BLACKSTONE REAL ESTATE MANAGEMENT ASSOCIATES EUROPE III L.P. THIRD AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP

Exhibit 10.28

BLACKSTONE REAL ESTATE MANAGEMENT ASSOCIATES EUROPE III L.P.

THIRD AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP

Dated as of June 30, 2008

Table of Contents

 

BLACKSTONE REAL ESTATE MANAGEMENT ASSOCIATES EUROPE III L.P.

THIRD AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP of Blackstone Real Estate Management Associates Europe III L.P. (the “ Partnership ”) dated as of June 30, 2008, by and between BREP Europe III GP L.P., a Delaware limited partnership (“ BREP GP Delaware ”), Blackstone Real Estate Europe (Cayman) III Ltd., a Cayman Islands exempted limited company (“ BREE (Cayman), ” and together with BREP GP Delaware, the “ General Partners ” or, collectively, the “ General Partner ”), and the limited partners listed as Limited Partners in the books and records of the Partnership, as limited partners.

PRELIMINARY STATEMENT

The Partnership was formed under the laws of Alberta, Canada pursuant to a Certificate of Limited Partnership, dated as of December 19, 2007, which was filed with the Registrar of Corporations (Alberta).

The original partnership agreement of the Partnership was executed as of December 19, 2007 (the “ Original Agreement ”).

The Original Agreement was amended and restated in its entirety by the Amended and Restated Agreement of Limited Partnership dated as of April 2, 2008 of the Partnership and by the Second Amended and Restated Agreement of Limited Partnership dated as of June 30, 2008 of the Partnership (the “ Second Amended and Restated Agreement ”).

The parties hereto now wish to amend and restate the Second Amended and Restated Agreement in its entirety as of the date hereof and as hereinafter set forth.

Accordingly, the parties agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1.  Definitions . Unless the context otherwise requires, the following terms shall have the following meanings for purposes of this Agreement:

“ Advancing Party ” has the meaning set forth in Section 7.1(b).

“ Affiliate ” when used with reference to another person means any person (other than the Partnership), directly or indirectly, through one or more intermediaries, controlling, controlled by, or under common control with, such other person.

“ Agreement ” means this Third Amended and Restated Agreement of Limited Partnership, as it may be further amended, supplemented or otherwise modified from time to time.

“ Alternative Investment Vehicle ” means any investment vehicle or structure formed pursuant to paragraph 2.7.1 of the agreement referred to in clause (i) of the definition of “BREP Europe III Agreement” in this Article I, or any other “Alternative Investment Vehicle” (as defined in any other BREP Europe III Agreement).

“ Applicable Collateral Percentage ” shall have the meaning with respect to any Firm Collateral or Special Firm Collateral as set forth in the books and records of the Partnership with respect thereto.

“ Bankruptcy ” means, with respect to any person, the occurrence of any of the following events: (i) the filing of an application by such person for, or a consent to, the appointment of a trustee or custodian of his assets; (ii) the filing by such person of a voluntary petition in Bankruptcy or the seeking of relief under Title 11 of the United States Code, as now constituted or hereafter amended, or the filing of a pleading in any court of record admitting in writing his inability to pay his debts as they become due; (iii) the failure of such person to pay his debts as such debts become due; (iv) the making by such person of a general assignment for the benefit of creditors; (v) the filing by such person of an answer admitting the material allegations of, or his consenting to, or defaulting in answering, a Bankruptcy petition filed against him in any Bankruptcy proceeding or petition seeking relief under Title 11 of the United States Code, as now constituted or as hereafter amended; or (vi) the entry of an order, judgment or decree by any court of competent jurisdiction adjudicating such person a bankrupt or insolvent or for relief in respect of such person or appointing a trustee or custodian of his assets and the continuance of such order, judgment or decree unstayed and in effect for a period of 60 consecutive days.

“ BCOM ” means the collective reference to (i) Blackstone Communications Partners I L.P., a Delaware limited partnership, and (ii) any other investment vehicle established pursuant to Article 2 of the partnership agreement for the partnership referred to in clause (i) above.

“ BCP ” means the collective reference to Blackstone Capital Partners L.P., a Delaware limited partnership, and any other investment vehicle established in accordance with the terms of Blackstone Capital Partners L.P.’s partnership agreement to invest in lieu of Blackstone Capital Partners L.P. on behalf of one or more of the partners thereof.

“ BCP II ” means the collective reference to Blackstone Capital Partners II Merchant Banking Fund L.P., a Delaware limited partnership formerly known as Blackstone Domestic Capital Partners II L.P., Blackstone Offshore Capital Partners II L.P., a Cayman Islands exempted limited partnership, and any other investment vehicle established pursuant to paragraph 2.7 of the respective partnership agreements of either of such partnerships.

“ BCP III ” means the collective reference to Blackstone Capital Partners III Merchant Banking Fund L.P., a Delaware limited partnership, Blackstone Offshore Capital Partners III L.P., a Cayman Islands exempted limited partnership, and any other investment vehicle established pursuant to paragraph 2.7 of the respective partnership agreements of either of such partnerships.

“BCP IV ” is the collective reference to Blackstone Capital Partners IV L.P., a Delaware limited partnership, and any other investment vehicle or structure formed to invest in lieu thereof (in whole or in part).

“ BCP V ” is the collective reference to (i) Blackstone Capital Partners V L.P., a Delaware limited partnership, and any alternative investment vehicle relating thereto, (ii) BCP V-S L.P., a Delaware limited partnership, and any alternative investment vehicle relating thereto, and (iii) any parallel fund formed in connection with either of such partnerships.

“BFCOMP” means Blackstone Family Communications Partnership I L.P., Blackstone Family Communications Partnership I-SMD L.P. and any other entity that is an Affiliate thereof

 

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and has terms substantially similar to those of the foregoing partnerships and is formed in connection with the participation by one or more partners thereof directly or indirectly in investments in securities also purchased by BCOM or any other funds with substantially similar investment objectives to BCOM and that are sponsored or managed by an Affiliate of the General Partner (which includes serving as general partner of such funds).

“ BFCOMP Agreement ” means the limited partnership agreement or other governing document of each limited partnership or other entity named or referred to in the definition of “BFCOMP”, as amended, supplemented, restated or otherwise modified to date, and as such limited partnership agreement or other governing document may be further amended, supplemented, restated or otherwise modified from time to time, and any other BFCOMP limited partnership agreement or other governing document.

“ BFCOMP Investment ” means any direct or indirect investment by BFCOMP.

“ BFIP ” means Blackstone Capital Associates II L.P., Blackstone Capital Associates III L.P., Blackstone Family Investment Partnership II L.P., Blackstone Family Investment Partnership III L.P., Blackstone Family Investment Partnership IV-A L.P., Blackstone Family Investment Partnership IV-A -SMD L.P., Blackstone Family Investment Partnership V L.P., Blackstone Family Investment Partnership V- SMD L.P. and any other entity that is an Affiliate thereof and has terms similar to those of the foregoing partnerships and is formed in connection with the participation by one or more of the partners thereof in investments in securities also purchased by BCP, BCP II, BCP III, BCP IV, BCP V or any other fund with substantially similar investment objectives to BCP, BCP II, BCP III, BCP IV and BCP V and that are sponsored or managed by an Affiliate of the General Partner (which includes serving as general partner of such funds).

“ BFIP Agreement ” means the limited partnership agreement or other governing document of each limited partnership or other entity named or referred to in the definition of “BFIP”, as amended, supplemented, restated or otherwise modified to date, and as such limited partnership agreement or other governing document may be further amended, supplemented, restated or otherwise modified from time to time, and any other BFIP limited partnership agreement or other governing document.

“ BFIP Investment ” means any direct or indirect investment by BFIP.

“ BFMEZP ” means Blackstone Family Mezzanine Partnership-SMD L.P., Blackstone Family Mezzanine Partnership II-SMD L.P., Blackstone Mezzanine Holdings L.P., Blackstone Mezzanine Holdings II L.P., any entity formed to invest side-by-side with GSO Capital Opportunities Fund L.P. and any other entity that is an Affiliate thereof and that has terms substantially similar to those of the foregoing partnerships or other entities and is formed in connection with the participation by one or more partners or other equity owners thereof directly or indirectly in investments in securities also purchased by BMEZP I, BMEZP II, GSO Capital Opportunities Fund L.P. or any other funds with substantially similar investment objectives to BMEZP I, BMEZP II or GSO Capital Opportunities Fund L.P. and that are sponsored or managed by an Affiliate of the General Partner (which includes serving as general partner of such funds).

“ BFMEZP Agreement ” means the limited partnership agreement or other governing document of each limited partnership or other entity named or referred to in the definition of “BFMEZP”, as amended, supplemented, restated or otherwise modified to date, and as such limited partnership agreement or other governing document may be further amended, supplemented, restated or otherwise modified from time to time, and any other BFMEZP limited partnership agreement or other governing document.

 

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“ BFMEZP Investment ” means any direct or indirect investment by BFMEZP.

“ BFREP ” means Blackstone Real Estate Capital Associates L.P., Blackstone Real Estate Capital Associates II L.P., Blackstone Real Estate Capital Associates III L.P., Blackstone Family Real Estate Partnership L.P., Blackstone Family Real Estate Partnership II L.P., Blackstone Family Real Estate Partnership III L.P., Blackstone Family Real Estate Partnership International-A-SMD L.P., Blackstone Family Real Estate Partnership IV-SMD L.P., Blackstone Family Real Estate Partnership International II-SMD L.P., Blackstone Family Real Estate Partnership V-SMD L.P., Blackstone Family Real Estate Partnership VI-SMD L.P., Blackstone Family Real Estate Partnership Europe III-SMD L.P., Blackstone Real Estate Holdings L.P., Blackstone Real Estate Holdings II L.P., Blackstone Real Estate Holdings III L.P., Blackstone Real Estate Holdings International - A L.P., Blackstone Real Estate Holdings IV L.P., Blackstone Real Estate Holdings International II L.P., Blackstone Real Estate Holdings V L.P., Blackstone Real Estate Holdings VI L.P., Blackstone Real Estate Holdings Europe III L.P., and any other entity that is an Affiliate thereof and that has terms substantially similar to those of the foregoing partnerships and is formed in connection with the participation by one or more partners thereof in real estate and real estate-related investments also purchased by BREP Europe III and any other funds with substantially similar investment objectives to BREP Europe III and that are sponsored or managed by an Affiliate of the General Partner (which includes serving as general partner of such funds).

“ BFREP Agreement ” means the limited partnership agreement or other governing document of each limited partnership or other entity named or referred to in the definition of “BFREP”, as amended, supplemented, restated or otherwise modified to date, and as such limited partnership agreement or other governing document may be further amended, supplemented, restated or otherwise modified from time to time, and any other BFREP limited partnership agreement or other governing document.

“ BFREP Investment ” means any direct or indirect investment by BFREP.

“ Blackstone ” shall mean collectively, The Blackstone Group L.P., a Delaware limited partnership, and any Affiliate thereof (excluding any natural persons and any portfolio companies of any Blackstone-sponsored fund).

“Blackstone Co-Investment Rights ” has the meaning set forth in the BREP Europe III Agreement.

“ Blackstone Commitment ” has the meaning set forth in the BREP Europe III Agreement.

“ BMEZP I ” means (i) Blackstone Mezzanine Partners L.P., a Delaware limited partnership, and (ii) any other investment vehicle established pursuant to Article 2 of the partnership agreement for the partnership referred to in clause (i) above.

“ BMEZP II ” means (i) Blackstone Mezzanine Partners II L.P., a Delaware limited partnership, and (ii) any other investment vehicle established pursuant to Article 2 of the partnership agreement for the partnership referred to in clause (i) above.

 

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“ BREE (Cayman) ” means Blackstone Real Estate Europe (Cayman) III Ltd., a Cayman Islands exempted limited company and a general partner of the Partnership.

“ BREA Europe III ” means Blackstone Real Estate Associates Europe III L.P., a Delaware limited partnership and the general partner of BREP Europe III.

“ BREP GP Delaware ” means BREP Europe III GP L.P., a Delaware limited partnership and a general partner of the Partnership.

“BREP Europe III” means the collective reference to: (i) Blackstone Real Estate Partners Europe III L.P., a limited partnership formed or to be formed under the laws of the United Kingdom pursuant to the Limited Partnerships Act 1907 of the United Kingdom, (ii) any other investment vehicle established pursuant to Article 2 of the partnership agreement for the partnership referred to in clause (i) above, and (iii) any investment vehicle formed to co-invest with the partnership referred to in clause (i) above using third party capital and that potentially pays Carried Interest Distributions (as such term is used in such partnership agreement).

“ BREP Europe III Agreement ” means (i) the Amended and Restated Agreement of Limited Partnership dated March 17, 2008, of the partnership referred to in clause (i) of the definition of “BREP Europe III” in this Article I, as such agreement may be amended supplemented or otherwise modified from time to time, and (ii) any other BREP Europe III partnership agreement.

“ Capital Commitment BREA Europe III Partner Interest ” means the Partnership’s interest in BREA Europe III with respect to the Capital Commitment BREP Europe III Interest.

“ Capital Commitment BREP Europe III Commitment ” means BREA Europe III’s Commitment (as defined in the BREP Europe III Agreement) to BREP Europe III that relates solely to the Capital Commitment BREP Europe III Interest.

“ Capital Commitment BREP Europe III Interest ” means the Interest (as defined in the BREP Europe III Agreement) of BREA Europe III, if any, as a capital partner in BREP Europe III.

“ Capital Commitment BREP Europe III Investment ” means the Partnership’s indirect interest in BREA Europe III’s indirect interest in a specific investment of BREP Europe III pursuant to the BREP Europe III Agreements in BREA Europe III’s capacity as a capital partner of BREP Europe III, but does not include any GP-Related Investment.

“ Capital Commitment Capital Account ” means, with respect to each Capital Commitment Investment for each Partner, the account maintained for such Partner to which are credited such Partner’s contributions to the Partnership with respect to such Capital Commitment Investment and any net income allocated to such Partner pursuant to Section 7.3 with respect to such Capital Commitment Investment and from which are debited any distributions with respect to such Capital Commitment Investment to such Partner and any net losses allocated to such Partner with respect to such Capital Commitment Investment pursuant to Section 7.3. In the case of any such distribution in kind, the Capital Commitment Capital Accounts for the related Capital Commitment Investment shall be adjusted as if the asset distributed had been sold in a taxable transaction and the proceeds distributed in cash, and any resulting gain or loss on such sale shall be allocated to the Partners participating in such Capital Commitment Investment pursuant to Section 7.3.

 

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“ Capital Commitment Class A Interest ” has the meaning set forth in Section 7.4(f).

“ Capital Commitment Class B Interest ” has the meaning set forth in Section 7.4(f).

“ Capital Commitment Defaulting Party ” has the meaning specified in Section 7.4(g).

“ Capital Commitment Deficiency Contribution ” has the meaning specified in Section 7.4(g).

“ Capital Commitment Disposable Investment ” has the meaning set forth in Section 7.4(f).

“ Capital Commitment Distributions ” means, with respect to each Capital Commitment Investment, all amounts of distributions, received by the Partnership with respect to such Capital Commitment Investment solely in respect of the Partnership’s Capital Commitment BREA Europe III Partner Interest, less any costs, fees and expenses of the Partnership with respect thereto and less reasonable reserves for payment of costs, fees and expenses of the Partnership that are anticipated with respect thereto, in each case which the General Partner may allocate to all or any portion of such Capital Commitment Investment as it may determine in good faith is appropriate.

“ Capital Commitment Giveback Amount ” has the meaning set forth in Section 7.4(g).

“ Capital Commitment Interest ” means the interest of a Partner in a specific Capital Commitment Investment as provided herein.

“ Capital Commitment Investment ” means any Capital Commitment BREP Europe III Investment, but shall exclude any GP-Related Investment. The General Partner shall determine who may participate in such Capital Commitment Investment.

“ Capital Commitment Liquidating Share ” with respect to each Capital Commitment Investment means, in the case of dissolution of the Partnership, the related Capital Commitment Capital Account of a Partner (less amounts reserved in accordance with Section 9.3) as of the close of business on the effective date of dissolution.

“ Capital Commitment Net Income (Loss) ” with respect to each Capital Commitment Investment means all amounts of income received by the Partnership with respect to such Capital Commitment Investment, including without limitation gain or loss in respect of the disposition, in whole or in part, of such Capital Commitment Investment, less any costs, fees and expenses of the Partnership allocated thereto and less reasonable reserves for payment of costs, fees and expenses of the Partnership anticipated to be allocated thereto; provided , that any income received in respect of the Partnership’s Capital Commitment BREA Europe III Partner Interest that is unrelated to any Capital Commitment Investment (as determined by the General Partner in its sole discretion) shall be allocated to the Partners in accordance with their Capital Commitment Profit Sharing Percentages.

“ Capital Commitment Partner Interest ” means a Partner’s interest in the Partnership with respect to the Partnership’s Capital Commitment BREA Europe III Partner Interest.

“ Capital Commitment Profit Sharing Percentage ” with respect to each Capital Commitment Investment means the percentage interest of a Partner in Capital Commitment Net Income (Loss) from such Capital Commitment Investment set forth in the books and records of the Partnership.

 

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“ Capital Commitment Recontribution Amount ” has the meaning set forth in Section 7.4(g).

“ Capital Commitment-Related Capital Contributions ” has the meaning set forth in Section 7.1(a).

“ Capital Commitment-Related Commitment ”, with respect to any Partner, means such Partner’s commitment to the Partnership relating to such Partner’s Capital Commitment Partner Interest, as set forth in the books and records of the Partnership, including any such commitment set forth in such Partner’s Commitment Agreement.

“ Capital Commitment Special Distribution ” has the meaning set forth in Section 7.7(a).

“ Capital Commitment Value ” has the meaning set forth in Section 7.5.

“ Carried Interest ” shall mean (i) carried interest distributions to the general partner of BREP Europe III (including BREA Europe III) pursuant to paragraphs 4.2.1(c) and (d), paragraphs 4.2.2(c) and (d) and paragraph 4.2.8 of the BREP Europe III Agreement (or similar provisions of investment vehicles formed after the date hereof) and (ii) any other carried interest payable pursuant to the BREP Europe III Agreement. In the case of each of (i) and (ii) above, the amount shall be less any costs, fees and expenses of the Partnership with respect thereto and less reasonable reserves for payment of costs, fees and expenses of the Partnership that are anticipated with respect thereto (in each case which the General Partner may allocate among all or any portion of the GP-Related Investments as it determines in good faith is appropriate).

“ Carried Interest Give Back Percentage ” shall mean, for any Partner or Withdrawn Partner, subject to Section 5.8(e), the percentage determined by dividing (A) the aggregate amount of distributions received by such Partner or Withdrawn Partner from the Partnership, any Other Fund GPs or their Affiliates (other than Holdings), in respect of Carried Interest by (B) the aggregate amount of distributions made to all Partners, Withdrawn Partners or any other person by the Partnership, any Other Fund GP or their Affiliates (other than Holdings) (in any capacity), in respect of Carried Interest. For purposes of determining any “Carried Interest Give Back Percentage” hereunder, all Trust Amounts contributed to the Trust by the Partnership, Other Fund GPs or their Affiliates (other than Holdings) on behalf of a Partner or Withdrawn Partner (but not the Trust Income thereon) shall be deemed to have been initially distributed or paid to the Partners and Withdrawn Partners as Partners or partners of the Partnership, any of the Other Fund GPs or their Affiliates (other than Holdings).

“ Carried Interest Sharing Percentage ” means, with respect to each GP-Related Investment, the percentage interest of a Partner in Carried Interest from such GP-Related Investment set forth in the books and records of the Partnership.

“ Cause ” means the occurrence or existence of any of the following with respect to any Partner, as determined fairly, reasonably, on an informed basis and in good faith by the General Partner: (i) (w) any breach by any Partner of any provision of any non-competition agreement, (x) any material breach of this Agreement or any rules or regulations applicable to such Partner that are established by the General Partner, (y) such Partner’s deliberate failure to perform his or her duties to the Partnership, or (z) such Partner’s committing to or engaging in any conduct or behavior that is or may be harmful to the Partnership in a material way as determined by the

 

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General Partner; provided , that in the case of any of the foregoing clauses (w), (x), (y) and (z), the General Partner has given such Partner written notice (a “ Notice of Breach ”) within fifteen days after the General Partner becomes aware of such action and such Partner fails to cure such breach, failure to perform or conduct or behavior within fifteen days after receipt of such Notice of Breach from the General Partner (or such longer period, not to exceed an additional fifteen days, as shall be reasonably required for such cure, provided that such Partner is diligently pursuing such cure); (ii) any act of fraud, misappropriation, dishonesty, embezzlement or similar conduct against the Partnership; or (iii) conviction (on the basis of a trial or by an accepted plea of guilty or nolo contendere) of a felony or crime (including any misdemeanor charge involving moral turpitude, false statements or misleading omissions, forgery, wrongful taking, embezzlement, extortion or bribery), or a determination by a court of competent jurisdiction, by a regulatory body or by a self-regulatory body having authority with respect to securities laws, rules or regulations of the applicable securities industry, that such Partner individually has violated any applicable securities laws or any rules or regulations thereunder, or any rules of any such self-regulatory body (including, without limitation, any licensing requirement), if such conviction or determination has a material adverse effect on (A) such Partner’s ability to function as a Partner of the Partnership, taking into account the services required of such Partner and the nature of the Partnership.

“ CC Carried Interest ” means, with respect to any Limited Partner, the aggregate amount of distributions or payments received by such Limited Partner (in any capacity) from Affiliates of the Partnership in respect of or relating to “carried interest”, including the amount of any bonuses received by a Limited Partner as an employee of an Affiliate of the Partnership that relate to the amount of “carried interest” received by an Affiliate of the Partnership. “CC Carried Interest” includes any amount initially received by an Affiliate of the Partnership from any fund (including BCP V and BREP Europe III, any similar funds formed prior to or after the date hereof, and any other private equity merchant banking, real estate or debt funds, whether or not in existence as of the date hereof) to which such Affiliate serves as general partner (or other similar capacity) that exceeds such Affiliate’s pro rata share of distributions from such fund based upon capital contributions thereto (or the capital contributions to make the investment of such fund giving rise to such “carried interest”).

“ Clawback Adjustment Amount ” has the meaning set forth in Section 5.8(e).

“ Clawback Amount ” shall mean the “Clawback Amount” and the “Interim Clawback Amount,” both as set forth in Article One of the BREP Europe III Agreement, and any other clawback amount payable to the limited partners of or investors in BREP Europe III pursuant to any BREP Europe III Agreement, as applicable.

“ Clawback Provisions ” shall mean paragraphs 4.2.9 and 9.2.6 of the BREP Europe III Agreement and any other similar provisions in any other BREP Europe III Agreement existing heretofore or hereafter entered into.

“ Code ” means the United States Internal Revenue Code of 1986, as amended from time to time, or any successor statute. Any reference herein to a particular provision of the Code shall mean, where appropriate, the corresponding provision in any successor statute.

“ Commitment Agreement ” means a commitment agreement, pursuant to which a Partner has committed to fund certain amounts with respect to the GP-Related BREP Europe III Investments, the Capital Commitment BREP Europe III Investments and certain expenses of BREP Europe III.

 

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“ Contingent ” means subject to repurchase rights and/or other requirements.

“ Covered Person ” has the meaning set forth in Section 3.6(a).

The term “ control ” when used with reference to any person means the power to direct the management and policies of such person, directly or indirectly, by or through stock or other equity ownership, agency or otherwise, or pursuant to or in connection with an agreement, arrangement or understanding (written or oral) with one or more other persons by or through stock ownership, agency or otherwise; and the terms “ controlling ” and “ controlled ” shall have meanings correlative to the foregoing.

“ Controlled Entity ” when used with reference to another person means any person controlled by such other person.

“ Deceased Partner ” shall mean any Partner or Withdrawn Partner who has died or who suffers from Incompetence. For purposes hereof, references to a Deceased Partner shall refer collectively to the Deceased Partner and the estate and heirs or legal representative of such Deceased Partner, as the case may be, that have received such Deceased Partner’s interest in the Partnership.

“ Default Rate ” shall mean the lower of (i) the sum of (a) the rate of interest per annum publicly announced from time to time by JPMorgan Chase Bank, N.A. as its prime rate and (b) 5%, or (ii) the highest rate of interest permitted under applicable law.

“ Delaware LLC GP ” means BREP Europe III GP L.L.C., a Delaware limited liability company.

“ Disabling Event ” means (a) the withdrawal of a General Partner, other than in accordance with Section 6.2(b)(ii), (b) the incapacity of a General Partner, (c) a General Partner (i) makes an assignment for the benefit of its creditors, (ii) files a voluntary petition in bankruptcy, (iii) is adjudged a bankrupt or insolvent or has entered against it an order for relief in any bankruptcy or insolvency proceeding, (iv) files a petition or answer seeking for itself any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute, law or regulation, (v) files an answer or other pleading admitting or failing to contest the material allegations of a petition filed against it in proceeding described in clause (iv), or (v) seeks, consents to, or acquiesces in, the appointment of a trustee, receiver or liquidator of the General Partner or of all or substantially all of its properties, or (d) any other event that causes the General Partner to cease to be a general partner of the Partnership as provided in the Partnership Act.

“ Estate Planning Vehicle ” has the meaning set forth in Section 6.3(a).

“ Excess Holdback ” has the meaning set forth in Section 4.1(d).

“ Excess Holdback Percentage ” has the meaning set forth in Section 4.1(d).

“ Excess Tax-Related Amount ” has the meaning set forth in Section 5.8(e).

“ Existing Partner ” shall mean any Partner who is neither a Retaining Withdrawn Partner nor a Deceased Partner.

 

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“ Feeder Vehicle ” shall mean any Limited Partner formed to serve as a collective investment vehicle for real estate-related investments in the United Kingdom which invests all or a portion of its investable resources in the Partnership.

“ Final Event ” means the death, Total Disability, Incompetence, Bankruptcy, liquidation, dissolution or withdrawal from the Partnership of any person who is a Partner.

“ Firm Advances ” has the meaning set forth in Section 7.1.

“ Firm Collateral ” shall mean a Partner’s or Withdrawn Partner’s interest in one or more partnerships or limited liability companies, in either case affiliated with the Partnership, and certain other assets of such Partner or Withdrawn Partner, in each case that has been pledged or made available to the Trustee(s) to satisfy all or any portion of the Excess Holdback of such Partner or Withdrawn Partner as more fully described in the books and records of the Partnership; provided , that for all purposes hereof (and any other agreement ( e.g. , the Trust Agreement) that incorporates the meaning of the term “Firm Collateral” by reference), references to “Firm Collateral” shall include “Special Firm Collateral”, excluding references to “Firm Collateral” in Section 4.1(d)(v) and Section 4.1(d)(viii).

“ Firm Collateral Realization ” has the meaning set forth in Section 4.1(d)(v)(B) with respect to Firm Collateral, and Section 4.1(d)(v)(B) with respect to Special Firm Collateral.

“ Fiscal Year ” shall mean a calendar year, or any other period chosen by the General Partner.

“ Fund GP ” means the Partnership (only with respect to the Partnership’s GP-Related BREA Europe III Partner Interest) and the Other Fund GPs.

“ GAAP ” means U.S. generally accepted accounting principles.

“ General Partner ” or “ General Partners ” means BREE (Cayman) and BREP GP Delaware and any person admitted to the Partnership as an additional General Partner in accordance with the provisions of this Agreement (until such time as such person ceases to be a general partner of the Partnership as provided herein or in the Partnership Act), subject to the provisions of Section 3.4.

“ Giveback ” has the meaning set forth in the BREP Europe III Agreement.

“ Giveback Amount ” shall mean an “Investment - Related Giveback Amount”, as such term is defined in the BREP Europe III Agreement.

“ Giveback Provisions ” shall mean paragraph 3.4.3 of the BREP Europe III Agreement and any other similar provisions in any other BREP Europe III partnership agreement existing heretofore or hereafter entered into.

“ GP-Related BREA Europe III Partner Interest ” means the Partnership’s interest in BREA Europe III with respect to the GP-Related BREP Europe III Interest.

“ GP-Related BREP Europe III Interest ” means the interest of BREA Europe III in BREP Europe III as general partner of BREP Europe III, excluding any Capital Commitment BREP Europe III Interest.

 

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“ GP-Related BREP Europe III Investment ” means the Partnership’s indirect interest in BREA Europe III’s indirect interest in an Investment (for purposes of this definition, as defined in the BREP Europe III Partnership Agreement) in BREA Europe III’s capacity as the general partner of BREP Europe III, but does not include any Capital Commitment Investment.

“ GP-Related Capital Account ” has the meaning set forth in Section 5.2.

“ GP-Related Capital Contributions ” means capital contributions to the Partnership as are necessary to fund the amounts required to satisfy the Partnership’s obligations to make capital contributions to BREA Europe III to satisfy BREA Europe III’s obligations to make capital contributions to BREP Europe III in respect of the GP-Related BREP Europe III Interest, as determined by the General Partner from time to time.

“ GP-Related Class A Interest ” has the meaning set forth in Section 5.8(a).

“ GP-Related Class B Interest ” has the meaning set forth in Section 5.8(a).

“ GP-Related Commitment ”, with respect to any Partner, means such Partner’s commitment to the Partnership relating to such Partner’s GP-Related Partner Interest, as set forth in the books and records of the Partnership, including, without limitation, any such commitment that may be set forth in such Partner’s Commitment Agreement or SMD Agreement, if any.

“ GP-Related Defaulting Party ” has the meaning set forth in Section 5.8(d).

“ GP-Related Deficiency Contribution ” has the meaning set forth in Section 5.8(d).

“ GP-Related Disposable Investment ” has the meaning set forth in Section 5.8(a).

“ GP-Related Giveback Amount ” has the meaning set forth in Section 5.8(d)(i).

“ GP-Related Investment ” means any investment (direct or indirect) of the Partnership in respect of the Partnership’s GP-Related BREA Europe III Partner Interest (including, without limitation, any GP-Related BREP Europe III Investment but excluding any Capital Commitment Investment).

“ GP-Related Net Income (Loss) ” has the meaning set forth in Section 5.1(b).

“ GP-Related Partner Interest ” of a Partner means all interests of such Partner in the Partnership (other than such Partner’s Capital Commitment Partner Interest), including, without limitation, such Partner’s interest in the Partnership with respect to the Partnership’s GP-Related BREA Europe III Partner Interest and with respect to all GP-Related Investments.

“ GP-Related Profit Sharing Percentage ” means the “Carried Interest Sharing Percentage” and “Non-Carried Interest Sharing Percentage” of each Partner; provided that any reference in this Agreement to any GP-Related Profit Sharing Percentage that specifically refers to GP-Related Net Income unrelated to BREP Europe III shall continue to refer to the amount of each Partner’s percentage interest in a category of GP-Related Net Income (Loss) established by the General Partner from time to time pursuant to Section 5.3; provided further that, the term “GP-Related Profit Sharing Percentage” shall not include any Capital Commitment Profit Sharing Percentage.

 

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“ GP-Related Recontribution Amount ” has the meaning set forth in Section 5.8(d).

“ GP-Related Required Amounts ” means amounts equal to the Partnership’s portion of the required capital contribution in respect of any GP-Related BREP Europe III Investment to be made by the general partner of BREP Europe III (including, without limitation, BREA Europe III), as determined by the General Partner from time to time, which amounts shall be used by the Partnership to fund capital contributions to the general partner of BREP Europe III (including, without limitation, BREA Europe III).

“ GP-Related Unallocated Percentage ” has the meaning set forth in Section 5.3(b).

“ GP-Related Unrealized Net Income (Loss) ” attributable to any GP-Related BREP Europe III Investment as of any date means the GP-Related Net Income (Loss) that would be realized by the Partnership with respect to such GP-Related BREP Europe III Investment if BREP Europe III’s entire portfolio of investments were sold on such date for cash in an amount equal to their aggregate value on such date (determined in accordance with Section 5.1(e)) and all distributions payable by BREP Europe III to the Partnership (indirectly through the general partner of BREP Europe III) pursuant to the BREP Europe III Agreement with respect to such GP-Related BREP Europe III Investment were made on such date. “GP-Related Unrealized Net Income (Loss)” attributable to any other GP-Related Investment (other than any Capital Commitment Investment) as of any date means the GP-Related Net Income (Loss) that would be realized by the Partnership with respect to such GP-Related Investment if such GP-Related Investment were sold on such date for cash in an amount equal to its value on such date (determined in accordance with Section 5.1(e)).

“ Holdback ” has the meaning set forth in Section 4.1(d).

“ Holdback Percentage ” has the meaning set forth in Section 4.1(d).

“ Holdback Vote ” has the meaning set forth in Section 4.1(d).

“ Holdings ” means Blackstone Holdings IV L.P., a societé en commandite organized in Québec.

“ Incompetence ” means, with respect to any Partner, the determination by the General Partner in its sole discretion, after consultation with a qualified medical doctor, that such Partner is incompetent to manage his person or his property.

“ Inflation Index ” means (i) the GNP deflator, which is the fixed-weighted price index representing the average change in the United States gross national product as published in the Survey of Current Business by the National Income and Wealth Division of the Bureau of Economic Analysis of the U.S. Department of Commerce, or (ii) such other index measuring changes in economic prices in the United States as shall be selected by the General Partner.

“ Initial Holdback Percentages ” has the meaning set forth in Section 4.1(d).

“ Interest ” means a Partner’s interest in the Partnership, including such Partner’s GP-Related Partner Interest (including, without limitation, that which is held by a Retaining Withdrawn Partner) and Capital Commitment Partner Interest.

 

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“ Investment ” means any investment (direct or indirect) of the Partnership designated by the General Partner from time to time as an investment in which the Partners’ respective interests shall be established and accounted for on a basis separate from the Partnership’s other businesses, activities and investments, including (a) GP-Related Investments, and (b) Capital Commitment Investments.

“ Investor Limited Partner ” means any Limited Partner so designated at the time of its admission as a partner of the Partnership.

“ Investor Note ” means a promissory note of a limited partner in BFREP, BFIP, BFMEZP or BFCOMP evidencing loans made to such limited partner by Blackstone to purchase an interest in BFREP, BFIP, BFMEZP or BFCOMP.

“ Issuer ” means the issuer of any Security comprising part of an Investment.

“ L/C ” has the meaning set forth in Section 4.1(d).

“ L/C Partner ” has the meaning set forth in Section 4.1(d).

“ Lender or Guarantor ” means Blackstone, in its capacity as lender or guarantor under the Investor Notes, including any Affiliate of the General Partner that makes or guarantees loans to enable a Partner to acquire Capital Commitment Interests, other interests in BFREP or interests in BFIP, interests in BFMEZP or interests in BFCOMP.

“ Limited Partner ” means any of the persons who is shown on the books and records of the Partnership as a Limited Partner of the Partnership, including any Special Limited Partner, any Investor Limited Partner and any Nonvoting Limited Partner.

“ Loss Amount ” has the meaning set forth in Section 5.8(e).

“ Loss Investment ” has the meaning set forth in Section 5.8(e).

“ Majority in Interest of the Partners ” on any date (a “ vote date ”) means one or more persons who are Partners (including the General Partner and the Special Limited Partners but excluding Nonvoting Limited Partners) on the vote date and who, as of the last day of the most recent accounting period ending on or prior to the vote date (or as of such later date on or prior to the vote date selected by the General Partner as of which the Partners’ GP-Related Capital Account balances can be determined), have aggregate GP-Related Capital Account balances representing at least a majority in amount of the total GP-Related Capital Account balances of all the persons who are Partners (including the General Partner and the Special Limited Partners but excluding Nonvoting Limited Partners) on the vote date.

“ Moody’s ” means Moody’s Investor Services, Inc., or any successor thereto.

“ Net Carried Interest Distribution ” has the meaning set forth in Section 5.8(e).

“ Net Carried Interest Distribution Recontribution Amount ” has the meaning set forth in Section 5.8(e).

“ Net GP-Related Recontribution Amount ” has the meaning set forth in Section 5.8(d).

 

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“ Non-Carried Interest ” means, with respect to each GP-Related Investment (including any GP-Related BREP Europe III Investment), all amounts of distributions, other than Carried Interest and other than Capital Commitment Distributions, received by the Partnership with respect to such GP-Related Investment (including any GP-Related BREP Europe III Investment), less any costs, fees and expenses of the Partnership with respect thereto and less reasonable reserves for payment of costs, fees and expenses of the Partnership that are anticipated with respect thereto, in each case which the General Partner may allocate to all or any portion of the GP-Related Investments (including any GP-Related BREP Europe III Investment) as it may determine in good faith is appropriate.

“ Non-Carried Interest Sharing Percentage ” means, with respect to each GP-Related Investment (including GP-Related BREP Europe III Investments), the percentage interest of a Partner in Non-Carried Interest from such GP-Related Investment (including GP-Related BREP Europe III Investments) set forth in the books and records of the Partnership.

“ Non-Contingent ” means generally not subject to repurchase rights or other requirements.

“ Nonvoting Limited Partner ” has the meaning set forth in Section 6.1(a).

“ Original Agreement ” has the meaning set forth in the Preamble.

“ Other Fund GPs ” means BREP GP Delaware, the Delaware LLC GP, BREA Europe III (only with respect to BREA Europe III’s GP-Related BREP Europe III Interest) and any other entity (other than the Partnership) through which any Partner, Withdrawn Partner or any other person directly receives any amounts of Carried Interest, and any successor thereto; provided , that this includes any other entity which has in its organizational documents a provision which indicates that it is a “Fund GP” or an “Other Fund GP”; provided further , that notwithstanding the foregoing, none of Holdings, any estate planning vehicles established for the benefit of family members of any Partner or of any member or partner of any Other Fund GP shall be considered an “Other Fund GP” for purposes hereof; provided further , that the foregoing exclusion of such estate planning vehicles shall in no way limit such Partners’ obligations pursuant to Section 5.8(d).

“ Other Sources ” means (i) distributions or payments of CC Carried Interest (which shall include amounts of CC Carried Interest which are not distributed or paid to a Limited Partner but are instead contributed to a trust (or similar arrangement) to satisfy any “holdback” obligation with respect thereto), (ii) bonuses paid by Blackstone to a Limited Partner (not covered by clause (i) above) and (iii) distributions from BFREP (other than from the Partnership), BFIP, BFMEZP and BFCOMP to such Limited Partner.

“ Partner ” means any person who is a partner of the Partnership, whether a General Partner or a Limited Partner in whatsoever Partner Category.

“ Partner Category ” shall mean the Existing Partners, Retaining Withdrawn Partners or Deceased Partners, each referred to as a group for purposes hereof.

“ Partnership ” means Blackstone Real Estate Management Associates Europe III L.P., an Alberta, Canada limited partnership.

“ Partnership Act ” means the Partnership Act (Revised Statutes of Alberta, 2000, C, P.-3, et seq.) , as it may be amended from time to time, and any successor to such statute.

 

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“ Pledgable Blackstone Interests ” has the meaning set forth in Section 4.1(a).

“ Prime Rate ” means the rate of interest per annum publicly announced from time to time by JPMorgan Chase Bank, N.A. as its prime rate.

“ Qualifying Fund ” means any fund designated by the General Partner as a “Qualifying Fund.”

“ Required Rating ” has the meaning set forth in Section 4.1(d).

“ Repurchase Period ” has the meaning set forth in Section 5.8(c).

“ Retained Portion ” has the meaning set forth in Section 7.7.

“ Retaining Withdrawn Partner ” shall mean a Withdrawn Partner who has retained a GP-Related Partner Interest in the Partnership, pursuant to Section 6.5(f) or otherwise. A Retaining Withdrawn Partner shall be considered a Partner for all purposes hereof.

“ Second Amended and Restated Agreement ” has the meaning set forth in the Preliminary Statement.

“ Securities ” means any debt or equity securities of an issuer and its subsidiaries and other Controlled Entities constituting part of an Investment, including without limitation common and preferred stock, interests in limited partnerships and interests in limited liability companies (including warrants, rights, put and call options and other options relating thereto or any combination thereof), notes, bonds, debentures, trust receipts and other obligations, instruments or evidences of indebtedness, choses in action, other property or interests commonly regarded as securities, interests in real property, whether improved or unimproved, interests in oil and gas properties and mineral properties, short-term investments commonly regarded as money-market investments, bank deposits and interests in personal property of all kinds, whether tangible or intangible.

“ Settlement Date ” has the meaning set forth in Section 6.5(a).

“ SMD Agreements ” means the agreements between the Partnership and/or one or more of its Affiliates and certain of the Partners, pursuant to which each such Partner undertakes certain obligations with respect to the Partnership and/or its Affiliates. The SMD Agreements are hereby incorporated by reference as between the Partnership and the relevant Partner.

“ Special Firm Collateral ” means interests in a Qualifying Fund that have been pledged to the Trustee(s) to satisfy all or any portion of a Partner’s or Withdrawn Partner’s Holdback obligation (excluding any Excess Holdback) as more fully described in the books and records of the Partnership.

“ Special Firm Collateral Realization ” has the meaning set forth in Section 4.1(d).

“ Special Limited Partner ” means any of the persons shown in the books and records of the Partnership as a Special Limited Partner and any person admitted to the Partnership as an additional Special Limited Partner in accordance with the provisions of this Agreement.

 

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“ S&P ” means Standard & Poor’s Ratings Group, and any successor thereto.

“ Subject Investment ” has the meaning set forth in Section 5.8(e).

“ Subject Partner ” has the meaning set forth in Section 4.1(d).

“ Successor in Interest ” means any (i) shareholder of; (ii) trustee, custodian, receiver or other person acting in any Bankruptcy or reorganization proceeding with respect to; (iii) assignee for the benefit of the creditors of; (iv) officer, director or partner of; (v) trustee or receiver, or former officer, director or partner, or other fiduciary acting for or with respect to the dissolution, liquidation or termination of; or (vi) other executor, administrator, committee, legal representative or other successor or assign of, any Partner, whether by operation of law or otherwise.

“ Tax Matters Partner ” has the meaning set forth in Section 6.7(b).

“ TM ” has the meaning set forth in Section 10.2

“ Total Disability ” means the inability of a Limited Partner substantially to perform the obligations required of such Limited Partner (in its capacity as such or in any other capacity with respect to any Affiliate of the Partnership) for a period of six consecutive months by reason of physical or mental illness or incapacity and whether arising out of sickness, accident or otherwise.

“ Transfer ” has the meaning set forth in Section 8.2.

“ Trust Account ” has the meaning set forth in the Trust Agreement.

“ Trust Agreement ” means the Trust Agreement dated as of the date hereof, as amended to date, among the Partners, the Trustee(s) and certain other persons that may receive distributions in respect of or relating to Carried Interest from time to time.

“ Trust Amount ” has the meaning set forth in the Trust Agreement.

“ Trust Income ” has the meaning set forth in the Trust Agreement.

“ Trustee(s) ” has the meaning set forth in the Trust Agreement.

“ Unadjusted Carried Interest Distributions ” has the meaning set forth in Section 5.8(e).

“ Unallocated Capital Commitment Interests ” has the meaning set forth in Section 8.1(f).

“ Unfunded Capital Commitment-Related Commitment ” has the meaning set forth in Section 7.1(ii).

“ Unfunded Commitment ” has the meaning set forth in Section 7.1(ii).

“ Withdraw ” or “ Withdrawal ” with respect to a Partner means a Partner ceasing to be a partner of the Partnership (except as a Retaining Withdrawn Partner) for any reason (including death, disability, removal, resignation or retirement, whether such is voluntary or involuntary), unless the context shall limit the type of withdrawal to a specific reason and subject to any written agreements between a Partner and the Partnership or any Affiliate thereof, and “Withdrawn” with respect to a Partner means, as aforesaid, a Partner who has ceased to be a partner of the Partnership.

 

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“ Withdrawal Date ” means the date of the Withdrawal from the Partnership of a Withdrawn Partner.

“ Withdrawn Partner ” means a Limited Partner whose Interest in the Partnership has been terminated for any reason, including the occurrence of an event specified in Section 6.2, and shall include, unless the context requires otherwise, the estate or legal representative of any such Partner.

“ W-8BEN ” has the meaning set forth in Section 3.8.

“ W-8IMY ” has the meaning set forth in Section 3.8.

“ W-9 ” has the meaning set forth in Section 3.8.

Section 1.2.  Terms Generally . The definitions in Section 1.1 shall apply equally to both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The term “ person ” includes individuals, partnerships (including limited liability partnerships), companies (including limited liability companies), joint ventures, corporations, trusts, governments (or agencies or political subdivisions thereof) and other associations and entities. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”.

ARTICLE II

GENERAL PROVISIONS

Section 2.1.  General Partner and Limited Partners . The Partners may be General Partners or Limited Partners. The General Partners are BREE (Cayman) and BREP GP Delaware. The Limited Partners shall be as shown on the books and records of the Partnership. The books and records of the Partnership contain the GP-Related Profit Sharing Percentage and GP-Related Commitment of each Partner (including, without limitation, BREP GP Delaware) with respect to the GP-Related Investments of the Partnership as of the date hereof. The books and records of the Partnership contain the Capital Commitment Profit Sharing Percentage and Capital Commitment-Related Commitment of each Partner (including, without limitation, BREP GP Delaware) with respect to the Capital Commitment Investments of the Partnership as of the date hereof. The books and records of the Partnership shall be amended by the General Partner from time to time to reflect additional GP-Related Investments, additional Capital Commitment Investments, dispositions by the Partnership of GP-Related Investments, dispositions by the Partnership of Capital Commitment Investments, the GP-Related Profit Sharing Percentages of the Partners (including, without limitation, BREP GP Delaware) as modified from time to time, the Capital Commitment Profit Sharing Percentages of the Partners (including, without limitation, BREP GP Delaware) as modified from time to time, the admission of additional Partners, the withdrawal of Partners and the transfer or assignment of interests in the Partnership pursuant to the terms of this Agreement. At the time of admission of each additional Partner, the General Partner shall determine in its sole discretion the GP-Related Investments and Capital Commitment Investments in which such Partner shall participate and such Partner’s GP-Related Commitment, Capital Commitment-Related Commitment, GP-Related Profit Sharing Percentage with respect to each such GP-Related Investment and Capital Commitment Profit Sharing Percentage with respect to each such Capital Commitment Investment.

Section 2.2.  Formation; Name . The Partnership was formed upon the filing and recording of a Certificate with the Registrar of Corporations on December 21, 2007 (L.P. No. 13708227) and is hereby continued as a limited partnership pursuant to the Partnership Act and shall conduct its activities under the name of Blackstone Real Estate Management Associates Europe III L.P.

 

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Section 2.3.  Term . The term of the Partnership shall continue until December 31, 2058, unless earlier dissolved and terminated in accordance with this Agreement.

Section 2.4.  Purpose; Powers . (a) The purpose and character of the business of the Partnership shall be, directly or indirectly through subsidiaries or Affiliates, (i) to serve as a limited partner of BREA Europe III or of any Other Fund GP and perform the obligations of a limited partner specified in such entities’ respective partnership or similar agreements, (ii) to invest in GP-Related Investments, Capital Commitment Investments and other Investments and to acquire and invest in Securities or other property (directly or indirectly), (iii) to serve as general partner or limited partner of other partnerships and/or a member of limited liability companies, and hold interests in companies, corporations and other entities, (iv) to carry on such other businesses for profit, perform such other services and make such other investments for profit as are deemed desirable by the General Partner, (v) any other lawful purpose, and (vi) to do all things necessary and incidental thereto.

(b) In furtherance of its purposes, the Partnership shall have all powers necessary, suitable or convenient for the accomplishment of its purposes, alone or with others, as principal or agent, including the following:

(i) to be and become a general or limited partner of partnerships, a member of limited liability companies, a holder of common and preferred stock of corporations and/or an investor in the foregoing entities or other entities, in connection with the making of Investments or the acquisition, holding or disposition of Securities or other property or as otherwise deemed appropriate by the General Partner in the conduct of the Partnership’s business, and to take any action in connection therewith;

(ii) to acquire and invest in general or limited partner interests, in limited liability company interests, in common and preferred stock of corporations and/or in other interests in or obligations of the foregoing entities or other entities and in Investments and Securities or other property or direct or indirect interests therein, whether such Investments and Securities or other property are readily marketable or not, and to receive, hold, sell, dispose of or otherwise transfer any such partner interests, limited liability company interests, stock, interests, obligations, Investments or Securities or other property and any dividends and distributions thereon and to purchase and sell, on margin, and be long or short, futures contracts and to purchase and sell, and be long or short, options on futures contracts;

(iii) to buy, sell and otherwise acquire investments, whether such investments are readily marketable or not;

(iv) to invest and reinvest the cash assets of the Partnership in money-market or other short-term investments;

(v) to hold, receive, mortgage, pledge, lease, transfer, exchange or otherwise dispose of, grant options with respect to, and otherwise deal in and exercise all rights, powers, privileges and other incidents of ownership or possession with respect to, all property held or owned by the Partnership;

(vi) to borrow or raise money from time to time and to issue promissory notes, drafts, bills of exchange, warrants, bonds, debentures and other negotiable and

 

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non-negotiable instruments and evidences of indebtedness, to secure payment of the principal of any such indebtedness and the interest thereon by mortgage, pledge, conveyance or assignment in trust of, or the granting of a security interest in, the whole or any part of the property of the Partnership, whether at the time owned or thereafter acquired, to guarantee the obligations of others and to buy, sell, pledge or otherwise dispose of any such instrument or evidence of indebtedness;

(vii) to lend any of its property or funds, either with or without security, at any legal rate of interest or without interest;

(viii) to have and maintain one or more offices within or without the Province of Alberta, Canada, and in connection therewith, to rent or acquire office space, engage personnel and compensate them and do such other acts and things as may be advisable or necessary in connection with the maintenance of such office or offices;

(ix) to open, maintain and close accounts, including margin accounts, with brokers;

(x) to open, maintain and close bank accounts and draw checks and other orders for the payment of moneys;

(xi) to engage accountants, auditors, custodians, investment advisers, attorneys and any and all other agents and assistants, both professional and nonprofessional, and to compensate them as may be necessary or advisable;

(xii) to form or cause to be formed and to own the stock of one or more corporations, whether foreign or domestic, to form or cause to be formed and to participate in partnerships and joint ventures, whether foreign or domestic, and to form or cause to be formed and be a member or manager or both of one or more limited liability companies;

(xiii) to enter into, make and perform all contracts, agreements and other undertakings as may be necessary, convenient or advisable or incident to carrying out its purposes;

(xiv) to sue and be sued, to prosecute, settle or compromise all claims against third parties, to compromise, settle or accept judgment to claims against the Partnership, and to execute all documents and make all representations, admissions and waivers in connection therewith;

(xv) to distribute, subject to the terms of this Agreement, at any time and from time to time to Partners cash or investments or other property of the Partnership, or any combination thereof; and

(xvi) to take such other actions necessary or incidental thereto and to engage in such other businesses as may be permitted under applicable law.

Section 2.5.  Place of Business . The Partnership shall maintain an office and principal place of business at 345 Park Avenue, New York, New York 10154 U.S.A., or such other place or places as may from time to time be designated by the General Partner.

 

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Section 2.6.  Feeder Vehicle . (a) The Interest of the Feeder Vehicle shall be treated as Interests held by more than one Limited Partner for purposes of determining the appropriate treatment of the Feeder Vehicle in connection herewith, in light of the multiple interest holders in the Feeder Vehicle. This shall include (i) reflecting on the books and records of the Partnership a separate Interest held by the Feeder Vehicle with respect to each interest holder therein and (ii) applying the provisions of Article IV as though the interest holder were a direct Limited Partner in the Partnership.

(b) If any interest holder of the Feeder Vehicle fails to make a Capital Contribution to the Feeder Vehicle, the Feeder Vehicle may be treated as a Defaulting Limited Partner in accordance with the provisions hereof, but solely with respect to such interest holder’s indirect interest in the Partnership.

(c) In the case of any vote of Limited Partners under this Agreement or any law, the Feeder Vehicle shall vote its Interest in proportion to the votes on such matter of the interest holders thereof, based on their pro rata interest therein, that are unaffiliated with the General Partner.

(d) The General Partner may make any adjustments to the Interest of the Feeder Vehicle to accomplish the overall objectives of this Section 2.6; provided , that such adjustments shall in no way have a materially adverse effect on the Interests of any other Partner.

ARTICLE III

MANAGEMENT

Section 3.1.  General Partners . BREE (Cayman) and BREP GP Delaware shall be the “General Partners,” subject to Section 3.4. A General Partner may not be removed without its consent. The management of the business and affairs of the Partnership shall be vested in the General Partners as provided in Section 3.4.

Section 3.2.  Limitations on Limited Partners . Except as may be expressly required or permitted by the Partnership Act, Limited Partners as such shall have no right to, and shall not, take part in the control of the Partnership’s business or act for or bind the Partnership, and shall have only the rights and powers of a limited partner as provided in both the Partnership Act and this Agreement.

Section 3.3.  Partner Voting . (a) To the extent a Partner is entitled to vote with respect to any matter relating to the Partnership, such Partner shall not be obligated to abstain from voting on any matter (or vote in any particular manner) because of any interest (or conflict of interest) of such Partner (or any Affiliate thereof) in such matter.

(b) Meetings of the Partners may be held only when called by the General Partner.

Section 3.4.  Management . (a) The full management, control and operation of the Partnership and the formulation and execution of business and investment policy shall be vested in the General Partners, and the General Partners shall have full control over the business and affairs of the Partnership; provided that, except as otherwise required by applicable law, (i) BREE (Cayman) shall have exclusive power, authority, management, control and operation with respect to the voting of securities of portfolio companies of BREP Europe III, (ii) BREP GP Delaware shall have exclusive power, authority, management, control and operation with respect to all matters of any kind except the voting of securities of portfolio companies of BREP Europe III, and (iii) each reference to the “General Partner” in this Agreement means BREP GP Delaware, unless such reference relates to the voting of securities of portfolio companies of BREP Europe III, in which case, such reference means BREE (Cayman). Subject

 

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to the proviso to the immediately preceding sentence, the General Partners shall, in the General Partners’ discretion, exercise all powers necessary and convenient for the purposes of the Partnership, including, without limitation, those enumerated in Section 2.4, on behalf and in the name of the Partnership. All decisions and determinations (howsoever described herein) to be made by the General Partners pursuant to this Agreement shall be made in the General Partners’ discretion, subject only to the express terms and conditions of this Agreement.

(b) All outside business or investment activities of the Partners (including outside directorships or trusteeships) shall be subject to such rules and regulations as are established by the General Partner from time to time.

Section 3.5.  Responsibilities of Partners . The General Partner may from time to time establish such rules and regulations applicable to Partners as the General Partner deems appropriate.

Section 3.6.  Exculpation and Indemnification . (a)  Liability to Partners . Notwithstanding any other provision of this Agreement, whether express or implied, to the fullest extent permitted by law, no Partner nor any of such Partner’s representatives, agents or advisors nor any partner, member, officer, employee, representative, agent or advisor of the Partnership or any of its Affiliates (individually, a “ Covered Person ” and collectively, the “ Covered Persons ”) shall be liable to the Partnership or any other Partner for any act or omission (in relation to the Partnership, this Agreement, any related document or any transaction or investment contemplated hereby or thereby) taken or omitted by a Covered Person (other than any act or omission constituting Cause), unless there is a final and non-appealable judicial determination and/or determination of an arbitrator that such Covered Person did not act in good faith and in what such Covered Person reasonably believed to be in, or not opposed to, the best interests of the Partnership and within the authority granted to such Covered Person by this Agreement, and, with respect to any criminal act or proceeding, had reasonable cause to believe that such Covered Person’s conduct was unlawful. Each Covered Person shall be entitled to rely in good faith on the advice of legal counsel to the Partnership, accountants and other experts or professional advisors, and no action taken by any Covered Person in reliance on such advice shall in any event subject such person to any liability to any Partner or the Partnership. To the extent that, at law or in equity, a Partner has duties (including fiduciary duties) and liabilities relating thereto to the Partnership or to another Partner, to the fullest extent permitted by law, such Partner acting under this Agreement shall not be liable to the Partnership or to any such other Partner for its good faith reliance on the provisions of this Agreement. The provisions of this Agreement, to the extent that they expand or restrict the duties and liabilities of a Partner otherwise existing at law or in equity, are agreed by the Partners, to the fullest extent permitted by law, to modify to that extent such other duties and liabilities of such Partner.

(b) Indemnification . To the fullest extent permitted by law, the Partnership shall indemnify and hold harmless (but only to the extent of the Partnership’s assets (including, without limitation, the remaining GP-Related Commitments and Capital Commitment - Related Commitments of the Partners) each Covered Person from and against any and all claims, damages, losses, costs, expenses and liabilities (including, without limitation, amounts paid in satisfaction of judgments, in compromises and settlements, as fines and penalties and legal or other costs and reasonable expenses of investigating or defending against any claim or alleged claim), joint and several, of any nature whatsoever, known or unknown, liquidated or unliquidated (collectively, for purposes of this Section 3.6, “ Losses ”), arising from any and all claims, demands, actions, suits or proceedings, civil, criminal, administrative or investigative, in which the Covered Person may be involved, or threatened to be involved, as a party or otherwise, by reason of such Covered Person’s management of the affairs of the Partnership or which relate to or arise out of or in connection with the Partnership, its property, its business or affairs (other than claims, demands, actions, suits or proceedings, civil, criminal, administrative or investigative, arising out of any act or omission of such Covered Person constituting Cause); provided , that a Covered Person

 

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shall not be entitled to indemnification under this Section with respect to any claim, issue or matter if there is a final and non-appealable judicial determination and/or determination of an arbitrator that such Covered Person did not act in good faith and in what such Covered Person reasonably believed to be in, or not opposed to, the best interest of the Partnership and within the authority granted to such Covered Person by this Agreement, and, with respect to any criminal act or proceeding, had reasonable cause to believe that such Covered Person’s conduct was unlawful; provided further , that if such Covered Person is a Partner or a Withdrawn Partner, such Covered Person shall bear its share of such Losses in accordance with such Covered Person’s GP-Related Profit Sharing Percentage in the Partnership as of the time of the actions or omissions that gave rise to such Losses. To the fullest extent permitted by law, expenses (including legal fees) incurred by a Covered Person (including, without limitation, the General Partner) in defending any claim, demand, action, suit or proceeding may, with the approval of the General Partner, from time to time, be advanced by the Partnership prior to the final disposition of such claim, demand, action, suit or proceeding upon receipt by the Partnership of a written undertaking by or on behalf of the Covered Person to repay such amount to the extent that it shall be subsequently determined that the Covered Person is not entitled to be indemnified as authorized in this Section, and the Partnership and its Affiliates shall have a continuing right of offset against such Covered Person’s interests/investments in the Partnership and such Affiliates and shall have the right to withhold amounts otherwise distributable to such Covered Person to satisfy such repayment obligation. If a Partner institutes litigation against a Covered Person which gives rise to an indemnity obligation hereunder, such Partner shall be responsible, up to the amount of such Partner’s Interests and remaining GP-Related Commitment and Capital Commitment - Related Commitment, for such Partner’s pro rata share of the Partnership’s expenses related to such indemnity obligation, as determined by the General Partner. The Partnership may purchase insurance, to the extent available at reasonable cost, to cover losses, claims, damages or liabilities covered by the foregoing indemnification provisions. Partners will not be personally obligated with respect to indemnification pursuant to this Section.

Section 3.7.  Representations of Limited Partners .

(a) Each Limited Partner by execution of this Agreement (or by otherwise becoming bound by the terms and conditions hereof as provided herein or in the Partnership Act) represents and warrants to every other Partner and to the Partnership, except as may be waived by the General Partner, that such Limited Partner is acquiring each of such Limited Partner’s Interests for such Limited Partner’s own account for investment and not with a view to resell or distribute the same or any part hereof, and that no other person has any interest in any such Interest or in the rights of such Limited Partner hereunder. Each Limited Partner represents and warrants that such Limited Partner understands that the Interests have not been registered under the Securities Act of 1933 and therefore such Interests may not be resold without registration under such Act or exemption from such registration, and that accordingly such Limited Partner must bear the economic risk of an investment in the Partnership for an indefinite period of time. Each Limited Partner represents that such Limited Partner has such knowledge and experience in financial and business matters that such Limited Partner is capable of evaluating the merits and risks of an investment in the Partnership, and that such Limited Partner is able to bear the economic risk of such investment. Each Limited Partner represents that such Limited Partner’s overall commitment to the Partnership and other investments which are not readily marketable is not disproportionate to the Limited Partner’s net worth and the Limited Partner has no need for liquidity in the Limited Partner’s investment in Interests. Each Limited Partner represents that to the full satisfaction of the Limited Partner, the Limited Partner has been furnished any materials that such Limited Partner has requested relating to the Partnership, any Investment and the offering of Interests and has been afforded the opportunity to ask questions of representatives of the Partnership concerning the terms and conditions of the offering of Interests and any matters pertaining to each Investment and to obtain any other additional information relating thereto. Each Limited Partner represents that the Limited Partner has consulted to the extent deemed appropriate by the Limited Partner with the Limited Partner’s own advisers as to the financial, tax, legal and related matters concerning an investment in Interests and on that basis believes that an investment in the Interests is suitable and appropriate for the Limited Partner.

 

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(b) Each Partner agrees that the representations and warranties contained in paragraph (a) above shall be true and correct as of any date that such Partner (1) makes a capital contribution to the Partnership (whether as a result of Firm Advances made to such Partner or otherwise) with respect to any Investment, and such Partner hereby agrees that such capital contribution shall serve as confirmation thereof and/or (2) repays any portion of the principal amount of a Firm Advance, and such Partner hereby agrees that such repayment shall serve as confirmation thereof.

Section 3.8.  Tax Representation . Each Limited Partner certifies that (A) if the Limited Partner is a United States person (as defined in the Code) (x) (i) the Limited Partner’s name, social security number (or, if applicable, employer identification number) and address provided to the Partnership and its Affiliates pursuant to an IRS Form W-9, Payer’s Request for Taxpayer Identification Number Certification (“ W-9 ”) or otherwise are correct and (ii) the Limited Partner will complete and return a W-9, and (y) (i) the Limited Partner is a United States person (as defined in the Code) and (ii) the Limited Partner will notify the Partnership within 60 days of a change to foreign (non-United States) status or (B) if the Limited Partner is not a United States person (as defined in the Code) (x) (i) the information on the completed IRS Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding (“ W-8BEN ”) or other applicable form, including but not limited to IRS Form W-8IMY, Certificate of Foreign Intermediary, Foreign Partnership, or Certain U.S. Branches for United States Tax Withholding (“ W-8IMY ”), or otherwise is correct and (ii) the Limited Partner will complete and return the applicable IRS form, including but not limited to a W-8BEN or W-8IMY, and (y) (i) the Limited Partner is not a United States person (as defined in the Code) and (ii) the Limited Partner will notify the Partnership within 60 days of any change of such status. The Limited Partner agrees to properly execute and provide to the Partnership in a timely manner any tax documentation that may be reasonably required by the General Partner.

ARTICLE IV

CAPITAL OF THE PARTNERSHIP

Section 4.1.  Capital Contributions by Partners . (a) Each Partner (other than BREE (Cayman)) may be required to make GP-Related Capital Contributions to the Partnership at such times and in such amounts as are required to fund the GP-Related Required Amounts, as determined by the General Partner from time to time; provided , that (i) such GP-Related Capital Contributions may be made pro rata among the Partners (other than BREE (Cayman)) based upon the allocation of the Carried Interest in each GP-Related BREP Europe III Investment by the General Partner and (ii) additional GP-Related Capital Contributions in excess of GP-Related Required Amounts which are to be used for ongoing business operations (as distinct from financing legal or other specific liabilities of the Partnership) (including those specifically set forth in Sections 4.1(d) and 5.8(d)) shall be determined by the General Partner; provided further , that the General Partner may excuse any Partner from making GP-Related Capital Contributions to fund GP-Related Required Amounts as provided in the books and records of the Partnership. Limited Partners (other than Special Limited Partners or any Affiliates thereof) shall not be required to make additional GP-Related Capital Contributions to the Partnership except (i) as a condition of an increase in such Limited Partner’s GP-Related Profit Sharing Percentage, or (ii) as specifically set forth in this Agreement; provided, however , that the General Partner and any Partner (other than BREE (Cayman)) may agree from time to time that such Partner shall make an additional GP-Related Capital Contribution to the Partnership; and provided further that each Investor Limited Partner shall maintain its GP-Related Capital Account at a level equal to the product of (i) its GP-Related Profit Sharing Percentage from time to time and (ii) the total capital of the Partnership related to the Partnership’s GP-Related

 

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BREA Europe III Partner Interest; provided further , that the foregoing in no way limits any other provision of this Agreement (including without limitation, Sections 5.8(d) and (e) and 6.5) or of any written agreement between a Partner and the Partnership or an Affiliate thereof which requires the making of any such additional GP-Related Capital Contribution; provided further , that if required by applicable law, the maximum amount of capital a Partner is obligated to contribute to the Partnership at any time in respect of such Partner’s GP-Related Partner Interest shall be disclosed in a Certificate filed in accordance with the Partnership Act; and provided further , that, any provision of this Agreement to the contrary notwithstanding, BREE (Cayman) shall be required to make a maximum capital contribution of (U.S.)$10. Notwithstanding the foregoing, the unfunded amount of the commitment of any Partner (other than BREE (Cayman)) to make GP-Related Capital Contributions to the Partnership (such Partner’s “ Unfunded Commitment ”) may be determined and redetermined by the General Partner from time to time (including, without limitation, any redetermination that results in a reduction in such Partner’s Unfunded Commitment, which reduction may be retroactive); provided that each Partner (other than BREE (Cayman)) agrees to make GP-Related Capital Contributions in the full amount of such Partner’s Unfunded Commitment at any time, on condition that the General Partner does not thereafter make a redetermination that results in a reduction in such Partner’s Unfunded Commitment and subject to all other terms and conditions set forth herein and/or in any other agreement relating thereto; and provided further , that, following an initial determination of the commitment of a Partner (other than BREE (Cayman)), such Partner’s Unfunded Commitment shall not be increased without the consent of such Partner. Any provision of this Agreement to the contrary notwithstanding, no GP-Related Capital Contribution shall become due and payable or be required to be made by any Partner, unless and until it shall be called by the General Partner for the purposes set forth herein or in the Commitment Agreement of such Partner.

(b) The General Partner may elect on a case by case basis to (i) cause the Partnership to loan any Partner (including any additional Partner admitted to the Partnership pursuant to Section 6.1 but excluding any Partners that are also executive officers of Blackstone) the amount of any GP-Related Capital Contribution required to be made by such Partner or (ii) permit any Partner (including any additional Partner admitted to the Partnership pursuant to Section 6.1) to make a required GP-Related Capital Contribution to the Partnership in installments, in each case on terms determined by the General Partner in accordance with Section 5.2.

(c) Each GP-Related Capital Contribution by a Partner shall be credited to the appropriate GP-Related Capital Account of such Partner in accordance with Section 5.2.

(d)(i) The Partners and the Withdrawn Partners have entered into the Trust Agreement, pursuant to which certain amounts of the distributions relating to the Carried Interest will be paid to the Trustee(s) for deposit in the Trust Account (such amounts to be paid to the Trustee(s) for deposit in the Trust Account constituting a “ Holdback ”). The General Partner shall determine, as set forth below, the percentage of each distribution of Carried Interest that shall be withheld for BREP GP Delaware and each Partner Category (such withheld percentage constituting BREP GP Delaware’s and such Partner Category’s “ Holdback Percentage ”). The applicable Holdback Percentages initially shall be 0% for BREP GP Delaware, 15% for Existing Partners (other than BREP GP Delaware), 21% for Retaining Withdrawn Partners (other than BREP GP Delaware) and 24% for Deceased Partners (the “ Initial Holdback Percentages ”) Any provision of this Agreement to the contrary notwithstanding, the Holdback Percentage for BREP GP Delaware shall not be subject to change pursuant to clause (ii), (iii) or (iv) of this Section 4.1(d).

(ii) The Holdback Percentage may not be reduced for any individual Partner as compared to the other Partners in his Partner Category (except as provided in clause (iv) below). The General Partner may only reduce the Holdback Percentages among the Partner

 

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Categories on a proportionate basis. For example, if the Holdback Percentage for Existing Partners is decreased to 12.5%, the Holdback Percentage for Retaining Withdrawn Partners and Deceased Partners shall be reduced to 17.5% and 20%, respectively. Any reduction in the Holdback Percentage for any Partner shall apply only to distributions relating to Carried Interest made after the date of such reduction.

(iii) The Holdback Percentage may not be increased for any individual Partner as compared to the other Partners in his Partner Category (except as provided in clause (iv) below). The General Partner may not increase the Retaining Withdrawn Partners’ Holdback Percentage beyond 21% unless the General Partner concurrently increases the Existing Partners’ Holdback Percentage to 21%. The General Partner may not increase the Deceased Partners’ Holdback Percentage beyond 24% unless the General Partner increases the Holdback Percentage for both Existing Partners and Retaining Withdrawn Partners to 24%. The General Partner may not increase the Holdback Percentage of any Partner Category beyond 24% unless such increase applies equally to all Partner Categories. Any increase in the Holdback Percentage for any Partner shall apply only to distributions relating to Carried Interest made after the date of such increase. The foregoing shall in no way prevent the General Partner from proportionately increasing the Holdback Percentage of any Partner Category (following a reduction of the Holdback Percentages below the Initial Holdback Percentages), if the resulting Holdback Percentages are consistent with the above. For example, if the General Partner reduces the Holdback Percentages for Existing Partners, Retaining Withdrawn Partners and Deceased Partners to 12.5%, 17.5% and 20%, respectively, the General Partner shall have the right to subsequently increase the Holdback Percentages to the Initial Holdback Percentages.

(iv)(A) Notwithstanding anything contained herein to the contrary, the Partnership may increase or decrease the Holdback Percentage for any Partner in any Partner Category (in such capacity, the “ Subject Partner ”) pursuant to a majority vote of the Special Limited Partners and BREP GP Delaware (a “ Holdback Vote ”); provided , that a Subject Partner’s Holdback Percentage shall not be (I) increased prior to such time as such Subject Partner (x) is notified by the Partnership of the decision to increase such Subject Partner’s Holdback Percentage and (y) has, if requested by such Subject Partner, been given 30 days to gather and provide information to the Partnership for consideration before a second Holdback Vote (requested by the Subject Partner) and (II) decreased unless such decrease occurs subsequent to an increase in a Subject Partner’s Holdback Percentage pursuant to a Holdback Vote under this clause (iv); provided further , that such decrease shall not exceed an amount such that such Subject Partner’s Holdback Percentage is less than the prevailing Holdback Percentage for such Subject Partner’s Partner Category; provided further , that a Partner shall not vote to increase a Subject Partner’s Holdback Percentage unless such voting partner determines, in his good faith judgment, that the facts and circumstances indicate that it is reasonably likely that such Subject Partner, or any of his successors or assigns (including his estate or heirs) who at the time of such vote holds the Partnership interest or otherwise has the right to receive distributions relating thereto, will not be capable of satisfying any GP-Related Recontribution Amounts that may become due.

(B) A Holdback Vote shall take place at a Partnership meeting. Each of the Special Limited Partners and BREP GP Delaware shall be entitled to cast one vote with respect to the Holdback Vote regardless of such Partner’s interest in the Partnership. Such vote may be cast by any such Partner in person or by proxy.

 

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(C) If the result of the second Holdback Vote is an increase in a Subject Partner’s Holdback Percentage, such Subject Partner may submit the decision to an arbitrator, the identity of which is mutually agreed upon by both the Subject Partner and the Partnership; provided , that if the Partnership and the Subject Partner cannot agree upon a mutually satisfactory arbitrator within 10 days of the second Holdback Vote, each of the Partnership and the Subject Partner shall request its candidate for arbitrator to select a third arbitrator satisfactory to such candidates; provided further , that if such candidates fail to agree upon a mutually satisfactory arbitrator within 30 days of such request, the then sitting President of the American Arbitration Association shall unilaterally select the arbitrator. Each Subject Partner that submits the decision of the Partnership pursuant to the second Holdback Vote to arbitration and the Partnership shall estimate their reasonably projected out-of-pocket expenses relating thereto and each such party shall, to the satisfaction of the arbitrator and prior to any determination being made by the arbitrator, pay the total of such estimated expenses (i.e., both the Subject Partner’s and the Partnership’s expenses) into an escrow account to be controlled by Simpson Thacher & Bartlett, as escrow agent (or such other comparable law firm as the Partnership and Subject Partner shall agree). The arbitrator shall direct the escrow agent to pay out of such escrow account all expenses associated with such arbitration (including costs leading thereto) and to return to the “victorious” party the entire amount of funds such party paid into such escrow account. If the amount contributed to the escrow account by the losing party is insufficient to cover the expenses of such arbitration, such “losing” party shall then provide any additional funds necessary to cover such costs to such “victorious” party. For purposes hereof, the “victorious” party shall be the Partnership, if the Holdback Percentage ultimately determined by the arbitrator is closer to the percentage determined in the second Holdback Vote than it is to the prevailing Holdback Percentage for the Subject Partner’s Partner Category; otherwise, the Subject Partner shall be the “victorious” party. The party that is not the “victorious” party shall be the “losing” party.

(D) In the event of a decrease in a Subject Partner’s Holdback Percentage (1) pursuant to a Holdback Vote under this clause (iv) or (2) pursuant to a decision of an arbitrator under paragraph (C) of this clause (iv), the Partnership shall release and distribute to such Subject Partner any Trust Amounts (and the Trust Income thereon (except as expressly provided herein with respect to using Trust Income as Firm Collateral)) which exceed the required Holdback of such Subject Partner (in accordance with such Subject Partner’s reduced Holdback Percentage) as though such reduced Holdback Percentage had applied since the increase of the Subject Partner’s Holdback Percentage pursuant to a previous Holdback Vote under this clause (iv).

(v)(A) If a Partner’s Holdback Percentage exceeds 15% (such percentage in excess of 15% constituting the “ Excess Holdback Percentage ”), such Partner may satisfy the portion of his Holdback obligation in respect of his Excess Holdback Percentage (such portion constituting such Partner’s “ Excess Holdback ”), and such Partner (or a Withdrawn Partner with respect to amounts contributed to the Trust Account while he was a Partner), to the extent his Excess Holdback obligation has previously been satisfied in cash, may obtain the release of the Trust Amounts (but not the Trust Income thereon which shall remain in the Trust Account and allocated to such Partner or Withdrawn Partner) satisfying such Partner’s or Withdrawn Partner’s Excess Holdback obligation, by pledging or otherwise making available to the Partnership, on a first priority basis (except as provided below), all or any portion of his Firm Collateral in satisfaction of his Excess Holdback obligation. Any Partner seeking to satisfy all or any portion of the Excess Holdback utilizing Firm Collateral shall sign such documents and otherwise take such other action as is necessary or appropriate (in the good faith judgment of the General Partner) to perfect a first priority security interest in, and otherwise assure the ability of the

 

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Partnership to realize on (if required), such Firm Collateral; provided , that in the case of entities listed in the books and records of the Partnership, in which Partners/members are permitted to pledge their interests therein to finance all or a portion of their capital contributions thereof (“ Pledgable Blackstone Interests ”), to the extent a first priority security interest is unavailable because of an existing lien on such Firm Collateral, the Partner or Withdrawn Partner seeking to utilize such Firm Collateral shall grant the Partnership a second priority security interest therein in the manner provided above; provided further , that (x) to the extent that neither a first priority nor a second priority security interest in Pledgable Blackstone Interests is available, or (y) if the General Partner otherwise determines in its good faith judgment that a security interest in Firm Collateral (and the corresponding documents and actions) are not necessary or appropriate, the Partner or Withdrawn Partner shall (in the case of either clause (x) or (y) above) irrevocably instruct in writing the relevant partnership, limited liability company or other entity listed on Exhibit A to remit any and all net proceeds resulting from a Firm Collateral Realization on such Firm Collateral to the Trustee(s) as more fully provided in clause (B) below. The Partnership shall, at the request of any Partner or Withdrawn Partner, assist such Partner or Withdrawn Partner in taking such action as is necessary to enable such Partner or Withdrawn Partner to use Firm Collateral as provided hereunder.

(B) If upon a sale or other realization of all or any portion of any Firm Collateral (a “ Firm Collateral Realization ”), the remaining Firm Collateral is insufficient to cover any Partner’s or Withdrawn Partner’s Excess Holdback requirement, then up to 100% of the net proceeds otherwise distributable to such Partner or Withdrawn Partner from such Firm Collateral Realization (including distributions subject to the repayment of financing sources as in the case of Pledgable Blackstone Interests) shall be paid into the Trust Account to fully satisfy such Excess Holdback requirement (allocated to such Partner or Withdrawn Partner) and shall be deemed to be Trust Amounts for purposes hereunder. Any net proceeds from such Firm Collateral Realization in excess of the amount necessary to satisfy such Excess Holdback requirement shall be distributed to such Partner or Withdrawn Partner.

(C) Upon any valuation or revaluation of Firm Collateral that results in a decreased valuation of such Firm Collateral so that such Firm Collateral is insufficient to cover any Partner’s or Withdrawn Partner’s Excess Holdback requirement (including upon a Firm Collateral Realization, if net proceeds therefrom and the remaining Firm Collateral are insufficient to cover any Partner’s or Withdrawn Partner’s Excess Holdback requirement), the Partnership shall provide notice of the foregoing to such Partner or Withdrawn Partner and such Partner or Withdrawn Partner shall, within 30 days of receiving such notice, contribute cash (or additional Firm Collateral) to the Trust Account in an amount necessary to satisfy his Excess Holdback requirement. If any such Partner or Withdrawn Partner defaults upon his obligations under this clause (C), then Section 5.8(d)(ii) shall apply thereto; provided , that the first sentence of Section 5.8(d)(ii) shall be deemed inapplicable to a default under this clause (C); provided further , that for purposes of applying Section 5.8(d)(ii) to a default under this clause (C): (1) the term “GP-Related Defaulting Party” where such term appears in such Section 5.8(d)(ii) shall be construed as “defaulting party” for purposes hereof and (2) the terms “Net GP-Related Recontribution Amount” and “GP-Related Recontribution Amount” where such terms appear in such Section 5.8(d)(ii) shall be construed as the amount due pursuant to this clause (C).

 

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(vi) Any Partner or Withdrawn Partner may (i) obtain the release of any Trust Amounts (but not the Trust Income thereon which shall remain in the Trust Account and allocated to such Partner or Withdrawn Partner) or Firm Collateral, in each case, held in the Trust Account for the benefit of such Partner or Withdrawn Partner or (ii) require the Partnership to distribute all or any portion of amounts otherwise required to be placed in the Trust Account (whether cash or Firm Collateral), by obtaining a letter of credit for the benefit of the Trustee(s) (an “ L/C ”) in such amounts. Any Partner or Withdrawn Partner choosing to furnish an L/C to the Trustee(s) (in such capacity, an “ L/C Partner ”) shall deliver to the Trustee(s) an unconditional and irrevocable L/C from a commercial bank whose (A) short-term deposits are rated at least A-1 by S&P and P-1 by Moody’s (if the L/C is for a term of 1 year or less), or (B) long-term deposits are rated at least A+ by S&P or A1 by Moody’s (if the L/C is for a term of 1 year or more) (each a “ Required Rating ”). If the relevant rating of the commercial bank issuing such L/C drops below the relevant Required Rating, the L/C Partner shall supply to the Trustee(s), within 30 days of such occurrence, a new L/C from a commercial bank whose relevant rating is at least equal to the relevant Required Rating, in lieu of the insufficient L/C. In addition, if the L/C has a term expiring on a date earlier than the latest possible termination date of BREP Europe III, the Trustee(s) shall be permitted to drawdown on such L/C if the L/C Partner fails to provide a new L/C from a commercial bank whose relevant rating is at least equal to the relevant Required Rating, at least 30 days prior to the stated expiration date of such existing L/C. The Trustee(s) shall notify an L/C Partner 10 days prior to drawing on any L/C. The Trustee(s) may (as directed by the Partnership in the case of clause (1) below) draw down on an L/C only if (1) such a drawdown is necessary to satisfy an L/C Partner’s obligation relating to the Partnership’s obligations under the Clawback Provisions or (2) an L/C Partner has not provided a new L/C from a commercial bank whose relevant rating is at least equal to the relevant Required Rating (or the requisite amount of cash and/or Firm Collateral (to the extent permitted hereunder)), at least 30 days prior to the stated expiration of an existing L/C in accordance with this clause (vi). The Trustee(s), as directed by the Partnership, shall return to any L/C Partner his L/C upon (1) termination of the Trust Account and satisfaction of the Partnership’s obligations, if any, in respect of the Clawback Provisions, (2) an L/C Partner satisfying his entire Holdback obligation in cash and Firm Collateral (to the extent permitted hereunder), or (3) the release, by the Trustee(s), as directed by the Partnership, of all amounts in the Trust Account to Partners or Withdrawn Partners. If an L/C Partner satisfies a portion of his Holdback obligation in cash and/or Firm Collateral (to the extent permitted hereunder) or if the Trustee(s), as directed by the Partnership, release a portion of the amounts in the Trust Account to the Partners or Withdrawn Partners in the Partner Category of such L/C Partner, an L/C Partner’s L/C may be reduced by an amount corresponding to such portion satisfied in cash and/or Firm Collateral (to the extent permitted hereunder) or such portion released by the Trustee(s), as directed by the Partnership; provided, that in no way shall the general release of any Trust Income cause an L/C Partner to be permitted to reduce the amount of an L/C by any amount.

(vii)(A) Any in-kind distributions by the Partnership relating to Carried Interest shall be made in accordance herewith as though such distributions consisted of cash. The Partnership may direct the Trustee(s) to dispose of any in-kind distributions held in the Trust Account at any time. The net proceeds therefrom shall be treated as though initially contributed to the Trust Account.

(B) In lieu of the foregoing, any Existing Partner may pledge with respect to any in-kind distribution the Special Firm Collateral referred to in the applicable books and records of the Partnership; provided , that the initial contribution of such Special Firm Collateral shall initially equal 130% of the required Holdback Amount for a period of 90 days, and thereafter shall equal at least 115% of the required Holdback Amount. Paragraphs 4.1(d)(viii)(C) and (D) shall apply to such Special Firm Collateral. To the extent such Special Firm Collateral exceeds the applicable minimum percentage of the required Holdback Amount specified in the first sentence of this clause (vii)(B), the related Partner may obtain a release of such excess amount from the Trust Account.

 

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(viii)(A) Any Partner or Withdrawn Partner may satisfy all or any portion of his Holdback (excluding any Excess Holdback), and such Partner or a Withdrawn Partner may, to the extent his Holdback (excluding any Excess Holdback) has been previously satisfied in cash or by the use of an L/C as provided herein, obtain a release of Trust Amounts (but not the Trust Income thereon which shall remain in the Trust Account and allocated to such Partner or Withdrawn Partner) that satisfy such Partner’s or Withdrawn Partner’s Holdback (excluding any Excess Holdback) by pledging to the Trustee(s) on a first priority basis all of his Special Firm Collateral in a particular Qualifying Fund, which at all times must equal or exceed the amount of the Holdback distributed to the Partner or Withdrawn Partner (as more fully set forth below). Any Partner seeking to satisfy such Partner’s Holdback utilizing Special Firm Collateral shall sign such documents and otherwise take such other action as is necessary or appropriate (in the good faith judgment of the General Partner) to perfect a first priority security interest in, and otherwise assure the ability of the Trustee(s) )to realize on (if required), such Special Firm Collateral.

(B) If upon a distribution, withdrawal, sale, liquidation or other realization of all or any portion of any Special Firm Collateral (a “ Special Firm Collateral Realization ”), the remaining Special Firm Collateral (which shall not include the amount of Firm Collateral that consists of a Qualifying Fund and is being used in connection with an Excess Holdback) is insufficient to cover any Partner’s or Withdrawn Partner’s Holdback (when taken together with other means of satisfying the Holdback as provided herein (i.e., cash contributed to the Tr