EXHIBIT 10.16
LIMITED PARTNERSHIP AGREEMENT
OF
VCH OAKS, LTD.
THIS LIMITED PARTNERSHIP AGREEMENT (this "Agreement") is entered into and
is effective as of June 25, 1996, by and between VCH OAKS, INC., a Florida
corporation, as the "General Partner," and R. XXXXXX XXXXX ("Xxxxx") XXXXXX X.
XXXX ("Xxxx"), and VISTANA OP INVESTMENT, LTD., a Florida limited partnership
("VOPI"), each as a "Limited Partner." The General Partner and Limited Partners
are referred to herein collectively as the "Partners," and individually as
"Partner." References herein to the Partners or to a Partner may include the
General Partner and/or the Limited Partners without reference to status.
ARTICLE I
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ORGANIZATION
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SECTION 1.1 Formation. The Partners hereby agree to form the limited
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partnership referred to in this Agreement as the "Partnership," pursuant to the
Partnership Law. The Partners shall execute and cause to be filed, recorded
and/or published all documents necessary to carry out the intent of this
Agreement, including, but not limited to:
A. A Certificate of Limited Partnership;
B. An Affidavit of Capital Contributions; and
C. An Affidavit or other appropriate documentation as to the use by the
Partnership of a fictitious name, as may be required by law.
The Partners, thereafter, shall execute such documents and take such action
as may be necessary to maintain the Partnership's status as a limited
partnership under the Partnership Law and as a partnership under the Code and to
carry out the business purposes of the Partnership as set forth in Article II
hereof. The Limited Partners shall, at the request of the General Partner,
promptly execute such documents and furnish such information as may be necessary
to enable the General Partner to perform, on behalf of the Partnership, those
acts contemplated under this Section 1.1.
SECTION 1.2 Name and Principal Place of Business. The name of the
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Partnership shall be VCH Oaks, Ltd., or such other name as the General Partner
may from time to time designate upon ten (10) days prior written notice to the
Limited Partners. The principal place
of business for the Partnership shall be 0000 Xxxxxxx Xxxxxx Xxxxx, Xxxx Xxxxx
Xxxxx, Xxxxxxx 00000, or such other place as the General Partner may from time
to time designate upon ten (10) days prior written notice to the Limited
Partners.
SECTION 1.3 Term. The term of this Partnership shall be from the date the
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Certificate of Limited Partnership is filed with the Florida Department of State
to December 31, 2046, unless sooner terminated in accordance with the provisions
of this Agreement (Article XIII) or as otherwise provided by the Partnership
Law.
SECTION 1.4 Costs of Formation. The Partnership shall bear all actual and
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direct costs and expenditures incident to its formation and to the issuance of
interests in the Partnership, and shall reimburse the General Partner and the
Limited Partners for all expenses actually paid or incurred by the General
Partner and the Limited Partners in connection therewith, including any legal
expenses actually paid or incurred by or on behalf of the General Partner and
the Limited Partners in connection with the preparation of this Agreement.
SECTION 1.5 Registered Office and Agent in Florida. The address of the
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Partnership's registered office in the State of Florida is 0000 Xxxxxxx Xxxxxx
Xxxxx, Xxxx Xxxxx Xxxxx, Xxxxxxx 00000. The registered agent at that address is
Xxxxxxx X. Xxxxx. The General Partner may, from time to time, on behalf of the
Partnership, change the registered office and/or the registered agent of the
Partnership.
SECTION 1.6 Definitions. Capitalized words and phrases used in this
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Agreement and which are not otherwise defined herein shall have the following
meanings:
A. "Accounts Receivable" means accounts receivable arising from the sale
of the Units (or interests therein) by the Developer.
B. "Adjusted Capital Account Deficit" means, with respect to any Partner,
the deficit balance, if any, in such Partner's Capital Account as of the end of
the relevant Partnership taxable year, after giving effect to the following
adjustments:
1. Debit to such Capital Account the items described in Reg.
(S)1.704-1(b)(2)(ii)(d)(4), (5) and (6); and
2. After making the foregoing debits, credit to such Capital Account
any amounts which such Partner is obligated to
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restore (pursuant to this Agreement or otherwise) or any amounts which such
Partner is deemed obligated to restore pursuant to Reg. (S)1.704-2(g)and
(i).
The foregoing definition of Adjusted Capital Account Deficit is
intended to comply with the provisions of Reg. (S)1.704 1(b)(2)(ii)(d) and shall
be interpreted consistently therewith.
C. "Affiliate" means the following: a party ("first party") will be
deemed to be an Affiliate of another party ("second party") if the first party
directly or indirectly owns or controls the second party, or if the first party
is, directly or indirectly, owned by or under common control with the second
party. For purposes of the preceding sentence, "control" shall mean ownership
(direct or indirect) of a majority of the voting interests in such entity or in
the managing general partner of such entity.
D. "Agreement" or "Partnership Agreement" means this Limited Partnership
Agreement of VCH Oaks, Ltd., as amended from time to time.
E. "Assign" or "Assignment" means any sale, assignment, option, gift,
pledge, hypothecation or other voluntary or involuntary encumbrance or transfer
of an interest in the Partnership (or, if applicable, of an interest in any
Partner, Affiliate of a Partner or other Person).
F. "Adjusted Capital Account Deficit" means, with respect to any Partner,
the deficit balance, if any, in such Partner's Capital Account as of the end of
the relevant Partnership taxable year, after giving effect to the following
adjustments:
1. Debit to such Capital Account the items described in Reg.
(S)1.704-1(b)(2)(ii)(d)(4), (5) and (6); and
2. After making the foregoing debits, credit to such Capital Account
any amounts which such Partner is obligated to restore (pursuant to this
Agreement or otherwise) or any amounts which such Partner is deemed
obligated to restore pursuant to Reg. (S)1.704-2(g)and (i).
The foregoing definition of Adjusted Capital Account Deficit is
intended to comply with the provisions of Reg. (S)1.704-1(b)(2)(ii)(d) and shall
be interpreted consistently therewith.
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G. "Available Cash" means all cash on hand other than cash which is (i)
restricted from distribution to Partners under the terms of any agreement to
which the Partnership is a party, or (ii) added to or retained in Partnership
reserves for all Partnership expenses, debt payments, capital improvements,
capital investments and reinvestments, replacements, contingencies, working
capital and other cash requirements, all as determined by the General Partner in
the reasonable exercise of its discretion.
H. "Bankruptcy" or "Bankrupt" with respect to a Partner or
Person shall mean:
1. Such Partner or Person has made an assignment for the benefit of
his creditors;
2. Such Partner or Person has filed a voluntary petition in
bankruptcy;
3. Such Partner or Person has been adjudged a bankrupt or insolvent
or has entered against him an order for any relief in any bankruptcy or
insolvency proceeding;
4. Such Partner or Person has filed a petition or answer seeking for
such Partner or Person any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any statute,
law or regulation;
5. Such Partner or Person has filed an answer or other pleading
admitting or failing to contest the material allegations of a petition
against such Partner or Person in any proceeding of this nature;
6. Such Partner or Person seeks, consents to or acquiesces in the
appointment of a trustee, receiver or liquidator of such Partner or Person
or of all or any substantial part of such Partner's or Person's property;
or
7. One Hundred Twenty (120) days after the commencement of any
proceeding against such Partner or Person seeking reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any statute, law or regulation, the proceeding has not been
dismissed; or if within ninety (90) days after the appointment, without
such Partner's or Person's consent or acquiescence, of a trustee, receiver
or liquidator of such Partner or Person or of any
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substantial part of such Partner's or Person's property, the appointment
has not been vacated or stayed; or if stayed, ninety (90) days following
the expiration of any such stay if the appointment has not been vacated.
I. "Capital Account" means, with respect to each Partner an individual
capital account which shall be determined and maintained for such Partner in
accordance with the rules of Reg. (S)1.704-1(b)(2)(iv). Except as otherwise
provided in such Regulations, each Partner's capital account shall be: (i)
credited with (a) such Partner's cash contributions to the capital of the
Partnership, (b) the fair market value of property contributed to the Partner
ship by such Partner (as of the date of contribution and net of liability
secured by such contributed property that the Partnership is considered to have
assumed or to have taken subject to pursuant to Code (S)752), and (c) such
Partner's allocable share of the Partnership's Profits (or items of income or
gain comprising the Profits and Losses of the Partnership); and (ii) debited for
(a) all distributions made by the Partnership to such Partner, and (b) such
Partner's allocable share of the Partnership's Losses (or items of expense or
deduction comprising the Profits or Losses of the Partnership). In the event
that Partnership property is subject to Code (S)704(c) or is revalued in
accordance with Reg. (S)1.704-1(b)(2)(iv)(f), the Partners' capital accounts
shall be adjusted in accordance with Reg. (S)1.704-1(b)(2)(iv)(g) for
allocations to them of depreciation, amortization and gain or loss, as computed
for book purposes (and not tax purposes), with respect to such property.
J. "Code" means the United States Internal Revenue Code of 1986, as
amended.
K. "Developer" means Oak Plantation Joint Venture, a Florida general
partnership formerly known as Caribbean Isle Joint Venture Phase II, and the
owner of the Property.
L. "GAAP" means generally accepted accounting principles, consistently
applied.
M. "General Partner" means any Person who (i) is referred to as such in
the first paragraph of this Agreement or who later becomes a General Partner
pursuant to the terms of this Agreement, and (ii) has not ceased to be a General
Partner pursuant to the terms of this Agreement.
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N. "Limited Partner" means any Person (i) whose name is set forth on the
signature page of this Agreement as a Limited Partner or who has been admitted
as an additional or substitute Limited Partner pursuant to the terms of this
Agreement, and (ii) who is the owner of an interest in the Partnership as a
Limited Partner. The term "Limited Partner" shall also be deemed to include the
holder of a converted Limited Partner interest (whether as an assignee or as a
substitute Limited Partner) received pursuant to Section 12.8 below.
O. "Liquidation of the Partnership" means the earlier of (i) the date
upon which the Partnership is terminated under Code (S)708(b)(1)(A), or (ii) the
date upon which the Partnership ceases to be a going concern (even though it may
continue in existence for the purpose of winding up its affairs, paying its
debts and distributing any remaining balance to its Partners).
P. "Non-Qualified Person" means a Person (i) who, directly or indirectly,
owns an interest in, or is otherwise engaged in (whether as a principal,
consultant, agent, employee, officer, director or otherwise) a timeshare or
interval ownership business (including timeshare development, timeshare
marketing, timeshare resort management or the operation or sale for timeshare
purposes of any kind of interest, including, without limitation, "timeshare
licenses," "timeshare estates" or "vacation clubs," as such terms are defined in
Chapter 721 of the Florida Statutes) other than through ownership of an interest
in the Partnership or through ownership of an interest in an Affiliate of the
General Partner, its successors or assigns (all of the foregoing activities
being hereinafter referred to as "Timeshare Activities"), (ii) which is an
Affiliate of any Person described in clause (i) above, or (iii) whose character
or reputation would, in the reasonable opinion of the General Partner,
jeopardize the authority of the Partnership to conduct any aspect of the
business of the Partnership in any state in which its business is conducted, or
would otherwise adversely affect the goodwill or business reputation of the
Partnership.
Q. "Partnership Law" means (S)(S)620.101 through 620.192, Florida
Statutes (the Revised Uniform Limited Partnership Act, as adopted by the State
of Florida) as amended from time to time and, to the extent not inconsistent
therewith, shall also be deemed to include (S)(S)620.81001 through 620.91,
Florida Statutes (the Revised Uniform Partnership Act, as adopted in the State
of Florida), as amended from time to time.
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R. "Percentage Interests" of the General Partner and the Limited
Partners shall be as follows:
Partner Percent Interest
General Partner 1.0 %
Noble 19.8 %
Xxxx 13.2 %
VOPI 66.0 %
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Total: 100.0 %
S. "Person" means an individual, partnership, limited liability company,
limited liability partnership, corporation, trust and any other association or
legal entity.
T. "Profits" and "Losses" of the Partnership for each taxable year of the
Partnership means an amount equal to the Partnership's taxable income or loss
for such taxable year, as determined for federal income tax purposes in
accordance with the accounting method followed by the Partnership and in
accordance with Code (S)703 (for this purpose, all items of income, gain, loss
or deduction required to be separately stated pursuant to Code (S)703(a)(1)
shall be included in taxable income or loss), subject to the following
modifications:
1. Any income of the Partnership that is exempt from federal income
tax and not otherwise taken into account in computing Profits and Losses
shall be added to such taxable income or loss;
2. Any expenditures of the Partnership described in Code
(S)705(a)(2)(B) or treated as Code (S)705(a)(2)(B) expenditures pursuant to
Reg. (S)1.704-1(b)(2)(iv)(i), and not otherwise taken into account, shall
be subtracted from such taxable income or loss; and
3. With respect to Partnership property, if any, which has a book
value greater than or less than its adjusted income tax basis, "Profits"
and "Losses" of the Partnership shall be determined by reference to the
depreciation and amortization deductions, if any, allowable with respect to
such property as computed for book purposes (and not tax purposes), as
determined pursuant to Reg. (S)1.704-1(b)(2)(iv)(g), and by the
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gain or loss attributable to such property as computed for book purposes
(and not for tax purposes).
U. "Project" means the conversion of the existing apartment complex on
the Property to a vacation timeshare resort.
V. "Property" means the land, buildings, improvements and associated
property interests described as Xxx 0 xxx Xxx 0 xx Xxx Xxxxxxxxxx according to
the plat thereof as recorded in Plat Book 6, Pages 208 and 209 of the public
records of Osceola County, Florida.
W. "Regulations" or "Reg." means regulations adopted by the Treasury
Department and the Internal Revenue Service pursuant to the Code.
X. "Regulatory Allocations" means the Regulations promulgated under Code
(S)704(b).
Y. "Tax Distribution" for any fiscal year of the Partnership means an
amount computed as follows:
1. Determine the highest effective marginal income tax rate (based
upon applicable federal, state and city income taxes levied on such income,
but taking into account any deductions or credits available in computing
any such income tax for either or both of the other income taxes levied on
such income) applicable to any Partner who was a Partner for all or any
portion of such fiscal year. For this purpose, if any such Partner is a
"pass-through entity" (i.e., an S corporation, a partnership, a limited
liability company, a limited liability partnership or a trust), the
"highest effective marginal income tax rate" deemed to be applicable to
such Partner hereunder shall be the highest such effective marginal income
tax rate (determined as above) applicable to any shareholder, partner,
member or beneficiary (whichever is applicable) of such Partner and, if
applicable, such rate shall also reflect any federal, state or city income
taxes imposed at the entity level on such pass-through entity.
2. Determine the amount of net taxable income or net taxable loss
(as the case may be) of the Partnership for federal income tax purposes for
such fiscal year.
3. If the Partnership has a net taxable loss for the fiscal year,
the "Tax Distribution" for such fiscal year shall
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be zero and the amount of such net taxable loss shall be carried forward to
future fiscal years of the Partnership to be applied in such years in the
manner described in subpart 4 below.
4. If the Partnership has net taxable income for such fiscal year,
and if the Partnership has any net taxable losses from any prior fiscal
years that have not been previously applied to reduce net taxable income of
the Partnership for any prior fiscal year (the "Net Carryover Losses"), the
net taxable income for such fiscal year shall be reduced (but not below
zero) by the Net Carryover Losses. The net taxable income of the
Partnership for such fiscal year, reduced by the Net Carryover Losses (if
any), shall be deemed to be the "Tax Base" for such fiscal year for
purposes of computing the Tax Distribution for such fiscal year.
5. The aggregate amount of the Tax Distribution for such fiscal year
shall be computed by multiplying the Tax Base for such fiscal year by the
rate computed under subpart 1 above for such fiscal year.
Z. "Transaction Documents" means that certain Agreement for Contribution
of Partnership interest dated as of the date hereof, between Noble, Xxxx and the
Partnership and all other documents, agreements and instruments executed
contemporaneously therewith or in connection with the acquisition by the
Partnership of a ninety-nine percent (99%) interest in the Developer, including,
without limitation, consulting agreements, management agreements, adminis
trative services agreements, declarations, easements, covenants, license
agreements, and sales and marketing agreements.
AA. "Units" means the condominium and/or vacation ownership units,
including ancillary facilities and amenities, to be developed by the Developer
on the Property.
ARTICLE II
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BUSINESS OF THE PARTNERSHIP
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SECTION 2.1 Business and Purpose. The purpose of the Partnership is to
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engage in or invest in entities engaged in all facets of the business of resort
development at the Property and related leisure and travel businesses, including
the acquisition, development, marketing, sale and operation of a timeshare or
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interval ownership resort on the Property, including, but not limited to, the
following:
A. Acquire a ninety-nine percent (99%) ownership interest in the
Developer pursuant to the terms of the Transaction Documents;
B. Cause the Developer to develop the Project, including the construction
of the Units;
C. Cause the Developer to market, sell and/or rent (transient or
otherwise) the Units or any interest herein, and in connection
therewith, engage in other activities incident to the development,
marketing, rental and/or sale of the Units or any interest therein,
including, but not limited to such financing transactions as are usual
and customary with respect to the development, marketing, renting
and/or sale of the Units or any interest therein or of any Accounts
Receivable;
D. Cause the Developer to provide or obtain hospitality management
services with respect to any transient, timeshare or interval
ownership development, condominium or resort hotel located within the
Property, and management services to or in connection with condominium
associations, all of which may include management and operation of
restaurants, general stores and other related amenities which are
ancillary to management services for a resort facility;
E. Cause the Developer or another contracting party to collect and
service all Accounts Receivable;
F. Engage in cash management transactions as contemplated in Section 4.5
below; and/or
G. At such time as the General Partner deems appropriate (but subject to
the limitations set forth in Sections 7.1 and 7.3 below), sell, in
whole or in part, the Partnership's interest in the Developer and
other assets of the Partnership.
SECTION 2.2 Other Business. The Partnership shall not be authorized to
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engage in any business activities not described in Section 2.1 above.
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ARTICLE III
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NAMES AND ADDRESSES OF PARTNERS
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SECTION 3.1 General Partner. The name and business address of the General
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Partner is:
VCH Oaks, Inc.
0000 Xxxxxxx Xxxxxx Xxxxx
Xxxx Xxxxx Xxxxx, Xxxxxxx 00000
Fax No. (000) 000-0000
SECTION 3.2 Limited Partners. The names and business addresses of the
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Limited Partners are:
R. Xxxxxx Xxxxx
c/o Xxxxx-Xxxx Development
00000 Xxxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Fax No. (000) 000-0000
Xxxxxx X. Xxxx
c/o Xxxxx-Xxxx Development
00000 Xxxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Fax No. (000) 000-0000
Vistana OP Investment, Ltd.
0000 Xxxxxxx Xxxxxx Xxxxx
Xxxx Xxxxx Xxxxx, Xxxxxxx 00000
Fax No. (000) 000-0000
SECTION 3.3 Admittance of Additional Limited Partners. Except as otherwise
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provided in Subsection 5.2.B. and elsewhere in this Agreement, Persons not
otherwise described in Section 3.2 above may be admitted as additional limited
partners only upon the unanimous consent of the Partners.
ARTICLE IV
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PARTNERSHIP ACCOUNTING/REPORTS/INVESTMENTS
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SECTION 4.1 Method of Accounting. The General Partner shall maintain full
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and accurate books of the Partnership at the
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Partnership's principal place of business specified in Section 1.2 above,
showing all receipts, expenditures, assets, liabilities, Profits and Losses of
the Partnership and all other records necessary for proper recordation of the
Partnership's business and affairs. The books of the Partnership, for tax and
financial reporting purposes, shall be kept on the method of accounting selected
by the General Partner, unless the Partnership is required to adopt a different
method of accounting. The fiscal year of the Partnership shall be the calendar
year unless a different fiscal year is required by the Code.
SECTION 4.2 Inspection of Books and Records. Any Limited Partner may at
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any time during regular business hours inspect and copy (at such Limited
Partner's personal expense) any of the Partnership records described in Section
620.106(1), Florida Statutes. In addition, a Limited Partner shall be entitled
to obtain from the General Partner copies of the Partnership's federal income
tax returns promptly after the same become available.
SECTION 4.3 Reports.
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A. No later than ten (10) days prior to the due date of the Partnership's
federal income tax return (as determined with regard to available extensions),
the General Partner shall send to each person who was a Partner at any time
during the fiscal year to which such return relates such tax information as
shall be necessary for the preparation by such person of such person's federal,
state and local income tax returns.
B. Within one hundred twenty (120) days after the end of each fiscal
year, the General Partner shall send to each Partner audited financial
statements of the Partnership, consisting of a balance sheet, statement of
income, statement of Partner's equity (based on relative capital account
balances), and statement of changes in cash flows for such fiscal year, all of
which shall be prepared in accordance with GAAP and certified by such national
or regional independent certified public accountants as shall be selected in the
sole discretion of the General Partner.
SECTION 4.4 Income Tax Elections. The General Partner may make, but shall
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not be required to make, any applicable election under the Code.
SECTION 4.5 Bank Accounts; Temporary Investments of Partnership Funds.
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Promptly after commencing operations, the General Partner shall open, and will
thereafter maintain, one or
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more bank accounts in the name and for the sole benefit of the Partnership
(except to the extent required in any loan document, receivable sale agreements
or other contractual commitments of the Partnership) in which there shall be
deposited all of the capital of the Partnership, all gross receipts of the
Partnership, and the proceeds of loans, if any, that the General Partner may
obtain for and/or in the name of the Partnership. The funds in the
Partnership's bank account or accounts shall be used solely for the business of
the Partnership. Withdrawals shall be made only in the regular course of the
Partnership's business on such signature or signatures as the General Partner
may determine. In the sole discretion of the General Partner, reserved cash,
cash held pending the expenditure of funds for the business of the Partnership
and cash held pending a distribution to the Partners may be held, placed or
otherwise invested in such liquid or illiquid investments as the General Partner
may determine from time to time, including, but not limited to, United States
Government and/or municipal securities and commercial paper (and repurchase
agreements secured by the foregoing), mutual funds, money market funds, bonds,
banker's acceptances, receivables (whether or not secured by an interest in real
property), interest-bearing bank accounts, certificates of deposit, or liquid
asset funds of brokerage houses, provided that any such investments are
reasonable, would not be classified as "speculative," and, in the case of
securities, would qualify as "investment grade securities."
ARTICLE V
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CAPITAL CONTRIBUTIONS
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SECTION 5.1 Capital of the Partnership.
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A. Initial Capital Contributions.
1. General Partner. The General Partner will receive its interest
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in the Partnership as the General Partner in exchange for its services
rendered in anticipation of the formation of the Partnership including, but
not limited to, the negotiation of the terms of the Purchase Documents, and
in consideration for its ongoing services of managing the Partnership as
described elsewhere in this Agreement. The Capital Account of the General
Partner shall be credited in the amount of One Dollars ($1.00) by reason of
its initial contribution hereunder.
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2. Limited Partners. VOPI shall contribute to the Partnership the
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amount set forth on Schedule A attached hereto in immediately available
funds, upon formation of the Partner ship in exchange for its interest as
Limited Partner. Noble and Xxxx shall each contribute Partnership
interests in Developer aggregating a ninety-nine percent (99%) interest in
Developer in exchange for their interests as Limited Partners. The Capital
Account of the Limited Partners shall be credited in the amount set forth
on Schedule A attached hereto by reason of said initial contributions to
the capital of the Partnership hereunder.
B. No Limited Partner shall be entitled to withdraw any portion of such
Limited Partner's capital contribution or such Limited Partner's Capital Account
in money or property prior to dissolution or Liquidation of the Partnership and
then only in accordance with the provisions of Partnership Law and this
Agreement. The General Partner shall not be personally liable for any portion
of any other Partner's capital contribution. No interest will be paid on
account of any capital contribution or in the credit balance in any Partner's
Capital Account, and no Limited Partner shall have the right to receive or
demand property other than cash in return for such Limited Partner's capital
contribu tion. Except as otherwise provided in this Agreement, no Limited
Partner shall have priority over any other Limited Partner either as to the
return of such Limited Partner's capital contribution or as to distributions.
SECTION 5.2 Additional Contributions. In addition to the capital
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contributions referred to in Section 5.1 above, if the General Partner
determines in the reasonable exercise of its discretion that additional capital
is necessary or desirable for the business of the Partnership, it may request
all the Partners to contribute such additional capital by written notice sent to
all such Partners. All such additional capital contributions shall be
contributed by the General Partner and the Limited Partners based upon their
relative Percentage Interests. Such additional capital contributions shall be
payable to the Partnership in full within forty-five (45) days after each
Partner receives written notice of said capital call.
A. If a Partner fails to make its additional capital contribution within
forty-five (45) days after receipt of the written notice of the capital call
from the General Partner, the General Partner shall diligently pursue a
financing (the "Institutional Loan") from a reputable financial institution and
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exhaust all sources that the Partners or their Affiliates have relationships
with or have borrowed money from and any other source that the General Partner
may deem appropriate. If the Partnership is able to consummate the
Institutional Loan within ninety (90) days after the date of the capital call,
the Partnership shall return all additional capital contributions tendered by
Partners pursuant to the capital call made by the General Partner pursuant to
this Section 5.2 within ten (10) days after the date of closing of the
Institutional Loan.
B. If a Partner fails to make its additional capital contribution within
forty-five (45) days after receipt of the written notice of the capital call
from the General Partner, and the Partnership is unable to close upon an
Institutional Loan within ninety (90) days after the date of the capital call,
all capital contributions made by any or all of the other Partners (the "Lending
Partners") with respect to such capital call, shall be deemed to be loans to the
Partnership (the "Contribution Loans"). Such Contribution Loans, together with
all interest due thereon, shall be repaid in full to the Lending Partners (pro
rata based upon the relative amounts of the Contribution Loans made by the
Lending Partners) within ten (10) days after demand is made provided that the
Lending Partners may not make a demand prior to the expiration of one hundred
eighty (180) days after the date such Contribution Loans were deemed to have
been made.
The Contribution Loans shall bear interest at the lower of: (i) the Base
Rate announced publicly by Citibank, N.A., New York, New York (or another
comparable national banking institution selected by the General Partner) to its
most preferred customers determined as of the date such Contribution Loan was
made, plus five percent (5%) per annum; or (ii) the highest rate permitted by
applicable law. Said Contribution Loans, together with all interest accrued
thereon, may be repaid at any time by the Partnership (but all repayments shall
be made to all the Lending Partners pro rata based upon the relative amounts of
the Contribution Loans made by the Lending Partners), but said Contribution
Loans shall in any event be repaid in full, together with all interest accrued
thereon, upon termination of the Partnership.
At the request of any Lending Partner, the Partnership shall execute and
deliver to any requesting Lending Partner a promissory note evidencing the
related Contribution Loan, which promissory note shall be in form and substance
reasonably acceptable to the General Partner.
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No distributions shall be made to any of the Partners during any period
that any Contribution Loan (including all accrued interest and other charges
related thereto, if any) remains unpaid and outstanding, in whole or in part,
without the express written consent of all Lending Partners whose Contribution
Loans (including all accrued interest and other charges related thereto, if any)
remain unpaid and outstanding as of the date such distribution is to be made.
C. In the event that all of the Partners have not made their additional
capital contributions within forty-five (45) days after receipt of the written
notice of the capital call from the General Partner, and the Partnership is
unable to consummate the Institutional Loan within ninety (90) days after the
date of the capital call, then notwithstanding any other provision in this
Agreement to the contrary, the General Partner may, in its sole discretion
without the consent of any other Partner, thereafter offer and sell interests in
the Partnership to any other Person which is not an Affiliate of any Partner and
not a Non-Qualified Person (the "Third Party Contributor") for a price, payable
in immediately available funds to the Partnership, equal to the aggregate amount
of the uncollected contributions requested in the capital call. All other terms
of the sale of such Partnership interest, including without limitation, the size
of the Percentage Interest to be acquired by the Third Party Contributor, shall
be determined by the General Partner in its sole and absolute discretion. In
such event, the Percentage Interests of all then existing Partners shall be
diluted by the issuance of the new interest in the Partnership to the Third
Party Contributor, pro rata in accordance with the relative Percentage Interests
of all of the Partners immediately prior to the admission of the Third Party
Contributor. If a Third Party Contributor acquires an interest in the
Partnership hereunder, the General Partner is authorized to admit such Third
Party Contributor as an additional Partner of the Partnership provided that such
Third Party Contributor executes a joinder agreement in such form as may be
acceptable to the General Partner and its counsel evidencing the agreement of
the Third Party Contributor to be bound by all the terms and conditions of this
Agreement, as amended through the date of the contribution.
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ARTICLE VI
----------
CAPITAL ACCOUNTS
----------------
SECTION 6.1 Capital Accounts. An individual Capital Account shall be
----------------
determined and maintained for each Partner as provided below.
SECTION 6.2 Capital Account of Assignee Partners; Code (S)708(b)
----------------------------------------------------
Termination. Upon the transfer of all or part of an interest in the
-----------
Partnership, the Capital Account of the transferor Partner that is attributable
to the transferred interest shall be carried over to the transferee. If the
transfer of an interest in the Partnership causes a termination of the
Partnership under Code (S)708(b)(1)(B), the capital account that carries over to
the transferee will be adjusted in accordance with Reg. (S)1.704-1(b)(2)(iv)(e),
and the constructive reformation of the Partner ship, will, for purposes of
Section 6.1 above, be treated as the formation of a new Partnership and the
Capital Account of the transferee and of the remaining Partners will be
determined and maintained accordingly.
SECTION 6.3 Adjustment to Capital Accounts/Revaluation of Partnership
--------------------------------------------- -----------
Property. If (1) a new or existing Partner contributes money or other property
--------
(other than a de minimis amount) to the Partnership as consideration for the
----------
receipt of an interest in the Partnership greater than the Partnership interest
owned prior to such contribution, or (2) there is a distribution of money or
other property (other than a de minimis amount) by the Partnership to a retiring
-- -------
or continuing Partner as consideration for the relinquishment of some or all of
such Partner's interest in the Partnership, or (3) upon the Liquidation of the
Partnership at the election of the General Partner, the values of the
Partnership's properties on its books ("book values") shall be adjusted to
reflect their fair market value [taking into consideration Code (S)7701(g)] as
of the date of the distribution, contribution or Liquidation of the Partnership,
as the case may be; and, in such event, the Capital Accounts of the Partners
shall be adjusted to reflect the manner in which the unrealized income, gain,
loss or deduction inherent in the Partnership's property (to the extent not
reflected in the Partners' Capital Accounts) would be allocated among all the
Partners under the terms of this Agreement, assuming that there was a fully
taxable disposition of such property immediately preceding such contribution of
money or other property to the Partnership, or immediately preceding the
distribution of money or other property by the Partnership, or upon the date of
the
-17-
Liquidation of the Partnership, as the case may be, for such properties' fair
market values as of such time. For purposes hereof, the fair market value of any
Partnership property shall be determined by unanimous agreement of the Partners
whose Capital Accounts are to be affected.
SECTION 6.4 Distributions of Property In-Kind. To the extent that the
---------------------------------
unrealized income, gain, loss and deduction inherent in property distributed (or
deemed distributed) in kind (whether or not distributed in liquidation) has not
previously been reflected in the Partners' Capital Accounts, the Capital
Accounts of the Partners shall be adjusted to reflect the manner in which the
unrealized income, gain, loss and deduction inherent in such property (that has
not been reflected previously in the Capital Accounts) would have been allocated
among the Partners under this Agreement if there were a taxable disposition of
such property for its fair market value on the date of its actual (or deemed)
distribution [taking into account Code (S)7701(g)]. For purposes hereof, the
fair market value of any Partnership property shall be determined by unanimous
agreement of the General Partner.
ARTICLE VII
-----------
RIGHTS, POWERS AND DUTIES OF THE PARTNERS
-----------------------------------------
SECTION 7.1 Management of the Partnership Business. The General
--------------------------------------
Partner shall have the sole and exclusive right to manage the business of the
Partnership.
SECTION 7.2 Powers of the General Partner. Except as otherwise
-----------------------------
provided by the Partnership Law, the General Partner shall have and enjoy all of
the rights and powers of a partner in a partnership without limited partners.
Without limiting the foregoing, to the extent consistent with the authorized
business of the Partnership as described in Section 2.1 above, but subject to
Sections 7.3 and 7.4 below and any agreement to which the Partnership is a
party, in addition to other matters (including other matters with respect to
which the General Partner is granted authority or control under this Agreement
and such other powers as are now or hereafter granted to a general partner of a
limited partnership under applicable law, including, without limitation, the
Partnership Law), the General Partner shall have the full and exclusive power on
behalf of the Partnership, and at the sole expense of the Partnership, to:
-18-
A. Sell, transfer, assign, convey, manage, dedicate, declare or otherwise
dispose of or deal with all or any part of the Partnership's business,
assets or property, whether or not in the ordinary course of business,
on such terms as the General Partner may negotiate at arms length;
provided, however, that any sale of the Partnership's interest in the
Developer shall be subject to the terms and conditions of the Amended
and Restated Joint Venture Agreement of the Developer and Article XII
of this Agreement to the extent applicable;
B. Acquire interests in personal property, directly or indi rectly,
whether by purchase or lease, in connection with the business of the
Partnership;
C. Borrow money from banks, financial institutions or any other person,
arrange financing or refinancing or arrange modifications of existing
debts, including indebtedness described in the Transaction Documents,
issue notes or other evidences of indebtedness of the Partnership and
secure the same by mortgage, deed of trust, pledge or other lien, in
furtherance of the Partnership's purposes and business in a reasonable
prudent manner;
D. Negotiate (or cause the Developer to negotiate) and execute, deliver
and enforce, and if applicable, file or record (directly or indirectly
through a designated representative), on behalf of the Partnership,
such documents, agreements and instruments, including, but not limited
to, any and all documents, agreements and instruments required to be
executed by the Partnership in connection with its purchase of assets
under the Purchase Documents and/or otherwise customarily employed or
entered into in the timeshare business or any phase thereof as the
General Partner may deem necessary or desirable for the Partnership's
business, and/or the proper management of Partnership affairs,
including the execution, filing or recording of any and all deeds,
contracts and other instruments relating to the timeshare business
(including financing transactions with respect thereto);
E. Perform, or cause to be performed, all of the Partner ship's
obligations under any agreement to which the Partnership or any
nominee of the Partnership is a party, except in the event that the
General Partner determines,
-19-
in good faith, that such performance is not in the best interests of
the Partnership or its Partners;
F. Bring, defend, settle or compromise, or cause the Partnership's
employees or agents to do so, all actions at law or in equity, or
before any governmental entity involving the Partnership, its business
or its assets or properties, and to satisfy any judgment, decree,
decision or settlement in connection therewith, without limitation;
G. Employ and/or contract for, on such terms and conditions as the
General Partner shall determine in its sole discretion, sales,
maintenance, managerial, adminis trative or secretarial personnel
(which such persons may include the General Partner or affiliates
thereof) and such other persons, including attorneys, accountants,
architects, consultants, brokers necessary or appropriate to assist
the General Partner, or otherwise necessary or appropriate for the
operation (and/or sale) of the business of the Partnership, and/or the
maintenance, management and/or sale of any Partnership property, and
to grant such person or persons such authority as may be necessary or
desirable;
H. Subject to the limitations of Section 4.5 above, open, maintain,
operate, control and close bank accounts in the name of the
Partnership, deposit Partnership funds into such account(s), invest
Partnership funds on behalf of the Partnership, authorize employees,
agents or representatives of the Partnership to sign checks and drafts
on such accounts, and to make such investments on behalf of the
Partnership, as the General Partner shall determine in its sole
discretion;
I. Determine the timing and amount of distributions by the Partnership to
the Partners, subject to the terms of this Agreement and any other
agreement to which the Partnership is a party or is otherwise bound;
J. Cause the Developer to be duly registered and licensed as a timeshare
developer in each jurisdiction in which such registration and/or
licensure is required, and/or otherwise to be duly registered and
licensed so that the Partnership may lawfully carry on any of its
authorized business activities, and otherwise to obtain, on behalf
-20-
of the Partnership, all necessary approvals from all governmental and
quasi-governmental authorities in connection with the operation of the
Partnership's time-share business activities;
K. Purchase such policy or policies of liability, casualty and other
insurance (including, but not limited to, directors and officers
liability insurance or its equivalent) which are necessary, advisable,
appropriate or convenient for the protection of any Partnership
property or business, or for any purpose convenient or beneficial to
the Partnership, as determined in the sole discretion of the General
Partner;
L. Arrange for the preparation and timely filing (subject to available
extensions) of all federal, state or local income tax returns required
to be filed by or on behalf of the Partnership, and in connection
therewith, to make such elections under the tax laws as may be
available to the Partnership with respect to the treatment of any item
of Partnership income, gain, loss, deduction and credit;
M. Arrange for the preparation of annual financial statements for the
Partnership from such national or regional accounting firm as the
General Partner shall determine in its sole discretion;
N. Expend the capital, revenues, income and other cash of the Partnership
in furtherance of the Partnership's business in such amounts, at such
times and for such purposes as the General Partner shall determine in
its sole discretion, such authority including (i) the right to pay or
arrange for the payment of all taxes imposed on the Partnership or on
the Partnership's assets or properties when due (provided that the
General Partner shall have the authority to take all actions provided
by law to contest the imposition or amount of any such taxes), (ii)
the right to pay or cause to be paid all expenses of the Partnership
in the ordinary course of business, and (iii) the right to pay or
cause to be paid all charges, fees or compensation to any person or
firm (including affiliates of the Partners) for property (tangible or
intangible) furnished or services rendered to or on behalf of the
Partnership;
-21-
O. Establish such reserves for working capital, insurance premiums, debt
repayments, improvements, repairs, replacements, renewals and such
other items required to be paid in connection with the business of the
Partner ship, and/or to otherwise provide for such contingencies as
the General Partner may determine in its sole discretion as may be
deemed necessary for the proper conduct of the Partnership;
P. Take such actions as the General Partner deems necessary or advisable
in order to comply with the laws of the United States and all other
jurisdictions to which the Partnership or its business or assets are
subject;
Q. Exercise, on behalf of the Partnership, any and all rights, options
and elections, if any, granted the Partnership pursuant to the terms
of this Agreement or any other agreement or arrangement to which the
Partnership is a party;
R. Solicit and accept additional contributions, and admit Persons who
make such contributions as additional limited partners (if not already
admitted as such) in accordance with Section 5.2 above.
X. Xxxxx or acquire easements, rights of way or similar rights for the
benefit of the Property and the Partnership and lease or acquire land
adjacent to the Property for ancillary uses by the Partnership.
T. Perform such other normal and routine business functions, and
otherwise operate and manage the day-today affairs of the Partnership,
in furtherance of the business of the Partnership, as the General
Partner shall determine; and
U. Do any act that is necessary and incidental to carrying out the
foregoing or to perform any of the duties or exercise any discretion
assigned or delegated to it under this Agreement.
Any person dealing with the Partnership or its property shall be entitled
to rely fully upon any deed, mortgage, xxxx of sale, contract, lease, sublease,
note or other written instrument signed by the General Partner or its duly
authorized representatives in the name of and/or on behalf of the Partnership.
-22-
SECTION 7.3 Limitations Upon Authority of General Partner. Notwithstanding
---------------------------------------------
anything in Section 7.2 above to the contrary, the General Partner shall not
take any of the following actions (or enter into a contract on behalf of the
Partnership requiring the Partnership to take any of such actions unless such
contract is made subject to the provisions hereof) without obtaining the consent
of all of the Limited Partners:
A. Cause the Partnership to file a voluntary petition in Bankruptcy, or
make a voluntary assignment of the Partnership's assets for the
benefit of its creditors, or otherwise take any voluntary action which
will directly result in an adjudication of Bankruptcy of the
Partnership;
B. Loan funds of the Partnership to any Person other than purchase money
----------
debt derived from the sale of Partnership properties, loans to
condominium associations relating to the Units, and temporary advances
made in the ordinary course of conduct of the Partnership's business.
C. Acquire any real property or interests therein, directly or
indirectly, whether by purchase or lease (other than in the ordinary
course of business or as expressly authorized in Section 7.2(S)),
develop or cause to be developed any such property, or enter into
joint ventures, general partnerships or limited partnerships in
connection therewith.
D. Guarantee the indebtedness of, or loan funds to, any Affiliate of the
General Partner.
SECTION 7.4 Limited Partners. Except in the case of a General Partner who
----------------
acquires a limited partnership interest, no Limited Partner shall participate
in, or have any control over, the management of the Partnership's business
(including the sale of any Partnership asset), nor transact any business for the
Partnership. No Limited Partner shall have the power to sign for or bind the
Partnership.
SECTION 7.5 Transactions with Affiliates. The General Partner may, on
----------------------------
behalf of the Partnership or otherwise, employ a Partner or a Person related to
or affiliated with a Partner to render or perform a service, may contract to buy
or lease property from a Partner or such affiliated Person, may enter into a
general partnership, limited partnership, joint venture, or other
-23-
association, and may otherwise deal with such Partner or such affiliated Person.
If the General Partner, on behalf of the Partnership, employs, leases or buys
property from a Partner or Persons, firms, or corporations affiliated with the
General Partner or any Limited Partner, or if the Partnership sells any property
to any such Person, then (i) the compensation paid for services rendered and/or
payments made for materials or property leased or sold by such Partner, Persons,
firms, or corporations, or the price and terms of any such sale by the
Partnership to such Person, as the case may be, must be on arms length terms and
conditions and must not be materially more favorable than those which would be
charged or imposed on those not so related, and (ii) any such transactions shall
be reported to the Limited Partners at least annually (at the time of providing
the Limited Partners with copies of the Partnership's annual financial
statements). Notwithstanding the foregoing, the General Partner may cause the
Developer to enter into all of the Transaction Documents, with Affiliates of the
Partners, without any further act or consent of the Partners.
SECTION 7.6 Liability of General Partner; Indemnification. The General
---------------------------------------------
Partner shall not be liable to the Limited Partners because any taxing
authorities disallow or adjust any deductions or credits in the Partnership
income tax returns nor shall the General Partner have any personal liability for
the repayment of capital contributions of the Limited Partners except as
otherwise provided in this Agreement. In addition, the doing of any act or the
omission to do any act by the General Partner, the effect of which may cause or
result in loss or damage to the Partnership, if done in good faith and in
accordance with the terms of this Agreement, shall not subject the General
Partner or its successors and assigns to any liability. The Partnership, in
addition to the indemnifi cation provided for in Section 14.5 below, will
indemnify and hold harmless the General Partner and its successors and assigns
and its (or their) partners, shareholders, directors, officers, employees and
agents from any claim, loss, expense, liability, action or damage resulting from
any such act or omission, including, without limitation, reasonable costs and
expenses of litigation and appeal (including reasonable fees and expenses of
attorneys engaged by the General Partner or such parties in defense of such act
or omission). However, the General Partner and such parties shall not be
entitled to be indemnified or held harmless from any claim, loss, expense,
liability, action or damage due to, or arising from, its (or their) fraud, gross
negligence or its (or their) willful failure to comply with any representation,
warranty, covenant, condition or other agreement of the General Partner herein
contained.
-24-
SECTION 7.7 Liability of Limited Partners. No Limited Partner, as such,
-----------------------------
shall be personally liable for the debts, liabilities or other obligations of
the Partnership, except that the capital contributions of the Limited Partners,
the Limited Partners' undistributed share of Partnership profits, and any
amounts referenced in Section 10.3 below shall be available for the debts,
liabilities or other obligations of the Partnership; provided, however, that
such liability shall be enforceable only by the Partnership and the Partners and
not by any creditor of the Partnership except as expressly provided in Section
620.136 of the Partnership Law.
ARTICLE VIII
------------
REIMBURSEMENT OF EXPENSES
-------------------------
SECTION 8.1 Reimbursement of General Partner's Expenses. The Partnership
--------------------------------------------
shall reimburse the General Partner (or its Affiliates) and the Limited Partners
(or their Affiliates) for all reasonable costs and expenses paid or incurred by
such parties in connection with the creation of the Partnership, the sale of
limited partnership interests, the acquisition of the partnership interest in
the Developer to be acquired by the Partnership pursuant to the Purchase
Documents, and shall reimburse the General Partner for all reasonable costs and
expenses paid or incurred by it (or its Affiliates) in connection with the
ownership, operation, development, marketing and sale of the assets and business
of the Partnership, the financing of the Partnership's business transactions,
and/or the administration of the affairs of the Partnership.
SECTION 8.2. Payment. Any reimbursement required by this Section 8.1
-------
shall be paid from the first Available Cash of the Partnership (as determined in
the sole discretion of the General Partner, but subject to the terms of any
agreement to which the Partnership is a party), without interest, if paid within
thirty (30) days of written demand therefor to the Partnership, or if not so
paid, with interest at the rate specified in Section 5.3 above, from the date
any such expense or capital expenditure was paid by the General Partner (or its
Affiliates) or the Limited Partners (or their Affiliates).
-25-
ARTICLE IX
----------
ALLOCATIONS
-----------
SECTION 9.1 Profits and Losses. Except as otherwise provided in Section
------------------
9.2 below, the Profits and Losses of the Partnership for each taxable year
shall be allocated among the Partners as follows:
A. Profits shall be allocated as follows:
1. First, to each Partner until each Partner has been allocated an
aggregate amount of Profits pursuant to this Section 9.1.A since the inception
of the Partnership equal to the aggregate Losses allocated to each such Partner
since the inception of the Partnership pursuant to Section 9.1.B.3 below;
2. Then, to each Partner until each Partner has been allocated an
aggregate amount of Profits pursuant to this Section 9.1.A.2 since the inception
of the Partnership equal to the aggregate Losses allocated to each such Partner
since the inception of the Partnership pursuant to Section 9.1.B.2 below; and
3. The balance, if any, shall be allocated among the Partners in
proportion to their relative Percentage Interests.
B. Losses shall be allocated as follows:
1. First, to each Partner, until each Partner has been allocated an
aggregate amount of Losses pursuant to this Section 9.1.B.1. since the inception
of the Partnership equal to the aggregate Profits allocated to each such Partner
since the inception of the Partnership pursuant to Section 9.1.A.3 above;
2. Then, an amount of Losses equal to the aggregate positive balance
in the capital accounts of the Partners having a positive capital account
balance, to each such Partner having a positive capital account balance (as
determined at the end of the Partnership taxable year to which the Losses to be
allocated relate, after giving effect to the allocation of Losses for such
taxable year pursuant to Section 9.1.B.1. above), in proportion to such positive
capital account balances so as to reduce each such positive capital account
balance to zero; and
3. The balance, if any, shall be allocated to the Partners in
proportion to their relative Percentage Interests.
-26-
C. For all purposes of this Agreement, except as otherwise required by
Code (S)706(d) including the determination of the allocable share of the Profits
and Losses (or items thereof) of a Partner who acquires or disposes of its
interest in the Partnership during any Partnership taxable year, Profits or
Losses (or items thereof) of the Partnership for any taxable year shall be
allocated to the periods of such taxable year on such method or methods as
permitted by Code (S)706 as determined by the General Partner in its sole
discretion.
For purposes of computing the amount of Profits or Losses to allocate to a
Partner under Subsection 9.1.A. and/or 9.1.B. above, to the extent such
determination relates back to the inception of the Partnership, such
determination shall be based upon the assumptions and provisions set forth in
Section 15.11 below (relating to allocations made to a predecessor-in-interest).
SECTION 9.2 Special Allocations. Notwithstanding the provisions of Section
-------------------
9.1 hereof to the contrary, the following special rules shall apply:
A. No allocation shall be made to any Limited Partner to the extent that
any such allocation would create or enlarge an Adjusted Capital Account Deficit
in any such Limited Partner's capital account, as determined as of the end of
any taxable year of the Partnership. Any items which would be allocated to a
Limited Partner but for the preceding sentence shall be allocated to the General
Partner.
B. If any Limited Partner unexpectedly receives any adjustments,
allocations or distributions described in Reg. (S)1.704-1(b)(2)(ii)(d)(4), (5)
or (6), then items of Partnership income and gain (comprising the Profits or
Losses of the Partnership) shall be specially allocated to each such Limited
Partner in an amount sufficient to eliminate, to the extent required by the
Regulations, such Limited Partner's Adjusted Capital Account Deficit, if any, as
quickly as possible; provided, that the allocations to be made pursuant to this
Subsection 9.2.B shall be made only if and to the extent that any such Limited
Partner, unexpectedly receiving any such adjustment, allocation or distribution,
would have an Adjusted Capital Account Deficit after all other allocations
provided for in this Agreement have been tentatively made, as if this Subsection
9.2.B were not in the Agreement.
-27-
C. 1. Except as provided in Subsection 9.2.C.2 below, notwithstanding
any other provision contained herein to the contrary, if in any Partnership
taxable year, beginning on or after the effective date of this Agreement, there
is a net decrease in the Partnership "minimum gain" [as such term is defined in
Reg. (S)1.704-2(d)], prior to allocating Profits or Losses (or items thereof)
for such taxable year and, if necessary, for subsequent years, under any other
provision of this Agreement, each Partner shall be allocated items of income and
gain (comprising the Partnership's Profits or Losses) for such taxable year and,
if necessary, for subsequent taxable years in proportion to and to the extent of
each Partner's share of the net decrease in the Partnership's minimum gain
during such Partnership taxable year. The items of income and gain to be so
allocated shall be determined in accordance with Reg. (S)1.704-2(f). This
Subsection 9.2.C.1 is intended to comply with the minimum gain chargeback
requirements of Reg. (S)1.704-2(f), and shall be interpreted in a manner
consistent therewith.
2. Notwithstanding Subsection 9.2.C.1 above, the provisions of
Subsection 9.2.C.1 above shall not apply to a Partner or Partners otherwise
subject thereto if:
(i) such Partner's share of the net decrease in Partner ship minimum
gain is caused by a guaranty, refinancing or other change in the debt
instrument causing it to become partially or wholly recourse debt or
partner nonrecourse debt, and such Partner bears the economic risk of loss
(within the meaning of Reg. (S)1.752-2) for the newly guaranteed,
refinanced or otherwise changed liability;
(ii) such Partner contributes capital to the Partnership that is used
to repay the nonrecourse liability (in whole or in part), and the Partner's
share of the net decrease in Partnership minimum gain results from such
repayment;
(iii) compliance with Subsection 9.2.C.1 above (after consideration
and tentative application of Subsection 9.2.D below) causes (or is
reasonably expected to cause) there to be a distortion in the economic
arrangement among the Partners, considering the Partners, previous
contributions to the Partnership and any Partner's contribution obligations
pursuant to Section 13.3 below, the Profits (or items of income or gain)
previously allocated to the Partners under this Agreement and, in light of
the distribution provisions of Section 13.2 below, the availability and
sufficiency of
-28-
additional Partnership Profits to offset the distortion which may otherwise
be created by such minimum gain chargebacks; or
(iv) The application thereof otherwise arises from a situation or
circumstance exempted from the application thereof pursuant to any revenue
ruling, regulation, amendment or otherwise.
The determination of whether and to what extent the allocations otherwise
required to be made pursuant to Subsection 9.2.C.1 should be made, based upon
the criteria set forth above, shall be made in the reasonable discretion of the
General Partner after consultation with the Partnership's tax advisers.
For purposes of determining whether compliance with the minimum gain
chargeback rules set forth in Subsection 9.2.C.1 above would distort the
economic arrangement of the Partners, the Partners acknowledge and agree that
the economic arrangement of the Partners is manifested in Section 10.1 below.
Section 10.1 hereof describes the economic arrangement among the Partners, both
as to the priority of distributions to be made by the Partnership to each of the
Partners and the amounts and/or relative amounts to be distributed to each of
the Partners at the separate priority levels.
3. Rules similar to those set forth in Subsection 9.3.C.2 above
shall apply with respect to determining whether and to what extent allocations
otherwise required to be made to any Partner under applicable regulations with
respect to any net decrease in a "partner nonrecourse debt" (as such term is
defined for purposes of Reg. (S)1.704-2) should be made.
D. 1. "Partner nonrecourse deductions" [within the meaning of Reg. S
1.704-2(i)] shall be allocated as prescribed in Reg. (S)1.704-2(i).
2. Subject to Subsection 9.2.C.2. above, if in any Partnership
taxable year there is a net decrease in "partner nonrecourse debt minimum gain"
(as such term is defined in Reg. (S)1.704.2), prior to allocating Profits or
Losses (or items thereof) of the Partnership for such taxable year (and, if
necessary, for subsequent taxable years), other than the allocations made
pursuant to Subsection 9.2.C.1. above, each Partner with a share of the partner
nonrecourse debt minimum gain (as determined under Reg. (S)1.704-2(i)(5) as the
beginning of such taxable year) shall be allocated items of income and gain
(comprising the Profits or
-29-
Losses for such taxable year and, if necessary, for subsequent taxable years) in
proportion to, and to the extent of, such Partner's share of the net decrease in
such partner nonrecourse minimum gain. The items of income and gain to be
allocated shall be determined in accordance with Reg. (S)1.704-2. This
Subsection 9.2.D.2. is intended to comply with the partner minimum gain
chargeback requirements of Reg. (S)1.704-2(i)(4), and shall be interpreted
consistently therewith.
3. Rules similar to those set forth in Subsection 9.2.C.2. above
shall apply with respect to determining whether and to what extent allocations
otherwise required to be made to any Partner under applicable Treasury
Regulations with respect to any net decrease in "partner nonrecourse debt
minimum gain" (as such term is defined for purposes of Reg. (S)1.704-2) shall be
made.
E. All "nonrecourse deductions" (as defined in Reg. (S)1.704-2(c)) shall
be allocated among the Partners in accordance with their relative Percentage
Interests.
SECTION 9.3 Allocations of Certain Tax Items.
--------------------------------
A. If property which is contributed to the Partnership is subject to the
provisions of Code (S)704(c), the Partners' distributive shares of income, gain,
loss and deductions, as computed for tax purposes, with respect to such property
(and, to the extent permitted by the Regulations, with respect to other
Partnership property) shall be determined in accordance with Code (S)704(c) by
utilizing such reasonable methods selected by the General Partner as shall be
consistent with Code (S)704(c) and the Regulations promulgated thereunder,
taking into account the Partners' distributive shares of the corresponding book
items with respect to such property, as determined under this Article IX, Code
(S)704(b) and Reg. (S)1.704-1(b)(1)(vi).
B. If Code (S)704(c) is not applicable, depreciation, amortization and
gain or loss, as computed for tax purposes, with respect to Partnership property
which is revalued on the books of the Partnership in accordance with Reg.
(S)1.704-1(b)(2)(iv)(f) and which has a book value greater or lesser than its
adjusted tax basis (and, to the extent permitted by the Regulations, with
respect to other Partnership property) shall be allocated among the Partners in
a manner that takes into account the variations between the adjusted income tax
basis and the book value of such property in the accordance with Code (S)704(c)
principles, utilizing such
-30-
reasonable method as determined by the General Partner, and shall be consistent
with Code (S)704(c) and the Regulations.
SECTION 9.4 Apportionment of Allocations. In every Partnership taxable
----------------------------
year in which the Percentage Interest of any one Partner varies, whether due to
entry into the Partnership after the first day of the Partnership's taxable year
or otherwise, Profits or Losses (or items thereof) which are to be allocated to
the Partners in proportion to their Percentage Interests shall be apportioned
among the Partners in accordance with each Partner's varying Percentage Interest
in the manner required by Code (S)706(d) (even if Code (S)706(d) is not
otherwise applicable).
In the event there are insufficient Profits or Losses to fully satisfy all
allocations required to be made to all Partners at any priority level set forth
in Sections 9.1 or 9.2 above, the available Profits and Losses (or items
thereof) to be allocated at such priority level shall be allocated among all
Partners entitled to allocations at such priority level based on the relative
amounts of Profits or Losses (or items thereof) to be allocated to each of the
Partners at such priority level (which, for this purpose, shall be determined by
assuming that there were sufficient Profits or Losses, or items thereof, to
fully satisfy the allocations at such priority level).
ARTICLE X
---------
DISTRIBUTIONS
-------------
SECTION 10.1 Distributions of Available Cash. Except as otherwise provided
-------------------------------
in this Article X, Available Cash for each fiscal year of the Partnership, if
any, shall be distributed as follows:
A. First, all Available Cash up to, but not exceeding, an amount equal to
the Tax Distribution for such taxable year shall be apportioned among, and
distributed to, the Partners in the same proportions as the aggregate net
taxable income of the Partnership for such fiscal year was allocated to the
Partners pursuant to Article IX above. Distributions of Available Cash at this
priority level shall be made either during the applicable fiscal year or at any
time thereafter, but the General Partner shall endeavor to make such
distributions to the Partners in sufficient time to allow the Partners to pay
their federal, state and city income taxes on their allocable share of the
Partnership's net taxable income for such
-31-
fiscal year. Notwithstanding the foregoing, the Partnership shall not make Tax
Distributions to Noble and Xxxx (or their successors or permitted assigns) to
cover any tax liability of Noble or Xxxx due to the inherent gain existing as of
the date hereof resulting from the debt on the Property exceeding Noble's or
Xxxx'x basis therein, resulting in a negative capital account.
B. Next, to the repayment of any Contribution Loans in accordance with
Section 5.2.
C. Then, any remaining Available Cash shall be distributed among the
Partners in such a manner as to bring the positive (i.e., credit) balances in
the Partners' Capital Accounts into the same proportions as the Percentage
Interests (determined as of the last day of such fiscal year and after all
allocations of Profits and Losses under Article IX for such fiscal year have
been properly reflected in the Partners' Capital Accounts and after adjustments
have been made to such Capital Accounts for any distributions made under
Subsection 10.1.A. above).
D. Thereafter, the balance (if any) of Available Cash shall be
distributed to the Partners in accordance with their relative Percentage
Interests.
SECTION 10.2 Liquidation Distributions. Following the earlier of the
-------------------------
dissolution of the Partnership, as provided in Section 13.1 below, or the
Liquidation of the Partnership, distributions shall be made in the manner set
forth in Section 13.2 below.
SECTION 10.3 Return of Capital Contributions/Limitations on
----------------------------------------------
Distribution/Liability for Repayment. Notwithstanding anything herein to the
------------------------------------
contrary, no Partner shall receive a return of such Partner's capital
contributions or receive any other distribution from the Partnership (other than
Tax Distributions) until all liabilities of the Partnership, (including
liabilities to the Partners for loans made to the Partnership, but excluding
liabilities to the Partners on account of their capital contributions), have
been paid or there remains sufficient property (based on the fair market value
of remaining assets) of the Partnership to pay them. If a Partner (including
former Partners) or an assignee of a Partner receives the return of any part of
such Partner's capital contributions or any other distribution in violation of
this Agreement or Partnership Law, such Partner shall be liable to the
Partnership for a period of six (6) years following such wrongful distribution
for the amount of such wrongful distribution. If a Partner (including former
Partners)
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receives the return in whole or in part of such Partner's capital contribution
in a distribution not violating the terms of this Agreement or Partnership Law,
such Partner shall be liable to the Partnership for a sum equal to such returned
contribution for a period of one (1) year following such return, but only to the
extent necessary to discharge the Partnership's liabilities to creditors who
extended credit to the Partnership during the period the contribution was held
by the Partnership. Any Partner so liable shall repay such amount within thirty
(30) days after the General Partner shall have delivered to such Partner a
written notice regarding such repayment. Failure of any Limited Partner or
former Limited Partner (or assignee) to make repayment required under this
Section 10.3 shall subject such defaulting person to payment of interest at the
highest legal rate on the amount due from such person from the date of the
delivery of notice requiring such repayment until (but not including) the date
of such repayment, plus all costs and expenses of collection, including
reasonable attorneys' fees.
ARTICLE XI
----------
INVESTMENT; LIMITED PARTNER REPRESENTATIONS;
--------------------------------------------
UNREGISTERED SECURITIES
-----------------------
THE LIMITED PARTNERSHIP INTERESTS HAVE NOT BEEN REGISTERED, QUALIFIED,
APPROVED OR DISAPPROVED UNDER ANY FEDERAL OR STATE SECURITIES LAW, INCLUDING THE
SECURITIES ACT OF 1933 AND THE FLORIDA SECURITIES AND INVESTOR PROTECTION ACT,
AND HAVE BEEN SOLD IN RELIANCE ON EXEMPTIONS FROM REGISTRATION AFFORDED BY
APPLICABLE FEDERAL AND STATE SECURITIES LAWS, INCLUDING, BUT NOT LIMITED TO, THE
SECURITIES ACT OF 1933 AND THE FLORIDA SECURITIES AND INVESTOR PROTECTION ACT.
SUBJECT TO THE OTHER LIMITATIONS CONTAINED IN THIS AGREEMENT, THE LIMITED
PARTNERSHIP INTERESTS MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
FOR THE OFFER AND SALE OF SUCH SECURITIES UNDER THE SECURITIES ACT OF 1933, THE
FLORIDA SECURITIES AND INVESTOR PROTECTION ACT, AND/OR THE APPLICABLE SECURITIES
ACT(S) OF ANY OTHER STATE, UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE
UNDER ALL APPLICABLE FEDERAL AND STATE SECURITIES LAWS, AND (UNLESS WAIVED BY
THE GENERAL PARTNER), THE TRANSFERRING LIMITED PARTNER FIRST PROVIDES THE
GENERAL PARTNER WITH AN OPINION OF COUNSEL, SATISFACTORY TO THE GENERAL PARTNER,
TO SUCH EFFECT.
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Each Limited Partner hereby represents and warrants to the Partnership and to
the General Partner that such Limited Partner has acquired such Limited
Partner's limited partnership interests for investment purposes only. In
addition to any other condition imposed by this Agreement, each Limited Partner
acknowledges and understands the above legends and agrees to accept and abide by
the above referenced restriction(s) on the transferability of such Limited
Partner's limited partnership interests.
ARTICLE XII
-----------
CHANGES IN PARTNER;
-------------------
TRANSFERABILITY OF PARTNERSHIP INTERESTS
----------------------------------------
SECTION 12.1 Permitted Transfers by General Partner. The General Partner
--------------------------------------
may not, without the prior written consent of Limited Partners holding a
majority in interest of the Percentage Interests of all Limited Partners,
retire, withdraw or remove itself from the Partnership, or sell, transfer,
assign, pledge or convey all or any portion of its interest in the Partnership
as a General Partner, to any Person, whether or not such person is a Non-
Qualified Person, and upon any such transfer, the transferee shall automatically
be admitted as a successor general partner and shall succeed to all of the
rights, duties and interests of the former General Partner in the Partnership.
SECTION 12.2 Restrictions on Limited Partners. Except as otherwise
--------------------------------
provided in Section 12.4 below, no Limited Partner shall have the right to
withdraw from the Partnership prior to the dissolution and winding up of the
Partnership, and, in the event of a dissolution, only in accordance with
Sections 13.2 and 13.3 below. Except as expressly provided in Sections 5.2 and
12.4, a Limited Partner may not Assign all or any portion of such Limited
Partner's interest in the Partnership (as a limited partner). If a Limited
Partner is a corporation, trust, or other entity and is dissolved or terminated,
the powers of such dissolved Limited Partner may be exercised by its legal
representative or its successor. Any Assignment of any of the voting interests
of a Limited Partner that is an entity (i.e., is not an individual) shall be
treated as an Assignment of the interest in the Partnership owned by such entity
if, as a result thereof, the Persons who hold a majority of the voting interests
in such entity as of the date of this Agreement (or if such entity was admitted
as a Partner after the inception of the Partnership, as of the date such entity
was admitted as a Partner in the Partnership) own less
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than a majority of the voting interests in such entity after such Assignment.
Any Assignment of a limited partner interest other than in accordance with the
provisions of this Section 12.2 (and to the extent applicable, Article XI and
Sections 5.2 and 12.4) shall be null and void ab initio. In the event that
---------
there shall be a permitted sale of a limited partner interest to any person in
accordance with all of the terms of Section 12.4 but in connection therewith the
transferee does not have the automatic right to be admitted as an additional
limited partner, or if in connection with any Assignment of an interest as a
limited partner in the Partnership permitted under this Article XII, the
transferring Limited Partner and/or the transferee do not execute all such
instruments as the General Partner may reasonably deem necessary or desirable,
or the transferee does not agree to assume the obligations of the transferring
Limited Partner to the Partnership, then the transferee in any such transaction
shall be treated as an assignee under the Partnership Law and shall not be
admitted as an additional limited partner unless consented to by the General
Partner, which consent may be withheld in the sole discretion of the General
Partner.
SECTION 12.3 Liability for Transfer Expenses. All costs and expenses
-------------------------------
incurred by the Partnership in connection with any disposition of a Partnership
interest pursuant to this Article XII (including any disposition caused by the
Bankruptcy of a Partner) in or in connection with another person becoming an
assignee or admitted as an additional limited partner or general partner in the
Partnership, including any filing, recording, and publishing costs and the
reasonable fees and disbursements of counsel, shall be paid by and be the sole
responsibility of the Partner disposing of such interest (or by the trustee,
receiver or other successor-in-interest in the case of a dissolved or bankrupt
Partner).
SECTION 12.4 Optional Purchases of Units.
---------------------------
A. Except as otherwise provided in Section 5.2, Section 12.1 and Section
12.10, in the event that any Limited Partner receives a "bona fide written offer
from a qualified purchaser" to purchase all, but not less than all, of such
Limited Partner's interest in the Partnership, and such Limited Partner desires
to sell all, but not less than all, of such Limited Partner's interest in the
Partnership pursuant thereto, such Limited Partner (the "Selling Limited
Partner") may sell all of its interest in the Partnership and without the
consent of the General Partner, subject, however, to the limitations of Section
12.2 and Article XI above, but only
-35-
in accordance with the provisions of this Section 12.4. Any such offer to
purchase voting interests in a Limited Partner which is a corporation,
partnership or other form of legal entity shall, to the extent any such sale
would constitute an Assignment under Section 12.2 above, be treated as an offer
to purchase the interest in the Partnership owned by such entity for purposes of
this Section 12.4. For purposes hereof, a "bona fide offer from a qualified
purchaser" means a written and binding offer from a Person, other than a Non-
Qualified Person, who has the financial ability to consummate the purchase
described in such offer, and which offer sets forth a description of the
Partnership interest subject thereto, the name and principal business address of
the Person who is the proposed purchaser (and, if such purchaser is purchasing
as a nominee for another Person, the name and address of such other Person), and
the price and all of the terms and conditions of the proposed purchase.
B. The Selling Limited Partner shall give written notice (the "Offer") to
the General Partner that such Selling Limited Partner desires to sell all of its
interest as a Limited Partner in the Partnership (the "Offered Interest"), for
the price and pursuant to the terms of the bona fide offer from the qualified
purchaser, a full description of which shall be attached to the Offer.
C. The General Partner shall have the option to purchase all, but not
less than all, of the Offered Interest, at the price and upon the terms
contained in the Offer for a period of twenty (20) days from the receipt of the
Offer, such option to be exercised by delivery of written notice to the Selling
Limited Partner within such twenty (20) day period.
D. During the twenty (20) day period described above during which the
General Partner has an option to purchase the Offered Interest, the Selling
Limited Partner may not transfer the Offered Interest to the qualified purchaser
or to any other Person. If, as of the expiration of the twenty (20) day period
described above, the General Partner has not elected to purchase all of the
Offered Interest in accordance with the foregoing, then the Selling Limited
Partner shall be free to sell the Offered Interest to the qualified purchaser
named in the Offer, provided that: (1) the Selling Limited Partner first
complies with the provisions of Article XI above, (2) such sale is on terms and
conditions no more favorable to the Qualified Purchaser than those set forth in
the offer, and (3) such sale is consummated within one hundred (100) days
following the giving of the Offer. If the Selling Limited Partner
-36-
does not consummate the sale of the Offered Interest to the Qualified Purchaser
within such one hundred (100) day period, the Offered Interest shall again be
fully subject to all the terms and conditions of this Section 12.4.
E. In the event that the General Partner timely elects to purchase the
Offered Interest in accordance with the foregoing, closing of the purchase of
the Offered Interest shall take place at the principal place of business of the
Partnership (or such other mutually agreed upon location) on such date selected
by the purchasing party within sixty (60) days after the exercise of the Option.
SECTION 12.5 Removal of General Partner.
--------------------------
A. If the General Partner becomes Bankrupt, is convicted of a felony or
files a certificate of dissolution (or its equivalent) or otherwise has its
charter revoked (other than a ministerial revocation resulting from a failure to
file an annual report, which failure is promptly cured after notice from any
Partner or its representative), the General Partner shall automatically be
removed as a general partner and such General Partner's general partner interest
in the Partnership shall be treated in the manner provided in Section 12.8
below. Notwithstanding the foregoing, if upon the dissolution of the General
Partner, its general partner interest in the Partnership is or will be assigned
in a manner permitted under Section 12.1 above, then such dissolved General
Partner's interest in the Partnership, as a general partner, shall not be
treated in the manner provided in Section 12.8 below, and such person or persons
or such corporation or other form of business entity succeeding to such former
General Partner's interest in the Partnership, as a general partner, shall be
admitted into the Partnership as a substitute or successor General Partner(s),
and shall succeed, collectively, to all of the interests of such former General
Partner (in its status as general partner) in the Partnership, effective the
moment before such former General Partner was dissolved.
B. Except as may be otherwise provided by law, and except as may
otherwise be mutually agreed to by all Partners (including the General Partner),
the right to remove the General Partner shall be limited to the events described
in Subsection 12.5.A above. Any successor general partner may be removed as a
general partner upon the terms and conditions provided in Subsection 12.5.A
above. The removal of a general partner in accordance herewith shall in no way
limit or affect the liability of such general partner to the
-37-
Partnership for debts and liabilities of the Partnership arising or accruing
prior to the effective date of such general partner's removal.
SECTION 12.6 Effect of Change of Partners. Subject to the provisions of
----------------------------
this Agreement, the withdrawal, Bankruptcy, or substitution of any Limited
Partner shall not interrupt the continuity of, or cause the termination or
dissolution of, the Partnership. Except as otherwise provided by this
Agreement, if the General Partner withdraws, dissolves, becomes Bankrupt, is
removed or otherwise ceases to be a member of the Partnership, the Partnership
shall dissolve upon the date of any such event, unless there is at least one
remaining General Partner (including a successor general partner to a dissolved
general partner), if any, who agrees to continue the business of the Partnership
(such right to continue the business of the Partnership being expressly granted
hereby), or unless within ninety (90) days after such event, all Partners agree
in writing to continue the business of the Partnership and to the appointment of
one or more additional general partners if necessary or desirable.
SECTION 12.7 Appointment of Additional General Partners. In the event that
------------------------------------------
the Partnership does not dissolve upon the date the General Partner withdraws,
dissolves, ceases to be a member of the Partnership, or becomes bankrupt solely
because all Partners within ninety (90) days of such event agree in writing to
continue the business of the Partnership and to the appointment of one or more
additional General Partners as may be necessary or desirable, such additional
general partner(s) shall be appointed by the unanimous agreement of all such
remaining Partners.
SECTION 12.8 Payments to (or Change in Status of) Removed General Partner.
-------------------------------------------- ---------------
In the event the General Partner is removed as a general partner pursuant to
this Article XII (or otherwise pursuant to the Partnership Law), whether or not
such removal triggers a dissolution of the Partnership, except as otherwise
provided in Subsection 12.5.B above, such General Partner's entire general
partner interest in the Partnership shall, upon such removal, be converted into
a special class limited partner interest having the same rights to distributions
and interests in the Profits, Losses and capital of the Partnership as prior to
such conversion, and the Certificate of Limited Partnership shall be duly
amended. After such conversion, the holder of such converted interest shall be
automatically admitted as an additional Limited Partner. Each holder of a
former General Partner's converted general partner interest, who is to be
admitted as an additional Limited Partner,
-38-
if not already bound by all of the terms and conditions of this Agreement,
shall, as a condition of such admission, be required to execute a joinder to
this Agreement, whereby such person becomes bound by all of the terms and
conditions of the Agreement (as it may be amended prior thereto or in connection
with such conversion). The conversion of the General Partner's interest
hereunder shall not, of itself, eliminate any liability to the Partnership or to
the other Partners that the General Partner may have under this Agreement at
such time.
SECTION 12.9 Option to Purchase if a Limited Partner Becomes a Non-
-----------------------------------------------------
Qualified Person. If any Limited Partner or any "Affiliate" of such Limited
----------------
Partner, is or becomes a Non-Qualified Person at any time during the term of
this Partnership Agreement, such Limited Partner shall promptly notify the
General Partner of such fact. Such Limited Partner (the "Selling Partner") shall
(whether or not such notice is timely given) be deemed for purposes of Section
12.4 above to have given an "Offer" to the General Partner to sell its entire
interest in the Partnership for a price equal to the positive (i.e., credit)
balance in its Capital Account (which shall be determined as of the date of
acceptance of such Offer or, at the sole option of the purchasing Partner(s),
determined as of the date such Partner first became a Non-Qualified Person) and
which shall be payable in full at closing. If the balance in the Selling
Partner's Capital Account at such time is zero or is a negative number, the
selling price shall be One Dollar ($1.00). Such offer shall remain open, and may
be accepted by the General Partner in accordance with the terms of Section 12.4
above, except that the period for acceptance of such Offer shall not terminate
until twenty (20) days after the Selling Partner first gives written notice to
the General Partner that it is, or has become, a Non-Qualified Person. In
addition, the period for exercising the Option will commence on the first date
on which the Selling Partner becomes a Non-Qualified Purchaser, regardless of
whether notice of such fact has been given by the Selling Partner to the General
Partner. (Thus, if a Partner becomes a Non-Qualified Person and fails to give
such notice, such Partner shall be in breach of this Agreement and, in addition,
the period during which the General Partner may exercise its Option hereunder
shall remain open indefinitely.) If the General Partner does not exercise its
Option to purchase the Selling Partner's interest in the Partnership prior to
the expiration of the option period provided hereunder, the interest of the
Selling Partner shall continue to be held by the Selling Partner and shall
remain subject to all terms and conditions of this Agreement. Except as set
forth in this Section 12.9 (the terms of which shall control if in conflict with
Section
-39-
12.4 above), the terms and conditions of Section 12.4 above shall apply to any
sale and purchase of the Selling Partner's interest in the Partnership
hereunder. Notwithstanding the foregoing, Noble and Xxxx shall not be deemed to
have become Non-Qualified Persons for purposes of this Section 12.9 if Noble and
Xxxx shall have first offered, in writing, to the General Partner, the right to
participate solely with Noble and Xxxx (or their Affiliates), and with no other
Non-Qualified Person, in any Timeshare Activity in which Noble and Xxxx intend
to engage, and the General Partner shall have declined, in a writing to be given
within thirty (30) days of the General Partner's receipt of Noble and Xxxx'x
offer, to participate with Noble and Xxxx in such proposed Timeshare Activity.
If the General Partners so declines and Noble or Xxxx thereafter desire to enter
into any Timeshare Activity with any third party on terms which are not
substantially similar in all material respects to those proposed to the General
Partner, the General Partner shall once again be offered, in writing, the right
to participate solely with Noble and Xxxx in such Timeshare Activity on the new
terms being proposed to or by the third party. If the General Partner still
declines (in writing to be given within fifteen (15) days of the General
Partner's receipt of Noble and Xxxx'x offer) to participate in the Timeshare
Activity, Noble and Xxxx may do so without becoming a Non-Qualified Person.
SECTION 12.10 General Partner's Call Options.
------------------------------
A. Call Option in the Event of a Transfer of the General Partner's
---------------------------------------------------------------
interest to a Non-Affiliate. Notwithstanding any other provision of this
---------------------------
Agreement, the General Partner shall have the option to purchase each Limited
Partner's entire interest in the Partnership as a limited partner, which option
may be exercised by written notice to a Limited Partner, which may be given only
in the event that the General Partner has entered into a binding agreement to
Assign its entire interest in the Partnership, to any Person, including a Non-
Qualified Person, which is not an Affiliate of the General Partner or of the
Persons listed on Schedule 12.10 attached hereto, at the time of exercise of the
option ("Non-Affiliate Purchaser") and which does not occur in conjunction with
a change in control of Vistana Development, Ltd. (as hereinafter defined). The
purchase price paid by the General Partner to the selling Limited Partner shall
be a price equal to the price per percentage point of Partnership Interest that
the Non-Affiliate Purchaser is paying to the General Partner in connection with
the acquisition by such Non-Affiliate Purchaser of the General Partner's one
percent (1%) interest in the Partnership multiplied by the number of percentage
points of Percentage Interest owned by the selling
-40-
Limited Partner. Such purchase price shall take into consideration any Residual
Income received by the General Partner from the Non-Affiliate Purchaser.
Residual Income shall mean all forms of consideration received and value derived
by the General Partner or its Affiliates on account of and in consideration for
such sale, transfer, conveyance or Assignment of its interest in the Partnership
(and not of any other entity), such as consulting fees and similar payments not
requiring the actual provision of valuable services by the General Partner or
any of its Affiliates, fees and similar payments received by the Managing
Partner or its Affiliates, to the extent they are above those usually and
customarily paid for similar services in arms length transactions, and the value
of partnership interests, shares or other forms of equity interests in the Non-
Affiliate Purchaser received by the General Partner or its Affiliates and
attributable solely to the Assignment of the General Partner's or its
Affiliate's interest in the Partnership (and not in any other entity). Closing
of the purchase of the Limited Partner's interest by the General Partner
pursuant to this Section shall occur concurrently with the acquisition of the
General Partner's interest by the Non-Affiliate Purchaser, at the Partnership's
principal business office on such business day and hour as the General Partner
may request, but not later than one hundred twenty (120) days after the notice
of exercise of the option is given by the General Partner. Payment for the
Limited Partner's interest shall be made on the same terms as those governing
the acquisition of the General Partner's interest by the Non-Affiliate
Purchaser. Any transferee of the interests of the General Partner or any Limited
Partner under this Section 12.10.A shall automatically be admitted as a
successor General Partner or Limited Partner (as appropriate) in the
Partnership.
B. Call Option in the Event of a Change in Control of Vistana
----------------------------------------------------------
Development, Ltd. The General Partner shall have the option to purchase each
-----------------
Limited Partner's entire interest in the Partnership as a limited partner, which
option may be exercised by written notice to a Limited Partner, which may be
given only in the event that the General Partner reasonably believes (whether by
the execution of a binding agreement, letter of intent or other written
proposal, term sheet or similar document) that there will be a "change in
control" of its Affiliate, Vistana Development, Ltd. For purposes of this
Section 12.10(B) change in control shall be defined to mean (i) the acquisition
by any Person or Persons acting in concert as a result of a tender or exchange
offer, open market purchases, privately negotiated purchases or otherwise, of
the beneficial ownership of securities representing more than fifty
-41-
percent (50%) of the combined voting power of the then outstanding securities of
Vistana Development, Ltd. or Vistana Capital Holdings, Inc.; (ii) the sale of
substantially all of the assets of Vistana Development, Ltd. and its Affiliates
to a third party which is not an Affiliate, or (iii) an initial public offering
of any class of securities of Vistana Development, Ltd. or any successor entity
thereto, or (iv) in the event Vistana Development, Ltd. or any successor or
entity has become a public company, any change in control required to be
disclosed under the proxy rules of promulgated by the securities and exchange
commission. Closing of the purchase of the Limited Partner's interest in the
Partnership shall occur concurrently with the change in control of Vistana
Development, Ltd. Payment for the purchase of the Limited Partner's interest
shall be made all in cash at closing.
The purchase price for each Limited Partner's interest acquired
pursuant to Section 12.10.B. shall be equal to the fair market value of such
interest (i.e., the price a willing buyer and a willing seller would agree upon
as a fair sales price that could reasonably be expected to be received upon the
sale of the Limited Partner's interest, based upon the assumption that (i) both
parties are well informed of all relevant factors affecting value including any
special or adverse tax, business, financial or operational burdens which the
Partnership may incur as a result of the transfer of any interest by any
individual Partner, (ii) neither party is compelled to buy or sell, and (iii)
the purchaser will be admitted as a limited partner in the Partnership, and (iv)
the selling Partner will be receiving its Percentage Interest of any Residual
Income relating solely to the Property, to be received by the Managing Partner
or its Affiliates). Promptly after the date (the "Election Date") the General
Partner exercises its option hereunder, the Limited Partners and the General
Partner shall attempt to agree upon the fair market value of the Limited
Partners' interests. If the Limited Partners and the General Partner cannot
agree upon the fair market value of the interests within thirty (30) days after
the Election Date, such parties shall attempt to agree upon a mutually
acceptable Qualified Appraiser (as hereinafter defined) to determine the fair
market value of the Limited Partner's Interests, and if a mutually acceptable
Qualified Appraiser is selected within ten (10) days after the expiration of the
thirty (30) day period specified above, such appraiser shall submit, within
sixty (60) days of such appraiser's selection, a written appraisal setting forth
such appraiser's determination of the fair market value of the interest of each
Limited Partner and such determination shall be binding upon the Limited
Partners and the General Partner.
-42-
If a mutually acceptable Qualified Appraiser is not selected within
the ten (10) day period described above, either the Limited Partners or the
General Partner may, by written notice to the other party, select a Qualified
Appraiser with experience in valuing interests in partnerships and also with
experience in appraising interests in timeshare businesses (a "Qualified
Appraiser"), and, within ten (10) days after receipt of such notice, the other
party may (but need not), by written notice, designate a second Qualified
Appraiser to determine the fair market value of the interests.
If the second Qualified Appraiser is not so designated, then the first
Qualified Appraiser shall proceed to appraise the Limited Partners' interests
and his determination of the fair market value of the Limited Partners'
interests shall be binding upon both the Limited Partners and the General
Partner.
If a second Qualified Appraiser is designated, the first and second
Qualified Appraisers shall each appraise the Limited Partners' interests. If
within forty-five (45) days after the second Qualified Appraiser is designated,
the first and second Qualified Appraisers do not agree upon the fair market
value of the Limited Partners interests and are unable to reduce the range of
their difference so that the higher appraisal does not exceed the lower
appraiser by more than ten percent (10%) of the amount of the lower appraisal,
then the Qualified Appraisers shall jointly designate a third Qualified
Appraiser within ten (10) days after the expiration of such 45-day period. If
there are two Qualified Appraisers and the higher appraisal does not exceed the
lower appraisal by more than ten percent (10%) of the lower appraisal, then the
fair market value of the Limited Partners' interests shall be deemed to be the
average of the two appraisals. If there are three appraisers and if they are
unable to agree upon the fair market value of the Limited Partners' interests,
then the fair market value of the Limited Partners' interests shall be deemed to
be the average of the two appraisals which are closest in value to each other.
The appraiser or appraisers shall promptly notify the Limited Partners and the
General Partner of their determination of the fair market value of the Limited
Partners' interests.
The General Partner shall pay the fees and expenses of the Qualified
Appraiser and, if there is more than one Qualified Appraiser, the fees and
expenses of the Qualified Appraisers.
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ARTICLE XIII
------------
DISSOLUTION OF THE PARTNERSHIP
------------------------------
SECTION 13.1 Events of Dissolution. The Partnership shall be
---------------------
dissolved, and its assets liquidated pursuant to Section 13.2 below, upon the
first to occur of:
A. December 31, 2046;
B. The sale, disposition or condemnation of all or substantially all of
the Partnership's property (other than cash); provided, that, if on
the disposition of any such property, the Partnership shall own any
purchase money notes and mortgages, or promissory notes, the
Partnership shall not be deemed to have disposed of all or
substantially all of its property until such time as such purchase
money notes and mortgages, or promissory notes, are paid or otherwise
disposed of in full;
C. The withdrawal, retirement, removal, dissolution, Bankruptcy or
cessation of membership in the Partnership of the General Partner,
unless the Partnership is continued as provided in Article XII;
D. The unanimous agreement of the Partners to dissolve the Partnership;
or
E. The occurrence of any event which, under the Partnership Law (but
subject to the provisions of this Agreement), causes the dissolution
of this Partnership.
The Partnership shall continue to exist following the occurrence of any of
the foregoing events solely for the purpose of winding up its affairs.
SECTION 13.2 Distributions Upon Dissolution or Liquidation of the
----------------------------------------------------
Partnership. Upon the earlier of (i) the dissolution of the Partnership as
-----------
provided by Section 13.1 above, or (ii) the Liquidation of the Partnership, the
General Partner (or, if none, a special liquidator appointed by Limited Partners
owning a majority of the Percentage Interests) shall immediately commence to
wind up the Partnership's affairs and, except as provided below, shall
distribute all the assets of the Partnership in liquidation as soon as
practicable. In connection with winding up the Partnership's affairs, the
General Partner (or, if none, the
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special liquidator appointed by the Limited Partners) shall have the authority
to sell any assets of the Partnership then on-hand for such price and on such
commercially reasonable terms and conditions as such General Partner (or special
liquidator) shall determine in its reasonable discretion, and distribute the
proceeds thereof in liquidation, and/or distribute all or any portion of such
assets to the Partners in-kind. In the event that any assets are to be
distributed in-kind, the General Partner (or special liquidator) shall have the
sole right to select the assets to be distributed to each of the Partners, and
may distribute any such assets proportionately or non-proportionately to or
among the Partners; provided that the aggregate distributions of cash and
property to each of the Partners (based on the net fair market value of property
distributed in-kind) does not exceed the aggregate amount to which each such
Partner would otherwise be entitled had all Partnership property otherwise to be
distributed in-kind been first converted into cash; and provided further that if
property and cash are to be distributed among the Partners, any such cash shall
be distributed among the Partners in proportion to the Partners' positive
capital account balances, as determined without regard to the distributions made
pursuant to Subsection 13.2.B hereof.
In the event of the Liquidation of the Partnership, except as provided
below, all assets of the Partnership to be distributed to the Partners shall be
distributed in liquidation no later than the last day of the Partnership fiscal
year in which such Liquidation occurs (or, if later, within ninety (90) days of
the date of Liquidation). Notwithstanding the above, if there is a Liquidation
of the Partnership solely because fifty percent (50%) or more of the total
interests in the Partnership capital and profits were sold or exchanged within a
twelve-month period, the assets of the Partnership shall not be actually
distributed in liquidation solely as a result of such occurrence (and no Partner
shall have the right to demand a distribution solely by reason of such
occurrence).
The assets to be distributed in liquidation shall be distributed in the
following order of priority:
A. Payment to creditors of the Partnership, including Partners, in the order
of priority provided by law; and
B. Payment to the Partners in accordance with and in proportion to their
positive capital account balances, as determined after taking into account
all proper capital account adjustments for the Partnership fiscal year
during which the
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dissolution or Liquidation of the Partnership occurs (or, if later, through
the date of the final distribution to the Partners as required by this
Section 13.2), other than those adjustments made for liquidating
distributions pursuant to this Subsection 13.2.B or for contributions by a
Partner pursuant to Section 13.3 below.
If upon the Liquidation of the Partnership the capital accounts of the
Partners are adjusted pursuant to Section 6.3 above, the General Partner (or
special liquidator, as the case may be), in its sole discretion, may, out of
amounts otherwise distributable to the Partners, create reserves reasonably
required to provide for Partnership liabilities (contingent or otherwise) and
may withhold the distribution of installment obligations owed to the Partnership
so long as (i) the other assets of the Partnership, distributable to the
Partners, are distributed within the time set forth above and in the ratios of
the Partners' positive capital account balances, and (ii) such withheld amounts
are distributed as soon as practicable and in the ratios of the Partners'
positive capital account balances.
SECTION 13.3 Balance Owed by Partner. Except as provided below, should the
-----------------------
General Partner have a deficit balance in the General Partner's capital account
following the liquidation of its interest in the Partnership (as defined in Reg.
(S)1.704 l(b)(2)(ii)(g)), as determined after taking into account all proper
capital account adjustments for the Partnership fiscal year during which such
liquidation occurs (or, if later, through the date of the final distribution in
liquidation of the General Partner's interest), other than the adjustment made
for contributions by the General Partner pursuant to this Section 13.3, the
deficit balance shall represent an obligation from the General Partner to the
Partnership to be paid in cash no later than the last day of the Partnership
fiscal year during which such liquidation occurs [or, if later, no later than
ninety (90) days after the date of such liquidation].
Any Limited Partner with a deficit balance in such Limited Partner's
capital account following the liquidation of such Limited Partner's interest in
the Partnership, to the extent attributable to a general partner interest which
was converted to that of a limited partner interest in accordance with Section
12.8 above, shall be obligated to restore such deficit balance to the extent of
the aggregate liability, if any, of such Limited Partner to Partnership
creditors, as determined by law as of the date of the liquidation of such
Limited Partner's interest in the Partnership,
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and by taking into account any and all assets of the Partnership (other than any
asset which consists of the obligation of such Limited Partner to make a
contribution pursuant to this Section 13.3) which are then available (or which
will thereafter be available) to satisfy, in whole or in part, the indebtedness
of the Partnership to which such creditors' claims relate.
No other Limited Partner shall be obligated to restore a deficit balance in
its capital account in its capacity as a Limited Partner following the
liquidation of such Limited Partner's interest in the Partnership.
SECTION 13.4 Instruments of Termination. Upon the termination of the
--------------------------
Partnership, the General Partner (or special liquidator, as the case may be)
shall make such filings and do such other acts as shall be required by the
Partnership Law and the Limited Partners hereby agree to execute and deliver to
the General Partner (or special liquidator, as the case may be) such
certificates or documents as shall be so required.
ARTICLE XIV
-----------
TAX MATTERS PARTNER
-------------------
SECTION 14.1 Appointment of Tax Matters Partner. The tax matters Partner
----------------------------------
("TMP") for the Partnership shall be the General Partner.
SECTION 14.2 Employment of Advisors. The TMP shall employ experienced tax
----------------------
advisors to represent the Partnership in connection with any audit, examination
or investigation of the Partnership by the Internal Revenue Service (or by any
state or local taxing authority), and in connection with all subsequent
administrative and judicial proceedings arising out of such audit, examination
or investigation. The fees and expenses of such tax advisors shall be a
Partnership expense and shall be paid by the Partnership. Such advisors shall
be responsible for representing the Partnership. It shall be the responsibility
of the General Partner and the Limited Partners, at their own expense, to employ
tax advisors to represent their respective separate interests.
SECTION 14.3 Notice and Expenses. The TMP shall keep the Limited Partners
-------------------
informed of all administrative and judicial proceedings, as required by the
Code, and shall furnish to each Limited Partner, who so requests in writing, a
copy of each notice
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or other communication received by the TMP from the Internal Revenue Service
(except such notices or communications which are sent directly to such
requesting Limited Partner by the Internal Revenue Service). All expenses
incurred by the TMP in serving as TMP shall be Partnership expenses and shall be
paid by the Partnership.
SECTION 14.4 Authority of Tax Matters Partner. The TMP shall have the full
--------------------------------
authority to take any and all actions otherwise permitted to be taken by a tax
matters partner under the Code in connection with any audit, examination or
investigation of the Partnership, and in connection with any and all
administrative and judicial proceedings arising out of such audit, examination
or investigation, including, but not limited to, any of the following actions:
A. Enter into a settlement agreement with the Internal Revenue Service,
even if such settlement agreement binds the Partners other than the
TMP;
B. File a petition as contemplated in Code (S)6226(a) or (S)6228;
C. Intervene in any action contemplated in Code (S)6226(b);
D. File any requests contemplated in Code (S)6227(b); or
E. Enter into an agreement extending the period of limitations, as
contemplated by Code (S)6229(b)(1)(B).
SECTION 14.5 Indemnification. The Partnership shall indemnify and hold the
---------------
TMP harmless against judgments, fines, amounts paid in settlement and expenses
(including reasonable attorneys' fees, whether before or at trial or during any
appellate proceeding), paid or incurred by the TMP in any civil, criminal or
investigative proceeding in which the TMP is involved or threatened to be
involved solely by reason of being the TMP for the Partnership; provided that
the TMP acted reasonably and in good faith within what the TMP reasonably
believed to be in the best interests of the Partnership or the Partners, as a
whole. Notwithstanding the foregoing, the TMP shall not be indemnified under
this Section 14.5 against any liability of the TMP to the Partnership or the
Limited Partners to the extent any such liability is attributable to or
otherwise arises out of the TMP's fraud, intentional misconduct or gross
negligence.
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ARTICLE XV
----------
MISCELLANEOUS
-------------
SECTION 15.1 Notices. All notices or other communications given or made
-------
under this Agreement shall be in writing, signed by the party giving same, and
shall be delivered personally, transmitted by a facsimile capable of verifying
receipt (receipt confirmed), sent by national overnight courier service, or sent
by United States certified mail, return receipt requested, postage prepaid,
addressed as follows:
A. To the General Partner at the address set forth in Section 3.1 above;
and
B. To each Limited Partner at the address set forth in Section 3.2
hereof; and
C. To the Partnership at the principal office of the Partnership
specified in Section 1.2 above.
Except as may be otherwise provided in this Agreement, all notices,
requests, demands, elections or other communications given in accordance with
this Section 15.1 shall be effective at the earlier of (i) five (5) business
days after deposit in the United States mail, certified postage prepaid; (ii)
twenty-four (24) hours after delivery to a national overnight courier service;
or (iii) confirmation of receipt if transmitted by facsimile or telexed or if
delivered personally. Any party may change the address to be used for
notification purposes hereunder by providing written notice thereof to the other
parties in accordance herewith.
SECTION 15.2 Applicable Law. This Agreement shall be governed by and
--------------
construed in accordance with the laws of the State of Florida without giving
effect to such State's conflicts of laws principles. Venue for any action
brought to enforce this Agreement or to interpret the rights of the Partners
hereunder shall lie in Orange County, Florida.
SECTION 15.3 Entire Agreement. This Agreement constitutes the entire
----------------
Partnership agreement between the Limited Partners and the General Partner and
supersedes all prior agreements and undertakings with respect hereto among them.
No Partner is making any guarantee, promise, or undertaking any obligation with
respect to the Partnership that is not expressly contained in this Agreement.
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SECTION 15.4 Amendment. Except as otherwise provided herein, this
---------
Agreement may only be amended upon the written consent of all Partners.
Notwithstanding the foregoing, the General Partner may amend this Agreement
without the consent of any other Partner provided that such amendment does not
(a) reduce the obligations of the General Partner, (b) affect, by making more or
less restrictive, the assignability of Partnership interests and/or the ability
of a Limited Partner to cause a transferee of such Limited Partner's interest in
the Partnership to be admitted as an additional limited Partner; (c) modify the
term or the authorized business purposes of the Partnership, or (d) reduce the
rights or interests, or enlarge the obligations of any Limited Partner (with
respect to a Limited Partner's interests in the Profits, Losses, Available Cash
or capital of the Partnership) or otherwise have a material adverse effect upon
such Limited Partner's interest in the Partnership or under the Transaction
Documents without the Limited Partner's prior written consent, except that, in
the case of subpart (d), the General Partner may amend the Agreement without
such Limited Partner's consent to the extent necessary to reflect the transfer
of all or such portion of such Limited Partner's interest as may have been
transferred pursuant to Subsection 5.2.B above.
SECTION 15.5 Binding Upon Successors. Each and every provision hereof
-----------------------
shall be binding upon, and inure to the benefit of, the heirs, personal
representatives, successors and assigns of the respective parties hereto except
to the extent explicitly provided to the contrary herein.
SECTION 15.6 Severability. Every provision hereof is intended to be
------------
severable, and if any term or provision hereof is illegal or invalid for any
reason whatsoever or would constitute the Limited Partners or any Limited
Partner a general Partner or would affect the Partnership status of the
Partnership or would affect the Partnership status of the Partnership for
federal income tax purposes, such provision shall be invalid, but such
illegality or invalidity shall not affect the validity of the remainder of this
Agreement.
SECTION 15.7 Captions/References. The titles and captions contained
-------------------
herein are for convenience only and shall not be deemed a part of the context of
this Agreement. All references to "regulations" or "Reg. (S)" refer to rules
and regulations promulgated by the United States Treasury Department under the
Code. The words "this Agreement," "herein," "hereof," "hereby," "hereunder" and
words of similar import refer to this Agreement as
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a whole and not to any particular subdivision unless expressly limited.
SECTION 15.8 Numbers and Gender. Where the context so indicates, the
------------------
masculine shall include the feminine and neuter, the singular shall include the
plural and the term person shall include a corporation, firm or other entity.
SECTION 15.9 Counterparts. This Agreement may be executed in
------------
counterparts, each of which shall be deemed to be an original and shall be
binding upon the party or parties who executed the same, but all of such
counterparts shall constitute one and the same agreement.
SECTION 15.10 Waiver of Partition. Each of the Partners hereby
-------------------
irrevocably waives any and all rights that such Partner may have to maintain
action for partition of any of the Partnership's property.
SECTION 15.11 Assignees. In the event that any transferee or other
---------
successor-in-interest to a Partner is not otherwise admitted as an additional
Limited Partner (or General Partner) in accordance with the provisions of this
Agreement, provided that the transfer at issue is not null and void, such
transferee or other successor-in-interest shall be treated as an assignee, and
shall only have the right to receive the profits and capital, and shall be
subject to all of the liabilities and obligations, to which the transfer ring
Partner (or transferring assignee, or other predecessor-in-interest) would
otherwise be entitled, or would otherwise be subject to, pursuant to this
Agreement (but for such transfer), to the extent attributable to the interest
transferred to such assignee. In applying the provisions of this Agreement,
including Articles IX and X, and Section 13.3 hereof, each successor to a
Partnership interest, whether admitted as an additional Partner or not, shall be
deemed to have received the aggregate allocations and distributions previously
made to each predecessor-in-interest to the interest in the Partnership held by
such person. An assignee who is not otherwise admitted as an additional limited
Partner (or general Partner) shall have no right to vote on any matter subject
to the approval of the Partners (or the Partners of any class), nor have any
rights to interfere in the management or administration of the Partnership's
business or affairs, acquire any information or account of Partnership
transactions, or inspect the Partnership's books during the continuance of the
Partnership.
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SECTION 15.12 Third-Party Beneficiaries. Any agreement contained
-------------------------
herein to make any contribution or to otherwise pay any amount, and any
assumption of liability herein contained, express or implied, shall be only for
the benefit of the undersigned parties and their respective permitted successors
and assigns, and such agreements and assumptions shall not inure to the benefit
of the obligees under any indebtedness, or to any other party whomsoever, it
being the intention of the undersigned parties that no one shall be deemed to be
a third-party beneficiary of this Agreement or any portion thereof.
SECTION 15.13 Confidential Information. Each Partner hereby
------------------------
acknowledges and agrees that confidential information concerning employees and
agents of the Partnership (including, but not limited to, the amount and nature
of the compensation paid to such employees and agents), customers, and owners of
units and properties of the Partnership or the Developer (the "Units"), and
proprietary sources of the Partnership's or the Developer's marketing programs
(including present and prospective OPC locations and the terms of leases or
similar financial arrangements with regard thereto) (collectively, the "Trade
Secrets") used by or relating to the Partnership, are and shall be considered
proprietary information belonging exclusively to the Partnership to the extent
such information is not readily available to the public or has not otherwise
become public knowledge through sources other than the Partners, their agents
and/or employees.
Each Partner shall not in any manner, either directly or indirectly,
(i) disseminate, disclose, use or communicate with any Person any Trade Secrets
regardless of whether such information is considered to be confidential by third
parties, or (ii) otherwise directly or indirectly misuse of this Section 15.13
shall apply to disclosures made to other employees or agents of the Partnership
which are made for valid business purposes of the Partnership. The provisions
of this Section 15.13 shall survive the termination of this Agreement and the
termination of any Partner's interest in the Partnership. Notwithstanding the
foregoing, in the event that Noble or Xxxx becomes a Non-Qualified Person solely
by reason of the provisions of and after following the procedures in Section
12.9, Noble or Xxxx (as appropriate) shall be relieved of the covenants set
forth in this Section 15.13 solely as to any Timeshare Activity in which the
Managing Partner or its Affiliates have declined to participate.
No Partner shall, during the term of this Agreement and for a period of one
(1) year thereafter, interfere with, disrupt or
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attempt to disrupt the relationship, contractual or otherwise, between the
Partnership and any employee of the Partnership or Vistana Development, Ltd. or
any of its Affiliates. Any contact or communication with or solicitation of,
any employee of the Partnership, Vistana Development, Ltd. or any of its
Affiliates, with the intent, purpose or effect of inducing or encouraging said
employee to leave his or her employment with the Partnership, Vistana
Development, Ltd. or any of its Affiliates or to breach his or her employment
relationship with or other employment obligations to the Company, Vistana
Development, Ltd. or any of its Affiliates, shall constitute a breach of this
provision.
Signatures Begin on Following Page
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GENERAL PARTNER
---------------
VCH OAKS, INC., a Florida
corporation, sole general partner
Dated: 6/25/96 By: /s/ Xxxxx Xxxxx
------------------------- ---------------------------------
Name: Xxxxx Xxxxx
--------------------------------
Title: Senior Vice President-Law
-------------------------------
LIMITED PARTNERS
----------------
Dated: 6/25/96 /s/ R. Xxxxxx Xxxxx
------------------------- --------------------------------------
R. XXXXXX XXXXX
Dated: 6/25/96 /s/ Xxxxxx X. Xxxx
------------------------- --------------------------------------
XXXXXX X. XXXX
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VISTANA OP INVESTMENT, LTD.
By: JAA OP HOLDINGS, INC., as its General
Partner
Witness
/s/ Xxx X. Xxxxx By: /s/ Xxxxxxx X. Xxxxx
----------------------------- ----------------------------
/s/ Xxxxx Xxxxx Name: Xxxxxxx X. Xxxxx
----------------------------- --------------------------
Title: President
-------------------------
By: RLG OP HOLDINGS, INC., as its General
Partner
Witness
/s/ Xxx X. Xxxxx By: /s/ Xxxxxxx X. Xxxxxxx, Xx.
----------------------------- ----------------------------
Name: Xxxxxxx X. Xxxxxxx, Xx.
--------------------------
/s/ Xxxxx Xxxxx
----------------------------- Title: Chairman
-------------------------
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