Exhibit 3.A
SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP OF
HANOVER MARRIOTT LIMITED PARTNERSHIP
This Second Amended and Restated Agreement of Limited Partnership, dated as
of April 3, 1997 is made and entered into by and among Marriott Hanover Hotel
Corporation, a Delaware corporation, as general partner (the "General Partner"),
and those persons who have been admitted as limited partners of the Partnership
in accordance with the provisions of the Amended and Restated Agreement of
Limited Partnership of Hanover Marriott Limited Partnership (the "Partnership")
dated as November 24, 1986 (the "Original Agreement") or this Agreement and are
identified in the books and records of the Partnership as the Limited Partners.
The Partnership was formed pursuant to a Certificate of Limited Partnership
filed with the Office of the Secretary of State of the State of Delaware on
October 8, 1986. On November __, 1986, the General Partner, Xxxxxxxxxxx X.
Xxxxxxxx, as initial limited partner and the Limited Partners who purchased
units of limited partnership interest (the "Units") in the Partnership in the
private placement effected pursuant to a Private Placement Memorandum dated
October 23, 1986 entered into the Original Agreement. On March 3, 1997, Hanover
Hotel Acquisition Corp., an affiliate of the General Partner, made an offer to
the Limited Partners to purchase their Units on the terms and conditions set
forth in Hanover Hotel Acquisition Corp.'s Offer to Purchase for Cash 40
Outstanding Units of Limited Partnership Interest, dated March 3, 1997 (the
"Offer"). In connection with, and as a condition to consummation of, the Offer,
the Partners are adopting this Second Amended and Restated Agreement of Limited
Partnership.
In consideration of the mutual agreements made herein, the parties hereby
agree to continue the Partnership as a limited partnership under the Act as
follows:
ARTICLE ONE
DEFINED TERMS
SECTION 1.01.
The defined terms used in this Agreement shall, unless the context
otherwise requires, have the respective meanings specified in this Section 1.01.
"Accounting Period" means the four week accounting periods having the same
beginning and ending dates as the General Partner's four week accounting
periods, except that an Accounting Period may occasionally contain up to five
weeks when necessary to conform the accounting system to the calendar year.
"Act" means the Delaware Revised Uniform Limited Partnership Act (6 Del. C.
(S) 17-101, et seq.), as amended from time to time.
"Adjustments" means the after-tax present values to the General Partner and
the Limited Partners of the Affected Items, as determined by the Expert.
"Affected Items" means those items of tax benefits that, because of the
Proposed Regulations, are lost by the Limited Partners or are received by the
General Partner.
"Affected Year" means any Fiscal Year of the Partnership in which there are
Affected Items.
"Affiliate," "Affiliates" or "Affiliated Person" means, when used with
reference to a specified Person, (i) any Person that directly or indirectly
through one or more intermediaries controls or is controlled by or is under
common control with the specified Person, (ii) any Person that is an officer of,
partner in or trustee of, or serves in a
C-1
similar capacity with respect to, the specified Person or of which the specified
Person is an officer, partner or trustee, or with respect to which the specified
Person serves in a similar capacity, (iii) any Person that, directly or
indirectly, is the beneficial owner of 10% or more of any class of equity
securities of the specified Person or of which the specified Person is directly
or indirectly the owner of 10% or more of any class of equity securities, and
(iv) any relative or spouse of the specified Person who makes his or her home
with that of the specified Person. Affiliate or Affiliated Person of the
Partnership or the General Partner does not include a Person who is a partner
of, or in a partnership or joint venture with, the Partnership or any other
Affiliated Person if such Person is not otherwise an Affiliate or Affiliated
Person of the Partnership or the General Partner. Notwithstanding the foregoing,
no corporation whose common stock is listed on a national securities exchange or
authorized for inclusion on the NASDAQ National Market, or any subsidiary
thereof, shall be an "Affiliate" of the General Partner or any Affiliate thereof
unless a Person (or Persons if such Persons would be treated as part of the same
group for purposes of Section 13(d) or 13(g) of the Securities Exchange Act of
1934) directly or indirectly owns twenty percent (20%) or more of the
outstanding common stock of the General Partner and such other corporation.
"Agreement" means this Second Amended and Restated Agreement of Limited
Partnership, as originally executed and as hereafter amended or modified from
time to time.
"Capital Account" or "Capital Accounts" means, with respect to a Partner,
the account maintained for such Partner which is determined and maintained in a
manner which the General Partner determines is in accordance with section 1.704-
1(b)(2)(iv) of the Treasury Regulations, as amended.
"Capital Contribution" or "Capital Contributions" means, with respect to
any Partner, the total amount of money (and the agreed value of any property
contributed to the Partnership by the General Partner) contributed and agreed to
be contributed to the Partnership (prior to the deduction of any selling
commissions or expenses) by such Partner; provided, however, that as and to the
extent any placement agent retained by the General Partner to assist in the
private placement of the Units foregoes any portion of its fees or selling
commission with a consequent reduction in the offering price of any Units so
placed or as and to the extent any Limited Partner receives a discount of
$12,400 per Unit as a result his making a payment of $87,600 per Unit in cash
($77,600 per Unit if purchased in cash by the General Partner, its Affiliates,
or officers and directors of the General Partner or its Affiliates) upon
execution of the subscription documents as full payment of his Capital
Contribution, the Limited Partners purchasing any such Units shall nevertheless
be deemed to have contributed to the Partnership the full amount of the offering
price without deduction on account of such reduced purchase price.
"Capital Receipts" means Sale Proceeds and/or Refinancing Proceeds.
"Cash Available for Distribution" means, with respect to any fiscal period,
the cash revenues of the Partnership from all sources during such fiscal period
other than Capital Receipts less (i) all cash expenditures of the Partnership
during such fiscal period, including, without limitation, repayment of all
Partnership indebtedness to the extent required to be paid, but not including
expenditures of Capital Receipts plus any fees for management services and
administrative expenses and (ii) such reserves as may be determined by the
General Partner, in its sole discretion, to be necessary to provide for the
foreseeable needs of the Partnership, but shall not include Capital Receipts.
"Code" means the Internal Revenue Code of 1986, as amended (or any
corresponding provision or provisions of succeeding law).
"Consent" means either (a) the approval given by vote at a meeting called
and held in accordance with the provisions of Section 10.01, or (b) a prior
written approval required or permitted to be given pursuant to this Agreement or
the act granting such approval, as the context may require. Unless otherwise
specified, Consent of the Limited Partners shall mean Consent of a majority in
interest of the Limited Partners.
"Cumulative Capital" means, with respect to any Partner, the amount of
Capital Contributions actually contributed to the Partnership as of the date in
question (prior to the deduction of any selling commissions or expenses) by such
Partner; provided, however, that as and to the extent any placement agent
retained by the General
C-2
Partner to assist in the private placement of the Units foregoes any portion of
its fees or selling commission with a consequent reduction in the offering price
of any Units so placed or as and to the extent any Limited Partner receives a
discount of $12,400 per Unit as a result of his paying $87,600 per Unit in cash
($77,600 if purchased in cash by the General Partner, its Affiliates, or
officers and directors of the General Partner or its Affiliates) upon execution
of the subscription documents as full payment of the purchase price for such
Unit the Limited Partners purchasing any such Unit shall nevertheless be deemed
to have contributed to the Partnership the full amount of the offering price
without deduction on account of such reduced purchase price, provided, further
that at the time of any calculation of Cumulative Capital, there shall only be
credited to the Cumulative Capital of a Limited Partner an amount per Unit not
in excess of the amount of Capital Contribution required to be paid by Limited
Partners who pay for their Units in installments.
"Debt Service Guarantee" means the guarantee by Marriott and the General
Partner in an amount not exceeding $3.5 million of interest and principal
payments owing by the Partnership under the Mortgage Debt.
"Defaulting Limited Partner" means a Limited Partner who fails to pay all
or any portion of any installment of his Capital Contribution for a period of
ten days after the date such installment was due.
"Defaulting Limited Partner Allocation" means allocations of Net Losses,
Net Profits, Gains, Losses, and tax credits to a Defaulting Limited Partner.
"Default Notice" means the notice given by the General Partner to the
Partnership of its desire to purchase all or a portion of a Defaulting Limited
Partner's Interest in the Partnership.
"Deferred Purchase Debt" means Partnership Debt in the maximum amount of
$5,788,000 incurred pursuant to the Purchase Agreement entered into between the
Partnership and Marriott as of the date of this Agreement.
"Designated Person" means the General Partner.
"Expert" means that independent expert retained by the General Partner who
will determine the respective after-tax present values to the General Partner
and the Limited Partners of the Affected Items.
"FF&E" means (i) furniture, fixtures and furnishings and equipment and (ii)
routine repairs and maintenance undertaken subsequent to the opening date of a
Hotel, the cost of which would not be expensed under generally accepted
accounting principles.
"Fiscal Quarter" means, for the respective fiscal periods in any year, (i)
the period beginning on January 1, and having the same ending date as the
General Partner's 12 week fiscal first quarter, (ii) the same period of time as
the General Partner's second fiscal quarter, (iii) the same period of time as
the General Partner's third fiscal quarter, and (iv) the period from the end of
the General Partner's third fiscal quarter through December 31 in such Fiscal
Year.
"Fiscal Year" means the fiscal year of the Partnership as established in
Section 9.02.
"Foreclosure Guarantee" means the guarantee of the General Partner in an
amount not exceeding $10 million of principal upon a foreclosure of the Hotel by
the Lender.
"Gain" or "Gains" means the gain or gains recognized by the Partnership for
Federal income tax purposes upon the sale or disposition of Partnership property
(other than the routine sale of used FF&E being replaced at the Hotel).
"General Partner" means Marriott Hanover Hotel Corporation, a Delaware
corporation and wholly owned subsidiary of Host, in its capacity as general
partner of the Partnership and its permitted successors or assigns.
C-3
"Hanover Hotel Acquisition Corp." means Hanover Hotel Acquisition Corp., a
Delaware corporation and a wholly owned subsidiary of Host.
"Host" means Host Marriott Corporation, a Delaware corporation.
"Hotel" means the Hanover Marriott hotel located in Hanover, New Jersey and
the land on which the hotel is located.
"Interest" means the entire interest of a Partner in the Partnership at any
particular time, including the right of such Partner to any and all benefits to
which a Partner may be entitled as provided in this Agreement, together with the
obligations of such Partner to comply with all the terms and provisions of this
Agreement.
"Interested Transaction" means any matter in which the General Partner or
its Affiliates has an actual economic interest, other than an interest solely as
a result of its or an Affiliate's ownership of Units or a general partner
interest or as a result of its or an Affiliate's (and any group of which it is a
part for purposes of Section 13(d) or 13(g) of the Securities Exchange Act of
1934) direct or indirect ownership of less than twenty percent (20%) of the
outstanding common stock of both the General Partner and a corporation whose
common stock is listed on a national securities exchange or authorized for
inclusion in the NASDAQ National Market, or any subsidiary thereof.
"Invested Capital" means the excess, if any, of Cumulative Capital of a
Partner over cumulative distributions to him of Capital Receipts.
"Investor List" means that list, required by the Tax Reform Act of 1984, as
amended, identifying Persons to whom Interests in the Partnership were sold,
such Persons' addresses and taxpayer identification numbers, the dates on which
the Interests were acquired and the name and tax shelter registration number of
the Partnership.
"IRS" means the Internal Revenue Service.
"Limited Partner" means any Person admitted to the Partnership pursuant to
Section 3.03, including any Substituted Limited Partner.
"Loss" or "Losses" means the loss or losses recognized by the Partnership
for Federal income tax purposes upon the sale or disposition of Partnership
property (other than the routine sale of used FF&E being replaced at the Hotel).
"Minimum Gain" means the Gain that would be recognized by the Partnership,
if property of the Partnership which is secured by a nonrecourse debt, were
foreclosed upon and such property were transferred to the creditor in
satisfaction thereof.
"Mortgage Debt" means the loan provided to the Partnership by the National
Bank of Canada in the principal amount of $36.5 million.
"Net Profits" or "Net Losses" means, for any period, the net profits or net
losses of the Partnership for Federal income tax purposes during such period as
determined under section 702 of the Code, including gain or loss on the routine
sale of used FF&E not in connection with the sale of a Hotel and excluding Gains
and Losses.
"Note" or "Notes" means the promissory note or notes given to the
Partnership by the Limited Partners pursuant to Section 3.05.
"Notification" means a written notice, containing the information required
by this Agreement to be communicated to any Person, sent by registered,
certified or regular mail to such Person; provided, however, that any
communication containing such information sent to such Person and actually
received by such Person shall constitute Notification for all purposes of this
Agreement.
C-4
"Operating Lease" means that certain amended and restated lease agreement
with the Operating Tenant, as assigned to the Partnership, dated as of July 29,
1986, whereby the Operating Tenant leases the Hotel from the Partnership.
"Operating Tenant" means Marriott Hotel Services, Inc., a Delaware
corporation and wholly owned subsidiary of Marriott International Inc., as
lessee and operator of the Hotel.
"Original Limited Partner" means any Limited Partner who acquired Units in
the initial offering of Units pursuant to the Private Placement Memorandum.
"Partners" means, collectively, the Limited Partners as constituted from
time to time and the General Partner.
"Partnership" means the limited partnership formed pursuant to this
Agreement by the parties hereto, as said Partnership may from time to time be
constituted.
"Partnership Debt" means any indebtedness for borrowed money incurred by
the Partnership.
"Person" means any individual, partnership, corporation, trust or other
legal entity.
"Prime Rate" means the base rate of interest announced from time-to-time by
Bankers Trust Company, New York, New York.
"Priority Return" means an annual non-cumulative priority cash return to
the Limited Partners equal to 10% of their Invested Capital.
"Private Placement Memorandum" means the Partnership's confidential private
placement memorandum dated October 23, 1986, concerning the offering of the
Units.
"Proposed Regulations" means, for purposes of computing Affected Items,
regulations proposed by the Department of the Treasury as directed by section 79
of the Tax Reform Act of 1984, as amended, or otherwise pursuant to section 704
or section 752 of the Code.
"Purchase Agreement" means the purchase agreement to be entered into
between the Partnership as purchaser and Marriott as seller providing for the
purchase of the Hotel and certain related materials and personal property
including FF&E.
"Refinancing Proceeds" means the net proceeds from any refinancing or
borrowing by the Partnership, the proceeds of which are applied to the repayment
of previously incurred debt of the Partnership, or borrowed for distributions to
the Partners including the proceeds of a sale and leaseback on which no taxable
gain is recognized for Federal income tax purposes.
"Sale Proceeds" means any net proceeds received by the Partnership from (i)
the exchange, condemnation, eminent domain taking, casualty, sale or other
disposition of all or a portion of the Partnership's assets, or (ii) the
liquidation of the Partnership's property in connection with a dissolution of
the Partnership (in excess of the outstanding indebtedness and other liabilities
of the Partnership). Sale Proceeds shall not include the proceeds from the
routine sale of used FF&E not in connection with the disposition of the Hotel.
"Substituted Limited Partner" means any Person admitted to the Partnership
as a Limited Partner pursuant to the provisions of Section 7.02 and who is
listed as such in the books and records of-the Partnership.
"Tax-Exempt Entity" means an entity or person defined in section 168(h)(2)
of the Code.
"Tax Matters Partner" means the General Partner.
C-5
"Total Partnership Distributions" means the total amount of cash and the
fair market value of any property (net of any associated liabilities)
distributed to the Partners pursuant to Sections 4.07 through 4.10.
"Treasury Regulations" means the regulations promulgated by the Department
of the Treasury as in effect as of the date of this Agreement.
"Unit" means the Interest of a Limited Partner represented by a Capital
Contribution of $100,000.
ARTICLE TWO
FORMATION, NAME, PLACE OF BUSINESS, PURPOSE AND TERM
SECTION 2.01. FORMATION.
The parties have formed and do hereby continue the Partnership pursuant to
the provisions of the Act.
SECTION 2.02. NAME AND OFFICES.
The name of the Partnership is and shall be Hanover Marriott Limited
Partnership. The principal offices of the Partnership shall be located at 00000
Xxxxxxxx Xxxx, Xxxxxxxx, Xxxxxxxx 00000 or at such other place or places as the
General Partner may from time to time determine. The address of the registered
office of the Partnership in the State of Delaware is at 0000 Xxxxxx Xxxx,
Xxxxxxxxxx, Xxxxxx of Xxx Xxxxxx, Xxxxxxxx 00000.
SECTION 2.03. PURPOSE.
The purpose of the Partnership is, without limitation, to (i) acquire and
own, directly or indirectly, the Hotel and then lease the Hotel to, or enter
into a management agreement with, an operator of the Hotel, (ii) sell or
otherwise dispose of the Hotel, and (iii) to engage in any other activities
related or incidental thereto as more fully set forth in Section 5.01 hereof.
SECTION 2.04. TERM.
The term of the Partnership shall continue in full force and effect from
the date of the filing of the original Certificate of Limited Partnership until
December 31, 2086, or until dissolution prior thereto pursuant to the provisions
of Article Eight.
SECTION 2.05. AGENT FOR SERVICE OF PROCESS.
The name and address of the agent for service of process on the Partnership
in the State of Delaware is The Prentice Hall Corporation System, Inc., 0000
Xxxxxx Xxxx, Xxxxxxxxxx, Xxxxxx xx Xxx Xxxxxx, Xxxxxxxx 00000.
ARTICLE THREE
PARTNERS AND CAPITAL
SECTION 3.01. GENERAL PARTNER.
The General Partner of the Partnership is and shall be Marriott Hanover
Hotel Corporation, a Delaware Corporation and wholly-owned subsidiary of Host,
having its principal executive offices at 00000 Xxxxxxxx Xxxx, Xxxxxxxx,
Xxxxxxxx 00000.
C-6
SECTION 3.02. [INTENTIONALLY OMITTED]
SECTION 3.03. LIMITED PARTNERS.
The names and addresses of the Limited Partners, the amount of their agreed
upon Capital Contributions and the number of Units held by them are set forth in
the books and records of the Partnership and a Person shall be deemed to be
admitted as a Limited Partner when the General Partner has accepted such Person
as a Limited Partner of the Partnership, the books and records reflect such
Person as admitted to the Partnership as a Limited Partner and such Person has
executed this Agreement.
SECTION 3.04. CAPITAL CONTRIBUTIONS BY GENERAL PARTNER.
The General Partner has made Capital Contributions in the amount of
$442,000 in cash.
SECTION 3.05. CAPITAL CONTRIBUTIONS BY THE LIMITED PARTNERS.
A. The number of Units subscribed for by each Limited Partner is set forth
in the subscription documents executed and delivered by such Limited Partner.
Each Original Limited Partner's contribution in respect of the Units subscribed
for was made (i) in cash and a fully recourse promissory note (the "Note") of
such Limited Partner payable as set forth in Section 3.05B or (ii) in cash in
the amount of $87,600 as full payment of the subscription price ($77,600 per
Unit in cash if purchased by the General Partner, its Affiliates, or officers,
directors or employees of the General Partner or its Affiliates). No Partner
shall be paid interest on any Capital Contribution.
B. The Original Limited Partners made Capital Contributions totaling up to
$8.4 million for which each such Limited Partner subscribed in Units of $100,000
each unless the General Partner in its sole discretion accepted subscriptions
for less than a full Unit. For each Unit purchased, an Original Limited Partner
made a Capital Contribution either by paying $87,600 per Unit in cash ($77,600
per Unit in cash if purchased by the General Partner, its Affiliates, or
officers, directors or employees of the General Partner or its Affiliates) on
execution of the subscription documents as full payment of the subscription
price or $100,000 in the following installments: (i) a first installment in the
amount of $15,560 payable on execution of the subscription documents; (ii) a
second installment in the amount of $25,000 payable on March 15, 1987; (iii) a
third installment in the amount of $22,500 payable on March 15, 1988; (iv) a
fourth installment in the amount of $22,500 payable on March 15, 1989; and (v) a
fifth installment of $14,440 payable on March 15, 1990. Original Limited
Partners who purchased more or less than a full Unit were required to make
proportionate installments on the dates aforesaid. Original Limited Partners
could prepay, without any reduction in the amount thereof, the foregoing
installments, in whole or in part, at any time prior to their respective due
date.
C. The obligation of each Original Limited Partner to pay the installments
required by Section 3.05B, other than the first installment, was evidenced by
the delivery to the Partnership concurrently with payment of the first
installment of the Note in the form of Exhibit A attached hereto payable to the
Partnership in the amount of $84,440 for each Unit purchased (adjusted if less
than a full Unit is purchased) representing the amount of the remaining unpaid
Capital Contribution of such Original Limited Partner. Such Original Limited
Partners could prepay in whole, or in part, all of the installments. If an
Original Limited Partner paid $87,600 in cash per Unit at the time he delivered
an executed subscription agreement, then there was no obligation to deliver a
Note to the Partnership. That portion of such $87,600 payment in excess of the
amount that would have been paid upon subscription had the Original Limited
Partner selected the installment method of paying the subscription price was
used by the Partnership to reduce the Deferred Purchase Debt.
D. Each Original Limited Partner paying in installments, pledged to the
Partnership his Interest as security for payment of the installments payable
under such Original Limited Partner's Note. The Partnership, acting through the
General Partner, shall have all rights and remedies granted to a secured party
under the Uniform Commercial Code as adopted in Delaware, including, but not
limited to, the right to sell such Interest, and such
C-7
Limited Partner agrees to execute such instruments, including, without
limitation, a financing statement on Form UCC-1, as the General Partner may from
time to time require to perfect such security interest. For purposes of the said
Uniform Commercial Code, this Agreement shall also be deemed to be a security
agreement.
E. The following provisions applied in the event a Limited Partner failed
to make installment payments when due:
(i) A Limited Partner who failed to pay when due all or any portion of
any installment for a period of 10 days (a "Defaulting Limited Partner")
shall be in default hereunder and the Defaulting Limited Partner shall be
required to pay the Partnership a late payment charge equal to five percent
(5%) of such unpaid installment or portion thereof. At any time prior to
any sale of all or any portion of the Defaulting Limited Partner's Interest
as provided in this subsection E, the General Partner may but shall not be
obligated to accept full payment from the Defaulting Limited Partner of any
unpaid installment then overdue. The acceptance of such payment by the
General Partner shall extinguish the further right (as hereafter defined)
of the General Partner to purchase the Defaulting Limited Partner's
Interest. If a default shall continue for more than 30 days after notice to
the Defaulting Limited Partner, in addition to the aforesaid late charge,
the unpaid portion of such installment or portion thereof shall bear
interest from the date due until paid in full at a rate equal to the lesser
of (a) four percentage points in excess of the Prime Rate or (b) the
maximum rate permitted by law. If the late charge is deemed to be interest
under law, it may only be imposed to the extent it does not cause total
interest to exceed the rate permitted by law. A Defaulting Limited Partner
shall have no voting rights with respect to his Interest for so long as any
unpaid installments plus any late charge or interest attributable to such
unpaid installment or portion thereof remains unpaid.
(ii) If a default shall continue for more than 30 days after notice to
the Defaulting Limited Partner, the General Partner shall have the option
of accelerating the payment of the entire unpaid balance of the Notes of
the Defaulting Limited Partner and the additional option of purchasing (for
the price set forth below) all or a portion of the Defaulting Limited
Partner's Interest. Such option may be exercised by the General Partner by
giving the Partner a Default Notice. The purchase price to be paid to the
Defaulting Limited Partner shall be an amount equal to the greater of (x)
10% of the amount of Cumulative Capital of the Defaulting Limited Partner
in respect of the Interest being purchased less the sum of (i) the total
amount of cash distributions, if any, theretofore made to the Defaulting
Limited Partner in respect of the Interest being purchased, (ii) any
reasonable expenses incurred by the Partnership and by the General Partner
in connection with such purchase, (iii) all tax credits previously reported
by the Partnership for all Fiscal Years then ended allocable to the
Interest being purchased, and (iv) 50% of the Net Losses previously
reported by the Partnership for all Fiscal Years then ended allocable to
the Interest being purchased, or (y) three percent (3%) of the amount of
the Cumulative Capital of the Defaulting Limited Partner in respect of the
Interest being purchased. Such purchase price shall be paid in cash within
thirty days after the date of the consummation of the purchase. The
General Partner shall also pay to the Partnership an amount equal to all
Capital Contribution installments in respect of the Interest being
purchased then due and not theretofore paid by the Defaulting Limited
Partner (including the unpaid installment giving rise to the default) and
shall assume all other obligations of the Defaulting Limited Partner in
respect of the Interest being purchased, if any, to the Partnership.
(iii) In the event that the General Partner does not acquire all of
the Interest of a Defaulting Limited Partner and after the exercise of due
diligence, the General Partner is unable to find a purchaser for all or the
balance of the Defaulting Limited Partner's Interest for the price set
forth in clause (ii) above, then the Defaulting Limited Partner shall sell
such Interest or the balance of such Interest, as the case may be, on such
terms and conditions as the General Partner deems reasonable under the
circumstances; provided that any purchaser shall be required to agree to
assume the obligation of the Defaulting Limited Partner to make payment of
the unpaid balance of the installments to the extent of the Interest so
acquired. At the closing of any purchase and sale pursuant to this clause
(iii), the purchaser shall pay to the Partnership the unpaid balance of the
installments then due and owing by the Defaulting Limited Partner and shall
agree to thereafter make payment of any future installments as and when the
same shall become
C-8
due and payable. The Defaulting Limited Partner shall pay all of the
Partnership's and General Partner's costs and expenses incurred in
connection with any purchase and sale of a Defaulting Limited Partner's
interest pursuant to this clause (iii).
(iv) A purchaser of all or any part of the Interest of a Defaulting
Limited Partner will receive all of the cash allocable to such Interest
from and after the date of default and not actually distributed to the
Defaulting Limited Partner prior to default. All Net Profits and Net
Losses that would otherwise be allocated in accordance with Sections 4.01,
4.02 and 4.03 to a Defaulting Limited Partner ("Defaulting Limited Partner
Allocation") shall be allocated, from and after the date of default to, but
not including, the date, if any, on which the Interest of such Defaulting
Limited Partner shall be purchased, among the non-Defaulting Limited
Partners in proportion to the number of Units owned by each. All
Defaulting Limited Partner Allocations from and after the date of purchase
of the Defaulting Limited Partner's Interest until the expiration of the
Fiscal Year in which such purchase date falls shall be allocated to the
purchaser. In the following Fiscal Year or Fiscal Years, all Net Profits
and Net Losses of the Partnership allocable to the Limited Partners under
Article Four shall first be allocated until the purchaser's capital account
balance shall be equal in amount to the capital account balance of a non-
Defaulting Partner owning the same number of Units as the purchaser.
(v) Notwithstanding the foregoing provisions of this Section 3.05E,
the obligations of the Defaulting Limited Partner hereunder shall not be
extinguished by the existence of any option of the General Partner to
purchase the Interest of the Defaulting Limited Partner, or by its
exercise, or by any agreement by any person to purchase such Interest, but
only to the extent of payment of the unpaid installments together with
interest thereon made in the Defaulting Limited Partner's stead by any
purchaser of such Interest.
(vi) In addition to the other rights of the Partnership against the
Defaulting Limited Partner, the Partnership may avail itself of appropriate
legal remedies at law or in equity to compel payment of any portion of the
installments remaining unpaid together with any interest thereon remaining
unpaid, together with reasonable court costs and legal fees in the event of
litigation against the Defaulting Limited Partner.
SECTION 3.06. PARTNERSHIP CAPITAL.
A. The Capital Contribution of each Limited Partner and the General
Partner shall be credited to each such Partner's Capital Account; provided,
however, that the deemed increase in the Capital Contribution of any Partner due
to (i) any relinquished selling commission or other fees with respect to such
Partner or (ii) any discount of $12,400 per Unit for any Limited Partner making
full payment of such Limited Partner's Capital Contribution ($22,400 for the
General Partner or any of its Affiliates of for officers or directors of the
General Partner or any of its Affiliates) upon execution of the subscription
agreement shall not be credited to such Partner's Capital Account and a Limited
Partner's obligation to make additional contributions in installments shall not
be credited to his Capital Account until the installments are actually
contributed. A Partner's Capital Account shall also be credited with the amount
of Net Profits or Gain allocable to the Partner, and shall be debited with (x)
such Partner's share of Total Partnership Distributions and (y) the amount of
Net Losses, Losses or deductions allocated to such Partner.
B. For purposes of this Section 3.06, upon a distribution in kind of
Partnership property, the Capital Accounts of Partners will be debited or
credited as though the property had been sold for an amount equal to its fair
market value, and gain or loss which would have been recognized for Federal
income tax purposes had the property actually been sold will be allocated to the
Partners under Article Four.
SECTION 3.07. LIABILITY OF THE LIMITED PARTNERS.
Except as otherwise required by the Act, no Limited Partner shall be liable
for the debts, liabilities, contracts or any other obligations of the
Partnership. Except as otherwise required by the Act, a Limited Partner has no
liability in excess of his Capital Contribution and his share of the
Partnership's assets and undistributed profits,
C-9
and shall not be required to lend any funds to the Partnership or, after his
Capital Contribution has been paid, to make any further Capital Contributions to
the Partnership or to repay to the Partnership, any Partner or to any creditor
of the Partnership any portion or all of any negative balance of his Capital
Account.
SECTION 3.08. LIABILITY OF THE GENERAL PARTNER.
Except as provided in the Act, the General Partner has the liabilities of a
partner in a partnership without limited partners to Persons other than the
Partnership and the other Partners. Except as provided in the Act or herein, the
General Partner has the liabilities of a general partner in a partnership
without limited partners to the Partnership and to the other Partners. This
Agreement shall not be amended to limit such liability of the General Partner.
ARTICLE FOUR
ALLOCATION OF PROFITS AND LOSSES;
DISTRIBUTIONS OF CASH AND CERTAIN PROCEEDS
SECTION 4.01. ALLOCATION OF NET PROFITS.
Net Profits for each Fiscal Year shall be allocated to the Partners in the
following order or priority:
(i) first, through and including the end of the Accounting Period
during which the General Partner and the Limited Partners shall have
received cumulative distributions of Capital Receipts equal to $4,421,000,
5% to the General Partner and 95% to the Limited Partners;
(ii) next, through and including the end of the Accounting Period
during which the General Partner and the Limited Partners shall have
received cumulative distributions of Capital Receipts equal to $8,842,000,
15% to the General Partner and 85% to the Limited Partners; and
(iii) thereafter, 35% to the General Partner and 65% to the Limited
Partner.
SECTION 4.02. ALLOCATION OF NET LOSSES AND LOSSES.
A. Net Losses and Losses for the Fiscal Year ending on December 31, 1986,
shall be allocated to the Limited Partners.
B. Net Losses and Losses for each Fiscal Year thereafter shall be
allocated to the General Partner.
SECTION 4.03. ALLOCATION OF GAIN.
Gain recognized by the Partnership shall be allocated (after giving effect
to the allocations referred to in Sections 4.01 and 4.02 and all distributions
other than distributions pursuant to Section 4.08) with respect to any Fiscal
Year in the following order of priority:
(i) first, to the Limited Partners whose Capital Accounts have
negative balances, in proportion to such negative balances until such
negative balances are brought to zero and then to the General Partner if
its Capital Account has a negative balance until such negative balance is
brought to zero; provided, however, that solely for purposes of this
Section 4.03(i), the Capital Account balance of a Limited Partner shall be
deemed to include the amount of any obligation to make additional
contributions to the capital of the Partnership;
C-10
(ii) second, to all Partners up to the amount necessary to bring their
respective Capital Account balances to an amount equal to their respective
Invested Capital; provided, however that in calculating Invested Capital
solely for purpose of this Section 4.03(ii), Cumulative Capital of a
Limited Partner who paid $87,600 per Unit in cash ($77,600 if purchased by
the General Partner, its Affiliates, or officers and directors of the
General Partner or its Affiliates), upon his execution of the subscription
documents as full payment of the purchase price of his Unit shall be deemed
to be $100,000;
(iii) third, in the case of Gain arising from the sale or disposition
(or from a related series of sales or dispositions) of all or substantially
all the assets of the Partnership, to the Limited Partners in an amount
equal to the excess, if any, of (1) the product of 12% times the weighted
average of the Limited Partners' Invested Capital each year, over (2) the
sum of distributions to the Limited Partners of Cash Available for
Distribution each year; and
(iv) thereafter, 35% to the General Partner and 65% to the Limited
Partners.
SECTION 4.04. ALLOCATION AMONG LIMITED PARTNERS OF NET PROFITS, GAINS, NET
LOSSES AND LOSSES.
Any Net Profits or Net Losses for any Fiscal Year allocable to the Limited
Partners shall be allocated among the Limited Partners pro rata in accordance
with the number of Units owned by each as of the end of such Fiscal Year;
provided that if any Unit is assigned during the Fiscal Year in accordance with
this Agreement, the Net Profits or Net Losses that are so allocable to such Unit
shall be allocated between the assignor and assignee of such Unit according to
the number of Accounting Periods in such Fiscal Year each owned such Unit. Any
Gains or Losses allocable to the Limited Partners shall be allocated among the
Limited Partners who held Units on the last day of the Accounting Periods in
which the sale or disposition giving rise to such Gains or Losses occurred, pro
rata in accordance with the number of Units owned by each such Limited Partner.
If any Unit is assigned by a Limited Partner other than on the first day of an
Accounting Period (in contravention of the Agreement), then the Partnership
shall recognize such assignment for the purposes of allocating Net Profits,
Gains, Net Losses or Losses if, and to the extent, it is legally required to so
do in the opinion of legal counsel. The preceding sentence shall not apply to
the Units (or fractions of Units) transferred to Hanover Hotel Acquisition Corp.
pursuant to Hanover Hotel Acquisition Corp.'s Offer to Purchase for Cash 40
Outstanding Units of Limited Partnership Interest, dated March 3, 1997, which
transfers shall be considered to be in accordance with this Agreement, shall be
deemed to occur for purposes of this Section 4.04 on the first day of the
Accounting Period in which the transfer of such Units occurs and shall be
governed by the first two sentences of this Section 4.04.
SECTION 4.05. ALLOCATION OF RECAPTURE INCOME.
"Recapture income," if any, realized by the Partnership pursuant to section
1245 or section 1250 of the Code shall be allocated to the Partners to whom the
prior corresponding depreciation deductions were allocated, such allocations to
be made pro rata to the Partners in accordance with the manner in which such
depreciation deductions were allocated.
SECTION 4.06. DISTRIBUTION OF CASH AVAILABLE FOR DISTRIBUTION.
Cash Available for Distribution with respect to each Fiscal Year shall be
distributed at least annually as follows:
(i) first, 100% to the Limited Partners until they have received the
Priority Return on their Invested Capital;
(ii) next, through and including the end of the Accounting Period
during which the General Partner and the Limited Partners shall have
received cumulative distributions of Capital Receipts equal to $4,421,000,
5% to the General Partner and 95% to the Limited Partners;
C-11
(iii) next, through and including the end of the Accounting Period
during which the General Partner and the Limited Partners shall have
received cumulative distributions of Capital Receipts equal to $8,842,000,
15% to the General Partner and 85% to the Limited Partner; and
(iv) thereafter, 35% to the General Partner and 65% to the Limited
Partners
SECTION 4.07. DISTRIBUTION OF REFINANCING PROCEEDS.
Refinancing Proceeds shall, unless the General Partner, in its sole
discretion, shall determine to retain any such amounts in the Partnership, be
distributed as follows:
(i) first, 5% to the General Partner and 95% to the Limited Partners,
until the Partners shall have received cumulative distributions of Capital
Receipts equal to $8,842,000; and
(ii) thereafter, 35% to the General Partner and 65% to the Limited
Partners.
SECTION 4.08. DISTRIBUTION OF SALE PROCEEDS.
A. Sale Proceeds from the sale or other disposition of less than
substantially all of the assets of the Partnership shall, unless the General
Partner, in its sole discretion, shall determine to retain any such amounts in
the Partnership, be distributed:
(i) first, until the Partners shall have received cumulative
distributions of Capital Receipts equal to $8,842,000, 5% to the General
Partner and 95% to the Limited Partners; and
(ii) thereafter, 35% to the General Partner and 65% to the Limited
Partners.
B. Sale Proceeds from the sale or other disposition (or from a related
series of sales or dispositions) of all or substantially all of the assets of
the Partnership shall be distributed in accordance with Article Eight.
SECTION 4.09. ALLOCATION AMONG LIMITED PARTNERS OF CASH AVAILABLE FOR
DISTRIBUTION, REFINANCING PROCEEDS AND SALE PROCEEDS.
Cash Available for Distribution distributable with respect to any
Accounting Period to the Limited Partners pursuant to Section 4.06, shall be
distributed to the Limited Partners pro rata in accordance with the number of
Units owned by each as of the end of such Accounting Period. Proceeds
distributable to the Limited Partners pursuant to Section 4.07 or Section 4.08A
shall be distributed to the Limited Partners pro rata in accordance with the
number of Units owned by each such Limited Partner on the last day of the
Accounting Period in which the transaction giving rise to such proceeds was
completed. If a Unit is assigned by a Limited Partner other than on the first
day of an Accounting Period (in contravention of this Agreement), then the
Partnership shall recognize such assignment for the purpose of distributing
amounts pursuant to Sections 4.06, 4.07 and 4.08 if, and to the extent, it is
legally required to do so in the opinion of legal counsel. The preceding
sentence shall not apply to the Units (or fractions of Units) transferred to
Hanover Hotel Acquisition Corp. pursuant to Hanover Hotel Acquisition Corp.'s
Offer to Purchase for Cash 40 Outstanding Units of Limited Partnership Interest,
dated March 3, 1997, which transfers shall be considered to be in accordance
with this Agreement, and for purposes of this Section 4.09 shall be deemed to
occur on the date of transfer of such Units for the purpose of distributing
amounts pursuant to Sections 4.06, 4.07 and 4.08 (which shall result in Hanover
Hotel Acquisition Corp. becoming the Limited Partner of record on such date of
transfer). Notwithstanding the first sentence of this Section 4.09, any
distributions pursuant to Section 4.06 with respect to such transferred Units
made before the date of transfer of such Units but after the last day of the
last Accounting Period ending before such date of transfer shall be made to the
transferring Limited Partner, and any distributions pursuant to Section 4.06
with respect to such transferred Units made after
C-12
such date of transfer but before the first day of the first Accounting Period
commencing after such date of transfer shall be made to Hanover Hotel
Acquisition Corp.
SECTION 4.10. SECTION 754 ADJUSTMENTS.
For income tax purposes (but not for purposes of adjusting the Capital
Accounts of the Partnership, except as otherwise provided in section 1.704-
1(b)(2)(iv) of the Treasury Regulations), appropriate adjustments shall be made
in the allocations to Limited Partners under this Article Four in order to
reflect adjustments in the basis of Partnership property permitted pursuant to
any election under section 754 of the Code, provided the General Partner, in its
sole discretion, makes such election. If such an election is made, the
Partnership will make the basis adjustments and calculate depreciation
deductions in accordance with such adjustments for those transferee Limited
Partners who advise the Partnership of this obligation with sufficient
information to enable the Partnership to determine when, and at what price, such
transferee Limited Partners acquired Units. In the case of a transferee Limited
Partner who does not advise the Partnership of such information, the Partnership
will attempt to supply such Limited Partner with reasonably available
information that will permit such Limited Partner to make the required basis
adjustment calculation.
SECTION 4.11. SPECIAL ALLOCATION OF SELLING COMMISSIONS.
Any selling commissions or other fees paid by the Partnership in any
Accounting Period in respect of any Unit shall be specially allocated to and
charged to the Capital Account of the Limited Partner owning such Unit during
such Accounting Period.
SECTION 4.12. CONTINGENT ADJUSTMENTS.
A. If prior to 1992, regulations shall have been proposed by the
Department of the Treasury, as directed by section 79 of the Deficit Reduction
Act of 1984 or otherwise pursuant to sections 704 or 752 of the Code (the
"Proposed Regulations"), and the General Partner (i) is of the opinion (based
upon advice of counsel) taking into account the Proposed Regulations for any
Fiscal Year of the Partnership (an "Affected Year"), that the amount of Net
Losses allocated to the General Partner should be increased, that the amount of
Net Profits allocated to the General Partner should be decreased or that the
General Partner or its Affiliates receive tax benefits (including the avoidance
or delay of the recognition of income) (the "Affected Items") and (ii) shall
have taken such steps to ameliorate the potential adverse effect of the Proposed
Regulations on the tax consequences of an investment in the Partnership by
Limited Partners, that the General Partner (upon advice of counsel) shall
consider to be reasonable under the circumstances (taking into account economic,
financial, accounting, regulatory and any other facts or circumstances existing
at the time), then to the extent that a change in the allocations is still
required, the adjustments required by the Proposed Regulations shall be made and
the General Partner shall retain a qualified expert (the "Expert"), the fees and
expenses of which shall be paid by the Partnership, which will be requested to
determine at the beginning of each Affected Year the respective after-tax
present values to the General Partner or its Affiliates and the Limited Partners
of the Affected Items for such Affected Year (the "Adjustments").
B. In determining such Adjustments the Expert shall (i) assume that the
Hotel will be sold in 2001 for an amount equal to its original cost, or
outstanding indebtedness, if greater, and that the Limited Partners and the
General Partner are subject to Federal income tax at the highest marginal tax
rates (for individual taxpayers in the case of the Limited Partners and for
corporate taxpayers in the case of the General Partner) in effect at the times
relevant to such determination and (ii) use such cash flow forecasts and other
economic data that the General Partner shall provide to assist the Expert in
making such determination. For each Affected Year, the General Partner will
make a Capital Contribution to the Partnership at the end of the Affected Year
equal to the adjustment to the General Partner or to the Limited Partners,
whichever is less. Each such Capital Contribution made by the General Partner
shall be promptly distributed to the Limited Partners in accordance with the
ratios in which Cash Available for Distribution would be distributed pursuant to
Section 4.06 for such Affected Year; and provided further that, notwithstanding
the foregoing proviso, if the Proposed Regulations shall be promulgated in a
form
C-13
other than the form in which they shall have been proposed, then the General
Partner shall make such reasonable adjustments to the amount of any such Capital
Contribution as it shall consider appropriate under the circumstances. Any
contribution or distribution of cash required by this Section 4.12 shall be
appropriately reflected in the Capital Accounts of the Partners but shall not
affect the amount or computation of Capital Contributions, Cumulative Capital or
Invested Capital and shall not be deemed a distribution of Capital Receipts or
Cash Available for Distribution for purposes of Article Four of this Agreement.
ARTICLE FIVE
RIGHTS, POWERS AND DUTIES OF THE GENERAL PARTNER
SECTION 5.01. AUTHORITY OF THE GENERAL PARTNER TO MANAGE THE PARTNERSHIP.
A. The General Partner shall have the exclusive right and power to conduct
the business and affairs of the Partnership and to do all things necessary to
carry on the business of the Partnership, and is hereby authorized to take any
action of any kind and to do anything and everything it deems necessary or
appropriate in accordance with the provisions of this Agreement and applicable
law. Except as expressly provided herein, the authority of the General Partner
to conduct the business of the Partnership shall be exercised only by the
General Partner.
B. No Limited Partner shall participate in or have any control whatsoever
over the Partnership's business or have any authority or right to act for or
bind the Partnership. The Limited Partners hereby unanimously Consent to the
exercise by the General Partner of the powers conferred on it by this Agreement.
C. Except to the extent otherwise provided herein, the General Partner, is
hereby authorized, without Consent of the Limited Partners, to:
(i) execute any and all agreements (including the Purchase Agreement
and the Operating Lease), contracts, documents, certifications and
instruments necessary or convenient in connection with the development,
financing, management, maintenance, operation, sale or other disposition of
the Partnership's properties and assets except as otherwise limited by this
Agreement;
(ii) borrow money from itself or others (including Affiliates of any
general partner of the Partnership) and issue evidences of indebtedness
necessary, convenient or incidental to the accomplishment of the purpose of
the Partnership and to secure the same by mortgage, pledge or other lien on
the assets of the Partnership, such borrowing and security to be only with
respect to the following: (a) the Deferred Purchase Debt, (b) any amounts
advanced by the General Partner or an Affiliate of the General Partner
(which amounts may or may not be secured) or any other lender to enable the
Partnership to satisfy its obligations arising in the normal course of its
business, to make payments of principal, interest, premium or penalty on
any debt of the Partnership or to make capital repairs, improvements and
expansions, provided any required Consents of Partners are obtained, (c)
the Mortgage Debt, (d) amounts incurred exclusively for the purpose of a
distribution to the Partners of the Partnership, (e) any indebtedness the
incurrence of which must be specifically consented to by the Limited
Partners under Section 5.02B, and (f) any indebtedness incurred to
refinance (and thereafter further refinance as often as shall be necessary)
the unamortized portion of any of the foregoing from time to time
outstanding. In connection with the borrowing of money on a nonrecourse
basis, no lender shall be granted or acquire, at any time as a result of
making such a loan, any direct or indirect interest in the profits, capital
or property of the Partnership other than as a secured creditor;
(iii) prepay in whole or in part, refinance (to the extent permitted
by clause (ii) above), fix the interest rate on any debt, recast, modify or
extend any mortgage debt affecting or encumbering any of the Partnership's
property and in connection therewith execute any extensions,
consolidations, modifications or renewals of mortgages on any assets of the
Partnership;
C-14
(iv) deal with, or otherwise engage in business with, or provide
services to and receive compensation therefor from, any Person who has
provided or may in the future provide any services, lend money or sell
property to or purchase property from the General Partner or any Affiliate
of the General Partner. No such dealing, engaging in business or providing
of services may involve any direct or indirect payment by the Partnership
of any rebate or any reciprocal arrangement for the purpose of
circumventing any restriction set forth herein upon dealings with the
General Partner or any Affiliate of the General Partner. The General
Partner may on behalf of the Partnership enter into agreements to employ
agents, attorneys, accountants, engineers, appraisers, or other consultants
or contractors who may be Affiliates of the General Partner and may enter
into agreements to employ Affiliates of the General Partner to provide
further or additional services to the Partnership; provided that any
employment of such Persons is on terms not less favorable to the
Partnership than those offered by persons who are not Affiliates of the
General Partner for comparable services;
(v) engage in any kind of activity and perform and carry out contracts
of any kind necessary to, or in connection with, or incidental to the
accomplishment of the purposes of the Partnership, as may be lawfully
carried on or performed by a limited partnership under the laws of the
State of Delaware and New Jersey and in each state where the Partnership
has been qualified to do business;
(vi) sell or otherwise dispose of or consent to the sale or
disposition of any assets of the Partnership to any Person provided that
such Person is not a general partner of the Partnership or an Affiliate of
any such general partner; and
(vii) take such actions as the General Partner determines are
advisable or necessary, and will not result in any material adverse effect
on the economic position of holders of a majority of the Units, to preserve
the tax status of the Partnership as a partnership for Federal income tax
purposes.
D. Any Person dealing with the Partnership or the General Partner may rely
upon a certificate signed by the Secretary or Assistant Secretary, Controller or
Treasurer of the General Partner, thereunto duly authorized, as to:
(i) the identity of the General Partner or any Limited Partner;
(ii) the existence or non-existence of any fact or facts which
constitute a condition precedent to the acts by the General Partner or in
any other manner germane to the affairs of the Partnership;
(iii) the Persons who are authorized to execute and deliver any
instrument or document of the Partnership; and
(iv) any act or failure to act by the Partnership or as to any other
matter whatsoever involving the Partnership or any Partner.
E. Any agreements, contracts and arrangements between the Partnership and
the General Partner or any of its Affiliates, except for rendering legal, tax,
accounting, procurement and engineering services by employees of the General
Partner and Affiliates of the General Partner which agreements will be on
commercially reasonable terms, shall be subject to the following additional
conditions:
(i) the General Partner or any such Affiliate must be actively engaged
in the business of rendering such services or selling or leasing such
goods, independently of its dealings with the Partnership and as an
ordinary ongoing business or must enter into and engage in such business
with Marriott full-service hotels or hotel owners generally and not
exclusively with the Partnership;
(ii) such agreements, contracts or arrangements must be fair to the
Partnership and reflect commercially reasonable terms and shall be embodied
in a written contract which precisely describes the subject matter thereof
and all compensation to be paid therefor;
C-15
(iii) no rebates or give-ups may be received by the General Partner
or any such Affiliate, nor may the General Partner or any such Affiliate
participate in any reciprocal business arrangements which would have the
effect of circumventing any of the provisions of this Agreement;
(iv) no such agreement, contract or arrangement as to which the
Limited Partners had previously given approval may be amended in such a
manner as to increase the fees or other compensation payable to the General
Partner or any such Affiliates or to decrease the responsibilities or
duties of the General Partner or any such Affiliate in the absence of the
Consent contemplated by Section 5.02B(ii); and
(v) any such agreement, contract or arrangement which relates to or
secures any funds advanced or loaned to the Partnership by the General
Partner or any Affiliate of the General Partner must reflect commercially
reasonable terms.
F. Notwithstanding anything to the contrary contained in this Agreement,
the General Partner shall have full power and authority, without the Consent of
the Limited Partners, (i) to form or organize one or more Subsidiaries of the
Partnership; (ii) to contribute any properties and assets or interests therein
to one or more Subsidiaries of the Partnership; (iii) to undertake any action in
connection with the Partnership's direct or indirect investment in any such
Subsidiary; (iv) to delegate authority to manage the business and affairs of any
Subsidiary of the Partnership to a governing entity or other body (including,
without limitation, a board of directors) other than the General Partner; and
(v) to exercise any of the powers of the General Partner enumerated in this
Agreement on behalf of, or in connection with, any Subsidiary of the
Partnership, or jointly with any such Subsidiary, or delegate the exercise
thereof pursuant to clause (iv) above. The term "Subsidiary" shall mean any
partnership, corporation, trust or other entity that is not less than 99% owned,
directly or indirectly, by the Partnership, provided that no Subsidiary that is
a corporation or otherwise is not entitled to flow-through tax treatment under
the Code can own directly the Hotel or an interest that is greater than 1% in
another Subsidiary that owns the Hotel. A Subsidiary shall not be deemed an
Affiliate of the General Partner for the purposes of this Agreement. The term
"Partnership" shall, as the context requires, include each Subsidiary of the
Partnership.
SECTION 5.02. RESTRICTIONS ON AUTHORITY OF THE GENERAL PARTNER.
A. Without the Consent of all the Limited Partners, the General Partner
shall not have authority on behalf of the Partnership to:
(i) do any willful act in contravention of this Agreement;
(ii) do any willful act which would make it impossible to carry on the
ordinary business of the Partnership;
(iii) confess a judgment in a material amount against the
Partnership;
(iv) convert property of the Partnership to its own use, or assign any
rights in specific property of the Partnership for other than a purpose of
the Partnership;
(v) admit a Person as a Limited Partner, except as provided in this
Agreement; or
(vi) perform any act that would subject any Limited Partner to
liability as a general partner in any jurisdiction or any other liability
except as provided for herein or under the Act.
B. Without the Consent of Limited Partners holding a majority of the
Units, the General Partner shall not have the authority on behalf of the
Partnership to:
(i) have the Partnership acquire interests in other hotel properties
in addition to the Hotel or in other entities;
C-16
(ii) sell or otherwise dispose of or consent to the sale or
disposition of the Hotel to the General Partner or an Affiliate of the
General Partner; provided, however, that if it is proposed that the
Partnership sell the Hotel to the General Partner or an Affiliate of the
General Partner, the following procedures shall also be followed: (a) the
General Partner shall first give notice of the proposed sale to the Limited
Partners who shall thereafter have 30 days within which to elect a
nationally recognized appraiser having the approval of Limited Partners
holding a majority of the Units, (b) the appraiser elected under clause (a)
above shall have 30 days from the date of election to prepare and submit to
the General Partner an appraisal of the fair market value of the Hotel, (c)
the purchaser shall submit to the General Partner an appraisal of the fair
market value of the Hotel, such appraisal to be submitted within the time
limit provided by clause (b) above in the case of the appraisal to be
submitted by the appraiser elected by the Limited Partners, and (d) the
General Partner shall thereafter make formal request for the required
Consent and in connection therewith shall submit to the Limited Partners
the two appraisals contemplated by clauses (b) and (c) above; provided,
further, however, that if the Limited Partners do not elect an appraiser as
contemplated by clause (a) above or if such appraiser does not supply an
appraisal within the time period required by clause (b) above, the General
Partner will not request the Consent to the sale of the Hotel to the
General Partner or an Affiliate of the General Partner unless such request
is accompanied by three appraisals as to market value of the Hotel, one
such appraisal to be prepared by an appraiser elected by the purchaser and
the other two appraisals to be prepared by appraisers elected by the first
such appraiser, the cost of all such appraisals to be borne by the
purchaser;
(iii) effect any amendment to any agreement, contract or arrangement
with the General Partner or any of its Affiliates which reduces the
responsibilities or duties of the General Partner as a general partner of
the Partnership or any of its Affiliates or which increases the
compensation payable to the General Partner or any of its Affiliates, or
which adversely affects the rights of the Limited Partners;
(iv) incur debt of the Partnership in excess of the limitations set
forth in Section 5.01C(ii);
(v) agree to the addition of transient guest rooms at the Hotel unless
(a) the Hotel has had an average occupancy rate of at least 70% for a
consecutive period of at least 12 months and (b) the Partnership has
obtained debt financing to finance the costs of the addition on a
nonrecourse basis as to all the Partners and the Partnership (including the
General Partner) except as provided in Section 5.02B(ix) below;
(vi) except as otherwise provided in Section 5.02B(ix), incur any debt
of the Partnership which does not provide by its terms that it shall be
nonrecourse as to all the Partners;
(vii) make any election to continue beyond its term, discontinue or
dissolve the Partnership;
(viii) admit any other Person as a General Partner or voluntarily
withdraw as a General Partner except as necessary to alleviate the negative
effect of any Affected Items pursuant to Section 4.12; and
(ix) guaranty, become personally liable or otherwise bear the risk of
loss, or permit any Affiliate to take any such action, with respect to any
portion of any Partnership debt otherwise permitted to be incurred pursuant
to the terms of this Agreement unless (a) the General Partner, in
accordance with its fiduciary duties as General Partner and taking into
consideration the tax consequences to the Limited Partners, determines that
such actions are in the best interests of the Partnership and the Limited
Partners, (b) assuming operating results then projected through 2001 by the
General Partner, such action (1) will not cause any deficit in the Capital
Account of any Limited Partner at any time to exceed the sum of such
Limited Partner's obligation to make additional capital contributions and
the portion at such time of Minimum Gain that would be allocated to him on
sale of the Hotel and (2) in the opinion of tax counsel, will not at any
time cause the recognition or allocation of income or gain to the Limited
Partners not within the parameters of the forecast allocations of income,
gain, loss and deduction set forth in the Financial Forecast in the Private
Placement Memorandum, or (c) with respect to a guarantee or incurrence of
personal liability or a risk of loss by the General Partner or its
Affiliates aggregating $13.5 million or less,
C-17
the General Partner agrees to apply the procedures set forth in Section
4.12 as if any benefit to the General Partner (including the delay or
avoidance of the recognition of income) and any adverse tax consequences to
the Limited Partners resulting from such guaranty, personal liability or
bearing of risk of loss were attributable to Proposed Regulations prior to
1992; provided, however, that the General Partner's rights pursuant to this
clause (c) are contingent on the General Partner's ability to fully meet
its obligations to make Capital Contributions required under Section 4.12.
SECTION 5.03. DUTIES AND OBLIGATIONS OF THE GENERAL PARTNER.
A. The General Partner shall take all action which may be necessary or
appropriate for the development, maintenance, preservation and operation of the
properties and assets of the Partnership in accordance with the provisions of
this Agreement and applicable laws and regulations (it being understood and
agreed, however, that the direct performance of day-to-day management or
operational services for the Hotel and other properties of the Partnership is
not an obligation of the General Partner as general partner of the Partnership).
B. The General Partner shall not (i) directly or through a subsidiary
engage in any business other than that of acting as general partner of the
Partnership, (ii) pay dividends or make other distributions or payments on its
stock or incur any obligations if, as a result, its net worth would be reduced
below the requirement of Section 5.03C, (iii) merge or consolidate with another
corporation except Host or a wholly-owned direct or indirect subsidiary of Host,
(iv) dissolve, or (v) borrow any funds or become liable for any obligations of
third parties except to the extent that any such borrowings or liabilities are
directly related to meeting the financial needs of the Partnership. The General
Partner further agrees that so long as the General Partner is the general
partner of the Partnership, its parent company, Host, will not transfer its
stock of the General Partner except to a wholly-owned, direct or indirect,
subsidiary of Host.
The General Partner shall devote to the Partnership such time as may be
necessary for the proper performance of its duties hereunder, but the officers
and directors of the General Partner shall not be required to devote their full
time to the performance of duties of the General Partner.
C. The General Partner shall use its reasonable best efforts to maintain
at all times a net worth at a level sufficient to meet all requirements of the
Code and applicable regulations, rulings and revenue procedures of the IRS and
to meet any future requirements set by Congress, the IRS, any agency of the
Federal government or any court of competent jurisdiction, to assure that the
Partnership will be classified for Federal income tax purposes as a partnership
and not as an association taxable as a corporation. These provisions are
designed to ensure that the equity capitalization of the General Partner will be
available to meet any legal obligations which the General Partner may have in
its role as the general partner of the Partnership.
D. The General Partner shall take such action as may be necessary or
appropriate in order to form or qualify the Partnership under the laws of any
jurisdiction in which the Partnership is doing business or owns property or in
which such formation or qualification is necessary in order to protect the
limited liability of the Limited Partners or in order to continue in effect such
formation or qualification. If required by law, the General Partner shall file
or cause to be filed for recordation in the office of the appropriate
authorities of the State of Delaware, and in the proper office or offices in
each other jurisdiction in which the Partnership is formed or qualified, such
certificates (including limited partnership and fictitious name certificates)
and other documents as are required by the applicable statutes, rules or
regulations of any such jurisdiction or as are necessary to reflect the identity
of the Partners and the amounts of their respective Capital Contributions.
E. The General Partner shall be obligated to use its best efforts to
remove any General Partner or Affiliate guaranty, personal liability, and other
risk of loss with respect to any Partnership debt, which was permitted under
Section 5.02B(ix) hereof when such action was incurred, but which subsequently
results in adverse tax consequences to the Limited Partners and which would no
longer be permitted if first being incurred at the time of such adverse
consequences. The General Partner shall use its best efforts, in the conduct of
the Partnership's business, to put all suppliers and other Persons with whom the
Partnership does business on notice that the Limited
C-18
Partners are not liable for Partnership obligations, and all agreements to which
the Partnership is a party shall include a statement to the effect that the
Partnership is a limited partnership organized under the Act; but the General
Partner shall not be liable to any Limited Partner for any failure to give such
notice to such suppliers or other Persons or to have any such agreement fail to
contain such statement.
F. The General Partner shall prepare or cause to be prepared and shall
file on or before the due date (or any extension thereof) any Federal, state or
local tax returns required to be filed by the Partnership. The General Partner
shall cause the Partnership to pay any taxes payable by the Partnership.
G. The General Partner shall be under a duty to conduct the affairs of the
Partnership in good faith and in accordance with the terms of this Agreement and
in a manner consistent with the purposes set forth in Section 2.03.
H. The General Partner shall use its best efforts to ensure that the
Partnership shall not be deemed an investment company as such term is defined in
the Investment Company Act of 1940.
SECTION 5.04. COMPENSATION OF GENERAL PARTNER.
The General Partner as general partner of the Partnership shall not in such
capacity receive any salary, fees, profits or distributions except for such
allocations to which it may be entitled under Article Four, Article Five or
Article Eight. Notwithstanding the foregoing, however, the Partnership shall
reimburse the General Partner for the cost of providing any administrative or
other services required or contemplated by this Agreement.
SECTION 5.05. OTHER BUSINESS OF PARTNERS.
Any Limited Partner may engage independently or with others in other
business ventures of every nature and description. Nothing in this Agreement
shall be deemed to prohibit any Affiliate of the General Partner from dealing,
or otherwise engaging in business with Persons transacting business with the
Partnership or from providing services relating to the purchase, sale,
financing, management, development or operation of hotels, motels, restaurants
or other food and lodging facilities and receiving compensation therefor. The
relationship created hereby in or to such other ventures or activities or to the
income or proceeds derived therefrom, and the pursuit of such ventures, even if
competitive with the business of the Partnership, shall not be deemed wrongful
or improper. Neither the General Partner nor any Affiliate of the General
Partner shall be obligated to present any particular opportunity to the
Partnership even if such opportunity is of a character which, if presented to
the Partnership, could be taken by the Partnership, and any Affiliate of the
General Partner shall have the right to take for its own account (individually
or as a trustee, partner or fiduciary) or to recommend to others any such
particular opportunity.
SECTION 5.06. LIMITATION ON LIABILITY OF GENERAL PARTNER; INDEMNIFICATION.
A. Other than pursuant to Section 5.07, the General Partner shall not be
liable to the Partnership or any Limited Partner because any taxing authority
disallows or adjusts any deductions or credits in the Partnership income tax
return unless such action by the taxing authority is due to the negligence of
the General Partner. The indemnification under this subsection is not broader
than any other indemnification contained in this Section 5.06. The General
Partner shall not be liable for the return of the Capital Contributions of the
Limited Partners or for any portion thereof, it being expressly understood that
any return of capital shall be made solely from the assets of the Partnership;
nor shall the General Partner be required to pay to the Partnership or to any
Limited Partner any deficit in the Capital Account of any Partner upon
dissolution or otherwise, except as otherwise provided in Section 8.02E.
B. The General Partner shall have no liability, responsibility or
accountability in damages or otherwise to any other Partner or to the
Partnership for, and the Partnership agrees to indemnify, pay, protect and hold
harmless the General Partner (on the demand of and to the satisfaction of the
General Partner and to the extent permitted by law) from and against any and all
liabilities, obligations, losses, damages, judgments, suits,
C-19
proceedings, costs, expenses and disbursements of any kind or nature whatsoever
(including, without limitation, all costs and expenses of defense, appeal and
settlement of any and all suits, actions or proceedings threatened or instituted
against the General Partner or the Partnership and all costs of investigations
in connection therewith) which may be imposed on, incurred by, or asserted
against the General Partner or the Partnership in any way relating to or arising
out of, or alleged to relate to or arise out of, any action or inaction on the
part of the Partnership, or on the part of the General Partner as the General
Partner of the Partnership including any action or inaction in connection with
the General Partner acting as Tax Matters Partner or Designated Person under
Section 5.07 or in connection with the results of the study provided in Section
1 1.03B; provided, that the General Partner shall be liable, responsible and
accountable, and the Partnership shall not be liable to the General Partner for
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, proceedings, costs, expenses or disbursements
(including, without limitation, all costs and expenses of defense, appeal and
settlement of any and all suits, actions or proceedings threatened or instituted
against the General Partner or the Partnership and all costs of investigation in
connection therewith) which resulted from the General Partner's own fraud,
negligence, or other breach of fiduciary duty to the Partnership or any Partner.
The satisfaction of the obligations of the Partnership under this Section 5.06
shall be from and limited to the assets of the Partnership and no Limited
Partner shall have any personal liability on account thereof. The provisions of
this indemnification shall also extend to any person performing services on
behalf of the Partnership who is an officer, director or owner of 10% or more of
the voting securities of the General Partner.
C. The General Partner shall have no liability or responsibility hereunder
to make loans, advances or additional Capital Contributions to the Partnership
except as specified in Section 3.04 and Section 4.12 and except as may otherwise
be provided as a matter of law or under the Mortgage Debt. However, except for
advances made pursuant to the Debt Service Guarantee and Foreclosure Guarantee
which will be repaid as noted below, to the extent the General Partner advances
any funds to meet any liabilities or obligations of the Partnership, any such
advances shall be deemed loans to the Partnership by the General Partner and
shall accrue interest per annum at one percentage point in excess of the Prime
Rate payable in arrears on the first day of each Fiscal Quarter and such amounts
shall be due and payable upon that date which is the fifth anniversary of the
date on which any such advances were made; provided, however, that any and all
such advances shall be paid prior to distributions to Partners out of any Cash
Available for Distribution to the Partners, upon the liquidation of the
Partnership, or the sale of the Hotel and the receipt by the Partnership of the
proceeds of such sale. Advances, if any, to the Partnership by the General
Partner or its Affiliates pursuant to the Debt Service Guarantee or Foreclosure
Guarantee will bear interest at one percentage point in excess of the Prime Rate
and will be paid as follows: (i) after the Partnership has distributed the
Priority Return to the Limited Partner; (ii) out of Capital Receipts before any
distribution to the Partner; and (iii) in any event, not later than November 15,
1993. Advances under the Debt Service Guarantee may be secured by a mortgage on
the Hotel junior to the Mortgage Debt.
D. Notwithstanding the foregoing, the General Partner shall not be
indemnified by the Partnership for liabilities arising under Federal and state
securities laws unless (i) there has been a successful adjudication in favor of
the General Partner on the merits of each count involving securities law
violations; (ii) such claims against the General Partner have been dismissed
with prejudice on the merits by a court of competent jurisdiction; (iii)
indemnification of litigation costs is approved by a court of competent
jurisdiction. In any claim for indemnification for Federal or state securities
law violations, the party seeking indemnification shall place before the court
the position, if available, of the Securities and Exchange Commission and the
Massachusetts Securities Division with respect to the issue of indemnification
for securities law violations.
SECTION 5.07. DESIGNATION OF TAX MATTERS PARTNER AND DESIGNATED PERSON FOR
PURPOSES OF INVESTOR LIST.
A. The General Partner shall act as the Tax Matters Partner of the
Partnership, as provided in regulations pursuant to section 6231 of the Code and
as the Designated Person for purposes of maintaining the Investor List. Each
Partner hereby approves of such designation and agrees to execute, certify,
acknowledge, deliver, swear to, file and record at the appropriate public
offices such documents as may be deemed necessary or appropriate to evidence
such approval.
C-20
B. To the extent and in the manner provided by applicable Code sections
and regulations thereunder, the Tax Matters Partner shall furnish the name,
address, profits, interest and taxpayer identification number of each Partner to
the IRS.
C. To the extent and in the manner provided by applicable Code sections
and regulations thereunder, the Tax Matters Partner shall inform each Partner of
administrative or judicial proceedings for the adjustment of Partnership items
required to be taken into account by a Partner for income tax purposes (such
administrative proceedings being referred to as a "tax audit" and such judicial
proceedings being referred to as "judicial review").
D. The Tax Matters Partner is authorized, but not required:
(a) to enter into any settlement with the IRS with respect to any tax
audit or judicial review, and in the settlement agreement the Tax Matters
Partner may expressly state that such agreement shall bind all Partners
except that such settlement agreement shall not bind any Partner who
(within the time prescribed pursuant to the Code and regulations
thereunder) files a statement with the IRS providing that the Tax Matters
Partner shall not have the authority to enter into a settlement agreement
on behalf of such Partner;
(b) in the event that a notice of a final administrative adjustment at
the Partnership level of any item required to be taken into account by a
Partner for tax purposes (a "final adjustment") is mailed to the Tax
Matters Partner, to seek judicial review of such final adjustment,
including the filing of a petition for readjustment with the Tax Court of
the United States Claims Court, or the filing of a complaint for refund
with the District Court of the United States for the district in which the
Partnership's principal place of business is located;
(c) to intervene in any action brought by any other Partner for
judicial review of a final adjustment;
(d) to file a request for an administrative adjustment with the IRS at
any time and, if any part of such request is not allowed by the IRS to file
an appropriate pleading (petition or complaint) for judicial review with
respect to such request;
(e) to enter into an agreement with the IRS to extend the period for
assessing any tax which is attributable to any item required to be taken
into account by a Partner for tax purposes, or an item affected by such
item; and
(f) to take any other action on behalf of the Partners or the
Partnership in connection with any tax audit or judicial review proceeding
to the extent permitted by applicable law or regulations.
E. Notwithstanding any other provision of this Agreement, the Partnership
shall indemnify and reimburse, to the full extent provided by law, the Tax
Matters Partner for all expenses, including legal and accounting fees (as such
fees are incurred), claims, liabilities, losses and damages incurred in
connection with any tax audit or judicial review proceeding with respect to the
tax liability of the Partners, the payment of all such expense to be made before
the distribution of Cash Available for Distribution to the Partners. Neither
the General Partner nor any of its Affiliates nor other person shall be
obligated to provide funds for such purpose.
The taking of any action and the incurring of any expense by the Tax
Matters Partner in connection with any such proceeding, except to the extent
required by law, is a matter in the sole discretion of the Tax Matters Partner
and the provisions on limitations of liability of the General Partner and
indemnification set forth in Section 5.06 of this Agreement shall be fully
applicable to the Tax Matters Partner in its capacity as such. The
indemnification under this subsection is no broader than any other
indemnification contained in this Section 5.06.
C-21
ARTICLE SIX
WITHDRAWAL AND REMOVAL OF GENERAL PARTNER
SECTION 6.01. LIMITATION ON VOLUNTARY WITHDRAWAL.
Except as permitted in Section 5.02B, the General Partner shall not retire
or withdraw voluntarily from the Partnership. The General Partner shall not
sell, transfer or assign its entire general partnership Interest or any portion
thereof other than as provided below. The General Partner shall be permitted to
assign its rights to up to 80% of its interest in the Net Profits, Net Losses,
Losses, Gain, Cash Available for Distribution, Capital Receipts and other
allocations and distributions. The General Partner shall not be permitted to
assign such rights unless the General Partner receives an opinion of counsel
that such assignment shall not cause any adverse tax consequences to the
Partnership or the Limited Partners or cause a default under any Partnership
debt obligation. Notwithstanding anything to the contrary set forth in this
Agreement, notwithstanding the assignment by the General Partner of its Interest
in the Partnership, upon any such assignment (i) the General Partner shall not
cease to be a general partner of the Partnership, and shall continue to be a
general partner of the Partnership, and (ii) the General Partner shall not cease
to have any and all rights and powers of a general partner under this Agreement
and the Act and the power to exercise any and all rights and powers of a general
partner under this Agreement and the Act and shall continue to have any and all
such rights and powers and the assignee shall not acquire any such rights and
powers of a general partner.
SECTION 6.02. BANKRUPTCY OR DISSOLUTION OF THE GENERAL PARTNER.
In the event of the bankruptcy or dissolution of the General Partner, the
General Partner shall immediately cease to be the General Partner and its
Interest shall terminate; provided, however, that such termination shall not
affect any rights or liabilities of the General Partner which matured prior to
such event, or the value, if any, at the time of such event of the Interest of
the General Partner.
SECTION 6.03. LIABILITY OF WITHDRAWN GENERAL PARTNER.
If the General Partner shall cease to be the General Partner of the
Partnership, it shall be and remain liable for all obligations and liabilities
incurred by it as General Partner prior to the time such withdrawal shall have
become effective, but it shall be free of any obligation or liability incurred
on account of the activities of the Partnership from and after the time such
withdrawal shall have become effective.
SECTION 6.04. REMOVAL OF GENERAL PARTNER.
In the event of the removal of the General Partner pursuant to Section
10.02B, the removed General Partner's Interest as General Partner in the
Partnership shall become a limited partnership interest but without any voting
or consensual rights which other Limited Partners may have.
SECTION 6.05. SUBSTITUTE GENERAL PARTNER.
If the General Partner shall withdraw, be removed, dissolve or become
bankrupt, it shall promptly notify the Limited Partners and thereafter the
Limited Partners may elect by written vote of Limited Partners holding all of
the Units within 90 days of such withdrawal, removal, dissolution or bankruptcy
to continue the Partnership and appoint a substitute general partner effective
as of the withdrawal, removal, dissolution or bankruptcy of the retiring General
Partner. Within 120 days following the withdrawal, removal, dissolution or
bankruptcy of the General Partner, in the event action pursuant to this Section
6.05 is not taken, the Limited Partners, acting by affirmative vote of a
majority in interest thereof, may elect in writing to reconstitute and continue
the business of the Partnership by forming a new partnership upon terms
identical to the terms set forth in this Agreement. Any such
C-22
election must also provide for the election of a general partner to the new
partnership. If such an election is made, all of the Limited Partners of the
Partnership shall continue as Limited Partners of the new limited partnership.
ARTICLE SEVEN
ASSIGNABILITY OF UNITS
SECTION 7.01. RESTRICTIONS ON ASSIGNMENTS.
After the admission to the Partnership of the Limited Partners, no Limited
Partner shall have the right to assign any Interest except with the Consent of
the General Partner, the giving or withholding of which is exclusively within
the discretion of the General Partner, and provided further that:
A. No assignment of any Interest may be made other than on the first day
of an Accounting Period; provided, however, that this restriction on the timing
of assignment shall not apply to (i) any transfer of Units (or fractions of
Units) to Hanover Hotel Acquisition Corp. pursuant to Hanover Hotel Acquisition
Corp.'s Offer to Purchase for Cash 40 Outstanding Units of Limited Partnership
Interest, dated March 3, 1997, or (ii) any subsequent assignment of any Units by
Hanover Hotel Acquisition Corp.
B. No assignment of any Interest may be made if the assignment is pursuant
to a sale or exchange of the Interest and if the Interest sought to be assigned,
when added to the total of all other Interests assigned within a period of 12
consecutive months prior thereto, would, in the opinion of legal counsel for the
Partnership, result in the Partnership being deemed to have been terminated
within the meaning of section 708 of the Code. The General Partner shall give
Notification to all Limited Partners in the event that sales or exchanges should
be suspended for such reason. Any deferred sales or exchanges shall be made (in
chronological order to the extent practicable) as of the first day of an
Accounting Period after the end of any such 12-month period, subject to the
provisions of this Article Seven.
C. The General Partner may require that any assignment of an Interest in
the Partnership be made only if the assignor or assignee provides an opinion of
counsel that such assignment would not require filing of a registration
statement under the Securities Act of 1933, as amended, and would otherwise not
be in violation of any Federal or state securities or Blue Sky laws (including
any investment suitability standards) applicable to the Partnership.
D. No purported assignment (i) by the holder of any Unit after which the
assignor or the assignee would hold a fraction of a Unit (other than a one-half
Unit) or (ii) by the holder of a fraction of a Unit of less than all of such
holder's entire fractional Interest, will be permitted or recognized (except for
assignments by gift, inheritance or family dissolution or assignments to
Affiliates of the assignor).
E. No assignment of any Interest may be made if, in the opinion of legal
counsel to the Partnership, it would result in the Partnership being treated as
an association taxable as a corporation.
F. No assignment of any Interest may be made if, in the opinion of legal
counsel to the Partnership, it would result in the Partnership not being able to
obtain or continue in effect any license permitting the service or sale of
alcoholic beverages in the Hotel.
G. No assignment of any Interest may be made to a Tax-Exempt Entity.
SECTION 7.02. ASSIGNEES AND SUBSTITUTED LIMITED PARTNERS.
A. If a Limited Partner dies, the executor, administrator or trustee, or,
if a Limited Partner is adjudicated incompetent or insane, the committee,
guardian or conservator, or, if a Limited Partner becomes bankrupt, the trustee
or receiver of the estate, shall have all the rights of a Limited Partner for
the purpose of settling
C-23
or managing the estate and such power as the decedent or incompetent possessed
to assign all or any part of the Units and to join with the assignee thereof in
satisfying conditions precedent to such assignee becoming a Substituted Limited
Partner. The death, dissolution, adjudication of incompetence or bankruptcy of a
Limited Partner in and of itself shall not dissolve the Partnership.
B. Except for an assignment permitted by the proviso to Section 7.01A, the
Partnership need not recognize for any purpose any assignment of any Interest
unless there shall have been filed with the Partnership a duly executed and
acknowledged counterpart of the instrument making such assignment signed by both
the assignor and the assignee and such instrument evidences the written
acceptance by the assignee of all of the terms and provisions of this Agreement
and represents that such assignment was made in accordance with all applicable
laws and regulations (including investment suitability requirements).
C. Limited Partners who shall assign all their Interests shall cease to be
Limited Partners of the Partnership except that unless and until a Substituted
Limited Partner is admitted in his stead, the assigning Limited Partner shall
not cease to be a Limited Partner of the Partnership and shall retain the
statutory rights and powers of a limited partner under the Act.
D. Any Person who is an assignee of any of the Interests of a Limited
Partner and who has satisfied the requirements of Section 7.01 and Section 7.02B
shall become a Substituted Limited Partner when the General Partner has accepted
such Person as a Limited Partner of the Partnership and the books and records of
the Partnership reflect such Person as admitted to the Partnership as a Limited
Partner and when such Person shall have satisfied the conditions of Section
11.02A and shall have paid all reasonable legal fees and filing costs in
connection with the substitution as a Limited Partner; provided, however, that
the General Partner's consent to the substitution of any assignee of an Interest
as a Substituted Limited Partner may be granted or withheld in its sole
discretion.
E. Any Person who is the assignee of an Interest of a Limited Partner, but
who does not become a Substituted Limited Partner and desires to make a further
assignment of any such Interests, shall be subject to all the provisions of this
Article Seven to the same extent and in the same manner as any Limited Partner
desiring to make an assignment of the Interests.
F. There shall be no restrictions on the assignments of Interests except
as provided in Article Six or this Article Seven.
ARTICLE EIGHT
DISSOLUTION AND LIQUIDATION OF THE PARTNERSHIP
SECTION 8.01. EVENTS CAUSING DISSOLUTION.
A. The Partnership shall be dissolved on the first to occur of the
following events:
(i) the bankruptcy of the Partnership;
(ii) the withdrawal or removal of the General Partner, unless the
Partnership is continued pursuant to Section 6.05;
(iii) the dissolution or bankruptcy of the General Partner, unless
the Partnership is continued pursuant to Section 6.05;
(iv) the sale or other disposition of all of the property of the
Partnership; or
(v) the expiration of the term of the Partnership.
C-24
Dissolution of the Partnership shall be effective on the day on which the
event occurs giving rise to the dissolution. The Partnership shall not
terminate until the assets of the Partnership shall have been liquidated as
provided in Section 8.02. Notwithstanding the dissolution of the Partnership,
prior to the termination of the Partnership, as aforesaid, the business of the
Partnership and the affairs of the Partners as such, shall continue to be
governed by this Agreement.
B. Except as otherwise provided in Section 8.02E, Partners shall look
solely to the assets of the Partnership for all distributions with respect to
the Partnership and their Capital Contribution thereto, and shall have no
recourse therefor (upon dissolution or otherwise) against the General Partner or
any other Limited Partner.
SECTION 8.02. LIQUIDATION.
A. Upon dissolution of the Partnership, the General Partner shall
liquidate the assets of the Partnership and the proceeds of such liquidation
shall be applied and distributed in the following order of priority:
(i) to the payment of the expenses of the liquidation;
(ii) to the payments of Partnership Debt and all other liabilities of
the Partnership owing to creditors of the Partnership other than Partners
who are creditors;
(iii) to the payment of any loans or advances that may have been made
by any of the Partners to the Partnership; and
(iv) pro rata to the General Partner and to the Limited Partners to
reduce any net balances then existing in the Capital Accounts of the
Partners.
B. Notwithstanding the foregoing, in the event the General Partner shall
determine that an immediate sale of all or part of the Partnership assets would
cause undue loss to the Partners, the General Partner, in order to avoid such
loss, may, after having given notification to all the Limited Partners, to the
extent not then prohibited by the limited partnership act of any jurisdiction in
which the Partnership is then formed or qualified and applicable in the
circumstances, either defer liquidation of and withhold from distribution for a
reasonable time any assets of the Partnership except those necessary to satisfy
the Partnership's debts and obligations, or distribute the assets of the
Partnership in kind.
C. If any assets of the Partnership are to be distributed in kind, such
assets shall be distributed on the basis of the fair market value thereof, and
any Partner entitled to any interest in such assets shall receive such interest
therein as a tenant-in-common with all other Partners so entitled. The fair
market value of such assets shall be determined by an independent appraiser to
be selected by random number from a list of three qualified appraisers obtained
by the General Partner from the American Institute of Real Estate Appraisers.
D. The General Partner shall cause the liquidation and distribution of all
the Partnership's assets and shall cause the cancellation of the Partnership's
certificate of limited partnership upon completion of winding up the business of
the Partnership.
E. Upon a dissolution of the Partnership if, after giving effect to
Sections 8.02A through 8.02D hereof for the Fiscal Year in which such
dissolution occurs, there shall be a deficit in the Capital Account of the
General Partner, while there is a positive balance in the capital account of any
other Partner, the General Partner shall contribute to the Partnership (in cash)
the amount of such deficit, which thereupon shall be distributed by the
Partnership pro rata to any Partner possessing a positive balance in his capital
account. Such contribution by the General Partner is to be made to the
Partnership not later than the close of the taxable year in which the
dissolution occurs.
C-25
ARTICLE NINE
BOOKS AND RECORDS, ACCOUNTING, REPORTS, TAX ELECTIONS, ETC.
SECTION 9.01. BOOKS AND RECORDS.
The books and records of the Partnership shall be maintained by the General
Partner in accordance with applicable law at the principal office of the
Partnership and shall be available for examination at such location by any
Partner or such Partner's duly authorized representatives at any and all
reasonable times for any purpose reasonably related to the Partner's interest in
the Partnership. Any Partner, upon paying the costs of collating, duplication
and mailing, shall be entitled, upon written application to the General Partner,
to a copy of the list of the names and addresses of the Limited Partners and the
number of Units owned by each of them for any purpose reasonably related to the
Partners' interest in the Partnership.
SECTION 9.02. ACCOUNTING AND FISCAL YEAR.
The books of the Partnership will be kept on the accrual basis. The
Partnership will report its operations for tax purposes on the accrual method.
The Fiscal Year of the Partnership shall end December 31 in each year.
SECTION 9.03. BANK ACCOUNTS AND INVESTMENTS.
The bank accounts of the Partnership shall be maintained in such banking
institutions as the General Partner shall determine, and withdrawals shall be
made only in the regular course of Partnership business on such signature or
signatures as the General Partner may determine. All deposits and other funds
not needed in the operation of the business or not yet invested may be invested
as provided in Section 5.01C(v) or in U.S. government securities, securities
issued or guaranteed by U.S. government agencies, securities issued or
guaranteed by states or municipalities, certificates of deposit and time or
demand deposits in commercial banks, bankers' acceptances, savings and loan
association deposits or deposits in members of the Federal Home Loan Bank
System. The funds of the Partners shall not be commingled with the funds of any
other Person.
SECTION 9.04. REPORTS.
The General Partner shall deliver to each Partner the following:
A. As soon as practicable but in no event later than 75 days after the end
of each Fiscal Year of the Partnership, such information as shall be necessary
for the preparation by such Partner of a Federal income tax return, and state
income or other tax returns with regard to the jurisdictions in which the Hotel
is located. Such information shall include computation of the distributions to
such Partner and the allocation to such Partner of the Net Profits or Net
Losses, as the case may be, the Gain or Loss, as the case may be, recognized by
or allocated to the Partnership on the sale of the Hotel or other Partnership
properties during such Fiscal Year; and
B. Within 120 days after the end of each Fiscal Year of the Partnership, a
statement prepared by the General Partner on an accrual basis of accounting
which statement is to be audited and certified by a firm of independent public
accountants selected by the General Partner, setting forth its opinion as to the
items in clauses (i) and (ii) below, which statement shall set forth the
following:
(i) a statement of assets, liabilities and Partners' capital, a
statement of income and expenses on an accrual basis and a statement of
cash flows, and a statement of changes in Partners' capital;
(ii) the balances in the Capital Accounts of the Limited Partners in
the aggregate and of the General Partner;
C-26
(iii) a report (which need not be audited) summarizing the fees,
commissions, compensation and other remuneration and reimbursed expenses
paid by the Partnership for such Fiscal Year to the General Partner or any
Affiliate of the General Partner and the services performed; and
(iv) a budget (which need not be audited) setting forth the expected
Net Profits and Net Losses per Unit, for the current Fiscal Year.
C. Within 75 days after the end of each of the first three Fiscal Quarters
of each Fiscal Year of the Partnership, the General Partner shall send to each
Person who was a Limited Partner at any time during the Fiscal Quarter then
ended (i) a balance sheet (which need not be audited) and (ii) a profit and loss
statement (which need not be audited) and any other pertinent information
regarding the Partnership and its activities during the period covered by the
report.
D. Concurrent with the report sent pursuant to Section 9.04C for the third
Fiscal Quarter of each Fiscal Year, the Partners will be furnished an estimate
of Net Profits or Net Losses per Unit for such Fiscal Year.
E. The General Partner may prepare and deliver to the Limited Partners
from time to time in its sole discretion during each Fiscal Year, in connection
with cash distributions, unaudited statements showing the results of operations
of the Partnership to the date of such statement.
F. The General Partner shall prepare and file such registration
statements, annual reports, quarterly reports, current reports, proxy statements
and other documents, if any, as may be required under the Securities Exchange
Act of 1934 and the rules and regulations of the Securities and Exchange
Commission thereunder.
SECTION 9.05. TAX DEPRECIATION AND ELECTIONS.
A. With respect to all depreciable assets of the Partnership, the General
Partner may, in its sole discretion, elect to use such depreciation method for
Federal tax purposes as it deems appropriate and in the best interest of the
Partners generally.
B. The General Partner shall be permitted in any Fiscal Year to make an
election under section 754 of the Code and such other tax elections as it may
from time to time deem necessary or appropriate.
SECTION 9.06. INTERIM CLOSING OF THE BOOKS.
There shall be an interim closing of the books of account of the
Partnership (i) at the date of the admission to the Partnership of the Original
Limited Partners, (ii) at any time a taxable year of the Partnership ends
pursuant to the Code and (iii) at such other times as the General Partner shall
determine are required by good accounting practice or may be appropriate under
the circumstances.
ARTICLE TEN
MEETINGS AND VOTING RIGHTS OF LIMITED PARTNERS
SECTION 10.01. MEETINGS.
A. Meetings of the Limited Partners for any purpose may be called by the
General Partner and shall be called by the General Partner upon receipt of a
request in writing signed by Limited Partners holding 10% or more of the Units.
Notification of any such meeting shall be sent to the Limited Partners within
ten business days after receipt of such a request. Such request or any
notification from the General Partner shall state the purpose of the proposed
meeting and the matters proposed to be acted upon thereat. Such meeting may be
held at the principal office of the Partnership or at such other location within
the United States as the General Partner may deem
C-27
appropriate or desirable. In addition, the General Partner may, and, upon
receipt of a request in writing signed by Limited Partners holding 25% or more
of the Units, the General Partner shall submit any matter (upon which the
Limited Partners are entitled to act) to the Limited Partners for a vote by
written Consent without a meeting.
B. Notification of any such meeting shall be given not less than 10 days
nor more than 60 days before the date of the meeting, to the Limited Partners at
their record addresses, or at such other address which they may have furnished
in writing to the General Partner. Such Notification shall be in writing, and
shall state the place, date, hour and purpose of the meeting, and shall indicate
that it is being issued at or by the direction of the Partner or Partners
calling the meeting. If a meeting is adjourned to another time or place, and if
any announcement of the adjournment of time or place is made at the meeting, it
shall not be necessary to give Notification of the adjourned meeting. The
presence in person or by proxy of Limited Partners holding a majority of the
Units (which in the case of an Interested Transaction, must include a majority
of the Units held by Limited Partners other than the General Partner and its
Affiliates) shall constitute a quorum at all meetings of the Limited Partners;
provided, however, that if there be no such quorum, Limited Partners holding a
majority of the Units so present or so represented may adjourn the meeting from
time to time without further notice, until a quorum shall have been obtained. No
Notification of the time, place or purpose of any meeting of Limited Partners
need be given to any Limited Partner who attends in person or is represented by
proxy (except when a Limited Partner attends a meeting for the express purpose
of objecting at the beginning of the meeting to the transaction of any business
on the ground that the meeting is not lawfully called or convened), or to any
Limited Partner entitled to such notice who, in a writing executed and filed
with the records of the meeting, either before or after the time thereof, waives
such Notification.
C. For the purpose of determining the Limited Partners entitled to vote at
any meeting of the Partnership or any adjournment thereof, or entitled to
Consent to any matter upon which the Limited Partners are entitled to act by
written Consent without a meeting, the General Partner or the Limited Partners
requesting such meeting may fix, in advance, a date as the record date for any
such determination of Limited Partners. Such date shall be not more than 60
days nor less than 10 days before any such meeting.
D. The Limited Partners may authorize any Person to act for them by Proxy
in all matters in which a Limited Partner is entitled to participate, whether by
waiving notice of any meeting, or voting or participating at a meeting. Every
proxy must be signed by the Limited Partner or the Partner's attorney-in-fact.
No proxy shall be valid beyond the period permitted by law. Every proxy shall
be revocable at the pleasure of the Limited Partner executing it.
E. At each meeting of Limited Partners, the General Partner shall appoint
such officers and adopt such rules for the conduct of such meeting as the
General Partner shall deem appropriate.
F. As and to the extent that the Securities Exchange Act of 1934 is
applicable to the procedural rules governing any meeting of Limited Partners
(including any proxies or proxy statement related thereto), the provisions of
such Act shall take precedence over any provision of this Section 10.01 which
may be inconsistent therewith.
G. If any consents, determinations or votes of Limited Partners, with or
without a meeting, are to be requested, made or taken with respect to an
Interested Transaction, Units held by the General Partner or any of its
Affiliates (other than officers, directors or employees of the General Partner
or any of its Affiliates) shall be voted in the same manner as the vote of
Limited Partners holding, in their capacity as Limited Partners and not as
assignees, a majority of the Units actually voting on the Interested Transaction
(not including those Units held by the General Partner or any of its Affiliates
other than officers, directors or employees of the General Partner or any of its
Affiliates); provided, however, that no Interested Transaction shall be deemed
to be approved unless a majority of the Units held by Limited Partners other
than the General Partner and its Affiliates are present in person or by proxy at
the meeting at which such Interested Transaction is considered, or, if written
consents are sought with respect to such Interested Transaction, consents
representing a majority of the Units held by Limited Partners other than the
General Partner and its Affiliates are returned and not withdrawn prior to the
expiration of the consent solicitation period. With respect to all matters
other than an Interested Transaction, the General Partner and its Affiliates may
vote Units held by them as Limited Partners in their sole and absolute
discretion.
C-28
SECTION 10.02. SPECIAL VOTING RIGHTS OF LIMITED PARTNERS.
A. If at any time any agreement pursuant to which operating management of
any property of the Partnership is vested in the General Partner or an Affiliate
of the General Partner or in Marriott International, Inc. or any of its
Affiliates and if pursuant to the terms of such agreement the Partnership has a
right to terminate such agreement as a result of the failure of the operation of
such property to attain any economic objective, the Limited Partners, without
the Consent of the General Partner, may upon the affirmative vote of Limited
Partners holding a majority of the Units, take action to exercise the right of
the Partnership to terminate such agreement.
B. To the extent not inconsistent with applicable law, in the event that
the General Partner has breached its obligations under Section 5.03B, has
committed any act of fraud or has committed and not, within a reasonable period
of time, remedied any act of bad faith or gross negligence in carrying out its
duties as the general partner, Limited Partners holding a majority of the Units
may, without the Consent of the General Partner, vote to:
(i) amend this Agreement, provided, however, that the allocable
percentage interests of the Partners in the allocations set forth in
Article Four may not be altered, and no new material obligation may be
imposed on any Partner without such Partner's approval;
(ii) dissolve the Partnership; or
(iii) remove the General Partner.
ARTICLE ELEVEN
MISCELLANEOUS PROVISIONS
SECTION 11.01. APPOINTMENT OF GENERAL PARTNER AS ATTORNEY-IN-FACT.
A. Each Limited Partner, including each Substituted Limited Partner, by
the execution and delivery of this Agreement, irrevocably constitutes and
appoints the General Partner and the President, any Vice President, Secretary,
Treasurer, Assistant Secretary and Assistant Treasurer of any corporate General
Partner as his true and lawful attorney-in-fact with full power and authority in
such Limited Partner's name, place, and stead to execute, acknowledge, deliver,
swear to, file, and record at the appropriate public offices such documents as
may be necessary or appropriate to carry out the provisions of this Agreement,
including but not limited to:
(i) all counterparts of this Agreement, and any amendment or
restatement thereof, including all certificates and instruments, which the
General Partner deems appropriate to form, qualify or continue the
Partnership as a limited partnership (or a partnership in which the Limited
Partners will have limited liability comparable to that provided by the
Act) in the jurisdictions in which the Partnership may conduct business or
in which such formation, qualification or continuation is, in the opinion
of the General Partner, necessary or desirable to protect the limited
liability of the Limited Partners;
(ii) all amendments to this Agreement adopted in accordance with the
terms hereof and all instruments which the General Partner deems
appropriate to reflect a change or modification of the Agreement in
accordance with the terms hereof;
(iii) all documents or instruments which the General Partner deems
appropriate to reflect the admission of a Limited Partner (including any
Substituted Limited Partner), in accordance with this Agreement, the
dissolution of the Partnership, sales or transfers of Partnership property,
sales or transfers of Partnership Interests, or the initial amount or
increase or reduction in amount of any Partner's Capital Contribution or
reduction in any Partner's Capital Account;
C-29
(iv) any instrument or document requested by the Partnership or any
purchaser of the Interest of a Defaulting Limited Partner under the
provisions of Section 3.05 of this Agreement;
(v) all documents, including but not limited to financing statements,
necessary or appropriate to perfect and continue the Partnership's security
interest in such Limited Partner's Interest; and
(vi) any instrument, certificate or document to implement the
provisions of Section 5.01C (vi).
B. The appointment by all Limited Partners of the General Partner and the
aforesaid officers of any corporate General Partner as attorney-in-fact shall be
deemed to be a power coupled with an interest, in recognition of the fact that
each of the Partners under this Agreement will be relying upon the power of the
General Partner to act as contemplated by this Agreement in any filing and other
action by it on behalf of the Partnership, and shall survive, and not be
affected by the subsequent bankruptcy, death, incapacity, disability,
adjudication of incompetence or insanity, or dissolution of any Person hereby
giving such power and the transfer or assignment of all or any part of the Units
or Interest of such Person; provided, however, that in the event of the transfer
by a Limited Partner of all of such Limited Partner's Interest, the foregoing
power of attorney of a transferor Partner shall survive such transfer only until
such time as the transferee shall have been admitted to the Partnership as a
Substituted Limited Partner and all required documents and instruments shall
have been duly executed, filed and recorded to effect such substitution.
SECTION 11.02. AMENDMENTS.
A. Each Limited Partner, Substituted Limited Partner and any successor
General Partner shall become a signatory hereof by signing such number of
counterpart signature pages to this Agreement and such other instrument or
instruments, and in such manner, as the General Partner shall determine. By so
signing, each Limited Partner, Substituted Limited Partner or successor General
Partner, as the case may be, shall be deemed to have adopted, and to have agreed
to be bound by all the provisions of, this Agreement subject to the provisions
of Section 7.02D.
B. In addition to the amendments otherwise authorized herein, amendments
may be made to this Agreement from time to time by the General Partner with the
Consent of the holders of a majority of the Units provided, however, that
without the Consent of all Partners, this Agreement may not be amended so as to
(i) convert the Interest of a Limited Partner into a general partner's Interest;
(ii) modify the limited liability of a Limited Partner; (iii) alter the Interest
of a Partner in Net Profits, Net Losses, or Gain or Loss or distributions of
Cash Available for Distribution, Sale Proceeds, Refinancing Proceeds or reduce
the percentage of Partners which is required to Consent to any action hereunder;
(iv) modify the liability of the General Partner as provided in Section 3.08;
(v) permit the General Partner to take any action prohibited by Section 5.02;
(vi) cause the Partnership to be treated for Federal income tax purposes as an
association taxable as a corporation; or (vii) effect any amendment or
modification to this Section 11.02B.
C. If this Agreement shall be amended as a result of adding or
substituting a Limited Partner, the amendment to this Agreement shall be signed
by the General Partner and by the Person to be substituted or added and, if a
Limited Partner is to be substituted, by the assigning Limited Partner. If this
Agreement shall be amended to reflect the withdrawal or removal of the General
Partner when the business of the Partnership is being continued, such amendment
shall be signed by the withdrawing General Partner (and the General Partner
hereby so agrees) and by the successor General Partner.
D. In making any amendments, there shall be prepared and filed for
recordation by the General Partner such documents and certificates as shall be
required to be prepared and filed, no such filing being required solely by
reason of this Agreement, under the Act and under the laws of the other
jurisdictions under the laws of which the Partnership is then formed or
qualified, not less frequently, in the case of a substitution of a Limited
Partner, than once each calendar quarter.
C-30
E. The General Partner may, without the Consent of the Limited Partners,
make any amendment to this Agreement as is necessary to clarify the provisions
hereof so long as such amendment does not affect the rights of the Limited
Partners or assignees of their Interests under this Agreement in any material
respect.
SECTION 11.03. GENERAL PARTNER REPRESENTATIONS AND WARRANTIES.
The General Partner represents that the Partnership shall not incur the
cost of any insurance which insures any party against any liability as to which
such party is prohibited from being indemnified under this Agreement.
SECTION 11.04. BINDING PROVISIONS.
The covenants and agreements contained herein shall be binding upon, and
inure to the benefit of, the heirs, executors, administrators, personal
representatives, successors and assigns of the respective parties hereto.
SECTION 11.05. APPLICABLE LAW.
This Agreement shall be construed and enforced in accordance with the laws
of the State of Delaware.
SECTION 11.06. COUNTERPARTS.
This Agreement may be executed in several counterparts, all of which
together shall constitute one agreement binding on all parties hereto,
notwithstanding that all the parties have not signed the same counterpart.
SECTION 11.07. SEPARABILITY OF PROVISIONS.
Each provision of this Agreement shall be considered separable and if for
any reason any provision or provisions hereof are determined to be invalid and
contrary to any existing or future law, such invalidity shall not impair the
operation of or affect those portions of this Agreement which are valid.
SECTION 11.08. ARTICLE AND SECTION TITLES.
Article and section titles are for descriptive purposes only and shall not
control or alter the meaning of this Agreement as set forth in the text.
SECTION 11.09. SHORT FORM FILINGS.
The General Partner shall have authority to sign any short-form Certificate
of Limited Partnership or restated or amended Certificate of Limited Partnership
meeting the requirement of applicable law which reflects this Agreement, as same
may be amended.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first above written.
GENERAL PARTNER:
MARRIOTT HANOVER HOTEL CORPORATION
By
-----------------------------------------
Xxxxx X. Xxxxxxxxx
C-31
President, Director and Treasurer
LIMITED PARTNERS:
By: MARRIOTT HANOVER HOTEL CORPORATION as,
Attorney-in-Fact for all the Limited Partners
By
-----------------------------------------
Xxxxx X. Xxxxxxxxx
President, Director and Treasurer
X-00
XXXXXXXXXXXXXX
Xxxxx Xx Xxx Xxxx )
County of New York )
On this _____ day of _____________, 1997, before me personally
appeared _______________, to me known, who, first by me duly sworn, did depose
and say that he is the _______________ of Marriott Hanover Hotel Corporation
that he knows the seal of such corporation and that such seal hereto affixed is
such seal and that it was so affixed by order of the Board of Directors of
Marriott Hanover Hotel Corporation and that he signed his name thereof on behalf
of the General Partner by order of the Board of Directors of Marriott Hanover
Hotel Corporation.
In Witness Whereof, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
/s/________________________________
(SEAL) Notary Public for:
My Commission Expires:
ACKNOWLEDGMENT
State Of New York )
County of new York )
On this _____ day of __________, 1997, before me personally appeared
__________________ to me known, who, first by me duly sworn, did depose and say
that he is the __________________ of Marriott Hanover Hotel Corporation that he
knows the seal of such corporation and that such seal hereto affixed is such
seal and that it was so affixed by order of the Board of Directors of Marriott
Hanover Hotel Corporation, and that he signed his name thereto on behalf of the
General Partner as attorney in fact for all the Limited Partners of the
Partnership.
In Witness Whereof, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
/s/ ______________________________
(SEAL) Notary Public for:
My Commission Expires:
C-33
Exhibit A
$84,440 per Unit _________ 1986
___ Units
LIMITED PARTNER NOTE
For Value Received, the undersigned promises to pay to the order of Hanover
Marriott Limited Partnership, a Delaware limited partnership (the "Partnership")
at its offices at 00000 Xxxxxxxx Xxxx, Xxxxxxxx, XX 00000, or at such other
place as the holder hereof from time to time shall designate in writing to the
undersigned, the principal sum of Eighty-four Thousand Four Hundred Forty
Dollars ($84,440) per Unit for the number of Units set forth above, without
interest, in the following installments per Unit at the following times:
Due Date Amount
-------- ------
March 15, 1987...................$25,000 per Unit for the number of
Units set forth above
March 15, 1988...................$22,500 per Unit for the number of
Units set forth above
March 15, 1989...................$22,500 per Unit for the number of
Units set forth above
March 15, 1990...................$14,440 per Unit for the number of
Units set forth above
In the event the undersigned fails to pay in lawful money of the United
States of America any amount which he is required to pay to the Partnership on
or before the tenth day following the date when such amount is due and payable,
a late payment fee of five percent (5%) of the amount of the overdue payment
shall be added to the amount due. If default shall continue beyond 30 days after
notice thereof to the undersigned, in addition to the aforesaid late charge, the
unpaid portion of such installment shall bear interest from the due date of such
installment until paid in full at a rate equal to the lesser of four percentage
points in excess of the base rate of interest announced from time-to-time by
Bankers Trust Company, New York, New York, charged to its best commercial
customers, or the maximum rate permitted by law. In no event may the late
charge, if deemed to be interest under law, when added to any interest exceed
the rate permitted by law. If the default continues beyond 30 days after notice
thereof to the undersigned, the general partner of the Partnership (the "General
Partner") shall also have the option of accelerating the payment of the entire
unpaid balance of the note, and exercising all of the Partnership's rights and
remedies under the Partnership Agreement, as hereinafter defined.
The undersigned shall have the right to repay, in whole or in part, at any
time, the unpaid principal balance to this note.
All the provisions of the Amended and Restated Agreement of Limited
Partnership (the "Partnership Agreement") regarding this note are incorporated
herein by reference.
The undersigned agrees that in the event his subscription for a limited
partnership interest in the Partnership is reduced, this note may be modified by
the General Partner in its sole discretion, to reflect a
C-34
corresponding reduction of the principal amount hereof, and the General Partner
shall allocate such reduction equally among the installment payments due under
this note.
This note may not be modified orally, and shall be governed by, enforced,
determined and construed in accordance with the laws of the State of Delaware.
The undersigned hereby consents to the non-exclusive jurisdiction and venue of
the courts of the State of Delaware and of the United States for the District of
Delaware in connection with the collection of this note or any matter relating
thereto and hereby irrevocably appoints the General Partner as its agent to
receive service of process in the State of Delaware in connection with any such
matter.
In the event of default, the undersigned agrees to pay the costs of
collection, including, without limitation, reasonable attorneys' fees and
disbursements and court costs.
The undersigned waives presentment, demand for payment, notice of dishonor,
notice of protest, protest and all other notices or demands in connection with
the delivery, acceptance, performance, default, endorsement or guaranty of this
instrument, except as set forth in the Partnership Agreement. No failure or
delay by the holder of this note in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise thereof or course of dealing preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.
To secure repayments of the outstanding amounts hereunder, the undersigned
has, pursuant to the Partnership Agreement, hereby granted to the Partnership a
security interest in all of the undersigned's right, title and interest in the
undersigned's limited partnership interest in the Partnership. In the event that
this note is negotiated, endorsed, assigned, transferred and/or pledged, all
references to the Partnership shall apply to the one which receives the
Partnership's interest as if the one instead of the Partnership was named as the
original payee under this note.
If any part of this note is determined by any court to be invalid or
unenforceable, the remaining portions of this note will remain in effect. Any
ambiguity or uncertainty in the note will be construed in favor of the
Partnership.
The terms of this note shall be binding upon and inure to the benefit of
the respective successors and assigns of the Partnership and the undersigned.
C-35
All definitions as used herein shall have the same meaning as such terms
are used in the Partnership Agreement:
If Subscriber is an individual:
____________________________________ ____________________________________
Print Name of Subscriber Signature of Subscriber
____________________________________ ____________________________________
Print Name of Co-Subscriber (if any) Signature of Co-Subscriber (if any)
If Subscriber is a corporation, partnership or trust:
By:_____________________________________________________________________________
Print Name of Subscribing Entity
____________________________________ ____________________________________
Print Name of Authorized Signature of Authorized Officer,
Officer, Partner or Trustee Partner or Trustee
____________________________________
Print Title of Authorized,
Partner or Trustee
____________________________________ ____________________________________
Print Name of Co-Trustee Signature of Co-Trustee
(if required by trust instrument) (if required by trust instrument)
C-36
