1
EXHIBIT 3.127
LIMITED PARTNERSHIP AGREEMENT
OF
75 ARLINGTON HEIGHTS LIMITED PARTNERSHIP, L.P.
A DELAWARE LIMITED PARTNERSHIP
DATED AS OF THE 18TH DAY OF FEBRUARY, 1997
THE INTERESTS ISSUED UNDER THIS AGREEMENT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR REGISTERED OR QUALIFIED UNDER THE APPLICABLE STATE SECURITIES LAWS, IN
RELIANCE UPON EXEMPTIONS FROM REGISTRATION AND QUALIFICATION PROVIDED IN THE
SECURITIES ACT AND THE APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AND QUALIFICATION OR REGISTRATION UNDER THE APPLICABLE STATE
SECURITIES LAWS, OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER THAT SUCH
REGISTRATION OR QUALIFICATION IS NOT REQUIRED
IN ADDITION, THE INTERESTS ISSUED UNDER THIS AGREEMENT
MAY BE SOLD OR TRANSFERRED ONLY IN COMPLIANCE WITH THE RESTRICTIONS ON TRANSFER
SET FORTH HEREIN.
2
TABLE OF CONTENTS
Page No.
ARTICLE 1
GENERAL PROVISIONS ....................................................................................... [1]
1.1 Formation ....................................................................................... [1]
1.2 Name of Partnership ............................................................................. [1]
1.3 Compliance ...................................................................................... [1]
1.4 Purposes of Partnership ......................................................................... [2]
1.5 Interests in the Partnership .................................................................... [3]
1.6 Other Qualifications ............................................................................ [3]
1.7 Term of Partnership ............................................................................. [3]
1.8 Title to Partnership Property ................................................................... [3]
1.9 Definitions ..................................................................................... [3]
1.10 Authorized Acts ................................................................................. [11]
1.11 Authorized Representatives ...................................................................... [12]
ARTICLE 2
CAPITAL CONTRIBUTIONS AND ADDITIONAL CONTRIBUTIONS ....................................................... [13]
2.1 Capital Contributions ........................................................................... [13]
2.2 Third Party Loans and Additional Capital Contributions and Capital Calls ........................ [13]
2.3 Partner Loans [15]
ARTICLE 3
INCOME TAX ALLOCATIONS ................................................................................... [15]
3.1 Establishment and Maintenance of Capital Accounts; Partnership Status ........................... [15]
3.2 Profit and Loss Allocations ..................................................................... [15]
3.3 Allocations of Gain or Loss on Disposition ...................................................... [16]
3.4 Minimum Gain Chargeback and Qualified Income Offset ............................................. [17]
3.5 Other Tax Allocation Provisions ................................................................. [18]
3.6 Intent of Allocations ........................................................................... [20]
3.7 Basis Elections ................................................................................. [20]
3.8 General Allocation Rules ........................................................................ [20]
3.9 Sharing of Partnership Nonrecourse Debt ......................................................... [21]
3.10 Adjustment of Gross Asset Value ................................................................. [21]
i
3
ARTICLE 4
INVESTMENT LOAN REPAYMENTS AND DISTRIBUTIONS ............................................................. [22]
4.1 Net Available Cash .............................................................................. [22]
4.2 Proceeds and Distributions in Liquidation ....................................................... [22]
4.3 General Distribution Rules ...................................................................... [23]
4.4 Source of Distributions ......................................................................... [23]
ARTICLE 5
MANAGEMENT, DUTIES AND POWERS OF GENERAL PARTNER, RIGHTS AND DUTIES OF PARTNERS .......................... [23]
5.1 Management of Business by General Partner; Execution Authority; Partner
Obligations; Reimbursements; Major Decisions; Retained Approvals ................................ [23]
5.2 Affiliate Transactions .......................................................................... [29]
5.3 Reporting Requirements; Financials; Meetings .................................................... [29]
5.4 Tax Matters Partner; Tax Returns ................................................................ [30]
5.5 Indemnification and Liability of Partners and Partnership Employees ............................. [31]
5.6 Opportunity to Defend ........................................................................... [32]
5.7 Limitation of Liability ......................................................................... [32]
5.8 No Priorities ................................................................................... [32]
ARTICLE 6
BOOKS, RECORDS AND BANK ACCOUNTS ......................................................................... [32]
6.1 Books and Records; Accounting Method ............................................................ [32]
6.2 Bank Accounts ................................................................................... [32]
ARTICLE 7
TRANSFERS OF PARTNERSHIP INTERESTS ....................................................................... [33]
7.1 Restrictions on Transfer ........................................................................ [33]
7.2 Take-Along Rights ............................................................................... [33]
7.3 Bankruptcy or Dissolution of Partners ........................................................... [33]
7.4 Substitution of Partner ......................................................................... [34]
7.5 Additional Transfer Restrictions ................................................................ [34]
7.6 Transfer Indemnification and Contribution Provisions ............................................ [35]
7.7 Basis for Restrictions and Section 7.3 and 7.9 Remedies ......................................... [36]
7.8 Representations, Warranties and Covenants ....................................................... [36]
7.9 Terminated Partner .............................................................................. [37]
ii
4
ARTICLE 8
TERM, DISSOLUTION AND TERMINATION ........................................................................ [39]
8.1 Events of Dissolution ........................................................................... [39]
8.2 Limitation on Dissolution ....................................................................... [40]
8.3 Liquidation and Winding Up ...................................................................... [40]
8.4 Reconstitution After Bankruptcy or Dissolution of Partners ...................................... [4l]
8.5 Distribution Upon Dissolution and Capital Account Adjustments ................................... [4l]
8.6 Compliance with Timing Requirements of Treasury Regulations ..................................... [42]
ARTICLE 9
MISCELLANEOUS ............................................................................................ [42]
9.1 Other Interests ................................................................................. [42]
9.2 Damages; Certain Cure Rights; Offset ............................................................ [42]
9.3 No Agency ....................................................................................... [43]
9.4 Governing Law ................................................................................... [43]
9.5 Notices ......................................................................................... [43]
9.6 Pronouns and Plurals ............................................................................ [45]
9.7 Waiver .......................................................................................... [45]
9.8 Severability .................................................................................... [45]
9.9 Titles and Captions ............................................................................. [45]
9.10 Agreement in Counterparts ....................................................................... [45]
9.11 Binding Agreement ............................................................................... [45]
9.12 Further Assurances .............................................................................. [45]
9.13 Waiver of Partition ............................................................................. [46]
9.14 Entire Agreement ................................................................................ [46]
9.15 Amendments ...................................................................................... [46]
9.16 No Drafting Presumption ......................................................................... [46]
9.17 No Third Party Beneficiaries .................................................................... [46]
Exhibit A - Description of the Investment .................................................................
iii
5
LIMITED PARTNERSHIP AGREEMENT
OF
75 ARLINGTON HEIGHTS LIMITED PARTNERSHIP, L.P.
A DELAWARE LIMITED PARTNERSHIP
THIS LIMITED PARTNERSHIP AGREEMENT ("Agreement") is made and entered
into as of the 18th day of February, 1997, by and among AMERICAN GENERAL
HOSPITALITY OPERATING PARTNERSHIP, L.P., a Delaware limited partnership
("AGHOP"), as a limited partner, and AGH 75 ARLINGTON HEIGHTS LLC, a Delaware
limited liability company ("AGHLLC"), as a general partner (AGHOP and AGHLLC are
collectively referred to as the "Partners"), with reference to the following:
RECITALS
WHEREAS, the General Partner formed 75 Arlington Heights Limited
Partnership, L.P (the "Partnership") pursuant to the Delaware Revised Uniform
Limited Partnership Act (the "Act") by filing a certificate of limited
partnership on February 18, 1997, with the Secretary of the State of Delaware.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein (the receipt and sufficiency of which hereby are acknowledged
by each party hereto), the parties do hereby agree as follows:
ARTICLE 1
GENERAL PROVISIONS
1.1 FORMATION. The Partners hereby confirm the formation of the
Partnership as a limited partnership pursuant to the Act. This Agreement shall
constitute the partnership agreement among the Partners under the Act. All
capitalized terms used in this Agreement and not otherwise defined herein shall
have the meanings set forth in Section 1.9 hereof. The Partners agree to take
such other actions (a) as may from time to time be necessary or appropriate
under the laws of the State of Delaware with respect to the formation, operation
and continued good standing of the Partnership as a limited partnership and (b)
as may be necessary to comply with Sections 1.3 and 1.6.
1.2 NAME OF PARTNERSHIP. The name of the Partnership shall be "75
Arlington Heights Limited Partnership, L.P." or such other name as may be
reasonably Approved by the Partners from time to time.
1.3 COMPLIANCE.
6
1.3.1 PARTNERSHIP CERTIFICATE. The Partners confirm that the
Partnership's Certificate has been filed in the Office of the Secretary of State
of Delaware. The Certificate shall be amended whenever, and within the time
periods, required by the Act.
1.3.2 PRINCIPAL OFFICE, RESIDENT AGENT AND REGISTERED OFFICE; FOREIGN
REGISTRATION. The principal office of the Partnership shall be located at ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, or at such other place
or places as the General Partner may from time to time reasonably Approve. The
name and address of the registered agent for service of process on the
Partnership in the State of Delaware is Corporation Trust Center, ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The address of the registered office of the
Partnership is ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇. Such principal
office, registered agent or registered office may be changed by the General
Partner from time to time upon the reasonable Approval of the General Partner,
so long as in accordance with the Act; concurrently with any such change,
written notice thereof shall be given by the General Partner to the Limited
Partner.
1.4 PURPOSES OF PARTNERSHIP. The purposes of the Partnership shall be:
1.4.1 To own for investment purposes, and dispose of the hotel
property (and related property) that is more particularly described on Exhibit A
(the "Investment"), to enter into the Lease with the Lessee and to lease the
Investment to the Lessee under the Lease, and to take all actions permitted to
be taken by it as the Lessor under the Lease; and
1 4.2 To engage in any and all other lawful general business
activities related to real estate investments and the hotel business that are
incidental or reasonably related to the foregoing, including, without
limitation, borrowing money from any source, whether secured or unsecured,
contracting for necessary or desirable services of professionals and others. All
of the foregoing shall be subject to the more specific terms and conditions,
including required Approvals by the Partners, set forth in this Agreement.
1.4.3 The Partnership shall be a single purpose entity and
shall not engage in any activity that is not described in the foregoing purposes
of the Partnership. The Partnership shall not merge, consolidate, dissolve,
enter into Bankruptcy, or declare insolvency without the unanimous Approval of
the Partners.
1 4.4 Notwithstanding anything in this Agreement to the
Contrary, the Partnership shall (i) conduct its own business in its own name;
(ii) hold itself out as a separate entity; (iii) correct any known
misunderstanding regarding its separate identity; (iv) use distinct stationery,
business forms, invoices, checks and telephone numbers; (v) maintain books and
records (including tax, accounting, financial reporting, payroll, employee
benefits administration, and legal) separate from any other Person or Entity;
(vi) maintain its bank and other accounts separate from any other Person or
Entity; (vii) maintain careful records of all transactions (including all
transactions with affiliates); (viii) not commingle assets with those of any
other Person; (ix) maintain separate financial statements;
[2]
7
(x) identify itself and its affiliates as a separate entity in each report, tax
return and business transaction; (xi) maintain adequate capital in light of its
contemplated business operations; (xii) pay its own liabilities (including
overhead, and employee salary and benefits) out of its own funds; (xiii) have no
employees; (xiv) not guarantee or become obligated for the debts of any other
Person or hold out its credit as being available to satisfy the obligations of
any other Person or Entity; (xv) not pledge its assets for the benefit of any
other Person other than the lender with respect to Partnership indebtedness or
make any loans or advances to any Person; (xvi) observe all applicable
partnership formalities; (xvii) except for the Lease, maintain an arm's-length
relationship with its affiliates and other Persons (including not entering into
any other transaction which is on terms which are not believed by both parties
to be fair and reasonable and comparable to those available from third parties);
(xvx) not acquire obligations or securities of its shareholders, beneficiaries
or affiliates; and (xvxi) act in a limited capacity to effectuate the intent of
its contemplated transactions. The management of the Partnership currently is
controlled (and will be controlled) by AGHLLC.
1.5 INTERESTS IN THE PARTNERSHIP
Unless the context otherwise clearly indicates, a Partner's
"interest" in the Partnership shall mean and include its share of the capital of
the Partnership, its share of the Profits and Losses (including its share of
Gain or Loss on Disposition) and other tax items of the Partnership, its share
of the distributions of the Partnership, its Capital Account, and its other
rights and obligations, all as determined under this Agreement.
1.6 OTHER QUALIFICATIONS. At Partnership expense, the Partners shall
cause the Partnership to be qualified to do business in each jurisdiction in
which such qualification becomes necessary, on or before the date on which such
qualification becomes necessary.
1.7 TERM OF PARTNERSHIP. The term of the Partnership commenced as of
the date of filing the Certificate and shall continue until the Partnership
shall be dissolved, liquidated and terminated pursuant to the provisions of
Article 8.
1.8 TITLE TO PARTNERSHIP PROPERTY. Legal title to the Investment and
other assets of the Partnership shall be held in such manner as the General
Partner shall Approve as being in the best interests of the Partnership. It is
expressly understood and agreed that the manner of holding title to Partnership
property is solely for the convenience of the Partnership; accordingly, legal
representatives, beneficiaries, distributees, officers, employees, partners,
members, shareholders, successors or assigns of any Partner shall have no right,
title or interest in or to any such Partnership property by reason of the manner
in which title is held, but all such property shall be treated as Partnership
property subject to the terms of this Agreement.
1.9 DEFINITIONS.
As used in this Agreement, the following terms shall have the following
meanings:
[3]
8
1.9.1 "Act" means the Delaware Revised Uniform Limited
Partnership Act.
1.9.2 "Adjusted Capital Account Deficit" shall mean with
respect to any Partner, the deficit balance, if any, in such Partner's Capital
Account as of the end of the relevant tax year, after giving effect to the
following adjustments:
1.9.2.1 Credit to such Capital Account any amounts
which such Partner is obligated to restore or is deemed to be obligated to
restore to the Partnership pursuant to the penultimate sentences of Regulations
Sections 1.704-2(g)(1) and 1.704-2(i)(5); and
1.9.2.2 Debit to such Capital Account the items
described in Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), and
1.704-1(b)(2)(ii)(d)(6) of the Regulations.
The foregoing definition of Adjusted Capital Account Deficit is intended to
comply with the provisions of Section 1.704-1(b)(2)(ii)(d) of the Regulations
and shall be interpreted consistently therewith.
1.9.3 "Affiliate," with respect to any Person, shall mean any
Person which (directly or indirectly) Controls or is Controlled or is under
common Control with such Person or such Person's Affiliates. For the purposes of
this Agreement, the term "Control," or any derivative thereof (including
"Controlled by" or "Controlling"), when used with respect to any specified
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such Person,
whether through ownership of voting securities or partnership or other ownership
interests, or by contract.
1.9.4 "AGHC" is defined in Section 5.1.1.
1.9.5 "AGHC Prospectuses" is defined in Section 5.1.1.
1.9.6 "AGHLLC" is defined in the Heading to this Agreement.
1.9.7 "AGHOP" is defined in the Heading to this Agreement.
1.9.8 "Agreement" shall mean and refer to this Limited
Partnership Agreement and all Exhibits referred to herein and attached hereto,
each of which is hereby made a part hereof, as amended and in effect from time
to time.
1.9.9 "Agreement Date" shall mean the date first written above
as of which this Agreement is effective.
1.9.10 "Approval" (and any variation thereof) of a Partner
shall mean the prior written consent or approval of the Partner, which may be
granted or withheld
[4]
9
in its sole discretion unless otherwise expressly provided to the contrary in
this Agreement. Such Approval shall be valid for a Partner who is not a natural
person only if given by an Authorized Representative of such Partner. Use of the
term "reasonable" or "reasonably" in connection with the term "Approval" or any
variation thereof or with the term "satisfactory" means that such Approval shall
not be withheld or delayed unreasonably. Unless either of such terms is used in
connection with the term "Approval" (or any variation thereof), such Approval
may be granted or withheld in a Partner's sole discretion. Except as provided in
Section 5.1.6.1, the Approval of a Partner shall not be required from and after
the date on which such Partner has ceased to have Approval rights under Section
7.9 of this Agreement.
1.9.11 "Approved by the Partners" is defined in Section 1.11.
1.9.12 "Assignment Agreement" is defined in Recital A hereto.
1.9.13 "Assignors" is defined in Recital A hereto.
1.9.14 "Authorized Representatives" is defined in Section 1.11
hereof.
1.9.15 "Bankrupt" shall mean, with respect to any Partner, if:
1.9.15.1 such Partner, or a Person that Controls such
Partner (the "Controlling Person"), shall (i) apply for or consent to the
appointment of, or the taking of possession by, a receiver, custodian, trustee,
administrator, liquidator or the like of itself or of all or of a substantial
portion of its assets, (ii) admit in writing its inability, or be generally
unable or deemed unable under any applicable law, to pay its debts as such debts
become due, (iii) convene a meeting of creditors for the purpose of consummating
an out-of-court arrangement, or entering into a composition, extension or
similar arrangement, with creditors in respect of all or a substantial portion
of its debts, (iv) make a general assignment for the benefit of its creditors,
(v) place itself or allow itself to be placed, voluntarily or involuntarily,
under the protection of the law of any jurisdiction relating to bankruptcy,
insolvency, reorganization, winding-up, or composition or adjustment of debts,
or (vi) take any action for the purpose of effecting any of the foregoing; or
1.9.15.2 a proceeding or case shall be commenced in
any court of competent jurisdiction, seeking (i) the liquidation,
reorganization, dissolution, winding-up, or composition or readjustment of
debts, of such Partner or a Controlling Person with respect thereto, (ii) the
appointment of a trustee, receiver, custodian, administrator, liquidator or the
like of such Partner or of a Controlling Person with respect thereto or of all
or a substantial portion of such Partner's or such Controlling Person's assets,
or (iii) similar relief in respect of such Partner or such Controlling Person
under any law relating to bankruptcy, insolvency, reorganization, winding-up, or
composition or adjustment of debts, without the consent of the other Partners
and such proceeding or case shall continue undismissed for a period of ninety
(90) days, or an order, judgment or decree approving or ordering any of the
foregoing shall be entered and continue unstayed and in effect for a period of
sixty (60) days, or an order for relief or other legal instrument of similar
effect
[5]
10
against such Partner or such Controlling Person shall be entered in an
involuntary case under such law and shall continue for a period of sixty (60)
days.
1.9.16 "Bankruptcy" shall mean any condition described in the
definition of "Bankrupt" which renders a Partner a Bankrupt.
1.9.17 "BFLLP" is defined in Section 7.8.5.
1.9.18 "Buy-Out Price" is defined in Section 7.9.
1.9.19 "Capital Account" shall mean, with respect to any
Partner, the Capital Account maintained for such Partner in accordance with the
provisions of Section 3.1.
1.9.20 "Capital Contribution" or "Capital Contributions" shall
mean the amount of cash and the net fair market value (as reasonably Approved by
the Partners) of any property contributed to the capital of the Partnership by
the Partners pursuant to this Agreement. The term "Capital Contributions" with
respect to a Partner shall include (i) the contributions of such Partner made
pursuant to Sections 2.1 and 2.2 and (ii) such Partner's payments made to third
party creditors of the Partnership after the Agreement Date with respect to
Partnership obligations unless and until reimbursed by the Partnership, but only
to the extent reimbursable to such Partner under this Agreement.
1.9.21 "Certificate" shall mean the Certificate of Limited
Partnership of the Partnership, as filed with the Office of the Secretary of
State of Delaware and amended from time to time.
1.9.22 "Code" shall mean the Internal Revenue Code of 1986, as
amended and in effect from time to time (or any corresponding provision of
succeeding law).
1.9.23 "Control" or "Controlled by" or "Controlling" is
defined in the definition of "Affiliate."
1.9.24 "Controlling Person" is defined in the definition of
the term "Bankrupt."
1.9.25 "Defaulting Partner" shall have the meaning set forth
in Section 2.2.1.
1.9.26 "Disposition" is defined in the definition of "Gain or
Loss on Disposition."
1.9.27 "Electing Partner(s)" is defined in Section 7.9.
[6]
11
1.9.28 "Emergency" shall mean an event which reasonably
requires immediate action involving the expenditure of funds or other action in
order to avert or mitigate significant damage to Persons or property in
connection with the Partnership, the Investment or any other assets of the
Partnership if it is not possible for a Partner after reasonable efforts to
reach or obtain the Approval of the other Partner whose Approval to take such
action otherwise would be required.
1.9.29 "Entity" shall mean any general partnership, limited
partnership, limited liability company, corporation, joint venture, trust,
business trust, joint-stock company, cooperative, association or other firm or
any governmental or political subdivision or agency, department or
instrumentality thereof.
1.9.30 "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended from time to time, and any successor statute.
1.9.31 "Force Majeure" shall mean any act of God (including
weather disturbance, earthquake, fire, mechanical failure of equipment, disease
and the like), labor strike or work stoppage or slowdown, sabotage, war, riot,
or any other act of any third party that reasonably prevents an action from
being taken through no fault of the party who is required to take such action.
1.9.32 "Funding Notice" is defined in Section 2.1.2.
1.9.33 "Funding Proportion" shall mean the following
percentage for each Partner:
AGHOP 99%
AGHLLC 1%
1.9.34 "Gain" or "Loss" on "Disposition" shall mean the gain
or loss (as the case may be) of the Partnership for federal income tax purposes,
arising from a sale, exchange or other taxable disposition (including casualty
or condemnation) of all or a portion of the Investment or other capital asset of
the Partnership. Gain or loss resulting from any disposition of property for
which there is a difference between Gross Asset Value and adjusted tax basis (as
computed for tax as opposed to book purposes) shall be computed by reference to
the Gross Asset Value (as reasonably Approved by the Partners) of the property
disposed of (as adjusted for book purposes from tune to time).
1.9.35 "General Partner" shall mean AGHLLC or any successor or
additional General Partner admitted as such under this Agreement, for so long as
such Person shall be a General Partner under this Agreement.
1.9.36 "Gross Asset Value" shall mean, with respect to any
asset, the adjusted basis of the asset for federal income tax purposes, adjusted
as provided in Section 3.10.
[7]
12
1.9.37 "Including" or "including" shall mean "including,
without limitation. "
1.9.38 "Independent Tax Counsel" shall mean a nationally
recognized tax counsel reasonably Approved by the General Partner that is
capable of advising the Partnership with respect to specified tax matters.
1.9.39 "Interest" or "interest" is defined in Section 1.5.
1.9.40 "Investment" is defined in Section 1 4.1.
1.9.41 "Lease" means that certain Lease Agreement among the
Partnership and AGH Leasing, L.P., dated as of even date herewith, or any
successor lease agreement with any Lessee other than AGH Leasing, L.P., pursuant
to which the Investment is leased to such Lessee, as amended and in effect from
time to time.
1.9.42 "Lessee" shall mean AGH Leasing, L.P., a Delaware
limited partnership, for so long as the Investment is leased to it by the
Partnership, or any other Person to whom the Investment is leased by the
Partnership from time to time pursuant to this Agreement.
1.9.43 "Liabilities" is defined in Section 5.5.3.
1.9.44 "Limited Partner" shall mean AGHOP or any other
successor or additional Limited Partner admitted as such under this Agreement,
for so long as such Person shall be a Limited Partner under this Agreement.
1.9.45 "Liquidator" is defined in Section 8.3.
1.9.46 "Major Decisions" is defined in Section 5.1.5.
1.9.47 "Major Defaults" is defined in Section 5.5.3.
1.9.48 "Net Available Cash," with respect to any period, shall
mean (i) the sum of all cash receipts of the Partnership during such period from
all sources (including Capital Contributions, cash on hand at the beginning of
such period to the extent not held in reserves, rents received under the Lease,
proceeds from the sale or other disposition of the Investment or any other asset
of the Partnership, proceeds from borrowings, and any funds released during such
period from cash reserves previously established), minus (ii) the Operating
Costs for such period.
1.9.49 "Non-Defaulting Partner" is defined in Section 2.2.1.
1.9.50 "Nonrecourse Deductions" is defined in Section 3.5.6.
1.9.51 "Nonrecourse Liability" is defined in Section 3.5.6.
[8]
13
1.9.52 "Operating Costs" for a period shall mean the sum of
(i) all cash expenditures of the Partnership made during such period for costs
and expenses including payments of interest and principal or other monetary
obligations due under any loan made to the Partnership; capital improvements to
the Investment; accounting, legal and auditing fees; taxes paid by the
Partnership; public or private utility charges; sales, use, payroll taxes and
withholding taxes related thereto; and all other operating costs, expenses and
other capital expenditures actually paid during such period with respect to the
Partnership's business or reimbursed to Partners, plus (ii) such reserves
established from time to time during such period upon the reasonable Approval of
the Partners.
1.9.53 "Original Agreement" is defined in Recital B hereto.
1.9.54 "Partner Assignee" is defined in Section 7.4.
1.9.55 "Partner Nonrecourse Debt" is defined in Section 3.5.6
hereof.
1.9.56 "Partner Nonrecourse Debt Minimum Gain" is defined in
Section 3.5.6 hereof.
1.9.57 "Partner Nonrecourse Deductions" is defined in Section
3.5.6 hereof.
1.9.58 "Partners" shall mean AGHLLC and AGHOP (each a
"Partner"), in their respective capacities as Partners, and any of their
successors in their respective capacities as Partners admitted to the
Partnership as Partners hereunder, and any other Person admitted as a Partner
under this Agreement, for so long as any such Person is a Partner under the
terms of this Agreement.
1.9.59 "Partnership" shall mean the limited partnership formed
under the Act and operated pursuant to this Agreement.
1.9.60 "Partnership Accounting Year" shall mean and refer to
the accounting year of the Partnership ending December 31 of each calendar year
or such shorter fiscal period during such year for which a relevant
determination is being made under this Agreement.
1.9.61 "Partnership Minimum Gain" is defined in Section 3.5.6
hereof.
1.9.62 "Person" shall mean any individual or Entity.
1.9.63 "Prime Rate" shall mean the so-called "Reference Rate"
announced by Citibank, N.A., in New York, New York, from time to time.
[9]
14
1.9.64 "Profit" or "Loss" shall mean, for each Partnership
Accounting Year, an amount equal to the Partnership's net taxable income or loss
for such Accounting Year (including any items of income, gain or deduction taken
into account in computing the Partnership's Gain or Loss on Disposition for such
Accounting Year), determined in accordance with Code Section 703(a) (for this
purpose, all items of income, gain, loss or deduction required to be stated
separately pursuant to Code Section 703(a)(1) shall be included in computing
such taxable income or loss), with the following adjustments:
1.9.64.1 Any income of the Partnership that is exempt
from federal income tax and is not otherwise taken into account in computing
Profit or Loss shall be added to such taxable income or loss;
1.9.64.2 In the event the agreed fair market value of
any Partnership asset is adjusted pursuant to Regulations Section 1
704-1(b)(2)(iv)(f) or other pertinent sections of such Regulations, the amount
of such adjustment shall be taken into account as Gain or Loss on Disposition of
such asset for purposes of computing Profit or Loss; and in lieu of the
depreciation, amortization and other cost recovery deductions taken into account
in computing such taxable income or loss, there shall be taken into account
depreciation, amortization or other cost recovery deduction computed with
reference to the value of Partnership property reasonably Approved by the
Partners (if different from its adjusted tax basis) pursuant to Regulations
Section 1.704-1(b)(2)(iv)(g) for such Partnership Accounting Year; and
1.9.64.3 Notwithstanding any other provisions, any
items which are specially allocated pursuant to Sections 3.4, 3.5 and 3.6 shall
not be taken into account in computing Profit or Loss.
1.9.65 "Purchase Notice" is defined in Section 7.9.1.
1.9.66 "Regulations" shall mean the final or temporary
regulations promulgated from time to time under the Code or, if no final or
temporary regulations with respect to a tax issue then are in effect, proposed
regulations then in effect if reasonably Approved by the General Partner, and
administrative and judicial interpretations thereof.
1.9.67 "Residual Percentage" of a Partner as of any relevant
time shall mean the following percentage for each Partner:
AGHOP 99%
AGHLLC 1%
1.9.68 "Revalued Property" is defined in Section 3.5.3.2.
1.9.69 "Shortfall Disbursement" is defined in Section 2.2.1.
[10]
15
1.9.70 "Tax Matters Partner" is defined in Section 5.4 (which
references the Code).
1.9.71 "Tax Termination" is defined in Section 7.5.1.3.
1.9.72 "Terminated Partner" shall mean (i) any Partner that
becomes Bankrupt, (ii) any Partner which has been dissolved (and which has not
been reconstituted within sixty (60) days thereafter) or (iii) any Partner which
has committed a Major Default.
1.9.73 "Termination Date" shall mean the date upon which a
Partner became a Terminated Partner.
1.9.74 "Transfer" shall mean (i) the issuance, transfer, sale,
gift, grant, conveyance, assignment, or redemption of any equity ownership
interest (whether stock, membership interest, partnership interest or otherwise)
in the Partnership; and (ii) the execution and delivery by the Partnership or
any Person holding a direct (or indirect through tiered Entities) interest in
the Partnership of a contract of sale, option or other agreement providing for
any of the foregoing.
1.9.75 "Transfer Restriction Termination Date" is defined in
Section 5.1.6.1.
1.9.76 "Unrepaid Capital" with respect to each Partner shall
mean the Capital Contributions made from time to time to the Partnership by such
Partner, reduced by any distributions previously made to such Partner pursuant
to Section 4.1.1.
1.10 AUTHORIZED ACTS. In furtherance of its purposes, but subject to
all the other provisions of this Agreement including required Approvals of the
Partners under Article 5, the Partnership, the General Partner and the
Partnership's employees appointed on its behalf under Section 5.5 are hereby
authorized:
1.10.1 To pursue any rights of the Partnership with respect to
the Investment pursuant to any agreement to which it is a party and to own
Investment and to own and operate any other asset acquired by the Partnership
pursuant to the provisions of this Agreement;
1.10.2 To own the Investment for investment purposes and to
finance, sell, convey, assign, transfer or mortgage the Investment, as well as
any other property necessary, convenient or incidental to the accomplishment of
the purposes of the Partnership, all on terms as shall be Approved by the
General Partner or Approved by the Partners, as appropriate under this
Agreement;
1.10.3 To borrow money (whether secured or unsecured), and
issue evidences of indebtedness in furtherance of any or all of the purposes of
the
[11]
16
Partnership, and to secure the same by mortgage, deed of trust, pledge or other
lien on any assets of the Partnership, including the Investment;
1.10.4 To borrow money on the general credit of the
Partnership for use in the Partnership business;
1.10.5 To enter into, perform and carry out contracts of any
kind, including the Lease with the Lessee and contracts with Affiliates of any
of the Partners or other Persons, necessary to, in connection with or incidental
to the accomplishment of the purposes of the Partnership, including contracts to
obtain services and supplies with respect to the Investment and/or the
Partnership;
1.10.6 To issue Funding Notices calling for additional Capital
Contributions in accordance with the provisions of this Agreement;
1.10.7 To enter into any kind of lawful activity and to
perform and carry out contracts of any kind necessary to or in connection with
or incidental to the accomplishment of the purposes of the Partnership, so long
as said activities and contracts may lawfully be carried on or performed by a
foreign limited liability company under the laws of the states in which the
Partnership is qualified to do business; and
1.10.8 To enter into and to perform the Partnership's
obligations under any agreement to which it becomes a party, as Approved by the
General Partner or as Approved by the Partners, as appropriate under this
Agreement.
1.11 AUTHORIZED REPRESENTATIVES. The "Authorized Representatives" of a
Partner that is not a natural person shall be those representatives designated
by notice to all other Partners by such Partner from time to time to represent
such Partner in connection with the Partnership, unless and until replaced or
removed by notice from such Partner to all Partners. The written statements and
representations of an Authorized Representative for a Partner that is not a
natural Person shall be the only authorized statements and representations of
such Partner with respect to the matters covered by this Agreement. The written
statement or representation of any one Authorized Representative of such Partner
shall be sufficient to bind such Partner with respect to all matters pertaining
to the Partnership. The term "Approved by" or "Consented to by" or "Consent of"
or "satisfactory to" with respect to a Partner that is not a natural Person
means a decision or action which has been consented to in writing by any
Authorized Representative of such Partner. In order for a decision or action to
be "Approved by the Partners" (or any variation thereof), the decision or action
must be Approved by at least one Authorized Representative of each Partner who
then continues to have Approval rights with respect to such action or decision
under this Agreement.
[12]
17
ARTICLE 2
CAPITAL CONTRIBUTIONS
AND ADDITIONAL CONTRIBUTIONS
2.1 CAPITAL CONTRIBUTIONS.
2.1.1 INITIAL CAPITAL CONTRIBUTIONS. Concurrently with
execution and delivery of this Agreement, the Partners shall be deemed to have
contributed to the capital of the Partnership the capital contributed to the
Partnership by their predecessors in interest in the Partnership, to the extent
remaining undistributed as of the Agreement Date.
2.1.2 ADDITIONAL CAPITAL CONTRIBUTIONS. If notice is given to
all Partners by the General Partner (unless it is then a Terminated Partner
under Section 7.9 of this Agreement) stating that the Partnership requires
additional Capital Contributions, and such notice is made on a form that has
been Approved by the Partners for such purpose (a "Funding Notice"), the
Partners shall contribute to the capital of the Partnership in cash the amounts
required under Section 2.2.1 (such amounts to be specified in such Funding
Notice) on or before the Due Date therefor under Section 2.2.1, provided,
however, that no Funding Notice may be issued by the Limited Partner under any
circumstances, or by the General Partner under any circumstances unless the
issuance of such notice has been Approved by the Partners or otherwise is
permitted to be issued without Approval of the Partners under this Agreement,
and provided, further, that no Partner shall be required to issue a Funding
Notice under any circumstances without such Partner's Approval.
2.2 THIRD PARTY LOANS AND ADDITIONAL CAPITAL CONTRIBUTIONS AND CAPITAL
CALLS.
2.2.1 If a Funding Notice is properly given by the General
Partner pursuant to Section 2.1.2, each Partner shall have the obligation to
contribute additional cash to the capital of the Partnership, in an amount equal
to the product of (a) the aggregate amount of required funds that is set forth
in such Funding Notice ("Shortfall Disbursement") multiplied by (b) such
Partner's Funding Proportion, which amount shall be used to satisfy the items
described in such Funding Notice. Such Capital Contributions shall be made by
the Partners pro rata in proportion to their respective Funding Proportions. The
Funding Notice shall specify the amount of each Partner's share, as so
determined, of any Shortfall Disbursement required under this Section 2.2.1.
Each Partner shall contribute its share of any Shortfall Disbursement within
five (5) days after the later to occur of (i) the date on which the Funding
Notice has been received (or is deemed to have been received under Section 9.5)
or (ii) the required funding date that is set forth in the Funding Notice (the
expiration of such five-day period is referred to as the "Due Date"). There
shall be a cure period of five (5) days after the Due Date for each Partner to
contribute its share of such Shortfall Disbursement, as provided in Section
2.2.2.
[13]
18
2.2.2 If any Partner fails to contribute the full amount of
its Capital Contributions required to be made pursuant to Section 2.1.2 and
Section 2.2.1 within five (5) days after the Due Date thereunder ("Defaulting
Partner"), then, as the exclusive remedies of the Partnership and the other
Partner (the "Non-Defaulting Partner"), the Non-Defaulting Partner shall have
the following remedies, exercisable by notice from the Non-Defaulting Partner to
the Defaulting Partner (i) to cause the Partnership to ▇▇▇ the Defaulting
Partner for actual (and not consequential) damages that shall be limited to the
portion of the Defaulting Partner's share of the Shortfall Disbursement that was
not received timely, plus interest at the Prime Rate and the costs of
collection, and (ii) either (a) to elect to lend (or to cause the Non-Defaulting
Partner's Affiliates to lend), to the Defaulting Partner or to the Partnership,
as Approved by the Non-Defaulting Partner, the amount of such Capital
Contribution that was not made timely by the Defaulting Partner, or (b) to elect
to contribute the amount of such Capital Contribution that was not made timely
by the Defaulting Partner, in which case the amount so contributed shall be
treated as Capital Contributions of the Non-Defaulting Partner for all purposes.
Upon the failure of the Non-Defaulting Partner to elect which of the remedies
specified in clause (a) or (b) of this Section 2.2.2 has been selected, by
written notice to the Partnership and the Defaulting Partner given within thirty
(30) days after funding the share of the Capital Contribution not made by the
Defaulting Partner, the remedy described in such clause (b) shall be deemed to
have been selected. The remedies described in clauses (i) and (ii) of this
Section 2.2.2 shall be cumulative, and all or any of them may be elected and
apply simultaneously, except that the remedies described in clauses (a) and (b)
of this Section 2.2.2 shall be mutually exclusive with respect to each Funding
Notice.
2.2.2.1 If the Non-Defaulting Partner chooses to
lend (or to cause its Affiliates to lend) the amount of the Capital Contribution
not made by the Defaulting Partner, the loan shall be a recourse loan to the
Partnership or to the Defaulting Partner, as the case may be, and shall bear
interest, compounded monthly, at the rate equal to the lesser of (i) the Prime
Rate or (ii) the maximum interest rate permitted by law, from the date such loan
is made until the date of repayment. Such loan shall be deemed to have been made
to the Defaulting Partner (and not to the Partnership) only if the
Non-Defaulting Partner (or the Non-Defaulting Partner's Affiliate) has paid such
amount directly to the Partnership and specifies, by notice to the Partners
given within five (5) days after such funding, that the loan is being made to
the Defaulting Partner, in which case said amount shall be deemed to have been
contributed to the Partnership by the Defaulting Partner for all purposes.
Repayment of any such loan to the Defaulting Partner shall be effected by the
Partners causing the Partnership to pay directly to the Non-Defaulting Partner
all distributions otherwise payable to the Defaulting Partner under this
Agreement as and when payable, instead of making such distributions to the
Defaulting Partner (with such distributions being deemed for all purposes to
have been made to the Defaulting Partner and then paid by the Defaulting Partner
to the Non-Defaulting Partner or its Affiliates, as the case may be). Repayment
of any such loan to the Partnership shall be made as provided in Section 4.1 and
Section 4.2.2. Any payments made with respect to loans described in this Section
2.2.2.1 shall first be deemed to pay accrued but unpaid interest, and then be
deemed to repay principal.
[14]
19
2.2.3 Except as otherwise specifically set forth in this
Agreement, no Partner shall have the right (i) to withdraw such Partner's
Capital Contribution or to demand or receive the return of a Capital
Contribution or to make any claim to any portion of Partnership capital or (ii)
to demand or receive property other than cash in return for a Capital
Contribution or to receive any cash in return for a Capital Contribution.
2.2.4 Except as expressly provided in this Agreement, no
Partner shall have personal liability to make any Capital Contribution.
2.2.5 A deficit Capital Account of a Partner (or of a partner
or member of a Partner) shall not be deemed to be a liability of such Partner
(or of such partner or member) or an asset or property of the Partnership (or
any Partner). Furthermore, no Partner shall have any obligation to the
Partnership or any other Partner for any deficit balance in such Partner's
Capital Account, except as expressly required by law.
2.3 PARTNER LOANS. The Partners may lend money to the Partnership for
any Partnership purposes on terms that are Approved by the Partners from time to
time.
ARTICLE 3
INCOME TAX ALLOCATIONS
3.1 ESTABLISHMENT AND MAINTENANCE OF CAPITAL ACCOUNTS; PARTNERSHIP
STATUS. The General Partner shall establish and cause the Partnership to
maintain a single Capital Account for each Partner which reflects such Partner's
Capital Contributions to the Partnership. Each Partner's Capital Account shall
also reflect the allocations and distributions made to such Partner pursuant to
Articles 3 and 4 and otherwise be adjusted in accordance with Code Section 704
and the principles set forth in Regulations Sections 1.704-1(b) and 1.704-2. In
applying such principles, any expenditures of the Partnership described in Code
Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures
pursuant to Regulations Section 1.704-1(b)(2)(iv)(i) shall be allocated among
the Partners in proportion to their respective Funding Proportions. The Partners
intend that the Partnership be treated as a partnership for tax purposes.
3.2 PROFIT AND LOSS ALLOCATIONS. For purposes of determining Capital
Account balances under this Section 3.2, Profit and Loss with respect to any
Partnership Accounting Year shall be allocated prior to reducing Capital
Accounts by any distributions with respect to such Partnership Accounting Year.
3.2.1 LOSS ALLOCATIONS. For each Partnership Accounting Year
from the Agreement Date until the termination of the Partnership, Loss from
Partnership operations shall be allocated among the Partners in the following
order of priority:
[15]
20
3.2.1.1 First, among the Partners as necessary to
cause the portion of each Partner's Capital Account balance exceeding such
Partner's Unrepaid Capital, if any, to be in proportion to the Partners'
respective Residual Percentages;
3.2.1.2 Second, as necessary to cause each Partner's
Capital Account balance, determined after adjusting the Partners' Capital
Accounts for the allocations made pursuant to Section 3.2.1.1 for the
Partnership Accounting Year, to equal such Partner's Unrepaid Capital;
3.2.1.3 Third, as necessary to cause each Partner's
Capital Account balance, determined after adjusting the Partners' Capital
Accounts for the allocations made pursuant to Sections 3.2.1.1 and 3.2.1.2 for
the Partnership Accounting Year to equal zero; and
3.2.1.4 Fourth, after giving effect to the
allocations made pursuant to Sections 3.3.1.1, 3.3.1.2 and 3.3.1.3, among the
Partners in proportion to their respective Residual Percentages.
3.2.2 PROFIT ALLOCATIONS. For each Partnership Accounting
Year, Profit from Partnership operations shall be allocated in the following
order of priority:
3.2.2.1 First, among the Partners as necessary to
cause the Capital Account balance of each Partner to equal such Partner's
Unrepaid Capital;
3.2.2.2 Second, after giving effect to the
allocations made pursuant to Section 3.2.2.1, among the Partners as necessary to
cause the portion of each Partner's Capital Account balance exceeding such
Partner's Unrepaid Capital to be in proportion to the Partners' respective
Residual Percentages; and
3.2.2.3 Third, among the Partners in proportion to
their then respective Residual Percentages.
3.3 ALLOCATIONS OF GAIN OR LOSS ON DISPOSITION.
3.3.1 GAIN OR LOSS ON DISPOSITION. Gain or Loss on Disposition
shall be a part of Profit or Loss for the period in which such Gain or Loss on
Disposition is recognized by the Partnership for tax purposes, and shall be
allocated as a part of Profit or Loss pursuant to Section 3.2.
3.3.2 RULES OF CONSTRUCTION.
3.3.2.1 For purposes of applying Section 3.2 for a
Partnership Accounting Year, a Partner's Capital Account balance shall be deemed
to be increased by such Partner's share of Partnership Minimum Gain and Partner
Nonrecourse
[16]
21
Debt Minimum Gain remaining at the close of such Partnership Accounting Year as
determined under the Regulations under Section 704(b).
3.3.2.2 If there is insufficient Profit or Loss
(including Gain or Loss on Disposition) to allocate to the Partners pursuant to
any subsection of Section 3.2 to cause every Partner's Capital Account balance
to equal the entire Capital Account balance described in such subsection with
respect to such Partner, such Profit or Loss (including Gain or Loss on
Disposition) available to be allocated among the Partners pursuant to said
subsection shall be allocated in proportion to the amounts thereof that would
have been allocated to each Partner pursuant to such subsection if there had
been sufficient amounts thereof to fully satisfy the requirements of such
subsection with respect to every Partner.
3.3.2.3 Except as is otherwise provided in this
Article 3, an allocation of Partnership taxable income or taxable loss to a
Partner shall be treated as an allocation to such Partner of the same share of
each item of income, gain, loss and deduction that has been taken into account
in computing such taxable income or taxable loss.
3.4 MINIMUM GAIN CHARGEBACK AND QUALIFIED INCOME OFFSET.
3.4.1 NO IMPERMISSIBLE DEFICITS. Notwithstanding any other
provision of this Agreement, taxable loss (or items of deduction) shall not be
allocated to a Partner to the extent that the Partner has or would have, as a
result of such allocations, an Adjusted Capital Account Deficit. Any taxable
loss (or items of deduction) which otherwise would be allocated to a Partner,
but which cannot be allocated to such Partner because of the application of the
immediately preceding sentence, shall instead be allocated to the other
Partners.
3.4.2 QUALIFIED INCOME OFFSET. In order to comply with the
"qualified income offset" requirement of the Regulations under Code Section
704(b), and notwithstanding any other provision of this Agreement to the
contrary except Section 3.4.3 below, in the event a Partner for any reason
(whether or not expected) has an Adjusted Capital Account Deficit, items of
Profits, including Gain on Disposition (consisting of a pro rata portion of each
item of income comprising the Partnership's Profits, including Gain on
Disposition, and both gross income and gain for the taxable year) shall be
allocated to such Partner in an amount and manner sufficient to eliminate as
quickly as possible the Adjusted Capital Account Deficit.
3.4.3 MINIMUM GAIN CHARGEBACK. In order to comply with the
"minimum gain chargeback" requirements of Treasury Regulations Sections
1.704-2(f)(1) and 1.704-2(i)(4), and notwithstanding any other provision of this
Agreement to the contrary, in the event there is a net decrease in a Partner's
share of Partnership Minimum Gain and/or Partner Nonrecourse Debt Minimum Gain
during a Partnership taxable year, such Partner shall be allocated items of
income and gain for that year (and if necessary, other years) as
[17]
22
required by and in accordance with Regulations Sections 1.704-2(f)(1) and
1.704-2(i)(4) before any other allocation is made.
3.5 OTHER TAX ALLOCATION PROVISIONS.
3.5.1 INCOME CHARACTERIZATION. For purposes of determining the
character (as ordinary income or capital gain) of any Gain on Disposition
allocated to the Partners pursuant to Section 3.2, 3.3 or 3.4, such portion of
the taxable income of the Partnership allocated pursuant to any such Section
which is treated as ordinary income attributable to the recapture of
depreciation shall, to the extent possible, be allocated among the Partners in
the proportion which (i) the amount of depreciation previously allocated to each
Partner bears to (ii) the total of such depreciation allocated to all Partners.
This Section 3.5.1 shall not alter the amount of allocations among the Partners
pursuant to Sections 3.2, 3.3 and 3.4, but merely the character of income so
allocated.
3.5.2 CHANGE IN PERCENTAGE INTERESTS. Notwithstanding the
foregoing, in the event any Partner's Residual Percentage changes during a
fiscal year for any reason, the allocations of taxable income or loss under this
Article 3, and distributions, shall be adjusted as necessary to reflect the
varying interests of the Partners during such year using an interim closing of
the books method as of the date of such change, or such other method as is
reasonably Approved by the General Partner.
3.5.3 MANDATORY ALLOCATIONS -- SECTION 704(c) AND PARTNER
NONRECOURSE DEBT.
3.5.3.1 Notwithstanding the foregoing, (i) in the
event Code Section 704(c) or Code Section 704(c) principles applicable under
Regulations Section 1.704-1(b)(2)(iv) require allocations of income or loss of
the Partnership in a manner different than that set forth above, the provisions
of Section 704(c) and the Regulations thereunder shall control such allocations
among the Partners; and (ii) all tax deductions and taxable losses of the
Partnership that, pursuant to Regulations Section 1.704-2(i), are attributable
to a Partner Nonrecourse Debt for which a Partner (or a Person related to such
Partner under Treasury Regulations Section 1.752-4(b)) bears the economic risk
of loss (within the meaning of Regulations Section 1.752-2) shall be allocated
to such Partner as required by Regulations Section 1.704-2(c).
3.5.3.2 Any item of income, gain, loss and deduction
with respect to any property (other than cash) that has been contributed by a
Partner to the capital of the Partnership or which has been revalued for Capital
Account purposes pursuant to Regulations Section 1.704-1(b)(2)(iv) and which is
required or permitted to be allocated to such Partner for income tax purposes
under Section 704(c) of the Code so as to take into account the variation
between the tax basis of such property and its fair market value at the time of
its contribution or at the time of its revaluation for Capital Account purposes
pursuant to Regulations Section 1.704-1(b)(2)(iv) (such contributed or revalued
property is referred to as "Revalued Property") shall be allocated solely for
income tax purposes in the manner so required or permitted under Code Section
704(c) using any
[18]
23
reasonable method of allocation permitted under the Regulations, such
allocations to be made as shall be reasonably Approved by the General Partner
Allocations under this Section 3.5.3.2 are solely for purposes of federal, state
and local taxes and shall not affect, or in any way be taken into account in
computing, any Partner's Capital Account or share of Profit or Loss (including
Gain or Loss on Disposition) or other items or distributions under any provision
of this Agreement.
3.5.4 GUARANTEE OF PARTNERSHIP INDEBTEDNESS. Except for
arrangements expressly described in this Agreement (including loans described in
Section 2.2.2.1 and/or 2.3), no Partner shall enter into (or permit any Person
related to the Partner to enter into) any arrangement with respect to any
liability of the Partnership that would result in such Partner (or a Person
related to such Partner under Regulations Section 1.752-4(b)) bearing the
economic risk of loss (within the meaning of Regulations Section 1.752-2) with
respect to such liability unless such arrangement has been Approved by the
Partners or such liability consists of trade payables incurred in the ordinary
course of business for which the General Partner is contingently liable by
reason of being a general partner of the Partnership. To the extent a Partner is
permitted to guarantee the repayment of any Partnership indebtedness under this
Agreement by reason of receiving the Approval of the Partners (other than
liabilities consisting of trade payables incurred in the ordinary course of
business for which the General Partner is contingently liable by reason of being
a general partner of the Partnership), each of the other Partners shall be
afforded the opportunity to guarantee such Partner's pro rata share of such
indebtedness, determined in accordance with the Partners' respective Funding
Proportions. If a loan is to be made to the Partnership and such loan is to be
guaranteed by any Partners (which guaranty by a Partner shall occur only upon
the Approval of such Partner), then, as between such Approving and guaranteeing
Partners, such liability shall be shared in proportion to their respective
Funding Proportions (and, if joint and several liability of such Partners shall
be required by the lender under a Partnership borrowing that has been Approved
by the Partners, each such Approving Partner shall make contributions to the
Partnership when requested by any Partner to do so, which amounts shall
immediately be distributed to such other Approving Partners, as necessary for
such Approving Partners to bear the economic risk of loss with respect to any
such borrowing in proportion to their respective Funding Proportions).
3.5.5 REFERENCES TO REGULATIONS. Any reference in this
Agreement to a provision of final, proposed and/or temporary Regulations shall,
in the event such provision is modified or renumbered, be deemed to refer to the
successor provision as so modified or renumbered, but only to the extent such
successor provision applies to the Partnership under the effective date rules
applicable to such successor provision or the General Partner otherwise so
reasonably Approves under applicable elections contained in such Regulations.
3.5.6 TAX DEFINITIONS.
3.5.6.1 "Nonrecourse Deductions" has the meaning set
forth in Regulations Section 1.704-2(c).
[19]
24
3.5.6.2 "Nonrecourse Liability" has the meaning set
forth in Regulations Section 1.704-2(b)(3).
3.5.6.3 "Partner Nonrecourse Debt Minimum Gain" means
an amount, with respect to each Partner Nonrecourse Debt, equal to the
Partnership Minimum Gain that would result if such Partner Nonrecourse Debt were
treated as a Nonrecourse Liability, determined in accordance with Regulations
Section 1.704-2(i)(2).
3.5.6.4 "Partner Nonrecourse Debt" has the meaning
set forth in Regulations Section 1.704-2(b)(4).
3.5.6.5 "Partner Nonrecourse Deductions" has the
meaning set forth in Regulations Section 1.704-2(i).
3.5.6.6 "Partnership Minimum Gain" has the meaning
set forth in Regulations Section 1.704-2(d)(1).
3.6 INTENT OF ALLOCATIONS. The parties intend that the foregoing tax
allocation provisions of this Article 3 shall produce final Capital Account
balances of the Partners that will permit liquidating distributions made in
accordance with final Capital Account balances under Section 4.2.3 to be made
(after unpaid loans and interest thereon, including those owed to Partners have
been paid) in a manner identical to the order of priorities set forth in
Sections 4.1.1 and 4.1.2. To the extent that the tax allocation provisions of
this Article 3 would fail to produce such final Capital Account balances, (i)
such provisions shall be amended by the General Partner if and to the extent
necessary to produce such result and (ii) taxable income and taxable loss of the
Partnership for prior open years (or items of gross income and deduction of the
Partnership for such years) shall be reallocated among the Partners to the
extent it is not possible to achieve such result with allocations of items of
income (including gross income) and deduction for the current year and future
years, as reasonably Approved by the General Partner. This Section 3.6 shall
control notwithstanding any reallocation or adjustment of taxable income,
taxable loss, or items thereof by the Internal Revenue Service or any other
taxing authority.
3.7 BASIS ELECTIONS. In the event of a transfer of all or any part of a
Partner's interest in the Partnership, the Partnership shall elect to adjust the
basis of the Partnership's assets under Code Section 754 if Approved by the
General Partner. The transferor or transferee of a Partnership interest shall
pay all costs of preparing and filing all instruments or documents necessary to
effectuate such election if made, unless otherwise Approved by the General
Partner.
3.8 GENERAL ALLOCATION RULES. The General Partner shall use reasonable
efforts to cause all Profit and Loss of the Partnership (including Gain or Loss
on Disposition) to be allocated with respect to each Partnership Accounting Year
as of the end of, and within ninety (90) days after the end of, such year, or as
soon thereafter as is practically possible. All Profit and Loss (including Gain
or Loss on Disposition) shall be allocated to the Partners shown on the records
of the Partnership to have been Partners as of the last day of the
[20]
25
Partnership Accounting Year for which such allocation is to be made, except
that, if a Partner sells or exchanges its interest in the Partnership or
otherwise is admitted as a substituted Partner, the Profit or Loss and Gain or
Loss on Disposition shall be allocated between the transferor and the transferee
by taking into account their varying interests during the Partnership Accounting
Year in accordance with Code Section 706(d), using the interim closing of the
books method or such other method as shall be reasonably Approved by the General
Partner.
3.9 SHARING, OF PARTNERSHIP NONRECOURSE DEBT. Throughout the term of
the Partnership, the nonrecourse debt of the Partnership (other than Partner
Nonrecourse Debt) shall be allocated for tax purposes among the Partners in
accordance with their then respective Residual Percentages.
3.10 ADJUSTMENT OF GROSS ASSET VALUE. Gross Asset Value, with respect
to any asset, shall be the adjusted basis for federal income tax purposes of
that asset, except as follows:
3.10.1 The initial Gross Asset Value of any asset contributed
(or deemed contributed under Regulations Section 1.708-1(b)(1)(iv)) by a Partner
to the Partnership shall be the fair market value of the asset on the date of
the contribution, as reasonably Approved by the Partners.
3.10.2 The Gross Asset Values of all Partnership assets shall
be adjusted to equal the respective fair market values of the assets, as
reasonably Approved by the Partners:
3.10.2.1 If the Partners reasonably Approve that an
adjustment is necessary or appropriate to reflect the relative economic
interests of the Partners in the Partnership, as a result of (i) the acquisition
of an additional interest in the Partnership by any new or existing Partner in
exchange for more than a de minimis capital contribution; or (ii) the
distribution by the Partnership to a Partner of more than a de minimis amount of
Partnership property as consideration for an interest in the Partnership; and
3.10.2.2 As of the liquidation of the Partnership
within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g).
3.10.3 The Gross Asset Value of any Partnership asset
distributed to any Partner shall be the gross fair market value of the asset on
the date of distribution as reasonably Approved by the Partners (less any
liabilities assumed by the distributee Partner or to which such asset is subject
as of the time of distribution).
3.10.4 The Gross Asset Values of Partnership assets shall be
increased or decreased to reflect any adjustment to the adjusted basis of the
assets under Code Section 734(b) or 743(b), but only to the extent that the
adjustment is taken into account in determining Capital Accounts under
Regulations Section 1.704-1(b)(2)(iv)(m),
[21]
26
provided that Gross Asset Values shall not be adjusted under this Section 3.10.4
to the extent that the Partners reasonably Approve that an adjustment under
Section 3.10.2 is necessary or appropriate in connection with a transaction that
would otherwise result in an adjustment under this Section 3.10.4.
After the Gross Asset Value of any asset has been determined or adjusted under
Section 3.10.1, 3.10.2 or 3.10.4, Gross Asset Value shall be adjusted by the
depreciation taken into account with respect to the asset for purposes of
computing Profits or Losses.
ARTICLE 4
INVESTMENT LOAN REPAYMENTS
AND DISTRIBUTIONS
4.1 NET AVAILABLE CASH. The General Partner shall, at the end of each
quarter, determine the amount of Net Available Cash for such quarter (or more
frequently, if Approved by the General Partner). All Net Available Cash for any
period shall be distributed as follows, within thirty (30) days after the end of
each calendar quarter (or at such other times as shall be Approved by the
General Partner) after first repaying any loans to the Partnership from the
Partners under Section 2.2.2.1 and/or 2.3 (loans which have been outstanding the
longest shall be repaid first and if two or more Partners have loans which have
been outstanding for equal periods, repayment of such loans shall be made pro
rata, in proportion to such Partners' then respective loan balances, with
payments first repaying accrued but unpaid interest and then repaying
principal):
4.1.1 First, distributions shall be made to the Partners until
each Partner has received distributions pursuant to this Section 4.1.1 in an
amount equal to such Partner's Unrepaid Capital; such distributions to be made
pro rata, in proportion to the then respective aggregate Unrepaid Capital of
each Partner; and
4.1.2 Next, the balance shall be distributed to the Partners,
pro rata, in proportion to the Partners' then respective Residual Percentages.
4.2 PROCEEDS AND DISTRIBUTIONS IN LIQUIDATION. The proceeds received by
the Partnership in connection with the liquidation and winding up of the
Partnership shall be applied in the following order of priority:
4.2.1 First, to the payment of the expenses incurred in
dissolution and termination;
4.2.2 Next, to the payment of creditors of the Partnership
(including making the repayments of any unpaid Partner loans in the same
priority as is described in Section 4.1) except secured creditors whose
obligations will be assumed or otherwise transferred on a liquidation of the
Partnership property or assets; and
[22]
27
4.2.3 The balance, if any, shall be distributed to the
Partners in accordance with their respective positive Capital Account balances
(determined after applying Article 3 for all periods, including the liquidation
period) as provided in Section 8.6.
4.3 GENERAL DISTRIBUTION RULES.
The timing and amount of all distributions shall be in accordance with
Sections 4.1, 4.2, 8.5 and 8.6. All distributions of cash shall be made by the
General Partner to the Partners shown on the records of the Partnership to have
been Partners on the date of the distribution. All distributions, upon request
by a Partner, shall be made by wire transfer in immediately available funds to
such Partner's account specified in such request. Distributions of Net Available
Cash made to a Partner shall be deemed to be advances on account of such
Partner's share of the distributable amounts thereof. For purposes of this
Agreement, the term "distributable" with respect to such distributions shall
mean the amount of such distributions as finally determined pursuant to the
provisions of this Agreement by the General Partner for the Partnership
Accounting Year in respect of which they were made and for the term of the
Partnership.
4.4 SOURCE OF DISTRIBUTIONS. Each Partner shall look solely to the
assets of the Partnership for the return of its Capital Contributions and its
share of distributions and shall have no recourse upon dissolution or otherwise
against the Partnership, the Partners or the Liquidator. No holder of an
interest in the Partnership shall have any right to receive any distributions
except as provided in this Agreement or any right to demand or receive property
other than cash upon dissolution and termination of the Partnership.
ARTICLE 5
MANAGEMENT; DUTIES AND POWERS OF GENERAL PARTNER;
RIGHTS AND DUTIES OF PARTNERS
5.1 MANAGEMENT OF BUSINESS BY GENERAL PARTNER; EXECUTION AUTHORITY;
PARTNER OBLIGATIONS; REIMBURSEMENTS; MAJOR DECISIONS; RETAINED APPROVALS.
5.1.1 MANAGEMENT.
5.1.1.1 GENERAL PARTNER MANAGEMENT. The Partnership's
business shall be managed by the General Partner and, except as expressly
provided in this Agreement, the Limited Partner shall not take part in the
business of the Partnership or have any Approval rights with respect thereto.
Except as otherwise provided in this Agreement (including the right of the
Limited Partner to Approve Major Decisions under Section 5.1.5), the General
Partner shall supervise and undertake the business of the Partnership and make
decisions affecting the day-to-day operations of the Partnership and the
Investment, including the acts to be taken by the Partnership as the Lessor
under the Lease,
[23]
28
and the General Partner shall have full authority to do so. Except to the extent
the Approval of the Limited Partner is expressly required under this Agreement,
no consent or Approval of the Limited Partner shall be required with respect to
any action or decision of the General Partner with respect to Partnership
matters. No Partner shall receive any compensation for serving as a Partner or
undertaking any action on behalf of the Partnership. Each Partner shall cause
each of its Authorized Representatives to devote as much time as is reasonably
necessary to fulfill the Partner's obligations under this Agreement.
5.1.1.2 EXECUTION AUTHORITY. The signature of the
General Partner, or any other Person appointed in writing by the General Partner
to do so under Section 5.1.4.1, shall be required on all contracts of the
Partnership. The execution and delivery by the General Partner, or any other
Person so appointed in writing by the General Partner to do so, of any document
shall be sufficient to bind and shall be binding upon the Partnership for all
purposes, and third parties shall be entitled to rely on the authority of any
General Partner, or any other Person so appointed in writing by the General
Partner to do so, to take any action on behalf of the Partnership.
Notwithstanding the foregoing, (i) neither Partner nor any other Person shall
take any action requiring Approval of the Partners under this Agreement unless
the provisions of this Agreement concerning such Approval have been fully
satisfied, and (ii) no employee of the Partnership shall take any action on
behalf of the Partnership unless such action either has been Approved by the
Partners or is both (a) permitted to be taken by the General Partner without the
Approval of the Limited Partner under this Agreement and (b) is directed to be
taken by such employee by the General Partner. The General Partner shall have
the authority and responsibility, at Partnership expense, of supervising the
Partnership's employees, if any.
5.1.1.3 AGHC PROSPECTUSES COMPLIANCE. The General
Partner shall use its reasonable efforts, at Partnership expense, to cause the
Partnership to comply with all applicable laws and regulations and to operate
the business of the Partnership and the Investment in a manner that is
reasonably consistent in all material respects with the description contained in
the prospectuses of American General Hospitality Corporation, a Maryland
corporation ("AGHC") pursuant to which shares in AGHC were offered (the "AGHC
Prospectuses").
5.1.2 COMPENSATION; REIMBURSEMENT. No compensation shall be
payable by the Partnership to any Partner or to an Affiliate of any Partner
unless permitted pursuant to the AGHC Prospectuses and Section 5.2. Unless
reimbursement is prohibited under Section 5.5 or another provision of this
Agreement, the Partnership shall reimburse the General Partner for its actual
and reasonable out-of-pocket expenses incurred in connection with Partnership
business to the extent the General Partner is authorized to take the action
resulting in such expenses, including those expenses that are described in this
Section 5.1 or that are otherwise specifically authorized by this Agreement.
5.1.3 BUDGETS AND RESERVES.
5.1.3.1 OPERATING BUDGET; INVESTMENT BUDGETS;
RESERVES. The General Partner shall cause to be prepared, at Partnership
Expense, such
[24]
29
budgets with respect to the Partnership or the Investments as shall be Approved
by the Partners or as shall be required by Persons making loans to the
Partnership, either Partner or their Affiliates. Reserves shall be established
for the Partnership only to the extent reasonably Approved by the Partners,
taking into account the requirements of lenders to the Partnership, either
Partner or their Affiliates under loan documents that are binding on the
Partnership.
5.1.4 POWERS OF THE GENERAL PARTNER. The General Partner, if
it is not a Terminated Partner, shall have full power and shall have the
obligation without the necessity of obtaining the Approval of the Limited
Partner (except as otherwise set forth in this Agreement), and at the expense of
the Partnership, to take all actions required to conduct the day-to-day
operations of the Partnership and accomplish the purposes stated in this
Agreement, and, subject to the availability of Partnership funds, to implement
the Major Decisions that have been Approved by the Partners, and to pay the
expenses of the Partnership (or cause them to be paid) when due. Neither Partner
(nor any employee) shall have the power to implement any Major Decision unless
such Major Decision has been Approved by the Partners, as set forth in Section 5
1.6.2 hereof.
5.1.4.1 EMPLOYEES; DELEGATION OF AUTHORITY; BONDING/
O&D INSURANCE. Subject to Section 1.4.4, the Partnership shall have its own
offices and administrative and operating employees, and shall bear the cost
thereof, to the extent Approved by the General Partner from time to time.
Subject to Section 1.4.4, at Partnership expense, the General Partner, if it is
not then a Terminated Partner, shall have the authority to hire and discharge
such Partnership employees as the General Partner shall reasonably Approve. The
compensation arrangements for all employees shall be as Approved by the General
Partner from time to time. The General Partner, and Persons appointed in writing
by the General Partner to do so, shall have the authority described in Section
5.1.1.2. Fidelity bonds, in amounts and on terms Approved by the General
Partner, may be obtained at Partnership expense for Partnership employees, and
the Partnership may obtain officer and director (or comparable) insurance for
the Partnership's employees on such terms, and in such amounts, as shall be
reasonably Approved by the General Partner from time to time. The General
Partner may delegate the authority to take any action permitted under this
Agreement to any Partnership employee or agent, in each case to the extent
Approved by the General Partner, as evidenced by a written document that has
been executed by the General Partner.
5.1.4.2 NON-EXCLUSIVITY. The General Partner shall
not be required to conduct the Partnership's day-to-day operations and implement
Major Decisions as its sole and exclusive function. Each Partner and its
Affiliates may have other business interests and may engage in other activities
in addition to those relating to the Partnership, without having or incurring
any obligation to offer any interest in such activities to the Partnership or
any Partner, except as provided in the AGHC Prospectuses, and the Partners shall
be obligated to devote, and cause controlling persons to devote, only so much of
their time to the Partnership's business as shall be reasonably required to meet
the Partners' respective obligations hereunder.
[25]
30
5.1.5 MAJOR DECISIONS. The following are major decisions (the
"Major Decisions") requiring the prior Approval (or unanimous reasonable
Approval, if so indicated) of the Partners (except as otherwise required in case
of Emergency or Force Majeure); provided, however, that a Partner's Approval
shall not be required after such Partner has lost its Approval rights under
Section 7.9 or another provision of this Agreement except to the extent provided
in Section ▇.▇.▇.▇:
5.1.5.1 Any act in contravention of this Agreement
(including the requirements concerning compliance with the AGHC Prospectuses
contained in Sections 5.1.1, 5.1.2 and 5.1.4.2) or extending the term of the
Partnership;
5.1.5.2 Any act which would make it impossible to
carry on the ordinary business of the Partnership, except the liquidation of the
Partnership under the circumstances permitted in Article 8, or the sale,
exchange or other disposition of the Investment or any other Partnership assets
by the Partnership that has been Approved by the Partners or otherwise is
permitted under this Agreement;
5.1.5.3 Any action which would cause the Partnership
to become an entity other than a Delaware limited partnership;
5.1.5.4 Changing the purposes of the Partnership;
5.1.5.5 Amending this Agreement except as permitted
herein (including Section 3.6);
5.1.5.6 Making in-kind distributions;
5.1.5.7 Establishing or adjusting Gross Asset Value
under Section 3.10 for any contributed or distributed asset (reasonable Approval
only);
5.1.5.8 Indemnification of any Person other than a
Partner;
5.1.5.9 Except as provided in Section 3.5.4, entering
into any agreement (i) which would cause the Limited Partner to become
personally liable on or in respect of or to guarantee any indebtedness of the
Partnership or (ii) which is not nonrecourse to the Limited Partner;
5.1.5.10 Causing the Partnership to redeem or
repurchase all or any portion of the interest of a Partner except as provided in
Section 7.9;
5.1.5.11 Acceptance of additional Capital
Contributions other than those expressly provided for in this Agreement;
5.1.5.12 Causing or permitting the Partnership to be
merged with any other entity;
[26]
31
5.1.5.13 Causing or permitting the Partnership to
make loans to, or enter into any contract with any Partner or any Affiliate of a
Partner, other than contracts permitted under Section 5.2;
5.1.5.14 Dissolving, terminating or liquidating of
the Partnership, except as provided in Article 8 of this Agreement;
5.1.5.15 Modifying or terminating the Lease, entering
into a new lease with respect to the Investment, Approving a capital improvement
program with respect to the Investment or selling or otherwise disposing of the
Investment; unless such action has been Approved by the Partners or is
authorized to be taken without further Approval under this Agreement (upon the
liquidation of the Partnership, the terms of all dispositions shall require only
the reasonable Approval of each Partner);
5.1.5.16 Engaging a manager with respect to the
Investment;
5.1.5.17 Issuing Funding Notices pursuant to Section
2.1.2 with respect to Shortfall Disbursements addressed in Section 2.2.1;
5.1.5.18 Obtain any third party loans (whether
secured or unsecured), or, in connection with any third party loan, execute or
deliver on behalf of the Partnership any guarantee or other agreement whereby
the Partnership is or may become liable for any obligations of any other Entity;
or borrow money from a Partner or its Affiliates except pursuant to Sections
2.2.2 or 2.3;
5.1.5.19 Acquire any real property other than the
Investment;
5.1.5.20 Except as provided in Sections 5.1.4.1 and
5.2, pay any salary, fees or other compensation to, or enter into any contract
with, any Affiliate of any Partner;
5.1.5.21 Modify or refinance any indebtedness of the
Partnership or select a lender to make loans to the Partnership;
5.1.5.22 Make any distribution except as permitted
under Article 4 or Section 7.9 1 except in connection with the liquidation of
the Partnership under Article 8, or make any Partnership expenditure for
extraordinary items other than as Approved by the Partners except as otherwise
permitted or authorized by this Agreement (including a budget that has been
Approved under Section 5.1.3 or an Emergency expenditure);
5.1.5.23 Commence, dismiss, terminate or settle any
material litigation matter or material condemnation claim, or any other matter
or claim
[27]
32
in connection with which the amount in controversy is reasonably expected to
exceed One Hundred Thousand Dollars ($100,000);
5.1.5.24 Substantially modify the terms of any
contract that required the Approval of the Partners to enter into (reasonable
Approval only);
5.1.5.25 Determine the terms of any participation
(e.g., distribution and control issues) of third party investors;
5.1.5.26 Admit additional or transferee Partners to
the Partnership as substituted Partners or enter into financing that
participates in profits; or permit any Transfer of any interest in the
Partnership or of ownership interests in a Partner, to the extent Approval of
the Partners for such Transfer is required under this Agreement;
5.1.5.27 Confess any judgment against the Partnership
or cause the Partnership to file for Bankruptcy or other relief from creditors;
5.1.5.28 Establish insurance requirements for the
Partnership other than those described in Section 5.1.4.1;
5.1.5.29 Make determinations concerning adjusting
Gross Asset Value under Section 3.10 (reasonable Approval only);
5.1.5.30 Establish or release reserves for use by the
Partnership except pursuant to a budget Approved by the Partners or as otherwise
provided in this Agreement (reasonable Approval only);
5.1.5.31 Voluntarily deviate materially from the
terms of ownership, disposition or other course of action with respect to the
Investment that required the Approval of the Partners, except in case of
Emergency or Force Majeure; or
5.1.5.32 Take any other action that is required to be
Approved by the Partners under this Agreement.
5.1.6 RETAINED APPROVALS; PROCEDURE FOR PARTNER REVIEW AND
APPROVAL.
5.1.6.1 RETAINED APPROVALS. Notwithstanding anything
to the contrary contained in this Agreement, after the loss of Approval rights
by a Terminated Partner under Section 7.9, the Terminated Partner shall still
retain Approval rights with respect to the matters described in (a) Sections
5.1.5.1 through (and including) 5.1.5.13, (b) Section 5.1.5.20, (c) Section
5.1.5.26 with respect to the substitution of a transferee or additional Partner
as a Partner, provided, however, that the provisions of this clause (c) shall
terminate if and when the Partnership has received an opinion of Independent Tax
Counsel that the termination of such Approval rights would not cause the
Partnership to lose its status as a partnership for income tax purposes under
the Code and Regulations, and
[28]
33
under state tax laws applicable to the Company, as in effect as of the date the
Approval of such substitution is required under this Agreement (the "Transfer
Restriction Termination Date"); and (d) Sections 5.1.5.25 and 5.1.5.26, except
that the Terminated Partner shall not have the right to Approve the actions
described in: (i) Section 5.1.5.25 or 5.5.5.26 (1) to the extent provided in (c)
of this Section 5.1.6.1, (2) otherwise except to the extent that the Terminated
Partner's interest is diluted by the admission of the third party investors, any
new Partner or any Transfer described therein, and (3) with respect to
participating financing, if Partners' interests are diluted pro rata by such
participating financing, (ii) Section 5.1.5.5 to the extent amendment of this
Agreement is permitted under Section 3.6 or is necessary or appropriate (as
reasonably Approved by the non-Terminated Partner) to admit a new Partner if the
Admission is permitted under preceding clause (i) without the Terminated
Partner's Approval, and (iii) Section 5.1.5.9 except to the extent the
Terminated Partner would be personally liable for the repayment of all or a
portion of the indebtedness or under the agreement described in such Section
5.1.5.9.
5.1.6.2 APPROVAL PROCEDURE. Notice of the request for
a Partner's Approval of any matter for which such Approval is required pursuant
to this Agreement shall be delivered by the requesting Partner to each of the
then Authorized Representatives, together with the requesting Partner's summary
and analysis of any other matter for which such Approval is requested and the
requesting Partner's recommendations with respect to any matter for which
Approval is requested. Each Authorized Representative shall approve or
disapprove such matter by notice to the other Partner given within ten (10) days
following delivery of such notice. Failure of any Authorized Representative to
timely respond by written notice to the requesting Partner, indicating Approval
or disapproval of such matter and, if disapproved, the reason for such
disapproval, shall be deemed withholding of the Approval by such Authorized
Representative of such matter for which Approval is requested. Notwithstanding
anything in this Agreement to the contrary, no Authorized Representative of a
Partner shall have the right to Approve any action if such Partner no longer has
Approval rights with respect to such issue under Sections 7.9 and 5.1 6.1.
5.2 AFFILIATE TRANSACTIONS. If Approved by the Partners, Affiliates of
any Partner may provide property management services, accounting services,
construction services, office administration, and/or document control services
to the Partnership, subject to the following conditions: (i) the fees for such
services must be no greater than the fees charged generally by qualified,
unaffiliated third-parties performing similar services in the geographical area
in which the services are to be performed; and (ii) the other terms of the
agreement pursuant to which such services will be performed shall generally be
no more onerous than the terms of agreements used by qualified, unaffiliated
third-parties performing similar services in the geographical area in which the
particular services are to be rendered.
5.3 REPORTING REQUIREMENTS; FINANCIALS; MEETINGS.
5.3.1 Governmental Reports; Meetings. The General Partner
shall, at Partnership expense, use reasonable efforts to cause to be prepared
and timely filed with appropriate federal, state and foreign regulatory and
administrative bodies, all reports
[29]
34
required to be filed with such entities under then current applicable laws,
rules and regulations, subject to the reasonable Approval of the General
Partner. Such reports shall be prepared on the accounting or reporting basis
required by such regulatory bodies. The Limited Partner shall be provided with a
copy of any such report. No meeting of the Partners shall be required unless
requested by any Partner upon notice to all Partners, which notice may be given
by any Partner at any time. All Partners shall be given written notice of any
meeting of the Partnership at least twenty (20) days prior to any such meeting
by the General Partner. Any meetings shall be held at the record-keeping office
of the Partnership or at any other reasonably convenient location within the
United States as the General Partner may reasonably Approve and specify in such
notice.
5.3.2 ACCESS; AUDIT. The General Partner shall permit the
Limited Partner to review and copy, during normal business hours at the office
of the Partnership, all Partnership financial records and information. The
records and information of the Partnership shall be audited at Partnership
expense by auditors to be selected upon the reasonable Approval of the General
Partner. The General Partner shall maintain (at the office of the Partnership)
reports required or otherwise prepared and delivered hereunder, or by law or any
contract to which the Partnership is a party, copies of which shall be furnished
to the Limited Partner when available, at the Partnership's expense.
5.3.3 FINANCIALS AND STATUS REPORTS. At Partnership expense,
the General Partner shall use reasonable efforts to cause the following to be
issued to the Limited Partner:
(i) annual financials shall be prepared by the Partnership's
independent certified public accountants at Partnership expense, within ninety
(90) days after the close of each year (including sources and uses of funds,
cash on hand, distributions, changes in financial position, tax information,
Unrepaid Capital and unrepaid Partner loans); and
(ii) such other reports as are contemplated by the AGHC Prospectuses.
5.4 TAX MATTERS PARTNER; TAX RETURNS. The General Partner is hereby
designated as the "Tax Matters Partner", as such term is defined in Section
6231(a)(7) of the Code, and it shall serve as such at Partnership expense with
all powers granted to a tax matters partner under the Code. Each Partner shall
give prompt notice to each other Partner of any and all notices it receives from
the Internal Revenue Service (or any other taxing authority) concerning the
Partnership, including any notice of audit, any notice of action with respect to
a revenue agent's report, any notice of a 30-day appeal letter and any notice of
a deficiency in tax concerning the Partnership's federal, state or local income
tax returns. At Partnership expense, the Tax Matters Partner shall furnish each
Partner with status reports regarding any negotiation between the Internal
Revenue Service (or other taxing authority) and the Partnership promptly after
any material new development. The Tax Matters Partner shall use its reasonable
efforts to cause the Partnership's accountants to prepare and file on a timely
basis, with due regard to extensions (if such extensions are reasonably Approved
by the General Partner) all tax and information returns which the Partnership
may be required to file. No tax or information return shall be filed unless
reasonably Approved by the General
[30]
35
Partner. The General Partner shall cause the Partnership's accountants to
prepare and deliver, at Partnership expense, to each Partner on a timely basis
an information reporting return (K-1) reflecting such Partner's distributive
share of all income, gain, loss, deductions, allowances or credits of the
Partnership for each Partnership Accounting Year, as computed pursuant to
Article 3.
5.5 INDEMNIFICATION AND LIABILITY OF PARTNERS AND PARTNERSHIP
EMPLOYEES.
5.5.1 No Partner or Partnership employee shall be liable,
responsible or accountable in damages or otherwise to any of the Partners or the
Partnership for any act or omission performed or omitted by it in good faith on
behalf of the Partnership and in a manner reasonably believed by it to be (i)
within the scope of the authority granted to it by this Agreement or, in the
case of an employee, the scope of the authority granted to the employee by the
General Partner and (ii) in the best interests of the Partnership, the Partners
or their Affiliates, except for Major Defaults (as defined in Section 5.5.3) and
damages for a breach of this Agreement as provided in Section 9.2 and, in the
case of an employee, damages for the employee's breach of any employment
agreement with the Partnership.
5.5.2 Except with respect to a Partner's Major Defaults
described in Section 5.5.3 and a Partner's breach of this Agreement as provided
in Section 9.2 (or, in the case of an employee, such employee's acting outside
the scope of the employee's authority granted to him by the General Partner, the
employee's Major Default, or the employee's breach of any employment agreement
with the Partnership), the Partnership shall indemnify and hold harmless each
Partner and employee from and against any obligations, actual damages,
penalties, actions, judgments, suits, expenses, disbursements, losses, costs or
liabilities of any kind or nature whatsoever which may be imposed upon, incurred
or asserted against such Partner or employee (including reasonable attorneys'
and paralegals' fees and court costs) in connection with, due to or arising out
of (i) such Partner's (or a partner or a member of such Partner) serving as a
Partner of the Partnership, (ii) such Partner's serving as an employee of an
Affiliate of a Partner or (iii) such employee serving as an employee of the
Partnership, in each case so long as such Partner (or such partner or member)
and its Affiliates, or employee, acted in good faith, with reasonable belief
that such actions were within the scope of authority granted to such Partner
under this Agreement, or to such employee by the General Partner, as the case
may be, and such actions did not constitute a Major Default or a breach of this
Agreement under Section 9.2 or, in the case of an employee, a breach of any
employment agreement with the Partnership.
5.5.3 Each Partner shall (and each employee shall be required
to) indemnify and hold harmless each other Partner, employee and the Partnership
from and against any direct (and not consequential or incidental) obligations,
actual damages, penalties, actions, judgments, suits, expenses, disbursements,
losses, costs or liabilities (collectively, the "Liabilities") incurred or paid
by such employees, other Partners or the Partnership (to the extent such
Liabilities are not reimbursed by insurance proceeds or indemnities from third
parties), to the extent such Liabilities are caused by, and such Partner or
employee is
[31]
36
finally adjudicated to have engaged in, actual fraud or intentional
misappropriation of funds ("Major Defaults") or is determined to have committed
a breach of this Agreement as provided in Section 9.2 or any employment
agreement with the Partnership.
5.6 OPPORTUNITY TO DEFEND. In any case where indemnity is sought by a
Partner (or an employee pursuant to the principles set forth in this Section
5.5), such Partner shall (and such employee shall be required to) give notice of
the request for indemnification to the Partnership and the other Partners from
whom the indemnity is required and give them the opportunity to the extent
reasonably possible, to participate in the defense of the claim giving rise to
the claim for indemnity, all at Partnership expense and subject to the
reasonable Approval of the Partners.
5.7 LIMITATION OF LIABILITY. Each Partner's liability shall be limited
as set forth in this Agreement, the Act and other applicable law. The Limited
Partner shall not be liable for the debts or obligations of the Partnership. No
partner, officer, director, shareholder, manager or member of a Partner shall be
liable for the obligations of such Partner to the Partnership or the other
Partners under any circumstances other than a Major Default that has actually
been committed by such partner, officer, director, shareholder, manager or
member.
5.8 NO PRIORITIES. Except as specifically provided in this Agreement,
no Partner shall have any priority over any other Partner as to the return of
its Capital Contributions or as to distributions or allocations of Profits or
Losses or other tax items.
ARTICLE 6
BOOKS, RECORDS AND BANK ACCOUNTS
6.1 BOOKS AND RECORDS; ACCOUNTING METHOD. At Partnership expense, the
General Partner shall cause to be kept (at the office of the Partnership
referred to in Section 1.3.2) accurate, just and true books of account, in which
shall be entered fully and accurately each and every transaction of the
Partnership. Such records shall be maintained for the period, in the manner, and
at the locations required by applicable law. The books shall be kept in
accordance with the Partnership's method of reporting for federal income tax
purposes (which shall be the accrual method of accounting). Tax accounting
elections, including methods of depreciation and deduction or capitalization of
interest, taxes and insurance premiums during any construction period, shall be
made as the General Partner shall reasonably Approve. The Partnership's
financial statements shall be prepared in accordance with generally accepted
accounting principles, consistently applied.
6.2 BANK ACCOUNTS. The funds of the Partnership shall be deposited in
the name of the Partnership, in such bank account or accounts as the General
Partner shall reasonably Approve. Such funds shall be invested by the General
Partner in such high quality, short term instruments as shall be reasonably
Approved by the General Partner (which may or may not bear interest as the
General Partner shall Approve). The individual
[32]
37
signatories on all Partnership accounts shall be appointed and Approved by the
General Partner from time to time. The signature of any such appointee shall be
sufficient to effect withdrawals if so Approved by the General Partner.
ARTICLE 7
TRANSFERS OF PARTNERSHIP INTERESTS
7.1 RESTRICTIONS ON TRANSFER. No Partner shall be permitted to Transfer
all or any part of its interest in the Partnership under any circumstances until
the Transfer Restriction Termination Date. Any such attempted or actual Transfer
shall be null and void ab initio and of no force and effect. Notwithstanding the
foregoing, from and after the Transfer Restriction Termination Date, a Partner
may Transfer all or part of its interest in the Partnership, as follows:
7.1.1 To the Partnership or another Partner or a partner,
member or shareholder or Affiliate of a Partner; and
7.1.2 Any other Transfer which is Approved by the Partners
(excluding any Partner that is a Terminated Partner).
The following shall be conditions precedent to the effectiveness of any Transfer
of any interest in the Partnership pursuant to this Article 7 (no such Transfer
shall occur or be effective for any purpose until the Transfer Restriction
Termination Date): (i) the transferee shall assume in writing each of the
obligations of the transferor to the Partnership; (ii) such transferee shall
agree in writing to be bound by each of the terms and conditions of this
Agreement; (iii) the transferee shall deliver to the Partnership instruments of
assumption and security reasonably Approved by the Partners, for the payment and
performance of all obligations of or attendant to the interest so transferred
and assumed; and (iv) the requirements of Sections 7.4 and 7.5 shall be
satisfied.
7.2 TAKE-ALONG RIGHTS. There shall be no right of any other Partner to
participate in any Transfer permitted by a Partner under this Agreement.
7.3 BANKRUPTCY OR DISSOLUTION OF PARTNERS. The Bankruptcy or
dissolution of the Limited Partner shall not dissolve the Partnership, and its
business shall be continued thereafter. The Bankruptcy or dissolution (without
reconstitution within sixty (60) days thereafter) of the General Partner shall
dissolve the Partnership and cause its liquidation, except as otherwise provided
in Section 8.4. Upon the occurrence of a Bankruptcy or the dissolution (without
reconstitution within sixty (60) days thereafter) of any Partner, such Partner
shall become a Terminated Partner under Section 7.9, and the trustee in
Bankruptcy, receiver or other legal representative of the Bankrupt Partner or
other legal representatives of the dissolved Partner, shall have all the rights
of an assignee of the Partner, including the same right (subject to the same
limitations) as the Bankrupt or dissolved Partner would have had under the
provisions of Section 7.1 to Transfer its interest
[33]
38
in the Partnership, subject to the substitution rules of Section 7.4 and the
provisions of Section 7.9; provided, however, that upon the Bankruptcy or
dissolution (without reconstitution within sixty (60) days thereafter) of the
General Partner, the General Partner shall cease taking any and all action with
respect to the Partnership and shall automatically have its entire interest in
the Partnership reconstituted as that of a Limited Partner in the Partnership
who shall be a Terminated Partner for all purposes of this Agreement, and the
Limited Partner who is not a Terminated Partner may, if it elects to
reconstitute and continue the Partnership under Section 7.4, appoint a successor
General Partner as provided in Section 8.4 (such remedies are intended to be
enforceable upon the Bankruptcy of the General Partner for the reasons set forth
in Section 7.7).
7.4 SUBSTITUTION OF PARTNER. Subject to the restrictions on Transfers
and Approval rights of the Partners as set forth in Section 7.1 and the
provisions of Section 7.5, the assignee of any Transfer by a Partner (a "Partner
Assignee") shall become a substitute Partner only if (i) the assignor Partner so
provides in an instrument of assignment, (ii) the Partner Assignee agrees in
writing to be bound by the provisions of this Agreement and of the Articles and
any amendments hereto and thereto, and (iii) each Partner Approves such
substitution, which Approval may be given or withheld in its sole and absolute
discretion (this clause (iii) shall cease to have any force and effect if and
when the Transfer Restriction Termination Date occurs). If the assignor Partner
so provides, the Partner Assignee agrees to be bound as aforesaid, and, if
applicable under preceding clause (iii), the Partners so Approve such
substitution, the Partner Assignee shall become a substitute Partner (having the
same status as a General Partner or as a Limited Partner as did the assignor
Partner immediately prior to the Transfer) upon payment to the Partnership of
all costs and expenses of reviewing the instrument of assignment, if
appropriate, and, if required by law, an amendment to the Certificate to reflect
such substitution. In such event, if and as required by law, the Partners shall
prepare or cause to be prepared an amendment to the Certificate to be signed by
the General Partner and, to the extent required, by the Limited Partner and by
the Partner Assignee. The General Partner shall attend to the due execution and
filing of such amendment to the Certificate, if such amendment is required.
Unless named in this Agreement, or unless admitted to the Partnership as
provided in this Agreement, no Person shall be considered a Partner, and the
Partnership, each Partner and any other Persons having business with the
Partnership need deal only with Partners so named or so admitted and shall not
be required to deal with any other Person by reason of a Transfer. A Partner
Assignee of an interest in the Partnership who is not admitted as a substitute
Partner as provided in this Section 7.4 shall be entitled to receive the
economic benefits of the interest purported to be Transferred but shall not be
considered a Partner for any purposes and shall have none of the rights of a
Partner under this Agreement or under the Act.
7.5 ADDITIONAL TRANSFER RESTRICTIONS.
7.5.1 Notwithstanding any provision of this Agreement to the
contrary, and subject to the limitations in Sections 7.1 through 7.4, a
Partner's ability to Transfer all or any portion of its interest as a Partner in
the Partnership shall be subject to the following additional restrictions:
[34]
39
7.5.1.1 No Transfer of all or any portion of such
interest shall be effective unless (i) such Transfer complies with the Transfer
restrictions in all agreements to which the Partnership, or such Partner is a
party, and (ii) such interest is registered under the Securities Act and any
applicable state securities laws, or an exemption from registration is
available, and, for any direct Transfer of an interest in the Partnership, the
Partnership shall have received an opinion of counsel, reasonably Approved by
the non-Transferring Partner, to such effect (unless the requirement that the
Partnership receive such legal opinion is waived by the Approval of the
non-Transferring Partner);
7.5.1.2 No Partner shall be permitted to Transfer
any portion of its Partnership interest or take any other action which would
cause the Partnership to be (i) treated as a "publicly traded partnership"
within the meaning of Code Section 7704 or (ii) classified as a corporation (or
as an association taxable as a corporation) within the meaning of Code Section
7701(a);
7.5.1.3 No Partner shall be permitted to Transfer
all or any portion of its Partnership interest or to take any other action
(including, in the case of any Partner which is a corporation, limited liability
company or partnership or a partner or member of a partnership or limited
liability company which is a Partner, a Transfer of any interest in such
partnership, limited liability company or corporation or in the partners,
members or shareholders thereof) which would result in a termination of the
Partnership as a partnership within the meaning of Code Section 708(b)(1)(B) (a
"Tax Termination"), without the Approval of the other Partner;
7.5.1.4 Unless arrangements concerning withholding
are reasonably Approved by the General Partner (if such withholding is required
of the Partnership), no Partner shall be permitted to Transfer all or any
portion of its interest in the Partnership to any Person, unless such Person is
a United States Person as defined in Code Section 7701(a)(30) and is not subject
to withholding of any federal tax; and
7.5.1.5 No Partner shall be permitted to Transfer
all or any portion of its Partnership interest if such Transfer will (i) cause
the assets of the Partnership to be deemed to be "plan assets" under ERISA or
its accompanying regulations or the Code or (ii) result in any "prohibited
transaction" under ERISA or its accompanying regulations affecting the
Partnership.
7.5.2 Any purported transfer or any other action taken in
violation of this Section 7.5 shall be void ab initio.
7.6 TRANSFER INDEMNIFICATION AND CONTRIBUTION PROVISIONS.
Each Partner shall indemnify, defend and hold the Partnership and each
other Partner, and the shareholders, partners, employees, agents, members and
Affiliates thereof, harmless from any Liabilities in any way arising from the
failure of a Transfer of any interest in the Partnership (including any Transfer
of an interest in any partners, members or shareholders of the indemnifying
Partner, or the partners, members or
[35]
40
shareholders therein, and regardless of whether occurring before or after the
date of this Agreement) to comply with all applicable federal and state
securities laws, including all registration or qualification requirements and
anti-fraud requirements, or the impact of such Transfer upon compliance of the
Partnership and its Partners with those securities laws in connection with any
previous Transfer of an interest in the Partnership. Should the preceding
indemnity be unenforceable to any extent, then, to such extent the Partner
otherwise required to so indemnify the Partnership and the other Partner shall
be obligated to contribute to any loss, liability, cost or expense resulting
from the actions, omissions or events set forth in the above indemnification to
the extent of its responsibility therefor, as determined by the trier of fact.
7.7 BASIS FOR RESTRICTIONS AND SECTION 7.3 AND 7.9 REMEDIES. The
Partners acknowledge that the relationship of each Partner to the other Partners
is a personal relationship and that the restrictions on the power of each
Partner to withdraw or Transfer its interest in the Partnership, and the
provisions of Section 7.3 (including the reconstitution of the General Partner's
interest in the Partnership as the interest of a Limited Partner) and Section
7.9 (including the purchase and redemption rights contained therein) (i) are
necessary to preserve such personal relationship and safeguard the investment of
the other Partners in the Partnership and, under current law, the Transfer
restrictions help preserve the Partnership's status as a partnership for tax
purposes, and (ii) were a material inducement to the other Partners entering
into this Agreement, and shall be enforceable notwithstanding the Bankruptcy of
any Partner or any applicable restrictions on alienation.
7.8 REPRESENTATIONS, WARRANTIES AND COVENANTS.
Each Partner hereby represents and warrants to each of the other
Partners as follows:
7.8.1 Such Partner, if not a natural Person, is duly formed
and validly existing under the laws of the jurisdiction of its organization with
full power and authority to enter into this Agreement and to conduct its
business to the extent contemplated in this Agreement;
7.8.2 This Agreement has been duly authorized, executed and
delivered by such Partner and constitutes the valid and legally binding
agreement of such Partner, enforceable in accordance with its terms against such
Partner, except as such enforceability may be limited by bankruptcy, insolvency,
moratorium and other similar laws relating to creditors' rights generally, by
general equitable principles and by any implied covenant of good faith and fair
dealing;
7.8.3 The execution and delivery of this Agreement by such
Partner and the performance of its duties and obligations hereunder do not
result in a breach of any of the terms, conditions or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, credit
agreement, note or other evidence of indebtedness, or any lease or other
agreement, or any license, permit, franchise or certificate to which such
Partner is a party or by which it is bound or to which its properties are
subject or require
[36]
41
any authorization or approval under or pursuant to any of the foregoing, or
violate any statute, regulation, law, order, writ, injunction, judgment or
decree to which such Partner is subject;
7.8.4 Such Partner is acquiring its interest in the
Partnership for investment purposes and without a view toward its resale or
distribution;
7 8.5 Such Partner recognizes that Battle ▇▇▇▇▇▇ LLP ("BFLLP")
serves as special counsel to Affiliates of both of the Partners, and each
Partner hereby waives all potential conflicts of interest resulting from BFLLP's
representation of the Partners and the Partnership hereunder, of Affiliates of
AGHLLC, AGHC and AGHOP in other transactions, and of the Partnership in the
future on matters for which BFLLP is retained as counsel by the Partnership;
7.8.6 Such Partner is aware that transfers of interests in the
Partnership and within such Partner are not permitted except in the limited
circumstances expressly as provided in Article 7 hereof and that an investment
in the Partnership is a long-term investment, without liquidity;
7.8.7 None of the other Partners is acting as the
representative or agent or in any other capacity, fiduciary or otherwise, on
behalf of such Partner in connection with the Partnership, or the other matters
referred to in this Agreement;
7.8.8 Such Partner understands that it may lose its Approval
rights (and be subject to having such Partner's interest purchased by the
Partnership for its appraised fair market value in certain circumstances) under
Section 7.9 if the Partner becomes a Terminated Partner, and that it has waived
its rights to a trial by jury in any dispute concerning this Agreement or the
Partnership under Section 9.4; and
7.8.9 Such Partner understands that the Partnership and its
Partners are relying on the accuracy of the representations set forth in this
Section 7.8 in entering into this Agreement without requiring that the interests
in the Partnership be registered under federal or state securities laws.
7.9 TERMINATED PARTNER.
7.9.1 If and when the General Partner becomes a Terminated
Partner, its interest in the Partnership automatically shall be deemed to be
converted to that of a Limited Partner who shall be a Terminated Partner for
purposes of then applying the provisions of this Section 7.9. If and when a
Partner becomes a Terminated Partner, (i) such Partner shall automatically cease
to have any Approval or voting rights under this Agreement or with respect to
the Partnership, except as provided in Section 5.1.6.1, (ii) upon the election
of the Partner who is not the Terminated Partner (the "Electing Partner"), given
by notice from the Electing Partner to the Terminated Partner (a "Purchase
Notice") at any time after a Partner becomes a Terminated Partner, sell the
Terminated Partner's interest in the Partnership to the Partnership (or to the
other Partner or its designee as set forth in Section
[37]
42
7.9.4), at a price (the "Buy-Out Price") to be determined as hereinafter
provided. The Electing Partner shall notify the Terminated Partner in writing of
its election (exercisable at any time after a Partner becomes a Terminated
Partner) under clause (ii), above, and (iii) the other provisions applicable by
reason of becoming a Defaulting Partner (including Sections 7.9.5 and 8.1.1)
shall apply
If a Purchase Notice has been given under clause (ii) above, the
Electing Partner and the Terminated Partner shall attempt to agree upon the
Buy-Out Price of the Terminated Partner's interest in the Partnership. If such
agreement is not reached within thirty (30) days after the notice of election is
given, the Terminated Partner, on the one hand, and the Electing Partner, on the
other hand, shall each, within ten (10) additional days, appoint an M.A.I.
accredited appraiser by notice to the others. The two appraisers so appointed
shall, within five (5) additional days, appoint a third M.A.I. accredited
appraiser and the three appraisers shall meet to determine the gross proceeds
that would have been received by the Partnership if the Partnership sold, on the
Termination Date, all of its assets (including the Investment) for cash at their
then fair market value, less all costs and expenses of sale, including closing
costs, real estate brokerage commissions and fees, title insurance premiums and
escrow fees, appropriate reserves and legal and other expenses incident to such
sale (the "Appraised Value"). The Appraised Value shall equal the average of the
appraised values determined by each of the two appraisers whose appraisals are
closest to each other. The cost of such appraisal shall be borne 50% by the
Partnership and 50% by the Terminated Partner. The Buy-Out Price shall equal
the amount the Terminated Partner would receive under Section 4.2.3, if all of
the assets of the Partnership were sold to a third party for the Appraised Value
and the Partnership were liquidated, after withholding therefrom any damages
determined to be payable by the Terminated Partner under Section 5.5.3 by reason
of the Terminated Partner's Major Default for all periods. If the Partnership
redeems the Terminated Partner, there shall be no discount in the Buy-Out Price
for any encumbrances to which such redeemed interest is subject, but the
Partnership shall apply the proceeds of such redemption to satisfy such
encumbrances instead of making distributions thereof to the Terminated Partner
to the extent required by law (such distributions being deemed for all purposes
to have been made to the Terminated Partner by the Partnership and then paid by
the Terminated Partner to satisfy such encumbrances). If the interest of the
Terminated Partner is purchased by the other Partner (or its designee), and not
by the Partnership, pursuant to Section 7.9.4, the Buy-Out Price for the
Terminated Partner's interest as determined above shall be reduced to the extent
the other Partner or its designee acquires the Terminated Partner's interest
subject to (or assumes) the encumbrances on such interest at the closing. Within
ten (10) days following the determination of the Buy-Out Price, the Electing
Partner may elect, in its sole and absolute discretion, by notice to the
Terminated Partner, to rescind any notice pursuant to this Section 7.9.1, in
which event the right to elect to cause the Terminated Partner to sell its
interest to the Partnership or to the other Partner (or its designee) pursuant
to this Section 7.9.1 as a result of the event(s) which led to the Purchase
Notice (but not any future event which would authorize any such notice) shall no
longer be of any force or effect.
7.9.2 The purchase and sale of the Terminated Partner's
interest in the Partnership pursuant to this Section 7.9 shall be consummated on
or before the
[38]
43
thirtieth (30th) day following the date upon which the Buy-Out Price was
determined (whether by agreement of the Terminated Partner and the Electing
Partner or by appraisal), at the offices of the Partnership, or at such other
time and place as may be agreed upon by the Terminated Partner and the Electing
Partner. At the closing, the Terminated Partner shall execute and deliver to the
Partnership (or the Electing Partner or its designee, as appropriate) such
instruments of assignment, conveyance and transfer as the Electing Partner(s)
may reasonably deem necessary or appropriate to consummate the purchase and
sale, and the purchaser shall issue its recourse promissory note payable to the
Terminated Partner in the amount of the Buy-Out Price (adjusted for encumbrances
to the extent provided in Section 7.9.1), bearing interest at an annual rate
equal to the Prime Rate, with interest compounded quarterly, and all principal
and accrued interest being payable on the date which is twenty-four (24) months
after the closing (and with prepayment being allowed at any time without
penalty).
7.9.3 Following the closing date, the Partnership shall
indemnify and hold the Terminated Partner harmless from and against all
liabilities of the Partnership arising from acts taken or omitted to be taken by
the Partnership after the date on which the closing occurs of the sale of the
Terminating Partner's interest to the Partnership (or to the Electing Partner or
its designee, as appropriate).
7.9.4 The Partnership shall fund the purchase of the
Terminated Partner's interest pursuant to this Section 7.9 by borrowings or, if
the remaining Partner so Approves, by additional Capital Contributions from the
remaining Partner, such borrowings or Capital Contributions to occur when needed
to make the required payments of the Buy-Out Price. If the remaining Partner so
Approves, the interest of the Terminated Partner shall be purchased by such
remaining Partner or its designee, which designee may be admitted as a Limited
Partner hereunder (or if the General Partner is the Terminated Partner, as the
General Partner hereunder) upon the date of the closing of the purchase of the
Terminated Partner's interest in order to avoid a termination of the
Partnership.
7.9.5 The provisions of this Section 7.9 have been agreed to
by the Partners for the reasons set forth in Section 7.7.
ARTICLE 8
TERM, DISSOLUTION AND TERMINATION
8.1 EVENTS OF DISSOLUTION. The Partnership shall continue until
December 31, 2046, or such later date as is Approved by the Partners; provided,
however, that dissolution and liquidation shall occur prior to that date upon
the occurrence of any one of the following events:
8.1.1 An election to dissolve the Partnership being made in
writing upon the Approval of the Partners other than any Terminated Partner;
[39]
44
8.1.2 The sale for cash, exchange or other disposition of all
or substantially all of the assets of the Partnership; or
8.1.3 The Bankruptcy or dissolution (without reconstitution
within sixty (60) days thereafter) of the General Partner, unless the
Partnership is reconstituted and continued as provided in Section 8.4.
8.2 LIMITATION ON DISSOLUTION. Until the dissolution of the Partnership
otherwise occurs, neither Partner shall voluntarily retire, resign or withdraw
from the Partnership, take any step voluntarily to dissolve itself or
voluntarily cause a dissolution of the Partnership, except as provided in
Section 8.1.1.
8.3 LIQUIDATION AND WINDING UP.
8.3.1 If the Partnership is dissolved for any reason and is
not reconstituted pursuant to Section 8.4.1, the General Partner, if it is not
then a Terminated Partner (or, if the General Partner is a Terminated Partner,
the Limited Partner) (the Partner who is not a Terminated Partner, or any other
Person empowered to liquidate the Partnership under this Section 8.3, the
"Liquidator") shall commence to wind up the affairs of the Partnership and to
liquidate and sell its assets as reasonably Approved by the Partners other than
Terminated Partners as soon as is practicable thereafter. A third-party
liquidator may be appointed as the Liquidator if Approved by the Partners other
than Terminated Partners. Any Liquidator other than the Partners shall have
sufficient business expertise and competence to conduct the winding up and
termination of the business of the Partnership as it has theretofore been
conducted or (subject to the limitations hereinafter set forth) which the
Partnership may thereafter enter into. No Liquidator who is a Partner shall be
paid any compensation or fee for conducting the liquidation of the Partnership.
8.3.2 The Liquidator shall proceed with such liquidation in as
expeditious a manner as is reasonably practicable. The holders of interests in
the Partnership shall continue to share income and losses during the period of
liquidation in accordance with Article 4.
8.3.3 If a Partner or an Affiliate of a Partner desires to
purchase any of the Partnership's remaining assets, the price, terms and
conditions of such purchase shall be subject to the Approval of the Partners.
8.3.4 Except as expressly provided in this Article 8, any
Liquidator which is not a Partner shall have and may exercise all of the powers
conferred upon a General Partner under the terms of this Agreement (but subject
to all of the applicable limitations, contractual and otherwise, upon the
exercise of such powers, including Approval of the Partners to the extent
required), to the extent necessary or desirable in the good faith judgment of
the Liquidator to carry out the duties and functions of the Liquidator hereunder
for and during the liquidation period.
[40]
45
8.3.5 If (i) the Partnership is dissolved for any reason and
is not reconstituted and continued pursuant to Section 8.4.1, (ii) both Partners
have become Bankrupt or been dissolved, and (iii) within ninety (90) days
following the date of dissolution a Liquidator or successor Liquidator has not
been appointed by remaining Partners pursuant to Section 8.3.1, any interested
party shall have the right to seek judicial supervision of the winding up of the
Partnership pursuant to the Act.
8.3.6 After making payment or provision for payment of all
debts and liabilities of the Partnership and all expenses of liquidation, the
Liquidator may establish, for a period Approved by the Partners not to exceed
eighteen (18) months after the date the liquidation is complete, such cash
reserves as the Liquidator may reasonably deem necessary for any contingent or
unforeseen liabilities or obligations of the Partnership.
8.4 RECONSTITUTION AFTER BANKRUPTCY OR DISSOLUTION OF PARTNERS.
8.4.1 Upon the Bankruptcy or dissolution (without
reconstitution within sixty (60) days thereafter) of the General Partner, the
Partnership shall be dissolved and liquidated unless within ninety (90) days
subsequent to such event the Limited Partner elects, by giving notice to the
General Partner, to reconstitute the Partnership and to continue the business of
the Partnership. If such election is made, then (i) the Partnership shall not be
dissolved and liquidated; (ii) the Partnership and the business of the
Partnership may be continued, under and pursuant to the provisions of this
Agreement; (iii) the Bankrupt or dissolved General Partner's interest in the
Partnership shall be reconstituted as that of a Limited Partner as provided in
Section 7.3, which interest then may be purchased as set forth in Section 7.9,
and upon such Bankruptcy or dissolution, the other rights against a Terminated
Partner under Section 7.9 shall also apply to the extent applicable; (iv) the
Certificate shall be amended to reflect such continuation, if so required; and
(v) the Limited Partner may elect, by notice to the former General Partner, to
reconstitute a portion of the Limited Partner's interest in the Partnership as
that of a General Partner and transfer such portion of its interest to an
Affiliate and appoint such Affiliate as a successor General Partner who shall
thereupon be admitted as such automatically, and shall be deemed to be a General
Partner for all purposes of this Agreement, upon signing a counterpart of this
Agreement (such former General Partner hereby consents to such Transfer and
admission, notwithstanding anything in this Agreement to the contrary). Section
7.3 sets forth the remedies that shall apply upon the Bankruptcy or dissolution
of either Partner.
8.5 DISTRIBUTION UPON DISSOLUTION AND CAPITAL ACCOUNT ADJUSTMENTS. Upon
dissolution of the Partnership without reconstitution as permitted by this
Article 8, the Partnership's assets shall be sold or otherwise disposed of to
third parties as directed by the Liquidator upon the reasonable Approval of the
Partners, and, after paying or providing for liabilities owing to creditors
(including Partners) and the establishment of such reserves as the Liquidator
reasonably deems necessary for contingent or unforeseen liabilities or
obligations of the Partnership for a period Approved by the Partners of up to
eighteen (18) months after the liquidation has been completed, the remaining
liquidation proceeds (and the reserves, after the expiration of a period of time
deemed reasonable by the Liquidator for a
[41]
46
period of up to eighteen (18) months after the liquidation has been completed)
shall be distributed pursuant to Section 4.2.
8.6 COMPLIANCE WITH TIMING REQUIREMENTS OF TREASURY REGULATIONS.
Notwithstanding anything in this Article 8 to the contrary, in the event the
Partnership is "liquidated" within the meaning of Regulations Section
1.704-1(b)(2)(ii)(g), distributions shall be made to the Partners who have
positive Capital Account balances pursuant to Section 4.2 in a manner that
complies with Regulations Section 1.704-1(b)(2)(ii)(b)(2). However, a
liquidation occurring as a result of a Tax Termination shall not require an
actual distribution of Partnership assets, but shall instead be treated as a
constructive liquidation and reformation in the manner in Regulations Section
1.708-1(b)(1)(iv), or otherwise as required by successor Regulations, if any.
ARTICLE 9
MISCELLANEOUS
9.1 OTHER INTERESTS. Except as provided in the AGHC Prospectuses, no
Partner and no Affiliate of a Partner shall have any right, by virtue of this
Agreement or otherwise, to share or participate in or to Approve any other
investments or activities of any other Partner or the income or proceeds
derived therefrom, no Partner and no Affiliate of any Partner shall be
obligated to offer or to bring to the attention of the Partnership or the
Partners any property or other business investment or opportunity, whether or
not within the scope of the Partnership's purposes, and any Partner and any
Affiliate of any Partner may at any time during the term of the Partnership
own, invest in, develop or manage, directly or indirectly, any property or
other business investment or opportunity, whether or not competitive with the
Partnership or its assets or otherwise within the scope of the Partnership
purposes. Each of the Partners acknowledges and agrees that, except as provided
in the AGHC Prospectuses, each Partner and its Affiliates may have engaged or
invested in, may now be engaged and investing in and may in the future be
offered, consider, engage and/or invest in other business or real property
ventures of every kind and nature, including the ownership, acquisition,
financing, leasing, operating, management, syndication, brokerage and
development of hotels, motels and/or other real property and other investments
and opportunities to make or purchase loans which may be competitive with the
Investment and/or other assets of the Partnership and, except as provided in
the AGHC Prospectuses, none of the Partners or their Affiliates shall have any
obligation or responsibility to disclose, account for or offer any of such real
properties, investments or opportunities to the Partnership or any Partner of
their Affiliates, and the Partnership, the Partners and their Affiliates shall
have no rights or interests therein.
9.2 DAMAGES; CERTAIN CURE RIGHTS; OFFSET. Each Partner shall be liable
(and each Partnership employee shall be required to agree to be liable) to the
Partnership and the other Partners for any actual (but not consequential or
incidental) damages arising from any breach hereof (or, in the case of an
employee, acting outside the scope of the employee's authority granted by the
General Partner of breaching any employment agreement with the
[42]
47
Partnership) Upon any alleged breach or default of this Agreement by any
Partner, it shall be a condition to any action against such Partner that such
Partner have received notice of such alleged breach or default (which may be any
notice otherwise required by this Agreement) and that such Partner shall have
failed to cure or commence to cure such alleged breach or default within thirty
(30) days following such notice and failed, at all times thereafter, to use
diligent efforts to pursue such cure to completion, but in no event beyond
ninety (90) days. Notwithstanding anything in this Agreement to the contrary,
(a) there shall be no cure period for a Major Default, and (b) the only cure
period for failure timely to make a Capital Contribution under Article 2 is set
forth in Sections 2.2.1 and 2.2.2. Notwithstanding anything in this Agreement to
the contrary, all amounts payable to a Partner under this Agreement shall be
subject to offset for amounts owed to the Partnership or the other Partner under
this Agreement and shall be withheld and either retained by the Partnership or
reallocated to the other Partner in a reasonable manner, as the case may be.
9.3 NO AGENCY. Except as provided herein, nothing herein contained
shall be construed to constitute any Partner hereof the agent of any other
Partner hereof or to limit in any manner the carrying on of each Partner's
respective businesses or activities.
9.4 GOVERNING LAW. It is the intent of the parties hereto that all
questions with respect to the construction of this Agreement and the rights and
liabilities of the parties hereto shall be determined in accordance with the
provisions of the laws of the State of Delaware as applicable to a limited
partnership formed under the Act. Each of the parties hereto hereby waives any
and all rights to a trial by jury with respect to any dispute among the Partners
or their Affiliates or among a Partner (or its Affiliates) and the Partnership
concerning this Agreement, the Partnership or its assets. In any dispute among
the Partners concerning the Partnership or this Agreement, the prevailing
Partner(s) shall be entitled to recover its reasonable attorneys' fees and costs
(including litigation and collection costs) from the non-prevailing Partner(s).
9.5 NOTICES. Any notices or solicitations of Approval required or
permitted to be given under the terms of this Agreement shall be in writing and
shall be deemed to have been given when (i) personally delivered with signed
delivery receipt obtained, (ii) when transmitted by facsimile machine, if
followed by a mailing thereof pursuant to this Section 9.5 before the end of the
first business day thereafter, with printed confirmation of successful
transmission to the facsimile number set forth in the appropriate address listed
below being obtained by the sender from the sender's facsimile machine, or (iii)
when deposited in the United States first class mail if sent postage prepaid by
registered or certified mail, return receipt requested, in each case addressed
as follows:
[43]
48
IF TO AGHOP, to it in care of:
American General Hospitality Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Battle ▇▇▇▇▇▇ LLP
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq. and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
IF TO AGHLLC, to it in care of:
American General Hospitality Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Battle ▇▇▇▇▇▇ LLP
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq. and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
[44]
49
The time to respond to any notice shall commence to run on the date of delivery
at the appropriate addresses (or attempted delivery if delivery is refused
during normal business hours). A Partner may change the address to which notices
shall be sent to it, or any of its Authorized Representatives, by written notice
to all Partners (said change of address or of Authorized Representatives to be
effective upon receipt by all Partners).
9.6 PRONOUNS AND PLURALS. References herein to the singular shall
include the plural and to the plural shall include the singular, and references
to the masculine gender shall include the feminine and neuter genders (and vice
versa), except where the same shall not be appropriate.
9.7 WAIVER. No consent or waiver, express or implied, by any Partner to
or of any breach or default by any other Partner in the performance by the other
of its obligations hereunder shall be deemed or construed to be a consent or
waiver to or of any other breach or default by the other in the performance by
such other party of the same or any other obligations of such Partner hereunder.
Failure on the part of any Partner to object to or complain of any act or
failure to act of any other Partner or to declare any other Partner in default,
irrespective of how long such failure continues, shall not constitute a waiver
by such Partner of its rights hereunder.
9.8 SEVERABILITY. If any provision of this Agreement or the application
thereof to any Person or circumstance shall be invalid or unenforceable to any
extent, the remainder of this Agreement and the application of such provisions
to other Persons or circumstances shall not be affected thereby and shall be
enforced to the greatest extent permitted by law.
9.9 TITLES AND CAPTIONS. All Article or Section titles or captions
contained in this Agreement are for convenience only and shall not be deemed a
part of the content of this Agreement.
9.10 AGREEMENT IN COUNTERPARTS. This Agreement may be executed in
several counterparts, each of which shall be deemed an original, but all of
which shall constitute one and the same instrument. In addition, this Agreement
may contain more than one counterpart of the signature page and the Agreement
may be executed by the affixing of the signatures of each of the Partners to one
of such counterpart signature pages; all of such signature pages shall be read
as though one, and shall have the same force and effect as though all of the
signers had signed a single signature page.
9.11 BINDING AGREEMENT. Subject to the restrictions on Transfers set
forth herein, this Agreement shall inure to the benefit of and be binding upon
the undersigned Partners and their respective successors and assigns. Whenever
in this instrument a reference to any party or Partner is made, such reference
shall be deemed to include a reference to the successors and assigns of such
party or Partner.
9.12 FURTHER ASSURANCES. The Partners shall execute and deliver such
further instruments and do such further acts and things as may reasonably be
required to
[45]
50
carry out the intent and purposes of this Agreement promptly upon request from
either Partner.
9.13 WAIVER OF PARTITION. Unless otherwise specifically provided in
this Agreement (including Article 8), no Partner shall, and each Partner hereby
irrevocably waives the right to, either directly or indirectly, take any action
to require partition or appraisement of the Partnership, the Investment, or any
part thereof, and, notwithstanding any provision of applicable law to the
contrary, each Partner hereby irrevocably waives any and all right to maintain
any action for partition or to compel any sale with respect to its interest in
the Partnership or with respect to the assets of the Partnership, or any part
thereof.
9.14 ENTIRE AGREEMENT. This Agreement contains the final and entire
agreement among the parties hereto with respect to the subject matter hereof,
and they shall not be bound by any terms, conditions, statements or
representations, oral or written, not contained herein.
9.15 AMENDMENTS. Except as expressly provided in this Agreement
(including Section 3.6 and Section 5.1.6.1), this Agreement may be modified or
amended only upon the Approval of the Partners.
9.16 NO DRAFTING PRESUMPTION. In interpreting the provisions of this
Agreement, no presumption shall apply against any Partner that otherwise would
operate against such Partner by reason of such document having been drafted by
such Partner or at the direction of such Partner or an Affiliate of such Partner
9.17 NO THIRD PARTY BENEFICIARIES. Except for the representations
concerning conflict waivers pertaining to BFLLP in Section 7.8.5 (which shall
inure to the benefit of BFLLP), the provisions of this Agreement are not
intended to be for the benefit of any creditor or other Person (other than the
Partners in their capacities as such) to whom any debts, liabilities or
obligations are owed by (or who otherwise have a claim against or dealings with)
the Partnership or the Partners, and no such creditor or other Person shall
obtain any rights under any of such provisions (whether as a third party
beneficiary or otherwise) or shall by reason of any such provisions make any
claim in respect to any debt, liability or obligation (or otherwise) including
any debt, liability or obligation with respect to Capital Contributions, against
the Partnership or the Partners. In addition, no deficit balance in any
Partner's Capital Account or in the capital account of any partner or member of
a Partner shall be an asset of the Partnership, and no Partner shall be
obligated to restore any such deficit balance.
[SIGNATURES BEGIN ON NEXT PAGE]
[46]
51
IN WITNESS WHEREOF, this Agreement is executed, and is effective for
all purposes, as of the date first set forth above.
AMERICAN GENERAL HOSPITALITY OPERATING PARTNERSHIP, L.P., a
Delaware limited partnership, a Member
By: AGH GP, INC. a Nevada corporation, its
general partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chairman of the Board, Chief
Executive Officer and President
AMERICAN GENERAL HOSPITALITY
CORPORATION, a Maryland corporation, a
Member
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chairman of the Board, Chief
Executive Officer and President
[47]
52
EXHIBIT A
DESCRIPTION OF THE INVESTMENT
THE RADISSON ARLINGTON HEIGHTS LOCATED AT ▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇., ▇▇▇▇▇▇▇▇▇ HEIGHTS, ▇▇▇▇ COUNTY, ILLINOIS, AND ALL OF THE REAL AND PERSONAL
PROPERTY, INCLUDING THE FURNITURE AND FIXTURES AND EQUIPMENT LOCATED THEREIN AND
THEREON AND THE REAL ESTATE ON WHICH IT IS SITUATED.
[48]