FIRST AMENDMENT TO CONTRIBUTION AND FORMATION AGREEMENT
THIS FIRST AMENDMENT TO CONTRIBUTION AND FORMATION AGREEMENT (the
"Amendment") is made as of April 3, 1998 among KEY BISCAYNE LIMITED PARTNERSHIP,
a Florida limited partnership ("KBLP"), FLORIDA SONESTA CORPORATION, a Florida
corporation, ("FSC"), KEY BISCAYNE LAND CORPORATION, a Florida corporation
("Sonesta II"), KEY BISCAYNE HOTEL ASSOCIATES, LTD., a Florida limited
partnership ("KBHA"), PARTNERS LIQUIDATING TRUST, a Delaware trust ("PLT"),
STRATEGIC REALTY ADVISORS, INC., an Illinois corporation ("SRAI") and SONESTA
INTERNATIONAL HOTELS CORPORATION, a New York corporation.
Recitals
A. The parties hereto have executed and delivered (or joined in) that
certain CONTRIBUTION AND FORMATION AGREEMENT dated as of January 30, 1998 (the
"Agreement"), pursuant to which, inter alia, KBLP agreed to contribute certain
of its real property and improvements to a partnership to be formed by FSC.
B. The parties desire to revise the Agreement with respect to rights of
KBLP to certain distributions under the partnership agreement and other matters,
all as further set forth herein.
Agreements
NOW THEREFORE, for and in consideration of the foregoing recitals, the
mutual covenants and agreements hereinafter set forth, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
ARTICLE I
Section 1.1. Definitions. Initially capitalized terms used but not
otherwise defined herein have the same meanings given them in the Agreement.
Section 1.2. Amended Definitions. The following definitions are amended
and restated as follows:
"Fair Market Value" shall have the meaning set forth in the Partnership
Agreement; provided that the Fair Market Value of the Property cannot exceed an
amount equal to ten times the average cash flow from the Property for the two
calendar years prior to the date of determination. Cash flow will equal revenues
less expenses and fixed expenses, including without limitation, all management
fees (including the Asset Management Fee), capital expenditures (up to four
percent of revenues per annum), insurance and real estate taxes; interest
payments on debt service shall not be an item of expense or fixed expense for
purposes of calculating the cash flow used to determine fair market value.
Section 1.3. Amended Deadlines. The deadlines set forth in sections
6.2(b)(i) and (ii) are amended to be April 15, 1998 and August 15, 1998,
respectively.
Section 1.4. New Definitions. The following defined terms are hereby
added to the Agreement:
"KBLP Excess" means (i) in the event of a Realization Event, an amount
equal to the Net Realization Proceeds from such Realization Event, less the
Transfer Basis, and (ii) in the event of a Special Final KBLP Distribution, an
amount equal to the Fair Market Value of the Property on the date the Notice (as
defined in the Partnership Agreement) is given, less the Transfer Basis.
"Special KBLP Distribution" means an amount distributable to KBLP in the
event of a Realization Event or a Special Final KBLP Distribution equal to a
portion of the KBLP Excess determined, on the date of calculation, as follows:
Percentage of Cumulative Dollar
Excess Allocable Amount of KBLP
Amount of Excess to KBLP Special Distribution
---------------- ------- --------------------
Less than $10.0 million 0% $ 0
Between $10.0 million and $10.1 million 100 up to 100,000
Between $10.1 million and $12.5 million 0 100,000
Between $12.5 million and $12.65 million 100 up to 250,000
Between $12.650 million and $15.0 million 0 250,000
Between $15.0 million and $15.25 million 100 up to 500,000
Between $15.250 million and $17.5 million 0 500,000
Between $17.5 million and $17.75 million 100 up to 750,000
Between $17.750 million and $20.0 million 0 750,000
Between $20.0 million and $20.25 million 100 up to 1,000,000
In excess of $20.25 million 0 1,000,000
In no event shall the total amount paid or payable to KBLP with respect to the
Special KBLP Distribution exceed $1,000,000.
ARTICLE II
2.1 Special KBLP Distribution. Notwithstanding anything contained in the
Agreement to the contrary, and in addition to the other distributions to which
KBLP is entitled, in the event of a Realization Event or a Special Final KBLP
Distribution, the Partnership shall make the Special KBLP Distribution to KBLP.
The Partnership shall pay to KBLP the Special KBLP Distribution in the form of
an unsecured non-interest bearing promissory note payable in five equal annual
installments beginning one year after the Realization Event or the Special Final
KBLP Distribution, as applicable (provided that the Partnership may, in its sole
discretion, prepay all or any portion of the note).
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2.2 Bankruptcy Plan. KBLP and FSC shall be co-proponents of a chapter 11
plan in substantially the form attached as Exhibit A (the "Plan"), and either
KBLP or FSC may seek confirmation of the Plan in accordance with its terms
except as specifically set forth herein. FSC acknowledges that its acting as a
proponent of the Plan, including the right to solicit acceptances and seek
confirmation of the Plan, will not otherwise impair KBLP's exclusive periods to
propose and solicit acceptance of a plan as provided in title 11 of the United
States Code, 11 U.S.C. xx.xx. 101 et seq., as the same may be amended or
modified by court order ("KBLP's Exclusivity Rights"). In the event that
circumstances arise or additional factors become known which KBLP believes in
its good faith judgment require withdrawal, material delay or modification of
the Plan (a "Change"), then FSC may not seek confirmation of the Plan or any
other plan except as may be permitted by KBLP's Exclusivity Rights, and KBLP may
withdraw, delay or modify the Plan or any other plan it seeks to propose,
without FSC's consent; provided, however, that KBLP will consult in good faith
with FSC for a five business day period regarding any such Change before
materially delaying, modifying or withdrawing the Plan or seeking confirmation
of an alternative plan; provided further, however, that in the event of a
Change, any ballot cast by Sonesta, KBHA, PLT or Aetna accepting the Plan may,
at such party's sole option, be considered null and void, and nothing herein
shall prejudice such party's rights to object to any modified plan, other plan
or action in KBLP's chapter 11 case. An offer or expression of interest by a
potential buyer of KBLP's property or unrelated third party funder of an
alternative plan shall not be sufficient grounds for a Change.
2.3 FSC Indebtedness. At Closing, the FSC Indebtedness shall be deemed
to be amended to provide that no portion of the FSC Indebtedness shall mature
prior to the date that is one day after the Measurement Date.
2.4 KBHA/PLT Debt. Prior to the Measurement Date, FSC shall not release
the security interests, if any, securing the KBHA/PLT Indebtedness (other than
in connection with a refinancing of the Aetna Indebtedness or its replacement),
without KBLP's consent.
2.5 Transaction Costs. Notwithstanding Section 6.4 of the Agreement, the
Sonesta Partners shall not be obligated to pay any Transaction Costs incurred by
KBLP and/or the general partner of KBLP or any of their Affiliates (including
KBHA and PLT) except in the event (a) the Closing occurs based upon the Plan (i)
in substantially the form attached or (ii) with a Change acceptable to the
Sonesta Partners in their sole discretion, or (b) the Closing fails to occur due
solely to an uncured Default by the Sonesta Partners under the Agreement.
Notwithstanding the foregoing, except in the event of a Default by KBLP and/or
the general partner of KBLP or any of their Affiliates (including KBHA), the
Sonesta Partners shall pay the fees of the debtor's counsel (Greenberg, Traurig,
et al, Miami Florida).
2.6 Partnership Agreement. The Partnership Agreement attached as Exhibit
B to the Agreement shall be amended as indicated on the attached Exhibit B.
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2.7 Defaults. Each of the covenants, representatives and warranties
contained herein shall, with those covenants, representations and warranties
contained in the Agreement, constitute covenants, representations and warranties
for all purposes set forth therein, including without limitation Article VII
"Defaults."
ARTICLE III
3.1 Notice. All notices, waivers, demands, requests or other
communications required or permitted hereunder shall be given in accordance with
the Agreement.
3.2 Entire Agreement. This Amendment and the Agreement embody the entire
agreement of the parties in relation to the subject matter hereof, and
supersedes prior agreements of the parties with respect to the subject matter
hereof. No change or modification of this Amendment or the Agreement shall be
valid unless the same is in writing and signed by both of the parties hereto.
3.3 Headings. The subject headings of the Sections of this Amendment are
included for purposes of convenience only, and shall not affect the construction
or interpretation of any of its provisions.
3.4 Governing Law. The validity and interpretation of this Amendment and
of each and every clause, term and part hereof shall be governed by and
construed in accordance with the laws of the State of Illinois applicable to
contracts made and to be performed therein.
3.5 Severability. If any provision hereof is held or finally determined
to be invalid or unenforceable to any extent for any reason, to the extent that
such provision is valid and enforceable, the arbiters or court of competent
jurisdiction, as the case may be, shall construe and interpret said provision to
provide for maximum validity and enforceability.
3.6 Binding Agreement. This Amendment and the Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors, assigns, heirs and legal representatives as one agreement,
notwithstanding the terms of the Agreement, including the deadlines originally
set forth in section 6.2 (b) thereof.
3.7 Counterparts. This Amendment may be executed in any number of
counterparts, each of which shall be deemed an original.
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IN WITNESS WHEREOF, the parties have caused this Amendment to be
duly executed as of the day and year first above written.
KEY BISCAYNE LIMITED PARTNERSHIP, a
Florida limited partnership
By:
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Its
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FLORIDA SONESTA CORPORATION,
a Florida corporation
By:
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Its
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KEY BISCAYNE LAND CORPORATION,
a Florida corporation
By:
-------------------------------
Its
----------------------------
KEY BISCAYNE HOTEL ASSOCIATES, LTD.,
a Florida limited partnership,
By:
-------------------------------
Its
----------------------------
PARTNERS LIQUIDATING TRUST,
a Delaware trust
By:
-------------------------------
Its
----------------------------
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STRATEGIC REALTY ADVISORS, INC.,
an Illinois corporation
By:
-------------------------------
Its
----------------------------
SONESTA INTERNATIONAL HOTELS
CORPORATION,
a New York corporation
By:
-------------------------------
Its
----------------------------
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EXHIBIT A
THE PLAN
EXHIBIT B
THE PARTNERSHIP AGREEMENT AMENDMENTS
