1
Exhibit 10.1
Exhibit-E
AGREEMENT OF LIMITED PARTNERSHIP
OF
CGLH-IHC FUND I, L.P.
2
TABLE OF CONTENTS
1.1 Formation................................................................................................1
1.2 Name.....................................................................................................1
1.3 Term.....................................................................................................2
1.4 Registered Office and Principal Office of Partnership; Addresses of Partners.............................2
1.5 Ownership................................................................................................2
1.6 Title to Partnership Property............................................................................2
1.7 Limits of Partnership....................................................................................3
2.1 Definitions..............................................................................................3
3.1 Purposes and Scope......................................................................................12
4.1 Capital Contributions; Initial Capital Contributions....................................................13
4.2 Tier 1 Capital Contributions............................................................................13
4.3 Additional Capital Contributions........................................................................15
4.4 Capital Accounts........................................................................................17
4.5 Negative Capital Accounts...............................................................................20
4.6 Interest................................................................................................20
4.7 No Withdrawal...........................................................................................20
4.8 Loans from Partners.....................................................................................20
5.1 Allocations of Profits and Losses.......................................................................20
5.2 Special Allocations of Profits and Losses...............................................................21
5.3 Curative Allocations....................................................................................22
5.4 Tax Allocations: Code Section 704(c)...................................................................22
5.5 Other Allocation Rules..................................................................................23
5.6 Depreciation Recapture..................................................................................23
6.1 Distributions...........................................................................................23
6.2 Payments Not Deemed Distributions.......................................................................25
6.3 Withheld Amounts........................................................................................25
7.1 Designation and Authority of Managing General Partner and General Partner...............................26
7.2 Major Decisions.........................................................................................27
7.3 Certificate of Limited Partnership......................................................................28
7.4 Compensation and Reimbursement of Managing General Partner and General Partner..........................28
7.5 Partnership Funds.......................................................................................28
7.6 Return of Capital.......................................................................................28
7.7 Duties..................................................................................................29
7.8 Transactions with Affiliates............................................................................29
7.9 Outside Activities......................................................................................29
7.10 Resolution of Conflicts of Interest.....................................................................29
7.11 Indemnification.........................................................................................29
7.12 Liability of Managing General Partner and the General Partner...........................................30
7.13 Reliance by Managing General Partner and the General Partner............................................30
7.14 Insurance...............................................................................................31
7.15 Acquisition of Real Property; Investment Banking; Financing.............................................31
7.16 Management of the Real Property.........................................................................32
8.1 Limitation of Liability.................................................................................33
8.2 Management of Business..................................................................................33
8.3 Outside Activities......................................................................................33
8.4 Return of Capital.......................................................................................34
i
3
9.1 Records and Accounting..................................................................................34
9.2 Fiscal Year.............................................................................................34
9.3 Reports.................................................................................................34
10.1 Preparation of Tax Returns..............................................................................35
10.2 Tax Elections...........................................................................................35
10.3 Tax Controversies.......................................................................................35
10.4 Organizational Expenses.................................................................................36
10.5 Taxation as a Partnership...............................................................................36
11.1 Transfer Restrictions...................................................................................36
11.2 Transfers by Managing General Partner...................................................................36
11.3 Transfers by General Partner............................................................................37
11.4 Transfer of Interests of Limited Partner................................................................37
11.5 Additional Limitations on Transfers of Limited Partnership Interests....................................37
11.6 Distributions and Allocations in Respect of Transferred Partnership Interests...........................37
11.7 Admission of Substitute or Successor Partners...........................................................38
11.8 Buy-Sell Provision......................................................................................39
11.9 Right to Require Sale...................................................................................40
11.10 Tag-Along Right.........................................................................................40
11.11 Reduction of Undistributed Class B Capital..............................................................42
11.12 Optional Redemption.....................................................................................42
12.1 Events of Withdrawal....................................................................................44
12.2 Removal.................................................................................................45
13.1 Dissolution.............................................................................................46
13.2 Continuation of the Partnership.........................................................................46
13.3 Liquidation.............................................................................................47
13.4 Distribution in Kind....................................................................................48
13.5 Cancellation of Certificate of Limited Partnership......................................................48
13.6 Return of Capital.......................................................................................48
13.7 Certain Terminations....................................................................................48
14.1 Amendment Procedures....................................................................................49
14.2 Action without a Meeting................................................................................49
15.1 Addresses and Notices...................................................................................49
15.2 Titles and Captions.....................................................................................50
15.3 Pronouns and Plurals....................................................................................50
15.4 Further Action..........................................................................................50
15.5 Binding Effect..........................................................................................50
15.6 Integration.............................................................................................50
15.7 Creditors...............................................................................................50
15.8 Waiver..................................................................................................50
15.9 Counterparts............................................................................................50
15.10 Applicable Law..........................................................................................50
15.11 Invalidity of Provisions................................................................................51
15.12 Confidentiality.........................................................................................51
15.13 Representations and Warranties of IHC...................................................................52
15.14 Representations and Warranties of CGLH..................................................................52
15.15 Conditions to Effectiveness of this Agreement...........................................................53
15.16 Third Party Beneficiaries...............................................................................53
ii
4
EXHIBITS
Exhibit A - Partners and Percentage Interests
Exhibit B - Description of Property to be Contributed by the Partners
Exhibit C - Market Rate Fees
Exhibit D - Form of Property Management Agreement
Exhibit E - Form of Asset Management Agreement
Exhibit F - Joint Venture Required (Consolidated) Reporting and Analysis
Exhibit G - Executives' Percentage Interests Upon Termination For Cause
iii
5
S&B DRAFT 8/31/00
THE PARTNERSHIP INTERESTS REPRESENTED BY THIS LIMITED PARTNERSHIP AGREEMENT HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR UNDER ANY STATE
SECURITIES ACTS IN RELIANCE UPON EXEMPTIONS UNDER THOSE ACTS. THE SALE OR OTHER
DISPOSITION OF THE PARTNERSHIP INTERESTS IS PROHIBITED UNLESS SUCH SALE OR
DISPOSITION IS MADE IN COMPLIANCE WITH ALL SUCH APPLICABLE ACTS. ADDITIONAL
RESTRICTIONS ON TRANSFER OF THE PARTNERSHIP INTERESTS ARE SET FORTH IN THIS
AGREEMENT.
AGREEMENT
OF
LIMITED PARTNERSHIP
OF
CGLH-IHC FUND I, L.P.
THIS AGREEMENT OF LIMITED PARTNERSHIP is entered into as of
_________ ___, 2000 (the "Effective Date"), by and between CGLH PARTNERS III LP,
a Delaware limited partnership ("CGLH GP"), as the Managing General Partner, and
INTERSTATE INVESTMENT CORPORATION, a Delaware corporation ("IHC GP"), as the
General Partner, and CGLH PARTNERS IV LP, a Delaware limited partnership ("CGLH
LP"), INTERSTATE PROPERTY PARTNERSHIP, L.P., a Delaware limited partnership
("IHC LP"), J. Xxxxxxx Xxxxxxxxxx, an individual ("Xxxxxxxxxx") and Xxxxxx X.
Xxxxxx, an individual ("Xxxxxx") as the Limited Partners.
Certain terms used in this Agreement are defined in Article II
hereof.
ARTICLE I
ORGANIZATIONAL MATTERS
1.1 FORMATION.
The Partners hereby form the Partnership as a limited
partnership pursuant to the Delaware Act, and subject to the provisions of this
Agreement. The rights and obligations of the Partners and the administration and
termination of the Partnership shall be governed by the Delaware Act, except as
expressly provided herein.
1.2 NAME.
The name of the Partnership shall be, and the business of the
Partnership shall be conducted under the name of, CGLH-IHC Fund I, L.P. The
Managing General Partner in its sole discretion may change the name of the
Partnership at any time and from time to time and shall provide the other
Partners with written notice of such name change within 20 days after such name
change.
6
1.3 TERM.
The Partnership shall commence on the Commencement Date and
shall continue in existence until the close of Partnership business on the
seventh anniversary of the Effective Date, or until the earlier termination of
the Partnership in accordance with the provisions of Section 13.1(b) of this
Agreement or unless extended by a vote or consent of Partners holding at least
51% of the Partnership Interests at the time such extension is sought; provided,
however, that after the occurrence of an event of dissolution pursuant to
Section 13.1(b), the continuation or wind-up of the Partnership shall be
governed by Article XIII hereof and the Partnership shall not have the ability
to extend the term of the Partnership pursuant to this sentence of Section 1.3.
Any and all actions taken by the Managing General Partner prior to the
Commencement Date in connection with the formation of the Partnership or that
are consistent with, or in furtherance of, the purpose of the Partnership are
hereby approved, confirmed and ratified as acts of the Company.
1.4 REGISTERED OFFICE AND PRINCIPAL OFFICE OF PARTNERSHIP; ADDRESSES OF
PARTNERS.
(a) Partnership Offices. The registered office of the
Partnership in the State of Delaware shall be 0000 Xxxxxx Xxxx,
Xxxxxxxxxx, Xxx Xxxxxx Xxxxxx, Xxxxxxxx 00000-0000, and its registered
agent for service of process on the Partnership at such registered
office shall be Corporation Service Company, or such other registered
office or registered agent as the Managing General Partner may from
time to time designate, on notice to the other Partners. The
Partnership shall direct its registered agent to provide copies of any
process served on it as registered agent of the Partnership to both the
Managing General Partner and the General Partner at their respective
addresses provided pursuant to Section 1.4(b) hereof. The principal
office of the Partnership shall be 3 World Financial Center, New York,
New York 10285, New York or such other place as the Managing General
Partner may from time to time designate, on notice to the other
Partners. The Partnership may maintain offices at such other place or
places as the Managing General Partner deems advisable.
(b) Addresses of Partners. The address of each of the Partners
shall be the address of such Partner appearing on the signature pages
to this Agreement. A Partner may change its address at any time by
giving all of the other Partners ten-(10) days' prior written notice of
such change in address.
1.5 OWNERSHIP.
The interest of each Partner in the Partnership shall be
personal property for all purposes. All property and interests in property, real
or personal, owned by the Partnership shall be deemed owned by the Partnership
as an entity, and no Partner, individually, shall have any ownership of such
property or interest except by having an ownership interest in the Partnership
as a Partner. Each of the Partners irrevocably waives, during the term of the
Partnership and during any period of its liquidation following any dissolution,
any right that it may have to maintain any action for partition with respect to
any of the assets of the Partnership. No interest of any Partner in the
Partnership shall be evidenced by a certificate.
1.6 TITLE TO PARTNERSHIP PROPERTY.
It is the desire and intention that legal title to all
property of the Partnership shall be held and conveyed in the name of the
Partnership.
2
7
1.7 LIMITS OF PARTNERSHIP.
The relationship between the parties hereto shall be limited
to the business of the Partnership in accordance with the terms of this
Agreement. Such relationship shall be construed and deemed to be a limited
partnership for the sole and limited purpose of such business. Except as
otherwise provided for or contemplated in this Agreement, nothing herein shall
be construed to create a partnership between the Partners or to authorize any
Partner to act as general agent for the other Partner.
ARTICLE II
DEFINITIONS
2.1 DEFINITIONS.
Unless otherwise clearly indicated to the contrary in this
Agreement, the following definitions shall apply to the terms used in this
Agreement, which definitions shall be applicable equally to the singular and
plural of the terms defined:
"Acceptance" has the meaning set forth in Section 11.10 of this
Agreement.
"Adjusted Capital Account" means, with respect to any Partner, a
special account maintained for such Partner, the balance of which shall equal
such Partner's Capital Account balance, increased by the amount (if any) of: (i)
such Partner's share of the Partnership Minimum Gain and Partner Minimum Gain,
plus (ii) all other amounts such Partner is unconditionally obligated to
contribute to the capital of the Partnership.
"Adjusted Capital Account Deficit" means, with respect to any Partner,
the deficit balance, if any, in such Partner's Adjusted Capital Account.
"Affiliate" means, as to any Person, a Person that directly or
indirectly Controls, is Controlled by, or is under common Control with, such
Person.
"Aggregate Net Profit Allocation" means with respect to any Partner for
any Fiscal Year or other fiscal period, an amount, which in no event shall be
below zero, equal to the excess of (i) the cumulative amount of Profits
allocated to such Partner with respect to all prior Fiscal Years or fiscal
periods and the current Fiscal Year or fiscal period, over (ii) the sum of (a)
the cumulative amount of Losses allocated to such Partner with respect to all
prior Fiscal Years or fiscal periods and the current Fiscal Year or fiscal
period, plus (b) the cumulative amount of Nonrecourse Deductions allocated to
such Partner with respect to all prior Fiscal Years and fiscal periods.
"Agreement" means this Agreement of Limited Partnership, as it may be
amended, supplemented, or restated from time to time.
"Available Cash" means, as of any date, all cash funds of the
Partnership on hand after: (a) payment of all Partnership costs and expenses
that are due and payable (including, without limitation, debt service payments
and any reserve requirements under property management agreements) as of such
date; (b) provision for payment of all Partnership costs and expenses that are
anticipated to become due and payable (including, without limitation, debt
service payments and any reserve requirements under property management
agreements) within 30 days following the date on which Available Cash is being
determined; and (c) provision for adequate reserves (including, without
limitation, working capital,
3
8
capital and other reserves), which reserves (and the amounts thereof) shall be
established by the Managing General Partner in its sole and absolute discretion.
"Beneficially Own" with respect to any securities means having
"beneficial ownership" of such securities (as determined pursuant to Rule 13d-3
under the Exchange Act), including pursuant to any agreement, arrangement or
understanding, whether or not in writing.
"Book Depreciation" has the meaning set forth in Section 4.4(b)(v) of
this Agreement.
"Book Value" has the meaning set forth in Section 4.4(c) of this
Agreement.
"Business Day" means Monday through Friday of each week, except that a
legal holiday recognized as such by the government of the United States or the
State of New York shall not be regarded as a Business Day.
"Buying Partner" has the meaning set forth in Section 11.8 of this
Agreement.
"Buy-Sell Date" means (i) the second anniversary of the Effective Date,
if the Partnership, at any one time prior to such date, had assets with an
aggregate Value of at least $200,000,000.00 or (ii) the third anniversary of the
Effective Date, if the Partnership, at any one time prior to such date, had
assets with an aggregate Value of at least $150,000,000.00.
"Buy-Sell Notice" has the meaning set forth in Section 11.8 of this
Agreement.
"Capital Account" means the capital account maintained for a Partner
pursuant to Section 4.4(a) of this Agreement.
"Capital Contribution" means any cash or other property contributed by
a Partner to the Partnership pursuant to the provisions of this Agreement.
"Capital Event" means: (i) the sale or other disposition of a Hotel and
its other, related assets held by the Partnership, a Controlled Entity or a
non-Controlled Entity, (ii) the refinancing of any indebtedness of the
Partnership, a Controlled Entity or a non-Controlled Entity or (iii) any sale or
other disposition (other than in the ordinary course of business) of an interest
in a Controlled or Non-Controlled Entity.
"Capital Stock" means (i) in the case of a corporation, corporate
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership or limited
liability company, partnership or membership interests (whether general or
limited) and (iv) any other interest or participation that confers on a person
the right to receive a share of the profits and losses of, or distributions of
assets of, the issuing person.
"Certificate" means the Certificate of Limited Partnership filed with
the Secretary of State of Delaware pursuant to Section 7.3 of this Agreement, as
such Certificate may be amended or restated from time to time.
"CGLH" means, collectively, CGLH GP and CGLH LP.
"CGLH GP" has the meaning set forth in the Preamble of this Agreement.
"CGLH LP" has the meaning set forth in the Preamble of this Agreement.
4
9
"Change in Control" means, with respect to the Corporation and for the
purposes of Section 11.9 only, any of the following:
(a) the acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act, a
"Group"), other than the Corporation, or any of its wholly owned
Subsidiaries or any Investor or Excluded Group, of Beneficial Ownership
of 35% or more of the combined voting power or economic interests of
the then-outstanding Voting Securities (a "Control Interest");
provided, however, that (i) any transfer of Notes or shares of Series B
Preferred Stock or other securities from any Investor or Excluded Group
will not result in a Change in Control unless such transfer is pursuant
to a Reorganization Transaction, merger proposal or tender offer in
respect of the Corporation which has been approved by (or participated
in by) the Board of Directors of the Corporation or by a majority of
the Voting Securities, and (ii) in no event shall the conversion of any
or all of the Notes in accordance with the terms of this Note
constitute a Change in Control; or
(b) there is a change in a majority of the members of the
Board within 12 months of an "election contest" (as defined in Rule 14a
pursuant to the Exchange Act) relating to the election of persons not
recommended by the Board of Directors at the time of the first public
announcements of such election contest and in which a Person not an
Affiliate of the Investor or any Related Person obtained valid proxies
or consents to effect such change; or
(c) the approval by the stockholders of the Corporation of a
reorganization, merger or consolidation, in each case, with respect to
which all or substantially all of the individuals and entities who were
the respective beneficial owners of the Voting Securities immediately
prior to such reorganization, merger or consolidation do not, following
such reorganization, merger or consolidation, Beneficially Own more
than 50% of the combined voting power of the then-outstanding Voting
Securities resulting from such reorganization, merger or consolidation;
(d) the sale or other disposition of assets representing 50%
or more of the assets of the Corporation in one transaction or series
of related transactions; or
(e) except as otherwise permitted under this Agreement, the
disposition by the Corporation of any of its interest in the
Partnership to a third party that is not a Subsidiary of the
Corporation (other than a disposition to CGLH Partners I LP, a Delaware
limited partnership, and CGLH Partners II LP, a Delaware limited
partnership, or their Affiliates);
provided, that the occurrence of any event identified in subparagraphs
(a) through (e) above that would otherwise be treated as a Change in Control
shall not constitute a Change in Control hereunder if the Required Holders, by
vote duly taken, shall so determine. "Required Holders" means the holders of
Notes or shares of Series B Preferred Stock representing a majority of the
combined (i) aggregate principal amount of the Notes Outstanding and (ii)
aggregate stated amount of the Series B Preferred Stock outstanding, on the
record date for such vote or, if no such record date is established, on the date
any written consent of such holders is solicited, in each case excluding Notes
or shares of Series B Preferred Stock then owned by the Corporation or any of
its Affiliates. For the purposes of this definition, "Affiliate" shall have the
meaning set forth in Rule 12b-2 promulgated by the Securities and Exchange
Commission under the Exchange Act. "Excluded Group" means any Group in which (A)
the Voting Securities either Beneficially Owned by such Group after the
applicable acquisition or Beneficially Owned by such Group and being transferred
by such Group, as the case may be, multiplied by (B) the percentage of the
Investor's interest in the Beneficial Ownership of such Group, represent a
5
10
Control Interest. "Outstanding" means when used with reference to the Notes at a
particular time, all Notes theretofore issued as provided in the Securities
Purchase Agreement dated as of August [___], 2000 between the Corporation and
the Investors, except (i) Notes theretofore reported as lost, stolen, damaged or
destroyed, or surrendered for transfer, exchange or replacement, in respect to
which replacement Notes have been issued, (ii) Notes theretofore paid in full,
and (iii) Notes theretofore canceled by the Corporation, except that, for the
purpose of determining whether Holders of the requisite principal amount of
Notes have made or concurred in any waiver, consent, approval, notice or other
communication under this Agreement, Notes registered in the name of, or
Beneficially Owned by, the Company or any Subsidiary of any thereof, shall not
be deemed to be outstanding. "Holder" means, at any time of reference, a Person
in whose name a Note is registered in the Note Register at such time.
"Class A Capital Contributions" means those Capital Contributions
designated as "Class A" on Exhibit B to this Agreement, as such Exhibit may be
amended from time to time in accordance with this Agreement.
"Class A Preference Amount" means, beginning on the Effective Date, for
each Fiscal Year of the Partnership, with respect to a Partner, an aggregate
amount equal to fifteen (15%) percent per annum multiplied by the average
weighted daily outstanding balance of such Partner's Undistributed Class A
Capital during such period, which Class A Preference Amount shall be cumulative,
compounded annually and prorated for any partial Fiscal Year or Fiscal Year
shorter than a calendar year.
"Class B Capital Contributions" means those Capital Contributions
designated as "Class B" on Exhibit B to this Agreement, as such Exhibit may be
amended from time to time in accordance with this Agreement.
"Class B Preference Amount" means, beginning on the Effective Date, for
each Fiscal Year of the Partnership, with respect to a Partner, an aggregate
amount equal to fifteen (15%) percent per annum multiplied by the average
weighted daily outstanding balance of such Partner's Undistributed Class B
Capital during such period, which Class B Preference Amount shall be cumulative,
compounded annually and prorated for any partial Fiscal Year or Fiscal Year
shorter than a calendar year.
"Code" means the Internal Revenue Code of 1986, as amended and in
effect from time to time.
"Commencement Date" means the date of the filing of the Certificate by
the Managing General Partner.
"Control" shall be used for the purposes of the definition of
"Affiliate," "Controlled Entity," and Section 11.1 hereof only, and shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through ownership
of voting securities or interests, by contract or otherwise.
"Controlled Entity" means a Person Controlled by the Partnership.
"Corporation" means Interstate Hotels Corporation, a Maryland
corporation.
"CPI" has the meaning set forth in Section 7.1 of this Agreement.
"Delaware Act" means the Delaware Revised Uniform Limited Partnership
Act, Chapter 17 of Title 6 of the Delaware Code, as it may be amended from time
to time, and any successor to such Delaware Act.
"Distribution Date" means, (i) with respect to each of the first three
Fiscal Year quarters in a Fiscal Year, the date that is 30 days following the
General Partner's delivery to the Managing General
6
11
Partner of the monthly financial statements pursuant to Section 9.3 of this
Agreement for the last month in such Fiscal Year quarter, and (ii) with respect
to last Fiscal Year quarter in a Fiscal Year, the date that is 30 days following
the General Partner's delivery to the Managing General Partner of the annual
financial statements pursuant to Section 9.3 of this Agreement for such Fiscal
Year.
"Effective Date" has the meaning set forth in the Preamble of this
Agreement.
"Event of Bankruptcy" means, with respect to any Partner or the
Partnership, any of the following acts or events:
(a) making an assignment for the benefit of creditors;
(b) filing a voluntary petition in bankruptcy;
(c) becoming the subject of an order for relief or being
declared insolvent or bankrupt in any federal or state bankruptcy or
insolvency proceeding;
(d) filing a petition or answer seeking a reorganization,
arrangement, composition, readjustment, liquidation, dissolution, or
similar relief under any statute, law or regulation;
(e) filing an answer or other pleading admitting or failing to
contest the material allegations of a petition filed against it in a
proceeding of the type described in parts (a) through (d) of this
definition;
(f) making an admission in writing of an inability to pay
debts as they mature;
(g) giving notice to any governmental body that insolvency has
occurred, that insolvency is pending, or that operations have been
suspended;
(h) seeking, consenting to, or acquiescing in the appointment
of a trustee, receiver, or liquidator of all or any substantial part of
its properties; or
(i) the expiration of 90 days after the date of the
commencement of a proceeding against such Person seeking
reorganization, arrangement, composition, readjustment, liquidation,
dissolution, or similar relief under any statute, law, or regulation if
the proceeding has not been previously dismissed, or the expiration of
60 days after the date of the appointment, without such Person's
consent or acquiescence, of a trustee, receiver, or liquidator of such
Person or of all or any substantial part of such Person's properties,
if the appointment has not previously been vacated or stayed, or the
expiration of 60 days after the date of expiration of a stay, if the
appointment has not been previously vacated.
"Event of Withdrawal" has the meaning set forth in Section 12.1 of the
Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Executive Tag-Along Interest" has the meaning set forth in Section
11.10 of this Agreement.
"Executive Employment Agreements" means the Amended and Restated
Agreement between Xxxxxx and the Corporation dated as of August [31], 2000 and
the Amended and Restated Agreement between Xxxxxxxxxx and the Corporation dated
as of August [31], 2000, in each case as in effect on the Effective Date, and
"Executive Employment Agreement" means one of the foregoing agreements.
"Executives" means Xxxxxxxxxx and Xxxxxx and "Executive" means
Xxxxxxxxxx or Xxxxxx.
7
12
"Financial Institution" has the meaning set forth in Section 7.15 of
this Agreement.
"Fiscal Year" has the meaning set forth in Section 9.2 of this
Agreement.
"General Partner" means IHC GP, in its capacity as the general partner
of the Partnership, and/or its permitted successors or assigns in accordance
with the terms of this Agreement.
"Grace Period" has the meaning set forth in Section 4.3 of this
Agreement.
"Hotel" means a hotel, motel, inn or other lodging facility and, if
applicable, the real property on which it is located.
"IHC" means, collectively, IHC GP and IHC LP.
"IHC GP" has the meaning set forth in the Preamble of this Agreement.
"IHC LP" has the meaning set forth in the Preamble of this Agreement.
"IHC Tag-Along Interest" has the meaning set forth in Section 11.10 of
this Agreement.
"Investment Banking Firm" has the meaning set forth in Section 11.9 of
this Agreement.
"Investment Banking Services" has the meaning set forth in Section 7.15
of this Agreement.
"Investors" means the following investors in the Corporation: CGLH
Partners I LP and CGLH Partners II LP, and all of their respective successors
and assigns, by operation of law or otherwise.
"Xxxxxx Brothers" has the meaning set forth in Section 7.15 of this
Agreement.
"Limited Partner" means CGLH LP, IHC LP, Xxxxxxxxxx, Xxxxxx and any
other Person who has been admitted as a limited partner of the Partnership in
accordance with the terms of this Agreement.
"Liquidator" has the meaning set forth in Section 13.3(a) of this
Agreement.
"Losses" has the meaning set forth in Section 4.4(b) of this Agreement.
"Major Decision" has the meaning set forth in Section 7.2 of this
Agreement.
"Majority Interest" means the owners of more than 51% of the Percentage
Interests of the Limited Partners.
"Managing General Partner" means CGLH GP in its capacity as the
managing general partner of the Partnership, and/or its permitted successors or
assigns in accordance with the terms of this Agreement.
"Manager" has the meaning set forth in Section 7.16 of this Agreement.
"Nonrecourse Deductions" has the meaning set forth in Section
1.704-2(b)(1) of the Regulations.
"Note" means the subordinated convertible note or notes having an
aggregate principal amount of $25,000,000, convertible into shares of Class A
Common Stock, par value $.01, of the Corporation, subject to certain
limitations.
8
13
"Notice" has the meaning set forth in Section 7.15 of this Agreement.
"Notice Period" has the meaning set forth in Section 11.10 of this
Agreement.
"Offering Partner" has the meaning set forth in Section 11.8 of this
Agreement.
"Partner" means a Managing General Partner, a General Partner or a
Limited Partner.
"Partner Minimum Gain" means partner nonrecourse debt minimum gain as
determined under the rules of Section 1.704-2(i) of the Regulations.
"Partner Nonrecourse Deduction" has the meaning set forth in Section
1.704-2(i)(1) and (2) of the Regulations.
"Partnership" means the limited partnership formed by the filing of the
Certificate with the Secretary of State of Delaware and established pursuant to
this Agreement.
"Partnership Interest" means the interest acquired by a Partner in the
Partnership including, without limitation, such Partner's right: (a) to an
allocable share of the Profits, Losses, and other income, gains, losses,
deductions, and credits of the Partnership; (b) to a distributive share of the
assets of the Partnership; (c) if a Limited Partner (other than an Executive),
to vote on those matters described in this Agreement; and (d) (i) if the
Managing General Partner, to manage and operate the business of the Partnership,
(ii) if the General Partner, to manage and operate the business of the
Partnership as and to the extent such power and authority are expressly granted
herein or by the Managing General Partner in writing.
"Partnership Minimum Gain" has the meaning set forth in Section
1.704-2(d) of the Regulations.
"Percentage Interest" means, as to a Partner, the ratio, expressed as a
percentage, of Class A Capital Contributions and Tier 2 Capital Contributions
actually contributed to the Partnership by such Partner to all Class A Capital
Contributions and Tier 2 Capital Contributions actually contributed to the
Partnership by all Partners; provided, however, that, subject to the provisions
of this Agreement, including, without limitation, Sections 4.3, 11.12 and 11.13
and Exhibit G hereof, the Percentage Interest of an Executive shall be the
applicable percentage interest stated on Exhibit A hereto for such Executive.
Exhibit A shall be amended from time to time in accordance with this Agreement;
provided, that, in conjunction with Class A Capital Contributions made by the
Partners (other than the Executives) as of a given date, the Executives shall be
deemed to have made, as of such date, Class A Capital Contributions pro rata in
proportion to their respective Percentage Interests set forth in Exhibit A
hereto, subject to the provisions of Section 11.13 and Exhibit G hereof.
"Preference Amount" means a Class A Preference Amount, or a Class B
Preference Amount or both.
"Person" means an individual, corporation, general or limited
partnership, limited liability company, government entity, joint venture,
estate, trust, association or organization or other entity of any kind or
nature.
"Profits" has the meaning set forth in Section 4.4(b) of this
Agreement.
"Purchase Price" has the meaning set forth in Section 11.9 of this
Agreement.
"Put Date" has the meaning set forth in Section 11.9 of this Agreement.
"Receiving Partner" has the meaning set forth in Section 11.8 of this
Agreement.
9
14
"Redemption Closing Date" has the meaning ascribed to it in Section
11.12 hereof
"Redemption Interest" has the meaning ascribed to it in Section 11.12
hereof.
"Redemption Notice" has the meaning ascribed to it in Section 11.12
hereof.
"Redemption Price" has the meaning ascribed to it in Section 11.12
hereof.
"Regulations" means the Department of Treasury Regulations promulgated
under the Code, as amended and in effect (including corresponding provisions of
succeeding regulations).
"Regulatory Allocations" has the meaning set forth in Section 5.3 of
this Agreement.
"Related Person" means, with respect to any Person, (A) any Affiliate
of such Person, (B) any investment manager, investment advisor or partner of
such Person or an Affiliate of such Person, and (C) any investment fund,
investment account or investment entity whose investment manager, investment
advisor or general partner is such Person or a Related Person of such Person.
For purposes of this definition, Person shall also include "Group" as such term
is defined in the definition of "Change in Control".
"Response Period" has the meaning set forth in Section 11.8 of this
Agreement.
"Sale" has the meaning set forth in Section 11.10 of this Agreement.
"Sale Notice" has the meaning set forth in Section 11.10 of this
Agreement.
"Securities Act" means the Securities Act of 1933, as amended, and any
successor to such statute.
"Selling Partner" has the meaning set forth in Section 11.8 of this
Agreement.
"Series B Preferred Stock" means Series B Convertible Preferred Stock,
par value $.01 per share, of the Corporation having an aggregate stated amount
of $5,000,000.00, convertible into shares of Class A Common Stock, par value
$.01, of the Corporation, subject to certain limitations.
"Stated Value" has the meaning set forth in Section 11.8 of this
Agreement.
"Subsidiary" of any Person means any corporation, partnership, limited
liability company or other entity of which a majority of the voting power of the
voting equity securities or equity interest is owned, directly or indirectly, by
such Person.
"Tier 1 Capital Contributions" has the meaning set forth in Section 4.1
of this Agreement.
"Tier 2 Capital Contributions" has the meaning set forth in Section 4.3
of this Agreement.
"Total Voting Power" means the total combined Voting Power, on a fully
diluted basis, of all the Voting Securities then outstanding.
"Tier 1 Capital Call Notice Period" has the meaning set forth in
Section 4.2 of this Agreement.
"Tier 2 Capital Call Notice Period" has the meaning set forth in
Section 4.3 of this Agreement.
10
15
"Transfer" has the meaning set forth in Section 11.1 of this Agreement.
"Undistributed Class A Capital" means, with respect to the Class A
Capital Contributions of a Partner and as of a given date, the aggregate amount
of such Partner's Class A Capital Contributions actually made as of such date,
reduced by all prior distributions to such Partner pursuant to Section
6.1(b)(ii)(C)(2). With respect to an Executive, his Undistributed Class A
Capital, as of a given date, shall be an amount equal to the product of: (i)
such Executive's then Percentage Interest (determined without regard to any
dilution in such Percentage Interest on account of such Executive's failure to
make a Tier 2 Capital Contribution); multiplied by (ii) the total amount of
Undistributed Class A Capital of all of the Partners other than Executives at
such time.
"Undistributed Class A Preference Amount" means, with respect to the
Class A Preference Amount of a Partner and as of a given date, the aggregate
amount of such Partner's Class A Preference Amount as of such date, reduced by
all prior distributions to such Partner pursuant to Section 6.1(b)(i)(B) and
Section 6.1(b)(ii)(B). The calculation and recalculation of the Undistributed
Class A Preference Amount for each Partner shall be made (a) prior to the time
any distributions are made pursuant to Section 6.1 if such distributions are
made at a time other than on the last day of a Fiscal Year of the Partnership,
(b) as of the last day of each Fiscal Year of the Partnership and (c) prior to
any Sale pursuant to Section 11.10. With respect to an Executive, his
Undistributed Class A Preference Amount, as of a given date, shall be an amount
equal to the product of: (i) such Executive's then Percentage Interest
(determined without regard to any dilution in such Percentage Interest on
account of such Executive's failure to make a Tier 2 Capital Contribution);
multiplied by (ii) the total amount of Undistributed Class A Preference Amounts
of all of the Partners other than Executives at such time.
"Undistributed Class B Capital" means, with respect to the Class B
Capital Contributions of a Partner and as of a given date, the aggregate amount
of such Partner's Class B Capital Contributions actually made as of such date,
reduced by all prior distributions to such Partner pursuant to Section
6.1(b)(ii)(C)(1) and Section 11.10.
"Undistributed Class B Preference Amount" means, with respect to the
Class B Preference Amount of a Partner and as of a given date, the aggregate
amount of such Partner's Class B Preference Amount as of such date, reduced by
all prior distributions to such Partner pursuant to Section 6.1(b)(i)(A) and
Section 6.1(b)(ii)(A). The calculation and recalculation of the Undistributed
Class B Preference Amount for each Partner shall be made (a) prior to the time
any distributions are made pursuant to Section 6.1 if such distributions are
made at a time other than on the last day of a Fiscal Year of the Partnership
and (b) as of the last day of each Fiscal Year of the Partnership.
"Undistributed Tier 2 Capital" means, with respect to the Tier 2
Capital Contributions of a Partner and as of a given date, the aggregate amount
of such Partner's Tier 2 Capital Contributions actually made as of such date,
reduced by all prior distributions to such Partner pursuant to Section
6.1(b)(ii)(D).
"Value" means, for purposes of Section 7.15(a) and (d) and the
definition of "Buy-Sell Date", with respect to the value of the assets of the
Partnership, the sum of: (i) the aggregate gross purchase prices paid by the
Partnership (including, without limitation, through Partnership capital, debt
and equity financing or otherwise) for interests in Hotels and other, related
assets and the Partnership's aggregate gross capital contributions to Controlled
Entities and non-Controlled Entities for the acquisition of interests in Hotels
and other, related assets (or for interests in other Controlled Entities and
non-Controlled Entities for the acquisition of interests in Hotels and other,
related assets); and (ii) the aggregate gross capital expenditures in respect of
such Hotels and other, related assets.
"Vesting Date" means any of Vesting Date 1, Vesting Date 2 or Vesting
Date 3.
11
16
"Vesting Date 1" means the first anniversary of the "Commencement
Date", as such term is defined in each of the Executive Employment Agreements;
provided, however, that with respect to Xxxxxxxxxx'x Executive Employment
Agreement, if Xxxxxxxxxx terminates his employment with the Corporation without
Good Reason (as such term is defined in such Executive's Executive Employment
Agreement), Vesting Date 1 with respect to his Percentage Interests shall be the
date that is nine calendar months following the "Commencement Date" as such term
is defined in Xxxxxxxxxx'x Executive Employment Agreement.
"Vesting Date 2" means the second anniversary of the "Commencement
Date", as such term is defined in each of the Executive Employment Agreements.
"Vesting Date 3" means the third anniversary of the "Commencement
Date", as such term is defined in each of the Executive Employment Agreements.
"Voting Securities" means (i) any securities entitled, or which may be
entitled, to vote generally in the election of directors of the Corporation,
(ii) any securities, including the Note and the Series B Preferred Stock,
convertible or exercisable into or exchangeable for such securities (whether or
not the right to convert, exercise or exchange is subject to the passage of time
or contingencies or both), or (iii) any direct or indirect rights or options to
acquire any such securities; provided, that unexercised options granted pursuant
to any employment benefit or similar plan and rights issued pursuant to any
shareholder rights plan shall be deemed not to be Voting Securities.
ARTICLE III
PURPOSE
3.1 PURPOSES AND SCOPE.
The purposes of the Partnership are expressly limited to: (a)
the acquisition, holding, ownership, operation, maintenance, improvement,
development, sale, exchange, lease, and other uses and dispositions of Hotels
and other, related assets, and the incurring of indebtedness or similar
obligations, including, without limitation, under secured or unsecured credit
facilities of every kind and nature, in connection therewith; (b) forming, and
owning equity securities or interests in, and/or acting as a general partner,
limited partner, managing member, member and/or equity holder of, Controlled
Entities or non-Controlled Entities that acquire, hold, own, operate, maintain,
improve, develop, sell, exchange, lease, and otherwise use or dispose of Hotels
and other, related assets, and the incurring of indebtedness or similar
obligations including, without limitation, under secured or unsecured credit
facilities of every kind and nature, in connection with the ownership of such
equity securities or interests; (c) forming, and owning equity securities or
interests in, and/or acting as a general partner, limited partner, managing
member, member and/or equity holder of, Controlled Entities or non-Controlled
Entities that own the equity securities or interests in, and/or act as a general
partner, limited partner, managing member, member and/or equity holder of,
Persons that acquire, hold, own, operate, maintain, improve, develop, sell,
exchange, lease, and otherwise use or dispose of Hotels and other, related
assets, and the incurring of indebtedness or similar obligations including,
without limitation, under secured or unsecured credit facilities of every kind
and nature, in connection with the ownership of such equity securities or
interests; and (d) the transacting of any and all lawful business for which the
Partnership may be organized under Delaware law that is incident, necessary and
appropriate to accomplish any of the foregoing.
12
17
ARTICLE IV
CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS; PARTNERSHIP INTERESTS
4.1 CAPITAL CONTRIBUTIONS; INITIAL CAPITAL CONTRIBUTIONS.
(a) Each Partner shall be required to contribute to the
Partnership in cash, payable from time to time in accordance with
Section 4.2 hereof, an amount equal to the sum of the amounts of Class
A Capital Contributions and Class B Capital Contributions listed on
Exhibit B hereto opposite such Partner's name under the headings,
"Class A Capital Contribution" and "Class B Capital Contribution". All
such capital contributions by all of the Partners are hereinafter
sometimes collectively referred to as "Tier 1 Capital Contributions".
To the extent that a Partner receives a return of capital in respect of
any Class A Capital Contribution or Class B Capital Contribution on or
before the fifth anniversary of the Effective Date, such returned
capital shall be subject to subsequent capital call with respect to
such class of capital, on the terms provided in Section 4.2, provided,
that the Partners or their Affiliates shall not be obligated to
maintain liquid reserves in amounts equal to such returned capital for
subsequent re-contribution. Nothing herein shall require the
Partnership to make such subsequent capital call before electing to
make a capital call for Tier 2 Capital Contributions, as provided in
Section 4.3 below.
(b) On the Effective Date, the Partners shall make initial
capital contributions to the Partnership, in cash, pro rata in
proportion to their Tier 1 Capital Contributions obligations, as
determined by the Managing General Partner and a Majority Interest, but
not to exceed amounts reasonably necessary for the initial
capitalization of the Partnership. Such initial capital contributions
shall be credited against the Partners' respective Tier 1 Capital
Contributions obligations.
4.2 TIER 1 CAPITAL CONTRIBUTIONS.
(a) The Managing General Partner and a Majority Interest shall
determine, from time to time, the capital needs of the Partnership.
Upon such determination, the Managing General Partner shall give
written notice to each Partner (a "Tier 1 Capital Call Notice"). The
Partners shall make Tier 1 Capital Contributions to the Partnership,
pro rata in proportion to their respective Tier 1 Capital Contributions
obligations. Capital constituting all or a portion of IHC LP's Tier 1
Capital Contributions shall be allocated as follows: (i) 53.02% as a
Class A Capital Contribution and (ii) 46.98% as a Class B Capital
Contribution, consistent with Exhibit B attached hereto. Each Partner
shall have five (5) days from the date such Tier 1 Capital Call Notice
is given to contribute to the Partnership its required amount of
additional capital constituting all or a portion of its respective Tier
1 Capital Contributions obligations. Each Partner shall receive a
credit to its Capital Account in the amount of any such capital that it
contributes to the Partnership.
(b) If a Partner does not timely contribute its required
portion of the Tier 1 Capital Contributions when and in such amounts as
required pursuant to subsection (a) hereof, that Partner shall be in
default under this Agreement. The Managing General Partner or those
non-defaulting Partners that hold a majority of the Percentage
Interests held by all non-defaulting Partners may exercise any one or
more of the following remedies, all of which are cumulative, and may be
exercised concurrently (provided, however, that if more than one remedy
is exercised, the non-defaulting Partners may not be compensated or
obtain relief in the aggregate in excess of the actual portion of the
Tier 1 Capital Contribution that the defaulting Partner has
13
18
failed to contribute, together with reimbursement for related expenses
as and to the extent expressly permitted hereunder):
(i) One or more of the non-defaulting Partners may
advance funds to the Partnership to cover those amounts which
the defaulting Partner fails to contribute. Amounts that a
non-defaulting Partner(s) so advances on behalf of the
defaulting Partner shall become a fully-recourse loan due and
owing from the defaulting Partner to such non-defaulting
Partner(s) and shall bear interest at the lesser of the
maximum lawful rate and the rate of fifteen percent (15%) per
annum, payable monthly. All cash distributions otherwise
distributable to the defaulting Partner under this Agreement
shall instead be paid to the non-defaulting Partner(s) making
such advances until such advances and interest thereon are
paid in full. Any such advances shall be due and payable by
the defaulting Partner one (1) year from the date that such
advance was made, with any amounts repaid applied first to
interest and thereafter to principal. Effective upon a
Partner's becoming a defaulting Partner, such defaulting
Partner grants to the non-defaulting Partner(s) that advances
funds under this Section a security interest in such
defaulting Partner's right to its allocable share of Profits
and Losses, and its distributive share of the assets, of the
Partnership, to secure its obligation to repay such advances
and agrees to execute and deliver a promissory note evidencing
such obligations in form and substance as provided in this
clause (i) and reasonably acceptable to the Managing General
Partner, together with a security agreement in a form
reasonably acceptable to the Managing General Partner and such
UCC-1 financing statements and other documents as such
non-defaulting Partner(s) may reasonably request. If the
defaulting Partner shall fail to make its monthly payments of
interest or pay the loan in full when due, the defaulting
Partner shall lose, until such time as the default Partner
cures the default: (i) its voting and approval rights under
the Delaware Act, the Certificate and this Agreement and (ii)
its ability, if any, to participate in the management and
operations of the Partnership. In addition, the defaulting
Partner shall have no right to receive any distributions from
the Partnership until the non-defaulting Partners have first
received distributions in an amount equal to the additional
capital contributed by each non-defaulting Partner to the
Partnership (pursuant to the capital call as to which the
defaulting Partner defaulted) plus a cumulative,
non-compounded return thereon at the lesser of the maximum
lawful rate and the rate of fifteen percent (15%) per annum.
(ii) The then existing Percentage Interests of the
Partners (other than the Executives) shall be proportionately
adjusted to reflect the failure of the defaulting Partner to
contribute its required capital to the Partnership.
(iii) One or more of the non-defaulting Partners that
hold a majority of the Percentage Interests held by all
non-defaulting Partners may with the consent of the Managing
General Partner dissolve the Partnership, in which event the
Partnership shall be wound-up, liquidated and terminated
pursuant to Article XIII hereof.
(iv) The Partnership or one or more of the
non-defaulting Partners (other than the Executives) may
purchase the defaulting Partner's entire Partnership Interest
in accordance with the same terms and conditions as those set
forth in Section 11.8 hereof except that the purchase price
shall be an amount equal to eighty percent (80%) of the
amounts the Selling Partner would have received under Section
11.8(a)(iii) hereof based upon a Stated Value determined in
good faith; provided, that, the defaulting Partner shall not
have the rights of a Receiving Partner under Section
11.8(a)(ii) and shall be deemed to have accepted the offer of
purchase.
(v) One or more of the non-defaulting Partners may
contribute the capital that the defaulting Partner failed to
so contribute and such defaulting Partner shall have
14
19
no right to receive any distributions from the Partnership
until the non-defaulting Partners have first received
distributions in an amount equal to the additional capital
contributed by each non-defaulting Partner to the Partnership,
in addition to any preferred return (and the priority of such
return) that may have been earned or payable with respect
thereto as if such contribution had been made by the
defaulting Partner.
(c) Each Partner acknowledges and agrees that (i) a default by
any Partner in making Tier 1 Capital Contributions will result in the
Partnership's and the non-defaulting Partners' incurring certain costs
and other damages in an amount that would be extremely difficult or
impractical to ascertain, and (ii) the remedies described herein bear a
reasonable relationship to the damages which the Partners estimate may
be suffered by the Partnership and the non-defaulting Partners by
reason of the failure of a defaulting Partner to make any such required
capital contribution and the exercise of any or all of the above
described remedies is not unreasonable under the circumstances existing
as of the date hereof.
(d) The exercise by the Managing General Partner or
non-defaulting Partners, as applicable, of one or more remedies
provided in this Section shall not be a waiver or limitation of the
right to pursue any one or more remedies available hereunder or at law
or equity with respect to any subsequent default.
(e) For the period commencing when a Partner does not timely
contribute its required portion of Tier 1 Capital Contributions until
such time as such loan is paid in full, any Preferences otherwise
accruing to the defaulting Partner under this Agreement shall not be
compounded (but shall accrue as aforesaid).
4.3 ADDITIONAL CAPITAL CONTRIBUTIONS.
This Section relates only to required capital contributions IN
ADDITION TO Tier 1 Capital Contributions. The sole purpose of the Tier 2 Capital
Contributions is to provide the Partnership with additional capital necessary to
operate the Hotels and other, related assets (and any other property) acquired
by the Partnership (using Tier 1 Capital Contributions) and Tier 2 Capital
Contributions are expressly not intended for the acquisition of interests in
Hotels and other, related assets (and any other property). The consent of all
Partners shall be required for the Partnership to make a Tier 2 Capital
Contribution capital call to pay for capital expenditures with respect to a
Hotel and its other, related assets to the extent that such capital expenditure
exceed those required by the licensor or franchisor under such Hotel's license
agreement or franchise agreement. This Section is not intended, and shall not be
construed, as having any effect on the Partnership's use of Tier 1 Capital
Contributions, the Partners' obligations to make Tier 1 Capital Contributions
and the Partnership's and the Partners' remedies with respect to any failure to
make the Tier 1 Capital Contributions. To the extent that a Partner receives a
return of capital in respect of any Tier 2 Capital Contribution on or before the
fifth anniversary of the Effective Date, such returned capital shall be subject
to subsequent capital call, on the terms provided in this Section 4.3, provided,
that the Partners or their Affiliates shall not be obligated to maintain liquid
reserves in amounts equal to such returned capital for subsequent
re-contribution. For the avoidance of doubt, the Executives shall be required to
make Tier 2 Capital Contributions in accordance with the provision of this
Section 4.3.
(a) The Partners shall contribute additional capital to the
Partnership as described in the first paragraph of this Section 4.3, in
proportion to their respective Percentage Interests ("Tier 2 Capital
Contributions") and in such amounts and at such times as required by
the Managing General Partner with the consent of a Majority Interest.
Upon such determination, the Managing General Partner shall give
written notice thereof to each Partner (the "Tier 2 Capital Call
Notice"). Each Partner shall have twenty (20) days from the date the
Tier 2 Capital Call Notice is given (the "Tier 2 Capital Call Notice
Period") to contribute its required Tier 2 Capital
15
20
Contribution to the Partnership; provided, however, if the stated
reason for the capital call is to cure a default under any obligation
of the Partnership, the Tier 2 Capital Call Notice Period may be such
lesser time as indicated in the Tier 2 Capital Call Notice. Each
Partner shall receive a credit to its Capital Account in the amount of
the Tier 2 Capital Contribution that it contributes to the Partnership.
(b) If a Partner does not timely contribute additional capital
when and in such amounts as required pursuant to subsection (a) hereof,
that Partner shall be in default under this Agreement. In such event,
the Managing General Partner shall send the defaulting Partner written
notice of such default, giving the defaulting Partner twenty (20) days
from the date such notice is given (the "Grace Period") to contribute
the entire amount of its required Tier 2 Capital Contribution;
provided, however, that if the stated reason for the capital call is to
cure a default under any obligation of the Partnership, there shall be
no Grace Period. If the defaulting Partner does not contribute its
required Tier 2 Capital Contribution to the Partnership within the Tier
2 Capital Call Notice Period or within the Grace Period, if applicable,
the Managing General Partner or those non-defaulting Partners that hold
a majority of the Percentage Interests held by all non-defaulting
Partners may exercise any one or more of the following remedies, all of
which are cumulative, and may be exercised concurrently (provided,
however, that if more than one remedy is exercised, the non-defaulting
Partners may not be compensated or obtain relief in the aggregate in
excess of the actual portion of the Tier 2 Capital Contribution that
the defaulting Partner has failed to contribute, together with
reimbursement for related expenses as and to the extent expressly
permitted hereunder):
(i) One or more of the non-defaulting Partners (other
than the Executives) may advance funds to the Partnership to
cover those amounts which the defaulting Partner fails to
contribute. Amounts that a non-defaulting Partner(s) so
advances on behalf of the defaulting Partner shall become a
loan due and owing from the defaulting Partner to such
non-defaulting Partner(s) and shall bear interest at the
lesser of the maximum lawful rate and the rate of fifteen
percent (15%) per annum, payable monthly. Such loan shall be
recourse only to the Partnership Interests of the defaulting
Partner. All cash distributions otherwise distributable to the
defaulting Partner under this Agreement shall instead be paid
to the non-defaulting Partner(s) making such advances until
such advances and interest thereon are paid in full. Any such
advances shall be due and payable by the defaulting Partner
one (1) year from the date that such advance was made, with
any amounts repaid applied first to interest and thereafter to
principal. Effective upon a Partner's becoming a defaulting
Partner, such defaulting Partner grants to the non-defaulting
Partner(s) that advance funds under this Section a security
interest in such defaulting Partner's right to its allocable
share of Profits and Losses, and its distributive share of the
assets, of the Partnership, to secure its obligation to repay
such advances and agrees to execute and deliver a promissory
note evidencing such obligations in form and substance as
provided in this clause (i) and reasonably acceptable to the
Managing General Partner, together with a security agreement
in a form reasonably acceptable to the Managing General
Partner and such UCC-1 financing statements and other
documents as such non-defaulting Partner(s) may reasonably
request. If the defaulting Partner shall fail to make its
monthly payments of interest or pay the loan in full when due,
the defaulting Partner shall lose, until such time as the
default Partner cures the default: (i) its voting and approval
rights under the Delaware Act, the Certificate and this
Agreement and (ii) its ability, if any, to participate in the
management and operations of the Partnership. In addition, the
defaulting Partner shall have no right to receive any
distributions from the Partnership until the non-defaulting
Partner(s) have first received distributions in an amount
equal to the additional capital contributed by each
non-defaulting Partner(s) to the Partnership (pursuant to the
capital call as to which the defaulting Partner defaulted)
plus a cumulative, non-compounded
16
21
return thereon at the lesser of the maximum lawful rate and
the rate of fifteen percent (15%) per annum.
(ii) The then existing Percentage Interests shall be
proportionately adjusted to reflect the failure of the
defaulting Partner to contribute its required additional
capital to the Partnership.
(iii) One or more of the non-defaulting Partners
(other than the Executives) may contribute the capital that
the defaulting Partner failed to so contribute and the
defaulting Partner shall have no right to receive any
distributions from the Partnership until the non-defaulting
Partners have first received distributions in an amount equal
to the additional capital contributed by each non-defaulting
Partner to the Partnership plus a cumulative, non-compounded
return thereon at the lesser of the maximum lawful rate and
the rate of fifteen percent (15%) per annum as if such
contribution had been made by the defaulting Partner.
(c) In addition to any of the remedies set forth in Section
4.3(b) hereof, if IHC GP or IHC LP defaults on its obligation to make a
Tier 2 Capital Contribution pursuant to a Tier 2 Capital Call Notice,
then the Partnership shall have the right to terminate the property
management agreement(s) covering the Hotel or Hotels for which the
additional Tier 2 Capital Contribution was required. The defaulting IHC
GP or IHC LP, and not the Partnership, shall be liable for termination
payments in connection with such termination and the defaulting IHC GP
or IHC LP shall indemnify and hold harmless the Partnership and the
non-IHC Partners against any liability or obligation with respect to
such payments.
(d) Each Partner acknowledges and agrees that (i) a default by
any Partner in making a required capital contribution will result in
the Partnership's and the non-defaulting Partners' incurring certain
costs and other damages in an amount that would be extremely difficult
or impractical to ascertain, and (ii) the remedies described herein
bear a reasonable relationship to the damages which the Partners
estimate may be suffered by the Partnership and the non-defaulting
Partners by reason of the failure of a defaulting Partner to make any
required additional capital contribution and the exercise of any or all
of the above described remedies is not unreasonable under the
circumstances existing as of the date hereof.
(e) The exercise by the Managing General Partner or
non-defaulting Partners, as applicable, of one or more remedies
provided in this Section shall not be a waiver or limitation of the
right to pursue any one or more remedies available hereunder or at law
or equity with respect to any subsequent default.
(f) For the period commencing when a Partner does not timely
contribute its required portion of the Tier 2 Capital Contributions
until such time as such loan is paid in full, any Preferences otherwise
accruing to the defaulting Partner under this Agreement shall not be
compounded (but shall accrue as aforesaid).
4.4 CAPITAL ACCOUNTS.
(a) Maintenance Rules. The Partnership shall maintain for each
Partner a separate Capital Account in accordance with this Section 4.4.
Each Capital Account shall be maintained in accordance with the
following provisions:
(i) Such Capital Account shall be increased by the
cash amount or Book Value of any property contributed by such
Partner to the Partnership pursuant to this Agreement, such
Partner's allocable share of Profits and any items in the
nature of income or gains which are specially allocated to
such Partner pursuant to Section 5.2 and
17
22
Section 5.3 hereof, and the amount of any Partnership
liabilities assumed by such Partner or which are secured by
any property distributed to such Partner.
(ii) Such Capital Account shall be decreased by the
cash amount or Book Value of any property distributed to such
Partner pursuant to this Agreement (except as payment with
respect to a loan), such Partner's allocable share of Losses
and any items in the nature of deductions or losses which are
specially allocated to such Partner pursuant to Section 5.2
and Section 5.3 hereof, and the amount of any liabilities of
the Partner assumed by the Partnership or which are secured by
any property contributed by such Partner to the Partnership.
(iii) In the event any interest in the Partnership is
transferred in accordance with the terms of this Agreement,
the transferee shall succeed to the Capital Account of the
transferor to the extent that it relates to the transferred
interest.
(iv) In determining the amount of any liability for
purposes of Sections 4.4(a)(i) and (ii) hereof, there shall be
taken into account Code Section 752(c) and any other
applicable provisions of the Code and Regulations.
(v) The Capital Accounts of each Partner shall be
adjusted as provided in Regulations Section
1.704-1(b)(2)(iv)(j) to take into account any required basis
adjustments with respect to Code Section 38 property.
The foregoing provisions and the other provisions of this Agreement
relating to the maintenance of Capital Accounts are intended to comply
with Section 1.704-1(b) of the Regulations and shall be interpreted and
applied in a manner consistent with such Regulations. If the Managing
General Partner determines that it is prudent to modify the manner in
which the Capital Accounts, or any increases or decreases to the
Capital Accounts, are computed in order to comply with such
Regulations, the Managing General Partner may authorize such
modifications, provided that it is not likely to have a material effect
on the amounts otherwise distributable to any Person.
(b) Definition of Profits and Losses. "Profits" and "Losses"
mean, for each fiscal year or other period, an amount equal to the
Partnership's taxable income or loss for such year or period,
determined in accordance with Code Section 703(a) (for this purpose,
all items of income, gain, loss or deduction required to be stated
separately pursuant to Code Section 703(a)(1) shall be included in
taxable income or loss), with the following adjustments:
(i) Income of the Partnership that is exempt from
federal income tax and not otherwise taken into account in
computing Profits and Losses pursuant to this Section 4.4(b)
shall be added to such taxable income or loss.
(ii) Any expenditures of the Partnership described in
Code Section 705(a)(2)(B), or treated as Code Section
705(a)(2)(B) expenditures pursuant to Section
1.704-1(b)(2)(iv)(i) of the Regulations, and not otherwise
taken into account in computing Profits and Losses pursuant to
this Section 4.4(b), shall be subtracted from such taxable
income or loss.
(iii) If the Book Value of any partnership asset is
adjusted pursuant to Sections 4.4(c)(ii) through (c)(iv), the
amount of such adjustment shall be taken into account as gain
or loss from the disposition of such asset for purposes of
computing Profits and Losses.
18
23
(iv) Gain or loss resulting from any disposition of
property with respect to which gain or loss is recognized for
federal income tax purposes shall be computed by reference to
the Book Value of the property disposed of, notwithstanding
that the adjusted tax basis of such property differs from its
Book Value.
(v) In lieu of the deduction for depreciation, cost
recovery or amortization taken into account in computing such
taxable income or loss, there shall be taken into account Book
Depreciation as defined in this Section 4.4(b)(v). Except as
may otherwise be provided in the Regulations, "Book
Depreciation" for any asset means for any fiscal year or other
period an amount that bears the same ratio to the Book Value
of that asset at the beginning of such fiscal year or other
period as the federal income tax depreciation, amortization or
other cost recovery deduction allowable for that asset for
such year or other period bears to the adjusted tax basis of
that asset at the beginning of such year or other period. If
the federal income tax depreciation, amortization or other
cost recovery deduction allowable for any asset for such year
or other period is zero, then Book Depreciation for that asset
shall be determined with reference to such beginning Book
Value using any reasonable method selected by the Managing
General Partner.
(vi) Notwithstanding any other provision of this
Section 4.4(b), any items that are specially allocated
pursuant to Section 5.2 or Section 5.3 shall not be taken into
account in computing Profits and Losses.
(c) Definition of Book Value. "Book Value" means for any asset
the asset's adjusted basis for federal income tax purposes, except as
follows:
(i) The initial Book Value of any asset contributed
by a Partner to the Partnership shall be the gross fair market
value of such asset, as determined by the Managing General
Partner in its reasonable discretion.
(ii) The Book Values of all Partnership assets shall
be adjusted to equal their respective gross fair market
values, as determined by the Managing General Partner in its
reasonable discretion, as of the following times: (A) on the
acquisition of an additional interest in the Partnership by
any new or existing Partner in exchange for more than a de
minimis capital contribution if the Managing General Partner
reasonably determines that such adjustment is necessary or
appropriate to reflect the relative economic interests of the
Partners in the Partnership; (B) on the distribution by the
Partnership to a Partner of more than a de minimis amount of
Partnership property as consideration for an interest in the
Partnership if the Managing General Partner reasonably
determines that such adjustment is necessary or appropriate to
reflect the relative economic interests of the Partners in the
Partnership; and (C) on the liquidation of the Partnership
within the meaning of Section 1.704-1(b)(2)(ii)(g) of the
Regulations.
(iii) The Book Value of any Partnership asset
distributed to any Partner shall be the gross fair market
value of such asset on the date of distribution.
(iv) The Book Values of Partnership assets shall be
increased (or decreased) to reflect any adjustment to the
adjusted basis of such assets pursuant to Code Section 734(b)
or Code Section 743(b), but only to the extent that such
adjustments are taken into account in determining Capital
Accounts pursuant to Section 1.704-1(b)(2)(iv)(m) of the
Regulations and Section 5.2(d) hereof; provided, however, that
Book Values shall not be adjusted pursuant to this Section
4.4(c)(iv) to the extent the Managing General Partner
determines that an adjustment pursuant to Section 4.4(c)(ii)
is necessary or
19
24
appropriate in connection with a transaction that would
otherwise result in an adjustment pursuant to this Section
4.4(c)(iv).
(v) If the Book Value of an asset has been determined
or adjusted pursuant to Section 4.4(c)(i), 4.4(c)(ii), or
4.4(c)(iv) hereof, such Book Value shall thereafter be
adjusted by the Book Depreciation taken into account with
respect to such asset for purposes of computing Profits and
Losses.
4.5 NEGATIVE CAPITAL ACCOUNTS.
If any Partner has a deficit balance in its Capital Account,
such Partner shall have no obligation to restore such negative balance or to
make any Capital Contribution to the Partnership by reason thereof, and such
negative balance shall not be considered an asset of the Partnership or of any
Partner.
4.6 INTEREST.
No interest shall be paid by the Partnership on Capital
Contributions or on balances in Capital Accounts. Nothing in this Section 4.6 is
intended to limit payments of Class A Preference Amounts and Class B Preference
Amounts to Partners as provided hereunder or on payments or contributions made
by non-defaulting Partners pursuant to Sections 4.2 and 4.3 hereof.
4.7 NO WITHDRAWAL.
No Partner shall be entitled to withdraw any part of its
Capital Contributions or its Capital Account or to receive any distribution from
the Partnership, except as provided in Section 6.1, Section 11.10 and Article
XIII of this Agreement.
4.8 LOANS FROM PARTNERS.
A Partner may advance funds to the Partnership upon the
request of the Partnership with the consent of all of the Partners as to the
terms thereof. Nothing in this Section 4.8 shall require the consent of all of
the Partners to the Partnership's incurring indebtedness or similar obligations,
including, without limitation, under secured and unsecured credit facilities of
every kind or nature, with an Affiliate of a Partner, or otherwise, where such
consent is not required under Section 7.2(a)(vi).
ARTICLE V
ALLOCATIONS
5.1 ALLOCATIONS OF PROFITS AND LOSSES.
Profits, Losses and items thereof of the Partnership for each
Fiscal Year (or other fiscal period) shall be allocated to the Partners in such
manner that:
(a) the Adjusted Capital Account balances of all Partners with
positive Adjusted Capital Account balances (after crediting or debiting
Capital Accounts for Profits, Losses, items thereof, and allocations to
Capital Accounts pursuant to all other provisions of this Article V for
such Fiscal Year or other fiscal period) will correspond as closely as
possible to the distributions that would result if an amount equal to
the sum of (X) plus (Y) were distributed in accordance with Section
13.3(d)(iii) at the end of such Fiscal Year or other fiscal period
where (X) equals the aggregate of the Adjusted Capital Account balances
of all Partners with positive Adjusted
20
25
Capital Account balances and (Y) equals the aggregate amount that would
be required to be contributed by the Partners with negative Adjusted
Capital Account balances (as determined pursuant to Section (b) below
and without duplication for amounts taken into account under clause
(ii) of the definition of Adjusted Capital Account). Allocations shall
be made as if the Executives' respective interests in the Partnership
were not subject to forfeiture pursuant to Section 11.13 hereof.
Notwithstanding the foregoing, an Executive shall only be allocated
Profits that are not attributable to a Capital Event only to the extent
that such Profits reflect such Executive's entitlement to greater
current or future distribution of Available Cash; and
(b) the Adjusted Capital Account balances of all Partners with
negative Adjusted Capital Account balances (after crediting or debiting
Capital Accounts for Profits, Losses, items thereof, and allocations
pursuant to all other provisions of this Article V for such Fiscal Year
or other fiscal period) will correspond as closely as possible to the
manner in which economic responsibility for any such negative balances
in connection with a liquidation of the Partnership at the end of such
Fiscal Year or other fiscal period would be borne by the Partners under
the terms of the Agreement or any collateral agreement.
(c) Limitation on Loss Allocations. The Losses allocated
pursuant to Section 5.1(b) hereof and the next sentence of this Section
5.1(c) to any Partner for any Fiscal Year shall not exceed the maximum
amount of Losses that may be allocated to such Partner without causing
such Partner to have an Adjusted Capital Account Deficit at the end of
such Fiscal Year. All Losses in excess of the limitation in this
Section 5.1(c) shall be allocated solely to the other Partners in
proportion to their respective Percentage Interests. If no other
Partner may receive an additional allocation of Losses pursuant to the
preceding sentence of this Section 5.1(c), such additional Losses not
allocated pursuant to Section 5.1(b) of this Agreement or the preceding
sentence shall be allocated solely to the Managing General Partner.
5.2 SPECIAL ALLOCATIONS OF PROFITS AND LOSSES.
(a) Minimum Gain Chargeback--Partnership Nonrecourse
Liabilities. If there is a net decrease in Partnership Minimum Gain
during any Partnership taxable year, certain items of income and gain
shall be allocated (on a gross basis) to the Partners in the amounts
and manner described in Section 1.704-2(f) and (j)(2)(i) and (iii) of
the Regulations, subject to the exemptions set forth in Section
1.704-2(f)(2), (3), (4) and (5) of the Regulations. This Section 5.2(a)
is intended to comply with the minimum gain chargeback requirement (set
forth in Section 1.704-2(f) of the Regulations) relating to Partnership
nonrecourse liabilities (as defined in Section 1.704-2(b)(3) of the
Regulations) and shall be so interpreted.
(b) Minimum Gain Chargeback--Partner Nonrecourse Debt. If
there is a net decrease in Partner Minimum Gain during any Partnership
taxable year, certain items of income and gain shall be allocated (on a
gross basis) as quickly as possible to those Partners that had a share
of the Partner Minimum Gain (determined pursuant to Section
1.704-2(i)(5) of the Regulations) in the amounts and manner described
in Section 1.704-2(i)(4), (j)(2)(ii) and (iii) of the Regulations. This
Section 5.2(b) is intended to comply with the minimum gain chargeback
requirement (set forth in Section 1.704-2(i)(4) of the Regulations)
relating to partner nonrecourse debt (as defined in Section
1.704-2(b)(4) of the Regulations) and shall be so interpreted.
(c) Qualified Income Offset. If, after applying Section 5.2(a)
and Section 5.2(b), any Partner has an Adjusted Capital Account
Deficit, items of Partnership income and gain shall be specially
allocated (on a gross basis) to each such Partner in an amount and
manner sufficient to eliminate the Adjusted Capital Account Deficit of
such Partner as quickly as possible. This Section 5.2(c) is intended to
comply with the "qualified income offset" requirement set forth in
Section 1.704-1(b)(2)(ii)(d) of the Regulations and shall be so
interpreted.
21
26
(d) Basis Adjustments. To the extent an adjustment to the tax
basis of any Partnership asset pursuant to Section 734(b) or 743(b) of
the Code is required, pursuant to Section 1.704-1(b)(2)(iv)(m) of the
Regulations, to be taken into account in determining Capital Accounts,
the amount of such adjustment to the Capital Accounts shall be treated
as an item of gain (if the adjustment increases the basis of the asset)
or loss (if the adjustment decreases such basis), and such gain or loss
shall be specially allocated to the Partners in a manner consistent
with the manner in which their Capital Accounts are required to be
adjusted pursuant to such Section of the Regulations.
(e) Nonrecourse Deductions. Nonrecourse Deductions for any
Fiscal Year or other fiscal period shall be allocated: (i) first, among
the Partners up to an amount equal to the sum of the Aggregate Net
Profit Allocations for all of the Partners in proportion to their
respective Aggregate Net Profit Allocations, and (ii) thereafter, among
the Partners in proportion to their Percentage Interests.
(f) Partner Nonrecourse Deductions. Partner Nonrecourse
Deductions shall be allocated pursuant to Section 1.704-2(b)(4) and
(i)(1) of the Regulations to the Partner who bears the economic risk of
loss with respect to the deductions.
5.3 CURATIVE ALLOCATIONS.
The allocations set forth in Section 5.1(c) and Section 5.2(a)
through Section 5.2(f) hereof (the "Regulatory Allocations") are intended to
comply with certain requirements of the Regulations. It is the intent of the
Partners that, to the extent possible, all Regulatory Allocations shall be
offset either with other Regulatory Allocations or with special allocations of
other items of Partnership income, gain, loss, or deduction pursuant to this
Section 5.3. Therefore, notwithstanding any other provisions of this Article V
(other than the Regulatory Allocations), the Managing General Partner shall make
such offsetting special allocations of Partnership income, gain, loss, or
deduction in whatever manner it determines appropriate so that, after such
offsetting allocations are made, each Partner's Capital Account balance is, to
the extent possible, equal to the Capital Account balance such Partner would
have had if the Regulatory Allocations were not part of the Agreement and all
Partnership items were allocated pursuant to Section 5.1(a) and (b) hereof. In
exercising its discretion under this Section 5.3, the Managing General Partner
shall take into account future Regulatory Allocations under Sections 5.2(a) and
5.2(b) that, although not yet made, are likely to offset other Regulatory
Allocations previously made under Sections 5.2(e) and 5.2(f).
5.4 TAX ALLOCATIONS: CODE SECTION 704(C).
(a) In accordance with Code Section 704(c) and the Regulations
thereunder, income, gain, loss and deduction with respect to any
property contributed to the capital of the Partnership shall, solely
for tax purposes, be allocated among the Partners so as to take account
of any variation between the adjusted basis of such property to the
Partnership for federal income tax purposes and its initial Book Value
(computed in accordance with Section 4.4(c)(i) hereof).
(b) If the Book Value of any Partnership asset is adjusted
pursuant to Section 4.4(c)(ii) hereof, subsequent allocations of
income, gain, loss and deduction with respect to such asset shall,
solely for tax purposes, take account of any variation between the
adjusted basis of such asset for federal income tax purposes and its
Book Value in the same manner as under Code Section 704(c) and the
Regulations thereunder.
(c) Any elections or other decisions relating to allocations
made pursuant to this Section 5.4 shall be made by the Managing General
Partner in any manner that reasonably
22
27
reflects the purpose and intention of the Agreement. Allocations
pursuant to this Section 5.4 are solely for purposes of federal, state,
and local taxes and shall not affect or in any way be taken into
account in computing any Partner's Capital Account, or share of
Profits, Losses, and other items or distributions pursuant to any
provision of this Agreement.
5.5 OTHER ALLOCATION RULES.
(a) For purposes of determining the Profits, Losses, or any
other item allocable to any period, Profits, Losses, and any such other
item shall be determined on a daily, monthly, or other basis, as
determined by the Managing General Partner using any permissible method
under Section 706 of the Code and the Regulations thereunder.
(b) For federal income tax purposes, every item of income,
gain, loss, and deduction shall be allocated among the Partners in
accordance with the allocations under Sections 5.1, 5.2, 5.3 and 5.4 of
this Agreement.
(c) The Partners are aware of the income tax consequences of
the allocations made by this Article V and hereby agree to be bound by
the provisions of this Article V in reporting their shares of
Partnership income and loss for income tax purposes.
(d) It is intended that the allocations in Sections 5.1, 5.2,
5.3 and 5.4 of this Agreement effect an allocation for federal income
tax purposes consistent with Section 704 of the Code and comply with
any limitations or restrictions therein.
(e) The Partners agree that their Percentage Interests
represent their respective interests in Partnership profits for
purposes of allocating excess nonrecourse liabilities (as defined in
Section 1.752-3(a)(3) of the Regulations) pursuant to Section
1.752-3(a)(3) of the Regulations.
5.6 DEPRECIATION RECAPTURE.
Pursuant to Regulations Section 1.1245-1(e), to the extent the
Partnership recognizes gain as a result of sale, exchange or other disposition
of Partnership assets which is taxable as ordinary income under Code Section
1245 or Code Section 1250, such ordinary income shall be allocated among the
Partners in the same proportion as the depreciation giving rise to such ordinary
income was allocable among the Partners. In no event, however, shall any Partner
be allocated to ordinary income hereunder in excess of the amount of gain
allocated to the Partner under this Agreement. Any ordinary income that is not
allocated to a Partner due to the gain limitation described in the previous
sentence shall be allocated among those Partners whose shares of total gain on
the sale, exchange or other disposition of the property exceed their respective
shares of depreciation from those Partnership assets being disposed of, in
proportion to their relative shares of the total allocable gain.
ARTICLE VI
DISTRIBUTIONS
6.1 DISTRIBUTIONS.
(a) The Managing General Partner shall review the
Partnership's accounts at the end of each calendar quarter to determine
whether distributions are appropriate. On each Distribution Date
(commencing with the second Fiscal Year quarter following the Effective
Date hereof or, in the Managing General Partner's sole discretion, the
first Fiscal Year quarter
23
28
following the Effective Date hereof), the Managing General Partner
shall make such distributions of, and to the extent of, Available Cash
calculated as of the end of such Fiscal Year quarter, in accordance
with Section 6.1(b) hereof.
(b) The distributions under this Section 6.1 are subject,
first, to any and all of the Partnership's obligations to lenders,
indebtedness or other obligations, including, without limitation, under
secured or unsecured credit facilities of every kind and nature (which
may include, among other things, additional interest obligations, exit
fees, equity kickers and similar obligations or payments) and, second,
to the applicability of Sections 4.2(b), 4.2(c), 4.3(b), 4.3(c), 13.3
or 13.4. Subject to the immediately preceding sentence, distributions
of Available Cash shall be made to the Partners in the manner set forth
below:
(i) With respect to Available Cash that does not
constitute net proceeds from a Capital Event:
(A) First, to Partners entitled to receive
Class B Preference Amounts, any Undistributed Class B
Preference Amounts, pro rata in proportion to their
respective Undistributed Class B Preference Amounts;
(B) Second, to Partners entitled to receive
Class A Preference Amounts, any Undistributed Class A
Preference Amounts, pro rata in proportion to their
respective Undistributed Class A Preference Amounts;
and
(C) Third, to Partners pro rata in
proportion to their respective Percentage Interests;
(ii) With respect to Available Cash constituting net
proceeds from a Capital Event:
(A) First, to Partners entitled to receive
Class B Preference Amounts, any Undistributed Class B
Preference Amounts, pro rata in proportion to their
respective Undistributed Class B Preference Amounts;
(B) Second, to Partners entitled to receive
Class A Preference Amounts, any Undistributed Class A
Preference Amounts, pro rata in proportion to their
respective Undistributed Class A Preference Amounts;
(C) Third, (1) first, to Partners to the
extent of their respective Undistributed Class B
Capital, pro rata in proportion to the Undistributed
Class B Capital, if any, of all Partners, until such
Undistributed Class B Capital is reduced to zero, (2)
second, to Partners (other than the Executives) to
the extent of their respective Undistributed Class A
Capital, pro rata in proportion to the Undistributed
Class A Capital, if any, of all Partners (other than
the Executives), until such Undistributed Class A
Capital is reduced to zero, and (3) third, to the
Executives, to the extent of their respective
Undistributed Class A Capital, pro rata in proportion
to the Undistributed Class A Capital, if any, of all
Executives, until such Undistributed Class A Capital
is reduced to zero; provided, that, (x) the amount
available to Partners under clause (1) hereof shall
be equal to the lesser of (I) the amount available
for distribution to Partners under this subsection
(C) and (II) Undistributed Class B Capital as of the
date of the distribution (but before giving effect to
a such distribution) invested in the Partnership's
asset that is the subject of the Capital Event for
which the proceeds are being distributed, and (y) the
amount available to Partners under clauses (2)
24
29
and (3) hereof shall be the difference between the
amount available for distribution under this
subsection (C) and the amounts paid to Partners under
clause (1) hereof, but such amount shall not be less
than zero;
(D) Fourth, to the Partners, to the extent
of their respective Undistributed Tier 2 Capital, pro
rata in proportion to their respective Undistributed
Tier 2 Capital until the Undistributed Tier 2 Capital
is reduced to zero; and
(E) Fifth, to the Partners, pro rata in
proportion to their respective Percentage Interests.
(iii) Any incentive-based management fees payable
under property management agreements as described in Section
7.16 of this Agreement (i) shall be calculated based upon
Available Cash prior to any distributions pursuant to Section
6.1(b) and (ii) shall be paid in the first Fiscal Year quarter
of the following Fiscal Year (or such later date as the
financial statements are available for the prior Fiscal Year
pursuant to Article IX hereof) after any distributions
pursuant to Sections 6.1(b)(i)(A) and (B), or Sections
6.1(b)(ii)(A) and (B), as applicable, and prior to any
distributions pursuant to Sections 6.1(b)(i)(C), or Sections
6.1(b)(ii)(C), (D) or (E), as applicable; provided, however,
that upon a Capital Event which results in the termination of
a property management agreement described in Section 7.16 of
this Agreement, any outstanding incentive-based management
fees under such terminated property management agreement shall
be payable upon distribution of proceeds of such Capital Event
pursuant to Section 6.1(b)(ii) hereof.
(c) Class A Preference Amounts and Class B Preference Amounts
are, by their terms, calculated on a Fiscal Year basis. Accordingly,
Fiscal Year quarter distributions in any Fiscal Year shall be made
based upon the Managing General Partner's reasonable calculation of
such Preference Amounts on a quarterly basis. In the first Fiscal Year
quarter of the following Fiscal Year (or such later date as the
financial statements are available for the prior Fiscal Year pursuant
to Article IX hereof) distributions for such prior Fiscal Year shall be
adjusted as necessary in order for the Partners to receive their
respective Preference Amounts in accordance with the terms hereof.
6.2 PAYMENTS NOT DEEMED DISTRIBUTIONS.
Any amounts paid pursuant to Section 7.4, Section 7.11 or
Section 7.16(a) of this Agreement shall not be considered distributions for
purposes of this Agreement and shall be treated as deductible items for tax
purposes and for purposes of determining Profit or Loss of the Partnership.
6.3 WITHHELD AMOUNTS.
(a) Notwithstanding any other provision of this Article VI to
the contrary, each Partner hereby authorizes the Partnership to
withhold and to pay over, or otherwise pay, any withholding or other
taxes payable by the Partnership with respect to such Partner as a
result of such Partner's participation in the Partnership. If and to
the extent that the Partnership shall be required to withhold or pay
any such taxes, such Partner shall be deemed for all purposes of this
Agreement to have received a payment from the Partnership as of the
time such withholding or tax is paid, which payment shall be deemed to
be a distribution with respect to such Partner's Partnership Interest
to the extent that the Partner (or any successor to such Partner's
Partnership Interest) is then entitled to receive a distribution.
25
30
(b) To the extent that the aggregate of such payments to a
Partner for any period exceeds the distributions to which such Partner
is entitled for such period, the amount of such excess shall be
considered a loan from the Partnership to such Partner. Such loan shall
bear interest (which interest shall be treated as an item of income to
the Partnership) at the lesser of the maximum rate permitted by law or
the rate of interest per annum most recently established by Citibank,
N.A., in New York, New York, as such bank's general reference rate of
interest (which rate may or may not be the lowest rate of interest then
charged by such bank), as determined hereunder from time to time, until
discharged by such Partner by repayment, which may be made in the sole
discretion of the Managing General Partner out of distributions to
which such Partner would otherwise be subsequently entitled.
(c) Any withholdings authorized by this Section 6.3 shall be
made at the maximum applicable statutory rate under the applicable tax
law unless the Managing General Partner shall have received an opinion
of counsel or other evidence satisfactory to the Managing General
Partner to the effect that a lower rate is applicable, or that no
withholding is applicable.
ARTICLE VII
MANAGEMENT OF THE PARTNERSHIP
7.1 DESIGNATION AND AUTHORITY OF MANAGING GENERAL PARTNER AND GENERAL
PARTNER.
(a) The Partners hereby designate CGLH GP as the managing
general partner of the Partnership. The Partners hereby designate IHC
GP as the general partner of the Partnership.
(b) The overall management and control of the business and
affairs of the Partnership shall be vested in the Managing General
Partner and the Managing General Partner shall have all of the power
and authority of a general partner of the Partnership granted under the
Act and pursuant to this Agreement. Except as otherwise provided in
this Agreement and subject specifically to Section 7.2, all decisions
concerning the management of the business and affairs of the
Partnership and its assets shall be made exclusively by the Managing
General Partner, in accordance with the objectives and purposes of the
Partnership set forth in Section 3.1 hereof. The Managing General
Partner shall be authorized to execute documents and take actions on
behalf of the Partnership, in accordance with its power and authority
granted under the Delaware Act and pursuant to this Agreement, which
shall be binding on the Partnership and on which third parties shall be
entitled to rely. The General Partner shall not take part in the
control (within the meaning of the Delaware Act) of the Partnership's
business, transact any business in the Partnership's name, or have the
power to sign documents for or otherwise bind the Partnership other
than as expressly set forth in this Agreement or as directed by the
Managing General Partner in writing, and the General Partner shall have
only the power and authority expressly granted it pursuant to this
Agreement or by the Managing General Partner in writing. Without
limiting the foregoing, the General Partner hereby disclaims any power
or authority that may be granted to a general partner of a partnership
pursuant to the Delaware Act that is not also granted to the General
Partner under this Agreement or by the Managing General Partner in
writing. Any grant of power or authority to the General Partner
pursuant to this Agreement or by the Managing General Partner is
non-exclusive and shall not divest the Managing General Partner of any
such power or authority. Each of the Managing General Partner and the
General Partner shall amend or otherwise modify its organizational and
charter documents or take such other action to satisfy or comply with
bankruptcy-remote, special purpose entity requirements of lenders, or
other entities extending credit, to the Partnership or its Controlled
or Non-Controlled Entities. The Partners agree that this Agreement and
the Certificate may be amended or otherwise modified or such other
action taken, as necessary to satisfy or otherwise comply with
26
31
bankruptcy-remote, special purpose entity requirements of lenders, or
other entities extending credit, to the Partnership or its Controlled
or Non-Controlled Entities.
(c) Without in any way limiting the provisions of Section
7.1(b), the General Partner shall submit for approval by the Managing
General Partner: (i) a proposed business plan within 60 days of the
effective date of this Agreement for the current Fiscal Year; and (ii)
thereafter, on or before November 1 of each year that this Agreement
shall be in effect, a proposed business plan for the next succeeding
Fiscal Year. If the General Partner shall fail timely to submit any
such proposed business plan when due, the Managing General Partner may
submit a business plan for the applicable Fiscal Year, and any costs
incurred by the Managing General Partner in connection therewith shall
be deducted from distributions to the General Partner under Section 6.1
hereof. Simultaneously with the submission of a proposed business plan
to the Managing General Partner, the General Partner shall distribute
copies of the proposed business plan (marked "proposed") to the other
Partners for informational purposes. Each such business plan shall
contain a proposed operating budget and a proposed capital budget for
the Hotels and other, related assets, or interests in Hotels and other,
related assets, presently owned and managed by the Partnership, a
strategic plan for new acquisitions of Hotels and other, related
assets, or interests in Hotels and other, related assets, and potential
funding sources therefor. Each such business plan shall specify
material assumptions contained therein. Each shall be sufficiently
detailed so as to allow for the reasonable review thereof. The General
Partner shall not be deemed to have made any guarantee, warranty or
representation whatsoever, other than that the General Partner used
good faith efforts in preparing such proposed plans and diligently
reviewed and assessed the information provided by Hotel managers, in
connection with such plans since the Partners acknowledge that such
plans are intended to set forth reasonable performance objectives and
goals based upon facts and circumstances known by the General Partner
at the time of such plans' preparation. If an annual business plan is
not approved prior to December 31 of the immediately preceding Fiscal
Year, the Partnership shall be managed and operated in accordance with
the approved annual business plan for such immediately preceding Fiscal
Year with each expense item increased (but not decreased) by the
average Consumer Price Index for all Urban Consumers for the
immediately preceding calendar year as reported by the U.S. Department
of Labor Bureau of Labor Statistics ("CPI") and each revenue item
increased (but not decreased) by Market Tract RevPAR growth percentage
for the immediately previous 12-month period, as published by Xxxxx
Travel Research, but in no event less than CPI.
7.2 MAJOR DECISIONS.
(a) All Major Decisions with respect to the Partnership's
business shall require the prior written approval of all the Partners
other than the Executives. The term "Major Decision," as used in this
Agreement, means any decision with respect to the following matters at
any time:
(i) to do any act which would make it impossible to carry on
the ordinary business of the Partnership;
(ii) to possess Partnership property for other than a
Partnership purpose or assign any rights in specific Partnership
property for other than a Partnership purpose;
(iii) to change or reorganize the Partnership into any other
legal form or materially change the purpose of the Partnership set
forth in Section 3.1 hereof;
(iv) to require any Limited Partner to make any contribution
to the capital of the Partnership not provided for hereunder (it being
understood that additional capital contributions (including, without
limitation, those described in Sections 4.2 and 4.3 hereof) are
expressly provided for hereunder);
27
32
(v) except as otherwise permitted herein, to admit any Person
as a partner of the Partnership or transfer the obligation to make
Class B Capital Contributions or the right to receive Class B
Preference Amounts and Undistributed Class B Preference Amounts;
(vi) to permit the Partnership to incur any indebtedness,
direct or indirect, absolute or contingent; provided, however, the
Partners agree that: (A) the incurrence by the Partnership of any
single indebtedness to any lender (an affiliate of a Partner or
otherwise), on market terms, and secured by an interest in property of
the Partnership, with a loan to value ratio of not greater than
0.85:1.00 shall not be a Major Decision, if the Partnership exercises
commercially reasonable efforts to seek such indebtedness from more
than one unaffiliated institution regularly engaged in the business of
making loans secured by interests in real property; and (B) the
incurrence by the Partnership of unsecured debt shall not be a Major
Decision; or
(vii) to approve any acquisition by the Partnership of a Hotel
or a direct or indirect interest in a Hotel.
7.3 CERTIFICATE OF LIMITED PARTNERSHIP.
The Managing General Partner shall cause the Certificate to be
filed with the Secretary of State of Delaware as required by the Delaware Act
and shall cause to be filed such other certificates or documents (including,
without limitation, copies, amendments, or restatements of this Agreement) as
may be determined by the Managing General Partner to be reasonable and necessary
or appropriate for the formation, qualification, or registration and operation
of a limited partnership (or a partnership in which Limited Partners have
limited liability) in the State of Delaware and in any other state where the
Partnership may elect to do business.
7.4 COMPENSATION AND REIMBURSEMENT OF MANAGING GENERAL PARTNER AND
GENERAL PARTNER.
Neither the Managing General Partner nor the General Partner
shall be compensated for services rendered to the Partnership as managing
general partner or as general partner, as applicable, unless such compensation
has previously been approved by all of the Partners. The Managing General
Partner shall, however, be reimbursed by the Partnership for all reasonable
expenditures incurred by the Managing General Partner on the Partnership's
behalf. The General Partner shall be reimbursed by the Partnership for all
reasonable expenditures incurred by the General Partner on the Partnership's
behalf that have been approved in advance by the Managing General Partner.
7.5 PARTNERSHIP FUNDS.
Subject to the terms and provisions of the management
agreements entered into by the Partnership for the management of the Hotels and
other, related assets, the funds of the Partnership shall be deposited in such
interest-bearing Partnership account or Partnership accounts as are designated
by the Managing General Partner. All withdrawals from or charges against such
accounts shall be made by the Managing General Partner or by its representative.
Funds of the Partnership may be invested as determined by the Managing General
Partner in accordance with the terms and provisions of this Agreement.
7.6 RETURN OF CAPITAL.
Neither the Managing General Partner nor the General Partner
shall be entitled to the withdrawal or return of its Capital Contribution except
to the extent, if any, that distributions made
28
33
pursuant to this Agreement or upon termination of the Partnership may be
considered as such by law, and then only to the extent provided for in this
Agreement.
7.7 DUTIES.
The Managing General Partner shall manage the Partnership and
its business and affairs in accordance with the terms of this Agreement to the
best of its ability, and shall use its good faith efforts to carry out the
business of the Partnership in the best interest of the Partnership. The
Managing General Partner shall devote itself to the business of the Partnership
to the extent that it determines is necessary for the efficient discharge of its
obligations hereunder. To the extent that the General Partner acts for and on
behalf of the partnership as expressly granted herein or by the Manager General
Partner, the General Partner shall act to the best of its ability, and shall use
its good faith efforts to carry out the business of the Partnership in the best
interest of the Partnership. The General Partner shall devote itself to its
duties to the extent that the General Partner determines is necessary for the
efficient discharge of its duties.
7.8 TRANSACTIONS WITH AFFILIATES.
Subject to the provisions of Section 7.2 hereof, the terms to
the Partnership of any transaction, agreement or contract involving the
Partnership with any Affiliate of a Partner shall be competitive with the terms
of similar transactions, agreements or contracts obtained by persons in the same
business as the Partnership in arms-length agreements with unrelated parties.
7.9 OUTSIDE ACTIVITIES.
The provisions regarding outside activities of the Managing
General Partner and the General Partner are set forth in Section 8.3 of this
Agreement.
7.10 RESOLUTION OF CONFLICTS OF INTEREST.
Unless otherwise expressly provided in this Agreement or any
other agreement contemplated herein, whenever a conflict of interest exists or
arises between the General Partner, or any of its Affiliates, or the Managing
General Partner, or any of its Affiliates, on the one hand, and the Partnership
or any Limited Partner, on the other hand, any action taken by the Managing
General Partner or the General Partner, as the case may be, in the absence of
bad faith by such entity, and in the case of the General Partner, pursuant to an
express grant of authority under this Agreement or by the Managing General
Partner in writing, shall not constitute a breach of this Agreement or any other
agreement contemplated herein or a breach of any standard of care or duty
imposed herein or therein or under the Delaware Act or any other applicable law,
rule, or regulation unless such action would have constituted a breach of the
Agreement in the absence of such conflict of interest.
7.11 INDEMNIFICATION.
(a) The Partnership shall indemnify and hold harmless the
Managing General Partner and General Partner and any director, officer,
employee, agent, or representative of the Managing General Partner or
the General Partner, against all liabilities, losses, and damages
incurred by any of them by reason of any act performed or omitted to be
performed in the name of or on behalf of the Partnership, or in
connection with the Partnership's business, including attorneys' fees
and any amounts expended in the settlement of any claims or
liabilities, losses, or damages, to the fullest extent permitted by the
Delaware Act, provided, that in the case of the General Partner, the
General Partner has not exceeded its power and authority granted under
this Agreement or by the Managing General Partner in writing. The
negative disposition of any action, suit or proceeding by judgment,
order, settlement, conviction or upon a plea of nolo
29
34
contendere, or its equivalent, shall not, of itself, create a
presumption that the indemnified Person has engaged in gross
negligence, fraud, willful misconduct, or a material breach of this
Agreement.
(b) The Partnership shall indemnify and hold harmless the
Limited Partners, employee, agent, or representative of the
Partnership, any Person who is or was serving at the request of the
Partnership or the Managing General Partner as a director, officer,
partner, trustee, employee, agent, or representative of another
corporation, partnership, joint venture, trust, or other enterprise, to
the fullest extent permitted by the Delaware Act. The negative
disposition of any action, suit or proceeding by judgment, order,
settlement, conviction or upon a plea of nolo contendere, or its
equivalent, shall not, of itself, create a presumption that the
indemnified Person has engaged in gross negligence, fraud, willful
misconduct, or a material breach of this Agreement.
(c) Notwithstanding anything to the contrary contained in this
Section 7.11, an indemnified Person shall not be entitled to
indemnification under Section 7.11 with respect to any claim, issue or
matter in which it has engaged in gross negligence, fraud, willful
misconduct, or a material breach of this Agreement.
(d) Notwithstanding any of the provisions to this Section 7.11
to the contrary, no amount shall be paid to any indemnitee under this
Section 7.11 until the obligations of the Partnership with respect to
any indebtedness of the Partnership are paid or satisfied in full.
However, if such indemnitee would otherwise be entitled to be paid
pursuant to this Section 7.11 but for the preceding sentence, an amount
of cash equal to the amount which would otherwise be paid to such
indemnitee shall be held by the Partnership in an escrow account until
such amounts may be paid to such indemnitee pursuant to this Section
7.11 or as otherwise required to be paid to satisfy claims against the
Partnership if there are no other available Partnership assets to pay
such claims.
7.12 LIABILITY OF MANAGING GENERAL PARTNER AND THE GENERAL PARTNER.
The Managing General Partner may exercise any of the powers
granted to it by this Agreement and perform any of the duties imposed upon it
under the Delaware Act and/or hereunder either directly or by or through its
directors, officers, employees, agents, or representatives. The General Partner
may exercise any of the powers expressly granted to it, and perform any of the
duties expressly imposed upon it, under this Agreement or by the Managing
General Partner in writing either directly or by or through its directors,
officers, employees, agents, or representatives. Neither the Managing General
Partner nor its directors, officers, employees, agents, or representatives shall
be liable to the Partnership or the Limited Partners for errors in judgment or
for any acts or omissions that do not constitute gross negligence, fraud, or
willful or wanton misconduct. Neither the General Partner nor its directors,
officers, employees, agents, or representatives shall be liable to the
Partnership or the Limited Partners for errors in judgment or for any acts or
omissions with respect to matters within its power and authority expressly
granted under this Agreement or by the Managing General Partner in writing, that
do not constitute gross negligence, fraud, or willful or wanton misconduct.
7.13 RELIANCE BY MANAGING GENERAL PARTNER AND THE GENERAL PARTNER.
(a) Each of the General Partner and the Managing General
Partner may rely and shall be protected in acting or refraining from
acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, bond, debenture, or
other paper or document believed by it to be genuine and to have been
signed or presented by the proper party or parties.
30
35
(b) Each of the Managing General Partner and the General
Partner may consult with legal counsel, accountants, appraisers,
management consultants, investment bankers, and other consultants and
advisers selected by it, and any opinion of any such Person as to
matters which the Managing General Partner or the General Partner, as
the case may be, believes to be within such Person's professional or
expert competence shall be full and complete authorization and
protection in respect of any action taken or suffered or omitted by the
Managing General Partner or the General Partner, as the case may be,
hereunder in good faith and in accordance with such opinion.
7.14 INSURANCE.
The General Partner, on behalf of the Partnership and at the
Partnership's cost and expense, shall, during the entire term hereof, obtain,
maintain and keep in full force and effect, such insurance coverage as the
Managing General Partner reasonably deems advisable.
7.15 ACQUISITION OF REAL PROPERTY; INVESTMENT BANKING; FINANCING.
(a) The Partnership intends to acquire, directly or through
Controlled Entities and non-Controlled Entities, Hotels and other,
related assets or interests in Hotels and other, related assets with an
aggregate Value of $300,000,000.00. The Partnership shall not fail in
its purposes if the aggregate Value of such Hotels and other, related
assets or interests in Hotels and other, related assets is less than,
greater than or equal to, $300,000,000.00, and the power and authority
of the Partnership and the Managing General Partner hereunder shall in
no way be diminished or otherwise affected thereby.
(b) Notwithstanding any provision in this Agreement to the
contrary, the Managing General Partner is hereby authorized, on behalf
of the Partnership and at the Partnership's cost and expense, to enter
into negotiations for acquisitions of Hotels and other, related assets
and interests in Hotels and other, related assets, investigate
potential funding sources for such acquisitions and retain an
investment bank or similar financial institution (a "Financial
Institution") to provide investment banking, advisory, underwriting or
other services in connection with the acquisition or disposition of
Hotels and/or other, related assets and interests in Hotels and other,
related assets, and any public offering of securities of the
Partnership or its Controlled Entities (and non-Controlled Entities) or
any secondary offering of securities of the Partnership or its
Controlled Entities (and non-Controlled Entities) (collectively, the
"Investment Banking Services"). The Managing General Partner, in its
discretion, may direct the General Partner to enter into negotiations
for the acquisitions of Hotels and other, related assets and to
investigate potential funding sources for such acquisitions. For the
purposes of Section 7.2, the right to negotiate pursuant to this
Section shall not be deemed an implied consent to the consummation of
any proposed transaction that may be the subject of such negotiation.
(c) If the Partnership seeks to retain a Financial Institution
other than Xxxxxx Brothers Holdings Inc., or any of its affiliates or
its subsidiaries (collectively, "Xxxxxx Brothers"), the Partnership
shall deliver written notice of such intended retention of another
Financial Institution (the "Notice") to a Senior Vice President of the
Principal Transactions Group of Xxxxxx Brothers, setting forth the
identity of such other Financial Institution, the nature of the
engagement or Investment Banking Services sought and offered, a
description (including timing) of the contemplated transaction(s), and
the fees charged by, or payable to, such Financial Institution. For a
period of fifteen days after the date that Xxxxxx Brothers shall have
received such notice, Xxxxxx Brothers shall have the right to advise
the Partnership that Xxxxxx Brothers will perform such Investment
Banking Services on the terms set forth in the Notice; provided,
however, that if the fees to be paid such Financial Institution are
less than the market rate fees charged for the contemplated
transaction, the fees payable to Xxxxxx Brothers
31
36
shall be the market rate fees. The Partners agree, for the purposes of
this Agreement, that listed on Exhibit C annexed hereto and made a part
hereof are market rate fees for the types of transactions described
thereon. If Xxxxxx Brothers declines the engagement set forth in the
Notice, the Partnership may engage (i) the Financial Institution set
forth in the Notice on the terms set forth therein or (ii) such other
Financial Institution to provide the Investment Banking Services set
forth in the Notice in connection with the contemplated transaction(s)
described therein for fees not in excess of market rate fees. Xxxxxx
Brothers shall be a third party beneficiary of this Section and shall
have the right to enforce the terms of this Section to their fullest
extent.
(d) For so long as CGLH GP is the Managing General Partner,
CGLH GP shall use its good faith efforts to obtain, on behalf of the
Partnership, equity and/or debt financing for the acquisition of Hotels
and other, related assets, on market terms.
7.16 MANAGEMENT OF THE REAL PROPERTY.
(a) The Corporation shall have the option to manage, or have
one or more of its Affiliates manage, the Hotels and other, related
assets owned by the Partnership or its Controlled Entities pursuant to
one or more property management agreements, which management agreements
shall be substantially in the form annexed hereto as Exhibit D (the
Corporation, or one or more Affiliates in its capacity as manager, the
"Manager"). The Partners agree that the terms of such form property
management agreement are subject to modification in connection with the
specific requirements and financial performance of a particular Hotel
and its other, related assets, which modifications shall be agreed upon
before the acquisition of such Hotel and its other, related assets. For
the management of a Hotel and its other, related assets, Manager shall
be entitled to receive an annual base management fee and an incentive
based management fee, on terms and conditions provided in the property
management agreement covering such Hotel and other, related assets. In
addition to any other terms and conditions set forth in any such
management agreement, any incentive based management fee shall be
payable only after the Partners have been paid their respective Class A
Preference Amounts and Class B Preference Amounts in accordance with
Section 6.1(b) hereof. Each property management agreement shall provide
that the Manager shall not have the right to receive termination
payments or fees for the termination of a property management agreement
upon the sale, transfer or other disposition of the subject Hotel (and
its other, related assets) if the original acquisition of such Hotel
(and its other, related assets) was identified by the Partnership, a
Controlled Entity or a non-Controlled Entity, prior to the acquisition
thereof as a short-term acquisition. In addition, each property
management agreement shall provide that the payment of termination
payments or fees, if any, for the termination of a property management
agreement upon the sale, transfer or other disposition of the subject
Hotel (and its other, related assets) may be deferred (without
interest, premium or penalty) for one year from the termination of such
property management agreement and, no termination payments or fees
shall be due under the terminated property management agreement if, at
or before the end of such one-year period, the Partnership, a
Controlled Entity or a non-Controlled Entity enters into another
property management agreement, in substantially the same form of
property management agreement as the agreement being terminated, with
such Manager or such Manager's Affiliate covering a Hotel (and its
other, related assets), and the ratio of management fees payable under
such other property management agreement to the Class B Capital
Contributions invested in such Hotel (and its other, related assets) is
equal to or greater than such ratio with respect to the terminated
property management agreement and the related Hotel (and other, related
assets). In addition, each property management agreement with a Manager
shall provide that, upon the occurrence of an event described in
Section 4.3(c), the Manager shall look to the defaulting IHC Partner
for payment of the applicable termination payments or fees, if any.
Nothing set forth in this Section 7.16 shall affect the rights of IHC
GP and IHC LP under Section 7.2 of this Agreement.
32
37
(b) For so long as CGLH LP, or its affiliate, shall remain a
partner of the Partnership, the Partnership shall retain CG Asset
Management Company LLC as the asset manager of the Hotels and other,
related assets pursuant to an Asset Management Agreement substantially
in the form annexed hereto as Exhibit E.
ARTICLE VIII
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
8.1 LIMITATION OF LIABILITY.
The Limited Partner shall have no liability under this
Agreement except as provided herein or under the Delaware Act.
8.2 MANAGEMENT OF BUSINESS.
The Limited Partner shall not take part in the control (within
the meaning of the Delaware Act) of the Partnership's business, transact any
business in the Partnership's name, or have the power to sign documents for or
otherwise bind the Partnership other than as specifically set forth in this
Agreement. Notwithstanding anything stated or implied to the contrary in this
Agreement, neither of the Executives shall have any voting, consent or approval
rights as a limited partner of this Partnership or otherwise under this
Agreement, the Delaware Act or otherwise, and each of the Executives hereby
disclaims any such rights to the fullest extent permitted by law. If an
Executive shall nevertheless have voting, consent or approval rights with
respect to Partnership affairs under this Agreement, the Delaware Act or
otherwise, such Executive shall, in consideration of the rights and interests
granted hereunder, be deemed to have irrevocably appointed the Managing General
Partner, as his true and lawful proxy and attorney-in-fact, with full power of
substitution and re-substitution, to exercise any and all such rights, effective
for the term of the Partnership (including any extensions thereof and the term
of any wind-up following dissolution). Nothing herein shall preclude an
Executive from requesting an audit pursuant to Section 9.3 hereof or reviewing
the books and records of the Partnership in accordance with the terms hereof.
The Executives shall execute such further documentation as the Managing General
Partner may reasonably deem necessary to evidence such irrevocable proxies.
Notwithstanding anything contained in the Agreement to the contrary, this
Agreement shall not be amended without the consent of each Person materially and
adversely affected if such amendment would (i) convert a Limited Partner's
Partnership Interest into a General Partner's Partnership Interest, (ii) modify
the limited liability of a Limited Partner, or (iii) alter the interest of a
Partner in Profits, Losses, other items of income, gain, loss and deduction, or
any Partnership distributions, but only to the extent that such amendment has a
disproportionately larger adverse effect on such Person as compared with the
other Partners.
8.3 OUTSIDE ACTIVITIES.
A Partner (including the Managing General Partner and the
General Partner) or any Affiliate thereof, and any director, officer, employee,
agent, or representative of such Partner or any Affiliate thereof, shall be
entitled to and may have business interests and engage in business activities in
addition to those relating to the Partnership, including business interests and
activities in direct competition with the Partnership. Neither the Partnership
nor any of the other Partners (including the Managing General Partner and the
General Partner) shall have any rights by virtue of this Agreement in any
business ventures of a Partner, any Affiliate thereof, or any director, officer,
employee, agent, or representative of such Partner or any Affiliate thereof.
33
38
8.4 RETURN OF CAPITAL.
The Limited Partner shall not be entitled to the withdrawal or
return of its Capital Contribution except to the extent, if any, that
distributions made pursuant to this Agreement or upon termination of the
Partnership may be considered as such by law and then only to the extent
provided for in this Agreement.
ARTICLE IX
BOOKS, RECORDS, ACCOUNTING AND REPORTS
9.1 RECORDS AND ACCOUNTING.
The Managing General Partner shall keep or cause to be kept
appropriate books and records with respect to the Partnership's business, which
shall at all times be kept at the principal office of the Partnership or such
other office as the Managing General Partner may designate for such purposes.
Any books and records maintained by the Partnership in the regular course of its
business, including books of account and records of Partnership proceedings, may
be kept on any information storage device, provided that the books and records
so kept are convertible into clearly legible written form within a reasonable
period of time. The General Partner shall at no cost to the Partnership provide
day-to-day accounting services to the Partnership and its Controlled Entities,
and shall prepare financial and other reports reasonably requested by the
Managing General Partner. The books of the Partnership shall be maintained for
financial reporting purposes on the method of accounting approved by the
Managing General Partner in its reasonable discretion.
9.2 FISCAL YEAR.
The fiscal year of the Partnership shall be the calendar year
(or relevant portion thereof with respect to the first and last years of the
Partnership) (the "Fiscal Year") for tax, accounting and other purposes.
9.3 REPORTS.
The General Partner shall deliver to each Partner, at the
Partnership's expense, not later than 90 days following the end of each Fiscal
Year, a balance sheet, an income statement, and an annual statement of source
and application of funds of the Partnership for such Fiscal Year. In addition to
any and all other reports and business plans required hereunder, the General
Partner shall deliver to the Managing General Partner such reports as set forth
on Exhibit F hereof. The General Partner shall deliver to the Managing General
Partner: (i) weekly reports listed on Exhibit F hereof within seven days
following the end of such weekly period; (ii) monthly reports listed on Exhibit
F hereof within 30 days following the end of such monthly period; and (iii)
annual reports listed on Exhibit F hereof within 90 days following the end of
such annual period. Such reports shall be available to Partners upon request.
Upon the request of a Majority Interest, such financial statements shall be
audited at Partnership expense by a firm of independent public accountants
selected by the Managing General Partner.
34
39
ARTICLE X
TAX MATTERS
10.1 PREPARATION OF TAX RETURNS.
The General Partner, under the supervision of the Managing
General Partner, shall arrange for the preparation and timely filing of all
returns of Partnership income, gains, deductions, losses and other items
necessary for federal, state and local income tax purposes and, in connection
therewith, the Managing General Partner shall make available to the General
Partner Partnership records necessary therefor. A copy of the Partnership's
federal income tax return will be furnished to all Partners at least 15 days
before such tax return is actually filed for their review and comment (the
Managing General Partner shall consider and may incorporate reasonable comments
made by the Partners), but in no event later than 120 days after the end of each
Fiscal Year. The classification, realization and recognition of income, gains,
losses and deductions and other items shall be on the accrual method of
accounting for federal income tax purposes, as the Managing General Partner
shall determine in accordance with applicable law. The Managing General Partner
in its sole discretion may pay state and local income taxes attributable to
operations of the Partnership and treat such taxes as an expense of the
Partnership. The Managing General Partner shall promptly (i) send to each
Partner on a quarterly basis an estimate of the taxable income of such Partner,
(ii) send to each Limited Partner copies of all notices and other written
documents sent to or received from any taxing authority, (iii) consult with each
Limited Partner before making or implementing any material tax election or other
material tax decision affecting the Partnership or any Partner or the defense,
resolution or settlement of any material tax controversy described in Section
10.3 and (iv) furnish to each Limited Partner copies of each of the federal,
state and local income tax returns at least 15 days prior to the filing thereof,
and such other tax and related information it may reasonably request from time
to time.
10.2 TAX ELECTIONS.
(a) Except as otherwise provided herein, the Managing General
Partner shall determine whether to make any election available to the
Partnership under the Code. In connection with any transfer of a
Partnership Interest permitted under Article XI hereof, the Managing
General Partner shall cause the Partnership at the written request of
the transferor or transferee, on behalf of a Partnership and at the
time and in the manner provided in Regulations Section 1.754-1(b), to
make an election to adjust the basis of the Partnership's property in
the manner provided in Sections 734(b) and 743(b) of the Code, and such
transferee shall pay all costs incurred by the Partnership in
connection therewith, including reasonable attorney's and accountant's
fees.
(b) Each of the Executives shall make a timely election under
Section 83(b) of the Code with respect to income from the Partnership.
10.3 TAX CONTROVERSIES.
Subject to the provisions hereof, CGLH GP is designated the
"tax matters partner" (as defined in Section 6231 of the Code), and is
authorized and required to represent the Partnership, at the Partnership's
expense, in connection with all examinations of the Partnership's affairs by tax
authorities, including resulting administrative and judicial proceedings, and to
expend Partnership funds for professional services and costs associated
therewith. Each Partner agrees to cooperate with CGLH GP in connection with such
proceedings. Notwithstanding the above, CGLH GP shall not extend the statute of
limitations with respect to any taxable years of the Partnership without the
consent of all the Partners.
35
40
10.4 ORGANIZATIONAL EXPENSES.
The Partnership shall elect to deduct expenses incurred in
organizing the Partnership ratably over a 60-month period as provided in Section
709 of the Code.
10.5 TAXATION AS A PARTNERSHIP.
No election shall be made by the Partnership or any Partner
for the Partnership to be excluded from the application of any of the provisions
of Subchapter K, Chapter 1 of Subtitle A of the Code or from any similar
provisions of any state tax laws.
ARTICLE XI
TRANSFERS OF PARTNERSHIP INTERESTS
11.1 TRANSFER RESTRICTIONS.
(a) No Partnership Interest shall be transferred, in whole or
in part, except in accordance with the terms and conditions set forth
in Sections 11.2, 11.3, 11.4, 11.5, 11.6, 11.7, 11.8, 11.9 and 11.10.
(b) Any transfer or purported transfer of any Partnership
Interest not made in accordance with this Article XI shall be null and
void. An alleged transferee shall have no right to require any
information or account of the Partnership's transactions or to inspect
the Partnership's books. The Partnership shall be entitled to treat the
alleged transferor of a Partnership Interest as the absolute owner
thereof in all respects, and shall incur no liability to any alleged
transferee for distributions to the Partner owning such Partnership
Interest of record or for allocations of income, gain, losses,
deductions or credits or for transmittal of reports and notices
required to be given to holders of Partnership Interests. The term
"transfer," when used in this Article XI with respect to a Partnership
Interest, includes a sale, assignment, gift, pledge, encumbrance,
hypothecation, mortgage, exchange, or any other disposition or
transfer, whether voluntarily or by operation of law, at judicial sale
or otherwise. Neither the Partnership nor the Managing General Partner
shall keep a register of transfers of interests in the Partnership. A
transfer of a Controlling interest in IHC GP and/or IHC LP, or any of
its successors or assigns, shall be deemed a transfer by such Partner,
or such successor or assign, of a Partnership Interest in the
Partnership and subject to the restrictions hereof.
11.2 TRANSFERS OF INTERESTS BY MANAGING GENERAL PARTNER.
The Managing General Partner may transfer all or a portion of
its Partnership Interest to any Person only after first obtaining the approval
of all of the Limited Partners other than the Executives (which approval may be
withheld in each such Limited Partner's sole and absolute discretion); provided,
however, that the consent of such Limited Partners shall not be required for a
transfer of the Managing General Partner's Partnership Interest: (a) as
collateral security for the indebtedness of an Affiliate of such Managing
General Partner; (b) to an Affiliate of the Managing General Partner, an
Affiliate of Xxxxxxxx X. Xxxxxx, Xxxxx Xxxxxxx, Xxxxxxx Xxxxxx or an Affiliate
of, or investment fund or other vehicle sponsored by, Xxxxxx Brothers; or (c)
pursuant to Sections 11.8, 11.9 and 11.10 of this Agreement. Any permitted
transfer by the Managing General Partner of its Partnership Interest under this
Section 11.2 shall not constitute a withdrawal of the Managing General Partner
under Article XII, Section 13.1(b), or any other provision of this Agreement. If
any such transfer is deemed to constitute a withdrawal under such provisions or
otherwise and results in the dissolution of the Partnership under this Agreement
or the laws of any jurisdiction to which the Partnership or this Agreement is
subject, the
36
41
Partners hereby unanimously consent to the reconstitution and continuation of
the Partnership immediately following such dissolution, pursuant to Section 13.2
of this Agreement.
11.3 TRANSFERS OF INTERESTS BY GENERAL PARTNER.
The General Partner may transfer all, but not less than all,
of its Partnership Interest to any Person only after first obtaining the
approval of the Managing General Partner (which approval may be withheld in the
Managing General Partner's sole and absolute discretion); provided, however,
that the consent of the Managing General Partner shall not be required for a
transfer pursuant to Sections 11.8 and 11.10 of this Agreement. Any permitted
transfer by the General Partner of its Partnership Interest under this Section
11.2 shall not constitute a withdrawal of the General Partner under Article XII,
Section 13.1(b), or any other provision of this Agreement. If any such transfer
is deemed to constitute a withdrawal under such provisions or otherwise and
results in the dissolution of the Partnership under this Agreement or the laws
of any jurisdiction to which the Partnership or this Agreement is subject, the
Partners hereby unanimously consent to the reconstitution and continuation of
the Partnership immediately following such dissolution, pursuant to Section 13.2
of this Agreement.
11.4 TRANSFER OF INTERESTS OF LIMITED PARTNER.
The Partnership Interests of IHC LP or the Executives, and any
of its successors or assigns, may not be transferred except: (a) if such
Partner, and any of its successors or assigns, is a natural person, by act of
law to his estate (for the benefit of an individual or other successor in
interest) or to the heir or legatee of such deceased individual; (b) if such
Partner, and any of its successors or assigns, is not an individual, upon the
adjudication of bankruptcy, dissolution or other cessation of its existence, to
the authorized representative thereof for the purpose of effecting the winding
up and disposition of the business of such entity; (c) to any other Person with
the prior written consent of the Managing General Partner and all of the Limited
Partners other than the Executives, which consent may be withheld in the sole
and absolute discretion of such Partners; (d) pursuant to the provisions of
Sections 11.8 and 11.10; and (e) in the case of the Executives, pursuant to
Section 11.12. Subject to the provisions of Sections 11.8, and 11.10, the
Partnership Interests of CGLH LP, and any of its successors or assigns, may be
transferred, in whole or in part, at the discretion of CGLH LP, or such
successor or assign.
11.5 ADDITIONAL LIMITATIONS ON TRANSFERS OF LIMITED PARTNERSHIP
INTERESTS.
The Managing General Partner may require, as a condition to
any transfer of a Partnership Interest of a Partner, that, in the Managing
General Partner's reasonable determination: (a) the transfer will not jeopardize
the treatment of the Partnership as a partnership not treated as a corporation
for federal income tax purposes; (b) the transfer will not result in or cause a
termination of the Partnership for federal income tax purposes; and (c) the
transfer will not violate the registration requirements of applicable securities
laws or cause any prior offer and sale of Partnership Interests to violate such
requirements. The Managing General Partner may also require the proposed
transferee to deliver to the Partnership acceptable representations and
warranties respecting its status under applicable securities laws and its
investment intent with respect to the Partnership Interest, and may require the
transferor and transferee to supply such other documentation as the Managing
General Partner may deem advisable in its sole discretion.
11.6 DISTRIBUTIONS AND ALLOCATIONS IN RESPECT OF TRANSFERRED
PARTNERSHIP INTERESTS.
If any Partnership Interest is transferred during any Fiscal
Year in compliance with the provisions of this Article XI, Profits, Losses, and
all other items attributable to the transferred interest for such period shall
be divided and allocated between the transferor and the transferee by taking
into account their varying interests during the period in accordance with Code
Section 706(d), using any
37
42
conventions permitted by law, selected by the Managing General Partner in its
reasonable discretion. All distributions on or before the date of such transfer
shall be made to the transferor. Solely for purposes of making such allocations
and distributions, the Partnership shall recognize such transfer not later than
the end of the calendar month during which it is given notice of such transfer,
provided that if the Partnership does not receive a notice stating the date such
Partnership Interest was transferred and such other information as the Managing
General Partner may reasonably require within 30 days after the end of the
Fiscal Year during which the transfer occurs, then all of such items shall be
allocated, and all distributions shall be made, to the person who, according to
the books and records of the Partnership, on the last day of the Fiscal Year
during which the transfer occurs, was the owner of the Partnership Interest.
Neither the Partnership nor any Partner shall incur any liability for making
allocations and distributions in accordance with the provisions of this Section
11.6, whether or not any Partner or the Partnership has knowledge of any
transfer of ownership of any Partnership Interest.
11.7 ADMISSION OF SUBSTITUTE OR SUCCESSOR PARTNERS.
(a) Admission of Substitute Limited Partners. A transferee
(which may be the heir or legatee of the Limited Partner) or assignee
of the Limited Partner's Partnership Interest, or Person acquiring a
Partnership Interest pursuant to any foreclosure made upon any
permitted pledge or hypothecation of such Partnership Interest, shall
be entitled to receive the distributive share of the Partnership's
Profits, Losses, income, gains, losses, deductions, and credits
attributable to such Partnership Interest. To become a substitute
Limited Partner, such transferee, assignee, heir, or legatee must be
acceptable to the Managing General Partner in the Managing General
Partner's sole and absolute discretion. If acceptable to the Managing
General Partner, such transferee, assignee, heir, or legatee shall
execute a counterpart of this Agreement, thereby agreeing to be bound
by the terms hereof as a Limited Partner with respect to the
Partnership Interest so transferred. Upon admission of a substitute
Limited Partner, such Limited Partner shall be subject to all of the
restrictions applicable to, shall assume all of the obligations of, and
shall attain the status of a Limited Partner under and pursuant to this
Agreement with respect to the Partnership Interest held by such Limited
Partner.
(b) Admission of Successor Managing General Partner. A
successor Managing General Partner selected pursuant to Section 13.2 of
this Agreement or the permitted transferee of or successor to the
Partnership Interest of the Managing General Partner pursuant to
Section 11.2 of this Agreement shall be admitted to the Partnership as
the Managing General Partner, effective as of the date of the
withdrawal or removal of the predecessor Managing General Partner or
the date of transfer of such predecessor's Partnership Interest.
(c) Admission of Successor General Partner. A successor
General Partner selected pursuant to Section 13.2 of this Agreement or
the permitted transferee of or successor to all of the Partnership
Interest of the General Partner pursuant to Section 11.3 of this
Agreement shall be admitted to the Partnership as the General Partner,
effective as of the date of the withdrawal or removal of the
predecessor General Partner or the date of transfer of such
predecessor's Partnership Interest.
(d) Action by Managing General Partner. In connection with the
admission of any substitute Limited Partner, successor General Partner
or successor Managing General Partner, the Managing General Partner
shall have the authority to take all such actions as it deems necessary
or advisable in connection therewith, including the amendment of
Exhibit A to this Agreement and the execution and filing with
appropriate authorities of any necessary documentation.
38
43
11.8 BUY-SELL PROVISION.
(a) If a Partner wishes at any time after the Buy-Sell Date,
for any reason or for no reason, to purchase the Partnership Interests
of another Partner or other Partners (for the purposes of this Section
11.8, the "Offering Partner"), the following procedure shall apply to
such proposed purchase:
(i) The Offering Partner shall give notice (the
"Buy-Sell Notice") to the Partner or Partners whose
Partnership Interests the Offering Partner seeks to purchase
(individually or collectively, the "Receiving Partner")
specifying a gross value (i.e., without taking into account
liabilities) (the "Stated Value") attributable to all of the
assets of the Partnership. The Buy-Sell Notice must be
delivered with the words "Confidential/Urgent" clearly visible
from the exterior of the container in which the Buy-Sell
Notice is contained and must expressly alert the Receiving
Partner to the duration of the Response Period (as defined
below). Delivery shall be in accordance with the notice
provisions of this Agreement.
(ii) The Receiving Partner shall have the options (A)
to require that the Offering Partner purchase all of the
Partnership Interests of the Receiving Partner and the
Partnership Interests of its Affiliates; or (B) to elect to
purchase the Offering Partner's Partnership Interest and those
of its Affiliates. If the Receiving Partner elects to purchase
the Offering Partner's Partnership Interest and those of the
Offering Partner's Affiliates or require the purchase of all
of its Partnership Interests and its Affiliate's Partnership
Interests, the Receiving Partner shall so notify the Offering
Partner in writing within 30 days from the receipt of the
Buy-Sell Notice (the "Response Period") and, in the case of
the election to acquire the Offering Partner's Partnership
Interests and those of its Affiliates, the Partnership
Interests being acquired shall be those of the Offering
Partner and its Affiliates. The Partner purchasing the
Partnership Interests of other Partner(s) pursuant to this
Section 11.8 shall be the "Buying Partner" and the Partner(s)
selling Partnership Interests pursuant to this Section 11.8
shall be the "Selling Partner". Unless the Receiving Partner
responds within the Response Period that it will be the Buying
Partner or requiring the purchase of the Partnership Interests
of its Affiliates, (A) the Offering Partner will be the Buying
Partner, (B) the Receiving Partner will be the Selling Partner
and (C) the Partnership Interests being acquired shall be only
those set forth in the Buy-Sell Notice.
(iii) Within 75 days after the Buy-Sell Notice has
been given, the Buying Partner shall pay to the Selling
Partner (and, if applicable, the Selling Partner's Affiliates
in this Partnership), in full payment for its (and, if
applicable, their) interest(s) in this Partnership, the
amounts that such Selling Partner (and, if applicable, the
Selling Partner's Affiliates in this Partnership) would have
received if the assets of the Partnership had been sold for an
amount equal to the Stated Value on the date of such payment,
Profit, Loss, and other items of income, gain, loss or
deduction were allocated among the Partners in accordance with
this Agreement and the proceeds of such sale (net of
liabilities that would have been paid out of such proceeds,
including without limitation any amounts due to a Partner
(and, if applicable, the Selling Partner's Affiliates in this
Partnership), if such sale had actually occurred) were
distributed in accordance with the provisions of this
Agreement.
(v) If the Receiving Partner elects to be the Buying
Partner but fails to complete the transaction as described
above, the Offering Partner shall be entitled to be the Buying
Partner as described above.
39
44
(vi) The purchase price to be paid under this Section
11.8 shall be payable entirely in cash at the closing of the
sale of interests. The Selling Partner shall represent to the
Buying Partner that the Partnership Interests being sold are
free and clear of liens other than those liens in connection
with guaranties of the Partnership's indebtedness or otherwise
pursuant to Article XI hereof. Upon the Buying Partner's
tender of payment of the purchase price, including, without
limitation, by wire transfer or delivery of a certified check
to the Selling Member's address on the records of the
Partnership, the Selling Partner (and, if applicable, the
Selling Partner's Affiliates in this Partnership) shall be
deemed to have transferred its (or, if applicable, their)
Partnership Interest(s) and shall cease to be a Partner (or,
if applicable, Partners) of this Partnership (or to have any
economic or other interest therein).
(vii) Notwithstanding anything to the contrary
herein, an Executive may only be a Buying Partner with the
consent of all of the other Partners.
11.9 RIGHT TO REQUIRE SALE.
(a) Upon, and for the two-year period after, the occurrence of
a Change in Control, CGLH LP and CGLH GP shall have the right to
require IHC to purchase all, but not less than all, of the Partnership
Interests held by such entity(ies) for cash at the purchase price
determined pursuant to Section 11.9(b) hereof. Such right shall be
exercised by delivery of a written notice by CGLH LP and CGLH GP to IHC
GP and IHC LP, respectively, that CGLH LP and CGLH GP elects to
exercise their right under this Section 11.9. The date of such notice
shall be the "Put Date".
(b) The purchase price to be paid shall be equal to the total
amount, determined as of the Put Date, that a willing buyer would pay
to a willing seller for CGLH LP's and CGLH GP's Partnership Interests,
taking into account assumed liabilities, determined as a whole and in
the context of the Partnership as a going concern in an arm's length,
negotiated transaction without undue time constraints (the "Purchase
Price"). In determining the Purchase Price, no discounts for lack of
control or lack of marketability shall be applied. The Purchase Price
shall be determined jointly by CGLH GP and CGLH LP, on the one hand,
and IHC, on the other hand. If there is a dispute between these parties
as to the Purchase Price (which dispute remains unresolved for 10
Business Days), such dispute shall be submitted for final determination
to a mutually acceptable investment banking firm of national reputation
familiar with the valuation of companies in the hospitality and lodging
industry ("Investment Banking Firm"). In the event that these parties
cannot agree on a mutually acceptable Investment Banking Firm within 10
Business Days, CGLH GP and CGLH LP, on the one hand, and IHC GP and IHC
LP, on the other hand, shall each select one Investment Banking Firm,
and shall cause such firms to promptly select a third Investment
Banking Firm within five Business Days. The three Investment Banking
Firms so selected shall, by majority vote, render their final
determination as promptly as practicable and in any event within 20
Business Days, which determination shall be final and binding on the
parties. The fees and expenses of any such determination shall be borne
by equally by CGLH GP and CGLH LP, on the one hand, and IHC GP and IHC
LP, on the other hand.
(c) Upon the closing of the sale under this Section 11.9, CGLH
LP and CGLH GP shall thereupon cease to be Partners of the Partnership
(or to have any economic or other interest therein).
11.10 TAG-ALONG RIGHT.
(a) In connection with the sale or syndication of any of CGLH
GP's and/or CGLH LP's Partnership Interests to an unrelated third party
(a "Sale"), IHC LP, IHC GP and the
40
45
Executives shall be afforded the opportunity to participate in such
Sale as and to the extent provided in this Agreement. At least twenty
(20) days prior to the consummation of the Sale, CGLH shall send a
written notice (a "Sale Notice") to IHC LP, IHC GP and the Executives
setting forth the terms of the Sale, including the percentage of
Partnership Interests being transferred and the purchase price offered
by such unrelated third party. IHC LP, IHC GP and the Executives shall
have twenty days from the date of the Sale Notice (the "Notice Period")
within which to exercise the right to participate in the Sale. Each of
IHC GP and IHC LP shall have the right to transfer such portion of its
Partnership Interests as relates to its Class A Capital Contributions
equal to the same percentage as being transferred by CGLH GP and/or
CGLH LP (the "IHC Tag-Along Interest"). Each Executive shall have the
right to transfer such portion of such Executive's Partnership Interest
equal to the same percentage as being transferred by CGLH GP and/or
CGLH LP(an "Executive Tag-Along Interest"). Neither the IHC Tag-Along
Interest nor an Executive Tag-Along Interest shall include any
interests or amounts related to Class B Capital Contributions,
Undistributed Class B Capital, Class B Preference Amounts or
Undistributed Class B Preference Amounts and no such interests or
amounts shall be included in the consideration paid (or the calculation
thereof) in respect of the IHC Tag-Along Interest or an Executive
Tag-Along Interest. If IHC LP, IHC GP shall elect to participate in the
Sale, it (or they) shall receive, as consideration therefor, the
product of: (i) the purchase price set forth in the Sale Notice and
(ii) the fraction, (A) the numerator of which is the IHC Tag-Along
Interest, and (B) the denominator of which is the sum of (1) CGLH GP's
and/or CGLH LP's Partnership Interests being transferred pursuant to
the Sale and (2) the IHC Tag-Along Interest. If an Executive shall
elect to participate in the Sale, he shall receive, as consideration
therefor, the product of: (i) the purchase price set forth in the Sale
Notice and (ii) the fraction, (A) the numerator of which is his
Executive Tag-Along Interest, and (B) the denominator of which is the
sum of (1) CGLH GP's and/or CGLH LP's Partnership Interests being
transferred pursuant to the Sale and (2) such Executive Tag-Along
Interest.
(b) If: (i) IHC GP and IHC LP elect to participate in the
proposed Sale, (ii) the Sale would result in the transfer of all of IHC
GP's and IHC LP's Partnership Interests and (iii) the termination of
one or more property management agreements between the Manager and the
Partnership or a Controlled Entity covering a Hotel (and its other,
related assets) arises therefrom, CGLH GP and/or CGLH LP shall, upon
consummation of the Sale, pay to the Partnership an amount equal to IHC
LP's Undistributed Class B Capital invested in the Hotel, and other
related assets as to which a property management agreement has been
terminated as a result of the Sale. The Partnership shall distribute
such amount to IHC LP in reduction of its Undistributed Class B
Capital. The Partners and the Partnership acknowledge and agree that
each of CGLH GP and CGLH LP has the right to consummate a Sale or other
transfer, notwithstanding any termination of, or penalty with respect
to, property management agreements or other agreements that may arise
therefrom and without any liability with respect to any such
termination or penalty.
(c) If IHC GP, IHC LP and/or the Executives elect to
participate in the proposed Sale (to the extent of the IHC Tag-Along
Interest or Executive Tag-Along Interest(s), as applicable), then IHC
GP and/or IHC LP or an Executive, as applicable, shall give notice of
such election by a signed writing by such electing party (the
"Acceptance"). Any Acceptance shall be received by CGLH GP and/or CGLH
LP prior to the end of the Notice Period. After the lapse of the Notice
Period within which CGLH GP and/or CGLH LP shall not have received an
Acceptance from IHC LP, IHC GP and/or the Executives, CGLH may
consummate, without the participation of such party, a Sale to one or
more purchasers, for consideration equal to or less than the purchase
price specified in the Sale and on terms no more favorable to CGLH GP
and/or CGLH LP than those specified in the Sale Notice. In the event
CGLH GP's and/or CGLH LP's Partnership Interests covered by the Sale
Notice are not disposed of within ninety (90) days following the lapse
of the Notice Period, then they shall once again be subject to the
tag-along rights set forth in this section.
41
46
(d) In connection with a Sale pursuant to which IHC GP and/or
IHC LP exercises its right to "tag along" pursuant to this Section
11.10 (and notwithstanding that an Executive did not exercise his right
to "tag-along" pursuant to this Section 11.10), CGLH LP and/or CGLH GP
may elect to require that the Executives, or either of them,
participate in such Sale, as if such Executive(s) elected to
"tag-along" pursuant to the other subsections of this Section 11.10.
11.11 REDUCTION OF UNDISTRIBUTED CLASS B CAPITAL.
Except as otherwise provided in Section 11.10 of this
Agreement, if a property management agreement with a Manager is terminated for
any reason (including without limitation the failure by the Manager to meet
performance standards contained in such property management agreement), the
Partnership shall distribute to the holders of the Undistributed Class B Capital
an amount equal to such holders' Undistributed Class B Capital invested in the
Hotel and its other, related assets with respect to which the property
management agreement was terminated by the Partnership.
11.12 OPTIONAL REDEMPTION.
Upon the termination of an Executive's employment with the
Corporation for any reason (including, without limitation, death, Cause, without
Cause, without Good Reason, with Good Reason or Disability, as such terms are
defined in such Executive's Executive Employment Agreement), the Partnership
shall have the right (but not the obligation) to acquire such Executive's
Percentage Interest in the Partnership as of the date immediately following the
date of such termination (i.e., after giving effect to the reduction in
Percentage Interest, if any, resulting from such termination) (such interest,
the "Redemption Interest"), for a purchase price (and subject to the amount of
such purchase price) determined pursuant to Section 11.12(a) and (h) hereof (the
"Redemption Price") as of the Redemption Closing Date. The following procedure
shall apply to such proposed acquisition:
(a) Upon the termination of an Executive's employment
with the Corporation as a result of such Executive's death or
Disability, without Cause or with Good Reason (as such terms are
defined in such Executive's Executive Employment Agreement), the
Redemption Price shall equal the greater of: (i) such Executive's
Undistributed Tier 2 Capital allocable to his Redemption Interest and
(ii) the fair market value of such Executive's Redemption Interest
determined in accordance with Section 11.12(h) hereof. Upon the
termination of an Executive's employment with the Corporation for Cause
or without Good Reason (as such terms are defined in such Executive's
Executive Employment Agreement), the Redemption Price shall equal the
fair market value of such Executive's Redemption Interest determined in
accordance with Section 11.12(h) hereof.
(b) The Partnership shall give notice (the
"Redemption Notice") to such Executive of the Partnership's intent to
acquire such Executive's Redemption Interest, subject to the
determination of the fair market value thereof determined pursuant to
Section 11.12(h). Delivery of the Redemption Notice shall be in
accordance with the notice provisions of this Agreement.
(c) Within 75 days after the Redemption Notice has
been given (or within 75 days after the delivery of a certified
appraisal to the Partnership of the fair market value of the
Executive's Redemption Interest as of the Redemption Date, if, after
receipt of the appraisal, the Partnership elects to continue with the
acquisition of the Redemption Interest), the Partnership shall pay to
such Executive the Redemption Price, in full payment for his Redemption
Interest
42
47
and the Redemption Interest shall be assigned to the Partnership (such
date, the "Redemption Closing Date"). The Redemption Price shall be
payable entirely in cash. Such Executive shall represent to the
Partnership that the Redemption Interests being sold are free and clear
of liens other than those liens in connection with guaranties of the
Partnership's indebtedness or otherwise pursuant to Article XI hereof.
(d) Upon the Partnership's tender of payment of the
Redemption Price, including, without limitation, by wire transfer or
delivery of a certified check to such Executive's address on the
records of the Partnership, such Executive shall be deemed to have
transferred his entire Partnership Interest and shall cease to be a
Partner or to have any economic or other interest herein.
(e) Such Executive's only remedy in connection with a
dispute arising under this Section (including, without limitation, any
dispute over the Redemption Price) shall be for damages. The Partners
agree that the remedy described herein bears a reasonable relationship
to the damages which the Partners estimate may be suffered by an
Executive for a breach by the Partnership under this Section and the
limitation of remedy is not unreasonable under the circumstances
existing as of the date hereof.
(f) The then existing Percentage Interests of the
remaining Partners (other than an Executive) shall be proportionately
increased to reflect the redemption of such Redemption Interest.
(g) For the purposes of this Section 11.12,
"Executive's Percentage Interest" shall include any transferee of an
Executive who is a spouse, natural or adopted child, grandchild,
parent, sibling or natural or adopted child of any sibling of
Executive, or trust for the benefit of any one of the foregoing
persons, or his estate or designated beneficiary, heir or legatee.
Nothing in this Section shall create a right of transfer contrary to
the other provisions of Article XI or otherwise.
(h) The fair market value of an Executive's
Redemption Interest shall be determined by agreement between the
Partnership and such Executive. In the absence of an agreement within
30 days following the date of the Redemption Notice, the following
procedure shall apply: The value of an Executive's Redemption Interest
as of the Redemption Closing Date shall be determined pursuant to an
appraisal performed by an appraiser of recognized standing in the
hospitality industry, selected by the Partnership in its reasonable
discretion. If such appraiser is not reasonably acceptable to such
Executive, such Executive shall so notify the Partnership and such
Executive shall select a second appraiser of recognized standing in the
hospitality industry. If, within ten days following notice to such
Executive of the selection of an appraiser by the Partnership, such
Executive does not notify the Partnership that such appraiser is not
acceptable, such appraiser shall be deemed reasonably satisfactory to
the Executive. If such Executive selects a second appraiser (as
provided herein), such two appraisers shall jointly select a third
appraiser of recognized standing in the hospitality industry and such
third appraiser shall be the appraiser for purposes of this Section
11.12. The appraiser selected by the Partnership, or the third
appraiser selected pursuant to this paragraph, as the case may be,
shall, within 60 days from the date of the Redemption Notice, complete
and deliver to the Executive and the Partnership certified copies of
the appraisal of the fair market value of the Executive's Redemption
Interest as of the Redemption Date. The costs of the appraisal shall be
borne by the Partnership. In order to determine the fair market value
of the Executive's Redemption Interest, the appraiser shall determine
the amount of cash the Executive would be entitled to receive under
Section 13 hereof if (i) the Partnership sold all of its property for
an amount of cash equal to the
43
48
aggregate value of all hotels and other property owned by the
Partnership, and paid or reserved for all liabilities of the
Partnership, and the Partnership received liquidation value for its
interests in entities in which the Partnership owns a direct or
indirect interest and (ii) the Partnership thereafter liquidated in
accordance with Section 13 hereof.
11.13 TERMINATION FOR CAUSE AND WITHOUT GOOD REASON.
If the Corporation terminates an Executive for Cause (as such
term is defined in such Executive's Executive Employment Agreement) or if an
Executive terminates his employment with the Corporation without Good Reason (as
such term is defined in such Executive's Executive Employment Agreement), then
such Executive's Percentage Interest shall be reduced as of the date of such
termination, pursuant to Exhibit G hereto; provided, however, that if such
Percentage Interest has been reduced below the percentage provided on Exhibit G
hereto pursuant to the terms of this Agreement (by way of example and not as a
limitation, if such Executive's Percentage Interest has been diluted pursuant to
Section 4.3(b)) then such Executive's Percentage Interest shall equal such
lesser Percentage Interest. The then existing Percentage Interests of the
Partners (other than the Executives) shall each be increased by one-half of the
percentage by which such Executive's Percentage Interest is reduced. In any and
all events, such terminated Executive's Percentage Interest, if any, as reduced
hereby, shall be subject to optional redemption by the Partnership pursuant to
Section 11.12.
ARTICLE XII
WITHDRAWAL AND REMOVAL OF MANAGING GENERAL PARTNER AND GENERAL PARTNER
12.1 EVENTS OF WITHDRAWAL.
(a) Neither the Managing General Partner nor the General
Partner may voluntarily withdraw from the Partnership at any time. The
Managing General Partner or the General Partner (as the case may be),
however, will be deemed to have withdrawn from the Partnership on the
occurrence of any one of the following events (each event herein
referred to as an "Event of Withdrawal"):
(i) Pursuant to Section 12.2 hereof, the Managing
General Partner is removed as managing general partner of the
Partnership, or the General Partner is removed as general
partner of the Partnership; or
(ii) The Managing General Partner transfers all of
its right, title and interest as managing general partner of
the Partnership other than as permitted by Article XI; or
(iii) The General Partner transfers all of its right,
title and interest as general partner of the Partnership other
than as permitted by Article XI.
44
49
(b) Upon an Event of Withdrawal with respect to the General
Partner, there shall be no dissolution of the Partnership, and if such
dissolution is otherwise mandated by applicable law, the remaining
Partners agree that they will be deemed to have unanimously elected to
continue the Partnership and the Partnership shall be deemed to be
dissolved and reconstituted as may be required by applicable law.
12.2 REMOVAL.
(a) A Managing General Partner may be removed as Managing
General Partner and a General Partner may be removed as General Partner
at any time: (i) after such Person commits an act of fraud or gross
negligence in its capacity as Managing General Partner or General
Partner, as the case may be; (ii) after such Person commits a material
breach of this Agreement; (iii) after such Person engages in
intentional and willful misconduct against the interests of the
Partnership; (iv) after such Person suffers or is subject to an Event
of Bankruptcy; or (v) with respect to the General Partner only, upon
the vote of a Majority Interest to remove the General Partner if the
General Partner exceeds the power or authority expressly granted herein
or the power or authority expressly granted by the Managing General
Partner in writing, or purports to have power or authority in excess of
those expressly granted herein or the power or authority expressly
granted by the Managing General Partner in writing.
(b) Any such removal of that Person as the Managing General
Partner or the General Partner shall be effective after the following
conditions have been satisfied: (i) delivery of a removal notice to
such Person, in the case of the removal of the Managing General
Partner, from a Majority Interest, and in the case of the General
Partner, from the Managing General Partner; and (ii) in the case of the
Managing General Partner, approval by a Majority Interest of a new
Managing General Partner and the admission of such Person as a Managing
General Partner in the Partnership. The removal of the Managing General
Partner shall cause a dissolution event under Section 13.1 of this
Agreement.
(c) If a Person is removed as a General Partner but continues
to own a Partnership Interest, then such Partnership Interest shall be
converted into a Partnership Interest as a Limited Partner. In the
event of a reconstitution of the Partnership pursuant to Section 13.2
of this Agreement, the Partnership Interest of a removed Managing
General Partner shall be converted into a Partnership Interest as a
Limited Partner.
(d) If a Person is removed as a General Partner, such Person
shall perform, execute and deliver or cause to be performed, executed
and delivered any and all acts, documents and assurances as the
Managing General Partner may reasonably require to evidence: (i) the
removal of the former General Partner; and (ii) if applicable, a
conversion of the Partnership Interest of the former General Partner to
a Partnership Interest as a Limited Partner. If a Person is removed as
a Managing General Partner, and thereafter the Partnership is
reconstituted pursuant to Section 13.2 of this Agreement, such Person
shall perform, execute and deliver or cause to be performed, executed
and delivered any and all acts, documents and assurances as the newly
appointed Managing General Partner may reasonably require to evidence:
(i) the removal of the Managing General Partner; and (ii) if
applicable, a conversion of the Partnership Interest of the former
Managing General Partner to a Partnership Interest as a Limited
Partner; and (iii) the admission of a new Managing General Partner.
(e) Notwithstanding anything to the contrary in Article XI, in
connection with the admission of a new Managing General Partner, the
Limited Partners may assign a portion of their respective Partnership
Interests to such new Managing General Partner so that such new
Managing General Partner has at least a 1% Percentage Interest in all
items of Profit, Loss,
45
50
income, gain, loss and deduction, Partnership capital, and
distributions. The portion of the Partnership Interest of a Limited
Partner that is assigned to such new Managing General Partner shall be
converted into a Partnership Interest as a Managing General Partner
upon its receipt by the new Managing General Partner.
ARTICLE XIII
DISSOLUTION AND WINDING UP
13.1 DISSOLUTION.
(a) Except as otherwise provided in this Agreement, no Partner
shall have the right to terminate this Agreement or dissolve the
Partnership by its express will or by withdrawal without the prior
written consent of the other Partners.
(b) The Partnership shall be dissolved upon the first to occur
of any of the following:
(i) The expiration of its term as provided in Section
1.3 of this Agreement (as such term may have been extended in
accordance with the provisions of Section 1.3 prior to an
event of dissolution);
(ii) The removal of the Managing General Partner, or
any other event that results in its ceasing to be the managing
general partner of the Partnership;
(iii) An election to dissolve the Partnership by the
Managing General Partner that is approved by all of the
Limited Partners other than the Executives;
(iv) At the election of CGLH GP, at such time as CGLH
Partners I LP, CGLH Partners II LP and their Affiliates cease
to Beneficially Own Voting Securities representing at least
30% or more of the Total Voting Power (without taking into
account any limitation on the conversion of such Voting
Securities in determining such Beneficial Ownership or the
number of shares issuable upon complete conversion); or
(v) Any other event, under the Delaware Act, that
would require (notwithstanding provisions in this Agreement to
the contrary) the Partnership's dissolution.
13.2 CONTINUATION OF THE PARTNERSHIP.
(a) Except as otherwise provided in this Agreement, upon the
occurrence of an event described in Section 13.1(b)(i), (b)(ii) or
(b)(v), the Partnership shall be deemed to be dissolved and
reconstituted only if 50.1% of the Percentage Interests of the
remaining Partners elect to continue the Partnership within 90 days of
such event. If no election to continue the Partnership is made within
90 days of such event, the Partnership shall conduct only those
activities necessary to wind up its affairs. If an election to continue
the Partnership is made upon the occurrence of an event described in
Section 13.1(b)(i), (b)(ii) or (b)(v), then:
(i) If there is no remaining Managing General Partner
as a result of Section 13.1(b)(ii), then within such 90 day
period a successor Managing General Partner shall be selected
by a Majority Interest (if such Partners cannot agree on the
selection of a successor Managing General Partner, the
Partnership shall be dissolved and liquidated);
46
51
(ii) The Partnership shall be deemed to be
reconstituted and shall continue until the end of the term for
which it is formed unless earlier dissolved in accordance with
this Article XIII;
(iii) If dissolution occurred pursuant to Section
(b)(ii), the withdrawn Managing General Partner shall be
automatically admitted to the Partnership as a Limited Partner
and its former Partnership Interest as a Managing General
Partner shall be automatically converted to a Limited
Partner's Partnership Interest in the manner provided in
Section 12.2 of the Agreement; and
(iv) All necessary steps shall be taken to amend or
restate this Agreement and the Certificate.
(b) Upon an Event of Withdrawal with respect to the General
Partner or an Event of Withdrawal other than removal with respect to
the Managing General Partner, there shall be no dissolution of the
Partnership, and if such dissolution is otherwise mandated by
applicable law, the remaining Partners agree that they will be deemed
to have unanimously elected to continue the Partnership and the
Partnership shall be deemed to be dissolved and reconstituted as may be
required by applicable law.
13.3 LIQUIDATION.
(a) Upon dissolution of the Partnership, unless the
Partnership is continued under Section 13.2 of this Agreement, the
Partnership's affairs shall be wound up. A Person selected by a
Majority Interest shall be the liquidator (the "Liquidator"). The
Liquidator shall be entitled to receive such compensation for its
services as may be approved by all of the Limited Partners other than
the Executives.
(b) The Liquidator shall agree not to resign at any time
without 15 days' prior written notice and may be removed at any time,
with or without cause, by notice of removal approved by a Majority
Interest. Upon dissolution, removal, or resignation of the Liquidator,
a successor and substitute Liquidator (who shall have, and succeed to,
all rights, powers, and duties of the original Liquidator) shall within
30 days thereafter be selected by a Majority Interest. The right to
appoint a successor or substitute Liquidator in the manner provided
herein shall be recurring and continuing for so long as the functions
and services of the Liquidator are authorized to continue under the
provisions hereof, and every reference herein to the Liquidator will be
deemed to refer also to any such successor or substitute Liquidator
appointed in the manner herein provided.
(c) Except as expressly provided in this Article XIII, the
Liquidator appointed in the manner provided herein shall have and may
exercise, without further authorization or consent of any of the
parties hereto, all of the powers conferred upon the Managing General
Partner under the terms of this Agreement (but subject to all of the
applicable limitations, contractual and otherwise, upon the exercise of
such powers) to the extent necessary or desirable in the good faith
judgment of the Liquidator to carry out the duties and functions of the
Liquidator hereunder for and during such period of time as shall be
reasonably required in the good faith judgment of the Liquidator to
complete the winding up and liquidation of the Partnership.
(d) The Liquidator shall liquidate the assets of the
Partnership and apply and distribute the proceeds of such liquidation
in the following order of priority, unless otherwise required by
mandatory provisions of applicable law:
47
52
(i) To the payment of the expenses of the terminating
transactions including, without limitation, brokerage
commissions, legal fees, accounting fees and closing costs;
(ii) To the payment to creditors of the Partnership,
including Partners, in order of priority provided by law; and
(iii) To the Partners and assignees in accordance
with the manner in which proceeds from a Capital Event are
distributed pursuant to Section 6.1(b)(ii) hereof; provided,
however, that any Available Cash, on hand at the time of the
event of dissolution giving rise to the liquidation of the
Company and during the term of such liquidation, from the
operations of any Hotels and other, related assets or
otherwise not from a Capital Event shall be distributed in
accordance with the manner in which Available Cash is
distributed pursuant to Section 6.1(b)(i); provided, further,
however, that the Liquidator may place in escrow a reserve of
cash or other assets of the Partnership for contingent
liabilities in an amount determined by the Liquidator to be
appropriate for such purposes.
13.4 DISTRIBUTION IN KIND.
Notwithstanding the provisions of Section 13.3 of this
Agreement which require the liquidation of the assets of the Partnership, but
subject to the order of priorities set forth therein, if on dissolution of the
Partnership the Liquidator determines (and if the Liquidator is the Managing
General Partner, then if the Liquidator determines after consultation with the
Limited Partners) that an immediate sale of part or all of the Partnership's
assets would be impractical or would cause undue loss to the Partners and
assignees, the Liquidator may defer for a reasonable time the liquidation of any
assets except those necessary to satisfy liabilities of the Partnership (other
than those to Partners) and/or may distribute to the Partners and assignees, in
lieu of cash, as tenants in common and in accordance with the provisions of
Section 13.3 of this Agreement, undivided interests in such Partnership assets
as the Liquidator deems not suitable for liquidation. Any such distributions in
kind shall be subject to such conditions relating to the disposition and
management of such properties as the Liquidator deems reasonable and equitable
and to any joint operating agreements or other agreements governing the
operation of such properties at such time. The Liquidator shall determine the
fair market value of any property distributed in kind using such reasonable
method of valuation as it may adopt.
13.5 CANCELLATION OF CERTIFICATE OF LIMITED PARTNERSHIP.
Upon the completion of the distribution of Partnership
property as provided in Section 13.3 and Section 13.4 of this Agreement, the
Partnership shall be terminated, and the Liquidator (or the Managing General
Partner and Limited Partners if necessary) shall cause the cancellation of the
Certificate in the State of Delaware and of all qualifications and registrations
of the Partnership as a foreign limited partnership in jurisdictions other than
the State of Delaware and shall take such other actions as may be necessary to
terminate the Partnership.
13.6 RETURN OF CAPITAL.
Except as otherwise provided in Section 4.5, neither the
Managing General Partner nor the General Partner shall be personally liable for
the return of the Capital Contributions, or any portion thereof, it being
expressly understood that any such return shall be made solely from Partnership
assets.
48
53
13.7 CERTAIN TERMINATIONS.
Notwithstanding any other provisions of this Article XIII, in
the event the Partnership is terminated within the meaning of Code Section
708(b)(1)(B), but no event requiring liquidation has occurred, the Partnership
shall not be liquidated, the Partnership's liabilities shall not be paid or
discharged, and the Partnership's affairs shall not be wound up.
ARTICLE XIV
AMENDMENT OF AGREEMENT; CONSENTS
14.1 AMENDMENT PROCEDURES.
Except as provided in Section 1.2 of this Agreement and the
amendments to Exhibit A and Exhibit B hereto, all amendments to this Agreement
shall be in accordance with the following requirements: (a) amendments to this
Agreement may be proposed only by a Partner; (b) if an amendment is proposed,
the Managing General Partner shall seek the written consent of the requisite
Percentage Interests of Limited Partners and as may be required under any debt
instruments pursuant to which the Partnership is debtor; (c) a proposed
amendment shall be effective upon its approval by: (i) the Managing General
Partner and the General Partner, and (ii) all of the Limited Partners; and (d)
the Managing General Partner shall notify all Partners upon final adoption of
any such proposed amendment.
14.2 ACTION WITHOUT A MEETING.
Any action that that requires the consent of all of the
Partners may be taken without a meeting if a consent in writing setting forth
the action so taken is signed by Limited Partners owning not less than the
minimum Percentage Interests that would be necessary to authorize or take such
action pursuant to the terms of this Agreement. To the extent that the laws of
any jurisdiction to which the Partnership or the Partnership Agreement is
subject require that any action of Limited Partners under this Agreement be
unanimous, any action taken by Limited Partners pursuant to and in accordance
with the preceding sentence shall be deemed to constitute the act of all Limited
Partners and, in such event, each Limited Partner that does not execute such
written consent hereby agrees to be bound by the decision of those Limited
Partners executing such consent and hereby approves such action to the extent
such approval is required for such matter to be effective under the laws of such
jurisdiction. Prompt notice of the taking of action shall be given to Limited
Partners that have not consented in writing.
ARTICLE XV
GENERAL PROVISIONS
15.1 ADDRESSES AND NOTICES.
Any notice, demand, request, or report required or permitted
to be given or made to a Partner under this Agreement shall be in writing and
shall be deemed given or made (unless otherwise expressly provided herein): (i)
when delivered in person, by overnight mail using a nationally recognized
courier service at his address as shown on the records of the Partnership or by
facsimile transmission (with call-back confirmation) at the telefacsimile phone
number for such Partner shown on the records of the Partnership, or (ii) three
days after being placed in a United States Postal Service mailbox when sent by
United States registered or certified mail to the Partner at its address as
shown on the records of the Partnership, in any case regardless of any claim of
any Person who may have an interest in any Partnership Interest by reason of an
assignment or otherwise. If any notice or action is to be given or taken, as the
case may be, on a day that is not a Business Day, then such notice or action may
be given or taken, as the case may be, on the next Business Day.
49
54
15.2 TITLES AND CAPTIONS.
All article and section titles and captions in this Agreement
are for convenience only, shall not be deemed part of this Agreement, and in no
way shall define, limit, extend, or describe the scope or intent of any
provisions hereof. Except as specifically provided otherwise, references to
"Articles" and "Sections" are to Articles and Sections of this Agreement.
15.3 PRONOUNS AND PLURALS.
Whenever the context may require, any pronoun used in this
Agreement shall include the corresponding masculine, feminine, or neuter forms,
and the singular form of nouns, pronouns, and verbs shall include the plural and
vice versa.
15.4 FURTHER ACTION.
The parties shall execute all documents, provide all
information, and take or refrain from taking all actions as may be necessary or
appropriate to achieve the purposes of this Agreement.
15.5 BINDING EFFECT.
This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their heirs, executors, administrators, successors,
legal representatives, and permitted assigns. The failure of any parties hereto
to execute and deliver this Agreement shall not invalidate the Partnership
created by and among those parties executing and delivering this Agreement.
15.6 INTEGRATION.
This Agreement constitutes the entire agreement among the
parties hereto pertaining to the subject matter hereof and supersedes all prior
agreements and understandings pertaining thereto.
15.7 CREDITORS.
Subject to the provisions of Section 7.15 only, none of the
provisions of this Agreement shall be for the benefit of or enforceable by any
creditors of the Partnership or any other Person not a party to this Agreement.
15.8 WAIVER.
No failure by any party to insist upon the strict performance
of any covenant, duty, agreement, or condition of this Agreement or to exercise
any right or remedy consequent upon a breach thereof shall constitute a waiver
of any such breach or any other covenant, duty, agreement, or condition.
15.9 COUNTERPARTS.
This Agreement may be executed in counterparts, all of which
together shall constitute one agreement binding on all the parties hereto,
notwithstanding that all such parties are not signatories to the original or the
same counterpart.
15.10 APPLICABLE LAW.
This Agreement shall be construed in accordance with and
governed by the laws of the State of Delaware, without regard to the principles
of conflicts of law.
50
55
15.11 INVALIDITY OF PROVISIONS.
If any provision of this Agreement is declared or found to be
illegal, unenforceable, or void, in whole or in part, then the parties shall be
relieved of all obligations arising under such provision, but only to the extent
that it is illegal, unenforceable, or void, it being the intent and agreement of
the parties that this Agreement shall be deemed amended by modifying such
provision to the extent necessary to make it legal and enforceable while
preserving its intent or, if that is not possible, by substituting therefor
another provision that is legal and enforceable and achieves the same
objectives.
15.12 CONFIDENTIALITY.
(a) The terms of this Agreement and information about the
Hotels and other, related assets and properties and operations of the
Partnership, its Controlled Entities and its non-Controlled Entities constitute
proprietary information and each of the Partners agrees to keep (and cause its
employees, agents, advisors, officers, directors, members and partners to keep)
all such information confidential. Proprietary information does not include,
however, information that is or becomes generally available to the public other
than as a result of a disclosure by a Partner or its employees, agents,
advisors, officers, directors, members and/or partners. If a Partner is
requested pursuant to, or required by, applicable law or regulation or by legal
process to disclose any proprietary information, prior to such disclosure by
such Partner (which disclosure, in such circumstances, will not constitute, or
be deemed to constitute, a breach of this Agreement), such Partner will provide
the Partnership and the other Partners with prompt notice of such request or
requirement in order to enable the Partnership to seek an appropriate protective
order or other remedy, to consult with such Partner with respect to taking steps
to resist or narrow the scope of such request or legal process, or to waive
compliance, in whole or in part, with the terms of this Section. In any such
event, such Partner will use its reasonable efforts to cause all proprietary
information that is so disclosed to be accorded confidential treatment. Without
prejudice to the rights and remedies otherwise available to the Partnership or
the Partners individually and collectively, each Partner agrees that the
Partnership and each other Partner shall be entitled to equitable relief by way
of injunction or otherwise if a Partner or any of its employees, agents,
advisors, officers, directors, members and/or partners breaches or threatens to
breach any of the provisions of this Section.
(b) Notwithstanding anything in this Section or the remainder
of the Agreement to the contrary (but subject to Article XI), each of the
Partnership and the Partners acknowledges that CGLH GP and/or CGLH LP may sell
or otherwise transfer all or a portion of its or their Partnership Interest(s)
to an investment fund or a party which may pool such interests with a number of
other equity positions and grant participations therein or issue one or more
classes of securities evidencing a beneficial interest in a rated or unrated
public offering or private placement (the "Securities"). One or more national
rating agencies may rate the investment fund or the Securities. In connection
therewith, each of the Partnership and the Partners agrees that CGLH LP and CGLH
GP may make available certain proprietary information to investment banking
firms, rating agencies, accounting firms, law firms and other third-party
advisory firms involved with the Securities or the investment fund(s). Such
proprietary information provided may ultimately be incorporated into the
offering documents for the Securities or investment fund(s) and thus such
information may be disclosed to various investors, purchasers and prospective
purchasers of the Securities or interests in the investment fund(s). All of the
aforesaid third-party advisors and professional firms shall be entitled to rely
on the information supplied by, or on behalf of, the Partnership. The
Partnership shall execute and deliver all such instruments, documents and other
papers, and do or cause to be done all such acts and things as CGLH LP and/or
CGLH GP may reasonably request in order to effect such sale, transfers,
participations and/or issuance of Securities. CGLH LP and/or CGLH GP shall pay
all of the Partnership's actual out-of-pocket expenses and third-party costs
(including attorneys' fees and expenses) associated therewith.
51
56
15.13 REPRESENTATIONS AND WARRANTIES OF IHC.
Each of IHC GP and IHC LP, individually, hereby represents and
warrants to CGLH and the Partnership as follows:
(a) Organization and Good Standing; Power and Authority;
Qualifications. Such Person is duly organized, validly existing and in
good standing under the laws of its state of incorporation or
organization. Such Person has the Power to enter into and carry out the
transactions contemplated by this Agreement to which it is a party.
(b) Authorization of the Agreement. The execution, delivery
and performance by such Person of this Agreement has been duly
authorized by all requisite corporate, partnership or other company
action on the part of such entity and do not or will not require the
approval or consent of the constituent equity holders of such entity.
This Agreement constitutes a legal, valid and binding obligation of
such Person, enforceable against such entity in accordance with its
terms except to the extent that enforceability may be limited by
bankruptcy, solvency or other similar laws affecting creditors' rights
generally and subject to limitations on the availability of equitable
remedies.
(c) No Conflict. The execution and delivery by such Person of
this Agreement and the consummation by such entity of the transactions
contemplated hereby and its compliance with the provisions hereof and
thereof will not (a) violate any provision of any federal, state, local
or foreign law, statute, rule or regulation, or any ruling, writ,
injunction, order, judgment or decree of any court, administrative
agency or other governmental body applicable to it, or (b) violate its
organizational documents.
(d) Consents. No licenses, permits, qualifications and
authorizations, consents or approvals of or by, or any notifications of
or filings with, any Person is required in connection with the
execution, delivery and performance by such Person of this Agreement,
or the consummation by such entity of the transactions contemplated
hereby.
(e) Financial Capacity. Such Person has cash on hand, in an
aggregate amount sufficient to enable such Person to timely perform its
obligations to fund its Tier 1 Capital Contributions.
15.14 REPRESENTATIONS AND WARRANTIES OF CGLH.
Each of CGLH GP and CGLH LP, individually, hereby represents
and warrants to IHC and the Partnership as follows:
(a) Organization and Good Standing; Power and Authority;
Qualifications. Such Person is duly organized, validly existing and in
good standing under the laws of its state of incorporation or
organization. Such Person has the Power to enter into and carry out the
transactions contemplated by this Agreement to which it is a party.
(b) Authorization of the Documents. The execution, delivery
and performance by such Person of this Agreement has been duly
authorized by all requisite corporate, partnership or other company
action on the part of such entity and do not or will not require the
approval or consent of the constituent equity holders of such entity.
This Agreement constitutes a legal,
52
57
valid and binding obligation of such Person, enforceable against such
entity in accordance with its terms except to the extent that
enforceability may be limited by bankruptcy, solvency or other similar
laws affecting creditors' rights generally and subject to limitations
on the availability of equitable remedies.
(c) No Conflict. The execution and delivery by such Person of
this Agreement and the consummation by such entity of the transactions
contemplated hereby and its compliance with the provisions hereof and
thereof will not (a) violate any provision of any federal, state, local
or foreign law, statute, rule or regulation, or any ruling, writ,
injunction, order, judgment or decree of any court, administrative
agency or other governmental body applicable to it, or (b) violate its
organizational documents.
(d) Consents. No licenses, permits, qualifications and
authorizations, consents or approvals of or by, or any notifications of
or filings with, any Person is required in connection with the
execution, delivery and performance by such Person of this Agreement,
or the consummation by such entity of the transactions contemplated
hereby.
(e) Financial Capacity. Such Person has cash on hand, or
commitments from its partners or other financially responsible third
parties, or a combination thereof, in an aggregate amount sufficient to
enable such Person to timely perform its obligations to fund its Tier 1
Capital Contributions.
15.15 CONDITIONS TO EFFECTIVENESS OF THIS AGREEMENT.
Notwithstanding anything to the contrary herein, this
Agreement shall not be effective unless and until the consummation of the
transactions contemplated under those certain Investor Agreement, dated as of
[____________], 2000 and Securities Purchase Agreement, dated as of August [__],
2000, each between the Corporation and the Investors, including, without
limitation, the filing of the Articles Supplementary to the Charter of the
Corporation designating the Series B Preferred Stock with the Secretary of State
of the State of Maryland, the issuance of the Series B Preferred Stock and the
Note to the Investors, and the execution of the Registration Rights Agreement.
15.16 THIRD PARTY BENEFICIARIES.
The terms and provisions of this Agreement are intended solely
for the benefit of each party hereto and their respective successors or
permitted assigns, and, except as expressly provided it is not the intention of
the parties to confer third-party beneficiary rights upon any other person.
[REMAINDER OF THE PAGE LEFT BLANK]
53
58
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first written above.
ADDRESS MANAGING GENERAL PARTNER:
-------
3 World Financial Center CGLH PARTNERS III LP
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000 By: MK/CG-GP LLC
General Partner
By: CG Interstate Associates, LLC
a Managing Member
By: Continental Gencom Holdings, LLC
its Sole Member
By:______________________
Name:
Title:
By: LB INTERSTATE GP LLC
General Partner
By: PAMI LLC
its Sole Member
By:______________________
Name:
Title:
GENERAL PARTNER:
Xxxxxx Plaza Ten Interstate Investment Corporation
000 Xxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000-0000
By:______________________
Name:
Title:
LIMITED PARTNERS:
__________________________ _________________________
__________________________ Xxxxxx X. Xxxxxx
__________________________ _________________________
__________________________ J. Xxxxxxx Xxxxxxxxxx
54
59
3 World Financial Center CGLH PARTNERS IV LP
12th Floor a Delaware limited partnership
Xxx Xxxx, Xxx Xxxx 00000
By: MK/CG-GP LLC
General Partner
By: CG Interstate Associates, LLC
a Managing Member
By: Continental Gencom Holdings,
LLC its Sole Member
By:______________________
Name:
Title:
By: LB INTERSTATE GP LLC
General Partner
By: PAMI LLC
its Sole Member
By:______________________
Name:
Title:
Xxxxxx Plaza Ten INTERSTATE PROPERTY PARTNERSHIP, L.P.
000 Xxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000-0000 By: Interstate Property Corporation
its Sole General Partner
By:______________________
Name:
Title:
55
60
[SAMPLE NOTARY BLOCKS FOR EXECUTIVES' SIGNATURES - TO BE CONFORMED AS NECESSARY]
--------------------------------------------------------------------------------
STATE OF ____________________ )
) ss.:
COUNTY OF ___________________ )
On the ___ day of _________ in the year ____ before me, the
undersigned, personally appeared _______________________________, personally
known to me or proved to me on the basis of satisfactory evidence to be the
individual(s) whose name(s) is (are) subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
capacity(ies), that by his/her/their signature(s) on the instrument, the
individual(s), or the person upon behalf of which the individual(s) acted,
executed the instrument, and that such individual made such appearance before
the undersigned in the __________________.
(Notarial Seal) ___________________________
Notary Public
STATE OF ____________________ )
) ss.:
COUNTY OF ___________________ )
On the ___ day of _________ in the year ____before me, the
undersigned, personally appeared _______________________________, personally
known to me or proved to me on the basis of satisfactory evidence to be the
individual(s) whose name(s) is (are) subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
capacity(ies), that by his/her/their signature(s) on the instrument, the
individual(s), or the person upon behalf of which the individual(s) acted,
executed the instrument, and that such individual made such appearance before
the undersigned in the __________________.
(Notarial Seal) ___________________________
Notary Public
56
