized terms used but not defined herein shall have the same meanings set forth in the Plan.
W I T N E S S E T H:
WHEREAS, the Participant is a key employee of the Company or one of its Subsidiaries or affiliates;
WHEREAS, the Company has adopted the 2007 Multi-Year Incentive Plan (the MIP) pursuant to the
Plan to provide executive officers of the Company or its Subsidiaries and affiliates, including the
Participant, in connection with their employment with the long-term incentive compensation
described in this Agreement, and thereby provide additional incentive for them to promote the
progress and success of the business of the Company and its Subsidiaries and affiliates, while
increasing the total return to the Companys shareholders . The MIP consists of three
separate components, all covered by this Agreement, designed collectively to reward the Participant
for his contribution to the Companys past superior performance, in terms of both total return to
shareholders and funds from operations, and to incentivize the Participant to contribute to
superior performance for the benefit of the Companys shareholders over the next several years as
follows: (i) a time-based restricted equity award (the TBRE Award); (ii) a core performance
restricted equity award (the CPRE Award); and (iii) a superior performance restricted equity
award (the SPRE Award);
WHEREAS, the MIP was adopted by the Compensation Committee (the Committee) of the Board of
Directors of the Company (the Board) pursuant to authority delegated to it by the Board as set
forth in the Committees charter. This Agreement evidences an award to the Participant under the
MIP (this Award), which is subject to the terms and conditions set forth herein; and
WHEREAS, the Participant was selected by the Committee to receive this Award as one of a select
group of highly compensated or management employees who, through the effective execution of their
assigned duties and responsibilities, are in a position to have a direct and measurable impact on
the Companys long-term financial results. Effective as of the grant date specified in Exhibit A
hereto, but conditional upon the execution of this Agreement, the Committee awarded to the
Participant the number of shares of Restricted Common Stock set forth in Exhibit A.
NOW, THEREFORE, for and in consideration of the premises, the mutual promises and
covenants herein contained, and other good and valuable consideration, the receipt, adequacy and
sufficiency of which are hereby acknowledged, the parties hereto do hereby agree as follows:
1. AWARD OF RESTRICTED STOCK. On the date specified on Exhibit A attached hereto (the
Date of Award) and conditional upon the execution of this Agreement, the Committee awarded to the
Participant this Award which entitles the Participant to receive the number of shares of Restricted
Common Stock (the Shares) as is set forth on Exhibit A from the authorized and unissued or
treasury Common Stock and in accordance with the provisions set forth herein. The Shares for the
TBRE Award component of this Award will be immediately issued and the Participant shall enter into
a Restricted Stock Award Agreement with the Company. No Shares shall be issued for the CPRE Award
and the SPRE Award components of this Award unless the provisions of Section 2 are satisfied.
2. ISSUANCE OF RESTRICTED STOCK. The actual number of shares of Restricted Common Stock to
be issued to the Participant for the CPRE Award and the SPRE Award components of this Award will
vary depending upon the achievement of specific performance thresholds as follows:
(a) CPRE Award. As soon as practicable following the end of each calendar year
beginning on March 1, 2007 (the Effective Date) through December 31, 2013, the Committee will
determine (x) the Total Return (as defined herein) of the Company for the applicable calendar year
and (y) the Total Return of the Company from the Effective Date through the end of the applicable
calendar year on a cumulative basis, and then perform the following calculations with respect to
the number of shares to be issued under the CPRE Award:
(A) if both (I) the Companys Total Return for the applicable calendar year is below 9%
(pro-rated to 7.5% for March 1, 2007 through December 31, 2007) and (II) the Companys Total Return
from the Effective Date through the end of the applicable calendar year on a cumulative basis is
below a simple 9% per year (pro-rated to 7.5% for March 1, 2007 through December 31, 2007), then
none of the Participants target shares under the CPRE Award will be issued;
(B) if for the applicable calendar year the Companys Total Return is 9% (pro-rated to 7.5%
for March 1, 2007 through December 31, 2007) or higher, then 14.286% of the number of target shares
under the CPRE Award will be issued as of the end of the applicable calendar year and such shares
will be fully vested and nonforfeitable upon grant;
(C) if the Companys Total Return from the Effective Date through the end of the applicable
calendar year on a cumulative basis is equal to or greater than a simple 9% per year (pro-rated to
7.5% for March 1, 2007 through December 31, 2007), then the sum of (I) 14.286% of the Participants
target shares granted under the CPRE Award (but without duplication of the issuing percentage set
forth in Section 2(a)(B)) and (II) any portion of the Participants target shares under the CPRE
Award that failed to be issued for prior calendar years will be issued as of the end of the
applicable calendar year and such shares will be fully vested and nonforfeitable upon grant.
(b) SPRE Award. With respect to the issuance of the number of target shares granted
under the SPRE Award:
(A) If after January 1, 2009, but before December 31, 2010, the Average Stock Price (as
defined herein) is at or above $26.00 on each trading day in a period of thirty (30) consecutive
trading days, then 100.000% of the target shares under the SPRE Award will be issued based on
performance (subject to further time vesting as provided in Exhibit A) as of the last trading day
in such 30-trading day period;
(B) If as of December 31, 2010 the target shares under the SPRE Award have not been issued
based on performance pursuant to Section 2(b)(A), as soon as practicable following December 31,
2010 the Company will calculate the Average Stock Price as of December 31, 2010 and the target
shares under the SPRE Award will be issued based on performance (subject to further time vesting as
provided in Exhibit A) as follows:
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Average Stock Price |
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Percentage Earned |
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Less than $20.00
|
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0.000%
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Equal to or greater than $20.00 and less than $22.00
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33.334 |
% |
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Equal to or greater than $22.00 and less than $24.00
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58.334 |
% |
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Equal to or greater than $24.00 and less than $26.00
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75.000 |
% |
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Equal to or greater than $26.00
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100.000 |
% |
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(C) Notwithstanding Section 2(b)(B), if as of December 31, 2010 the target shares under the
SPRE Award have not been issued based on performance pursuant to Section 2(b)(A) or Section
2(b)(B), and the Average Stock Price is less than $20, as soon as practicable following December
31, 2010:
(i) the Committee will determine the Total Return of the Company from the Effective Date
through December 31, 2010;
(ii) the Committee will determine the Total Return of the real estate investment trusts (the
REITs) included in the Morgan Stanley REIT Index from the Effective Date through December 31,
2010; and
(iii) if the Companys Total Return calculated pursuant to clause (i) above is at or above the
50th percentile of the Total Return of the REITs included in the Morgan Stanley REIT
Index calculated pursuant to clause (ii) above, then 33.334% of the target shares under the SPRE
Award will be issued based on performance (subject to further time vesting as provided in Exhibit
A) as of December 31, 2010.
Average Stock Price means, as of any date, the average of the Fair Market Value of a share of
Common Stock over the thirty (30) consecutive trading days immediately preceding such date.
Total Return means, with respect to a REIT included in the Morgan Stanley REIT Index or the
Company, as applicable, the total percentage return per share achieved by the common shares of such
REIT or the Companys Common Stock, as applicable, assuming contemporaneous reinvestment in such
common shares or Common Stock of all dividends and other distributions, in each case measured
following the end of each calendar year for the applicable calendar year or from the Effective Date
through the end of the applicable calendar year, as the case may be.
3. DIVIDENDS. The Participant shall be entitled to receive dividends with respect
to the Shares as provided in the Plan. In addition:
(a) For Shares granted as part of the TBRE Award and the CPRE
Award, to the extent Shares are not issued until after the Effective Date, the Participant
shall be entitled to the full dividend paid on shares of the Companys Common Stock
outstanding as of the record dates for the first and second 2007 quarterly distributions
and periods thereafter, even though such Shares were not outstanding for some or all of
such period. An amount equal to such dividends shall be paid to the Participant in cash
promptly following the date of issuance of the applicable Shares.
(b) For Shares granted as part of the SPRE Award, then (i) from
the Effective Date until the earlier of (x) the date on which such Shares are issued based
on performance as provided in Section 2 hereof or (y) the date on which such
Shares have become fully vested upon a Change of Control or qualified termination as
provided in Section 4, the Participant shall be entitled to 20% of the dividend
paid/payable on shares of the Companys Common Stock outstanding as of the record dates
for the first and second 2007 quarterly distributions and periods thereafter, even though
such Shares were not outstanding for some or all of such period; and (ii) thereafter, the
Participant shall be entitled to the full dividend paid on shares of the Companys Common
Stock outstanding as of the applicable record dates, even though such Shares were not
outstanding for some or all of such period. In the case of (i) or (ii) above, an amount
equal to such dividends shall be paid to the Participant in cash promptly following the
date of issuance of the applicable Shares.
(c) All dividends and equivalent cash amounts paid with respect
to the Shares hereunder shall be fully vested and non-forfeitable when paid, whether or
not the underlying Shares have been earned based on performance or have become vested
based on the passage of time.
4. RESTRICTIONS. Immediately before the earliest of (A) the occurrence of a Change of
Control; (B) a termination of such Participants employment by the Company without Cause (as
defined in such Participants employment agreement with the Company); (C) a resignation by the
Participant for Good Reason (as defined in such Participants employment agreement with the
Company); (D) the Participants death or (E) the Participant becoming Permanently Disabled (as
defined in such Participants employment agreement with the Company) ((A) through (E) collectively,
the Qualified Events), all target shares under the CPRE Award that had not previously been issued
pursuant to Section 2 shall be issued and such shares will be fully vested and nonforfeitable upon
grant. For the avoidance of doubt, all Shares except for those that had previously been issued
pursuant to Section 1, Section 2 or Section 4 hereof shall automatically and immediately be
forfeited by the Participant upon the Participants Termination of Employment and thereafter no
further calculations pursuant to Section 2 shall be performed with respect to the Participants
target shares under the CPRE Award or the SPRE Award. The Shares as to which the restrictions
shall not have lapsed and which are not vested shall be forfeited upon the Participants
Termination of Employment; provided, however, that all unvested Shares actually issued shall be
100% vested and no longer subject to forfeiture immediately before the earliest of any of the
Qualified Events. The Shares may not be sold, transferred, pledged, assigned or otherwise
alienated or hypothecated until such restrictions lapse and the Shares vest. During the period
prior to the lapse of such restrictions and the vesting of such Shares, any stock dividends paid
with respect to the Shares shall be subject to the same restrictions and vesting period as the
Shares with respect to which they are paid.
5. CERTIFICATES FOR SHARES OF RESTRICTED COMMON STOCK. Certificates respecting the Shares
shall be registered in the Participants name or the Shares shall be issued to the Participant
through the book-entry system, as determined by the Company.
6. NO RIGHT TO CONTINUED EMPLOYMENT. Neither the Plan nor this Agreement shall give the
Participant the right to continued employment by the Company or by any Subsidiary or shall
adversely affect the right of the Company or any Subsidiary to terminate the Participants
employment with or without cause at any time.
7. SECURITIES LAW RESTRICTIONS. Acceptance of this Agreement shall be deemed to constitute
the Participants acknowledgement that the Shares shall be subject to such restrictions and
conditions on any resale and on any other disposition as the Company shall deem necessary under any
applicable laws or regulations or in light of any stock exchange requirements.
8. LEGEND. In order to enforce the restrictions imposed on the Shares, the certificates
representing such Shares shall bear the following legend:
THESE SHARES ARE HELD SUBJECT TO THE TERMS OF THE SECOND AMENDED AND RESTATED 2004
EQUITY INCENTIVE PLAN (THE PLAN) AND SUCH SHARES MAY ONLY BE TRANSFERRED IN
ACCORDANCE WITH THE TERMS THEREOF. A COPY OF THE PLAN IS AVAILABLE AT THE OFFICE OF
THE COMPANY.
Such legend shall be removed as the restrictions lapse with respect to such Shares and the Shares
vest.
9. MISCELLANEOUS.
(a) The Participants rights under this Agreement can be modified, suspended or canceled only
in accordance with the terms of the Plan. This Agreement may not be changed orally, but may be
changed only by an agreement in writing signed by the party against whom enforcement of any waiver,
change, modification or discharge is sought.
(b) The invalidity or unenforceability of any provision hereof shall in no way affect the
validity of enforceability of any other provision of this Agreement.
(c) This Agreement shall bind all parties, their respective heirs, executors, administrators
and assigns. Nothing contained herein shall be construed as an authorization or right of any party
to assign their respective rights or obligations hereunder and the Participant shall have no right
to assign this Agreement, and any such attempted assignment shall be ineffective. This Agreement
shall be binding upon the Company and its successors or assigns.
(d) This Agreement shall be subject to the applicable provisions, definitions, terms and
conditions set forth in the Plan, all of which are incorporated by this reference in this Agreement
and the terms of the Plan shall govern in the event of any inconsistency between the Plan and this
Agreement.
(e) This Agreement shall be interpreted and construed according to and governed by the laws of
the State of Alabama.
[Signatures appear on the following page.]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above
written.
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MEDICAL PROPERTIES TRUST, INC.
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By: |
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Name: |
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Title: |
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[PARTICIPANT]
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EXHIBIT A
TO
2007 MULTI-YEAR INCENTIVE PLAN AWARD AGREEMENT FOR RESTRICTED STOCK dated as of ___
between Medical Properties Trust, Inc. and ___.
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1.
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Date of Award:
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2. |
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Number of Target Shares of Restricted Common Stock: |
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The TBRE Award:
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The CPRE Award:
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The SPRE Award:
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3.
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Vesting Schedule |
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The TBRE Award:
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Date Restrictions Lapse |
Number of Target Shares Becoming Vested |
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and Shares Vest |
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(14.286 |
%) |
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December 31, 2007 |
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(14.286 |
%) |
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December 31, 2008 |
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(14.286 |
%) |
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December 31, 2009 |
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(14.286 |
%) |
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December 31, 2010 |
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(14.286 |
%) |
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December 31, 2011 |
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(14.286 |
%) |
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December 31, 2012 |
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(14.286 |
%) |
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December 31, 2013 |
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With respect to the shares actually issued as part of the SPRE Award on December 31, 2010:
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Date Restrictions Lapse |
Percentage of Issued Shares Becoming Vested |
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and Shares Vest |
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33.33%
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December 31, 2011 |
33.33%
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December 31, 2012 |
33.34%
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December 31, 2013 |