EXHIBIT 10.15
AMENDED AND RESTATED JOINT VENTURE AGREEMENT
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This Amended and Restated Joint Venture Agreement ("Agree ment") is made
and entered into as of the 25th day of June, 1996 by and between R. ▇▇▇▇▇▇
▇▇▇▇▇ ("▇▇▇▇▇"), ▇▇▇▇▇▇ ▇. ▇▇▇▇ ("▇▇▇▇"), ▇▇▇▇▇-▇▇▇▇ CORPORATION ("N-K") and V
CH OAKS, LTD. ("VCH" or "Managing Partner").
R E C I T A L S
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A. Pursuant to Joint Venture Agreement made and entered into as of April
12, 1990 (the "Joint Venture Agreement"), NOBLE, ▇▇▇▇ and FKD KISSIMMEE
PARTNERS, a Florida general partnership ("FKD"), formed Caribbean Isle Joint
Venture Phase II (the "Partnership").
B. As of June 10, 1996, FKD has withdrawn from the Partnership and has
released and relinquished any and all of its right, title and interest in and to
the Partnership and any and all assets and properties of the Partnership,
thereby leaving NOBLE and ▇▇▇▇ as the sole remaining general partners of the
Partnership.
C. Pursuant to Agreement for Contribution of Partnership Interest of even
date herewith, NOBLE and ▇▇▇▇ have contributed, transferred and conveyed to VCH
and VCH has received from NOBLE and ▇▇▇▇, an aggregate ninety-nine percent (99%)
interest in the Partnership and has been admitted as a general partner.
D. Contemporaneously with the execution of this Amendment, NOBLE and ▇▇▇▇
are, with the consent of VCH, conveying their remaining, collective one percent
(1%) interest in the Partnership to their Affiliate, N-K and thereupon will
cease to individually own an interest in the Partnership.
E. The parties desire to continue the existence of the Partnership, amend
and restate the Joint Venture Agreement in its entirety and formally admit VCH
and N-K as Partners in the Partnership (the "Partners").
F. The Partnership continues to hold good, marketable and insurable title
to the Property (hereinafter defined) upon which it has developed and operated
an apartment complex (the "Complex") and which includes the Adjacent Land
(hereinafter defined) which was acquired, immediately preceding the execution
and delivery of this Agreement.
G. The parties desire to continue the Partnership for the purpose of
owning, operating, mortgaging, developing, managing, using and investing in the
Property and converting the Complex to a vacation timeshare resort (the
"Project") in accordance with the terms of this Agreement.
NOW, THEREFORE, in consideration of the Recitals and other good and
valuable consideration, the receipt and sufficiency for which is hereby
acknowledged, the parties agree as follows:
ARTICLE I
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CONTINUATION OF PARTNERSHIP
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SECTION 1.1 Continuation of Existence. NOBLE and ▇▇▇▇ hereby consent to
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the admission of VCH and N-K as partners in the Partnership. The Partners hereby
agree to continue the Partnership, referred to in this Agreement as the
"Partnership," pursuant to the Partnership Law. The Partners shall execute and
cause to be filed, recorded and/or published all documents necessary to carry
out the intent and purposes of this Agreement. The Partners, thereafter, shall
execute such documents and take such action as may be necessary to maintain the
Partnership's status as a general partnership under the Partnership Law and as a
partnership under the Code and to carry out the business purposes of the
Partnership as set forth in Article II hereof. The Partners shall, at the
request of the Managing Partner, promptly execute such documents and furnish
such information as may be necessary to enable the Managing Partner to perform,
on behalf of the Partnership, those acts contemplated under this Section 1.1.
SECTION 1.2 Name and Principal Place of Business. From and after the date
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hereof, the name of the Partnership shall be "Oak Plantation Joint Venture," or
such other name as the Managing Partner may from time to time designate upon ten
(10) days prior written notice to the Partners. The principal place of business
for the Partnership shall be ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇, or such other place as the Managing Partner may from time to time
designate upon ten (10) days prior written notice to the Partners.
SECTION 1.3 Term. The term of this Partnership continue until December
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31, 2046, unless sooner terminated in accordance with the provisions of this
Agreement (Article XIII) or as otherwise provided by the Partnership Law.
SECTION 1.4 Costs of Formation. The Partnership shall bear all actual and
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direct costs and expenditures incident to the preparation of this Agreement and
to the issuance of Partnership interests in the Partnership, and shall reimburse
the Managing Partner and N-K for all expenses actually paid or incurred by the
Managing Partner in connection therewith, including any legal expenses actually
paid or incurred by or on behalf of the Managing
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Partner and N-K in connection with the preparation of this Agreement.
SECTION 1.5 Registered Office and Agent in Florida. The address of the
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Partnership's registered office in the State of Florida is ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇. The registered agent at that address is
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇. The Managing Partner may, from time to time, on behalf of the
Partnership, change the registered office and/or the registered agent of the
Partnership.
SECTION 1.6 Definitions. Capitalized words and phrases used in the
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Agreement and which are not otherwise defined herein shall have the following
meanings:
A. "Accounts Receivable" means accounts receivable arising from the
sale of the Units (or interests therein) or other property of the Partnership.
B. "Adjacent Land" means the property described on Lot 2 of Oak
Plantation according to the plat thereof as recorded in Plat Book 6, Pages 208
and 209 of the public records of Osceola County, Florida.
C. "Affiliate" means the following: a party ("first party") will be
deemed to be an Affiliate of another party ("second party") if the first party
directly or indirectly owns or controls the second party, or if the first party
is, directly or indirectly, owned by or under common control with the second
party. For purposes of the preceding sentence, "control" shall mean ownership
(direct or indirect) of a majority of the voting interests in such entity or in
the managing general partner of such entity.
D. "Agreement" or "Partnership Agreement" means this Amended and
Restated Joint Venture Agreement of Oak Plantation Joint Venture, as amended
from time to time.
E. "Assign" or "Assignment" means any sale, assignment, option, gift,
pledge, hypothecation or other voluntary or involuntary encumbrance or transfer
of an interest in the Partnership (or, if applicable, of an interest in any
Partner, Affiliate of a Partner or other Person).
F. "Adjusted Capital Account Deficit" means, with respect to any
Partner, the deficit balance, if any, in such Partner's Capital Account as of
the end of the relevant Partnership taxable year, after giving effect to the
following adjustments:
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1. Debit to such Capital Account the items described in Reg. (S)1.704
-1(b)(2)(ii)(d)(4), (5) and (6); and
2. After making the foregoing debits, credit to such Capital Account
any amounts which such Partner is obligated to restore (pursuant to this
Agreement or otherwise) or any amounts which such Partner is deemed
obligated to restore pursuant to Reg. (S)1.704-2(g)and (i).
The foregoing definition of Adjusted Capital Account Deficit is
intended to comply with the provisions of Reg. (S)1.704-1(b)(2)(ii)(d) and shall
be interpreted consistently therewith.
G. "Available Cash" means all cash on hand other than cash which is (i)
restricted from distribution to Partners under the terms of any agreement to
which the Partnership is a party, or (ii) added to or retained in Partnership
reserves for all Partnership expenses, debt payments, capital improvements,
capital investments and reinvestments, replacements, contingencies, working
capital and other cash requirements, all as determined by the Managing Partner
in the reasonable exercise of its discretion.
H. "Bankruptcy" or "Bankrupt" with respect to a Partner or
Person shall mean:
1. Such Partner or Person has made an assignment for the benefit of
his creditors;
2. Such Partner or Person has filed a voluntary petition in
Bankruptcy;
3. Such Partner or Person has been adjudged a Bankrupt or insolvent
or has entered against him an order for any relief in any bankruptcy or
insolvency proceeding;
4. Such Partner or Person has filed a petition or answer seeking for
such Partner or Person any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any statute,
law or regulation;
5. Such Partner or Person has filed an answer or other pleading
admitting or failing to contest the material allegations of a petition
against such Partner or Person in any proceeding of this nature;
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6. Such Partner or Person seeks, consents to or acquiesces in the
appointment of a trustee, receiver or liquidator of such Partner or Person
or of all or any substantial part of such Partner's or Person's property;
or
7. One Hundred Twenty (120) days after the commencement of any
proceeding against such Partner or Person seeking reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any statute, law or regulation, the proceeding has not been
dismissed; or if within ninety (90) days after the appointment, without
such Partner's or Person's consent or acquiescence, of a trustee, receiver
or liquidator of such Partner or Person or of any substantial part of such
Partner's or Person's property, the appointment has not been vacated or
stayed; or if stayed, ninety (90) days following the expiration of any such
stay if the appointment has not been vacated.
I. "Capital Account" means, with respect to each Partner an individual
capital account which shall be determined and maintained for such Partner in
accordance with the rules of Reg. (S)1.704-1(b)(2)(iv). Except as otherwise
provided in such Regulations, each Partner's capital account shall be: (i)
credited with (a) such Partner's cash contributions to the capital of the
Partnership, (b) the fair market value of property contributed to the
Partnership by such Partner (as of the date of contribution and net of liability
secured by such contributed property that the Partnership is considered to have
assumed or to have taken subject to pursuant to Code (S)752), and (c) such
Partner's allocable share of the Partnership's Profits (or items of income or
gain comprising the Profits and Losses of the Partnership); and (ii) debited for
(a) all distributions made by the Partnership to such Partner, and (b) such
Partner's allocable share of the Partnership's Losses (or items of expense or
deduction comprising the Profits or Losses of the Partnership). In the event
that Partnership property is subject to Code (S)704(c) or is revalued in
accordance with Reg. (S)1.704-1(b)(2)(iv)(f), the Partners' capital accounts
shall be adjusted in accordance with Reg. (S)1.704-1(b)(2)(iv)(g) for
allocations to them of depreciation, amortization and gain or loss, as computed
for book purposes (and not tax purposes), with respect to such property.
J. "Code" means the United States Internal Revenue Code of 1986, as
amended.
K. "GAAP" means generally accepted accounting principles, consistently
applied.
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L. "Liquidation of the Partnership" means the earlier of (i) the date
upon which the Partnership is terminated under Code (S)708(b)(1), or (ii) the
date upon which the Partnership ceases to be a going concern (even though it may
continue in existence for the purpose of winding up its affairs, paying its
debts and distributing any remaining balance to its Partners).
M. "Managing Partner" means any Person who (i) is referred to as such in
the first paragraph of this Agreement or who later becomes a Managing Partner
pursuant to the terms of this Agreement, and (ii) has not ceased to be a
Managing Partner pursuant to the terms of this Agreement.
N. "Non-Qualified Person' means a Person (i) who, directly or indirectly,
owns an interest in, or is otherwise engaged in (whether as a principal,
consultant, agent, employee, officer, director or otherwise) a timeshare or
interval ownership business (including timeshare development, timeshare
marketing, timeshare resort management or the operation or sale for timeshare
purposes of any kind of interest, including, without limitation, "timeshare
licenses," "timeshare estates" or "vacation clubs," as such terms are defined in
Chapter 721 of the Florida Statutes) other than through ownership of an interest
in the Partnership or through ownership of an interest in an Affiliate of VCH
Oaks, Inc., a Florida corporation, its successors or assigns (all of the
foregoing activities being hereinafter referred to as "Timeshare Activities"),
(ii) which is an Affiliate of any Person described in clause (i) above, or (iii)
whose character or reputation would, in the reasonable opinion of the Partner,
jeopardize the authority of the Partnership to conduct any aspect of the
business of the Partnership in any state in which its business is conducted, or
would otherwise adversely affect the goodwill or business reputation of the
Partnership.
O. "Partner" means any Person (i) whose name is set forth on the
signature page of this Agreement as a Partner or who has been admitted as an
additional or substitute Partner pursuant to the terms of this Agreement, and
(ii) who is the owner of an interest in the Partnership as a Partner. The term
"Partner" shall also be deemed to include the holder of a converted Partner
interest (whether as an assignee or as a substitute Partner) received pursuant
to Section 12.8 below.
P. "Partnership Law" means (S)(S)620.81001 through 620.91, Florida
Statutes (the Revised Uniform Partnership Act, as adopted in the State of
Florida), as amended from time to time.
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Q. "Percentage Interests" of the Partners shall be as follows:
Partner Percentage Interest
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VCH 99 %
N-K 1 %
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Total: 100.0 %
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R. "Person" means an individual, partnership, limited liability company,
limited liability partnership, corporation, trust and any other association or
legal entity.
S. "Profits" and "Losses" of the Partnership for each taxable year of the
Partnership means an amount equal to the Partnership's taxable income or loss
for such taxable year, as determined for federal income tax purposes in
accordance with the accounting method followed by the Partnership and in
accordance with Code (S)703 (for this purpose, all items of income, gain, loss
or deduction required to be separately stated pursuant to Code (S)703(a)(1)
shall be included in taxable income or loss), subject to the following
modifications:
1. Any income of the Partnership that is exempt from federal income
tax and not otherwise taken into account in computing Profits and Losses
shall be added to such taxable income or loss;
2. Any expenditures of the Partnership described in Code
(S)705(a)(2)(B) or treated as Code (S)705(a)(2)(B) expenditures pursuant to
Reg. (S)1.704-1(b)(2)(iv)(i), and not otherwise taken into account, shall
be subtracted from such taxable income or loss; and
3. With respect to Partnership property, if any, which has a book
value greater than or less than its adjusted income tax basis, "Profits"
and "Losses" of the Partnership shall be determined by reference to the
depreciation and amortization deductions, if any, allowable with respect to
such property as computed for book purposes (and not tax purposes), as
determined pursuant to Reg. (S)1.704-1(b)(2)(iv)(g), and by the gain or
loss attributable to such property as computed for book purposes (and not
for tax purposes).
T. "Project" means the conversion of the existing apartment complex on
the Property to a vacation timeshare resort.
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U. "Property" means the land, buildings, improvements and associated
property interests described as ▇▇▇ ▇ ▇▇▇ ▇▇▇ ▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ according to
the plat thereof as recorded in Plat Book 6, Pages 208 and 209 of the public
records of Osceola County, Florida.
V. "Regulations" or "Reg." means regulations adopted by the Treasury
Department and the Internal Revenue Service pursuant to the Code.
W. "Regulatory Allocations" means the Regulations promulgated under Code
(S)704(b).
X. "Tax Distribution" for any fiscal year of the Partnership means an
amount computed as follows:
1. Determine the highest effective marginal income tax rate (based
upon applicable federal, state and city income taxes levied on such income,
but taking into account any deductions or credits available in computing
any such income tax for either or both of the other income taxes levied on
such income) applicable to any Partner who was a Partner for all or any
portion of such fiscal year. For this purpose, if any such Partner is a
"pass-through entity" (i.e., an S corporation, a partnership, a limited
liability company, a limited liability partnership or a trust), the
"highest effective marginal income tax rate" deemed to be applicable to
such Partner hereunder shall be the highest such effective marginal income
tax rate (determined as above) applicable to any shareholder, partner,
member or beneficiary (whichever is applicable) of such Partner and, if
applicable, such rate shall also reflect any federal, state or city income
taxes imposed at the entity level on such pass-through entity).
2. Determine the amount of net taxable income or net taxable loss (as
the case may be) of the Partnership for federal income tax purposes for
such fiscal year.
3. If the Partnership has a net taxable loss for the fiscal year, the
"Tax Distribution" for such fiscal year shall be zero and the amount of
such net taxable loss shall be carried forward to future fiscal years of
the Partnership to be applied in such years in the manner described in
subpart 4 below.
4. If the Partnership has net taxable income for such fiscal year,
and if the Partnership has any net taxable losses from any prior fiscal
years that have not been previously
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applied to reduce net taxable income of the Partnership for any prior
fiscal year (the "Net Carryover Losses"), the net taxable income for such
fiscal year shall be reduced (but not below zero) by the Net Carryover
Losses. The net taxable income of the Partnership for such fiscal year,
reduced by the Net Carryover Losses (if any), shall be deemed to be the
"Tax Base" for such fiscal year for purposes of computing the Tax
Distribution for such fiscal year.
5. The aggregate amount of the Tax Distribution for such fiscal year
shall be computed by multiplying the Tax Base for such fiscal year by the
rate computed under subpart 1 above for such fiscal year.
Y. "Transaction Documents" means that certain Agreement for Contribution
of Partnership Interest dated as of the date hereof, between NOBLE, ▇▇▇▇ and VCH
and all other documents, agreements and instruments executed contemporaneously
therewith or in connection with the acquisition of VCH's partnership interest in
the Partnership, including, without limitation, consulting agreements,
management agreements, administrative services agreements, declarations,
easements, covenants, license agreements, and sales and marketing agreements.
Z. "Units" means the condominium and/or vacation ownership units
including ancillary facilities and amenities, to be developed by the Partnership
on the Property.
ARTICLE II
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BUSINESS OF THE PARTNERSHIP
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SECTION 2.1 Business and Purpose. The purpose of the Partnership is to
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engage in all facets of the business of resort development at the Property and
related leisure and travel businesses, including the acquisition, development,
marketing, sale and operation of a timeshare or interval ownership resort on the
Property, including, but not limited to, the following:
A. Own and/or acquire the Complex and the Adjacent Land;
B. Develop the Property as a vacation, timeshare resort, including the
construction and/or renovation of the Units and ancillary facilities
and amenities;
C. Market, sell and/or rent (transient or otherwise) the Units or any
interest therein, and in connection
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therewith, engage in other activities incident to the development,
marketing, rental and/or sale of the Units or any interest therein,
including, but not limited to such financing transactions as are usual
and customary with respect to the development, marketing, renting
and/or sale of the Units or any interest therein or of any Accounts
Receivable;
D. Provide or obtain hospitality management services with respect to any
transient, timeshare or interval ownership development, condominium or
resort hotel located within the Property, and management services to
or in connection with condominium associations, all of which may
include management and operation of restaurants, general stores and
other related amenities which are ancillary to management services for
a resort facility;
E. Collect and service all Accounts Receivable;
F. Engage in cash management transactions as contemplated in Section 4.5
below; and/or
G. At such time as the Managing Partner deems appropriate (but subject to
the limitations set forth in Sections 7.1 and 7.3 below), sell, in
whole or in part, the Property or any interest therein and other
assets of the Partnership.
SECTION 2.2 Other Business. The Partnership shall not be authorized to
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engage in any business activities not described in Section 2.1 above.
ARTICLE III
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NAMES AND ADDRESSES OF PARTNERS
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SECTION 3.1 Managing Partner. The name and business address of the
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Managing Partner is:
VCH Oaks, Ltd.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
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SECTION 3.2 Partners. The names and business addresses of the Partners
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are:
VCH Oaks, Ltd.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇-▇▇▇▇ Corporation
c/o ▇▇▇▇▇-▇▇▇▇ Development
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
SECTION 3.3 Admittance of Additional Partners. Except as otherwise
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provided in Subsection 5.2.B. and elsewhere in this Agreement, Persons not
otherwise described in Section 3.2 above may be admitted as additional partners
only upon the consent of the Managing Partner.
ARTICLE IV
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PARTNERSHIP ACCOUNTING/REPORTS/INVESTMENTS
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SECTION 4.1 Method of Accounting. The Managing Partner shall maintain
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full and accurate books of the Partnership at the Partnership's principal place
of business specified in Section 1.2 above, showing all receipts, expenditures,
assets, liabilities, Profits and Losses of the Partnership and all other records
necessary for proper recordation of the Partnership's business and affairs. The
books of the Partnership, for tax and financial reporting purposes, shall be
kept on the method of accounting selected by the Managing Partner, unless the
Partnership is required to adopt a different method of accounting. The fiscal
year of the Partnership shall be the calendar year unless a different fiscal
year is required by the Code.
SECTION 4.2 Inspection of Books and Records. Any Partner may at any time
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during regular business hours inspect and copy (at such Partner's personal
expense) any of the Partnership records described in Section 620.106(1), Florida
Statutes. In addition, a Partner shall be entitled to obtain from the Managing
Partner copies of the Partnership's federal income tax returns promptly after
the same become available.
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SECTION 4.3 Reports.
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A. No later than ten (10) days prior to the due date of the Partnership's
federal income tax return (as determined with regard to available extensions),
the Managing Partner shall send to each person who was a Partner at any time
during the fiscal year to which such return relates such tax information as
shall be necessary for the preparation by such person of such person's federal,
state and local income tax returns.
B. Within one hundred twenty (120) days after the end of each fiscal
year, the Managing Partner shall send to each Partner audited financial
statements of the Partnership, consisting of a balance sheet, statement of
income, statement of Partner's equity (based on relative capital account
balances), and statement of changes in cash flows for such fiscal year, all of
which shall be prepared in accordance with GAAP and certified by such national
or regional independent certified public accountants as shall be selected in the
sole discretion of the Managing Partner.
SECTION 4.4 Income Tax Elections. The Managing Partner may make, but
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shall not be required to make, any applicable election under the Code.
SECTION 4.5 Bank Accounts; Temporary Investments of Partnership Funds.
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Managing Partner shall open, and will thereafter maintain, one or more bank
accounts in the name and for the sole benefit of the Partnership (except to the
extent required in any loan document, receivable sale agreements or other
contractual commitments of the Partnership) in which there shall be deposited
all of the capital of the Partnership, all gross receipts of the Partnership,
and the proceeds of loans, if any, that the Managing Partner may obtain for
and/or in the name of the Partnership. The funds in the Partnership's bank
account or accounts shall be used solely for the business of the Partnership.
Withdrawals shall be made only in the regular course of the Partnership's
business on such signature or signatures as the Managing Partner may determine.
In the sole discretion of the Managing Partner, reserved cash, cash held pending
the expenditure of funds for the business of the Partnership and cash held
pending a distribution to the Partners may be held, placed or otherwise invested
in such liquid or illiquid investments as the Managing Partner may determine
from time to time, including, but not limited to, United States Government
and/or municipal securities and commercial paper (and repurchase agreements
secured by the foregoing), mutual funds, money market funds, bonds, banker's
acceptances, receivables (whether or not secured by an interest in real
property), interest-bearing bank accounts, certificates of
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deposit, or liquid asset funds of brokerage houses, provided that any such
investments are reasonable, would not be classified as "speculative," and, in
the case of securities, would qualify as "investment grade securities."
ARTICLE V
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CAPITAL CONTRIBUTIONS
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SECTION 5.1 Capital of the Partnership.
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A. The Partners have heretofore made capital contributions as are
reflected in the Partnership's financial statements and in the Partner's capital
accounts.
B. No Partner shall be entitled to withdraw any portion of such Partner's
capital contribution or such Partner's Capital Account in money or property
prior to dissolution or Liquidation of the Partnership and then only in
accordance with the provisions of Partnership Law and this Agreement. No Partner
shall be personally liable for any portion of any other Partner's capital
contribution. No interest will be paid on account of any capital contribution or
in the credit balance in any Partner's Capital Account, and no Partner shall
have the right to receive or demand property other than cash in return for such
Partner's capital contribution. Except as otherwise provided in this Agreement,
no Partner shall have priority over any other Partner either as to the return of
such Partner's capital contribution or as to distributions.
SECTION 5.2 Additional Contributions. In addition to the capital
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contributions referred to in Section 5.1 above, if the Managing Partner
determines in the reasonable exercise of its discretion that additional capital
is necessary or desirable for the business of the Partnership, it may request
all the Partners to contribute such additional capital by written notice sent to
all such Partners. All such additional capital contributions shall be
contributed by the Partners based upon their relative Percentage Interests.
Such additional capital contributions shall be payable to the Partnership in
full within forty-five (45) days after each Partner receives written notice of
said capital call.
A. If a Partner fails to make its additional capital contribution within
forty-five (45) days after receipt of the written notice of the capital call
from the Managing Partner, the Managing Partner shall diligently pursue a
financing (the "Institutional Loan") from a reputable financial institution and
exhaust all sources that the Partners or their Affiliates have
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relationships with or have borrowed money from and any other source that the
Managing Partner may deem appropriate. If the Partnership is able to consummate
the Institutional Loan within ninety (90) days after the date of the capital
call, the Partnership shall return all additional capital contributions tendered
by Partners pursuant to the capital call made by the Managing Partner pursuant
to this Section 5.2 within ten (10) days after the date of closing of the
Institutional Loan.
B. If a Partner fails to make its additional capital contribution within
forty-five (45) days after receipt of the written notice of the capital call
from the Managing Partner, and the Partnership is unable to close upon an
Institutional Loan within ninety (90) days after the date of the capital call,
all contributions made by any or all of the other Partners (the "Lending
Partners") with respect to such capital call shall be deemed to be loans to the
Partnership (the "Contribution Loans"). Such Contribution Loans, together with
all interest due thereon, shall be repaid in full to the Lending Partners (pro
rata based upon the relative amounts of the Contribution Loans made by the
Lending Partners) within ten (10) days after demand is made provided that the
Lending Partners may not make a demand prior to the expiration of one hundred
eighty (180) days after the date such Contribution Loans were deemed to have
been made.
The Contribution Loans shall bear interest at the lower of: (i) the Base
Rate announced publicly by Citibank, N.A., New York, New York (or another
comparable national banking institution selected by the Managing Partner) to its
most preferred customers determined as of the date such Contribution Loan was
made, plus five percent (5%) per annum; or (ii) the highest rate permitted by
applicable law. Said Contribution Loans, together with all interest accrued
thereon, may be repaid at any time by the Partnership (but all repayments shall
be made to all the Lending Partners pro rata based upon the relative amounts of
the Contribution Loans made by the Lending Partners), but said Contribution
Loans shall in any event be repaid in full, together with all interest accrued
thereon, upon termination of the Partnership.
At the request of any Lending Partner, the Partnership shall execute and
deliver to any requesting Lending Partner a promissory note evidencing the
related Contribution Loan, which promissory note shall be in form and substance
reasonably acceptable to the Managing Partner.
No distributions (other than Tax Distributions) shall be made to any of the
Partners during any period that any Contribution Loan
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(including all accrued interest and other charges related thereto, if any)
remains unpaid and outstanding, in whole or in part, without the express written
consent of all Lending Partners whose Contribution Loans (including all accrued
interest and other charges related thereto, if any) remain unpaid and
outstanding as of the date such distribution is to be made.
C. In the event that all of the Partners have not made their additional
capital contributions within forty-five (45) days after receipt of the written
notice of the capital call from the Managing Partner, and the Partnership is
unable to consummate the Institutional Loan within ninety (90) days after the
date of the capital call, then notwithstanding any other provision in this
Agreement to the contrary, the Managing Partner may, in its sole discretion
without the consent of any other Partner, thereafter offer and sell interests in
the Partnership to any other Person which is not an Affiliate of any Partner and
not a Non-Qualified Person (the "Third Party Contributor") for a price, payable
in immediately available funds to the Partnership, equal to the aggregate amount
of the contributions requested in the capital call. All other terms of the sale
of such Partnership interest, including without limitation, the size of the
Percentage Interest to be acquired by the Third Party Contributor, shall be
determined by the Managing Partner in its sole and absolute discretion. In such
event, the Percentage Interests of all then existing Partners shall be diluted
by the issuance of the new interest in the Partnership to the Third Party
Contributor, pro rata in accordance with the relative Percentage Interests of
all of the Partners immediately prior to the admission of the Third Party
Contributor. If a Third Party Contributor acquires an interest in the
Partnership hereunder, the Managing Partner is authorized to admit such Third
Party Contributor as an additional Partner of the Partnership provided that such
Third Party Contributor executes a joinder agreement in such form as may be
acceptable to the Managing Partner and its counsel evidencing the agreement of
the Third Party Contributor to be bound by all the terms and conditions of this
Agreement, as amended through the date of the contribution.
ARTICLE VI
----------
CAPITAL ACCOUNTS
----------------
SECTION 6.1 Capital Accounts. An individual Capital Account has been
----------------
determined and shall be maintained for each Partner as provided herein.
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SECTION 6.2 Capital Account of Assignee Partners; Code (S)708(b)
----------------------------------------------------
Termination. Upon the transfer of all or part of an interest in the
-----------
Partnership, the Capital Account of the transferor Partner that is attributable
to the transferred interest has been and shall be carried over to the
transferee. If the transfer of an interest in the Partnership causes a
termination of the Partnership under Code (S)708(b)(1)(B), the capital account
that carries over to the transferee will be adjusted in accordance with Reg.
(S)1.704-1(b)(2)(iv)(e), and the constructive reformation of the Partnership,
will, for purposes of Section 6.1 above, be treated as the formation of a new
Partnership and the Capital Account of the transferee and of the remaining
Partners will be determined and maintained accordingly.
SECTION 6.3 Adjustment to Capital Accounts/Revaluation of Partnership
--------------------------------------------- -----------
Property. If (1) a new or existing Partner contributes money or other property
--------
(other than a de minimis amount) to the Partnership as consideration for the
----------
receipt of an interest in the Partnership greater than the Partnership interest
owned prior to such contribution, or (2) there is a distribution of money or
other property (other than a de minimis amount) by the Partnership to a retiring
-- -------
or continuing Partner as consideration for the relinquishment of some or all of
such Partner's interest in the Partnership, or (3) upon the Liquidation of the
Partnership at the election of the Managing Partner, the values of the
Partnership's properties on its books ("book values") shall be adjusted to
reflect their fair market value [taking into consideration Code (S)7701(g)] as
of the date of the distribution, contribution or Liquidation of the Partnership,
as the case may be; and, in such event, the Capital Accounts of the Partners
shall be adjusted to reflect the manner in which the unrealized income, gain,
loss or deduction inherent in the Partnership's property (to the extent not
reflected in the Partners' Capital Accounts) would be allocated among all the
Partners under the terms of this Agreement, assuming that there was a fully
taxable disposition of such property immediately preceding such contribution of
money or other property to the Partnership, or immediately preceding the
distribution of money or other property by the Partnership, or upon the date of
the Liquidation of the Partnership, as the case may be, for such properties'
fair market values as of such time. For purposes hereof, the fair market value
of any Partnership property shall be determined by unanimous agreement of the
Partners whose Capital Accounts are to be affected.
SECTION 6.4 Distributions of Property In-Kind. To the extent that the
---------------------------------
unrealized income, gain, loss and deduction inherent in property distributed (or
deemed distributed) in kind (whether or not distributed in liquidation) has not
previously been reflected
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in the Partners' Capital Accounts, the Capital Accounts of the Partners shall be
adjusted to reflect the manner in which the unrealized income, gain, loss and
deduction inherent in such property (that has not been reflected previously in
the Capital Accounts) would have been allocated among the Partners under this
Agreement if there were a taxable disposition of such property for its fair
market value on the date of its actual (or deemed) distribution [taking into
account Code (S)7701(g)]. For purposes hereof, the fair market value of any
Partnership property shall be determined by the Managing Partner.
ARTICLE VII
-----------
RIGHTS, POWERS AND DUTIES OF THE PARTNERS
-----------------------------------------
SECTION 7.1 Management of the Partnership Business. The Managing Partner
--------------------------------------
shall have the sole and exclusive right to manage the business of the
Partnership. The Managing Partner shall not be required to manage the
Partnership as its sole and exclusive function and may have other business
interests or engage in activities other than those relating to the Partnership.
The Partnership shall file and maintain with the Department of State and in the
office for recording transfers of real property in each county in which the
Partnership owns real property, a Statement of Partnership Authority pursuant to
the Partnership Law, stating that the Managing Partner has the sole and
exclusive authority to bind the Partnership and that no other Partner may bind
or act on behalf of the Partnership in any respect.
SECTION 7.2 Powers of the Managing Partner. The Managing Partner shall
------------------------------
have and enjoy all of the rights and powers of a general partner in a
Partnership. Without limiting the foregoing, to the extent consistent with the
authorized business of the Partnership as described in Section 2.1 above, but
subject to Sections 7.3 and 7.4 below and any agreement to which the Partnership
is a party, in addition to other matters (including other matters with respect
to which the Managing Partner is granted authority or control under this
Agreement and such other powers as are now or hereafter granted to a general
partner of a limited partnership under applicable law, including, without
limitation, the Partnership Law), the Managing Partner shall have the full power
on behalf of the Partnership, and at the sole expense of the Partnership, to:
A. Sell, transfer, assign, convey, manage, dedicate, declare or otherwise
dispose of or deal with all or any part of the Partnership's business,
property or assets, whether
-17-
or not in the ordinary course of business, on such terms as the
Managing Partner may negotiate at arms length; provided, however that
upon consummation of any such sale, transfer or assignment of all or
any material part of the assets of the Partnership, if the Managing
Partner or its Affiliates receives Residual Income (as defined in
Section 12.10.B.), the other Partners shall, in addition to their
Percentage Interests of any Available Cash resulting from the sale of
the assets by the Partnership, be entitled to receive their Percentage
Interests of such Residual Income received by the Managing Partner or
its Affiliates as related solely to the assets of this Partnership;
B. Acquire interests in personal property, directly or indi rectly,
whether by purchase or lease, in connection with the business of the
Partnership;
C. Borrow money from banks, financial institutions or any other person,
arrange financing or refinancing or arrange modifications of existing
debts, including indebtedness described in the Transaction Documents,
issue notes or other evidences of indebtedness of the Partnership and
secure the same by mortgage, deed of trust, pledge or other lien, in
furtherance of the Partnership's purposes and business in a reasonably
prudent manner;
D. Negotiate (or cause the Partnership's employees or agents to
negotiate) and execute, deliver and enforce, and if applicable, file
or record (directly or indirectly through a designated
representative), on behalf of the Partnership, such documents,
agreements and instruments, including, but not limited to, any and all
documents, agreements and instruments customarily employed or entered
into in the timeshare business or any phase thereof as the Managing
Partner may deem necessary or desirable for the Partnership's
business, and/or the proper management of Partnership affairs,
including the execution, filing or recording of any and all deeds,
contracts and other instruments relating to the timeshare business
(including financing transactions with respect thereto);
E. Perform, or cause to be performed, all of the Partnership's
obligations under any agreement to which the Partnership or any
nominee of the Partnership is a party, except in the event that the
Managing Partner
-18-
determines, in good faith, that such performance is not in the best
interests of the Partnership or its Partners;
F. Bring, defend, settle or compromise, or cause the Partnership's
employees or agents to do so, all actions at law or in equity, or
before any governmental entity involving the Partnership, its business
or its assets or properties, and to satisfy any judgment, decree,
decision or settlement in connection therewith, without limitation;
G. Employ and/or contract for, on such terms and conditions as the
Managing Partner shall determine in its sole discretion, sales,
maintenance, managerial, administrative or secretarial personnel
(which such persons may include the Managing Partner or Affiliates
thereof) and such other persons, including attorneys, accountants,
architects, consultants, brokers necessary or appropriate to assist
the Managing Partner, or otherwise necessary or appropriate for the
operation (and/or sale) of the business of the Partnership, and/or the
maintenance, management and/or sale of any Partnership property, and
to grant such person or persons such authority as may be necessary or
desirable;
H. Subject to the limitations of Section 4.5 above, open, maintain,
operate, control and close bank accounts in the name of the
Partnership, deposit Partnership funds into such account(s), invest
Partnership funds on behalf of the Partnership, authorize employees,
agents or representatives of the Partnership to sign checks and drafts
on such accounts, and to make such investments on behalf of the
Partnership, as the Managing Partner shall determine in its sole
discretion;
I. Determine the timing and amount of distributions by the Partnership to
the Partners, subject to the terms of this Agreement and any other
agreement to which the Partnership is a party or is otherwise bound;
J. Cause the Partnership to be duly registered and licensed as a
timeshare developer in each jurisdiction in which such registration
and/or licensure is required, and/or otherwise to be duly registered
and licensed so that the Partnership may lawfully carry on any of its
authorized business activities, and otherwise to obtain, on behalf of
the Partnership, all necessary approvals from all governmental and
quasi-governmental authorities in
-19-
connection with the operation of the Partnership's timeshare business
activities;
K. Purchase such policy or policies of liability, casualty, title and
other insurance (including, but not limited to, directors and officers
liability insurance or its equivalent) which are necessary, advisable,
appropriate or convenient for the protection of any Partnership
property or business, or for any purpose convenient or beneficial to
the Partnership, as determined in the sole discretion of the Managing
Partner;
L. Arrange for the preparation and timely filing (subject to available
extensions) of all federal, state or local income tax returns required
to be filed by or on behalf of the Partnership, and in connection
therewith, to make such elections under the tax laws as may be
available to the Partnership with respect to the treatment of any item
of Partnership income, gain, loss, deduction and credit;
M. Arrange for the preparation of annual financial statements for the
Partnership from such national or regional accounting firm as the
Managing Partner shall determine in its sole discretion;
N. Expend the capital, revenues, income and other cash of the Partnership
in furtherance of the Partnership's business in such amounts, at such
times and for such purposes as the Managing Partner shall determine in
its sole discretion, such authority including (i) the right to pay or
arrange for the payment of all taxes imposed on the Partnership or on
the Partnership's assets or properties when due (provided that the
Managing Partner shall have the authority to take all actions provided
by law to contest the imposition or amount of any such taxes), (ii)
the right to pay or cause to be paid all expenses of the Partnership
in the ordinary course of business, and (iii) the right to pay or
cause to be paid all charges, fees or compensation to any person or
firm for property (tangible or intangible) furnished or services
rendered to or on behalf of the Partnership;
O. Establish such reserves for working capital, insurance premiums, debt
repayments, improvements, repairs, replacements, renewals and such
other items required to be paid in connection with the business of the
Partnership, and/or to otherwise provide for such contingencies as the
Managing Partner may determine in
-20-
its sole discretion as may be deemed necessary for the proper conduct
of the Partnership;
P. Take such actions as the Managing Partner deems necessary or advisable
in order to comply with the laws of the United States and all other
jurisdictions to which the Partnership or its business or assets are
subject;
Q. Exercise, on behalf of the Partnership, any and all rights, options
and elections, if any, granted the Partnership pursuant to the terms
of this Agreement or any other agreement or arrangement to which the
Partnership is a party;
R. Solicit and accept additional contributions, and admit Persons who
make such contributions as additional limited partners (if not already
admitted as such) in accordance with Section 5.2 above.
▇. ▇▇▇▇▇ or acquire easements, rights of way or similar rights for the
benefit of the Property and the Partnership and lease or acquire land
adjacent to the Property for ancillary uses by the Partnership.
T. Perform such other normal and routine business functions, and
otherwise operate and manage the day-to-day affairs of the
Partnership, in furtherance of the business of the Partnership, as the
Managing Partner shall determine; and
U. Do any act that is necessary and incidental to carrying out the
foregoing or to perform any of the duties or exercise any discretion
assigned or delegated to it under this Agreement.
Any person dealing with the Partnership or its property shall be
entitled to rely fully upon any deed, mortgage, ▇▇▇▇ of sale, contract, lease,
sublease, note or other written instrument signed by the Managing Partner or its
duly authorized representa tives in the name of and/or on behalf of the
Partnership.
SECTION 7.3 Limitations Upon Authority of Managing Partner.
----------------------------------------------
Notwithstanding anything in Section 7.2 above to the contrary, the Managing
Partner shall not take any of the following actions (or enter into a contract on
behalf of the Partnership requiring the Partnership to take any of such actions
unless such contract is made subject to the provisions hereof) without obtaining
the consent of all of the Partners:
-21-
A. Cause the Partnership to file a voluntary petition in Bankruptcy, or
make a voluntary assignment of the Partnership's assets for the
benefit of its creditors, or otherwise take any voluntary action which
will directly result in an adjudication of Bankruptcy of the
Partnership;
B. Loan funds of the Partnership to any Person other than purchase money
----------
debt derived from the sale of Partnership properties, including the
Units or any interest therein, loans to condominium associations
relating to the Units, and temporary advances made in the ordinary
course of conduct of the Partnership's business.
C. Acquire any real property or interests therein, directly or
indirectly, whether by purchase or lease (other than in the ordinary
course of business or as expressly authorized in Section 7.2(S)),
develop or cause to be developed any such property, or enter into
joint ventures, general partnerships, or limited partnerships in
connection therewith.
D. Guarantee the indebtedness of, or loan funds to, any Affiliate of the
Managing Partner.
SECTION 7.4 Partners. No Partner (other than the Managing Partner) shall
--------
participate in or have any control over the management of the Partnership's
business (including the sale or mortgaging of any Partnership asset), nor
transact any business or enter into any contract for the Partnership. No
Partner (other than the Managing Partner) shall have the power to sign for or
bind the Partnership. N-K Corp., NOBLE and ▇▇▇▇ hereby pledge and grant to VCH
Oaks, Inc., the General Partner of VCH, a security interest in and to their
partnership interests in the Partnership and VCH, as collateral security for the
due observance of the provisions of Section 7.1 and this Section 7.4 and agree
to jointly and severally indemnify, defend and hold harmless, VCH Oaks, Inc.,
VCH and their respective partners, officers, directors and shareholders, from
and against any and all damages, liabilities, claims, judgments, losses, cost
and expenses of every nature, suffered or incurred as a direct or indirect
result of any action taken by N-K Corp., NOBLE or ▇▇▇▇ in violation of this
Agreement which binds or obligates the Partnership in any way. N-K, NOBLE and
▇▇▇▇ each hereby irrevocably make, constitute and appoint VCH as their
respective attorney-in-fact to execute, in its name and on behalf of VCH, one or
more UCC-1 financing statements or such other documents as may be necessary to
perfect the security interest granted hereby.
-22-
SECTION 7.5 Transactions with Affiliates. The Managing Partner may, on
----------------------------
behalf of the Partnership or otherwise, employ a Partner or a Person related to
or Affiliated with a Partner to render or perform a service, may contract to buy
or lease property from a Partner or such Affiliated Person, may enter into a
general partnership, limited partnership, joint venture, or other association,
and may otherwise deal with such Partner or such Affiliated Person. If the
Managing Partner, on behalf of the Partnership, employs, leases or buys property
from a Partner or Persons, firms, or corporations Affiliated with the Managing
Partner or any Partner, or if the Partnership sells any property to any such
Person, then (i) the compensation paid for services rendered and/or payments
made for materials or property leased or sold by such Partner, Persons, firms,
or corporations, or the price and terms of any such sale by the Partnership to
such Person, as the case may be, must be on arms length terms and conditions and
must not be more materially favorable than those which would be charged or
imposed on those not so related, and (ii) any such transactions shall be
reported to the Partners at least annually (at the time of providing the
Partners with copies of the Partnership's annual financial statements).
Notwithstanding the foregoing, the Managing Partner may execute and deliver on
behalf of the Partnership, all of the Transaction Documents, with Affiliates of
the Partners, without any further act or consent of the Partners.
SECTION 7.6 Liability of Managing Partner; Indemnification. The Managing
----------------------------------------------
Partner shall not be liable to the Partners because any taxing authorities
disallow or adjust any deductions or credits in the Partnership income tax
returns nor shall the Managing Partner have any personal liability for the
repayment of capital contributions of the Partners except as otherwise provided
in this Agreement. In addition, the doing of any act or the omission to do any
act by the Managing Partner, the effect of which may cause or result in loss or
damage to the Partnership, if done in good faith and in accordance with the
terms of this Agreement, shall not subject the Managing Partner or its
successors and assigns to any liability. The Partnership, in addition to the
indemnification provided for in Section 14.5 below, will indemnify and hold
harmless the Managing Partner and its successors and assigns and its (or their)
partners, shareholders, directors, officers, employees and agents from any
claim, loss, expense, liability, action or damage resulting from any such act or
omission, including, without limitation, reasonable costs and expenses of
litigation and appeal (including reasonable fees and expenses of attorneys
engaged by the Managing Partner or such parties in defense of such act or
omission). However, the Managing Partner and such parties shall not be entitled
to be indemnified or held
-23-
harmless from any claim, loss, expense, liability, action or damage due to, or
arising from, its (or their) fraud, gross negligence or its (or their) willful
failure to comply with any representation, warranty, covenant, condition or
other agreement of the Managing Partner herein contained.
ARTICLE VIII
------------
REIMBURSEMENT OF EXPENSES
-------------------------
SECTION 8.1 Reimbursement of Partner's Expenses. The Partnership shall
-----------------------------------
reimburse each Partner (or its Affiliates) for all reasonable costs and expenses
paid or incurred by it (or its Affiliates) in connection with the acquisition of
any property or assets to be acquired by the Partnership, the refinancing of the
Partnership's debt, and the preparation of this Agreement, and shall reimburse
the Managing Partner for all reasonable costs and expenses paid or incurred by
it (or its Affiliates) in connection with the ownership, operation, development,
marketing and sale of the assets and business of the Partnership, the financing
of the Partnership's business transactions, and/or the administration of the
affairs of the Partnership.
SECTION 8.2 Payment. Any reimbursement required by Section 8.1 shall be
-------
paid from the first Available Cash of the Partnership (as determined in the sole
discretion of the Managing Partner, but subject to the terms of any agreement to
which the Partnership is a party), without interest, if paid within thirty (30)
days of written demand therefor from the Partner to the Partnership, or if not
so paid, with interest at the rate specified in Section 5.2 above, from the date
any such expense or capital expenditure was paid by the Partner (or its
affiliates).
ARTICLE IX
----------
ALLOCATIONS
-----------
SECTION 9.1 Profits and Losses. Except as otherwise provided in Section
------------------
9.2 below, the Profits and Losses of the Partnership for each taxable year shall
be allocated among the Partners as follows:
A. Profits shall be allocated as follows:
1. First, to each Partner until each Partner has been allocated an
aggregate amount of Profits pursuant to this Section 9.1.A since the
inception of the Partnership equal to
-24-
the aggregate Losses allocated to each such Partner since the inception of
the Partnership pursuant to Section 9.1.B.3 below;
2. Then, to each Partner until each Partner has been allocated an
aggregate amount of Profits pursuant to this Section 9.1.A.2 since the
inception of the Partnership equal to the aggregate Losses allocated to
each such Partner since the inception of the Partnership pursuant to
Section 9.1.B.2 below; and
3. The balance, if any, shall be allocated among the Partners in
proportion to their relative Percentage Interests.
B. Losses shall be allocated as follows:
1. First, to each Partner, until each Partner has been allocated an
aggregate amount of Losses pursuant to this Section 9.1.B.1. since the
inception of the Partnership equal to the aggregate Profits allocated to
each such Partner since the inception of the Partnership pursuant to
Section 9.1.A.3 above;
2. Then, an amount of Losses equal to the aggregate positive balance
in the capital accounts of the Partners having a positive capital account
balance, to each such Partner having a positive capital account balance (as
determined at the end of the Partnership taxable year to which the Losses
to be allocated relate, after giving effect to the allocation of Losses for
such taxable year pursuant to Section 9.1.B.1. above), in proportion to
such positive capital account balances so as to reduce each such positive
capital account balance to zero; and
3. The balance, if any, shall be allocated among the Partners in
proportion to their relative Percentage Interests.
C. For all purposes of this Agreement, except as otherwise required by
Code (S)706(d) including the determination of the allocable share of the Profits
and Losses (or items thereof) of a Partner who acquires or disposes of its
interest in the Partnership during any Partnership taxable year, Profits or
Losses (or items thereof) of the Partnership for any taxable year shall be
allocated to the periods of such taxable year on such method or methods as
permitted by Code (S)706 as determined by the Managing Partner in its sole
discretion.
-25-
For purposes of computing the amount of Profits or Losses to allocate to a
Partner under Subsection 9.1.A. and/or 9.1.B. above, to the extent such
determination relates back to the inception of the Partnership, such
determination shall be based upon the assumptions and provisions set forth in
Section 15.11 below (relating to allocations made to a predecessor-in-interest).
SECTION 9.2 Special Allocations. Notwithstanding the provisions of
-------------------
Section 9.1 hereof to the contrary, the following special rules shall apply:
A. No allocation shall be made to any Partner to the extent that any such
allocation would create or enlarge an Adjusted Capital Account Deficit in any
such Partner's capital account, as determined as of the end of any taxable year
of the Partnership. Any items which would be allocated to a Partner but for the
preceding sentence shall be allocated to the Managing Partner.
B. If any Partner unexpectedly receives any adjustments, allocations or
distributions described in Reg. (S)1.704-1(b)(2)(ii)(d)(4), (5) or (6), then
items of Partnership income and gain (comprising the Profits or Losses of the
Partnership) shall be specially allocated to each such Partner in an amount
sufficient to eliminate, to the extent required by the Regulations, such
Partner's Adjusted Capital Account Deficit, if any, as quickly as possible;
provided, that the allocations to be made pursuant to this Subsection 9.2.B
shall be made only if and to the extent that any such Partner, unexpectedly
receiving any such adjustment, allocation or distribution, would have an
Adjusted Capital Account Deficit after all other allocations provided for in
this Agreement have been tentatively made, as if this Subsection 9.2.B were not
in the Agreement.
C. 1. Except as provided in Subsection 9.2.C.2 below, notwithstanding
any other provision contained herein to the contrary, if in any Partnership
taxable year, beginning on or after the effective date of this Agreement, there
is a net decrease in the Partnership "minimum gain" [as such term is defined in
Reg. (S)1.704-2(d)], prior to allocating Profits or Losses (or items thereof)
for such taxable year and, if necessary, for subsequent years, under any other
provision of this Agreement, each Partner shall be allocated items of income and
gain (comprising the Partnership's Profits or Losses) for such taxable year and,
if necessary, for subsequent taxable years in proportion to and to the extent of
each Partner's share of the net decrease in the Partnership's minimum gain
during such Partnership taxable year. The items of income and gain to be so
allocated shall be determined in accordance with Reg. (S)1.704-2(f). This
Subsection 9.2.C.1 is
-26-
intended to comply with the minimum gain chargeback requirements of Reg.
(S)1.704-2(f), and shall be interpreted in a manner consistent therewith.
2. Notwithstanding Subsection 9.2.C.1 above, the provisions of
Subsection 9.2.C.1 above shall not apply to a Partner or Partners otherwise
subject thereto if:
(i) such Partner's share of the net decrease in Partnership
minimum gain is caused by a guaranty, refinancing or other change in the debt
instrument causing it to become partially or wholly recourse debt or partner
nonrecourse debt, and such Partner bears the economic risk of loss (within the
meaning of Reg. (S)1.752-2) for the newly guaranteed, refinanced or otherwise
changed liability;
(ii) such Partner contributes capital to the Partnership that
is used to repay the nonrecourse liability (in whole or in part), and the
Partner's share of the net decrease in Partnership minimum gain results from
such repayment;
(iii) compliance with Subsection 9.2.C.1 above (after
consideration and tentative application of Subsection 9.2.D below) causes (or is
reasonably expected to cause) there to be a distortion in the economic
arrangement among the Partners, considering the Partners, previous contributions
to the Partnership and any Partner's contribution obligations pursuant to
Section 13.3 below, the Profits (or items of income or gain) previously
allocated to the Partners under this Agreement and, in light of the distribution
provisions of Section 13.2 below, the availability and sufficiency of additional
Partnership Profits to offset the distortion which may otherwise be created by
such minimum gain chargebacks; or
(iv) The application thereof otherwise arises from a situation
or circumstance exempted from the application thereof pursuant to any revenue
ruling, regulation, amendment or otherwise.
The determination of whether and to what extent the allocations otherwise
required to be made pursuant to Subsection 9.2.C.1 should be made, based upon
the criteria set forth above, shall be made in the reasonable discretion of the
Managing Partner after consultation with the Partnership's tax advisers.
For purposes of determining whether compliance with the minimum gain
chargeback rules set forth in Subsection 9.2.C.1 above would distort the
economic arrangement of the Partners, the
-27-
Partners acknowledge and agree that the economic arrangement of the Partners is
manifested in Section 10.1 below. Section 10.1 hereof describes the economic
arrangement among the Partners, both as to the priority of distributions to be
made by the Partnership to each of the Partners and the amounts and/or relative
amounts to be distributed to each of the Partners at the separate priority
levels.
3. Rules similar to those set forth in Subsection 9.3.C.2 above
shall apply with respect to determining whether and to what extent
allocations otherwise required to be made to any Partner under applicable
regulations with respect to any net decrease in a "partner nonrecourse
debt" (as such term is defined for purposes of Reg. (S)1.704-2) should be
made.
D. 1. "Partner nonrecourse deductions" [within the meaning of Reg.
(S)1.704-2(i)] shall be allocated as prescribed in Reg. (S)1.704-2(i).
2. Subject to Subsection 9.2.C.2. above, if in any Partnership
taxable year there is a net decrease in "partner nonrecourse debt minimum gain"
(as such term is defined in Reg. (S)1.704.2), prior to allocating Profits or
Losses (or items thereof) of the Partnership for such taxable year (and, if
necessary, for subsequent taxable years), other than the allocations made
pursuant to Subsection 9.2.C.1. above, each Partner with a share of the partner
nonrecourse debt minimum gain (as determined under Reg. (S)1.704-2(i)(5) as the
beginning of such taxable year) shall be allocated items of income and gain
(comprising the Profits or Losses for such taxable year and, if necessary, for
subsequent taxable years) in proportion to, and to the extent of, such Partner's
share of the net decrease in such partner nonrecourse minimum gain. The items
of income and gain to be allocated shall be determined in accordance with Reg.
(S)1.704-2. This Subsection 9.2.D.2. is intended to comply with the partner
minimum gain chargeback requirements of Reg. (S)1.704-2(i)(4), and shall be
interpreted consistently therewith.
3. Rules similar to those set forth in Subsection 9.2.C.2. above
shall apply with respect to determining whether and to what extent allocations
otherwise required to be made to any Partner under applicable Treasury
Regulations with respect to any net decrease in "partner nonrecourse debt
minimum gain" (as such term is defined for purposes of Reg. (S)1.704-2) shall be
made.
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E. All "nonrecourse deductions" (as defined in Reg. (S)1.704-2(c)) shall
be allocated among the Partners in accordance with their relative Percentage
Interests.
SECTION 9.3 Allocations of Certain Tax Items.
--------------------------------
A. If property which is contributed to the Partnership is subject to the
provisions of Code (S)704(c), the Partners' distributive shares of income, gain,
loss and deductions, as computed for tax purposes, with respect to such property
(and, to the extent permitted by the Regulations, with respect to other
Partnership property) shall be determined in accordance with Code (S)704(c) by
utilizing such reasonable methods selected by the Managing Partner as shall be
consistent with Code (S)704(c) and the Regulations promulgated thereunder,
taking into account the Partners' distributive shares of the corresponding book
items with respect to such property, as determined under this Article IX, Code
(S)704(b) and Reg. (S)1.704-1(b)(1)(vi).
B. If Code (S)704(c) is not applicable, depreciation, amortization and
gain or loss, as computed for tax purposes, with respect to Partnership property
which is revalued on the books of the Partnership in accordance with Reg.
(S)1.704-1(b)(2)(iv)(f) and which has a book value greater or lesser than its
adjusted tax basis (and, to the extent permitted by the Regulations, with
respect to other Partnership property) shall be allocated among the Partners in
a manner that takes into account the variations between the adjusted income tax
basis and the book value of such property in the accordance with Code (S)704(c)
principles, utilizing such reasonable method as determined by the Managing
Partner, and shall be consistent with Code (S)704(c) and the Regulations.
SECTION 9.4 Apportionment of Allocations. In every Partnership taxable
----------------------------
year in which the Percentage Interest of any one Partner varies, whether due to
entry into the Partnership after the first day of the Partnership's taxable year
or otherwise, Profits or Losses (or items thereof) which are to be allocated to
the Partners in proportion to their Percentage Interests shall be apportioned
among the Partners in accordance with each Partner's varying Percentage Interest
in the manner required by Code (S)706(d) (even if Code (S)706(d) is not
otherwise applicable).
In the event there are insufficient Profits or Losses to fully satisfy all
allocations required to be made to all Partners at any priority level set forth
in Sections 9.1 or 9.2 above, the available Profits and Losses (or items
thereof) to be allocated at such priority level shall be allocated among all
Partners entitled to allocations at such priority level based on the relative
amounts
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of Profits or Losses (or items thereof) to be allocated to each of the Partners
at such priority level (which, for this purpose, shall be determined by assuming
that there were sufficient Profits or Losses, or items thereof, to fully satisfy
the allocations at such priority level).
ARTICLE X
---------
DISTRIBUTIONS
-------------
SECTION 10.1 Distributions of Available Cash. Except as otherwise
-------------------------------
provided in this Article X, Available Cash for each fiscal year of the
Partnership, if any, shall be distributed as follows:
A. First, all Available Cash up to, but not exceeding, an amount equal to
the Tax Distribution for such taxable year shall be apportioned among, and
distributed to, the Partners in the same proportions as the aggregate net
taxable income of the Partnership for such fiscal year was allocated to the
Partners pursuant to Article IX above. Distributions of Available Cash at this
priority level shall be made either during the applicable fiscal year or at any
time thereafter, but the Managing Partner shall endeavor to make such
distributions to the Partners in sufficient time to allow the Partners to pay
their federal, state and city income taxes on their allocable share of the
Partnership's net taxable income for such fiscal year. Notwithstanding the
foregoing, the Partnership shall not make Tax Distributions to N-K (or its
successors or permitted assigns) to cover any tax liability of N-K or its
shareholders due to the inherent gain existing as of the date hereof resulting
from the debt on the Property exceeding N-K's or Noble's or ▇▇▇▇'▇ basis
therein, resulting in a negative capital account.
B. Next, to the repayment of any Contribution Loans in accordance with
Section 5.2.
C. Then, any remaining Available Cash shall be distributed among the
Partners in such a manner as to bring the positive (i.e., credit) balances in
the Partners' Capital Accounts into the same proportions as the Percentage
Interests (determined as of the last day of such fiscal year and after all
allocations of Profits and Losses under Article IX for such fiscal year have
been properly reflected in the Partners' Capital Accounts and after adjustments
have been made to such Capital Accounts for any distributions made under
Subsection 10.1.A. above).
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D. Thereafter, the balance (if any) of Available Cash shall be
distributed to the Partners in accordance with their relative Percentage
Interests.
SECTION 10.2 Liquidation Distributions. Following the earlier of the
-------------------------
dissolution of the Partnership, as provided in Section 13.1 below, or the
Liquidation of the Partnership, distributions shall be made in the manner set
forth in Section 13.2 below.
SECTION 10.3 Return of Capital Contributions/Limitations
-------------------------------------------
on Distribution/Liability for Repayment. Notwithstanding anything herein to
---------------------------------------
the contrary, no Partner shall receive a return of such Partner's capital
contributions or receive any other distribution from the Partnership (other than
Tax Distributions) until all liabilities of the Partnership, (including
liabilities to the Partners for loans made to the Partnership, but excluding
liabilities to the Partners on account of their capital contributions), have
been paid or there remains sufficient property (based on the fair market value
of remaining assets) of the Partnership to pay them. If a Partner (including
former Partners) or an assignee of a Partner receives the return of any part of
such Partner's capital contributions or any other distribution in violation of
this Agreement or Partnership Law, such Partner shall be liable to the
Partnership for a period of six (6) years following such wrongful distribution
for the amount of such wrongful distribution. If a Partner (including former
Partners) receives the return in whole or in part of such Partner's capital
contribution in a distribution not violating the terms of this Agreement or
Partnership Law, such Partner shall be liable to the Partnership for a sum equal
to such returned contribution for a period of one (1) year following such
return, but only to the extent necessary to discharge the Partnership's
liabilities to creditors who extended credit to the Partnership during the
period the contribution was held by the Partnership. Any Partner so liable
shall repay such amount within thirty (30) days after the Managing Partner shall
have delivered to such Partner a written notice regarding such repayment.
Failure of any Partner or former Partner (or assignee) to make repayment
required under this Section 10.3 shall subject such defaulting person to payment
of interest at the highest legal rate on the amount due from such person from
the date of the delivery of notice requiring such repayment until (but not
including) the date of such repayment, plus all costs and expenses of
collection, including reasonable attorneys' fees.
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ARTICLE XI
----------
INVESTMENT; PARTNER REPRESENTATIONS;
------------------------------------
UNREGISTERED SECURITIES
-----------------------
THE PARTNERSHIP INTERESTS HAVE NOT BEEN REGISTERED, QUALIFIED, APPROVED OR
DISAPPROVED UNDER ANY FEDERAL OR STATE SECURITIES LAW, INCLUDING THE SECURITIES
ACT OF 1933 AND THE FLORIDA SECURITIES AND INVESTOR PROTECTION ACT, AND HAVE
BEEN SOLD IN RELIANCE ON EXEMPTIONS FROM REGISTRATION AFFORDED BY APPLICABLE
FEDERAL AND STATE SECURITIES LAWS, INCLUDING, BUT NOT LIMITED TO, THE SECURITIES
ACT OF 1933 AND THE FLORIDA SECURITIES AND INVESTOR PROTECTION ACT.
SUBJECT TO THE OTHER LIMITATIONS CONTAINED IN THIS AGREEMENT, THE
PARTNERSHIP INTERESTS MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
FOR THE OFFER AND SALE OF SUCH SECURITIES UNDER THE SECURITIES ACT OF 1933, THE
FLORIDA SECURITIES AND INVESTOR PROTECTION ACT, AND/OR THE APPLICABLE SECURITIES
ACT(S) OF ANY OTHER STATE, UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE
UNDER ALL APPLICABLE FEDERAL AND STATE SECURITIES LAWS, AND (UNLESS WAIVED BY
THE MANAGING PARTNER), THE TRANSFERRING PARTNER FIRST PROVIDES THE MANAGING
PARTNER WITH AN OPINION OF COUNSEL, SATISFACTORY TO THE MANAGING PARTNER, TO
SUCH EFFECT.
Each Partner hereby represents and warrants to the Partnership and to the
Managing Partner that such Partner has acquired such Partner's partnership
interests for investment purposes only. In addition to any other condition
imposed by this Agreement, each Partner acknowledges and understands the above
legends and agrees to accept and abide by the above referenced restriction(s) on
the transferability of such Partner's partnership interests.
ARTICLE XII
-----------
CHANGES IN PARTNER
------------------
TRANSFERABILITY OF PARTNERSHIP INTERESTS
----------------------------------------
SECTION 12.1 Restrictions on Managing Partner/Permitted Transfers to
-------------------------------------------------------
Affiliates. Except in connection with an Assignment of its interest to the
----------
extent permitted in this Article XII, or in connection with a transfer under
Section 5.2, the Managing Partner shall not, without the prior written consent
of all Partners, retire or withdraw from the Partnership, or Assign all or any
part of its interest in the Partnership.
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SECTION 12.2 Restrictions on Partners. Except as otherwise provided in
------------------------
Section 12.1 above and Section 12.4 below, no Partner shall have the right to
withdraw from the Partnership prior to the dissolution and winding up of the
Partnership, and, in the event of a dissolution, only in accordance with
Sections 13.2 and 13.3 below. Except as expressly provided in Sections 5.2, 12.1
and 12.4, a Partner may not Assign all or any portion of such Partner's interest
in the Partnership. If a Partner is a corporation, trust, or other entity and is
dissolved or terminated, the powers of such dissolved Partner may be exercised
by its legal representative or its successor. Any Assignment of the voting
interests of a Partner that is an entity (i.e., is not an individual) shall be
treated as an Assignment of the interest in the Partnership owned by such entity
if, as a result thereof, the Persons who hold a majority of the voting interests
in such entity as of the date of this Agreement (or if such entity was admitted
as a Partner after the inception of the Partnership, as of the date such entity
was admitted as a Partner in the Partnership) own less than a majority of the
voting interests in such entity after such Assignment. Any Assignment of a
partner interest other than in accordance with the provisions of this Section
12.2 (and to the extent applicable, Article XI and Sections 5.2, 12.1 and 12.4)
shall be null and void ab initio. In the event that there shall be a permitted
---------
sale of a partner interest to any person in accordance with all of the terms of
Section 12.4 but in connection therewith the transferee does not have the
automatic right to be admitted as an additional Partner, or if in connection
with any Assignment of an interest as a partner in the Partnership permitted
under this Article XII, the transferring Partner and/or the transferee do not
execute all such instruments as the Managing Partner may reasonably deem
necessary or desirable, or the transferee does not agree to assume the
obligations of the transferring Partner to the Partnership, then the transferee
in any such transaction shall be treated as an assignee under the Partnership
Law and shall not be admitted as an additional partner unless consented to by
the Managing Partner, which consent may be withheld in the sole discretion of
the Managing Partner.
SECTION 12.3 Liability for Transfer Expenses. All costs and expenses
-------------------------------
incurred by the Partnership in connection with any disposition of a Partnership
interest pursuant to this Article XII (including any disposition caused by the
Bankruptcy of a Partner) in or in connection with another person becoming an
assignee or admitted as an additional partner in the Partnership, including any
filing, recording, and publishing costs and the reasonable fees and
disbursements of counsel, shall be paid by and be the sole responsibility of the
Partner disposing of such interest (or by the
-33-
trustee, receiver or other successor-in-interest in the case of a dissolved or
bankrupt Partner).
SECTION 12.4 Optional Purchases of Units. Except as otherwise provided in
---------------------------
Section 5.2, in Section 12.1 and in Section 12.10, in the event that any Partner
receives a "bona fide written offer from a qualified purchaser" to purchase all,
but not less than all, of such Partner's interest in the Partnership, and such
Partner desires to sell all, but not less than all, of such Partner's interest
in the Partnership pursuant thereto, such Partner (the "Selling Partner") may
sell all of its interest in the Partnership and without the consent of the
Managing Partner, subject, however, to the limitations of Section 12.2 and
Article XI above, but only in accordance with the provisions of this Section
12.4. Any such offer to purchase voting interests in a Partner which is a
corporation, partnership or other form of legal entity shall, to the extent any
such sale would constitute an "Assignment" under Section 12.2 above, be treated
as an offer to purchase the interest in the Partnership owned by such entity for
purposes of this Section 12.4. For purposes hereof, a "bona fide offer from a
qualified purchaser" means a written and binding offer from a Person, other than
a Non-Qualified Person, who has the financial ability to consummate the purchase
described in such offer, and which offer sets forth a description of the
Partnership interest subject thereto, the name and principal business address of
the Person who is the proposed purchaser (and, if such purchaser is purchasing
as a nominee for another Person, the name and address of such other Person), and
the price and all of the terms and conditions of the proposed purchase.
The Selling Partner shall give written notice (the "Offer") to the Managing
Partner and to each of the other Partners (collectively, the "Remaining
Partners") that such Selling Partner desires to sell all of its interest as a
Partner in the Partnership (the "Offered Interest"), for the price and pursuant
to the terms of the bona fide offer from the qualified purchaser, a full
description of which shall be attached to the Offer.
The Managing Partner shall have the first option to purchase all, but not
less than all, of the Offered Interest, at the price and upon the terms
contained in the Offer for a period of twenty (20) days from the receipt of the
offer, such option to be exercised by delivery of written notice to the Selling
Partner within such twenty (20) day period.
If, as of the expiration of the twenty (20) day period described above, the
Managing Partner does not exercise its option to purchase all of the Offered
Interest, then each of the Remaining
-34-
Partners shall have the option to purchase each such Remaining Partner's
proportionate share (as hereinafter defined), or other mutually agreed portion,
of all, but not less than all, of the Offered Interest, at the price and upon
the terms contained in the Offer for a period of twenty (20) days following the
expiration of the above-described twenty (20) day period during which the
Managing Partner had an option to purchase. Each such Remaining Partner's
"proportionate share" of the Offered Interest shall mean the product of the
Offered Interest and a fraction, the numerator of which is the Percentage
Interest of such Remaining Partner and the denominator of which is the total
Percentage Interests owned by all such Remaining Partners who have timely
elected (and which were eligible to elect) to purchase their proportionate
shares of the Offered Interest. The option of such Remaining Partners shall be
exercised by delivery of a written notice to the Selling Partner within such
twenty (20) day period (i.e., within the twenty (20) day period that the
Remaining Partners have an option to purchase hereunder).
During the combined forty (40) day period described above during which the
Managing Partner and the Remaining Partners have an option to purchase the
Offered Interest, the Selling Partner may not transfer the Offered Interest to
the qualified purchaser or to any other Person. If, as of the expiration of the
combined forty (40) day period described above, the Managing Partner and the
Remaining Partners have not elected to purchase all of the Offered Interest in
accordance with the foregoing, then the Selling Partner shall be free to sell
the Offered Interest to the qualified purchaser named in the Offer, provided
that: (1) the Selling Partner first complies with the provisions of Article XI
above, (2) such sale is on terms and conditions no more favorable to the
Qualified Purchaser than those set forth in the offer, and (3) such sale is
consummated within one hundred (100) days following the giving of the Offer. If
the Selling Partner does not consummate the sale of the Offered Interest to the
Qualified Purchaser within such one hundred (100) day period, the Offered
Interest shall again be fully subject to all the terms and conditions of this
Section 12.4.
In the event that the Managing Partner or the eligible Remaining Partners
timely elect to purchase the Offered Interest in accordance with the foregoing,
closing of the purchase of the Offered Interest shall take place at the
principal place of business of the Partnership (or such other mutually agreed
upon location) on such date selected by the purchasing party within sixty (60)
days after the exercise of the Option.
-35-
SECTION 12.5 Removal of Managing Partner.
---------------------------
A. If the Managing Partner becomes Bankrupt, is convicted of a felony or
files a certificate of dissolution (or its equivalent) or otherwise has its
charter revoked (other than a ministerial revocation resulting from a failure to
file an annual report, which failure is promptly cured after notice from any
Partner or its representative), the Managing Partner shall automatically be
removed as managing partner and such Managing Partner's interest in the
Partnership shall be treated in the manner provided in Section 12.8 below.
Notwithstanding the foregoing, if upon the dissolution of the Managing Partner,
its interest in the Partnership is or will be assigned in a manner permitted
under Section 12.1 above, then such dissolved Managing Partner's interest in the
Partnership, as a general partner, shall not be treated in the manner provided
in Section 12.8 below, and such person or persons or such corporation or other
form of business entity succeeding to such former Managing Partner's interest in
the Partnership, as a general partner, shall be admitted into the Partnership as
a substitute or successor Managing Partner(s), and shall succeed, collectively,
to all of the interests of such former Managing Partner (in its status as
general partner) in the Partnership, effective the moment before such former
Managing Partner was dissolved.
B. Except as may be otherwise provided by law, and except as may
otherwise be mutually agreed to by all Partners (including the Managing
Partner), the right to remove the Managing Partner shall be limited to the
events described in Subsection 12.5.A above. Any successor general partner may
be removed as a general partner upon the terms and conditions provided in
Subsection 12.5.A above. The removal of a general partner in accordance
herewith shall in no way limit or affect the liability of such general partner
to the Partnership for debts and liabilities of the Partnership arising or
accruing prior to the effective date of such general partner's removal.
SECTION 12.6 Effect of Change of Partners. Subject to the provisions of
----------------------------
this Agreement, the withdrawal, Bankruptcy, or substitution of any Partner shall
not interrupt the continuity of, or cause the termination or dissolution of, the
Partnership. Except as otherwise provided by this Agreement, if the Managing
Partner withdraws, dissolves, becomes Bankrupt, is removed or otherwise ceases
to be a member of the Partnership, the Partnership shall dissolve upon the date
of any such event, unless there is at least one remaining Managing Partner
(including a successor general partner to a dissolved general partner), if any,
who agrees to continue the business of the Partnership (such right to continue
-36-
the business of the Partnership being expressly granted hereby), or unless
within ninety (90) days after such event, all Partners agree in writing to
continue the business of the Partnership and to the appointment of one or more
additional general partners if necessary or desirable.
SECTION 12.7 Appointment of Additional Managing Partners. In the event
-------------------------------------------
that the Partnership does not dissolve upon the date the Managing Partner
withdraws, dissolves, ceases to be a member of the Partnership, or becomes
bankrupt solely because all Partners within ninety (90) days of such event agree
in writing to continue the business of the Partnership and to the appointment of
one or more additional Managing Partners as may be necessary or desirable, such
additional Managing Partner(s) shall be appointed by the unanimous agreement of
all such remaining Partners.
SECTION 12.8 Payments to (or Change in Status of) Removed Managing
-------------------------------------------- --------
Partner. In the event the Managing Partner is removed as a general partner
pursuant to this Article XII (or otherwise pursuant to the Partnership Law),
whether or not such removal triggers a dissolution of the Partnership, except as
otherwise provided in Subsection 12.5.B above, such Managing Partner's entire
general partner interest in the Partnership shall, upon such removal, be
converted into a special partner interest having the same rights to
distributions and interests in the Profits, Losses and capital of the
Partnership as prior to such conversion, and this Agreement shall be duly
amended. After such conversion, the holder of such converted interest shall be
automatically admitted as an additional Partner. Each holder of a former
Managing Partner's converted interest, who is to be admitted as an additional
partner, if not already bound by all of the terms and conditions of this
Agreement, shall, as a condition of such admission, be required to execute a
joinder to this Agreement, whereby such person becomes bound by all of the terms
and conditions of the Agreement (as it may be amended prior thereto or in
connection with such conversion). The conversion of the Managing Partner's
interest hereunder shall not, of itself, eliminate any liability to the
Partnership or to the other Partners that the Managing Partner may have under
this Agreement at such time.
SECTION 12.9 Option to Purchase if a Partner Becomes a Non-Qualified
-------------------------------------------------------
Person. If any Partner (other than the Managing Partner) or any "Affiliate" of
------
such Partner is or becomes a Non-Qualified Person at any time during the term of
this Partnership Agreement, such Partner shall promptly notify the Managing
Partner and all the other Partners of such fact. Such Partner (the "Selling
Partner") shall (whether or not such notice is timely given) be deemed for
-37-
purposes of Section 12.4 above to have given an "Offer" to the Managing Partner
and to the "Remaining Partners" to sell its entire interest in the Partnership
for a price equal to the positive (i.e., credit) balance in its Capital Account
(which shall be determined as of the date of acceptance of such Offer or, at the
sole option of the purchasing Partner(s), determined as of the date such Partner
first became a Non-Qualified Person) and which shall be payable in full at
closing. If the balance in the Selling Partner's Capital Account at such time
is zero or is a negative number, the selling price shall be One Dollar ($1.00).
Such offer shall remain open, and may be accepted by the Managing Partner or the
Remaining Partners in accordance with the terms of Section 12.4 above, except
that the period for acceptance of such Offer shall not terminate until twenty
(20) days or forty (40) days (whichever period is applicable under Section 12.4)
after the Selling Partner first gives written notice to the Managing Partner and
all of the Remaining Partners that it is, or has become, a Non-Qualified Person.
In addition, the period for exercising the Option will commence on the first
date on which the Selling Partner becomes a Non-Qualified Purchaser, regardless
of whether notice of such fact has been given by the Selling Partner to the
Managing Partner and the Remaining Partners. (Thus, if a Partner becomes a Non-
Qualified Person and fails to give such notice, such Partner shall be in breach
of this Agreement and, in addition, the period during which the Managing Partner
and the Remaining Partners may exercise their Option hereunder shall remain open
indefinitely.) If the Managing Partner and the Remaining Partners do not
exercise their Option to purchase the Selling Partner's Interest in the
Partnership prior to the expiration of the option period provided hereunder, the
interest of the Selling Partner shall continue to be held by the Selling Partner
and shall remain subject to all terms and conditions of this Agreement. Except
as set forth in this Section 12.9 (the terms of which shall control if in
conflict with Section 12.4 above), the terms and conditions of Section 12.4
above shall apply to any sale and purchase of the Selling Partner's interest in
the Partnership hereunder. Notwithstanding the foregoing, N-K shall not be
deemed to have become a Non-Qualified Person for purposes of this Section 12.9
if N-K shall have first offered, in writing, to the Managing Partner, the right
to participate solely with N-K (or its Affiliates), and with no other Non-
Qualified Person, in any Timeshare Activity in which N-K intends to engage, and
the Managing Partner shall have declined, in a writing to be given within thirty
(30) days of the Managing Partner's receipt of N-K's offer, to participate with
N-K in such proposed Timeshare Activity. If the Managing Partner so declines
and N-K thereafter desires to enter into any Timeshare Activity with any third
party on terms which are not substantially similar in all material respects to
those proposed to the Managing Partner,
-38-
the Managing Partner shall once again be offered, in writing, the right to
participate solely with N-K in such Timeshare Activity on the new terms being
proposed to or by the third party. If the Managing Partner still declines (in
writing to be given within fifteen (15) days of the Managing Partner's receipt
of N-K's offer) to participate in the Timeshare Activity, N-K may do so without
becoming a Non-Qualified Person.
SECTION 12.10 Managing Partner's Call Options.
-------------------------------
A. Transfers by Managing Partner to Non-Affiliates. Notwithstanding any
-----------------------------------------------
other provision of this Agreement, upon thirty (30) days prior written notice to
the remaining Partners, the Managing Partner may sell its entire interest in the
Partnership, or the Persons who hold not less than a majority of the voting
interests in the Managing Partner may sell all or not less than a majority of
their equity interests (which, in the case of a sale of equity interests, shall
include not less than a majority of the voting control) in the Managing Partner,
provided, in either event, that such sales are effected in conjunction with (a)
the sale of not less than fifty-one percent (51%) of the assets or equity
interests (which shall include voting control) of VCH Oaks, Inc., to any Persons
other than (i) the Persons listed on Schedule 12.10 attached hereto, and (ii)
any affiliate of the Managing Partner; or (b) a change in control (hereinafter
defined) of Vistana Development, Ltd. Any such sales shall not be subject to
the restrictions set forth in this Article XII except to the extent any such
provisions are specifically made applicable to sales made pursuant to this
Section 12.10. In the event of a sale by the Managing Partner of its entire
interest in the Partnership under this Section 12.10, the Managing Partner may
also require the remaining Partner to sell its entire interest in the
Partnership simultaneously with the closing of the sale of the interest of the
Managing Partner hereunder or "call" the interest of the remaining Partner, as
set forth below. The option of the Managing Partner to require a simultaneous
sale of the remaining Partner's entire interest in the Partnership may be
exercised by the Managing Partner by including a notification of such required
sale in the notice given to the remaining Partner in the first sentence of this
Section 12.10.
B. Call Option in the Event of a Transfer of the Managing Partner's
----------------------------------------------------------------
interest to a Non-Affiliate. The Managing Partner shall have the option to
---------------------------
purchase (or cause its designee to purchase) each Partner's entire interest in
the Partnership, which option may be exercised by written notice to a Partner,
which may be given only in the event that the Managing Partner has entered into
a binding agreement to Assign its entire interest in the Partnership
-39-
to any Person, including a Non-Qualified Person, which is not an Affiliate of
the Managing Partner or of the Persons listed on Schedule 12.10 attached hereto,
at the time of exercise of the option ("Non-Affiliate Purchaser") and which does
not occur in conjunction with a change in control of Vistana Development, Ltd.
The purchase price paid by the Managing Partner to the selling Partner shall be
a price equal to the price per percentage point of Partnership Interest that the
Non-Affiliate Purchaser is paying to the Managing Partner in connection with the
acquisition by such Non-Affiliate Purchaser of the Managing Partner's interest
in the Partnership multiplied by the number of percentage points of Percentage
Interest owned by the selling Partner. Such purchase price shall take into
consideration any Residual Income (hereinafter defined) received by the Managing
Partner from the Non-Affiliate Purchaser. Residual Income shall mean all forms
of consideration received and value derived by the Managing Partner or its
Affiliates on account of and in consideration for such sale, transfer,
conveyance or Assignment of its interest in the Partnership (and not of any
other entity), including without limitation, consulting fees and similar
payments and other fees and similar payments received by the Managing Partner or
its Affiliates, to the extent they are above those usually and customarily paid
for similar services in arms length transactions, and the value of partnership
interests, shares or other forms of equity interests in the Non-Affiliate
Purchaser received by the Managing Partner or its Affiliates and attributable
solely to the Assignment of the Managing Partner's or its Affiliate's interest
in the Partnership (and not of any other entity). Closing of the purchase of
the selling Partner's interest by the Managing Partner (or its designee (which
may include the Non-Affiliate Purchaser)) pursuant to this Section shall occur
concurrently with the acquisition of the Managing Partner's interest by the Non-
Affiliate Purchaser, at the Partnership's principal business office on such
business day and hour as the Managing Partner may request, but not later than
one hundred twenty (120) days after the notice of exercise of the option is
given by the Managing Partner. Payment for the selling Partner's interest shall
be made on the same terms as those governing the acquisition of the Managing
Partner's interest by the Non-Affiliate Purchaser. Any transferee of the
interests of the Managing Partner or any other Partner under this Section
12.10.B shall automatically be admitted as a successor Managing Partner or
Partner (as appropriate) in the Partnership.
C. Call Option in the Event of a Change in Control of Vistana
----------------------------------------------------------
Development, Ltd. The Managing Partner shall have the option to purchase each
-----------------
Partner's entire interest in the Partnership, which option may be exercised by
written notice to a Partner, which may be given only in the event that the
Managing
-40-
Partner reasonably believes (whether by the execution of a binding agreement,
letter of intent or other written proposal, term sheet or similar document) that
there will be a "change in control" of its Affiliate, Vistana Development, Ltd.
For purposes of this Section 12.10.C change in control shall be defined to mean
(i) the acquisition by any Person or Persons acting in concert as a result of a
tender or exchange offer, open market purchases, privately negotiated purchases
or otherwise, of the beneficial ownership of securities representing more than
fifty percent (50%) of the combined voting power of the then outstanding
securities of Vistana Development, Ltd. or Vistana Capital Holdings, Inc.; (ii)
the sale of substantially all of the assets of Vistana Development, Ltd. and its
Affiliates to a third party which is not an Affiliate, or (iii) an initial
public offering of any class of securities of Vistana Development, Ltd. or any
successor entity thereto, or (iv) in the event Vistana Development, Ltd. or any
successor or entity has become a public company, any change in control required
to be disclosed under the proxy rules of promulgated by the securities and
exchange commission. Closing of the purchase of the Partner's interest in the
Partnership shall occur concurrently with the change in control of Vistana
Development, Ltd. Payment for the purchase of the Limited Partner's interest
shall be made all in cash at closing.
The purchase price for each Partner's interest acquired pursuant to this
Section 12.10.C. shall be equal to the fair market value of such interest (i.e.,
the price a willing buyer and a willing seller would agree upon as a fair sales
price that could reasonably be expected to be received upon the sale of the
Partner's interest, based upon the assumption that (i) both parties are well
informed of all relevant factors affecting value including any special or
adverse tax, business, financial or operational burdens which the Partnership
may incur as a result of the transfer of any interest by any individual Partner,
(ii) neither party is compelled to buy or sell, (iii) the purchaser will be
admitted as a partner in the Partnership, and (iv) the selling Partner will be
receiving its Percentage Interest of any Residual Income relating solely to the
Property, to be received by the Managing Partner or its Affiliates). Promptly
after the date (the "Election Date") the Managing Partner exercises its option
hereunder, the selling Partner and the Managing Partner shall attempt to agree
upon the fair market value of the selling Partner's interest. If the selling
Partner and the Managing Partner cannot agree upon the fair market value of the
interest within thirty (30) days after the Election Date, such parties shall
attempt to agree upon a mutually acceptable Qualified Appraiser (as hereinafter
defined) to determine the fair market value of the selling Partner's interest,
and if a mutually acceptable Qualified Appraiser is selected within
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ten (10) days after the expiration of the thirty (30) day period specified
above, such appraiser shall submit, within sixty (60) days of such appraiser's
selection, a written appraisal setting forth such appraiser's determination of
the fair market value of the interest of each selling Partner and such
determination shall be binding upon the selling Partner and the Managing
Partner.
If a mutually acceptable Qualified Appraiser is not selected within the ten
(10) day period described above, either the selling Partner or the Managing
Partner may, by written notice to the other party, select a Qualified Appraiser
with experience in valuing interests in partnerships and also with experience in
appraising interests in timeshare businesses (a "Qualified Appraiser"), and,
within ten (10) days after receipt of such notice, the other party may (but need
not), by written notice, designate a second Qualified Appraiser to determine the
fair market value of the interest.
If the second Qualified Appraiser is not so designated, then the first
Qualified Appraiser shall proceed to appraise the selling Partner's interest and
his determination of the fair market value of the selling Partner's interest
shall be binding upon both the selling Partner and the Managing Partner.
If a second Qualified Appraiser is designated, the first and second
Qualified Appraisers shall each appraise the selling Partner's interest. If
within forty-five (45) days after the second Qualified Appraiser is designated,
the first and second Qualified Appraisers do not agree upon the fair market
value of the selling Partner interest and are unable to reduce the range of
their difference so that the higher appraisal does not exceed the lower
appraiser by more than ten percent (10%) of the amount of the lower appraisal,
then the Qualified Appraisers shall jointly designate a third Qualified
Appraiser within ten (10) days after the expiration of such 45-day period. If
there are two Qualified Appraisers and the higher appraisal does not exceed the
lower appraisal by more than ten percent (10%) of the lower appraisal, then the
fair market value of the selling Partner's interest shall be deemed to be the
average of the two appraisals. If there are three appraisers and if they are
unable to agree upon the fair market value of the selling Partner's interest,
then the fair market value of the selling Partner's interest shall be deemed to
be the average of the two appraisals which are closest in value to each other.
The appraiser or appraisers shall promptly notify the selling Partner and the
Managing Partner of their determination of the fair market value of the selling
Partner's interest.
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The Managing Partner shall each pay the fees and expenses of the Qualified
Appraiser, and if there is more than one Qualified Appraiser, the fees and
expenses of the Qualified Appraisers.
D. The Partners agree that the provisions of this Section 12.10 may be
specifically enforced.
ARTICLE XIII
------------
DISSOLUTION OF THE PARTNERSHIP
------------------------------
SECTION 13.1 Events of Dissolution. The Partnership shall be dissolved,
---------------------
and its assets liquidated pursuant to Section 13.2 below, upon the first to
occur of:
A. December 31, 2046;
B. The sale, disposition or condemnation of all or substantially all of
the Partnership's property (other than cash); provided, that, if on
the disposition of any such property, the Partnership shall own any
purchase money notes and mortgages, or promissory notes, the
Partnership shall not be deemed to have disposed of all or
substantially all of its property until such time as such purchase
money notes and mortgages, or promissory notes, are paid or otherwise
disposed of in full;
C. The withdrawal, retirement, removal, dissolution, Bankruptcy or
cessation of membership in the Partnership of the Managing Partner,
unless the Partnership is continued as provided in Article XII;
D. The agreement, in writing, of Partners owning not less than seventy-
five percent (75%) of the Percentage Interests to dissolve the
Partnership; or
E. The occurrence of any event which, under the Partnership Law (but
subject to the provisions of this Agreement), causes the dissolution
of this Partnership.
The Partnership shall continue to exist following the occurrence of any of
the foregoing events solely for the purpose of winding up its affairs.
SECTION 13.2 Distributions Upon Dissolution or Liquidation of the
----------------------------------------------------
Partnership. Upon the earlier of (i) the dissolution of the Partnership as
-----------
provided by Section 13.1 above, or (ii) the
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Liquidation of the Partnership, the Managing Partner (or, if none, a special
liquidator appointed by Partners owning not less than a majority of the
Percentage Interests) shall immediately commence to wind up the Partnership's
affairs and, except as provided below, shall distribute all the assets of the
Partnership in liquidation as soon as practicable. In connection with winding
up the Partnership's affairs, the Managing Partner (or, if none, the special
liquidator appointed by the Partners) shall have the authority to sell any
assets of the Partnership then on-hand for such price and on such commercially
reasonable terms and conditions as such Managing Partner (or special liquidator)
shall determine in its reasonable discretion, and distribute the proceeds
thereof in liquidation, and/or distribute all or any portion of such assets to
the Partners in-kind. In the event that any assets are to be distributed in-
kind, the Managing Partner (or special liquidator) shall have the sole right to
select the assets to be distributed to each of the Partners, and may distribute
any such assets proportionately or non-proportionately to or among the Partners;
provided that the aggregate distributions of cash and property to each of the
Partners (based on the net fair market value of property distributed in-kind)
does not exceed the aggregate amount to which each such Partner would otherwise
be entitled had all Partnership property otherwise to be distributed in-kind
been first converted into cash; and provided further that if property and cash
are to be distributed among the Partners, any such cash shall be distributed
among the Partners in proportion to the Partners' positive capital account
balances, as determined without regard to the distributions made pursuant to
Subsection 13.2.B hereof.
In the event of the Liquidation of the Partnership, except as provided
below, all assets of the Partnership to be distributed to the Partners shall be
distributed in liquidation no later than the last day of the Partnership fiscal
year in which such Liquidation occurs (or, if later, within ninety (90) days of
the date of Liquidation). Notwithstanding the above, if there is a Liquidation
of the Partnership solely because fifty percent (50%) or more of the total
interests in the Partnership capital and profits were sold or exchanged within a
twelve-month period, the assets of the Partnership shall not be actually
distributed in liquidation solely as a result of such occurrence (and no Partner
shall have the right to demand a distribution solely by reason of such
occurrence).
The assets to be distributed in liquidation shall be distributed in the
following order of priority:
A. Payment to creditors of the Partnership, including Partners, in the
order of priority provided by law; and
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B. Payment to the Partners in accordance with and in proportion to their
positive capital account balances, as determined after taking into
account all proper capital account adjustments for the Partnership
fiscal year during which the dissolution or Liquidation of the
Partnership occurs (or, if later, through the date of the final
distribution to the Partners as required by this Section 13.2), other
than those adjustments made for liquidating distributions pursuant to
this Subsection 13.2.B or for contributions by a Partner pursuant to
Section 13.3 below.
If upon the Liquidation of the Partnership the capital accounts of the
Partners are adjusted pursuant to Section 6.3 above, the Managing Partner (or
special liquidator, as the case may be), in its sole discretion, may, out of
amounts otherwise distributable to the Partners, create reserves reasonably
required to provide for Partnership liabilities (contingent or otherwise) and
may withhold the distribution of installment obligations owed to the Partnership
so long as (i) the other assets of the Partnership, distributable to the
Partners, are distributed within the time set forth above and in the ratios of
the Partners' positive capital account balances, and (ii) such withheld amounts
are distributed as soon as practicable and in the ratios of the Partners'
positive capital account balances.
SECTION 13.3 Balance Owed by Partner. Except as provided below, should
-----------------------
the Managing Partner have a deficit balance in the Managing Partner's capital
account following the liquidation of its interest in the Partnership (as defined
in Reg. (S)1.704-1(b)(2)(ii)(g)), as determined after taking into account all
proper capital account adjustments for the Partnership fiscal year during which
such liquidation occurs (or, if later, through the date of the final
distribution in liquidation of the Managing Partner's interest), other than the
adjustment made for contributions by the Managing Partner pursuant to this
Section 13.3, the deficit balance shall represent an obligation from the
Managing Partner to the Partnership to be paid in cash no later than the last
day of the Partnership fiscal year during which such liquidation occurs [or, if
later, no later than ninety (90) days after the date of such liquidation].
Any Partner with a deficit balance in such Partner's capital account
following the liquidation of such Partner's interest in the Partnership, to the
extent attributable to a general partner interest which was converted to that of
a limited partner interest in accordance with Section 12.8 above, shall be
obligated to restore such deficit balance to the extent of the aggregate
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liability, if any, of such Partner to Partnership creditors, as determined by
law as of the date of the liquidation of such Partner's interest in the
Partnership, and by taking into account any and all assets of the Partnership
(other than any asset which consists of the obligation of such Partner to make a
contribution pursuant to this Section 13.3) which are then available (or which
will thereafter be available) to satisfy, in whole or in part, the indebtedness
of the Partnership to which such creditors' claims relate.
No other Partner shall be obligated to restore a deficit balance in its
capital account in its capacity as a Partner following the liquidation of such
Partner's interest in the Partnership.
SECTION 13.4 Instruments of Termination. Upon the ter mination of the
--------------------------
Partnership, the Managing Partner (or special liquidator, as the case may be)
shall make such filings and do such other acts as shall be required by the
Partnership Law and the Partners hereby agree to execute and deliver to the
Managing Partner (or special liquidator, as the case may be) such certificates
or documents as shall be so required.
ARTICLE XIV
-----------
TAX MATTERS PARTNER
-------------------
SECTION 14.1 Appointment of Tax Matters Partner. The tax matters Partner
----------------------------------
("TMP") for the Partnership shall be the Managing Partner.
SECTION 14.2 Employment of Advisors. The TMP shall employ experienced tax
----------------------
advisors to represent the Partnership in connection with any audit, examination
or investigation of the Partnership by the Internal Revenue Service (or by any
state or local taxing authority), and in connection with all subsequent
administrative and judicial proceedings arising out of such audit, examination
or investigation. The fees and expenses of such tax advisors shall be a
Partnership expense and shall be paid by the Partnership. Such advisors shall
be responsible for representing the Partnership. It shall be the responsibility
of the Managing Partner and the Partners, at their own expense, to employ tax
advisors to represent their respective separate interests.
SECTION 14.3 Notice and Expenses. The TMP shall keep the Partners
-------------------
informed of all administrative and judicial proceedings, as required by the
Code, and shall furnish to each Partner, who so
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requests in writing, a copy of each notice or other communication received by
the TMP from the Internal Revenue Service (except such notices or communications
which are sent directly to such requesting Partner by the Internal Revenue
Service). All expenses incurred by the TMP in serving as TMP shall be
Partnership expenses and shall be paid by the Partnership.
SECTION 14.4 Authority of Tax Matters Partner. The TMP shall have the
--------------------------------
full authority to take any and all actions otherwise permitted to be taken by a
tax matters partner under the Code in connection with any audit, examination or
investigation of the Partnership, and in connection with any and all
administrative and judicial proceedings arising out of such audit, examination
or investigation, including, but not limited to, any of the following actions:
A. Enter into a settlement agreement with the Internal Revenue Service,
even if such settlement agreement binds the Partners other than the
TMP;
B. File a petition as contemplated in Code (S)6226(a) or (S)6228;
C. Intervene in any action contemplated in Code (S)6226(b);
D. File any requests contemplated in Code (S)6227(b); or
E. Enter into an agreement extending the period of limitations, as
contemplated by Code (S)6229(b)(1)(B).
SECTION 14.5 Indemnification. The Partnership shall indemnify and hold
---------------
the TMP harmless against judgments, fines, amounts paid in settlement and
expenses (including reasonable attorneys' fees, whether before or at trial or
during any appellate proceeding), paid or incurred by the TMP in any civil,
criminal or investigative proceeding in which the TMP is involved or threatened
to be involved solely by reason of being the TMP for the Partnership; provided
that the TMP acted reasonably and in good faith within what the TMP reasonably
believed to be in the best interests of the Partnership or the Partners, as a
whole. Notwithstanding the foregoing, the TMP shall not be indemnified under
this Section 14.5 against any liability of the TMP to the Partnership or the
Partners to the extent any such liability is attributable to or otherwise arises
out of the TMP's fraud, intentional misconduct or gross negligence.
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ARTICLE XV
----------
MISCELLANEOUS
-------------
SECTION 15.1 Notices. All notices or other communications given or
-------
made under this Agreement shall be in writing, signed by the party giving same,
and shall be delivered personally, transmitted by a facsimile capable of
verifying receipt (receipt confirmed), sent by national overnight courier
service, or sent by United States certified mail, return receipt requested,
postage prepaid, addressed as follows:
A. To the Managing Partner at the address set forth in Section 3.1 above;
and
B. To each Partner at the address set forth in Section 3.2 hereof; and
C. To the Partnership at the principal office of the Partnership
specified in Section 1.2 above.
Except as may be otherwise provided in this Agreement, all notices,
requests, demands, elections or other communications given in accordance with
this Section 15.1 shall be effective at the earlier of (i) five (5) business
days after deposit in the United States mail, certified postage prepaid; (ii)
twenty-four (24) hours after delivery to a national overnight courier service;
or (iii) confirmation of receipt if transmitted by facsimile or telexed or if
delivered personally. Any party may change the address to be used for
notification purposes hereunder by providing written notice thereof to the other
parties in accordance herewith.
SECTION 15.2 Applicable Law. This Agreement shall be governed by and
--------------
construed in accordance with the laws of the State of Florida without giving
effect to such State's conflicts of laws principles. Venue for any action
brought to enforce this Agreement or to interpret the rights of the Partners
hereunder shall lie in Orange County, Florida.
SECTION 15.3 Entire Agreement. This Agreement constitutes the entire
----------------
Partnership agreement between the Partners and the Managing Partner and
supersedes all prior agreements and undertakings with respect hereto among them.
No Partner is making any guarantee, promise, or undertaking any obligation with
respect to the Partnership that is not expressly contained in this Agreement.
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SECTION 15.4 Amendment. Except as otherwise provided herein, this
---------
Agreement may only be amended upon the written consent of all Partners.
Notwithstanding the foregoing, the Managing Partner may amend this Agreement
without the consent of any other Partner provided that such amendment does not
(a) reduce the obligations of the Managing Partner, (b) affect, by making more
or less restrictive, the assignability of Partnership interests and/or the
ability of a Partner to cause a transferee of such Partner's interest in the
Partnership to be admitted as an additional limited Partner; (c) modify the term
or the authorized business purposes of the Partnership, or (d) reduce the rights
or interests, or enlarge the obligations of any Partner (with respect to a
Partner's interests in the Profits, Losses, Available Cash or capital of the
Partnership) or otherwise have a material adverse effect upon such Partner's
interest in the Partnership or under the Transaction Documents without the
Partner's prior written consent, except that, in the case of subpart (d), the
Managing Partner may amend the Agreement without such Partner's consent to the
extent necessary to reflect the transfer of all or such portion of such
Partner's interest as may have been transferred pursuant to Subsection 5.2.B
above.
SECTION 15.5 Binding Upon Successors. Each and every provision hereof
-----------------------
shall be binding upon, and inure to the benefit of, the heirs, personal
representatives, successors and assigns of the respective parties hereto except
to the extent explicitly provided to the contrary herein.
SECTION 15.6 Severability. Every provision hereof is intended to be
------------
severable, and if any term or provision hereof is illegal or invalid for any
reason whatsoever or would constitute the Partners or any Partner a general
Partner or would affect the Partnership status of the Partnership or would
affect the Partnership status of the Partnership for federal income tax
purposes, such provision shall be invalid, but such illegality or invalidity
shall not affect the validity of the remainder of this Agreement.
SECTION 15.7 Captions/References. The titles and captions contained
-------------------
herein are for convenience only and shall not be deemed a part of the context of
this Agreement. All references to "regulations" or "Reg. (S)" refer to rules
and regulations promulgated by the United States Treasury Department under the
Code. The words "this Agreement," "herein," "hereof," "hereby," "hereunder" and
words of similar import refer to this Agreement as a whole and not to any
particular subdivision unless expressly limited.
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SECTION 15.8 Numbers and Gender. Where the context so indicates, the
------------------
masculine shall include the feminine and neuter, the singular shall include the
plural and the term person shall include a corporation, firm or other entity.
SECTION 15.9 Counterparts. This Agreement may be executed in
------------
counterparts, each of which shall be deemed to be an original and shall be
binding upon the party or parties who executed the same, but all of such
counterparts shall constitute one and the same agreement.
SECTION 15.10 Waiver of Partition. Each of the Partners hereby
-------------------
irrevocably waives any and all rights that such Partner may have to maintain
action for partition of any of the Partnership's property.
SECTION 15.11 Assignees. In the event that any transferee or other
---------
successor-in-interest to a Partner is not otherwise admitted as an additional
Partner in accordance with the provisions of this Agreement, provided that the
transfer at issue is not null and void, such transferee or other successor-in-
interest shall be treated as an assignee, and shall only have the right to
receive the profits and capital, and shall be subject to all of the liabilities
and obligations, to which the transferring Partner (or transferring assignee, or
other predecessor-in-interest) would otherwise be entitled, or would otherwise
be subject to, pursuant to this Agreement (but for such transfer), to the extent
attribut able to the interest transferred to such assignee. In applying the
provisions of this Agreement, including Articles IX and X, and Section 13.3
hereof, each successor to a Partnership interest, whether admitted as an
additional Partner or not, shall be deemed to have received the aggregate
allocations and distributions previously made to each predecessor-in-interest to
the interest in the Partnership held by such person. An assignee who is not
otherwise admitted as an additional Partner shall have no right to vote on any
matter subject to the approval of the Partners, nor have any rights to interfere
in the management or administration of the Partnership's business or affairs,
acquire any information or account of Partnership transactions, or inspect the
Partnership's books during the continuance of the Partnership.
SECTION 15.12 Third-Party Beneficiaries. Any agreement contained herein
-------------------------
to make any contribution or to otherwise pay any amount, and any assumption of
liability herein contained, express or implied, shall be only for the benefit of
the undersigned parties and their respective permitted successors and assigns,
and such agreements and assumptions shall not inure to the benefit of the
obligees under any indebtedness, or to any other party
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whomsoever, it being the intention of the undersigned parties that no one shall
be deemed to be a third-party beneficiary of this Agreement or any portion
thereof.
SECTION 15.13 Confidential Information. Each Partner hereby acknowledges
------------------------
and agrees that confidential information concerning employees and agents of the
Partnership (including, but not limited to, the amount and nature of the
compensation paid to such employees and agents), customers, and owners of units
and properties of the Partnership (the "Units"), and proprietary sources of the
Partnership's marketing programs (including present and prospective OPC
locations and the terms of leases or similar financial arrangements with regard
thereto) (collectively, the "Trade Secrets") used by or relating to the
Partnership, are and shall be considered proprietary information belonging
exclusively to the Partnership to the extent such information is not readily
available to the public or has not otherwise become public knowledge through
sources other than the Partners, their agents and/or employees.
No Partner shall in any manner, either directly or indirectly, (i)
disseminate, disclose, use or communicate with any Person any Trade Secrets
regardless of whether such information is considered to be confidential by third
parties; provided that none of the provisions of this Section 15.13 shall apply
to disclosures made to other employees or agents of the Partnership which are
made for valid business purposes of the Partnership. The provisions of this
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Section 15.13 shall survive the termination of this Agreement and the
termination of any Partner's interest in the Partnership. Notwithstanding the
foregoing, in the event that N-K becomes a Non-Qualified Person solely by reason
of the provisions of and after following the procedures in Section 12.9, N-K
shall be relieved of the covenants set forth in this Section 15.13 solely as to
any Timeshare Activity in which the Managing Partner or its Affiliates have
declined to participate.
No Partner shall, during the term of this Agreement and for a period of one
(1) year thereafter, interfere with, disrupt or attempt to disrupt the
relationship, contractual or otherwise, between the Partnership and any employee
of the Partnership or Vistana Development, Ltd. or any of its Affiliates. Any
contact or communication with or solicitation of, any employee of the
Partnership, Vistana Development, Ltd. or any of its Affiliates, with the
intent, purpose or effect of inducing or encouraging said employee to leave his
or her employment with the Partnership, Vistana Development, Ltd. or any of its
Affiliates or to breach his or her employment relationship with or other
employment obligations to the Company, Vistana Development, Ltd. or any of its
Affiliates, shall constitute a breach of this provision.
Signatures Begin on Following Page
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MANAGING PARTNER
----------------
Witness VCH OAKS, LTD.
By: VCH OAKS, INC., a Florida corporation,
sole general partner
/s/ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. Avril
----------------------------- ---------------------------------
/s/ ▇▇▇▇ Melichavek, Jr. Name: ▇▇▇▇▇▇▇ ▇. Avril
----------------------------- ---------------------------------
Title: SVP
-------------------------------
PARTNERS
--------
Witness ▇▇▇▇▇-▇▇▇▇ CORPORATION
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------- ----------------------------------
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------- --------------------------------
Title: Vice President
-------------------------------
WITHDRAWING PARTNERS
--------------------
Witness
/s/ ▇▇▇▇▇▇▇▇ Vantes /s/ R. ▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------- --------------------------------------
R. ▇▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇. ▇. ▇▇▇▇▇
-----------------------------
Witness
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------- --------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------
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