REDEMPTION AGREEMENT
REDEMPTION AGREEMENT dated as of January 21, 1997 among
Watertone L.L.C., a Delaware limited liability company ("Watertone"), Watermark
Investments Limited, an international business company created under the laws of
the Bahamas, Watermark Investments Limited, a Delaware corporation (collectively
"Watermark") and Watertone Holdings L.P., a Delaware limited partnership (the
"Partnership").
RECITALS
A. Watertone is the General Partner of the Partnership and Watermark is
the Limited Partner of the Partnership.
B. Watermark wishes to cause the Partnership to redeem Watertone's
entire interest (the "Interest") in the Partnership, and Watertone is willing to
have its Interest redeemed, in accordance with the terms and conditions set
forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are acknowledged, it is agreed as follows:
1. Redemption of Partnership Interest
The Partnership hereby pays to Watertone $4,220,454 in
redemption of Watertone's entire Interest in the Partnership. Watertone hereby
accepts such payment and agrees that upon receipt of such amount, from and after
the date hereof it will have no further interest in the Partnership or its
assets, profits, losses or distributions.
2. Representations and Warranties of Watertone
Watertone hereby represents and Warrants to the Partnership
and Watermark that it owns legal and beneficial title to the Interest free and
clear of all liens and encumbrances.
3. Tax Characterization and Tax Returns
(a) The parties agree that the transaction described herein
will be characterized as a purchase by a partnership of an interest of a partner
pursuant to Section 736(b) of the Internal Revenue Code of 1986, as amended.
(b) Watertone will prepare the federal income tax return of
the Partnership for the calendar year ended December 31, 1996. Such tax return
will reflect a year-end capital account of Watertone in the amount of
$3,675,000, and no income or loss allocated to any partner.
(c) Watermark will prepare the Partnership's federal income
tax return for the year ended December 31, 1997 (and any year thereafter). Such
return will reflect an allocation of a share of the Partnership's taxable income
to Watertone in the amount of its Preferred Return, as defined in the
Partnership Agreement of the Partnership (in the amount of $545,454) from
taxable income of the Partnership generated as of the date hereof, based on an
interim closing of the Partnership's books as of the date hereof. Such tax
return will reflect a closing capital account of Watertone of zero. Watertone
will have no interest in any other item of profit, loss or cash distributions of
the Partnership (including its 1% interest set forth in the Partnership
Agreement of the Partnership) accruing either before or after the date hereof.
The remainder of the Partnership's profits, losses and distributions will be
allocated to Watermark, or as directed by Watermark (other than to Watertone).
4. Further Assurances
Watertone and Watermark will cooperate with each other after
the closing of the transaction described herein with respect to all aspects of
the Partnership, including without limitation providing each other with
information, documentation and records in their possession relating to the
Partnership, Without limiting the foregoing, Watermark agrees to cause the
Partnership to take all actions reasonably required to complete registration of
500,000 shares of common stock of Executone Information Systems, Inc. and
500,000 shares of common stock of Hospitality Worldwide Services, Inc. currently
registered in the name of the Partnership into the name of Watertone.
5. Indemnification and Mutual Release
Watermark and the Partnership hereby agree to indemnify and
hold harmless Watertone for any and all claims, liabilities and expenses
relating to the Partnership arising from any event or cause occurring on or
after the date hereof. Watertone and Watermark hereby release each other from
all claims, liabilities and expenses relating to the Partnership or any of the
assets or activities thereof.
6. Miscellaneous
This Agreement is the entire agreement of the parties, and is
governed by the laws of New York. This Agreement may be executed in
counterparts. This Agreement is binding on the parties and their respective
successors and assignees.
-2-
IN WITNESS WHEREOF, the parties have executed this Redemption
Agreement as of the date first above written.
WATERTONE L.L.C., a Delaware limited
liability company
By: /s/ Xxxx X. Xxxxxxx, Xx.
-----------------------------------
Xxxx X. Xxxxxxx, Xx., Manager
WATERMARK INVESTMENTS LIMITED, a
Bahamian international business company
By: /s/ Xxxxxx Xxxxxx
-----------------------------------
Xxxxxx Xxxxxx, Managing Director
WATERMARK INVESTMENTS LIMITED, a
Delaware corporation
By: /s/ Xxxxxx Xxxxxx
-----------------------------------
Xxxxxx Xxxxxx
Its: President
WATERTONE HOLDINGS L.P.
By: Watertone L.L.C., a general partner
By: /s/ Xxxx X. Xxxxxxx, Xx.
-----------------------------------
Xxxx X. Xxxxxxx, Xx., Manager
-3-
