1
EXHIBIT 3.3
FIFTH AMENDED AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP
OF
RFS PARTNERSHIP, L.P.
2
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINED TERMS 2
ARTICLE II PARTNERSHIP CONTINUATION AND IDENTIFICATION 9
2.01. Continuation........................................................................9
2.02. Name, Office and Registered Agent...................................................9
2.03. Partners............................................................................9
2.04. Term and Dissolution...............................................................10
2.05. Filing of Certificate and Perfection of Limited Partnership........................10
ARTICLE III BUSINESS OF THE PARTNERSHIP 11
ARTICLE IV CAPITAL CONTRIBUTIONS AND ACCOUNTS 11
4.01. Capital Contributions..............................................................11
4.02. Additional Capital Contributions and Issuances of Additional
Partnership Interests............................................................11
4.03. General Partner Loans..............................................................15
4.04. Capital Accounts...................................................................15
4.05. Percentage Interests...............................................................15
4.06. No Interest on Contributions.......................................................16
4.07. Return of Capital Contributions....................................................16
4.08. No Third Party Beneficiary.........................................................16
ARTICLE V PROFITS AND LOSSES; DISTRIBUTIONS 16
5.01. Allocation of Profit and Loss......................................................16
5.02. Distribution of Cash...............................................................19
5.03. REIT Distribution Requirements.....................................................21
5.04. No Right to Distributions in Kind..................................................21
5.05. Limitations on Return of Capital Contributions.....................................21
5.06. Distributions Upon Liquidation.....................................................21
5.07. Substantial Economic Effect........................................................22
ARTICLE VI RIGHTS, OBLIGATIONS AND POWERS OF THE GENERAL PARTNER 22
6.01. Management of the Partnership......................................................22
6.02. Delegation of Authority............................................................24
6.03. Indemnification and Exculpation of Indemnitees.....................................25
6.04. Liability of the General Partner...................................................26
6.05. Expenditures by the Partnership....................................................27
6.06. Outside Activities; Redemption/Tender Offer of REIT Shares.........................27
-i-
3
6.07. Redemption Right With Respect To Preferred Partnership Units.......................28
6.08. Employment or Retention of Affiliates..............................................29
6.09. Loans to the Partnership...........................................................29
6.10. Loans to the General Partner.......................................................29
6.11. General Partner Participation......................................................29
6.12. Authority on Behalf of Limited Partners............................................30
ARTICLE VII CHANGES IN GENERAL PARTNER 30
7.01. Transfer of the General Partner's Partnership Interest.............................30
7.02. Admission of a Substitute or Successor General Partner.............................31
7.03. Effect of Bankruptcy, Withdrawal, Death or Dissolution of a General Partner.......32
7.04. Removal of a General Partner.......................................................32
ARTICLE VIII RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNERS 34
8.01. Management of the Partnership......................................................34
8.02. Power of Attorney..................................................................34
8.03. Limitation on Liability of Limited Partners........................................34
8.04. Ownership by Limited Partner of Corporate General Partner or Affiliate.............34
8.05. Limited Partner Redemption Right...................................................34
8.06. Registration.......................................................................36
8.07. Other Agreements...................................................................40
8.08. Outside Activities of Class A Limited Partners.....................................40
ARTICLE IX TRANSFERS OF LIMITED PARTNERSHIP INTERESTS 41
9.01. Purchase for Investment............................................................41
9.02. Restrictions on Transfer of Limited Partnership Interests..........................41
9.03. Admission of Substitute Limited Partner............................................42
9.04. Rights of Assignees of Partnership Interests.......................................43
9.05. Effect of Bankruptcy, Death, Incompetence or Termination of a Limited Partner.....44
9.06. Joint Ownership of Interests.......................................................44
ARTICLE X BOOKS AND RECORDS; ACCOUNTING; TAX MATTERS 44
10.01. Books and Records.................................................................44
10.02. Custody of Partnership Funds; Bank Accounts.......................................45
10.03. Fiscal and Taxable Year...........................................................45
10.04. Annual Tax Information and Report.................................................45
10.05. Tax Matters Partner; Tax Elections; Special Basis Adjustments.....................45
10.06. Reports to Limited Partners.......................................................46
ARTICLE XI AMENDMENT OF AGREEMENT 46
-ii-
4
ARTICLE XII GENERAL PROVISIONS 47
12.01. Notices...........................................................................47
12.02. Survival of Rights................................................................47
12.03. Additional Documents..............................................................47
12.04. Severability......................................................................47
12.05. Entire Agreement..................................................................47
12.06. Pronouns and Plurals..............................................................48
12.07. Headings..........................................................................48
12.08. Counterparts......................................................................48
12.09. Governing Law.....................................................................48
Exhibit A
Exhibit B
-iii-
5
FIFTH AMENDED AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP
OF
RFS PARTNERSHIP, L.P.
RECITALS
RFS Partnership, L.P. (the "Partnership") was formed as a limited
partnership under the laws of the State of Tennessee by a Certificate of Limited
Partnership filed with the Secretary of State of the State of Tennessee on
August 3, 1993. The Partnership was governed originally by an agreement of
limited partnership maintained at the offices of the Partnership (the "Original
Agreement"). The parties to the Original Agreement were RFS Hotel Investors,
Inc., a Tennessee corporation (the "Company" and in its capacity as the General
Partner, the "General Partner"), and RFS, Inc. (in its capacity as the Original
Limited Partner, the "Original Limited Partner"). The Original Agreement was
amended and restated on August 13, 1993 (the "First Amended and Restated
Agreement") to (i) admit Limited Partners to the Partnership and (ii) provide
for the withdrawal of the Original Limited Partner. The First Amended and
Restated Agreement was amended on November 19, 1993 (the "First Amendment to the
First Amended and Restated Agreement") to change the cash distribution
provisions. The First Amendment to the First Amended and Restated Agreement was
amended and restated on August 24, 1994 (the "Second Amended and Restated
Agreement") to admit additional Limited Partners (the "Class B Limited
Partners") to the Partnership. The Second Amended and Restated Agreement was
amended and restated on February 27, 1996 (the "Third Amended and Restated
Agreement") to (i) issue to itself a preferred general partnership interest and
(ii) restate the Second Amended and Restated Agreement in its entirety. The
Third Amended and Restated Agreement was amended and restated on January 3, 1997
to (i) admit additional Class B Limited Partners to the Partnership, (ii) amend
certain provisions relating to allocations of items of income, gain and loss on
liquidation of the Partnership and (iii) restate the Third Amended and Restated
Agreement in its entirety (the "Fourth Amended and Restated Agreement"). The
General Partner now desires to (i) reflect its redemption of its Series A
Preferred Shares and issuance of Series B Preferred Shares pursuant to Articles
of Amendment, dated January 2, 2001, to the Charter, (ii) reflect the redemption
of the Series A Preferred Units held by the General Partner, (iii) issue to
itself Series B Preferred Partnership Units, (iv) amend certain provisions
relating to the powers of the General Partner, and (v) restate the Fourth
Amended and Restated Agreement in its entirety.
NOW, THEREFORE, in consideration of the foregoing, of mutual covenants
between the parties hereto, and of other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree to amend the Fourth Amended and Restated Agreement to read in its entirety
as follows:
-1-
6
ARTICLE I
DEFINED TERMS
The following defined terms used in this Agreement shall have the
meanings specified below:
"ACT" means the Tennessee Revised Uniform Limited Partnership Act, as
it may be amended from time to time.
"ADMINISTRATIVE EXPENSES" means (i) all administrative and operating
costs and expenses incurred by the Partnership, (ii) all administrative costs
and expenses of the General Partner, including any salaries or other payments to
directors, officers and/or employees of the General Partner, and any accounting
and legal expenses of the General Partner, which expenses, the Partners have
agreed, are expenses of the Partnership and not the General Partner, and (iii)
to the extent not included in clause (ii) above, REIT Expenses; provided,
however, that Administrative Expenses shall not include any administrative
expenses incurred by the General Partner that are attributable to Properties
owned by the General Partner directly, or to activities of the General Partner
not related to the Partnership, the allocation of such administrative expenses
between the Partnership and the General Partner shall be determined by the
Partnership's independent accounting firm.
"AFFILIATE" means, (i) any Person that, directly or indirectly,
controls or is controlled by or is under common control with such Person, (ii)
any other Person that owns, beneficially, directly or indirectly, 5% or more of
the outstanding capital stock, shares or equity interests of such Person, or
(iii) any officer, director, employee, partner or trustee of such Person or any
Person controlling, controlled by or under common control with such Person
(excluding trustees and persons serving in similar capacities who are not
otherwise an Affiliate of such Person). For the purposes of this definition,
"control" (including the correlative meanings of the terms "controlled by" and
"under common control with"), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, through the ownership
of voting securities, partnership interests or other equity interests.
"AGREED VALUE" means the fair market value of a Partner's non-cash
Capital Contribution as of the date of its contribution to the Partnership as
agreed to by the contributing Partner and the General Partner. For purposes of
this Agreement, unless the General Partner in its sole discretion determines
otherwise, the Agreed Value of a Partner's non-cash Capital Contribution shall
be equal to the number of Partnership Units received by such Partner in exchange
for such contribution, multiplied by the "Market Price" on the date of
contribution calculated in accordance with the definition of "Value." The names
and addresses of the Partners, the number of Partnership Units issued to each
Partner, and the Agreed Value of non-cash Capital Contributions is set forth on
Exhibit A attached hereto ("Exhibit A").
-2-
7
"AGREEMENT" means this Fifth Amended and Restated Agreement of Limited
Partnership of the Partnership.
"ARTICLES OF AMENDMENT" means the Articles of Amendment, dated January
2, 2001, to the Charter that govern the Series B Preferred Shares.
"CAPITAL ACCOUNT" has the meaning provided in Section 4.04 hereof.
"CAPITAL CONTRIBUTION" means the total amount of capital initially
contributed or agreed to be contributed, as the context requires, to the
Partnership by each Partner pursuant to the terms of the Agreement. Any
reference to the Capital Contribution of a Partner shall include the Capital
Contribution made by a predecessor holder of the Partnership Interest of such
Partner. The paid-in Capital Contribution shall mean the cash amount or the
Agreed Value of other assets actually contributed by each Partner to the capital
of the Partnership.
"CASH AMOUNT" means an amount of cash per Partnership Unit equal to the
Value of the REIT Shares Amount on the date of receipt by the General Partner of
a Notice of Redemption.
"CERTIFICATE" means any instrument or document that is required under
the laws of the State of Tennessee, or any other jurisdiction in which the
Partnership conducts business, to be signed and sworn to by the Partners of the
Partnership (either by themselves or pursuant to the power-of-attorney granted
to the General Partner in Section 8.02 hereof) and filed for recording in the
appropriate public offices within the State of Tennessee or such other
jurisdiction to perfect or maintain the Partnership as a limited partnership, to
effect the admission, withdrawal, or substitution of any Partner of the
Partnership, or to protect the limited liability of the Limited Partners as
limited partners under the laws of the State of Tennessee or such other
jurisdiction.
"CHARTER" means the Amended and Restated Charter of the General Partner
on file with the Secretary of State of the State of Tennessee as of the date
hereof, as further amended or restated from time to time.
"CLASS A LIMITED PARTNER" means any Person named as a Class A Limited
Partner on Exhibit A, and any Person who becomes a Substitute or additional
Class A Limited Partner, in such Person's capacity as a Class A Limited Partner
in the Partnership.
"CLASS B LIMITED PARTNER" means any Person named as a Class B Limited
Partner on Exhibit A, and any Person who becomes a Substitute or additional
Class B Limited Partner, in such Person's capacity as a Class B Limited Partner
in the Partnership.
"CODE" means the Internal Revenue Code of 1986, as amended, and as
hereafter amended from time to time. Reference to any particular provision of
the Code shall mean that provision in the Code as of the date hereof and any
successor provision of the Code.
"COMMISSION" means the United States Securities and Exchange
Commission.
"COMPANY" means RFS Hotel Investors, Inc., a Tennessee corporation.
-3-
8
"CONVERSION FACTOR" means one (1), provided that in the event that the
General Partner (i) declares or pays a dividend on its outstanding REIT Shares
in REIT Shares or makes a distribution to all holders of its outstanding REIT
Shares in REIT Shares, (ii) subdivides its outstanding REIT Shares, or (iii)
combines its outstanding REIT Shares into a smaller number of REIT Shares, the
Conversion Factor shall be adjusted by multiplying the Conversion Factor by a
fraction, the numerator of which shall be the number of REIT Shares issued and
outstanding on the record date for such dividend, distribution, subdivision or
combination (assuming for such purposes that such dividend, distribution,
subdivision or combination has occurred as of such time), and the denominator of
which shall be the actual number of REIT Shares (determined without the above
assumption) issued and outstanding on the record date for such dividend
distribution, subdivision or combination and, provided further, that in the
event that an entity shall cease to be the General Partner (the "Predecessor
Entity") and another entity shall become the General Partner (the "Successor
Entity") (including, without limitation, pursuant to any merger, consolidation
or combination of the Predecessor Entity with or into the Successor Entity), the
Conversion Factor shall be adjusted by multiplying the Conversion Factor by the
number (expressed in decimal form) of shares of the Successor Entity into which
one REIT Share of the Predecessor Entity is converted pursuant to such merger,
consolidation or combination, determined as of the date on which the Successor
Entity becomes the General Partner. Any adjustment to the Conversion Factor
shall become effective immediately after the effective date of such event
retroactive to the record date, if any, for such event.
"EVENT OF BANKRUPTCY" as to any Person means the filing of a petition
for relief as to such Person as debtor or bankrupt under the Bankruptcy Code of
1978 or similar provision of law of any jurisdiction (except if such petition is
contested by such Person and has been dismissed within 90 days); insolvency or
bankruptcy of such Person as finally determined by a court proceeding; filing by
such Person of a petition or application to accomplish the same or for the
appointment of a receiver or a trustee for such Person or a substantial part of
his assets; commencement of any proceedings relating to such Person as a debtor
under any other reorganization, arrangement, insolvency, adjustment of debt or
liquidation law of any jurisdiction, whether now in existence or hereinafter in
effect, either by such Person or by another, provided that if such proceeding is
commenced by another, such Person indicates his approval of such proceeding,
consents thereto or acquiesces therein, or such proceeding is contested by such
Person and has not been finally dismissed within 90 days.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"GENERAL PARTNER" means RFS Hotel Investors, Inc. and any Person who
becomes a substitute or additional General Partner as provided herein, and any
of their successors as General Partner.
"GENERAL PARTNERSHIP INTEREST" means a Partnership Interest held by a
General Partner that is a general partnership interest.
"HOTELS" means hotel properties owned by the Partnership from time to
time.
-4-
9
"INDEMNITEE" means (i) any Person made a party to a proceeding by
reason of his status as the General Partner or a director or officer of the
Partnership or the General Partner, and (ii) such other Persons (including
Affiliates of the General Partner or the Partnership) as the General Partner may
designate from time to time, in its sole and absolute discretion.
"INDEPENDENT DIRECTOR" means a Director of the Company who is not an
officer or employee of the Company or an Affiliate of (i) any advisor to the
Company under an advisory agreement, (ii) any lessee of any Property, (iii) any
subsidiary of the Company, or (iv) any partnership which is an Affiliate of the
Company.
"LIMITED PARTNER" means any Person named as a Class A Limited Partner
or a Class B Limited Partner on Exhibit A, and any Person who becomes a
Substitute or additional Class A Limited Partner or Class B Limited Partner, in
such Person's capacity as a Class A Limited Partner or a Class B Limited Partner
in the Partnership.
"LIMITED PARTNER REDEMPTION RIGHT" has the meaning provided in Section
8.05(a) hereof.
"LIMITED PARTNERSHIP INTEREST" means the ownership interest of a
Limited Partner in the Partnership at any particular time, including the right
of such Limited Partner to any and all benefits to which such Limited Partner
may be entitled as provided in this Agreement and in the Act, together with the
obligations of such Limited Partner to comply with all the provisions of this
Agreement and of such Act.
"LOSS" has the meaning provided in Section 5.01(h) hereof.
"MINIMUM LIMITED PARTNERSHIP INTEREST" means the lesser of (i) 1% or
(ii) if the total Capital Contributions to the Partnership exceed $50 million,
1% divided by the ratio of the total Capital Contributions to the Partnership to
$50 million; provided, however, that the Minimum Limited Partnership Interest
shall not be less than 0.2% at any time.
"NOTICE OF REDEMPTION" means the Notice of Exercise of Redemption Right
substantially in the form attached as Exhibit B hereto.
"PARTNER" means any General Partner or Limited Partner.
"PARTNER NONRECOURSE DEBT MINIMUM GAIN" has the meaning set forth in
Regulations Section 1.704-2(i). A Partner's share of Partner Nonrecourse Debt
Minimum Gain shall be determined in accordance with Regulations Section
1.704-2(i)(5).
"PARTNERSHIP INTEREST" means an ownership interest in the Partnership
held by either a Limited Partner or the General Partner and includes any and all
benefits to which the holder of such a Partnership Interest may be entitled as
provided in this Agreement, together with all obligations of such Person to
comply with the terms and provisions of this Agreement.
-5-
10
"PARTNERSHIP MINIMUM GAIN" has the meaning set forth in Regulations
Section 1.704-2(d). In accordance with Regulations Section 1.704-2(d), the
amount of Partnership Minimum Gain is determined by first computing, for each
Partnership nonrecourse liability, any gain the Partnership would realize if it
disposed of the property subject to that liability for no consideration other
than full satisfaction of the liability, and then aggregating the separately
computed gains. A Partner's share of Partnership Minimum Gain shall be
determined in accordance with Regulations Section 1.704-2(g)(1).
"PARTNERSHIP RECORD DATE" means the record date established by the
General Partner for the distribution of cash pursuant to Section 5.02 hereof,
which record date shall be the same as the record date established by the
General Partner for a distribution to its shareholders of some or all of its
portion of such distribution.
"PARTNERSHIP UNIT" means a fractional, undivided share of the
Partnership Interests of all Partners issued hereunder. The allocation of
Partnership Units among the Partners shall be as set forth on Exhibit A, as may
be amended from time to time.
"PERCENTAGE INTEREST" means the percentage ownership interest in the
Partnership of each Partner, as determined by dividing the Partnership Units
owned by such Partner by the total number of Partnership Units then outstanding.
The Percentage Interest of each Partner shall be as set forth on Exhibit A, as
may be amended from time to time.
"PERSON" means any individual, partnership, corporation, limited
liability company, joint venture, trust or other entity.
"PREDECESSOR ENTITY" has the meaning provided in the definition of
"Conversion Factor" contained herein.
"PREFERRED PARTNERSHIP INTEREST" means an ownership interest in the
Partnership held by the General Partner and includes any and all benefits to
which the holder of such a Preferred Partnership Interest may be entitled as
provided in this Agreement, together with all obligations of such Person to
comply with the terms and provisions of this Agreement.
"PREFERRED PARTNERSHIP UNIT" means a fractional, undivided share of the
Preferred Partnership Interests issued hereunder. The allocation of Preferred
Partnership Units among the Partners shall be as set forth on Exhibit A, as may
be amended from time to time.
"PREFERRED SHARE" means a share of preferred stock of the General
Partner.
"PROFIT" has the meaning provided in Section 5.01(h) hereof.
"PROPERTY" means any hotel property or other investment in which the
Partnership holds an ownership interest.
"REDEEMING LIMITED PARTNER" has the meaning provided in Section 8.05(a)
hereof.
-6-
11
"REDEMPTION AMOUNT" means either the Cash Amount or the REIT Shares
Amount, as selected by the General Partner in its sole discretion pursuant to
Section 8.05(b) hereof.
"REDEMPTION SHARES" means REIT Shares that may be issued in redemption
of Partnership Units under Section 8.05.
"REGULATIONS" means the Federal Income Tax Regulations issued under the
Code, as amended and as hereafter amended from time to time. Reference to any
particular provision of the Regulations shall mean that provision of the
Regulations on the date hereof and any successor provision of the Regulations.
"REIT" means a real estate investment trust under Sections 856 through
860 of the Code.
"REIT EXPENSES" means (i) costs and expenses relating to the formation
and continuity of existence of the General Partner and any Subsidiaries thereof
(which Subsidiaries shall, for purposes of this definition, be included within
the definition of General Partner), including taxes, fees and assessments
associated therewith, any and all costs, expenses or fees payable to any
director, officer, or employee of the General Partner, (ii) costs and expenses
relating to the public offering and registration of securities by the General
Partner and all statements, reports, fees and expenses incidental thereto,
including underwriting discounts and selling commissions applicable to any such
offering of securities, (iii) costs and expenses associated with the preparation
and filing of any periodic reports by the General Partner under federal, state
or local laws or regulations, including filings with the Commission, (iv) costs
and expenses associated with compliance by the General Partner with laws, rules
and regulations promulgated by any regulatory body, including the Commission,
and (v) all other operating or administrative costs of the General Partner
incurred in the ordinary course of its business on behalf of the Partnership.
"REIT SHARE" means a share of the common stock of the General Partner
(or Successor Entity, as the case may be), par value $.01 per share.
"REIT SHARES AMOUNT" shall mean a number of REIT Shares equal to the
product of the number of Partnership Units offered for redemption by a Redeeming
Limited Partner, multiplied by the Conversion Factor; provided that in the event
the General Partner issues to all holders of REIT Shares rights, options,
warrants or convertible or exchangeable securities entitling the shareholders to
subscribe for or purchase REIT Shares, or any other securities or property
(collectively, the "rights"), then the REIT Shares Amount shall also include
such rights that a holder of that number of REIT Shares would be entitled to
receive.
"SERIES B PARTNERSHIP REDEMPTION RIGHT" has the meaning provided in
Section 6.07(b) hereof.
"SERIES B PREFERENCE VALUE PER UNIT" means, with respect to the Series
B Preferred Partnership Units held by the General Partner, the liquidation
preference value of $100 per Series B Preferred Partnership Unit.
-7-
12
"SERIES B PREFERRED PARTNERSHIP UNIT" means a unit of general
partnership interest, Series B, of the Partnership.
"SERIES B PREFERRED RETURN" means (i) for the period prior to December
31, 2005, a fixed per annum rate per Series B Preferred Partnership Unit of
12.50% of the Series B Preference Value per Unit and (ii) for the period
beginning on January 1, 2006, as follows for each Series B Preferred Partnership
Unit: (A) a fixed quarterly rate of 3.625% of the Series B Preference Value per
▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇) a fixed quarterly rate of 4.125%
of the Series B Preference Value per Unit for the quarter ending June 30, 2006,
(C) a fixed quarterly rate of 4.625% of the Series B Preference Value per Unit
for the quarter ending September 30, 2006, and (D) a fixed quarterly rate of
5.125% of the Series B Preference Value per Unit for the quarter ending December
31, 2006 and thereafter. The Series B Preferred Return will be increased by
0.625% per quarter of the Series B Preference Value per Unit per Series B
Preferred Partnership Unit (or 2.50% per annum of the Series B Preference Value
per Unit per Series B Preferred Partnership Unit) in the event that and for so
long as the Company's Consolidated Total Indebtedness (as defined in the
Articles of Amendment) exceed 60% of its Total Asset Value (as defined in the
Articles of Amendment). The General Partner's Series B Preferred Return (i)
shall be cumulative, (ii) if unpaid, shall accrue interest at an annual rate
equal to the distribution rate referred to above in effect from time to time
(annualized to the extent that such rate is stated as a quarterly rate), and
(iii) shall be prorated for any partial calendar quarter.
"SERIES B PREFERRED SHARE" means a share of cumulative preferred stock,
Series B, of the General Partner. The Series B Preferred Shares are governed by
the Articles of Amendment.
"SERVICE" means the Internal Revenue Service.
"SPECIFIED REDEMPTION DATE" means the first business day of the month
that is at least 5 business days after the receipt by the General Partner of the
Notice of Redemption (or any other date agreed to by the General Partner and the
Redeeming Limited Partner).
"SUBSIDIARY" means, with respect to any Person, any corporation or
other entity of which a majority of (i) the voting power of the voting equity
securities or (ii) the outstanding equity interests is owned, directly or
indirectly, by such Person.
"SUBSTITUTE LIMITED PARTNER" means any Person admitted to the
Partnership as a Limited Partner pursuant to Section 9.03 hereof.
"SUCCESSOR ENTITY" has the meaning provided in the definition of
"Conversion Factor" contained herein.
"TRANSACTION" has the meaning provided in Section 7.01.
"TRANSFER" has the meaning provided in Section 9.02.
-8-
13
"VALUE" means, with respect to any security, the average of the daily
"Market Price" of such security for the ten (10) consecutive trading days
immediately preceding the date of such valuation. The Market Price for each such
trading day shall be: (i) if such security is listed or admitted to trading on
any securities exchange or The Nasdaq National Market, the closing price,
regular way, on such day or, if no sale takes place on such day, the average of
the closing bid and asked prices on such day, (ii) if such security is not
listed or admitted to trading on any securities exchange or The Nasdaq National
Market, the last reported sale price on such day or, if no sale takes place on
such day, the average of the closing bid and asked prices on such day, as
reported by a recognized quotation source designed by the Company, or (iii) if
such security is not listed or admitted to trading on any securities exchange or
The Nasdaq National Market and no such last reported sale price or closing bid
and asked prices are available, the average of the reported high bid and low
asked prices on such day, as reported by a recognized quotation source designed
by the Company, or if there shall be no bid and asked prices on such day, the
average of the high bid and low asked prices, as so reported, on the most recent
day (not more than ten (10) days prior to the date in question) for which prices
have been so reported; provided, that if there are no bid and asked prices
reported during the ten (10) days prior to the date in question, the value of
such security shall be determined by the Company acting in good faith on the
basis of such quotations and other information as it considers, in its
reasonable judgment, appropriate. In the event that any security includes any
additional rights, then the Value of such rights shall be determined by the
Company acting in good faith on the basis of such quotations and other
information as it considers, in its reasonable judgment, appropriate.
ARTICLE II
PARTNERSHIP CONTINUATION AND IDENTIFICATION
2.01.00 CONTINUATION. The Partners hereby agree to continue the
Partnership pursuant to the Act and upon the terms and conditions set forth in
this Agreement.
2.02.00 NAME, OFFICE AND REGISTERED AGENT. The name of the Partnership
shall be RFS Partnership, L.P. The specified office and place of business of the
Partnership shall be ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The General Partner may at any time change the location of such
office, provided the General Partner gives notice to the Partners of any such
change. The name and address of the Partnership's registered agent is ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇. The sole duty of the registered agent as such is to forward to the
Partnership any notice that is served on him as registered agent.
2.03.00 PARTNERS.
(a) The General Partner of the Partnership is RFS Hotel Investors, Inc.
Its principal place of business shall be the same as that of the Partnership.
(b) The Limited Partners shall be those Persons identified as Limited
Partners on Exhibit A, as amended from time to time.
-9-
14
2.04.00 TERM AND DISSOLUTION.
(a) The term of the Partnership shall continue in full force and effect
until December 31, 2050, except that the Partnership shall be dissolved upon the
happening of any of the following events:
(i) The occurrence of an Event of Bankruptcy as to a General
Partner or the dissolution, death or withdrawal of a General Partner
unless the business of the Partnership is continued pursuant to Section
7.03(b) hereof; provided that if a General Partner is on the date of
such occurrence a partnership, the dissolution of such General Partner
as a result of the dissolution, death, withdrawal, removal or Event of
Bankruptcy of a partner in such partnership shall not be an event of
dissolution of the Partnership if the business of such General Partner
is continued by the remaining partner or partners, either alone or with
additional partners, and such General Partner and such partners comply
with any other applicable requirements of this Agreement;
(ii) The passage of 90 days after the sale or other
disposition of all or substantially all the assets of the Partnership
(provided that if the Partnership receives an installment obligation as
consideration for such sale or other disposition, the Partnership shall
continue, unless sooner dissolved under the provisions of this
Agreement, until such time as such note or notes are paid in full);
(iii) The redemption of all Limited Partnership Interests
(other than any of such interests held by the General Partner); or
(iv) The election by the General Partner that the Partnership
should be dissolved.
(b) Upon dissolution of the Partnership (unless the business of the
Partnership is continued pursuant to Section 7.03(b) hereof), the General
Partner (or its trustee, receiver, successor or legal representative) shall
amend or cancel the Certificate and liquidate the Partnership's assets and apply
and distribute the proceeds thereof in accordance with Section 5.06 hereof.
Notwithstanding the foregoing, the liquidating General Partner may either (i)
defer liquidation of, or withhold from distribution for a reasonable time, any
assets of the Partnership (including those necessary to satisfy the
Partnership's debts and obligations), or (ii) distribute the assets to the
Partners in kind according to the order of priority set forth in Section 5.06
hereof.
2.05.00 FILING OF CERTIFICATE AND PERFECTION OF LIMITED PARTNERSHIP.
The General Partner shall execute, acknowledge, record and file at the expense
of the Partnership, the Certificate and any and all amendments thereto and all
requisite fictitious name statements and notices in such places and
jurisdictions as may be necessary to cause the Partnership to be treated as a
limited partnership under, and otherwise to comply with, the laws of each state
or other jurisdiction in which the Partnership conducts business.
-10-
15
ARTICLE III
BUSINESS OF THE PARTNERSHIP
The purpose and nature of the business to be conducted by the
Partnership is (i) to conduct any business that may be lawfully conducted by a
limited partnership organized pursuant to the Act; provided, however, that such
business shall be limited and conducted in such a manner as to permit the
General Partner at all times to be classified as a REIT, unless the General
Partner otherwise ceases to qualify as a REIT, (ii) to enter into any
partnership, joint venture or other similar arrangement to engage in any of the
foregoing or the ownership of interests in any entity engaged in any of the
foregoing and (iii) to do anything necessary or incidental to the foregoing. The
Limited Partners acknowledge that the status of the Company as a REIT and the
avoidance of federal income and excise taxes on the Company inures to the
benefit of all the Partners and not solely the General Partner. Notwithstanding
the foregoing, the General Partner shall also be empowered to do any and all
acts and things necessary or prudent to ensure that the Partnership will not be
classified as a "publicly traded partnership" for purposes of Section 7704 of
the Code.
ARTICLE IV
CAPITAL CONTRIBUTIONS AND ACCOUNTS
4.01.00 CAPITAL CONTRIBUTIONS. The General Partner has contributed to
the capital of the Partnership cash in the amounts set forth on Exhibit A. The
Class A Limited Partners have contributed the Class A Limited Partners'
proportionate ownership interests in certain Hotels to the capital of the
Partnership. The Class B Limited Partners have contributed the Class B Limited
Partners' proportionate ownership interests in certain Hotels to the capital of
the Partnership. The Agreed Values of the Partners' Capital Contributions are as
set forth opposite their names on Exhibit A.
4.02.00 ADDITIONAL CAPITAL CONTRIBUTIONS AND ISSUANCES OF ADDITIONAL
PARTNERSHIP INTERESTS. Except as provided in this Section 4.02 or in Section
4.03 hereof, the Partners shall have no right or obligation to make any
additional Capital Contributions or loans to the Partnership. The General
Partner may contribute additional capital to the Partnership, from time to time,
and receive additional Partnership Interests in respect thereof, in the manner
contemplated in this Section 4.02.
(a) Issuances of Additional Partnership Interests.
(i) General. The General Partner is hereby authorized to cause
the Partnership to issue such additional Partnership Interests in the
form of Partnership Units for any Partnership purpose at any time or
from time to time, to the Partners (including the General Partner) or
to other Persons for such consideration and on such terms and
conditions as shall be established by the General Partner in its sole
and absolute
-11-
16
discretion, all without the approval of any Limited Partners. Any
additional Partnership Interests issued thereby may be issued in one or
more classes, or one or more series of any of such classes, with such
designations, preferences and relative, participating, optional or
other special rights, powers and duties, including rights, powers and
duties senior to Limited Partnership Interests, all as shall be
determined by the General Partner in its discretion based upon its good
faith determination that the Partnership will receive adequate
consideration therefor and without the approval of any Limited Partner,
subject to Tennessee law, including, without limitation, (i) the
allocation of items of Partnership income, gain, loss, deduction and
credit to each such class or series of Partnership Interests; (ii) the
right of each such class or series of Partnership Interests to share in
Partnership distributions; and (iii) the rights of each such class or
series of Partnership Interests upon dissolution and liquidation of the
Partnership; provided, however, that no additional Partnership
Interests shall be issued to the General Partner unless either:
(1) (A) the additional Partnership Interests
are issued in connection with an issuance of shares
of or other interests in the General Partner, which
shares or interests have designations, preferences
and other rights, all such that the economic
interests are substantially similar to the
designations, preferences and other rights of the
additional Partnership Interests issued to the
General Partner by the Partnership in accordance with
this Section 4.02 and (B) except as provided in
Section 4.02(a)(ii) hereof, the General Partner shall
make a Capital Contribution to the Partnership in an
amount equal to the proceeds raised in connection
with the issuance of such shares of or other
interests in the General Partner, or
(2) the additional Partnership Interests are
issued to all Partners in proportion to their
respective Percentage Interests.
Without limiting the foregoing, the General Partner is
expressly authorized to cause the Partnership to issue
Partnership Units for less than fair market value, so long as
the General Partner concludes in good faith that such issuance
is in the best interests of the General Partner and the
Partnership.
(ii) Upon Issuance of New Securities. The General Partner
shall not issue any additional REIT Shares (other than REIT Shares
issued in connection with a redemption pursuant to Section 8.05
hereof), Preferred Shares, or rights, options, warrants or convertible
or exchangeable securities containing the right to subscribe for or
purchase REIT Shares (collectively, "New Securities") other than to all
holders of REIT Shares or Preferred Shares, respectively, unless (A)
the General Partner shall cause the Partnership to issue to the General
Partner, Partnership Interests or rights, options, warrants or
convertible or exchangeable securities of the Partnership having
designations, preferences and other rights, all such that the economic
interests are substantially similar to those of the New Securities, and
(B) the General Partner contributes the proceeds from
-12-
17
the issuance of such New Securities and from the exercise of rights
contained in such New Securities to the Partnership; provided, however,
that the General Partner is allowed to issue New Securities in
connection with an acquisition of a property to be held directly by the
General Partner, but if and only if, such direct acquisition and
issuance of New Securities have been approved and determined to be in
the best interests of the General Partner and the Partnership by a
majority of the Independent Directors. Without limiting the foregoing,
the General Partner is expressly authorized to issue New Securities for
less than fair market value, and to cause the Partnership to issue to
the General Partner corresponding Partnership Interests, so long as (x)
the General Partner concludes in good faith that such issuance is in
the best interests of each of the General Partner and the Partnership
(for example, and not by way of limitation, the issuance of REIT Shares
and corresponding Partnership Units pursuant to an employee stock
purchase plan providing for employee purchases of REIT Shares at a
discount from fair market value or employee stock options that have an
exercise price that is less than the fair market value of the REIT
Shares, either at the time of issuance or at the time of exercise), and
(y) the General Partner contributes all proceeds from such issuance to
the Partnership. By way of example, in the event the General Partner
issues REIT Shares for a cash purchase price and contributes all of the
proceeds of such issuance to the Partnership as required hereunder, the
General Partner shall be issued a number of additional Partnership
Units equal to the product of (A) the number of such REIT Shares issued
by the General Partner the proceeds of which were so contributed,
multiplied by (B) a fraction, the numerator of which is one, and the
denominator of which is the Conversion Factor in effect on the date of
such contribution.
(b) Certain Deemed Contributions of Proceeds of Issuance of Shares. In
connection with any and all issuances of REIT Shares and Preferred Shares, the
General Partner shall make a Capital Contribution to the Partnership of the
proceeds raised in connection with such issuance as required above, provided
that if the proceeds actually received by the General Partner are less than the
gross proceeds of such issuance as a result of any underwriter's discount or
other expenses paid or incurred in connection with such issuance, then the
General Partner shall be deemed to have made a Capital Contribution to the
Partnership in the amount of the gross proceeds of such issuance and the
Partnership shall be deemed simultaneously to have paid such underwriting
discount and offering expenses in connection with the required issuance of
additional Partnership Units to General Partner for such Capital Contribution
pursuant to Section 4.02(a) hereof.
(c) Reimbursement to General Partner upon Repurchase of REIT Shares. If
the General Partner shall repurchase shares of any class of the General
Partner's capital stock, the purchase price thereof and all costs incurred in
connection with such repurchase shall be reimbursed to the General Partner by
the Partnership pursuant to Section 6.05 hereof and the General Partner shall
cause the Partnership to cancel a number of Partnership Units of the appropriate
class held by the General Partner equal to the quotient of the number of such
shares of the General Partner's capital stock divided by the Conversion Factor.
-13-
18
(d) Minimum Limited Partnership Interest. In the event that either a
redemption pursuant to Section 8.05 hereof or an additional Capital Contribution
by the General Partner would result in the Limited Partners, in the aggregate,
owning less than the Minimum Limited Partnership Interest, the General Partner
and the Limited Partners shall form another partnership and contribute
sufficient Limited Partnership Interests together with such other Limited
Partners so that such partnership owns at least the Minimum Limited Partnership
Interest.
(e) 1993 Plan. The General Partner has established the Amended and
Restated 1993 Restricted Stock and Stock Option Plan and may from time to time
establish other compensation or other incentive plans to provide incentives to
directors, executive officers and certain key employees of the General Partner
or its subsidiaries. The following examples are illustrative of the operation of
the provisions of Section 4.02(a)(ii) with respect to issuances of New
Securities to such directors, officers and employees:
(i) If the General Partner awards REIT Shares to any such
director, officer or other employee (A) the General Partner shall, as
soon as practicable, contribute to the Partnership (to be thereafter
taken into account for the purposes of calculating any cash
distributable to the Partners) an amount equal to the price, if any,
paid to the General Partner by such party for such REIT Shares, and (B)
the General Partner shall be issued by the Partnership a number of
additional Partnership Units equal to the product of (1) the number of
such REIT Shares issued by the General Partner, multiplied by (2) a
fraction, the numerator of which is one hundred percent (100%), and the
denominator of which is the Conversion Factor in effect on the date of
such contribution.
(ii) If the General Partner awards an option or warrant
relating to REIT shares, whether or not qualifying as an incentive
stock option under the Code, to any director, officer or other
employee, then the Partnership shall grant to the General Partner a
corresponding option or warrant to acquire Partnership Units. Upon the
exercise of such option or warrant, (A) the General Partner shall, as
soon as practicable after such exercise, contribute to the capital of
the Partnership (to be thereafter taken into account for the purposes
of calculating distributable cash) an amount equal to the exercise
price, if any, paid to the General Partner by such exercising party in
connection with the exercise of the option or warrant, and (B) the
General Partner shall be issued by the Partnership a number of
additional Partnership Units equal to the product of (1) the number of
REIT Shares issued by the General Partner in satisfaction of such
exercised option or warrant, multiplied by (2) a fraction, the
numerator of which is one hundred percent (100%), and the denominator
of which is the Conversion Factor in effect on the date of such
contribution.
(iii) If the General Partner grants any director, officer or
employee share appreciation rights, performance share awards or other
similar rights ("Incentive Rights"), then simultaneously, the
Partnership shall grant to the General Partner corresponding and
economically equivalent rights. Consequently, upon the cash payment by
General Partner to its directors, officers or employees pursuant to
such Incentive Rights, the Partnership shall make an equal cash payment
to the General Partner.
-14-
19
4.03.00 GENERAL PARTNER LOANS. The General Partner may from time to
time advance funds to the Partnership for any proper Partnership purpose as a
loan ("Funding Loan"), provided that any such funds must first be obtained by
the General Partner from a third party lender, and then all of such funds must
be loaned by the General Partner to the Partnership on the same terms and
conditions, including principal amount, interest rate, repayment schedule and
costs and expenses, as shall be applicable with respect to or incurred in
connection with such loan from such third party lender. Except for Funding
Loans, the General Partner shall not incur any indebtedness for borrowed funds;
provided, however, that upon a majority vote of the Independent Directors, any
loan proceeds received by the General Partner may be distributed to its
shareholders or other equity holders if such loan and distribution have been
determined by a majority of the Independent Directors to be necessary to enable
the General Partner to maintain its status as a REIT under Sections 856 through
860 of the Code.
4.04.00 CAPITAL ACCOUNTS. A separate capital account (a "Capital
Account") shall be established and maintained for each Partner in accordance
with Regulations Section 1.704-1(b)(2)(iv). If (i) a new or existing Partner
acquires additional Partnership Units in exchange for more than a de minimis
Capital Contribution, (ii) the Partnership distributes to a Partner more than a
de minimis amount of Partnership property in redemption or liquidation of
Partnership Units, or (iii) the Partnership is liquidated within the meaning of
Regulation Section 1.704-1(b)(2)(ii)(g), the General Partner shall revalue the
property of the Partnership to its fair market value (as determined by the
General Partner in its sole discretion and taking into account Section 7701(g)
of the Code) in accordance with Regulations Section 1.704-1(b)(2)(iv)(f). When
the Partnership's property is revalued by the General Partner, the Capital
Accounts of the Partners shall be adjusted in accordance with Regulations
Sections 1.704-1(b)(2)(iv)(f) and (g), which generally require such Capital
Accounts to be adjusted to reflect the manner in which the unrealized gain or
loss inherent in such property (that has not been reflected in the Capital
Accounts previously) would be allocated among the Partners pursuant to Section
5.01 hereof if there were a taxable disposition of such property for its fair
market value (as determined by the General Partner in its sole discretion and
taking into account Section 7701(g) of the Code) on the date of the revaluation.
4.05.00 PERCENTAGE INTERESTS. If the number of outstanding Partnership
Units increases or decreases during a taxable year, each Partner's Percentage
Interest shall be adjusted to a percentage equal to the number of Partnership
Units held by such Partner divided by the aggregate number of outstanding
Partnership Units. If the Partners' Percentage Interests are adjusted pursuant
to this Section 4.05, the Profits and Losses for the taxable year in which the
adjustment occurs shall be allocated between the part of the year ending on the
day when the Partnership's property is revalued by the General Partner and the
part of the year beginning on the following day either (i) as if the taxable
year had ended on the date of the adjustment or (ii) based on the number of days
in each part. The General Partner, in its sole discretion, shall determine which
method shall be used to allocate Profits and Losses for the taxable year in
which the adjustment occurs. The allocation of Profits and Losses for the
earlier part of the year shall be based on the Percentage Interests before
adjustment, and the allocation of Profits and Losses for the later part shall be
based on the adjusted Percentage Interests.
-15-
20
4.06.00 NO INTEREST ON CONTRIBUTIONS. No Partner shall be entitled to
interest on its Capital Contribution.
4.07.00 RETURN OF CAPITAL CONTRIBUTIONS. No Partner shall be entitled
to withdraw any part of its Capital Contribution or its Capital Account or to
receive any distribution from the Partnership, except as specifically provided
in this Agreement. Except as otherwise provided herein, there shall be no
obligation to return to any Partner or withdrawn Partner any part of such
Partner's Capital Contribution for so long as the Partnership continues in
existence.
4.08.00 NO THIRD PARTY BENEFICIARY. No creditor or other third party
having dealings with the Partnership shall have the right to enforce the right
or obligation of any Partner to make Capital Contributions or loans or to pursue
any other right or remedy hereunder or at law or in equity, it being understood
and agreed that the provisions of this Agreement shall be solely for the benefit
of, and may be enforced solely by, the parties hereto and their respective
successors and assigns. None of the rights or obligations of the Partners herein
set forth to make Capital Contributions or loans to the Partnership shall be
deemed an asset of the Partnership for any purpose by any creditor or other
third party, nor may such rights or obligations be sold, transferred or assigned
by the Partnership or pledged or encumbered by the Partnership to secure any
debt or other obligation of the Partnership or of any of the Partners. In
addition, it is the intent of the parties hereto that no distribution to any
Limited Partner shall be deemed a return of money or other property in violation
of the Act. However, if any court of competent jurisdiction holds that,
notwithstanding the provisions of this Agreement, any Limited Partner is
obligated to return such money or property, such obligation shall be the
obligation of such Limited Partner and not of the General Partner. Without
limiting the generality of the foregoing, a deficit Capital Account of a Partner
shall not be deemed to be a liability of such Partner nor an asset or property
of the Partnership.
ARTICLE V
PROFITS AND LOSSES; DISTRIBUTIONS
5.01.00 ALLOCATION OF PROFIT AND LOSS.
(a) Profit. Profit of the Partnership for each fiscal year of the
Partnership shall be allocated as follows:
(i) First, if the Partners previously have been allocated Loss
under Section 5.01(b)(v), to the Partners in accordance with their
respective Percentage Interests until the aggregate amount of Profit
allocated under this Section 5.01(a)(i) equals the aggregate amount of
Loss allocated under Section 5.01(b)(v);
(ii) Second, if the General Partner previously has been
allocated Loss under Section 5.01(b)(iv), to the General Partner until
the aggregate amount of Profit allocated under this Section 5.01(a)(ii)
equals the aggregate amount of Loss allocated under Section
5.01(b)(iv);
-16-
21
(iii) Third, if the General Partner and the Class B Limited
Partners previously have been allocated Loss under Section
5.01(b)(iii), to the General Partner and the Class B Limited Partners
in proportion to their Percentage Interests until the aggregate amount
of Profit allocated under this Section 5.01(a)(iii) equals the
aggregate amount of Loss allocated under Section 5.01(b)(iii);
(iv) Fourth, if the Class A Limited Partners previously have
been allocated Loss under Section 5.01(b)(ii), to the Class A Limited
Partners in proportion to their Percentage Interests until the
aggregate amount of Profit allocated under this Section 5.01(a)(iv)
equals the aggregate amount of Loss allocated under Section
5.01(b)(ii);
(v) Fifth, to the General Partner until the aggregate amount
of Profit allocated to the General Partner under this Section
5.01(a)(v) for the current and all prior years equals the aggregate
amount of cash distributed to the General Partner under Section
5.02(a)(i) for the current and all prior years;
(vi) Sixth, to the General Partner and the Class B Limited
Partners in proportion to their Percentage Interests until the
aggregate amount of Profit allocated to the General Partner and the
Class B Limited Partners under this Section 5.01(a)(vi) for the current
and all prior years equals the aggregate amount of cash distributed to
the General Partner and the Class B Limited Partners under Section
5.02(a)(ii) for the current and all prior years;
(vii) Seventh, to the Class A Limited Partners in proportion
to their Percentage Interests until the aggregate amount of Profit
allocated to the Class A Limited Partners under this Section
5.01(a)(vii) for the current and all prior years equals the aggregate
amount of cash distributed to the Class A Limited Partners under
Section 5.02(a)(iii) for the current and all prior years; and
(viii) Thereafter, any remaining Profit shall be allocated
among the Partners in accordance with their respective Percentage
Interests.
(b) Loss. Loss of the Partnership for each fiscal year of the
Partnership shall be allocated as follows:
(i) First, if the Partners previously have been allocated
Profit under Section 5.01(a)(viii), Loss shall be allocated among the
Partners in accordance with their respective Percentage Interests until
the aggregate amount of Loss allocated under this Section 5.01(b)(i)
equals the aggregate amount of Profit allocated under Section
5.01(a)(viii);
(ii) Second, if the Class A Limited Partners previously have
been allocated Profit under Section 5.01(a)(vii), Loss shall be
allocated to the Class A Limited Partners in proportion to their
Percentage Interests until the aggregate amount of Loss allocated under
this Section 5.01(b)(ii) equals the aggregate amount of Profit
allocated under Section 5.01(a)(vii);
-17-
22
(iii) Third, if the General Partner and the Class B Limited
Partners previously have been allocated Profit under Section
5.01(a)(vi), Loss shall be allocated to the General Partner and the
Class B Limited Partners in proportion to their Percentage Interests
until the aggregate amount of Loss allocated under this Section
5.01(b)(iii) equals the aggregate amount of Profit allocated under
Section 5.01(a)(vi);
(iv) Fourth, if the General Partner previously has been
allocated Profit under Section 5.01(a)(v), Loss shall be allocated to
the General Partner until the aggregate amount of Loss allocated under
this Section 5.01(b)(iv) equals the aggregate amount of Profit
allocated under Section 5.01(a)(v); and
(v) Thereafter, any remaining Loss shall be allocated among
the Partners in accordance with their respective Percentage Interests.
(c) Depreciation and Amortization Deductions. Depreciation and
amortization deductions for each fiscal year of the Partnership shall be
allocated among the Partners in accordance with their respective Percentage
Interests.
(d) Minimum Gain Chargeback. Notwithstanding any provision to the
contrary, (i) any expense of the Partnership that is a "nonrecourse deduction"
within the meaning of Regulations Section 1.704-2(b)(1) shall be allocated among
the Partners in accordance with their respective Percentage Interests, (ii) any
expense of the Partnership that is a "partner nonrecourse deduction" within the
meaning of Regulations Section 1.704-2(i)(2) shall be allocated in accordance
with Regulations Section 1.704-2(i)(1), (iii) if there is a net decrease in
Partnership Minimum Gain within the meaning of Regulations Section 1.704-2(f)(1)
for any Partnership taxable year, items of gain and income shall be allocated
among the Partners in accordance with Regulations Section 1.704-2(f) and the
ordering rules contained in Regulations Section 1.704-2(j), and (iv) if there is
a net decrease in Partner Nonrecourse Debt Minimum Gain within the meaning of
Regulations Section 1.704-2(i)(4) for any Partnership taxable year, items of
gain and income shall be allocated among the Partners in accordance with
Regulations Section 1.704-2(i)(4) and the ordering rules contained in
Regulations Section 1.704-2(j). A Partner's "interest in partnership profits"
for purposes of determining its share of the nonrecourse liabilities of the
Partnership within the meaning of Regulations Section 1.752-3(a)(3) shall be
such Partner's Percentage Interest.
(e) Qualified Income Offset. If a Limited Partner receives in any
taxable year an adjustment, allocation, or distribution described in
subparagraphs (4), (5), or (6) of Regulations Section 1.704-1(b)(2)(ii)(d) that
causes or increases a negative balance in such Partner's Capital Account that
exceeds the sum of such Partner's shares of Partnership Minimum Gain and Partner
Nonrecourse Debt Minimum Gain, as determined in accordance with Regulations
Sections 1.704-2(g) and 1.704-2(i), such Partner shall be allocated specially
for such taxable year (and, if necessary, later taxable years) items of income
and gain in an amount and manner sufficient to eliminate such negative Capital
Account balance as quickly as possible as provided in Regulations Section
1.704-1(b)(2)(ii)(d). After the occurrence of an allocation of income or gain to
a Limited Partner in accordance with this Section 5.01(e), to the extent
permitted by
-18-
23
Regulations Section 1.704-1(b) and Section 5.01(f), items of expense or loss
shall be allocated to such Partner in an amount necessary to offset the income
or gain previously allocated to such Partner under this Section 5.01(e).
(f) Capital Account Deficits. Loss shall not be allocated to a Limited
Partner to the extent that such allocation would cause a deficit in such
Partner's Capital Account (after reduction to reflect the items described in
Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6)) to exceed the sum of
such Partner's shares of Partnership Minimum Gain and Partner Nonrecourse Debt
Minimum Gain. Any Loss in excess of that limitation shall be allocated to the
General Partner. After the occurrence of an allocation of Loss to the General
Partner in accordance with this Section 5.01(f), to the extent permitted by
Regulations Section 1.704-1(b), Profit shall be allocated to such Partner in an
amount necessary to offset the Loss previously allocated to such Partner under
this Section 5.01(f).
(g) Allocations Between Transferor and Transferee. If a Partner
transfers any part or all of its Partnership Interest, the distributive shares
of the various items of Profit and Loss allocable among the Partners during such
fiscal year of the Partnership shall be allocated between the transferor and the
transferee either (i) as if the Partnership's fiscal year had ended on the date
of the transfer, or (ii) based on the number of days of such fiscal year that
each was a Partner without regard to the results of Partnership activities in
the respective portions of such fiscal year in which the transferor and the
transferee were Partners. The General Partner, in its sole discretion, shall
determine which method shall be used to allocate the distributive shares of the
various items of Profit and Loss between the transferor and the transferee.
(h) Definition of Profit and Loss. "Profit" and "Loss" and any items of
income, gain, expense, or loss referred to in this Agreement shall be determined
in accordance with federal income tax accounting principles, as modified by
Regulations Section 1.704-1(b)(2)(iv), except that Profit and Loss shall not
include items of income, gain and expense that are specially allocated pursuant
to Section 5.01(c), 5.01(d), 5.01(e), 5.01(f), or 5.06(a)(ii). All allocations
of income, Profit, gain, Loss, and expense (and all items contained therein) for
federal income tax purposes shall be identical to all allocations of such items
set forth in this Section 5.01, except as otherwise required by Section 704(c)
of the Code and Regulations Section 1.704-1(b)(4). The General Partner shall
have the authority to elect the method to be used by the Partnership for
allocating items of income, gain, and expense as required by Section 704(c) of
the Code and such election shall be binding on all Partners.
5.02.00 DISTRIBUTION OF CASH.
(a) The General Partner shall distribute cash on a quarterly (or, at
the election of the General Partner, more frequent) basis, in an amount
determined by the General Partner in its sole discretion, to the Partners who
are Partners on the Partnership Record Date with respect to such quarter (or
other distribution period), as follows:
(i) First, to the General Partner until the General Partner
has received an amount equal to the excess, if any, of (A) its
cumulative Series B Preferred Return for the current
-19-
24
and all prior years over (B) the sum of all prior distributions to the
General Partner pursuant to this Section 5.02(a)(i);
(ii) Second, to the General Partner and the Class B Limited
Partners in proportion to their Percentage Interests until the General
Partner has received, on a cumulative basis, an amount sufficient to
provide the General Partner with Funds From Operations (net income
(computed in accordance with generally accepted accounting principles)
excluding gains (or losses) from debt restructuring and sales of
property, plus depreciation and amortization, and after adjustments for
unconsolidated partnerships and joint ventures) each year equal to
$1.00 per share of common stock of the General Partner, based on the
weighted average number of such shares outstanding during such year;
(iii) Third, to the Class A Limited Partners in proportion to
their Percentage Interests until the Class A Limited Partners have
received, on a cumulative basis, an amount per Partnership Unit equal
to the amount per Partnership Unit received by the General Partner and
Class B Limited Partners under Section 5.02(a)(ii) hereof; and
(iv) Thereafter, to the Partners in accordance with their
respective Percentage Interests.
(b) In no event may a Partner receive a distribution of cash with
respect to a Partnership Unit if such Partner is entitled to receive a dividend
with respect to a REIT Share for which all or part of such Partnership Unit has
been or will be exchanged.
(c) Notwithstanding any other provision of this Agreement, the General
Partner is authorized to take any action that it determines to be necessary or
appropriate to cause the Partnership to comply with any withholding requirements
established under the Code or any other federal, state or local law including,
without limitation, pursuant to Sections 1441, 1442, 1445, and 1446 of the Code.
If the Partnership is required to withhold and pay over to any taxing authority
any amount resulting from the allocation or distribution of income to a Partner
or its assignee (including by reason of Section 1446 of the Code) and if the
amount to be distributed to the Partner (the "Distributable Amount") equals or
exceeds the amount required to be withheld by the Partnership (the "Withheld
Amount"), the Withheld Amount shall be treated as a distribution of cash to such
Partner. If, however, the Distributable Amount is less than the Withheld Amount,
no amount shall be distributed to the Partner, the Distributable Amount shall be
treated as a distribution of cash to such Partner, and the excess of the
Withheld Amount over the Distributable Amount shall be treated as a loan (a
"Partnership Loan") from the Partnership to the Partner on the day the
Partnership pays over such excess to a taxing authority. A Partnership Loan may
be repaid, at the election of the General Partner in its sole discretion, either
(i) through withholding by the Partnership with respect to subsequent
distributions to the applicable Partner or assignee, or (ii) at any time more
than twelve (12) months after a Partnership Loan arises, by cancellation of
Partnership Units with a value equal to the unpaid balance of the Partnership
Loan (including accrued interest). Any amounts treated as a Partnership Loan
pursuant to this Section 5.02(c) shall bear interest at the lesser of (i) the
base
-20-
25
rate on corporate loans at large United States money center commercial banks, as
published from time to time in The Wall Street Journal (or an equivalent
successor publication), or (ii) the maximum lawful rate of interest on such
obligation, such interest to accrue from the date the Partnership is deemed to
extend the loan until such loan is repaid in full.
5.03.00 REIT DISTRIBUTION REQUIREMENTS. The General Partner shall use
its reasonable efforts to cause the Partnership to distribute amounts sufficient
to enable the General Partner (i) to meet its distribution requirement for
qualification as a REIT as set forth in Section 857(a)(1) of the Code and (ii)
to avoid any federal income or excise tax liability imposed by the Code.
5.04.00 NO RIGHT TO DISTRIBUTIONS IN KIND. No Partner shall be entitled
to demand property other than cash in connection with any distributions by the
Partnership.
5.05.00 LIMITATIONS ON RETURN OF CAPITAL CONTRIBUTIONS. Notwithstanding
any of the provisions of this Article V, no Partner shall have the right to
receive and the General Partner shall not have the right to make, a distribution
which includes a return of all or part of a Partner's Capital Contributions,
unless after giving effect to the return of a Capital Contribution, the sum of
all Partnership liabilities, other than the liabilities to a Partner for the
return of his Capital Contribution, does not exceed the fair market value of the
Partnership's assets.
5.06.00 DISTRIBUTIONS UPON LIQUIDATION.
(a) Upon liquidation of the Partnership, after payment of, or adequate
provision for, debts and obligations of the Partnership, including any Partner
loans, any remaining assets of the Partnership shall be distributed to all
Partners with positive Capital Accounts in accordance with their respective
positive Capital Account balances. For purposes of this Section 5.06(a), the
Capital Account of each Partner shall be determined (i) after all adjustments
made in accordance with Sections 5.01 and 5.02 hereof resulting from Partnership
operations and from all sales and dispositions of all or any part of the
Partnership's assets and (ii) if the General Partner's cumulative Series B
Preferred Return for the current and all prior years exceeds the sum of all
prior distributions to the General Partner pursuant to Section 5.02(a)(i)
hereof, after the General Partner has been allocated income or gain equal to
such excess. Any distributions pursuant to this Section 5.06 shall be made by
the end of the Partnership's taxable year in which the liquidation occurs (or,
if later, within 90 days after the date of the liquidation). To the extent
deemed advisable by the General Partner, appropriate arrangements (including the
use of a liquidating trust) may be made to assure that adequate funds are
available to pay any contingent debts or obligations of the Partnership.
(b) If the General Partner has a negative balance in its Capital
Account following a liquidation of the Partnership, as determined after taking
into account all Capital Account adjustments in accordance with Sections 5.01
and 5.02 hereof resulting from Partnership operations and from all sales and
dispositions of all or any part of the Partnership's assets, the General Partner
shall contribute to the Partnership an amount of cash equal to the negative
balance in its Capital Account and such cash shall be paid or distributed by the
Partnership to creditors, if any, and then to the Limited Partners in accordance
with Section 5.06(a). Such
-21-
26
contribution by the General Partner shall be made by the end of the
Partnership's taxable year in which the liquidation occurs (or, if later, within
90 days after the date of the liquidation).
5.07.00 SUBSTANTIAL ECONOMIC EFFECT. It is the intent of the Partners
that the allocations of Profit and Loss under the Agreement have substantial
economic effect (or be consistent with the Partners' interests in the
Partnership in the case of the allocation of losses attributable to nonrecourse
debt) within the meaning of Section 704(b) of the Code as interpreted by the
Regulations promulgated pursuant thereto. Article V and other relevant
provisions of this Agreement shall be interpreted in a manner consistent with
such intent.
ARTICLE VI
RIGHTS, OBLIGATIONS AND POWERS OF THE GENERAL PARTNER
6.01.00 MANAGEMENT OF THE PARTNERSHIP.
(a) Except as otherwise expressly provided in this Agreement, the
General Partner shall have full, complete and exclusive discretion to manage and
control the business of the Partnership for the purposes herein stated, and
shall make all decisions affecting the business and assets of the Partnership.
Subject to the restrictions specifically contained in this Agreement, the powers
of the General Partner shall include, without limitation, the authority to take
the following actions on behalf of the Partnership:
(i) to acquire, purchase, own, lease and dispose of any or all
real property and any or all other property or assets that the General
Partner determines are necessary or appropriate or in the best
interests of the business of the Partnership;
(ii) to construct buildings and make other improvements on the
properties owned or leased by the Partnership;
(iii) to authorize, issue, sell, redeem or otherwise purchase
any Partnership Interests or any securities (including secured and
unsecured debt obligations of the Partnership, debt obligations of the
Partnership convertible into any class or series of Partnership
Interests, or options, rights, warrants or appreciation rights relating
to any Partnership Interests) of the Partnership;
(iv) to borrow money for the Partnership, issue evidences of
indebtedness in connection therewith, refinance, guarantee, increase
the amount of, modify, amend or change the terms of, or extend the time
for the payment of, any indebtedness or obligation to the Partnership,
and secure such indebtedness by mortgage, deed of trust, pledge or
other lien on the Partnership's assets;
(v) to pay, either directly or by reimbursement, for all
operating costs and general administrative expenses of the General
Partner or the Partnership, to third parties or to the General Partner
as set forth in this Agreement;
-22-
27
(vi) to lease all or any portion of any of the Partnership's
assets, whether or not the terms of such leases extend beyond the
termination date of the Partnership and whether or not any portion of
the Partnership's assets so leased are to be occupied by the lessee,
or, in turn, subleased in whole or in part to others, for such
consideration and on such terms as the General Partner may determine;
(vii) to prosecute, defend, arbitrate, or compromise any and
all claims or liabilities in favor of or against the Partnership, on
such terms and in such manner as the General Partner may reasonably
determine, and similarly to prosecute, settle or defend litigation with
respect to the Partners, the Partnership, or the Partnership's assets;
provided, however, that the General Partner may not, without the
consent of all of the Partners, confess a judgment against the
Partnership;
(viii) to file applications, communicate, and otherwise deal
with any and all governmental agencies having jurisdiction over, or in
any way affecting, the Partnership's assets or any other aspect of the
Partnership business;
(ix) to make or revoke any election permitted or required of
the Partnership by any taxing authority;
(x) to maintain such insurance coverage for public liability,
fire and casualty, and any and all other insurance for the protection
of the Partnership, for the conservation of Partnership assets, or for
any other purpose convenient or beneficial to the Partnership, in such
amounts and such types, as it shall determine from time to time;
(xi) to determine whether or not to apply any insurance
proceeds for any property to the restoration of such property or to
distribute the same;
(xii) to retain legal counsel, accountants, consultants, real
estate brokers, and such other persons, as the General Partner may deem
necessary or appropriate in connection with the Partnership business
and to pay therefor such reasonable remuneration as the General Partner
may deem reasonable and proper;
(xiii) to retain other services of any kind or nature in
connection with the Partnership business, and to pay therefor such
remuneration as the General Partner may deem reasonable and proper;
(xiv) to negotiate and conclude agreements on behalf of the
Partnership with respect to any of the rights, powers and authority
conferred upon the General Partner;
(xv) to maintain accurate accounting records and to file
promptly all federal, state and local income tax returns on behalf of
the Partnership;
(xvi) to distribute Partnership cash or other Partnership
assets in accordance with this Agreement;
-23-
28
(xvii) to form or acquire an interest in, and contribute
property to, any further limited or general partnerships, joint
ventures or other relationships that it deems desirable (including,
without limitation, the acquisition of interests in, and the
contributions of property to, its Subsidiaries and any other Person in
which it has an equity interest from time to time);
(xviii) to establish Partnership reserves for working capital,
capital expenditures, contingent liabilities, or any other valid
Partnership purpose; and
(xix) to merge, consolidate or combine the Partnership with or
into another Person (to the extent permitted by applicable law);
(xx) to do any and all acts and things necessary or prudent to
ensure that the Partnership will not be classified as a "publicly
traded partnership" for purposes of Section 7704 of the Code; and
(xxi) to take such other action, execute, acknowledge, swear
to or deliver such other documents and instruments, and perform any and
all other acts the General Partner deems necessary or appropriate for
the formation, continuation and conduct of the business and affairs of
the Partnership and to possess and enjoy all of the rights and powers
of a general partner as provided by the Act.
Except as otherwise provided herein, to the extent the duties of the General
Partner require expenditures of funds to be paid to third parties, the General
Partner shall not have any obligations hereunder except to the extent that
Partnership funds are reasonably available to it for the performance of such
duties, and nothing herein contained shall be deemed to authorize or require the
General Partner, in its capacity as such, to expend its individual funds for
payment to third parties or to undertake any individual liability or obligation
on behalf of the Partnership.
(b) In no event shall the General Partner incur or allow to exist as of
the end of any month Indebtedness (as defined below) in an amount in excess of
thirty percent (30%) of the General Partner's investment in hotel properties, at
cost, after giving effect to the General Partner's use of proceeds from any
Indebtedness. For purposes of the foregoing restrictions, "Indebtedness" of the
General Partner shall mean all obligations of the General Partner, the
Partnership or any other subsidiaries or partnerships in which the General
Partner serves as general partner, for borrowed money (including all notes
payable and drafts accepted representing extensions of credit) and all
obligations evidenced by bonds, debentures, notes or other similar instruments
on which interest charges are customarily paid, including obligations under
capital leases.
6.02.00 DELEGATION OF AUTHORITY. The General Partner may delegate any
or all of its powers, rights and obligations hereunder, and may appoint, employ,
contract or otherwise deal with any Person for the transaction of the business
of the Partnership, which Person may, under supervision of the General Partner,
perform any acts or services for the Partnership as the General Partner may
approve.
-24-
29
6.03.00 INDEMNIFICATION AND EXCULPATION OF INDEMNITEES.
(a) The Partnership shall indemnify an Indemnitee from and against any
and all losses, claims, damages, liabilities (joint or several), expenses
(including reasonable legal fees and expenses), judgments, fines, settlements,
and other amounts arising from any and all claims, demands, actions, suits or
proceedings, civil, criminal, administrative or investigative, that relate to
the operations of the Partnership as set forth in this Agreement in which any
Indemnitee may be involved, or is threatened to be involved, as a party or
otherwise, unless it is established that: (i) the act or omission of the
Indemnitee was material to the matter giving rise to the proceeding and either
was committed in bad faith or was the result of active and deliberate
dishonesty; (ii) the Indemnitee actually received an improper personal benefit
in money, property or services; or (iii) in the case of any criminal proceeding,
the Indemnitee had reasonable cause to believe that the act or omission was
unlawful. The termination of any proceeding by judgment, order or settlement
does not create a presumption that the Indemnitee did not meet the requisite
standard of conduct set forth in this Section 6.03(a). The termination of any
proceeding by conviction or upon a plea of nolo contendere or its equivalent, or
an entry of an order of probation prior to judgment, creates a rebuttable
presumption that the Indemnitee acted in a manner contrary to that specified in
this Section 6.03(a). Any indemnification pursuant to this Section 6.03 shall be
made only out of the assets of the Partnership.
(b) The Partnership may reimburse an Indemnitee for reasonable expenses
incurred by an Indemnitee who is a party to a proceeding in advance of the final
disposition of the proceeding upon receipt by the Partnership of (i) a written
affirmation by the Indemnitee of the Indemnitee's good faith belief that the
standard of conduct necessary for indemnification by the Partnership as
authorized in this Section 6.03 has been met, and (ii) a written undertaking by
or on behalf of the Indemnitee to repay the amount if it shall ultimately be
determined that the standard of conduct has not been met.
(c) The indemnification provided by this Section 6.03 shall be in
addition to any other rights to which an Indemnitee or any other Person may be
entitled under any agreement, pursuant to any vote of the Partners, as a matter
of law or otherwise, and shall continue as to an Indemnitee who has ceased to
serve in such capacity.
(d) The Partnership may purchase and maintain insurance, on behalf of
the Indemnitees and such other Persons as the General Partner shall determine,
against any liability that may be asserted against or expenses that may be
incurred by such Person in connection with the Partnership's activities,
regardless of whether the Partnership would have the power to indemnify such
Person against such liability under the provisions of this Agreement.
(e) For purposes of this Section 6.03, the Partnership shall be deemed
to have requested an Indemnitee to serve as fiduciary of an employee benefit
plan whenever the performance by it of its duties to the Partnership also
imposes duties on, or otherwise involves services by, it to the plan or
participants or beneficiaries of the plan; excise taxes assessed on an
Indemnitee with respect to an employee benefit plan pursuant to applicable law
shall constitute fines within the meaning of this Section 6.03; and actions
taken or omitted by the Indemnitee with respect to an
-25-
30
employee benefit plan in the performance of its duties for a purpose reasonably
believed by it to be in the interest of the participants and beneficiaries of
the plan shall be deemed to be for a purpose which is not opposed to the best
interests of the Partnership.
(f) In no event may an Indemnitee subject the Limited Partners to
personal liability by reason of the indemnification provisions set forth in this
Agreement.
(g) An Indemnitee shall not be denied indemnification in whole or in
part under this Section 6.03 because the Indemnitee had an interest in the
transaction with respect to which the indemnification applies if the transaction
was otherwise permitted by the terms of this Agreement.
(h) The provisions of this Section 6.03 are for the benefit of the
Indemnitees, their heirs, successors, assigns and administrators and shall not
be deemed to create any rights for the benefit of any other Persons.
6.04.00 LIABILITY OF THE GENERAL PARTNER.
(a) Notwithstanding anything to the contrary set forth in this
Agreement, the General Partner shall not be liable for monetary damages to the
Partnership or any Partners for losses sustained or liabilities incurred as a
result of errors in judgment or of any act or omission if the General Partner
acted in good faith.
(b) The Limited Partners expressly acknowledge that the General Partner
is acting on behalf of the Partnership and the General Partner's shareholders
collectively, that the General Partner is under no obligation to consider the
separate interests of the Limited Partners (including, without limitation, the
tax consequences to Limited Partners) in deciding whether to cause the
Partnership to take (or decline to take) any actions, and that the General
Partner shall not be liable for monetary damages for losses sustained,
liabilities incurred, or benefits not derived by Limited Partners in connection
with such decisions, provided that the General Partner has acted in good faith.
In any case in which the General Partner determines in good faith that the
interests of the Limited Partners and the General Partner's shareholders may
conflict, the Limited Partners further acknowledge and agree that the General
Partner shall be deemed to have discharged its fiduciary duties to the Limited
Partners by discharging such duties to the General Partner's shareholders.
(c) Subject to its obligations and duties as General Partner set forth
in Section 6.01 hereof, the General Partner may exercise any of the powers
granted to it under this Agreement and perform any of the duties imposed upon it
hereunder either directly or by or through its agents. The General Partner shall
not be responsible for any misconduct or negligence on the part of any such
agent appointed by it in good faith.
(d) Notwithstanding any other provisions of this Agreement or the Act,
any action of the General Partner on behalf of the Partnership or any decision
of the General Partner to refrain from acting on behalf of the Partnership,
undertaken in the good faith belief that such action or omission is necessary or
advisable in order (i) to protect the ability of the General Partner to
-26-
31
continue to qualify as a REIT or (ii) to prevent the General Partner from
incurring any taxes under Section 857, Section 4981, or any other provision of
the Code, is expressly authorized under this Agreement and is deemed approved by
all of the Limited Partners.
(e) Any amendment, modification or repeal of this Section 6.04 or any
provision hereof shall be prospective only and shall not in any way affect the
limitations on the General Partner's liability to the Partnership and the
Limited Partners under this Section 6.04 as in effect immediately prior to such
amendment, modification or repeal with respect to matters occurring, in whole or
in part, prior to such amendment, modification or repeal, regardless of when
claims relating to such matters may arise or be asserted.
6.05.00 EXPENDITURES BY THE PARTNERSHIP. The General Partner is hereby
authorized to pay compensation for accounting, administrative, legal, technical,
management and other services rendered to the Partnership. All of the aforesaid
expenditures (including REIT Expenses and Administrative Expenses) shall be made
on behalf of the Partnership, and the General Partner shall be entitled to
reimbursement by the Partnership for any expenditure (including REIT Expenses
and Administrative Expenses) incurred by it on behalf of the Partnership which
shall be made other than out of the funds of the Partnership. The Partnership
shall also assume, and pay when due, all Administrative Expenses.
6.06.00 OUTSIDE ACTIVITIES; REDEMPTION/TENDER OFFER OF REIT SHARES.
(a) Subject to Section 6.11 hereof, the Charter and any agreements
entered into by the General Partner or its Affiliates with the Partnership or a
Subsidiary, any officer, director, employee, agent, trustee, Affiliate or
shareholder of the General Partner shall be entitled to and may have business
interests and engage in business activities in addition to those relating to the
Partnership, including business interests and activities substantially similar
or identical to those of the Partnership. Neither the Partnership nor any of the
Limited Partners shall have any rights by virtue of this Agreement in any such
business ventures, interests or activities. None of the Limited Partners nor any
other Person shall have any rights by virtue of this Agreement or the
partnership relationship established hereby in any such business ventures,
interests or activities, and the General Partner shall have no obligation
pursuant to this Agreement to offer any interest in any such business ventures,
interests and activities to the Partnership or any Limited Partner, even if such
opportunity is of a character which, if presented to the Partnership or any
Limited Partner, could be taken by such Person.
(b) In the event the General Partner redeems any REIT Shares, then the
General Partner shall cause the Partnership to purchase from it a number of
Partnership Units as determined based on the application of the Conversion
Factor on the same terms that the General Partner redeemed such REIT Shares.
Moreover, if the General Partner makes a cash tender offer or other offer to
acquire REIT Shares, then the General Partner shall cause the Partnership to
make a corresponding offer to the General Partner to acquire an equal number of
Partnership Units held by the General Partner. In the event any REIT Shares are
redeemed by the General Partner pursuant to such offer, the Partnership shall
redeem an equivalent number of the General
-27-
32
Partner's Partnership Units for an equivalent purchase price based on the
application of the Conversion Factor.
6.07.00 REDEMPTION RIGHT WITH RESPECT TO PREFERRED PARTNERSHIP UNITS.
(a) Mandatory Redemption. In the event the General Partner redeems all
of the Series B Preferred Shares as a result of the occurrence of a "Redemption
Event" under the Articles of Amendment, or in the event the holders of the
Series B Preferred Shares are entitled to have such shares repurchased pursuant
to the terms of the Series B Cumulative Stock Purchase Agreement under which
such shares were originally issued and sold by the General Partner, the
Partnership shall redeem all of the Series B Preferred Partnership Units held by
the General Partner at the applicable redemption price reflected below plus
accrued and unpaid distributions, together with interest thereon (if any), to
the date of redemption.
Redemption Price Per
Series B Preferred
Date of Redemption Partnership Unit
------------------ ----------------
Prior to December 31, 2001 $103.00
January 1, 2002 through December 31, 2002 $102.00
January 1, 2003 through December 31, 2003 $101.00
After January 1, 2004 $100.00
(b) Voluntary Redemption of Series B Preferred Partnership Units. On
and after December 31, 2003, the Partnership may, at its option following notice
as described below, redeem at any time all of the Series B Preferred Partnership
Units held by the General Partner (the "Series B Partnership Redemption Right")
at a redemption price per Series B Preferred Partnership Unit, payable in cash,
equal to the sum of (i) the Series B Preference Value per Unit and (ii) the
excess, if any, of (A) the General Partner's cumulative Series B Preferred
Return for the current and all prior years (up to and including the date of
redemption) with respect to the Series B Preferred Partnership Unit (including
accrued and unpaid interest thereon up to and including the date of redemption)
over (B) the sum of all prior distributions to the General Partner with respect
to such Series B Preferred Partnership Unit pursuant to Section 5.02(a)(i)
hereof. The Partnership shall exercise the Series B Partnership Redemption Right
by notifying the General Partner of the redemption not less than 30 nor more
than 60 days prior to the redemption date and by specifying in such notice the
redemption date and the redemption price. If the General Partner exercises its
voluntary redemption right with respect to the Series B Preferred Shares, then
the exercise of the Series B Partnership Redemption Right will become mandatory.
Similarly, if the Partnership exercises the Series B Partnership Redemption
Right, the General Partner agrees to redeem a corresponding portion of the
Series B Preferred Shares.
(c) On and after the redemption date, the Series B Preferred Return
will no longer accrue or accumulate with respect to the Series B Preferred
Partnership Units redeemed by the Partnership. In addition, the General Partner
shall have no right, with respect to the Series B Preferred Partnership Units so
redeemed, to receive any distribution payable after the
-28-
33
redemption date unless the General Partner was the holder of record of such
Units on the record date of the distribution.
6.08.00 EMPLOYMENT OR RETENTION OF AFFILIATES.
(a) Any Affiliate of the General Partner may be employed or retained by
the Partnership and may otherwise deal with the Partnership (whether as a buyer,
lessor, lessee, manager, furnisher of goods or services, broker, agent, lender
or otherwise) and may receive from the Partnership any compensation, price, or
other payment therefor which the General Partner determines to be fair and
reasonable.
(b) The Partnership may lend or contribute to its Subsidiaries or other
Persons in which it has an equity investment, and such Persons may borrow funds
from the Partnership, on terms and conditions established in the sole and
absolute discretion of the General Partner. The foregoing authority shall not
create any right or benefit in favor of any Subsidiary or any other Person.
(c) The Partnership may transfer assets to joint ventures, other
partnerships, corporations or other business entities in which it is or thereby
becomes a participant upon such terms and subject to such conditions as the
General Partner deems are consistent with this Agreement and applicable law.
(d) Except as expressly permitted by this Agreement, neither the
General Partner nor any of its Affiliates shall sell, transfer or convey any
property to, or purchase any property from, the Partnership, directly or
indirectly, except pursuant to transactions that are on terms that are fair and
reasonable to the Partnership.
6.09.00 LOANS TO THE PARTNERSHIP. If additional funds are required by
the Partnership for any purpose relating to the business of the Partnership or
for any of its obligations, expenses, costs, or expenditures, including
operating deficits, the Partnership may borrow such funds as are needed from the
General Partner or any Affiliate of the General Partner for such period of time
and on such terms as the General Partner or its Affiliate may agree, provided
that the terms shall be substantially equivalent to the terms that could be
obtained from a third party on an arm's-length basis.
6.10.00 LOANS TO THE GENERAL PARTNER. If additional funds are required
by the General Partner for any purpose relating to the business of the General
Partner or for any of its obligations, expenses, costs, or expenditures,
including operating deficits, the General Partner may borrow such funds as are
needed from the Partnership or any Affiliate of the Partnership for such period
of time and on such terms as the Partnership or its Affiliate may agree,
provided that the terms shall be substantially equivalent to the terms that
could be obtained from a third party on an arm's-length basis.
6.11.00 GENERAL PARTNER PARTICIPATION. The General Partner agrees that
all business activities of the General Partner, including activities pertaining
to the acquisition, development and/or ownership of hotels or other property,
shall be conducted through the Partnership;
-29-
34
provided, however, that the General Partner is allowed to make a direct
acquisition, but if and only if, such acquisition is made in connection with the
issuance of New Securities, which direct acquisition and issuance have been
approved and determined to be in the best interests of the General Partner and
the Partnership by a majority of the Independent Directors. The General Partner
also agrees that all borrowings shall constitute Funding Loans, subject to the
exception set forth in Section 4.03 hereof.
6.12.00 AUTHORITY ON BEHALF OF LIMITED PARTNERS. Subject to the terms
of this Agreement, the General Partner shall have the right, power and authority
to negotiate and conclude agreements with any Person (including, without
limitation, an Affiliate of the General Partner) on behalf of the Limited
Partners in any transaction involving the sale or exchange of all of the
Partnership Interests and to sell to or exchange with any Person all of the
Partnership Interests for such consideration and on such terms as the General
Partner may determine.
ARTICLE VII
CHANGES IN GENERAL PARTNER
7.01.00 TRANSFER OF THE GENERAL PARTNER'S PARTNERSHIP INTEREST.
(a) Other than to an Affiliate of the General Partner, the General
Partner may not transfer any of its General Partnership Interest or Limited
Partnership Interest or withdraw as General Partner except as provided in
Section 7.01(c).
(b) The General Partner agrees that it will at all times own at least a
10% Partnership Interest.
(c) The General Partner shall not engage in any merger, consolidation
or other combination with or into another Person or any sale of all or
substantially all of its assets (other than in connection with a change in the
General Partner's state of incorporation or organizational form) (a
"Transaction"), unless one of the following conditions is met: (i) the consent
of Limited Partners (other than the General Partner or any wholly-owned
Subsidiary) holding more than 50% of the Percentage Interests of the Limited
Partners (other than those held by the General Partner or any wholly-owned
Subsidiary) is obtained; (ii) the Transaction also includes a merger of the
Partnership or sale of substantially all of the assets of the Partnership or
other transaction (including, without limitation, a sale or exchange of
Partnership Interests pursuant to Section 6.12 hereof) as a result of which all
Limited Partners, other than the General Partner or any wholly-owned Subsidiary,
will receive for each Partnership Unit an amount of cash, securities, or other
property (or a partnership interest or other security readily convertible into
such cash, securities or other property) no less than the product of the
Conversion Factor and the greatest amount of cash, securities or other property
(expressed as an amount per REIT Share) paid in the Transaction in consideration
for REIT Shares, provided, that if, in connection with the Transaction, a
purchase, tender or exchange offer ("Offer") shall have been made to and
accepted by the holders of more than 50 percent of the outstanding REIT Shares
would have received had they (A) exercised their Redemption Right and received
REIT shares and (B) sold,
-30-
35
tendered or exchanged such REIT shares pursuant to the Offer the REIT Shares
received upon exercise of the Limited Partner Redemption Right immediately prior
to the expiration of the Offer; (iii) the General Partner is the surviving
entity in the Transaction and either (A) the holders of REIT Shares do not
receive cash, securities or other property in the Transaction or (B) all Limited
Partners (other than the General Partner or any wholly-owned Subsidiary) receive
an amount of cash, securities, or other property (expressed as an amount per
Partnership Unit) that is no less than the product of the Conversion Factor and
the greatest amount of cash, securities, or other property (expressed as an
amount per REIT Share) received in the Transaction by any holder of REIT Shares;
or (iv) the General Partner merges, consolidates or combines with or into
another entity and, immediately after such merger or consolidation (A)
substantially all of the assets of the successor or surviving entity (the
"Surviving General Partner"), other than Partnership Units held by the General
Partner and the ownership interests in any wholly-owned Subsidiaries held by the
General Partner, are contributed to the Partnership as a Capital Contribution in
exchange for Partnership Units with a fair market value equal to the value of
the assets so contributed as determined pursuant to Section 7.04(c) of the Code
(B) the Surviving General Partner expressly agrees to assume all obligations of
the General Partner hereunder, and (C) the Conversion Factor is adjusted
appropriately to reflect the ratio at which REIT Shares are converted into
shares of the surviving entity. Upon such contribution and assumption, the
Surviving General Partner shall have the right and duty to amend this Agreement
as set forth in this Section 7.01(c). The Surviving General Partner shall in
good faith arrive at a new method for the calculation of the Cash Amount and
Conversion Factor for a Partnership Unit after any such merger or consolidation
so as to approximate the existing method for such calculation as closely as
reasonably possible. Such calculation shall take into account, among other
things, the kind and amount of securities, cash and other property that was
receivable upon such merger or consolidation by a holder of REIT Shares and/or
options, warrants or other rights relating thereto, and to which a holder of
Partnership Units could have acquired had such Partnership Units been redeemed
immediately prior to such merger or consolidation. Such amendment to this
Agreement shall provide for adjustment to such method of calculation which shall
be as nearly equivalent as may be practicable to the adjustments provided for
with respect to the Conversion Factor. The above provisions of this Section
7.01(c) shall similarly apply to successive mergers or consolidations permitted
hereunder.
7.02.00 ADMISSION OF A SUBSTITUTE OR SUCCESSOR GENERAL PARTNER. A
Person shall be admitted as a substitute or successor General Partner of the
Partnership if the following exclusive terms and conditions are satisfied:
(a) the Person to be admitted as a substitute or additional General
Partner shall have accepted and agreed to be bound by all the terms and
provisions of this Agreement by executing a counterpart thereof and such other
documents or instruments as may be required or appropriate in order to effect
the admission of such Person as a General Partner, and a certificate evidencing
the admission of such Person as a General Partner shall have been filed for
recordation and all other actions required by Section 2.05 hereof in connection
with such admission shall have been performed;
-31-
36
(b) if the Person to be admitted as a substitute or additional General
Partner is a corporation or a partnership it shall have provided the Partnership
with evidence satisfactory to counsel for the Partnership of such Person's
authority to become a General Partner and to be bound by the terms and
provisions of this Agreement; and
(c) counsel for the Partnership shall have rendered an opinion (relying
on such opinions from other counsel and the state or any other jurisdiction as
may be necessary) that the admission of the person to be admitted as a
substitute or additional General Partner is in conformity with the Act, that
none of the actions taken in connection with the admission of such Person as a
substitute or additional General Partner will cause (i) the Partnership to be
classified other than as a partnership for federal income tax purposes or (ii)
the loss of any Limited Partner's limited liability.
7.03.00 EFFECT OF BANKRUPTCY, WITHDRAWAL, DEATH OR DISSOLUTION OF A
GENERAL PARTNER.
(a) Upon the occurrence of an Event of Bankruptcy as to a General
Partner (and its removal pursuant to Section 7.04(a) hereof) or the withdrawal,
removal or dissolution of a General Partner (except that, if a General Partner
is on the date of such occurrence a partnership, the withdrawal, death,
dissolution, Event of Bankruptcy as to, or removal of a partner in, such
partnership shall be deemed not to be a dissolution of such General Partner if
the business of such General Partner is continued by the remaining partner or
partners), the Partnership shall be dissolved and terminated unless the
Partnership is continued pursuant to Section 7.03(b) hereof. The merger of the
General Partner with or into any entity that is admitted as a substitute or
successor General Partner pursuant to Section 7.02 hereof shall not be deemed to
be the withdrawal, dissolution or removal of the General Partner.
(b) Following the occurrence of an Event of Bankruptcy as to a General
Partner (and its removal pursuant to Section 7.04(a) hereof) or the withdrawal,
removal or dissolution of a General Partner (except that, if a General Partner
is on the date of such occurrence a partnership, the withdrawal, death,
dissolution, Event of Bankruptcy as to, or removal of a partner in, such
partnership shall be deemed not to be a dissolution of such General Partner if
the business of such General Partner is continued by the remaining partner or
partners), the Limited Partners, within 90 days after such occurrence, may elect
to continue the business of the Partnership for the balance of the term
specified in Section 2.04 hereof by selecting, subject to Section 7.02 hereof
and any other provisions of this Agreement, a substitute General Partner by
consent of the Limited Partners (other than the General Partner or any
wholly-owned Subsidiary) holding more than 66 2/3% of the Percentage Interests
of the Limited Partners (other than the General Partner or any wholly-owned
Subsidiary). If the Limited Partners elect to continue the business of the
Partnership and admit a substitute General Partner, the relationship with the
Partners and of any Person who has acquired an interest of a Partner in the
Partnership shall be governed by this Agreement.
-32-
37
7.04.00 REMOVAL OF A GENERAL PARTNER.
(a) Upon the occurrence of an Event of Bankruptcy as to, or the
dissolution of, a General Partner, such General Partner shall be deemed to be
removed automatically; provided, however, that if a General Partner is on the
date of such occurrence a partnership, the withdrawal, death, dissolution, Event
of Bankruptcy as to or removal of a partner in such partnership shall be deemed
not to be a dissolution of the General Partner if the business of such General
Partner is continued by the remaining partner or partners. The Limited Partners
may not remove the General Partner, with or without cause.
(b) If a General Partner has been removed pursuant to this Section 7.04
and the Partnership is continued pursuant to Section 7.03 hereof, such General
Partner shall promptly transfer and assign its General Partnership Interest in
the Partnership (i) to the substitute General Partner approved by a
majority-in-interest of the Limited Partners in accordance with Section 7.03(b)
hereof and otherwise admitted to the Partnership in accordance with Section 7.02
hereof. At the time of assignment, the removed General Partner shall be entitled
to receive from the substitute General Partner the fair market value of the
General Partnership Interest of such removed General Partner as reduced by any
damages caused to the Partnership by such General Partner. Such fair market
value shall be determined by an appraiser mutually agreed upon by the General
Partner and a majority-in-interest of the Limited Partners within 10 days
following the removal of the General Partner. In the event that the parties are
unable to agree upon an appraiser, the General Partner and a
majority-in-interest of the Limited Partners each shall select an appraiser.
Each such appraiser shall complete an appraisal of the fair market value of the
General Partner's General Partnership Interest within 30 days of the General
Partner's removal, and the fair market value of the General Partner's General
Partnership Interest shall be the average of the two appraisals; provided,
however, that if the higher appraisal exceeds the lower appraisal by more than
20% of the amount of the lower appraisal, the two appraisers, no later than 40
days after the removal of the General Partner, shall select a third appraiser
who shall complete an appraisal of the fair market value of the General
Partner's General Partnership Interest no later than 60 days after the removal
of the General Partner. In such case, the fair market value of the General
Partner's General Partnership Interest shall be the average of the two
appraisals closest in value.
(c) The General Partnership Interest of a removed General Partner,
during the time after default until transfer under Section 7.04(b), shall be
converted to that of a special Limited Partner; provided, however, such removed
General Partner shall not have any rights to participate in the management and
affairs of the Partnership, and shall not be entitled to any portion of the
income, expense, profit, gain or loss allocations or cash distributions
allocable or payable, as the case may be, to the Limited Partners. Instead, such
removed General Partner shall receive and be entitled to retain only
distributions or allocations of such items which it would have been entitled to
receive in its capacity as General Partner, until the transfer is effective
pursuant to Section 7.04(b) hereof.
(d) All Partners shall have given and hereby do give such consents,
shall take such actions and shall execute such documents as shall be legally
necessary and sufficient to effect all the foregoing provisions of this Section
7.04.
-33-
38
ARTICLE VIII
RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNERS
8.01.00 MANAGEMENT OF THE PARTNERSHIP. The Limited Partners shall not
participate in the management or control of Partnership business nor shall they
transact any business for the Partnership, nor shall they have the power to sign
for or bind the Partnership, such powers being vested solely and exclusively in
the General Partner.
8.02.00 POWER OF ATTORNEY. Each Limited Partner hereby irrevocably
appoints the General Partner his true and lawful attorney-in-fact, who may act
for each Limited Partner and in his name, place and ▇▇▇▇▇, and for his use and
benefit, to sign, acknowledge, swear to, deliver, file or record, at the
appropriate public offices, any and all documents, certificates, and instruments
as may be deemed necessary or desirable by the General Partner to carry out
fully the provisions of this Agreement (including specifically, but without
limitation, the provisions of Article VI with respect to the making of any
amendments hereto and the provisions of Section 6.12 hereof and any related sale
or exchange of such Limited Partner's Partnership Interests) and the Act in
accordance with their terms, which power of attorney is coupled with an interest
and shall survive the death, dissolution or legal incapacity of the Limited
Partner, or the transfer by the Limited Partner of any part or all of his
Interest in the Partnership.
8.03.00 LIMITATION ON LIABILITY OF LIMITED PARTNERS. No Limited Partner
shall be liable for any debts, liabilities, contracts or obligations of the
Partnership. A Limited Partner shall be liable to the Partnership only to make
payments of his Capital Contribution, if any, as and when due hereunder. After
his Capital Contribution is fully paid, no Limited Partner shall, except as
otherwise required by the Act, be required to make any further Capital
Contributions or other payments or lend any funds to the Partnership.
8.04.00 OWNERSHIP BY LIMITED PARTNER OF CORPORATE GENERAL PARTNER OR
AFFILIATE. No Limited Partner shall at any time, either directly or indirectly,
own any stock or other interest in the General Partner or in any Affiliate
thereof, if such ownership by itself or in conjunction with other stock or other
interests owned by other Limited Partners would, in the opinion of counsel for
the Partnership, jeopardize the classification of the Partnership as a
partnership for federal income tax purposes. The General Partner shall be
entitled to make such reasonable inquiry of the Limited Partners as is required
to establish compliance by the Limited Partners with the provisions of this
Section.
8.05.00 LIMITED PARTNER REDEMPTION RIGHT.
(a) Subject to Section 8.05(c) and the provisions of any agreements
between the Partnership and one or more Limited Partners, each Class A Limited
Partner shall have the right to require the Partnership to redeem on a Specified
Redemption Date all or a portion of the Partnership Units held by such Class A
Limited Partner at a redemption price equal to and in the form of the Redemption
Amount. Subject to Section 8.05(c), each Class B Limited Partner shall have the
right to require the Partnership to redeem on a Specified Redemption Date all or
a
-34-
39
portion of such Class B Limited Partner's Partnership Units, at a redemption
price equal to and in the form of the Redemption Amount subject to any
restriction agreed to in writing between the Redeeming Limited Partner and the
General Partner. The redemption right described in this Section 8.05 shall be
referred to as the "Limited Partner Redemption Right." The Limited Partner
Redemption Right shall be exercised pursuant to a Notice of Redemption delivered
to the General Partner by the Limited Partner who is exercising the Limited
Partner Redemption Right (the "Redeeming Limited Partner"). A Limited Partner
may not exercise the Limited Partner Redemption Right for less than three
hundred (300) Partnership Units or, if such Limited Partner holds less than
three hundred (300) Partnership Units, all of the Partnership Units held by such
Partner. The Redeeming Limited Partner shall have no right, with respect to any
Partnership Units so redeemed, to receive any distribution paid with respect to
Partnership Units if the record date for such distribution is on or after the
Specified Redemption Date.
(b) Notwithstanding the provisions of Section 8.05(a), the General
Partner may, in its sole and absolute discretion, assume directly and satisfy a
Limited Partner Redemption Right by paying to the Redeeming Limited Partner the
Redemption Amount on the Specified Redemption Date, whereupon the General
Partner shall acquire the Partnership Units offered for redemption by the
Redeeming Limited Partner and shall be treated for all purposes of this
Agreement as the owner of such Partnership Units. In the event the General
Partner shall exercise its right to satisfy the Limited Partner Redemption Right
in the manner described in the preceding sentence, the Partnership shall have no
obligation to pay any amount to the Redeeming Limited Partner with respect to
such Redeeming Limited Partner's exercise of the Limited Partner Redemption
Right, and each of the Redeeming Limited Partner, the Partnership, and the
General Partner shall treat the transaction between the General Partner and the
Redeeming Limited Partner as a sale of the Redeeming Limited Partner's
Partnership Units to the General Partner for federal income tax purposes. Each
Redeeming Limited Partner agrees to execute such documents as the General
Partner may reasonably require in connection with the issuance of REIT Shares
upon exercise of the Limited Partner Redemption Right.
(c) The Partnership or the General Partner, as the case may be, shall
pay the Cash Amount to a Redeeming Limited Partner as the Redemption Amount for
such Partner if (i) the acquisition of REIT Shares by such Partner on the
Specified Redemption Date would (A) result in such Partner or any other person
owning, directly or indirectly, REIT Shares in excess of the "Ownership Limit,"
as defined in the Charter and calculated in accordance therewith, except as
provided in the Charter, (B) result in REIT Shares being owned by fewer than 100
persons (determined without reference to any rules of attribution), except as
provided in the Charter, (C) result in the General Partner being "closely held"
within the meaning of Section 856(h) of the Code, (D) cause the General Partner
to own, directly or constructively, 10% or more of the ownership interests in a
tenant of the General Partner's or the Partnership's real property, within the
meaning of Section 856(d)(2)(B) of the Code, or (E) cause the acquisition of
REIT Shares by such Partner to be "integrated" with any other distribution of
REIT Shares for purposes of complying with the registration provisions of the
Securities Act of 1933, as amended, or (ii) the Partnership or the General
Partner, as the case may be, so elects in its sole discretion. Any Cash Amount
or REIT shares to be paid to a redeeming Limited Partner pursuant to this
Section 8.05 shall be paid within five (5) business days after the initial date
of receipt by the General Partner
-35-
40
of the Notice of Redemption relating to the Partnership Units to be redeemed;
provided, however, that such five (5) day period may be extended for up to an
additional one hundred eighty (180) day period to the extent required for the
General Partner to cause additional REIT Shares to be issued to provide
financing to be used to make such payment of the Cash Amount and provided
further, that the Partnership shall pay interest at the Prime Rate as published
in The Wall Street Journal, Eastern Edition, from time to time on the Cash
Amount from the expiration of the five day period to the date of payment.
Notwithstanding the foregoing, the General Partner and the Partnership agree to
use their best efforts to cause the closing of the acquisition of redeemed
Partnership Units hereunder to occur as quickly as reasonably possible. If a
Class B Limited Partner exercises its Limited Partner Redemption Right and the
Partnership or the General Partner, as the case may be, elects to pay the REIT
Shares Amount rather than the Cash Amount, the REIT Shares received by such
Class B Limited Partner shall be properly registered under the Securities Act of
1933, as amended.
(d) Each certificate, if any, evidencing REIT Shares that may be issued
in redemption of Partnership Units under this Section 8.05 (the "Redemption
Shares") shall bear a restrictive legend in substantially the following form:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or
any state securities law. No transfer of the Shares
represented by this certificate shall be valid or effective
unless (A) such transfer is made pursuant to an effective
registration statement under the Securities Act of 1933, as
amended (the "Act"), or (B) the holder of the securities
proposed to be transferred shall have delivered to the company
either a no-action letter from the Securities and Exchange
Commission or an opinion of counsel (who may be an employee of
such holder) experienced in securities matters to the effect
that such proposed transfer is exempt from the registration
requirements of the act which opinion shall be reasonably
satisfactory to the company."
8.06.00 REGISTRATION.
(a) Shelf Registration. Subject to the provisions of agreements between
the General Partner and the Limited Partners, at the request of a Class B
Limited Partner, the General Partner agrees to file with the Commission a shelf
registration statement under Rule 415 of the Securities Act, or any similar rule
that may be adopted by the Commission (the "Shelf Registration"), with respect
to all of the REIT Shares that may be issued in redemption of Partnership Units
under Section 8.05 above (the "Redemption Shares"). The General Partner will use
its best efforts to have the Shelf Registration declared effective under the
Securities Act to permit the disposition of the Redemption Shares by the holders
thereof in accordance with the method or methods of disposition specified by the
holders, and to keep the Shelf Registration continuously effective until the
earliest of (the "Shelf Registration Period") (i) two years after the effective
date thereof, (ii) the date when all of the Redemption Shares are sold
thereunder, or
-36-
41
(iii) the date on which all of the holders of Redemption Shares, pursuant to
Rule 144(k) under the Securities Act, may sell the Redemption Shares without
registration under the Securities Act of 1933, as amended (the "Securities
Act"). The General Partner further agrees to supplement or make amendments to
the Shelf Registration, if required by the rules, regulations or instructions
applicable to the registration form utilized by the Company or by the Securities
Act or rules and regulations thereunder for the Shelf Registration.
Notwithstanding the foregoing, if for any reason the effectiveness of the Shelf
Registration is delayed or suspended or it ceases to be available for sales of
Redemption Shares thereunder, the Shelf Registration Period shall be extended by
the aggregate number of days of such delay, suspension or unavailability.
(b) Registration and Qualification Procedures. The General Partner
will:
(i) prepare and file with the Commission a registration
statement, including amendments thereof and supplements relating
thereto, with respect to the Redemption Shares, in connection with
which the General Partner will give each holder of Redemption Shares,
their underwriters, if any, and their counsel and accountants a
reasonable opportunity to participate in the preparation thereof and
will give such persons reasonable access to its books, records,
officers and independent public accountants;
(ii) use its best efforts to cause the registration statement
to be declared effective by the Commission;
(iii) keep the registration statement effective and the
related prospectus current throughout the Shelf Registration Period;
provided, however, that the General Partner shall have no obligation to
file any amendment or supplement at its own expense more than ninety
(90) days after the effective date of the registration statement;
(iv) furnish to each holder of Redemption Shares such numbers
of copies of prospectuses, and supplements or amendments thereto, and
such other documents as such holder reasonably requests;
(v) register or qualify the securities covered by the
registration statement under the securities or blue sky laws of such
jurisdictions within the United States as any holder of Redemption
Shares shall reasonably request, and do such other reasonable acts and
things as may be required of it to enable such holders to consummate
the sale or other disposition in such jurisdictions of the Redemption
Shares; provided, however, that the General Partner shall not be
required to (i) qualify as a foreign corporation or consent to a
general and unlimited service or process in any jurisdictions in which
it would not otherwise be required to be qualified or so consent or
(ii) qualify as a dealer in securities;
(vi) furnish, at the request of the holders of Redemption
Shares, on the date Redemption Shares are delivered to the underwriters
for sale pursuant to such registration, or, if such Shares are not
being sold through underwriters, on the date the Shelf Registration
with respect to such Redemption Shares becomes effective, (A) a
securities opinion of counsel representing the General Partner for the
purposes of such
-37-
42
registration covering such legal matters as are customarily included in
such opinions and (B) letters of the firm of independent public
accountants that certified the financial statements included in the
registration statement, addressed to the underwriters, covering
substantially the same matters as are customarily covered in
accountant's letters delivered to underwriters in underwritten public
offerings of securities and such other financial matters as such
holders (or the underwriters, if any) may reasonably request;
(vii) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available
to its shareholders as soon as reasonably practicable, but not later
than sixteen (16) months after the effective date of the Shelf
Registration, an earnings statement covering a period of at least
twelve (12) months beginning after the effective date of the Shelf
Registration, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act;
(viii) enter into and perform an underwriting agreement with
the managing underwriter, if any, selected as provided herein,
containing customary (A) terms of offer and sale of the securities,
payment provisions, underwriting discounts and commissions and (B)
representations, warranties, covenants, indemnities, terms and
conditions; and
(ix) keep the holders of Redemption Shares advised as to the
initiation and progress of the registration.
(c) Allocation of Expenses. The Partnership shall pay all expenses in
connection with the Shelf Registration, including without limitation (i) all
expenses incident to filing with the National Association of Securities Dealers,
Inc., (ii) registration fees, (iii) printing expenses, (iv) accounting and legal
fees and expenses, except to the extent holders of Redemption Shares elect to
engage accountants or attorneys in addition to the accountants and attorneys
engaged by the General Partner, (v) accounting expenses incident to or required
by any such registration or qualification and (vi) expenses of complying with
the securities or blue sky laws of any jurisdictions in connection with such
registration or qualification; provided, however, the Partnership shall not be
liable for (A) any discounts or commissions to any underwriter or broker
attributable to the sale of Redemption Shares, or (B) any fees or expenses
incurred by holders of Redemption Shares in connection with such registration
which, according to the written instructions of any regulatory authority, the
Partnership is not permitted to pay.
(d) Indemnification.
(i) In connection with the Shelf Registration, the General
Partner and the Partnership agree to indemnify holders of Redemption
Shares within the meaning of Section 15 of the Securities Act, against
all losses, claims, damages, liabilities and expenses (including
reasonable costs of investigation) caused by any untrue, or alleged
untrue, statement of a material fact contained in the Shelf
Registration, preliminary prospectus or prospectus (as amended or
supplemented if the General Partner shall have furnished any amendments
or supplements thereto) or caused by any omission, or alleged omission,
to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar
as such losses, claims,
-38-
43
damages, liabilities or expenses are caused by any untrue statement,
alleged untrue statement, omission, or alleged omission based upon
information furnished to the General Partner expressly for use therein.
The General Partner and each officer, director and controlling person
of the General Partner shall be indemnified by each holder of
Redemption Shares covered by the Shelf Registration for all such
losses, claims, damages, liabilities and expenses (including reasonable
costs of investigation) caused by any such untrue, or alleged untrue,
statement or any such omission, or alleged omission, based upon
information furnished to the General Partner expressly for use therein
in a writing signed by the holder.
(ii) Promptly upon receipt by a party indemnified under this
Section 8.06(d) of notice of the commencement of any action against
such indemnified party in respect of which indemnity or reimbursement
may be sought against any indemnifying party under this Section
8.06(d), such indemnified party shall notify the General Partner in
writing of the commencement of such action, but the failure to so
notify the General Partner shall not relieve it of any liability which
it may have to any indemnified party otherwise than under this Section
8.06(d) unless such failure shall materially adversely affect the
defense of such action. In case notice of commencement of any such
action shall be given to the General Partner as above provided, the
General Partner shall be entitled to participate in and, to the extent
it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense of such action at its own expense, with
counsel chosen by it and reasonably satisfactory to such indemnified
party. The indemnified party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel (other than reasonable costs of
investigation) shall be paid by the indemnified party unless (i) the
General Partner or the Partnership agrees to pay the same, (ii) the
General Partner fails to assume the defense of such action with counsel
reasonably satisfactory to the indemnified party or (iii) the named
parties to any such action (including any impleaded parties) have been
advised by such counsel that representation of such indemnified party
and the General Partner by the same counsel would be inappropriate
under applicable standards of professional conduct (in which case the
General Partner shall not have the right to assume the defense of such
action on behalf of such indemnified party). No indemnifying party
shall be liable for any settlement entered into without its consent.
(e) Contribution.
(i) If for any reason the indemnification provisions
contemplated by Section 8.06(d) are either unavailable or insufficient
to hold harmless an indemnified party in respect of any losses, claims,
damages or liabilities referred to therein, then the party that would
otherwise be required to provide indemnification or the indemnifying
party (in either case, for purposes of this Section 8.06(e), the
"Indemnifying Party") in respect of such losses, claims, damages or
liabilities, shall contribute to the amount paid or payable by the
party that would otherwise be entitled to indemnification or the
indemnified party (in either case, for purposes of this Section
8.06(e), the "Indemnified Party") as a result of such losses, claims,
damages, liabilities or expense, in such proportion as is
-39-
44
appropriate to reflect the relative fault of the Indemnifying Party and
the Indemnified Party, as well as any other relevant equitable
considerations. The relative fault of the Indemnifying Party and
Indemnified Party shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact related
to information supplied by the Indemnifying Party or Indemnified Party,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The
amount paid or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be deemed to
include any legal or other fees or expenses reasonably incurred by such
party. In no event shall any holder of Redemption Shares covered by the
Shelf Registration be required to contribute an amount greater than the
dollar amount of the proceeds received by such holder from the sale of
Redemption Shares pursuant to the registration giving rise to the
liability.
(ii) The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 8.06(e) were
determined by pro rata allocation (even if the holders or any
underwriters or all of them were treated as one entity for such
purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately
preceding paragraph. No person or entity determined to have committed a
fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person
or entity who was not guilty of such fraudulent misrepresentation.
(iii) The contribution provided for in this Section 8.06(e)
shall survive the termination of this Agreement and shall remain in
full force and effect regardless of any investigation made by or on
behalf of any Indemnified Party.
(f) Listing on Securities Exchange. If the General Partner shall list
or maintain the listing of any shares of Common Stock on any securities exchange
or national market system, it will at its expense and as necessary to permit the
registration and sale of the Redemption Shares hereunder, list thereon, maintain
and, when necessary, increase such listing to include such Redemption Shares.
8.07.00 OTHER AGREEMENTS.
The Partnership may enter into one or more agreements with its Limited
Partners with respect to the matters described in Sections 8.05 and 8.06 hereof,
including with respect to the redemption of Units, the registration of REIT
Shares issued upon redemption of such Units and certain other matters specific
to some but not all Partners. The existence and operation of such agreements
shall not modify or terminate the rights, benefits or obligations of any Partner
who is not a party to such agreements under this Agreement or applicable law.
8.08.00 OUTSIDE ACTIVITIES OF CLASS A LIMITED PARTNERS.
(a) No Class A Limited Partner or director, shareholder or Affiliate of
a Class A Limited Partner may (i) invest in any motel or hotel property or (ii)
manage or agree to manage a motel
-40-
45
or hotel property, except for a Property or any other hotel or motel property in
which the General Partner or the Partnership has an ownership interest, that, at
the time such management is undertaken or agreement to manage is entered into,
is located within a 20-mile radius of a Property or any other motel or hotel
property in which the General Partner has an ownership interest.
(b) The General Partner, in its sole discretion, may waive the
restrictions on Class A Limited Partners set forth in Section 8.08(a) above as
to (i) any particular business venture in which a Limited Partner proposes to
engage or (ii) any particular Class A Limited Partner.
ARTICLE IX
TRANSFERS OF LIMITED PARTNERSHIP INTERESTS
9.01.00 PURCHASE FOR INVESTMENT.
(a) Each Limited Partner hereby represents and warrants to the General
Partner and to the Partnership that the acquisition of his Partnership Interest
is made as a principal for his account for investment purposes only and not with
a view to the resale or distribution of such Partnership Interest.
(b) Each Limited Partner agrees that he will not sell, assign or
otherwise transfer his Partnership Interest or any fraction thereof, whether
voluntarily or by operation of law or at judicial sale or otherwise, to any
Person who does not make the representations and warranties to the General
Partner set forth in Section 9.01(a) above and similarly agree not to sell,
assign or transfer such Partnership Interest or fraction thereof to any Person
who does not similarly represent, warrant and agree.
9.02.00 RESTRICTIONS ON TRANSFER OF LIMITED PARTNERSHIP INTERESTS.
(a) Except as otherwise provided in Section 9.02(d) hereof, no Limited
Partner may offer, sell, assign, hypothecate, pledge or otherwise transfer his
Limited Partnership Interest, in whole or in part, whether voluntarily or by
operation of law or at judicial sale or otherwise (collectively, a "Transfer")
without the written consent of the General Partner, which consent may be
withheld in the sole discretion of the General Partner. The General Partner may
require, as a condition of any Transfer, that the transferor assume all costs
incurred by the Partnership in connection therewith.
(b) No Limited Partner may effect a Transfer of his Limited Partnership
Interest, in whole or in part, if, in the opinion of legal counsel for the
Partnership, such proposed Transfer would require the registration of the
Limited Partnership Interest under the Securities Act of 1933, as amended, or
would otherwise violate any applicable federal or state securities or "Blue Sky"
law (including investment suitability standards).
-41-
46
(c) No transfer by a Limited Partner of his Partnership Units, in whole
or in part, may be made to any Person if (i) in the opinion of legal counsel for
the Partnership, the transfer would result in the Partnership's being treated as
an association taxable as a corporation (other than a qualified REIT subsidiary
within the meaning of Section 856(i) of the Code), or (ii) such transfer is
effectuated through an "established securities market" or a "secondary market
(or the substantial equivalent thereof)" within the meaning of Section 7704 of
the Code.
(d) Section 9.02(a) shall not apply to the following transactions,
except that the General Partner may require that the transferor assume all costs
incurred by the Partnership in connection therewith:
(i) any Transfer by a Limited Partner pursuant to the exercise
of its Limited Partner Redemption Right under Section 8.05 hereof;
(ii) any Transfer by a Limited Partner that is a corporation
or other business entity to any of its Affiliates or subsidiaries or to
any successor in interest of such Limited Partner; or
(iii) any donative Transfer by an individual Limited Partner
to his immediate family members or any trust in which the individual or
his immediate family members own, collectively, 100% of the beneficial
interests. For purposes of this Section 9.02(c)(iii), the term
"immediate family member" shall be deemed to include only an individual
Limited Partner's spouse, children (including step-children and adopted
children) and grandchildren.
(e) Any Transfer in contravention of any of the provisions of this
Article IX shall be void and ineffectual and shall not be binding upon, or
recognized by, the Partnership.
9.03.00 ADMISSION OF SUBSTITUTE LIMITED PARTNER.
(a) Subject to the other provisions of this Article IX, an assignee of
the Limited Partnership Interest of a Limited Partner (which shall be understood
to include any purchaser, transferee, donee, or other recipient of any
disposition of such Limited Partnership Interest) shall be deemed admitted as a
Limited Partner of the Partnership only upon the satisfactory completion of the
following:
(i) The assignee shall have accepted and agreed to be bound by
the terms and provisions of this Agreement by executing a counterpart
or an amendment thereof, including a revised Exhibit A, and such other
documents or instruments as the General Partner may require in order to
effect the admission of such Person as a Limited Partner.
(ii) To the extent required, an amended Certificate evidencing
the admission of such Person as a Limited Partner shall have been
signed, acknowledged and filed for record in accordance with the Act.
-42-
47
(iii) The assignee shall have delivered a letter containing
the representation set forth in Section 9.01(a) hereof and the
agreement set forth in Section 9.01(b) hereof.
(iv) If the assignee is a corporation, partnership or trust,
the assignee shall have provided the General Partner with evidence
satisfactory to counsel for the Partnership of the assignee's authority
to become a Limited Partner under the terms and provisions of this
Agreement.
(v) The assignee shall have executed a power of attorney
containing the terms and provisions set forth in Section 8.02 hereof.
(vi) The assignee shall have paid all reasonable legal fees of
the Partnership and the General Partner and filing and publication
costs in connection with his substitution as a Limited Partner.
(vii) The assignee has obtained the prior written consent of
General Partner to its admission as a Substitute Limited Partner, which
consent may be given or denied in the exercise of General Partner's
sole and absolute discretion.
(viii) The assignee shall surrender to the General Partner any
certificate evidencing the Limited Partnership Interest properly
endorsed for transfer.
(b) For the purpose of allocating profits and losses and distributing
cash received by the Partnership, a Substitute Limited Partner shall be treated
as having become, and appearing in the records of the Partnership as, a Partner
upon the filing of the Certificate described in Section 9.03(a)(ii) hereof or,
if no such filing is required, the later of the date specified in the transfer
documents, or the date on which the General Partner has received all necessary
instruments of transfer and substitution.
(c) The General Partner shall cooperate with the Person seeking to
become a Substitute Limited Partner by preparing the documentation required by
this Section and making all official filings and publications. The Partnership
shall take all such action as promptly as practicable after the satisfaction of
the conditions in this Article IX to the admission of such Person as a Limited
Partner of the Partnership.
9.04.00 RIGHTS OF ASSIGNEES OF PARTNERSHIP INTERESTS.
(a) Subject to the provisions of Sections 9.01 and 9.02 hereof, except
as required by operation of law, the Partnership shall not be obligated for any
purposes whatsoever to recognize the assignment by any Limited Partner of his
Partnership Interest until the Partnership has received notice thereof.
(b) Any Person who is the assignee of all or any portion of a Limited
Partner's Limited Partnership Interest, but does not become a Substitute Limited
Partner and desires to make a further assignment of such Limited Partnership
Interest, shall be subject to all the provisions of
-43-
48
this Article IX to the same extent and in the same manner as any Limited Partner
desiring to make an assignment of his Limited Partnership Interest.
9.05.00 EFFECT OF BANKRUPTCY, DEATH, INCOMPETENCE OR TERMINATION OF A
LIMITED PARTNER. The occurrence of an Event of Bankruptcy as to a Limited
Partner, the death of a Limited Partner or a final adjudication that a Limited
Partner is incompetent (which term shall include, but not be limited to,
insanity) shall not cause the termination or dissolution of the Partnership, and
the business of the Partnership shall continue if an order for relief in a
bankruptcy proceeding is entered against a Limited Partner, the trustee or
receiver of his estate or, if he dies, his executor, administrator or trustee,
or, if he is finally adjudicated incompetent, his committee, guardian or
conservator, shall have the rights of such Limited Partner for the purpose of
settling or managing his estate property and such power as the bankrupt,
deceased or incompetent Limited Partner possessed to assign all or any part of
his Partnership Interest and to join with the assignee in satisfying conditions
precedent to the admission of the assignee as a Substitute Limited Partner.
9.06.00 JOINT OWNERSHIP OF INTERESTS. A Partnership Interest may be
acquired by two individuals as joint tenants with right of survivorship,
provided that such individuals either are married or are related and share the
same home as tenants in common. The written consent or vote of both owners of
any such jointly held Partnership Interest shall be required to constitute the
action of the owners of such Partnership Interest; provided, however, that the
written consent of only one joint owner will be required if the Partnership has
been provided with evidence satisfactory to the counsel for the Partnership that
the actions of a single joint owner can bind both owners under the applicable
laws of the state of residence of such joint owners. Upon the death of one owner
of a Partnership Interest held in a joint tenancy with a right of survivorship,
the Partnership Interest shall become owned solely by the survivor as a Limited
Partner and not as an assignee. The Partnership need not recognize the death of
one of the owners of a jointly-held Partnership Interest until it shall have
received notice of such death. Upon notice to the General Partner from either
owner, the General Partner shall cause the Partnership Interest to be divided
into two equal Partnership Interests, which shall thereafter be owned separately
by each of the former owners.
ARTICLE X
BOOKS AND RECORDS; ACCOUNTING; TAX MATTERS
10.01.00 BOOKS AND RECORDS. At all times during the continuance of the
Partnership, the Partners shall keep or cause to be kept at the Partnership's
specified office true and complete books of account in accordance with generally
accepted accounting principles, including: (a) a current list of the full name
and last known business address of each Partner, (b) a copy of the Certificate
of Limited Partnership and all certificates of amendment thereto, (c) copies of
the Partnership's federal, state and local income tax returns and reports, (d)
copies of the Agreement and any financial statements of the Partnership for the
three most recent years and (e) all documents and information required under the
Act. Any Partner or his duly authorized
-44-
49
representative, upon paying the costs of collection, duplication and mailing,
shall be entitled to inspect or copy such records during ordinary business
hours. The corporate Secretary of the General Partner shall serve as the
transfer agent for the certificates representing the Partnership Units.
10.02.00 CUSTODY OF PARTNERSHIP FUNDS; BANK ACCOUNTS.
(a) All funds of the Partnership not otherwise invested shall be
deposited in one or more accounts maintained in such banking or brokerage
institutions as the General Partner shall determine, and withdrawals shall be
made only on such signature or signatures as the General Partner may, from time
to time, determine.
(b) All deposits and other funds not needed in the operation of the
business of the Partnership may be invested by the General Partner in investment
grade instruments (or investment companies whose portfolio consists primarily
thereof), government obligations, certificates of deposit, bankers' acceptances
and municipal notes and bonds. The funds of the Partnership shall not be
commingled with the funds of any other Person except for such commingling as may
necessarily result from an investment in those investment companies permitted by
this Section 10.02(b).
10.03.00 FISCAL AND TAXABLE YEAR. The fiscal and taxable year of the
Partnership shall be the calendar year.
10.04.00 ANNUAL TAX INFORMATION AND REPORT. Within 75 days after the
end of each fiscal year of the Partnership, the General Partner shall furnish to
each person who was a Limited Partner at any time during such year the tax
information necessary to file such Limited Partner's individual tax returns as
shall be reasonably required by law.
10.05.00 TAX MATTERS PARTNER; TAX ELECTIONS; SPECIAL BASIS ADJUSTMENTS.
(a) The General Partner shall be the Tax Matters Partner of the
Partnership within the meaning of Section 6231(a)(7) of the Code. As Tax Matters
Partner, the General Partner shall have the right and obligation to take all
actions authorized and required, respectively, by the Code for the Tax Matters
Partner. The General Partner shall have the right to retain professional
assistance in respect of any audit of the Partnership by the Service and all
out-of-pocket expenses and fees incurred by the General Partner on behalf of the
Partnership as Tax Matters Partner shall constitute Partnership expenses. In the
event the General Partner receives notice of a final Partnership adjustment
under Section 6223(a)(2) of the Code, the General Partner shall either (i) file
a court petition for judicial review of such final adjustment within the period
provided under Section 6226(a) of the Code, a copy of which petition shall be
mailed to all Limited Partners on the date such petition is filed, or (ii) mail
a written notice to all Limited Partners, within such period, that describes the
General Partner's reasons for determining not to file such a petition.
(b) All elections required or permitted to be made by the Partnership
under the Code shall be made by the General Partner in its sole discretion.
-45-
50
(c) In the event of a transfer of all or any part of the Partnership
Interest of any Partner, the Partnership, at the option of the General Partner,
may elect pursuant to Section 754 of the Code to adjust the basis of the
Properties. Notwithstanding anything contained in Article V of this Agreement,
any adjustments made pursuant to Section 754 shall affect only the successor in
interest to the transferring Partner and in no event shall be taken into account
in establishing, maintaining or computing Capital Accounts for the other
Partners for any purpose under this Agreement. Each Partner will furnish the
Partnership with all information necessary to give effect to such election.
10.06.00 REPORTS TO LIMITED PARTNERS.
(a) The books of the Partnership shall be audited annually as of the
end of each fiscal year of the Partnership by accountants selected by the
General Partner, who shall be the same accountants responsible for the
examination of the General Partner's books. The General Partner shall determine
and prepare an annual balance sheet, a statement of partners' capital as of the
end of such year, as well as statements of cash flow and income, all in
accordance with generally accepted accounting principles and accompanied by an
independent auditor's report (collectively, the "Financial Statements"),
together with all supplementary schedules and information prepared by the
accountants related thereto. As a note to such Financial Statements, the General
Partner shall prepare a schedule of all loans to the Partnership. Such schedule
shall demonstrate that loans have been made, used, carried on the books of the
Partnership (and repaid, if applicable) in accordance with the provisions of
this Agreement. Within 90 days after the end of each fiscal year, the General
Partner shall transmit the Financial Statements to the Limited Partners. The
General Partner also shall prepare quarterly unreviewed Financial Statements and
shall transmit such statements to the Limited Partners within 45 days of the end
of each fiscal quarter of the Partnership.
(b) Any Partner shall further have the right to a private audit of the
books and records of the Partnership, provided such audit is made for
Partnership purposes, at the expense of the Partner desiring it and is made
during normal business hours.
ARTICLE XI
AMENDMENT OF AGREEMENT
The General Partner, without the consent of the Limited Partners, may
amend this Agreement in any respect; provided, however, that the following
amendments shall require the consent of Limited Partners (other than the General
Partner or any wholly-owned Subsidiary) holding more than 66 2/3% of the
Percentage Interests of the Limited Partners (other than the General Partner or
any wholly-owned Subsidiary):
(a) any amendment adversely affecting the operation of the Conversion
Factor or the Limited Partner Redemption Right;
-46-
51
(b) any amendment that would adversely affect the rights of the Limited
Partners to receive the distributions payable to them hereunder;
(c) any amendment that would materially affect the rights of the
Limited Partners to receive allocations of Profit and Loss; or
(d) any amendment that would impose on the Limited Partners any
obligation to make additional Capital Contributions to the Partnership.
The foregoing shall not limit the Partnership's or the General
Partner's rights to issue Additional Partnership Interests and New Securities
pursuant to Section 4.02. Notwithstanding the foregoing, the General Partner,
without the consent of the Limited Partners, may amend this agreement in any
respect in connection with a Transaction complying with the provisions of
Section 7.01(c) hereof.
ARTICLE XII
GENERAL PROVISIONS
12.01.00 NOTICES. All communications required or permitted under this
Agreement shall be in writing and shall be deemed to have been given when
delivered personally or upon deposit in the United States mail, registered,
postage prepaid return receipt requested, to the Partners at the addresses set
forth in Exhibit A; provided, however, that any Partner may specify a different
address by notifying the General Partner in writing of such different address.
Notices to the Partnership shall be delivered at or mailed to its specified
office.
12.02.00 SURVIVAL OF RIGHTS. Subject to the provisions hereof limiting
transfers, this Agreement shall be binding upon and inure to the benefit of the
Partners and the Partnership and their respective legal representatives,
successors, transferees and assigns.
12.03.00 ADDITIONAL DOCUMENTS. Each Partner agrees to perform all
further acts and execute, swear to, acknowledge and deliver all further
documents which may be reasonable, necessary, appropriate or desirable to carry
out the provisions of this Agreement or the Act.
12.04.00 SEVERABILITY. If any provision of this Agreement shall be
declared illegal, invalid, or unenforceable in any jurisdiction, then such
provision shall be deemed to be severable from this Agreement (to the extent
permitted by law) and in any event such illegality, invalidity or
unenforceability shall not affect the remainder hereof.
12.05.00 ENTIRE AGREEMENT. This Agreement and exhibits attached hereto
constitute the entire Agreement of the Partners and supersede all prior written
agreements and prior and contemporaneous oral agreements, understandings and
negotiations with respect to the subject matter hereof.
-47-
52
12.06.00 PRONOUNS AND PLURALS. When the context in which words are used
in the Agreement indicates that such is the intent, words in the singular number
shall include the plural and the masculine gender shall include the neuter or
female gender as the context may require.
12.07.00 HEADINGS. The Article headings or sections in this Agreement
are for convenience only and shall not be used in construing the scope of this
Agreement or any particular Article.
12.08.00 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original copy and all of
which together shall constitute one and the same instrument binding on all
parties hereto, notwithstanding that all parties shall not have signed the same
counterpart.
12.09.00 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Tennessee.
-48-
53
IN WITNESS WHEREOF, the parties hereto have hereunder affixed their
signatures to this Fifth Amended and Restated Agreement of Limited Partnership,
all as of the 2nd day of January, 2001.
GENERAL PARTNER:
RFS HOTEL INVESTORS, INC., a
Tennessee corporation
By:
---------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
CLASS A LIMITED PARTNERS:
*
--------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
*
--------------------------------------------
H. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
*
--------------------------------------------
RFS, INC., a Tennessee corporation
THE ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ TRUST
By: *
---------------------------------------
-49-
54
CLASS B LIMITED PARTNERS:
*
--------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
*
--------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Michel Family Partnership
By: *
---------------------------------------
DubFam, Inc.
By: *
---------------------------------------
▇▇▇▇▇▇▇ Family Partnership
By: *
---------------------------------------
*
--------------------------------------------
Grant Gund
*
--------------------------------------------
G. ▇▇▇▇▇▇▇ ▇▇▇▇
-50-
55
▇▇▇▇▇▇ ▇▇▇▇-▇▇▇▇▇ GUND TRUST:
By: *
---------------------------------------
▇▇▇▇▇▇ ▇▇▇▇, Trustee
▇▇▇▇▇▇ ▇▇▇▇-G. ▇▇▇▇▇▇▇ ▇▇▇▇ TRUST:
By: *
---------------------------------------
▇▇▇▇▇▇ ▇▇▇▇, Trustee
DIONIS TRUST:
By: *
---------------------------------------
▇▇▇▇▇▇ ▇▇▇▇, Trustee
1988 ▇▇▇▇▇ FAMILY TRUST
By: *
---------------------------------------
▇▇▇▇ ▇▇▇▇▇, Trustee
*
--------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇
By: RFS Hotel Investors, Inc., an attorney-
in-fact for the named Parties
By:
---------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
-51-
56
EXHIBIT A, dated as of November 30, 2000
============================================================================================
Amount or
Agreed Value of Preferred
Partner Capital Partnership Partnership Percentage
and Address Contributions Units Units Interest
--------------------------------------------------------------------------------------------
General Partner:
--------------------------------------------------------------------------------------------
RFS Hotel Investors, Inc.
c/o ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ $414,528,000 250,000 25,184,479 90.76768%
--------------------------------------------------------------------------------------------
Class A Limited Partners:
--------------------------------------------------------------------------------------------
H. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇
c/o ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ $ 349,741 -- 20,573 .07415%
--------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
c/o ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ $ 95,353 -- 5,609 .02022%
--------------------------------------------------------------------------------------------
The ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Trust
c/o ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ $ 120,462 -- 7,086 .02554%
--------------------------------------------------------------------------------------------
RFS, Inc.
c/o ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ $ 1,324,351 -- 77,903 .28077%
--------------------------------------------------------------------------------------------
A-1
57
--------------------------------------------------------------------------------------------
Class B Limited Partners:
--------------------------------------------------------------------------------------------
Dubfam Inc.
▇/▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ $ 24,429 -- 1,437 .00518%
--------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇/▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ $ 637,551 -- 29,503 .10633%
--------------------------------------------------------------------------------------------
The ▇▇▇▇▇▇▇ Family Partnership
▇/▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ $ 806,089 -- 47,417 .17090%
--------------------------------------------------------------------------------------------
The Michel Family Partnership
▇/▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ $ 1,534,998 -- 90,294 .32543%
--------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇/▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ $ 626,501 -- 36,853 .13282%
--------------------------------------------------------------------------------------------
Dionis Trust
c/o ▇▇▇▇▇▇ ▇▇▇▇, Trustee
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ $ 18,099,203 -- 1,064,659 3.83715%
--------------------------------------------------------------------------------------------
Grant Gund
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ $ 5,114,960 -- 300,880 1.08440%
--------------------------------------------------------------------------------------------
G. ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ $ 5,114,960 -- 300,880 1.08440%
--------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇-▇▇▇▇▇ Gund Trust
c/o Llura Gund, Trustee
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ $ 2,548,980 -- 149,940 .54040%
--------------------------------------------------------------------------------------------
A-2
58
--------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇-G. ▇▇▇▇▇▇▇ ▇▇▇▇
Trust
c/o Llura Gund, Trustee
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ $ 2,548,980 -- 149,940 .54040%
--------------------------------------------------------------------------------------------
1988 ▇▇▇▇▇ Family Trust, c/o
▇▇▇▇ ▇. ▇▇▇▇▇, Trustee
#▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ $ 3,422,032 -- 201,296 .72549%
--------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ $ 1,314,763 -- 77,339 .27874%
--------------------------------------------------------------------------------------------
Total $458,211,353 250,000 27,746,088 100%
============================================================================================
A-3
59
EXHIBIT B
NOTICE OF EXERCISE OF REDEMPTION RIGHT
The undersigned hereby irrevocably (i) presents for redemption ______
units of limited partnership interest ("Units") in RFS Partnership, L.P. (the
"Partnership") in accordance with the terms of the Agreement of Limited
Partnership ("Agreement") of the Partnership and the "Limited Partner Redemption
Right" defined therein, (ii) surrenders such Units and all right, title and
interest therein, (iii) surrenders herewith any certificate or other writing
evidencing the Units (and requests that any Units so evidenced that are not
redeemed be evidenced by the issuance of a new certificate or writing) and (iv)
directs that the "Cash Amount" or "REIT Shares Amount" (as determined by the
General Partner), as defined in the Agreement, deliverable upon exercise of the
Limited Partner Redemption Rights be delivered to the address specified below,
and if REIT Shares are to be delivered, such REIT Shares be registered or placed
in the name(s) and at the address(es) specified below.
Dated:________________
Name of Limited Partner:
------------------------------
(Signature of Limited Partner)
------------------------------
(Street Address)
------------------------------
(City) (State) (Zip Code)
Signature Guaranteed by:
------------------------------
If REIT Shares are to be issued, issue to:
----------------------------
----------------------------
----------------------------
Please provide social security or identifying number:
---------------
B-1
60
ACCEPTANCE OF GENERAL PARTNER:
RFS Hotel Investors, Inc., as General Partner of the Partnership,
hereby accepts the Units described above for redemption in accordance with the
Agreement, and by its execution hereof evidences conclusively that the Limited
Partner has satisfied all of the requirements under the Agreement for exercise
of the Limited Partner Redemption Right, or that some or all of such
requirements have been waived, such waiver being in the sole discretion of the
General Partner.
RFS Hotel Investors, Inc.
By:
------------------------------
Name:
Its:
Dated:
----------------------------