Exhibit 3.2
SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
DESERT SPRINGS MARRIOTT
LIMITED PARTNERSHIP
TABLE OF CONTENTS
Page
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ARTICLE ONE DEFINED TERMS........................................................D-1
ARTICLE TWO FORMATION, NAME, PLACE OF BUSINESS, PURPOSE AND TERM
2.01 Formation.................................................................D-7
2.02 Name and Offices..........................................................D-7
2.03 Purpose...................................................................D-7
2.04 Term......................................................................D-8
2.05 Agent for Service of Process..............................................D-8
ARTICLE THREE PARTNERS AND CAPITAL
3.01 General Partner...........................................................D-8
3.02 [Intentionally Omitted]...................................................D-8
3.03 Limited Partners..........................................................D-8
3.04 Capital Contribution by the General Partner...............................D-8
3.05 Capital Contributions by the Limited Partners.............................D-8
3.06 Partnership Capital.......................................................D-11
3.07 Liability of the Limited Partners.........................................D-12
3.08 Liability of the General Partner..........................................D-12
ARTICLE FOUR ALLOCATION OF PROFITS AND LOSSES; DISTRIBUTIONS OF CASH
AND CERTAIN PROCEEDS
4.01 Allocation of Net Profits.................................................D-12
4.02 Allocation of Net Losses and Losses.......................................D-13
4.03 Allocation of Gain........................................................D-13
4.04 Allocation Among Limited Partners of Net Profits, Gains, Net Losses
and Losses...............................................................D-14
4.05 Allocation of Recapture Income............................................D-14
4.06 Distribution of Cash Available for Distribution...........................D-14
4.07 Distribution of Refinancing Proceeds......................................D-14
4.08 Distribution of Sale Proceeds.............................................D-15
4.09 Allocation Among Limited Partners of Cash Available for Distribution,
Refinancing Proceeds and Sale Proceeds...................................D-15
4.10 Section 754 Adjustments...................................................D-15
4.11 Special Allocation of Syndication Expenses................................D-15
4.12 Contingent Adjustments....................................................D-16
4.13 Special Allocation of Interest on Purchase Debt...........................D-17
4.14 Special Allocation in Event of Advances by General Partner................D-17
ARTICLE FIVE RIGHTS, POWERS AND DUTIES OF THE GENERAL PARTNER
5.01 Authority of the General Partner to Manage the Partnership................D-17
5.02 Restrictions on Authority of the General Partner..........................D-20
5.03 Duties and Obligations of the General Partner.............................D-22
5.04 Compensation of the General Partner.......................................D-24
5.05 Other Business of Partners................................................D-24
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5.06 Limitation on Liability of General Partner; Indemnification...............D-24
5.07 Designation of Tax Matters Partner and Designated Person for Purposes
of Investor List.........................................................D-26
ARTICLE SIX WITHDRAWAL AND REMOVAL OF GENERAL PARTNER
6.01 Limitation on Voluntary Withdrawal........................................D-28
6.02 Bankruptcy or Dissolution of the General Partner..........................D-28
6.03 Liability of Withdrawn General Partner....................................D-28
6.04 Removal of General Partner................................................D-28
6.05 Substitute General Partner................................................D-29
ARTICLE SEVEN ASSIGNABILITY OF UNITS
7.01 Restrictions on Assignments...............................................D-29
7.02 Assignees and Substituted Limited Partners................................D-30
ARTICLE EIGHT DISSOLUTION AND LIQUIDATION OF THE PARTNERSHIP
8.01 Events Causing Dissolution................................................D-31
8.02 Liquidation...............................................................D-31
ARTICLE NINE BOOKS AND RECORDS, ACCOUNTING, REPORTS, TAX
ELECTIONS, ETC.
9.01 Books and Records.........................................................D-33
9.02 Accounting and Fiscal Year................................................D-33
9.03 Bank Accounts and Investments.............................................D-33
9.04 Reports...................................................................D-33
9.05 Tax Depreciation and Elections............................................D-34
9.06 Interim Closing of the Books..............................................D-35
ARTICLE TEN MEETINGS AND VOTING RIGHTS OF LIMITED PARTNERS
10.01 Meetings.................................................................D-35
10.02 Special Voting Rights of Limited Partners................................D-36
ARTICLE ELEVEN MISCELLANEOUS PROVISIONS
11.01 Appointment of General Partner as Attorney-in-Fact.......................D-37
11.02 Amendments...............................................................D-38
11.03 General Partner Representations and Warranties...........................D-39
11.04 Binding Provisions.......................................................D-39
11.05 Applicable Law...........................................................D-39
11.06 Counterparts.............................................................D-39
11.07 Separability of Provisions...............................................D-39
11.08 Article and Section Titles...............................................D-40
11.09 Short Form Filings.......................................................D-40
EXHIBIT A Limited Partner Note
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SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP OF
DESERT SPRINGS MARRIOTT LIMITED PARTNERSHIP
This Second Amended and Restated Agreement of Limited Partnership, dated as
of September 26, 1997 is made and entered into by and among Marriott Desert
Springs 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 Desert Springs Marriott Limited Partnership
(the "Partnership") dated as of April 24, 1987 (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
February 26, 1987. On April 27, 1987, 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
March 20, 1987 entered into the Original Agreement. The Partners are adopting
this Second Amended and Restated Agreement of Limited Partnership in order to
effect certain amendments to the Original Agreement approved by the General
Partner and the Limited Partners.
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.
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"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 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
$12,285 per Unit as a result his making a payment of $87,715 per Unit in cash
($77,715 per Unit if purchased in cash by the General Partner, its Affiliates,
or officers, directors or employees of the General Partner or its Affiliates, or
by the Placement Agents) 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
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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.
"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 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 $12,285 per Unit as a result of his
paying $87,715 per Unit in cash ($77,715 if purchased in cash by the General
Partner, its Affiliates, or officers, directors and employees of the General
Partner or its Affiliates, or by the Placement Agents) 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 Guarantees" means the guarantees by Marriott and the General
Partner in an amount not exceeding $21,875,000 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 20
days after the date such installment was due.
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"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.
"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 the
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 $50 million of principal upon a foreclosure of the Hotel.
"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 Desert Springs 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.
"Host" means Host Marriott Corporation, a Delaware corporation.
"Hotel" means Marriott's Desert Springs Resort and Spa in Palm Desert,
California and the land on which the hotel and a golf course is located.
"Hotel Operating Lease" means that certain agreement with the Operating
Tenant, executed as of the closing of the offering pursuant to the Private
Placement Memorandum, whereby the Operating Tenant leases the Hotel and
subleases a golf course from the Partnership.
"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
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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 First
National Bank of Chicago and any other commercial banks in the principal amount
of $175 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 from the sale
or other disposition of Equipment except in connection with a sale or other
disposition of all or substantially all the assets of the Partnership, and
excluding Gains and Losses and items specially allocated under Sections 4.05,
4.11, 4.13 and 4.14.
"Note" or "Notes" means the promissory note or notes given to the
Partnership by the Limited Partners pursuant to Section 3.05.
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"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.
"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 under the Act and
continued 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, limited liability company,
corporation, trust or other legal entity.
"Placement Agents" means Xxxxx Xxxxxx, Xxxxxx Xxxxx & Co. Incorporated and
Mutual Benefit Financial Service Company.
"Prime Rate" means the base rate of interest announced from time-to-time by
Bankers Trust Company, New York, New York.
"Private Placement Memorandum" means the Partnership's confidential private
placement memorandum dated March 20, 1987, 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 Debt" means a loan in the maximum amount of up to $56,442,000
borrowed by the Partnership from Marriott Corporation to finance, among other
things, a portion of the purchase price of the Hotel.
"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.
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"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.
"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
Desert Springs 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 directly or indirectly, (i) acquire, own, and then lease to, or
enter into a management agreement with, an operator the Hotel and a golf course
adjacent to the Hotel, (ii) lease a second golf course and sublease the course
to an operator, (iii) sell or otherwise dispose of the Hotel, and (iv) to engage
in any other activities related or incidental thereto as more fully set forth in
Section 5.01 hereof.
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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, 2087, 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
Xxxxxxxx-Xxxx 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 Desert Springs Corporation, a Delaware Corporation and
wholly-owned subsidiary of Host, having its principal executive offices at 00000
Xxxxxxxx Xxxx, Xxxxxxxx, Xxxxxxxx 00000.
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 Contribution by the General Partner. The General
Partner has made a Capital Contribution in the amount of $909,100 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 $87,715 as full payment of the subscription price ($77,715
per Unit in cash if purchased by the General Partner, its Affiliates, or
officers, directors or employees of the General Partner or its Affiliates, or by
the Placement Agents). No Partner shall be paid interest on any Capital
Contribution.
B. The Original Limited Partners made Capital Contributions totaling up
to $90 million for which each such Limited Partner subscribed in Units of
$100,000 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 $87,715 per Unit in
cash ($77,715 per Unit in cash if purchased by the General Partner, its
Affiliates, or officers, directors or employees of the General Partner or its
Affiliates, or the Placement Agents)
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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 $25,000 payable on execution of the subscription documents; (ii) a
second installment in the amount of $30,000 payable on June 15, 1988; (iii) a
third installment in the amount of $25,000 payable on June 15, 1989; and (iv) a
fourth installment in the amount of $20,000 payable on June 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 $75,000 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 $87,715 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 $87,715 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 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 Limited Partner agrees to
execute such instruments, including, without limitation, a financing statement
on Form UCC-l, 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 (a "Defaulting Limited Partner") for a period of 20 days
and such default continues, 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
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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. The General Partner will deduct
the amount of any delinquent installments, late penalty or interest from any
cash distributions to Limited Partners.
(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 30 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
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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 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 $12,285 per Unit for any Limited Partner making
full payment of such Limited Partner's Capital Contribution ($22,285 for the
General Partner or any of its Affiliates of for officers, directors or employees
of the General Partner or
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any of its Affiliates, or the Placement Agents) 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, 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 of priority:
(i) first, through and including the year ending on December 31,
1990, 99% to the General Partner and 1% to the Limited Partners;
(ii) next, through and including the year ending December 31, 1992,
70% to the General Partner and 30% to the Limited Partners; and
(iii) thereafter, 10% to the General Partner and 90% to the Limited
Partners.
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SECTION 4.02. Allocation of Net Losses and Losses. Net Losses and Losses
for each Fiscal Year shall be allocated through December 31, 1990, 100% to the
General Partner, and in Fiscal Years thereafter, 70% to the General Partner and
30% to the Limited Partners; provided, however, that if and to the extent the
allocation of Net Losses and Losses in this manner would cause the negative
balances, if any, in the Capital Accounts of Limited Partners (deemed, for
purposes of this Section 4.02, to include the amount of any obligation to make
additional contributions to the capital of the Partnership) to exceed the
portions of the Minimum Gain which would be respectively allocated to such
Partners at the end of such Fiscal Year, then such Net Losses and Losses shall
instead 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
4.08B) with respect to any Fiscal Year in the following order of priority:
(i) first, to all Partners whose Capital Accounts have a negative
balance, in the ratio of such negative balances until such negative
balances are brought to zero; provided, however, if there is insufficient
Gain to bring such negative balances to zero, then: (a) if the sum of such
negative balances is less than or equal to the Partnership Minimum Gain at
the end of the Fiscal Year, then Gain shall be allocated in the ratio of
the negative balances; and (b) if the sum of such negative balances exceeds
the Partnership Minimum Gain at the end of the Fiscal Year, then Gain shall
be allocated in the ratio of the deficit balance of the General Partner as
reduced by such excess to the deficit balances of the Limited Partners,
until the deficit balances of the Limited Partners are brought to zero, and
then to the General Partner until its deficit balance is brought to zero;
provided further, 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;
(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 $87,715 per Unit in cash ($77,715 if
purchased by the General Partner, its Affiliates, or officers, directors or
employees 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 Hotel or of all or substantially all the assets of the Partnership:
(a) to the Limited Partners in an amount equal to the excess, if any, of
(1) the sum of 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 (b)
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next, to the General Partner until it has been allocated an amount equal to
10/90 times the amount allocated to the Limited Partners under clause (a);
and
(iv) thereafter, 12% to the General Partner and 88% to the Limited
Partners.
SECTION 4.04. Allocation Among Limited Partners of Net Profits, Gains, Net
Losses and Losses. 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.
SECTION 4.05. Allocation of Recapture Income. Notwithstanding Sections
4.01, 4.02 and 4.03, "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) 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 $45,454,545, 1% to
the General Partner and 99% to the Limited Partners;
(ii) thereafter, 10% to the General Partner and 90% 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, 1% to the General Partner and 99% to the Limited
Partners, until the Partners shall have received cumulative distributions
of Capital Receipts equal to $90,909,100; and
(ii) thereafter, 10% to the General Partner and 90% to the Limited
Partners.
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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, other than from the sale or
other disposition of all or substantially all the Hotel, 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 $90,909,100, 1% to the General
Partner and 99% to the Limited Partners; and
(ii) thereafter, 10% to the General Partner and 90% 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 or all or substantially all the Hotel shall be distributed in
accordance with Section 8.02.
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.
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-l(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 by 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 Syndication Expenses. Any "syndication
expenses," as described in the regulations under section 709 of the Code, paid
or incurred by the
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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 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 2002 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
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.
D-16
SECTION 4.13. Special Allocation of Interest on Purchase Debt.
Notwithstanding Sections 4.01, 4.02, and 4.04, the deduction for interest on the
Purchase Debt incurred in each Fiscal Year shall be allocated to the Limited
Partners owning the Units during each Fiscal Year with respect to which Capital
Contributions are being paid in installments pro rata in proportion to the
number of Units held by each such Partner on each day of the Fiscal Year;
provided, however, that the total allocation under this Section 4.13 with
respect to any Unit since the formation of the Partnership shall not exceed
$12,285.
SECTION 4.14. Special Allocation in Event of Advances by General Partner.
Notwithstanding any other provision of this Article, in the event of the General
Partner makes an advance which is described in Section 5.06C, then before any
Net Losses or Losses attributable to the Accounting Period in which such an
advance is made, or any subsequent Accounting Period, are allocated pursuant to
Section 4.02, there shall first be allocated to the General Partner an amount of
Net Losses or Losses equal to the amount of any advance.
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, contracts, documents,
certifications and instruments necessary or convenient in connection with
the development, expansion, improvement, financing, management,
maintenance, operation, re-leasing, 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 purposes
of the Partnership and to secure the same by mortgage, pledge or other lien
on the assets of the Partnership, such borrowing
D-17
and security to be only with respect to the following: (a) the 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 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, recast, modify or extend any debt
and in connection therewith execute any extensions, consolidations,
modifications or renewals of mortgages on any assets of the Partnership;
(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 State of California 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
D-18
(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 and 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 system 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;
(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 by the
Partnership to the General Partner or any of
D-19
its Affiliates or to decrease the responsibilities or duties of the General
Partner or any such Affiliates in the absence of the Consent contemplated
by Section 5.02B(iii); 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, limited liability company 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.
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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;
(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 68% for
a period consisting of at least 12 consecutive 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;
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(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 $71,875,000 million or less, 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
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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 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
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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 the 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 or
distributions 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 catering operations, including airline catering
operations, 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
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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 reasonable
satisfaction of the General Partner and to the extent permitted by law) from and
against any and all liabilities, losses, judgments, and expenses 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 assessed 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; 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, losses, judgments,
or expenses (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 resulted from the General
Partner's own fraud, negligence, or other breach of fiduciary duty to the
Partnership or any Partner. The indemnification set forth above shall not
include advances by the Partnership to the General Partner for legal expenses
and other costs incurred by the General Partner as a result of any legal action
initiated against the General Partner by a Limited Partner. Said indemnification
shall include, however, advances by the Partnership to the General Partner for
legal fees and other costs incurred by the General Partner as a result of a
legal action initiated by a third party, who is not a Limited Partner, which
relates to the performance of the General Partner's duties or services. The
General Partner hereby agrees to repay any advances if the General Partner is
not otherwise entitled to be indemnified under this Agreement. 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, employee 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 Guarantees 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
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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 Guarantees or Foreclosure
Guarantee will bear interest at one percentage point in excess of the Prime Rate
and will be paid as follows: (i) out of Partnership cash flow after payment of
Debt Service on the Mortgage Debt; (ii) out of Capital Receipts before any
distribution to the Partners; and (iii) in any event, not later than December
31, 1997. Advances under the Debt Service Guarantees 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 any losses, liabilities or expenses arising
from or out of an alleged violation of 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 alleged securities law violations; or (ii)
such claims against the General Partner have been dismissed with prejudice on
the merits by a court of competent jurisdiction; or (iii) a settlement of the
claims is approved by a court of competent jurisdiction. Pursuant to that
certain Agency Agreement among the Partnership, the General Partner, the
Placement Agents and others, the Placement Agents are to receive certain
indemnifications. Such indemnifications, however, shall be limited to the same
extent that the General Partner's indemnifications are limited by this
subsection D. 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 violation.
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.
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
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judicial proceeding 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 or 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 shall 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.
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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 Section 5.06.
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 l0.02B, 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.
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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 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.
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. At any time
within one year of the closing of the sale of the Units, the General Partner
will require such an opinion of counsel for any assignment.
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D. No purported assignment 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) 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
including, without limitation, foreign persons and entities.
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 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. 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
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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.
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 Limited Partner.
SECTION 8.02. Liquidation.
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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 the General Partner 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.
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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' interests 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
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:
D-33
(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;
(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 Partner 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.
D-34
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 10
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 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
D-35
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 outstanding 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.
SECTION 10.02. Special Voting Rights of Limited Partners.
A. If at any time any agreement (including the Hotel Operating
Lease, if the Operating Tenant is an Affiliate of the General Partner) 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
D-36
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),
D-37
in accordance with this Agreement, the dissolution of the Partnership,
sales or transfers of Partnership property, sales or transfers of
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;
(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(vii).
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
D-38
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 change 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.
F. 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 adversely 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
D-39
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.
D-40
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first above written.
GENERAL PARTNER:
MARRIOTT DESERT SPRINGS CORPORATION
By /s/ X.X. Xxxxx
--------------------------------------------
Vice President
LIMITED PARTNERS:
All Limited Partners now and hereafter admitted to
the Partnership as limited partners of the
Partnership pursuant to powers of attorney now and
hereafter executed in favor of and delivered to the
General Partner.
By: MARRIOTT DESERT SPRINGS CORPORATION
as Attorney-in-Fact for all the Limited Partners
By /s/ X.X. Xxxxx
--------------------------------------------
Vice President
X-00
XXXXXXXXXXXXXXX
XXXXX XX XXXXXXXX )
COUNTY OF XXXXXXXXXX )
On this 26th day of September, 1997, before me personally appeared
, to me known, who, first by me duly sworn, did depose
and say that he is the Vice President of Marriott Desert Springs 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 Desert Springs Corporation and that he signed his name thereof on
behalf of the General Partner by order of the Board of Directors of Marriott
Desert Springs 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/ Xxxxx Xxxxxxxx
--------------------------------------------
(SEAL) Notary Public for:
My Commission Expires:
XXXXX XXXXXXXX
NOTARY PUBLIC STATE OF MARYLAND
My Commission Expires October 18, 0000
XXXXXXXXXXXXXXX
XXXXX XX XXXXXXXX )
COUNTY OF XXXXXXXXXX )
On this 26th day of September, 1997, before me personally appeared
, to me known, who, first by me duly sworn, did depose
and say that he is the Vice President of Marriott Desert Springs 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 Desert Springs 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.
D-42
/s/ Xxxxx Xxxxxxxx
--------------------------------------------
(SEAL) Notary Public for:
My Commission Expires:
XXXXX XXXXXXXX
NOTARY PUBLIC STATE OF MARYLAND
My Commission Expires October 18, 1998
D-43
Exhibit A
$75,000 per Unit , 1987
------------------
Units
------------
LIMITED PARTNER NOTE
FOR VALUE RECEIVED, the undersigned promises to pay to the order of Desert
Springs 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 Seventy Five Thousand Dollars
($75,000) 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
-------- ------
June 15, 1988.............................. $30,000 per Unit for
the number of Units
set forth above
June 15, 1989.............................. $25,000 per Unit for
the number of Units
set forth above
June 15, 1990.............................. $20,000 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 20th 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 provisions of the Amended and Restated Agreement of Limited
Partnership (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.
D-44
All the provisions of 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 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.
All definitions as used herein shall have the same meaning as such terms
are used in the Partnership Agreement:
If Subscriber is an individual:
D-45
------------------------------------ ------------------------------------
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)
D-46
