Exhibit 10.7
SECOND AMENDED AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP
OF
▇▇▇▇▇▇▇▇ HOSPITALITY LIMITED PARTNERSHIP
TABLE OF CONTENTS
EXHIBITS
EXHIBIT A - Partners, Capital Contributions and Percentage Interests
EXHIBIT B - Notice of Exercise of Redemption Right
SECOND AMENDED AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP
OF
▇▇▇▇▇▇▇▇ HOSPITALITY LIMITED PARTNERSHIP
THIS SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF
▇▇▇▇▇▇▇▇ HOSPITALITY LIMITED PARTNERSHIP (the "Agreement") is made and entered
into as of September 2, 1997, by and among ▇▇▇▇▇▇▇▇ Hospitality REIT Trust, a
Maryland real estate investment trust, as General Partner (the "General
Partner"), and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇▇▇▇ Associates, Inc., a Maryland
corporation, Farmville Lodging Associates, LLC, a Maryland limited liability
company, and ▇▇▇▇▇▇▇▇-Key Largo Associates, L.P., a Maryland limited
partnership, as Limited Partners (the "Limited Partners").
RECITALS
WHEREAS, ▇▇▇▇▇▇▇▇ Hospitality Limited Partnership (the "Partnership")
was formed as a limited partnership under the laws of the Commonwealth of
Virginia upon the filing of its Certificate of Limited Partnership with the
Virginia State Corporation Commission on August 29, 1994, and is governed by a
First Amended and Restated Agreement of Limited Partnership, dated November 29,
1994, as amended by a First Amendment dated July 20, 1995, a Second Amendment
dated March 13, 1997, and a Third Amendment dated September 2, 1997 to make
certain clarifying changes necessitated by the Second Amendment (collectively,
the "Partnership Agreement").
WHEREAS, ▇▇▇▇▇▇▇▇ Hospitality Trust, Inc., a Virginia corporation
("HHTI") was originally the general partner of the Partnership and by virtue of
the Second Amendment withdrew from the Partnership and the General Partner, a
wholly-owned subsidiary of HHTI, became the general partner of the Partnership;
and
WHEREAS, the Partners desire to amend and restate the Partnership
Agreement in its entirety; and to admit ▇▇▇▇▇▇▇▇-Key Largo Associates, L.P., as
a Limited Partner.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing, of the mutual
promises contained herein and in the Partnership Agreement, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
ARTICLE I
DEFINED TERMS
The following defined terms used in this Agreement shall have the
meanings specified below:
"Act" means the Virginia Revised Uniform Limited Partnership Act, as it
may be amended from time to time.
"Additional Limited Partner" means a Person admitted to this
Partnership as a Limited Partner pursuant to Section 4.02 hereof.
"Administrative Expenses" means (i) all administrative and operating
costs and expenses incurred by the Partnership, (ii) those administrative costs
and expenses of the General Partner and HHTI, including any salaries or other
payments to directors, officers and/or employees of the General Partner and HHTI
and any accounting and legal expenses of the General Partner and HHTI, which
expenses, the Partners have agreed, are expenses of the Partnership and not the
General Partner and HHTI, and (iii) to the extent not included in clause (ii)
above, REIT Expenses; provided, however, that Administrative Expenses shall not
include any administrative costs and expenses incurred by Solomons Beacon Inn
Limited Partnership that are attributable to Properties owned by the Company
directly or (ii) interest expenses attributable to any loans incurred by HHTI
the proceeds of which are distributed to its shareholders or other equity
holders pursuant to Section 4.03 hereof.
"Affiliate" means, (i) any Person that, directly or indirectly,
controls or is controlled by or is under common control with such Person, (ii)
any other Person that owns, beneficially, directly or indirectly, 5% or more of
the outstanding capital stock, shares or equity interests of such Person, or
(iii) any officer, director, employee, partner or trustee of such Person or any
Person controlling, controlled by or under common control with such Person
(excluding trustees and persons serving in similar capacities who are not
otherwise an Affiliate of such Person). For the purposes of this definition,
"control" (including the correlative meanings of the terms "controlled by" and
"under common control with"), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, through the ownership
of voting securities, partnership interests or other equity interests.
"Agreed Value" means the fair market value of a Partner's non-cash
Capital Contribution as of the date hereof as agreed to by the Partners. For
purposes of this Partnership Agreement, the Agreed Value of a Partner's non-cash
Capital Contribution shall be equal to the number of Partnership Units received
by such Partner in exchange for a Property or an interest therein or in
connection with the merger of a partnership of which such person is a partner
with and into the Partnership, or for any other non-cash asset so contributed,
multiplied by the Public Offering Price or, if the contribution is made after
the date hereof, the "Market Price" calculated in accordance with the second and
third sentences of the definition of "Cash Amount." The names and addresses of
the Partners, number of Partnership Units issued to each Partner, and the Agreed
Value of non-cash Capital Contributions is set forth on Exhibit A.
"Agreement" means this Second Amended and Restated Agreement of Limited
Partnership.
"Articles of Incorporation" means the Amended and Restated Articles of
Incorporation of HHTI filed with the Secretary of Virginia State Corporation
Commission as amended or restated from time to time.
"Capital Account" has the meaning provided in Section 4.04 hereof.
"Capital Contribution" means the total amount of capital initially
contributed or agreed to be contributed, as the context requires, to the
Partnership by each Partner pursuant to the terms of the Agreement. Any
reference to the Capital Contribution of a Partner shall include the Capital
Contribution made by a predecessor holder of the Partnership Interest of such
Partner. The paid-in Capital Contribution shall mean the cash amount or the
Agreed Value of other assets actually contributed by each Partner to the capital
of the Partnership.
"Capital Transaction" means the refinancing, sale, exchange,
condemnation, recovery of a damage award or insurance proceeds (other than
business or rental interruption insurance proceeds not reinvested in the repair
or reconstruction of Properties), or other disposition of any of Property (or
the Partnership's interest therein).
"Cash Amount" means an amount of cash per Partnership Unit equal to the
value of the REIT Shares Amount on the date of receipt by HHTI of a Notice of
Redemption. The value of the REIT Shares Amount shall be based on the average of
the daily market price of REIT Shares for the ten consecutive trading days
immediately preceding the date of such valuation. The market price for each such
trading day shall be: (i) if the REIT Shares are listed or admitted to trading
on any securities exchange or the NASDAQ-National Market System, the sale price,
regular way, on such day, or if no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, on such day, (ii) if
the REIT Shares are not listed or admitted to trading on any securities exchange
or the NASDAQ-National Market System, the last reported sale price on such day
or, if no sale takes place on such day, the average of the closing bid and asked
prices on such day, as reported by a reliable quotation source designated by
HHTI and by a majority in interest of the Limited Partners; or (iii) if the REIT
Shares are not listed or admitted to trading on any securities exchange or the
NASDAQ-National Market System and no such last reported sale price or closing
bid and asked prices are available, the average of the reported high bid and low
asked prices on such day, as reported by a reliable quotation source designated
by HHTI and by a majority in interest of the Limited Partners, or if there shall
be no bid and asked prices on such day, the average of the high bid and low
asked prices, as so reported, on the most recent day (not more than 10 days
prior to the date in question) for which prices have been so reported; provided
that if there are no bid and asked prices reported during the ten days prior to
the date in question, the value of the REIT Shares shall be determined by an
appraiser mutually agreed upon by the General Partner and a majority in interest
of the Limited Partners (excluding the General Partner). In the event that the
parties are unable to agree upon an appraiser, the General Partner and a
majority in interest of the Limited Partners (excluding the General Partner)
each shall select an appraiser. Each such appraiser shall complete an appraisal
of the fair market value of the REIT Shares within 20 days of the first attempt
at evaluating the REIT Shares, and the fair market value of the REIT Shares
shall be the average of the two appraisals; provided, however, that if the
higher appraisal exceeds the lower appraisal by more than 20% of the lower
appraisal, the two appraisers shall select a third appraiser who shall complete
an appraisal of the fair market value of the REIT Shares no later than 30 days
after the first attempt at evaluating the REIT Shares. In such case, the fair
market value of the REIT Shares shall be the average of the two appraisals
closest in value.
"Certificate" means any instrument or document that is required under
the laws of the Commonwealth of Virginia, or any other jurisdiction in which the
Partnership conducts business, to be signed and sworn to by the Partners of the
Partnership (either by themselves or pursuant to the power-of-attorney granted
to the General Partner in Section 8.02 hereof) and filed for recording in the
appropriate public offices within the Commonwealth of Virginia or such other
jurisdiction to perfect or maintain the Partnership as a limited partnership, to
effect the admission, withdrawal, or substitution of any Partner of the
Partnership, or to protect the limited liability of the Limited Partners as
limited partners under the laws of the Commonwealth of Virginia or such other
jurisdiction.
"Code" means the Internal Revenue Code of 1986, as amended, and as
hereafter amended from time to time. Reference to any particular provision of
the Code shall mean that provision in the Code at the date hereof and any
succeeding provision of the Code.
"Commission" means the U.S. Securities and Exchange Commission.
"Conversion Factor" means one (1), provided that in the event that the
General Partner (i) declares or pays a dividend on its outstanding REIT Shares
in REIT Shares or makes a distribution to all holders of its outstanding REIT
Shares in REIT Shares, (ii) subdivides its outstanding REIT Shares, or (iii)
combines its outstanding REIT Shares into a smaller number of REIT Shares, the
Conversion Factor shall be adjusted by multiplying the Conversion Factor by a
fraction, the numerator of which shall be the number of REIT Shares issued and
outstanding on the record date for such dividend, distribution, subdivision or
combination (assuming for such purposes that such dividend, distribution,
subdivision or combination has occurred as of such time), and the denominator of
which shall be the actual number of REIT Shares (determined without the above
assumption) issued and outstanding on such date. Any adjustment to the
Conversion Factor shall become effective immediately after the effective date of
such event retroactive to the record date, if any, for such event.
"Event of Bankruptcy" as to any Person means the filing of a petition
for relief as to such Person as debtor or bankrupt under the Bankruptcy Code of
1978 or similar provision of law of any jurisdiction (except if such petition is
contested by such Person and has been dismissed within 90 days); insolvency or
bankruptcy of such Person as finally determined by a court proceeding; filing by
such Person of a petition or application to accomplish the same or for the
appointment of a receiver or a trustee for such Person or a substantial part of
his assets; commencement of any proceedings relating to such Person as a debtor
under any other reorganization, arrangement, insolvency, adjustment of debt or
liquidation law of any jurisdiction, whether now in existence or hereinafter in
effect, either by such Person or by another, provided that if such proceeding is
commenced by another, such Person indicates his approval of such proceeding,
consents thereto or acquiesces therein, or such proceeding is contested by such
Person and has not been finally dismissed within 90 days.
"Financial Statement" means an annual balance sheet, a statement of
partners' capital as of the end of such year, as well as statements of cash flow
and income, all in accordance with generally accepted accounting principles and
accompanied by an independent auditor's report.
"Funding Loan" means any loan advanced to the Partnership by the
General Partner or HHTI for any proper Partnership purpose.
"General Partner" means ▇▇▇▇▇▇▇▇ Hospitality REIT Trust, a Maryland
real estate investment trust, and any Person who becomes a substitute or
additional General Partner as provided herein, and any of their successors as
General Partner.
"General Partnership Interest" means a Partnership Interest held by the
General Partner that is a general partnership interest.
"Indemnifying Party" means the party that would otherwise be required
to provide indemnification or the indemnifying party for the purposes of Section
8.06(e) hereof.
"Indemnitee" means (i) any Person made a party to a proceeding by
reason of his status as the General Partner or a director or officer of the
Partnership or the General Partner, and (ii) such other Persons (including
Affiliates of the General Partner or the Partnership) as the General Partner may
designate from time to time, in its sole and absolute discretion.
"Initial Hotels" means the following hotels: (1) Comfort Inn -
▇▇▇▇▇▇▇▇, Virginia, (2) Comfort Inn Dublin, Virginia, (3) Comfort Inn -
Elizabethton, Tennessee, (4) Comfort Inn - Farmville, Virginia, (5) Comfort Inn
- Morgantown, West Virginia, (6) Comfort Inn - Princeton, West Virginia, (7)
Comfort Inn - Beacon Marina, Solomons, Maryland and (8) Rodeway Inn- Wytheville,
Virginia.
"Limited Partner" means any Person named as a Limited Partner on
Exhibit A attached hereto, and any Person who becomes a Substitute or Additional
Limited Partner, in such Person's capacity as a Limited Partner in the
Partnership.
"Limited Partnership Interest" means the ownership interest of a
Limited Partner in the Partnership at any particular time, including the right
of such Limited Partner to any and all benefits to which such Limited Partner
may be entitled as provided in this Agreement and in the Act, together with the
obligations of such Limited Partner to comply with all the provisions of this
Agreement and of such Act.
"Loss" has the meaning provided in Section 5.01(f) hereof.
"New Securities" means any REIT Shares in addition to those offered in
the Initial Offering and issued in connection with a redemption pursuant to
Section 8.05 hereof or any rights, options warrants or convertible or
exchangeable securities containing the right to subscribe for or purchase REIT
Shares
"Notice of Redemption" means the Notice of Exercise of Redemption Right
substantially in the form attached as Exhibit B hereto.
"Offer" Means a purchase, tender or exchange offer.
"Offering" means the initial offer and sale by HHTI and the purchase by
the Underwriters (as defined in the Prospectus) of the common shares of HHTI for
sale to the public.
"Original Limited Partners" means ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. and ▇▇▇▇▇▇▇▇
Associates, Inc.
"Partner" means any General Partner or Limited Partner.
"Partner Non-recourse Debt Minimum Gain" has the meaning set forth in
Regulations Section 1.704-2(i). A Partner's share of Partner Non-recourse Debt
Minimum Gain shall be determined in accordance with Regulations Section
1.704-2(i)(5).
"Partnership Interest" means an ownership interest in the Partnership
representing a Capital Contribution by either a Limited Partner or the General
Partner and includes any and all benefits to which the holder of such a
Partnership Interest may be entitled as provided in this Agreement, together
with all obligations of such Person to comply with the terms and provisions of
this Agreement.
"Partnership Minimum Gain" has the meaning set forth in Regulations
Section 1.704-2(d). In accordance with Regulations Section 1.704-2(d), the
amount of Partnership Minimum Gain is determined by first computing, for each
Partnership non-recourse liability, any gain the Partnership would realize if it
disposed of the property subject to that liability for no consideration other
than full satisfaction of the liability, and then aggregating the separately
computed gains. A Partner's share of Partnership Minimum Gain shall be
determined in accordance with Regulations Section 1.704-2(g)(1).
"Partnership Record Date" means the record date established by the
General Partner for the distribution of Distributable Cash pursuant to Section
5.02 hereof, which record date shall be the same as the record date established
by the General Partner for a distribution to its shareholders of some or all of
its portion of such distribution.
"Partnership Unit" means a fractional, undivided share of the
Partnership Interests of all Partners issued hereunder. As of the date of this
Agreement, there shall be considered to be 4,139,073 Partnership Units
outstanding, with each Partnership Unit representing a .00000024159% Percentage
Interest in the Partnership. The current allocation of Partnership Units among
the Partners is as set forth on Exhibit A.
"Percentage Interest" means the percentage ownership interest in the
Partnership of each Partner, as determined by dividing the Partnership Units
owned by a Partner by the total number of Partnership Units then outstanding.
The initial Percentage Interest of each Partner is as set forth opposite its
respective name on Exhibit A.
"Person" means any individual, partnership, corporation, limited
liability company, joint venture, trust or other entity.
"Profit" has the meaning provided in Section 5.01(f) hereof.
"Property" means any hotel property or other investment in which the
Partnership holds an ownership interest.
"Prospectus" means the final prospectus delivered to purchasers of
HHTI's common stock in the Offering.
"Public Offering Price" shall mean the initial public offering price
set forth in the Prospectus.
"Redeeming Partner" has the meaning provided in Section 8.05(a) hereof.
"Redemption Amount" means either the Cash Amount or the REIT Shares
Amount, as selected by HHTI in its sole discretion pursuant to Section 8.05(c)
hereof.
"Redemption Right" has the meaning provided in Section 8.05(a) hereof.
"Redemption Shares" are the REIT Shares that may be issued in
redemption of Partnership Units under Section 8.05(a) hereof.
"Regulations" means the Federal Income Tax Regulations issued under the
Code, as amended and as hereafter amended from time to time. Reference to any
particular provision of the Regulations shall mean that provision of the
Regulations on the date hereof and any succeeding provision of the Regulations.
"REIT" means a real estate investment trust under Sections 856 through
860 of the Code.
"REIT Expenses" means (i) costs and expenses relating to the formation
and continuity of existence of HHTI and any Subsidiaries thereof (which
Subsidiaries shall, for purposes of this definition, be included within all
references to HHTI in this definition), including taxes, fees and assessments
associated therewith, any and all costs, expenses or fees payable to any
director, officer, or employee of HHTI, (ii) costs and expenses relating to the
public offering and registration of securities by HHTI and all statements,
reports, fees and expenses incidental thereto, including underwriting discounts
and selling commissions applicable to any such offering of securities, (iii)
costs and expenses associated with the preparation and filing of any periodic
reports by HHTI under federal, state or local laws or regulations, including
filings with the Commission, (iv) costs and expenses associated with compliance
by HHTI with laws, rules and regulations promulgated by any regulatory body,
including the Commission, and (v) all other operating or administrative costs of
HHTI incurred in the ordinary course of its business on behalf of the
Partnership.
"REIT Share" means a common share of HHTI.
"REIT Shares Amount" shall mean a number of REIT Shares equal to the
product of the number of Partnership Units offered for redemption by a Redeeming
Partner, multiplied by the Conversion Factor; provided that in the event HHTI
issues to all holders of REIT Shares rights, options, warrants or convertible or
exchangeable securities entitling the shareholders to subscribe for or purchase
REIT Shares, or any other securities or property (collectively, the "rights") ,
then the REIT Shares Amount shall also include such rights that a holder of that
number of REIT Shares would be entitled to receive.
"Securities Act" means the Securities Act of 1933 as amended.
"Service" means the Internal Revenue Service.
"Shelf Registration" means a shelf registration statement under Rule
415 of the Securities Act, or any similar rule that may be adopted by the
Commission pursuant to Section 8.06 hereof.
"Specified Redemption Date" means the first business day of the month
that is at least 10 business days after the receipt by HHTI of the Notice of
Redemption.
"Subsidiary" means, with respect to any Person, any corporation or
other entity of which a majority of (i) the voting power of the voting equity
securities or (ii) the outstanding equity interests is owned, directly or
indirectly, by such Person.
"Subsidiary Partnership" means Solomons Beacon Inn Limited Partnership,
a Maryland limited Partnership.
"Substitute Limited Partner" means any Person admitted to the
Partnership as a Limited Partner pursuant to Section 9.03 hereof.
"Surviving General Partner" means the successor or surviving entity of
a merger or consolidation of the General Partner with another entity.
"Transaction" means, with respect to HHTI any merger, consolidation, or
other combination with or into another Person or sale of all or substantially
all of its assets or any reclassification or any recapitalization or change of
outstanding REIT Shares (other than a change in par value or from par value to
no par value, or as a result of a subdivision or combination of REIT Shares).
"Transfer" means collectively any offer, sale, assignment,
hypothecation, pledge or transfer, of a Limited Partnership Interest by a
Limited Partner, in whole or in part, whether voluntarily or by operation of law
or at judicial sale or otherwise.
ARTICLE II
PARTNERSHIP CONTINUATION AND IDENTIFICATION
2.01 Continuation. The Partners hereby agree to continue the
Partnership pursuant to the Act and upon the terms and conditions set forth in
this Agreement.
2.02 Name, Office and Registered Agent. The name of the Partnership
shall be ▇▇▇▇▇▇▇▇ Hospitality Limited Partnership. The specified office and
place of business of the Partnership shall be ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The General Partner may at any time change the location
of such office, provided the General Partner gives notice to the Partners of any
such change. The name and address of the Partnership's registered agent is
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Riverfront Plaza - East Tower, ▇▇▇ ▇. ▇▇▇▇ ▇▇., ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The sole duty of the registered agent as such is to forward to
the Partnership any notice that is served on him as registered agent.
2.03 Partners.
(a) The General Partner of the Partnership is ▇▇▇▇▇▇▇▇
Hospitality REIT Trust, a Maryland real estate investment trust. Its principal
place of business shall be the same as that of the Partnership.
(b) The Limited Partners shall be those Persons identified as
Limited Partners in Exhibit A hereto, as amended from time to time. The Limited
Partners (other than the Original Limited Partners) hereby are admitted as
Limited Partners.
2.04 Term and Dissolution.
(a) The term of the Partnership shall continue in full force
and effect until December 31, 2050, except that the Partnership shall be
dissolved upon the happening of any of the following events:
(i) The occurrence of an Event of
Bankruptcy as to a General Partner or the dissolution, death or withdrawal of
a General Partner unless the business of the Partnership is continued pursuant
to Section 7.03(b) hereof; provided that if a General Partner is on the date of
such occurrence a partnership, the dissolution of such General Partner as a
result of the dissolution, death, withdrawal, removal or Event of Bankruptcy of
a partner in such partnership shall not be an event of dissolution of the
Partnership if the business of such General Partner is continued by the
remaining partner or partners, either alone or with additional partners, and
such General Partner and such partners comply with any other applicable
requirements of this Agreement;
(ii) The passage of 90 days after the sale or
other disposition of all or
substantially all the assets of the Partnership; (provided that if the
Partnership receives an installment obligation as consideration for such sale or
other disposition, the Partnership shall continue, unless sooner dissolved under
the provisions of this Agreement, until such time as such note or notes are paid
in full);
(iii) The redemption of all Limited
Partnership Interests (other than any of such interests held by the General
Partner); or
(iv) The election by the General
Partner and the holders of 75% of the Percentage Interests of the Limited
Partners (excluding the General Partner) that the Partnership should be
dissolved.
(b) Upon dissolution of the Partnership (unless the business
of the Partnership is continued pursuant to Section 7.03(b) hereof), the General
Partner (or its trustee, receiver, successor or legal representative) shall
amend or cancel the Certificate and liquidate the Partnership's assets and apply
and distribute the proceeds thereof in accordance with Section 5.06 hereof.
Notwithstanding the foregoing, the liquidating General Partner may either (i)
defer liquidation of, or withhold from distribution for a reasonable time, any
assets of the Partnership (including those necessary to satisfy the
Partnership's debts and obligations), or (ii) distribute the assets to the
Partners in kind.
2.05 Filing of Certificate and Perfection of Limited Partnership. The
General Partner shall execute, acknowledge, record and file at the expense of
the Partnership, the Certificate and any and all amendments thereto and all
requisite fictitious name statements and notices in such places and
jurisdictions as may be necessary to cause the Partnership to be treated as a
limited partnership under, and otherwise to comply with, the laws of each state
or other jurisdiction in which the Partnership conducts business.
ARTICLE III
BUSINESS OF THE PARTNERSHIP
The purpose and nature of the business to be conducted by the
Partnership is (i) to conduct any business that may be lawfully conducted by a
limited partnership organized pursuant to the Act, provided, however, that such
business shall be limited to and conducted in such a manner as to permit HHTI at
all times to qualify as a REIT, unless HHTI otherwise ceases to qualify as a
REIT, (ii) to enter into any partnership, joint venture or other similar
arrangement to engage in any of the foregoing or the ownership of interests in
any entity engaged in any of the foregoing and (iii) to do anything necessary or
incidental to the foregoing. HHTI and the General Partner shall also be
empowered to do any and all acts and things necessary or prudent to ensure that
the Partnership will not be classified as a "publicly traded partnership" for
the purposes of Section 7704(a) of the Code.
ARTICLE IV
CAPITAL CONTRIBUTIONS AND ACCOUNTS
4.01 Capital Contributions. The General Partner shall contribute to the
capital of the Partnership cash in an amount set forth opposite its name on
Exhibit A, which shall represent the gross proceeds of the Offering. The Limited
Partners shall contribute to the capital of the Partnership cash and interests
in one or more of the Initial Hotels as set forth opposite their names on
Exhibit A. The Agreed Values of the Limited Partners' ownership interests in the
Initial Hotels that are contributed to the Partnership are as set forth opposite
their names on Exhibit A.
4.02 Additional Capital Contributions and Issuances of Additional
Partnership Interests. Except as provided in this Section 4.02 or in Section
4.03, the Partners shall have no right or obligation to make any additional
Capital Contributions or loans to the Partnership. The General Partner may
contribute additional capital to the Partnership, from time to time, and receive
additional Partnership Interests in respect thereof, in the manner contemplated
in this Section 4.02.
(a) Issuances of Additional Partnership Interests.
(i) General. The General Partner is
hereby authorized to cause the Partnership to issue such additional
Partnership Interests in the form of Partnership Units for any Partnership
purpose at any time or from time to time, to the Partners (including the General
Partner) or to other Persons for such consideration and on such terms and
conditions as shall be established by the General Partner in its sole and
absolute discretion, all without the approval of any Limited Partners. Upon such
issuance of Partnership Units hereunder, the General Partner is hereby
authorized to amend Exhibit A attached hereto to reflect such issuance. Any
additional Partnership Interests issued thereby may be issued in one or more
classes, or one or more series of any of such classes, with such designations,
preferences and relative, participating, optional or other special rights,
powers and duties, including rights, powers and duties senior to Limited
Partnership Interests, all as shall be determined by the General Partner in its
sole and absolute discretion and without the approval of any Limited Partner,
subject to Virginia law, including, without limitation, (i) the allocations of
items of Partnership income, gain, loss, deduction and credit to each such class
or series of Partnership Interests; (ii) the right of each such class or series
of Partnership Interests to share in Partnership distributions; and (iii) the
rights of each such class or series of Partnership Interests upon dissolution
and liquidation of the Partnership; provided, however, that no additional
Partnership Interests shall be issued to the General Partner unless either:
(1)(A) the additional Partnership Interests are issued in
connection with an issuance of shares of or other interests in
HHTI, which shares or interests have designations, preferences
and other rights, all such that the economic interests are
substantially similar to the designations, preferences and
other rights of the additional Partnership Interests issued to
the General Partner by the Partnership in accordance with this
Section 4.02 and (B) the General Partner shall make a Capital
Contribution to the Partnership in an amount equal to the
proceeds raised in connection with the issuance of such shares
of HHTI or other interests in HHTI, or
(2) the additional Partnership Interests are issued to all
Partners in proportion to their respective Percentage
Interests.
Without limiting the foregoing, the General Partner is expressly authorized to
cause the Partnership to issue Partnership Units for less than fair market
value, so long as the General Partner concludes in good faith that such issuance
is in the best interests of the General Partner and the Partnership.
(ii) Upon Issuance of New Securities.
After the initial public offering for HHTI (the "Initial Offering"), HHTI
shall not issue any additional REIT Shares (other than REIT Shares issued in
connection with a redemption pursuant to Section 8.05 hereof) or rights,
options, warrants or convertible or exchangeable securities containing the right
to subscribe for or purchase REIT Shares (collectively, "New Securities") other
than to all holders of REIT Shares, unless (A) the General Partner shall cause
the Partnership to issue to the General Partner, Partnership Interests or
rights, options, warrants or convertible or exchangeable securities of the
Partnership having designations, preferences and other rights, all such that the
economic interests are substantially similar to those of the New Securities, and
(B) HHTI contributes to the General Partner and the General Partner contributes
to the Partnership the proceeds from the issuance of such New Securities and
from the exercise of rights contained in such New Securities to the Partnership;
provided, however, that HHTI is allowed to issue New Securities in connection
with an acquisition of property to be held directly by HHTI, but if and only if
such direct acquisition and issuance of New Securities have been approved and
determined to be in the best interests of HHTI, the General Partner and the
Partnership by a majority of the directors of HHTI, which majority includes a
majority of the Independent Directors (as defined in the Articles of
Incorporation). Without limiting the foregoing, HHTI is expressly authorized to
issue New Securities for less than fair market value and to cause the
Partnership to issue to the General Partner corresponding Partnership Interests,
so long as (x) HHTI concludes in good faith that such issuance is in the best
interests of HHTI, the General Partner and the Partnership (for example, and not
by way of limitation, the issuance of REIT Shares and corresponding Partnership
Units pursuant to an employee stock purchase plan providing for employee
purchases of REIT Shares at a discount from fair market value or employee stock
options that have an exercise price that is less than the fair market value of
the REIT Shares, either at the time of issuance or at the time of exercise), and
(y) HHTI contributes to the General Partner and the General Partner contributes
to the Partnership all proceeds from such issuance. By way of example, in the
event HHTI issues REIT Shares for a cash purchase price and contributes all of
the proceeds of such issuance to the General Partner for contribution to the
Partnership as required hereunder, the General Partner shall be issued a number
of additional Partnership Units equal to the product of (A) the number of such
REIT Shares issued by HHTI, the proceeds of which were so contributed,
multiplied by (B) a fraction, the numerator of which is one hundred percent
(100%), and the denominator of which is the Conversion Factor in effect on the
date of such contribution.
(b) Certain Deemed Contributions of Proceeds of Issuance of
Shares. In connection with any and all issuance of REIT Shares, HHTI shall
contribute to the General Partner and the General Partner shall make a Capital
Contribution to the Partnership of the proceeds raised in connection with such
issuance as required above, provided that if the proceeds actually received by
the General Partner are less than the gross proceeds of such issuance as a
result of any underwriter's discount or other expenses paid or incurred in
connection with such issuance, then the General Partner shall be deemed to have
made a Capital Contribution to the Partnership in the amount of the gross
proceeds of such issuance and the Partnership shall be deemed simultaneously to
have paid such offering expenses in connection with the required issuance of
additional Partnership Units to General Partner for such Capital Contribution
pursuant to Section 4.02(a) hereof.
4.03 General Partner Loans. The General Partner or HHTI may from time
to time advance funds to the Partnership for any proper Partnership purpose as a
loan ("Funding Loan"), provided that any such funds must first be obtained by
the General Partner or HHTI from a third party lender, and then all of such
funds must be loaned by the General Partner or HHTI to the Partnership on the
same terms and conditions, including principal amount, interest rate, repayment
schedule and costs and expenses, as shall be applicable with respect to or
incurred in connection with such loan with such third party lender. Except for
Funding Loans, neither the General Partner nor HHTI shall incur any indebtedness
for borrowed funds; provided, however, that upon the affirmative vote of a
majority of the directors of HHTI, which majority must include a majority of the
Independent Directors, any loan proceeds received by the General Partner or HHTI
may be distributed to their respective shareholders or other equity holders if
such loan and distribution have been determined by the aforesaid majorities to
be necessary to enable HHTI to maintain its status as a REIT under Sections
856-860 of the Code.
4.04 Capital Accounts. A separate capital account (a "Capital Account")
shall be established and maintained for each Partner in accordance with
Regulations Section 1.704-1(b)(2)(iv). If (i) a new or existing Partner acquires
an additional Partnership Interest in exchange for more than a de minimis
Capital Contribution, (ii) the Partnership distributes to a Partner more than a
de minimis amount of Partnership property as consideration for a Partnership
Interest, or (iii) the Partnership is liquidated within the meaning of
Regulation Section 1.704-1(b)(2)(ii)(g), the General Partner shall revalue the
property of the Partnership to its fair market value (taking into account
Section 7701(g) of the Code) in accordance with Regulations Section
1.704-1(b)(2)(iv)(f). When the Partnership's property is revalued by the General
Partner, the Capital Accounts of the Partners shall be adjusted in accordance
with Regulations Sections 1.704-1(2)(iv)(f) and (g), which generally require
such Capital Accounts to be adjusted to reflect the manner in which the
unrealized gain or loss inherent in such property (that has not been reflected
in the Capital Accounts previously would be allocated among the Partners
pursuant to Section 5.01 if there were a taxable disposition of such property
for its fair market value (taking into account Section 7701(g) of the Code) on
the date of the revaluation.
4.05 Percentage Interests. If the number of outstanding Partnership
Units increases or decreases during a taxable year, each Partner's Percentage
Interest shall be adjusted to a percentage equal to the number of Partnership
Units held by such Partner divided by the aggregate number of outstanding
Partnership Units. If the Partners' Percentage Interests are adjusted pursuant
to this Section 4.05, the Profits and Losses for the taxable year in which the
adjustment occurs shall be allocated between the part of the year ending on the
day when the Partnership's property is revalued by the General Partner and the
part of the year beginning on the following day either (i) as if the taxable
year had ended on the date of the adjustment or (ii) based on the number of days
in each part. The General Partner, in its sole discretion, shall determine which
method shall be used to allocate Profits and Losses for the taxable year in
which the adjustment occurs. The allocation of Profits and Losses for the
earlier part of the year shall be based on the Percentage Interests before
adjustment, and the allocation of Profits and Losses for the later part shall be
based on the adjusted Percentage Interests.
4.06 No Interest on Contributions. No Partner shall be
entitled to interest on its Capital Contribution.
4.07 Return of Capital Contributions. No Partner shall be entitled to
withdraw any part of its Capital Contribution or its Capital Account or to
receive any distribution from the Company, except as specifically provided in
this Agreement. Except as otherwise provided herein, there shall be no
obligation to return to any Partner or withdrawn Partner any part of such
Partner's Capital Contribution for so long as the Partnership continues in
existence.
4.08 No Third Party Beneficiary. No creditor or other third party
having dealings with the Partnership shall have the right to enforce the right
or obligation of any Partner to make Capital Contributions or loans or to pursue
any other right or remedy hereunder or at law or in equity, it being understood
and agreed that the provisions of this Agreement shall be solely for the benefit
of, and may be enforced solely by, the parties hereto and their respective
successors and assigns. None of the rights or obligations of the Partners herein
set forth to make Capital Contributions or loans to the Partnership shall be
deemed an asset of the Partnership for any purpose by any creditor or other
third party, nor may such rights or obligations be sold, transferred or assigned
by the Partnership or pledged or encumbered by the Partnership to secure any
debt or other obligation of the Partnership or of any of the Partners. In
addition, it is the intent of the parties hereto that no distribution to any
Limited Partner shall be deemed a return of money or other property in violation
of the Act. However, if any court of competent jurisdiction holds that,
notwithstanding the provisions of this Agreement, any Limited Partner is
obligated to return such money or property, such obligation shall be the
obligation of such Limited Partner and not of the General Partner. Without
limiting the generality of the foregoing, a deficit Capital Account of a Partner
shall not be deemed to be a liability of such Partner nor an asset or property
of the Partnership.
4.09 Loans from Limited Partners. If a Limited Partner guarantying any
debt that is secured by Property is required by the related lender to pay all or
part of such debt, the amount paid toward such debt by such Limited Partner
shall be deemed a loan to the Partnership secured by the assets of the
Partnership only and not those of the General Partner and shall be repaid in
full, without interest, by the Partnership prior to it making any distributions
of cash pursuant to Sections 5.02 or 5.06.
ARTICLE V
PROFITS AND LOSSES; DISTRIBUTIONS
5.01 Allocation of Profit and Loss.
(a) General. Except as otherwise provided in this Section
5.01, Profit and Loss of the Partnership for each fiscal year of the Partnership
shall be allocated among the Partners in accordance with their respective
Percentage Interests.
(b) Minimum Gain Chargeback. Notwithstanding any provision to
the contrary, (i) any expense of the Partnership that is a "non-recourse
deduction" within the meaning of Regulations Section 1.704-2(b)(1) shall be
allocated in accordance with the Partners' respective Percentage Interests, (ii)
any expense of the Partnership that is a "partner non-recourse deduction" within
the meaning of Regulations Section 1.704-2(i)(2) shall be allocated in
accordance with Regulations Section 1.704-2(i)(1), (iii) if there is a net
decrease in Partnership Minimum Gain within the meaning of Regulations Section
1.704-2(f)(1) for any Partnership taxable year, items of gain and income shall
be allocated among the Partners in accordance with Regulations Section
1.704-2(f) and the ordering rules contained in Regulations Section 1.704-2(j),
and (iv) if there is a net decrease in Partner Non-recourse Debt Minimum Gain
within the meaning of Regulations Section 1.704-2(i)(4) for any Partnership
taxable year, items of gain and income shall be allocated among the Partners in
accordance with Regulations Section 1.704-2(i)(4) and the ordering rules
contained in Regulations Section 1.704-2(j). A Partner's "interest in
partnership profits" for purposes of determining its share of the non-recourse
liabilities of the Partnership within the meaning of Regulations Section
1.752-3(a)(3) shall be such Partner's Percentage Interest.
(c) Qualified Income Offset. If a Limited Partner receives in
any taxable year an adjustment, allocation, or distribution described in
subparagraphs (4), (5), or (6) of Regulations Section 1.704-1(b)(2)(ii)(d) that
causes or increases a negative balance in such Partner's Capital Account that
exceeds the sum of such Partner's shares of Partnership Minimum Gain and Partner
Non-recourse Debt Minimum Gain, as determined in accordance with Regulations
Sections 1.704-2(g) and 1.704-2(i), such Partner shall be allocated specially
for such taxable year (and, if necessary, later taxable years) items of income
and gain in an amount and manner sufficient to eliminate such negative Capital
Account balance as quickly as possible as provided in Regulations Section
1.704-1(b)(2)(ii)(d). After the occurrence of an allocation of income or gain to
a Limited Partner in accordance with this Section 5.01(c), to the extent
permitted by Regulations Section 1.704-1(b), items of expense or loss shall be
allocated to such Partner in an amount necessary to offset the income or gain
previously allocated to such Partner under this Section 5.01(c).
(d) Capital Account Deficits. Loss shall not be allocated to a
Limited Partner to the extent that such allocation would cause a deficit in such
Partner's Capital Account (after reduction to reflect the items described in
Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6)) to exceed the sum of
such Partner's shares of Partnership Minimum Gain and Partner Non-recourse Debt
Minimum Gain. Any Loss in excess of that limitation shall be allocated to the
General Partner. After the occurrence of an allocation of Loss to the General
Partner in accordance with this Section 5.01(d), to the extent permitted by
Regulations Section 1.704-1(b), Profit shall be allocated to such Partner in an
amount necessary to offset the Loss previously allocated to such Partner under
this Section 5.01(d).
(e) Allocations Between Transferor and Transferee. If a
Partner transfers any part or all of its Partnership Interest, and the
transferee is admitted as a substitute Partner as provided herein, the
distributive shares of the various items of Profit and Loss allocable among the
Partners during such fiscal year of the Partnership shall be allocated between
the transferor and the substitute Partner either (i) as if the Partnership's
fiscal year had ended on the date of the transfer, or (ii) based on the number
of days of such fiscal year that each was a Partner without regard to the
results of Partnership activities in the respective portions of such fiscal year
in which the transferor and the transferee were Partners. The General Partner,
in its sole discretion, shall determine which method shall be used to allocate
the distributive shares of the various items of Profit and Loss between the
transferor and the substitute Partner.
(f) Definition of Profit and Loss. "Profit" and "Loss" and any
items of income, gain, expense, or loss referred to in this Agreement shall be
determined in accordance with federal income tax accounting principles, as
modified by Regulations Section 1.704-1(b)(2)(iv), except that Profit and Loss
shall not include items of income, gain and expense that are specially allocated
pursuant to Section 5.01(b), 5.01(c), or 5.01(d). All allocations of income,
Profit, gain, Loss, and expense (and all items contained therein) for federal
income tax purposes shall be identical to all allocations of such items set
forth in this Section 5.01, except as otherwise required by Section 704(c) of
the Code and Regulations Section 1.704-1(b)(4). The Partnership shall use the
"traditional method" for allocating items of income, gain and expense with
respect to its Initial Hotels as allowed by Regulations promulgated under
Section 704(c) of the Code.
5.02 Distribution of Cash.
(a) The General Partner shall distribute cash on a quarterly
(or, at the election of the General Partner, more frequent) basis, in an amount
determined by the General Partner in its sole discretion, to the Partners who
are Partners on the Partnership Record Date with respect to such quarter (or
other distribution period) in accordance with their respective Percentage
Interests on the Partnership Record Date.
(b) In no event may a Partner receive a distribution of cash
with respect to a Partnership Unit if such Partner is entitled to receive a
dividend with respect to a REIT Share for which all or part of such Partnership
Unit has been or will be exchanged.
5.03 REIT Distribution Requirements. The General Partner shall use its
reasonable efforts to cause the Partnership to distribute amounts sufficient to
enable the General Partner (i) to meet its distribution requirement for
qualification as a REIT as set forth in Section 857(a)(1) of the Code and (ii)
to avoid any federal income or excise tax liability imposed by the Code;
provided, however, that the Limited Partners shall receive their pro rata share
of all distributions.
5.04 No Right to Distributions in Kind. No Partner shall be entitled to
demand property other than cash in connection with any distributions by the
Partnership.
5.05 Limitations on Return of Capital Contributions. Notwithstanding
any of the provisions of this Article V, no Partner shall have the right to
receive and the General Partner shall not have the right to make, a distribution
which includes a return of all or part of a Partner's Capital Contributions,
unless after giving effect to the return of a Capital Contribution, the sum of
all Partnership liabilities, other than the liabilities to a Partner for the
return of his Capital Contribution, does not exceed the fair market value of the
Partnership's assets.
5.06 Distributions Upon Liquidation.
(a) Upon liquidation of the Partnership, after payment of, or
adequate provision for, debts and obligations of the Partnership, including any
Partner loans, any remaining assets of the Partnership shall be distributed to
all Partners with positive Capital Accounts in accordance with their respective
positive Capital Account balances. For purposes of the preceding sentence, the
Capital Account of each Partner shall be determined after all adjustments made
in accordance with Sections 5.01 and 5.02 resulting from Partnership operations
and from all sales and dispositions of all or any part of the Partnership's
assets. Any distributions pursuant to this Section 5.06 should be made by the
end of the Partnership's taxable year in which the liquidation occurs (or, if
later, within 90 days after the date of the liquidation). To the extent deemed
advisable by the General Partner, appropriate arrangements (including the use of
a liquidating trust) may be made to assure that adequate funds are available to
pay any contingent debts or obligations.
(b) If the General Partner has a negative balance in its
Capital Account following a liquidation of the Partnership, as determined after
taking into account all Capital Account Adjustments in accordance with Sections
5.01 and 5.02 resulting from Partnership operations and from all sales and
dispositions of all or any part of the Partnership's assets, the General Partner
shall contribute to the Partnership an amount of cash equal to the negative
balance in its Capital Account and such cash shall be paid or distributed by the
Partnership to creditors, if any, and then to the Limited Partners in accordance
with Section 5.06(a). Such contribution by the General Partner shall be made by
the end of the Partnership's taxable year in which the liquidation occurs (or,
if later, within 90 days after the date of the liquidation).
5.07 Substantial Economic Effect. It is the intent of the Partners that
the allocations of Profit and Loss under the Agreement have substantial economic
effect (or be consistent with the Partners' interests in the Partnership in the
case of the allocation of losses attributable to non-recourse debt) within the
meaning of Section 704(b) of the Code as interpreted by the Regulations
promulgated pursuant thereto. Article V and other relevant provisions of this
Agreement shall be interpreted in a manner consistent with such intent.
ARTICLE VI
RIGHTS, OBLIGATIONS AND
POWERS OF THE GENERAL PARTNER
6.01 Management of the Partnership.
(a) Except as otherwise expressly provided in this Agreement,
the General Partner shall have full, complete and exclusive discretion to manage
and control the business of the Partnership for the purposes herein stated, and
shall make all decisions affecting the business and assets of the Partnership.
Subject to the restrictions specifically contained in this Agreement, the powers
of the General Partner shall include, without limitation, the authority to take
the following actions on behalf of the Partnership:
(i) to acquire, purchase, own, lease
and dispose of any real property and any other property or assets that the
General Partner determines are necessary or appropriate or in the best interests
of the business of the Partnership;
(ii) to construct buildings and make
other improvements on the properties owned or leased by the Partnership;
(iii) to borrow money for the
Partnership, issue evidences of indebtedness in connection therewith,
refinance, guarantee, increase the amount of, modify, amend or change the terms
of, or extend the time for the payment of, any indebtedness or obligation to the
Partnership, and secure such indebtedness by mortgage, deed of trust, pledge or
other lien on the Partnership's assets;
(iv) to pay, either directly or by
reimbursement, for all operating costs and general administrative expenses of
the General Partner or the Partnership, to third parties or to the General
Partner as set forth in this Agreement;
(v) to lease all or any portion of
any of the Partnership's assets, whether or not the terms of such leases extend
beyond the termination date of the Partnership and whether or not any portion of
the Partnership's assets so leased are to be occupied by the lessee, or, in
turn, subleased in whole or in part to others, for such consideration and on
such terms as the General Partner may determine;
(vi) to prosecute, defend, arbitrate,
or compromise any and all claims or liabilities in favor of or against the
Partnership, on such terms and in such manner as the General Partner may
reasonably determine, and similarly to prosecute, settle or defend litigation
with respect to the Partners, the Partnership, or the Partnership's assets;
provided, however, that the General Partner may not, without the consent of all
of the Partners, confess a judgment against the Partnership;
(vii) to file applications, communicate,
and otherwise deal with any and all governmental agencies having jurisdiction
over, or in any way affecting, the Partnership's assets or any other aspect of
the Partnership business;
(viii) to make or revoke any election
permitted or required of the Partnership by any taxing authority; provided,
however, that the Partnership's election to use the traditional method as
specified in Section 5.01(f) of this Agreement shall not be revoked without the
consent of the holders of 75% of the Percentage Interests of the Limited
Partners (excluding the General Partner);
(ix) to maintain such insurance
coverage for public liability, fire and casualty, and any and all other
insurance for the protection of the Partnership, for the conservation of
Partnership assets, or for any other purpose convenient or beneficial to the
Partnership, in such amounts and such types, as it shall determine from time to
time;
(x) to determine whether or not to
apply any insurance proceeds for any property to the restoration of such
property or to distribute the same;
(xi) to retain legal counsel,
accountants, consultants, real estate brokers, and such other persons, as the
General Partner may deem necessary or appropriate in connection with the
Partnership business and to pay therefor such reasonable remuneration as the
General Partner may deem reasonable and proper;
(xii) to retain other services of any
kind or nature in connection with the Partnership business, and to pay
therefor such remuneration as the General Partner may deem reasonable and
proper;
(xiii) to negotiate and conclude
agreements on behalf of the Partnership with respect to any of the rights,
powers and authority conferred upon the General Partner;
(xiv) to maintain accurate accounting
records and to file promptly all federal, state and local income tax returns on
behalf of the Partnership;
(xv) to distribute Partnership cash or
other Partnership assets in accordance with this Agreement;
(xvi) to form or acquire an interest in,
and contribute property to, any further limited or general partnerships, joint
ventures or other relationships that it deems desirable (including, without
limitation, the acquisition of interests in, and the contributions of property
to, its Subsidiaries and any other Person in which it has an equity interest
from time to time);
(xvii) to establish Partnership
reserves for working capital, capital expenditures, contingent liabilities,
or any other valid Partnership purpose; and
(xviii) to take such other action, execute,
acknowledge, swear to or deliver such other documents and instruments, and
perform any and all other acts the General Partner deems necessary or
appropriate for the formation, continuation and conduct of the business and
affairs of the Partnership and to possess and enjoy all of the rights and powers
of a general partner as provided by the Act.
(b) Except as otherwise provided herein, to the extent the
duties of the General Partner require expenditures of funds to be paid to third
parties, the General Partner shall not have any obligations hereunder except to
the extent that Partnership funds are reasonably available to it for the
performance of such duties, and nothing herein contained shall be deemed to
authorize or require the General Partner, in its capacity as such, to expend its
individual funds for payment to third parties or to undertake any individual
liability or obligation on behalf of the Partnership.
6.02 Delegation of Authority. The General Partner may delegate any or
all of its powers, rights and obligations hereunder, and may appoint, employ,
contract or otherwise deal with any Person for the transaction of the business
of the Partnership, which Person may, under supervision of the General Partner,
perform any acts or services for the Partnership as the General Partner may
approve.
6.03 Indemnification and Exculpation of Indemnitees.
(a) The Partnership shall indemnify an Indemnitee from and
against any and all losses, claims, damages, liabilities, joint or several,
expenses (including reasonable legal fees and expenses), judgments, fines,
settlements, and other amounts arising from any and all claims, demands,
actions, suits or proceedings, civil, criminal, administrative or investigative,
that relate to the operations of the Partnership as set forth in this Agreement
in which any Indemnitee may be involved, or is threatened to be involved, as a
party or otherwise, unless it is established that: (i) the act or omission of
the Indemnitee was material to the matter giving rise to the proceeding and
either was committed in bad faith or was the result of active and deliberate
dishonesty; (ii) the Indemnitee actually received an improper personal benefit
in money, property or services; or (iii) in the case of any criminal proceeding,
the Indemnitee had reasonable cause to believe that the act or omission was
unlawful. The termination of any proceeding by judgment, order or settlement
does not create a presumption that the Indemnitee did not meet the requisite
standard of conduct set forth in this Section 6.03(a). The termination of any
proceeding by conviction or upon a plea of nolo contendere or its equivalent, or
an entry of an order of probation prior to judgment, creates, a rebuttable
presumption that the Indemnitee acted in a manner contrary to that specified in
this Section 6.03(a). Any indemnification pursuant to this Section 6.03 shall be
made only out of the assets of the Partnership.
(b) The Partnership may reimburse an Indemnitee for reasonable
expenses incurred by an Indemnitee who is a party to a proceeding in advance of
the final disposition of the proceeding upon receipt by the Partnership of (i) a
written affirmation by the Indemnitee of the Indemnitee's good faith belief that
the standard of conduct necessary for indemnification by the Partnership as
authorized in this Section 6.03 has been met, and (ii) a written undertaking by
or on behalf of the Indemnitee to repay the amount if it shall ultimately be
determined that the standard of conduct has not yet been met.
(c) The indemnification provided by this Section 6.03 shall be
in addition to any other rights to which an Indemnitee or any other Person may
be entitled under any agreement, pursuant to any vote of the Partners, as a
matter of law or otherwise, and shall continue as to an Indemnitee who has
ceased to serve in such capacity.
(d) The Partnership may purchase and maintain insurance, on
behalf of the Indemnitees and such other Persons as the General Partner shall
determine, against any liability that may be asserted against or expenses that
may be incurred by such Person in connection with the Partnership's activities,
regardless of whether the Partnership would have the power to indemnify such
Person against such liability under the provisions of this Agreement.
(e) For purposes of this Section 6.03, the Partnership shall
be deemed to have requested an Indemnitee to serve as fiduciary of an employee
benefit plan whenever the performance by it of its duties to the Partnership
also imposes duties on, or otherwise involves services by, it to the plan or
participants or beneficiaries of the plan; excise taxes assessed on an
Indemnitee with respect to an employee benefit plan pursuant to applicable law
shall constitute fines within the meaning of this Section 6.03; and actions
taken or omitted by the Indemnitee with respect to an employee benefit plan in
the performance of its duties for a purpose reasonably believed by it to be in
the interest of the participants and beneficiaries of the plan shall be deemed
to be for a purpose which is not opposed to the best interests of the
Partnership.
(f) In no event may an Indemnitee subject the Limited Partners
to personal liability by reason of the indemnification provisions set forth in
this Agreement.
(g) An Indemnitee shall not be denied indemnification in whole
or in part under this Section 6.03 because the Indemnitee had an interest in the
transaction with respect to which the indemnification applies if the transaction
was otherwise permitted by the terms of this Agreement.
(h) The provisions of this Section 6.03 are for the benefit of
the Indemnitees, their heirs, successors, assigns and administrators and shall
not be deemed to create any rights for the benefit of any other Persons.
(i) Any amendment, modification or repeal of this Section 6.03
or any provision hereof shall be prospective only and shall not in any way
affect the limitations on the General Partner's or HHTI's liability to the
Partnership and the Limited Partners under this Section 6.03 as in effect
immediately prior to such amendment, modification or repeal with respect to
matters occurring, in whole or in part, prior to such amendment, modification or
repeal, regardless of when claims relating to such matters may arise or be
asserted.
6.04 Liability of the General Partner.
(a) Notwithstanding anything to the contrary set forth in this
Agreement, the General Partner shall not be liable for monetary damages to the
Partnership or any Partners for losses sustained or liabilities incurred as a
result of errors in judgment or of any act or omission if the General Partner
acted in good faith.
(b) The Limited Partners expressly acknowledge that the
General Partner is acting on behalf of the Partnership and the General Partner's
shareholders collectively, that the General Partner is under no obligation to
consider the separate interests of the Limited Partners (including, without
limitation, the tax consequences to Limited Partners) in deciding whether to
cause the Partnership to take (or decline to take) any actions, and that the
General Partner shall not be liable for monetary damages for losses sustained,
liabilities incurred, or benefits not derived by Limited Partners in connection
with such decisions, provided that the General Partner has acted in good faith.
(c) Subject to its obligations and duties as General Partner
set forth in Section 6.01 hereof, the General Partner may exercise any of the
powers granted to it under this Agreement and perform any of the duties imposed
upon it hereunder either directly or by or through its agents. The General
Partner shall not be responsible for any misconduct or negligence on the part of
any such agent appointed by it in good faith.
(d) Notwithstanding any other provisions of this Agreement or
the Act, any action of the General Partner on behalf of the Partnership or any
decision of the General Partner to refrain from acting on behalf of the
Partnership, undertaken in the good faith belief that such action or omission is
necessary or advisable in order (i) to protect the ability of HHTI to continue
to qualify as a REIT, or (ii) to prevent HHTI from incurring any taxes under
Section 857, Section 4981, or any other provision of the Code, is expressly
authorized under this Agreement and is deemed approved by all of the Limited
Partners.
(e) Any amendment, modification or repeal of this Section 6.04
or any provision hereof shall be prospective only and shall not in any way
affect the limitations on the General Partner's liability to the Partnership and
the Limited Partners under this Section 6.04 as in effect immediately prior to
such amendment, modification or repeal with respect to matters occurring, in
whole or in part, prior to such amendment, modification or repeal, regardless of
when claims relating to such matters may arise or be asserted.
6.05 Expenditures by Partnership. The General Partner is hereby
authorized to pay compensation for accounting, administrative, legal, technical,
management and other services rendered to the Partnership. All of the aforesaid
expenditures (including Administrative Expenses) shall be made on behalf of the
Partnership, and the General Partner and HHTI shall be entitled to reimbursement
by the Partnership for any expenditure (including Administrative Expenses)
incurred by it on behalf of the Partnership which shall be made other than out
of the funds of the Partnership. The Partnership shall also assume, and pay when
due, all Administrative Expenses.
6.06 Outside Activities; Redemption/Tender Offer of REIT Shares.
(a) Subject to Section 6.09 hereof, the Articles of
Incorporation and any agreements entered into by the General Partner or its
Affiliates with the Partnership or a Subsidiary, any officer, director,
employee, agent, Affiliate or shareholder of the General Partner shall be
entitled to and may have business interests and engage in business activities in
addition to those relating to the Partnership, including business interests and
activities substantially similar or identical to those of the Partnership.
Neither the Partnership nor any of the Limited Partners shall have any rights by
virtue of this Agreement in any such business ventures, interest or activities.
None of the Limited Partners nor any other Person shall have any rights by
virtue of this Agreement or the partnership relationship established hereby in
any such business ventures, interests or activities, and the General Partner
shall have no obligation pursuant to this Agreement to offer any interest in any
such business ventures, interests and activities to the Partnership or any
Limited Partner, even if such opportunity is of a character which, if presented
to the Partnership or any Limited Partner, could be taken by such Person.
(b) In the event HHTI redeems any REIT Shares, then the
General Partner shall cause the Partnership to purchase from it a number of
Partnership Units as determined based on the application of the Conversion
Factor on the same terms that HHTI redeemed such REIT Shares. Moreover, if HHTI
makes a cash tender offer or other offer to acquire REIT Shares, then the
General Partner shall cause the Partnership to make a corresponding offer to the
General Partner to acquire an equal number of Partnership Units held by the
General Partner. In the event any REIT Shares are redeemed by HHTI pursuant to
such offer, the Partnership shall redeem an equivalent number of the General
Partner's Partnership Units for an equivalent purchase price based on the
application of the Conversion Factor.
6.07 Employment or Retention of Affiliates.
(a) Any Affiliate of the General Partner may be employed or
retained by the Partnership and may otherwise deal with the Partnership (whether
as a buyer, lessor, lessee, manager, furnisher of goods or services, broker,
agent, lender or otherwise) and may receive from the Partnership any
compensation, price, or other payment therefor that is fair and reasonable for
the services provided.
(b) The Partnership may lend or contribute to its Subsidiaries
or other Persons in which it has an equity investment, and such Persons may
borrow funds from the Partnership, on terms and conditions established in the
sole and absolute discretion of the General Partner. The foregoing authority
shall not create any right or benefit in favor of any Subsidiary or any other
Person.
(c) The Partnership may transfer assets to joint ventures,
other partnerships, corporations or other business entities in which it is or
thereby becomes a participant upon such terms and subject to such conditions as
the General Partner deems are consistent with this Agreement and applicable law.
(d) Except as expressly permitted by this Agreement, neither
the General Partner nor any of its Affiliates shall sell, transfer or convey any
property to, or purchase any property from, the Partnership, directly or
indirectly, except pursuant to transactions that are on terms that are fair and
reasonable to the Partnership.
6.08 General Partner Participation. The General Partner and HHTI agree
that all business activities of the General Partner and HHTI, including
activities pertaining to the acquisition, development and/or ownership of hotels
or other property, shall be conducted through the Partnership; provided,
however, that the General Partner and HHTI are each allowed to make a direct
acquisition, but if and only if, such acquisition is made in connection with the
issuance of New Securities, which direct acquisition and issuance have been
approved and determined to be in the best interests of the General Partner and
HHTI and the Partnership by a majority of the Independent Directors. The General
Partner and HHTI also agree that all borrowings shall constitute Funding Loans,
subject to the exception set forth in Section 4.03 hereof.
ARTICLE VII
CHANGES IN GENERAL PARTNER
7.01 Transfer of the General Partner's Partnership Interest.
(a) The General Partner may not transfer any of its General
Partnership Interest or Limited Partnership Interests or withdraw as General
Partner or HHTI may not transfer its interest in the General Partner or withdraw
from the General Partner except as provided in Section 7.01(c) or in connection
with a transaction described in Section 7.01(d).
(b) The General Partner agrees that it will at all
times own at least a 20% Percentage Interest in the form of a General Partner
Interest.
(c) Except as otherwise provided in Section 6.06(b) or Section
7.01(d) hereof, the General Partner and HHTI shall not engage in any merger,
consolidation or other combination with or into another Person or sale of all or
substantially all of its assets, or any reclassification, or any
recapitalization or change of outstanding REIT Shares (other than a change in
par value, or from par value to no par value, or as a result of a subdivision or
combination of REIT Shares) (a "Transaction"), unless (i) the Transaction also
includes a merger of the Partnership or sale of substantially all of the assets
of the Partnership as a result of which all Limited Partners will receive for
each Partnership Unit an amount of cash, securities, or other property equal to
the product of the Conversion Factor and the greatest amount of cash, securities
other property paid in the Transaction to a holder of one REIT Share in
consideration of one REIT Share, provided that if, in connection with the
Transaction, a purchase, tender or exchange offer ("Offer") shall have been made
to and accepted by the holders of more than fifty percent (50%) of the
outstanding REIT Shares, each holder of Partnership Units shall be given the
option to exchange its Partnership Units for the greatest amount of cash,
securities, or other property which a Limited Partner would have received had it
(A) exercised its Redemption Right and (B) sold, tendered or exchanged pursuant
to the Offer the REIT Shares received upon exercise of the Redemption Right
immediately prior to the expiration of the Offer.
(d) Notwithstanding Section 7.01(c), HHTI may merge into or
consolidate with another entity if immediately after such merger or
consolidation (i) substantially all of the assets of the successor or surviving
entity (the "Surviving Entity"), other than the Partnership Units held by the
General Partner or HHTI's interest in the General Partner, respectively, are
contributed to the Partnership as a Capital Contribution in exchange for
Partnership Units with a fair market value equal to the value of the assets so
contributed. Such valuation shall be determined by an appraiser mutually agreed
upon by the Surviving Entity and a majority-in-interest of the Limited Partners
(excluding the Surviving Entity or the General Partner) within 10 days following
the effective date of the merger or consolidation. In the event that the parties
are unable to agree upon an appraiser, the Surviving Entity and a
majority-in-interest of the Limited Partners (excluding the General Partner)
each shall select an appraiser. Each such appraiser shall complete an appraisal
of the fair market value of the Units and the assets contributed within 30 days
of the effective date of the merger or consolidation. The fair market value of
the General Partner's General Partnership Interest shall be the average of the
two appraisals; provided, however, that if the higher appraisal exceeds the
lower appraisal by more than 20% of the amount of the lower appraisal, the two
appraisals, no later than 40 days after the effective date of the merger or
consolidation, shall select a third appraiser who shall complete an appraisal of
the fair market value of the General Partner's General Partnership Interest no
later than 60 days after the effective date of the merger or consolidation. In
such case, the fair market value of the General Partner's General Partnership
Interest shall be the average of the two appraisals closest in value. The above
provisions of this Section 7.01(d) shall similarly apply to successive mergers
or consolidations permitted hereunder.
7.02 Admission of a Substitute or Successor General Partner. A Person
shall be admitted as a substitute or successor General Partner of the
Partnership only if the following terms and conditions are satisfied:
(a) a majority-in-interest of the Limited Partners (other than
the General Partner) shall have consented in writing to the admission of the
substitute or successor General Partner, which consent may be withheld in the
sole discretion of such Limited Partners;
(b) the Person to be admitted as a substitute or additional
General Partner shall have accepted and agreed to be bound by all terms and
provisions of this Agreement by executing a counterpart thereof and such other
documents or instruments as may be required or appropriate in order to effect
the admission of such Person as a General Partner, and a certificate evidencing
the admission of such Person as a General Partner shall have been filed for
recordation and all other actions required by Section 2.05 hereof in connection
with such admission shall have been performed;
(c) if the Person to be admitted as a substitute or additional
General Partner is a corporation or a partnership it shall have provided the
Partnership with evidence satisfactory to counsel for the Partnership of such
Person's authority to become a General Partner and to be bound by the terms and
provisions of this Agreement; and
(d) counsel for the Partnership shall have rendered an opinion
(relying on such opinions from other counsel and the state or any other
jurisdiction as may be necessary) that the admission of the person to be
admitted as a substitute or additional General Partner is in conformity with the
Act, that none of the actions taken in connection with the admission of such
Person as a substitute or additional General Partner will cause (i) the
Partnership to be classified other than as a partnership for federal income tax
purposes, or (ii) the loss of any Limited Partner's limited liability.
7.03 Effect of Bankruptcy, Withdrawal, Death or Dissolution of a
General Partner.
(a) Upon the occurrence of an Event of Bankruptcy as to a
General Partner (and its removal pursuant to Section7.04(a) hereof) or the
withdrawal, removal or dissolution of a General Partner (except that, if a
General Partner is on the date of such occurrence a partnership, the withdrawal,
death, dissolution, Event of Bankruptcy as to, or removal of a partner in, such
partnership shall be deemed not to be a dissolution of such General Partner if
the business of such General Partner is continued by the remaining partner or
partners), the Partnership shall be dissolved and terminated unless the
Partnership is continued pursuant to Section 7.03(b) hereof.
(b) Following the occurrence of an Event of Bankruptcy as to a
General Partner (and its removal pursuant to Section 7.04(a) hereof) or the
withdrawal, removal or dissolution of a General Partner (except that, if a
General Partner is on the date of such occurrence a partnership, the withdrawal,
death, dissolution, Event of Bankruptcy as to, or removal of a partner in, such
partnership shall be deemed not to be a dissolution of such General Partner if
the business of such General Partner is continued by the remaining partner or
partners), the Limited Partners, within 90 days after such occurrence, may elect
to reconstitute the Partnership and continue the business of the Partnership for
the balance of the term specified in Section 2.04 hereof by selecting, subject
to Section 7.02 hereof and any other provisions of this Agreement, a substitute
General Partner by unanimous consent of the Limited Partners. If the Limited
Partners elect to reconstitute the Partnership and admit a substitute General
Partner, the relationship with the Partners and of any Person who has acquired
an interest of a Partner in the Partnership shall be governed by this Agreement.
7.04 Removal of a General Partner.
(a) Upon the occurrence of an Event of Bankruptcy as to, or
the dissolution of, a General Partner, such General Partner shall be deemed to
be removed automatically; provided, however, that if a General Partner is on the
date of such occurrence a partnership, the withdrawal, death, dissolution, Event
of Bankruptcy as to or removal of a partner in such partnership shall be deemed
not to be a dissolution of the General Partner if the business of such General
Partner is continued by the remaining partner or partners.
(b) if a General Partner has been removed pursuant to this
Section 7.04 and the Partnership is continued pursuant to Section 7.03 hereof,
such General Partner shall promptly transfer and assign its General Partnership
Interest in the partnership (i) to the substitute General Partner approved by a
majority-in-interest of the Limited Partners (excluding the General Partner) in
accordance with Section 7.03(b) hereof and otherwise admitted to the Partnership
in accordance with Section 7.02 hereof. At the time of assignment, the removed
General Partner shall be entitled to receive from the substitute General Partner
the fair market value of the General Partnership Interest of such removed
General Partner as reduced by any damages caused to the Partnership by such
General Partner. Such fair market value shall be determined by an appraiser
mutually agreed upon by the General Partner and a majority-in-interest of the
Limited Partners (excluding the General Partner) within 10 days following the
removal of the General Partner. In the event that the parties are unable to
agree upon an appraiser, the General Partner and a majority-in-interest of the
Limited Partners (excluding the General Partner) each shall select an appraiser.
Each such appraiser shall complete an appraisal of the fair market value of the
General Partner's General Partnership Interest within 30 days of the General
Partner's removal, and the fair market value of the General Partner's General
Partnership Interest shall be the average of the two appraisals; provided
however, that if the higher appraisal exceeds the lower appraisal by more than
20% of the amount of the lower appraisal, the two appraisers, no later than 40
days after the removal of the General Partner, shall select a third appraiser
who shall complete an appraisal of the fair market value of the General
Partner's General Partnership Interest no later than 60 days after the removal
of the General Partner. In such case, the fair market value of the General
Partner's General Partnership Interest shall be the average of the two
appraisals closest in value.
(c) The General Partnership Interest of a removed General
Partner, during the time after default until transfer under Section 7.04(b),
shall be converted to that of a special Limited Partner; provided, however, such
removed General Partner shall not have any rights to participate in the
management and affairs of the Partnership, and shall not be entitled to any
portion of the income, expense, profit, gain or loss allocations or cash
distributions allocable or payable as the case may be, to the Limited Partners.
Instead, such removed General Partner shall receive and be entitled only to
retain distributions or allocations of such items which it would have been
entitled to receive in its capacity as General Partner, until the transfer is
effective pursuant to Section 7.04(b).
(d) All Partners shall have given and hereby do give such
consents, shall take such actions and shall execute such documents as shall be
legally necessary and sufficient to effect all the foregoing provisions of this
Section.
ARTICLE VIII
RIGHTS AND OBLIGATIONS
OF THE LIMITED PARTNERS
8.01 Management of the Partnership. The Limited Partners shall not
participate in the management or control of Partnership business nor shall they
transact any business for the Partnership, nor shall they have the power to sign
for or bind the Partnership, such powers being vested solely and exclusively in
the General Partner.
8.02 Power of Attorney. Each Limited Partner hereby irrevocably
appoints the General Partner his true and lawful attorney-in-fact, who may act
for each Limited Partner and in his name, place and ▇▇▇▇▇, and for his use and
benefit, to sign, acknowledge, swear to, deliver, file and record, at the
appropriate public offices, any and all documents, certificates, and instruments
as may be deemed necessary or desirable by the General Partner to carry out
fully the provisions of this Agreement and the Act in accordance with their
terms, which power of attorney is coupled with an interest and shall survive the
death, dissolution or legal incapacity of the Limited Partner, or the transfer
by the Limited Partner of any part or all of his Interest in the Partnership.
This power of attorney shall be limited to documents, certificates and
instruments the contents of which shall have no adverse economic impact on the
Limited Partners.
8.03 Limitation on Liability of Limited Partners. No Limited Partner
shall be liable for any debts, liabilities, contracts or obligations of the
Partnership. A Limited Partner shall be liable to the Partnership only to make
payments of his Capital Contribution, if any, as and when due hereunder. After
his Capital Contribution is fully paid, no Limited Partner shall, except as
otherwise required by the Act, be required to make any further Capital
Contribution or other payments or lend any funds to the Partnership.
8.04 Ownership by Limited Partner of Corporate General Partner or
Affiliate. No Limited Partner shall at any time, either directly or indirectly,
own any stock or other interest in the General Partner or in any Affiliate
thereof, if such ownership by itself or in conjunction with other stock or other
interests owned by other Limited Partners would, in the opinion of counsel for
the Partnership, jeopardize the classification of the Partnership as a
partnership for federal income tax purposes. The General Partner shall be
entitled to make such reasonable inquiry of the Limited Partners as is required
to establish compliance by the Limited Partners with the provisions of this
Section.
8.05 Redemption Right.
(a) Subject to the terms of Section 8.05, on or after the date
(i) that is one (1) year after the closing of the Offering, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
▇▇. and ▇▇▇▇▇▇▇▇ Associates, Inc. as Limited Partners with respect to the Units
received by them in connection with the offering of the REIT Shares issued on
November 29, 1994, or (ii) that is six months after the issuance by the
Partnership of any Units other than those issued in connection with the November
29, 1994 issuance of REIT Shares (each such date, a "First Redemption Date" with
respect to the applicable Units), each Limited Partner shall have the right (the
"Redemption Right") to require the Partnership to redeem on a Specified
Redemption Date all or a portion of the applicable Units held by such Limited
Partner at a redemption price equal to and in the form of the Redemption Amount.
The Redemption Right shall be exercised pursuant to a Notice of Redemption
delivered to the General Partner by the Limited Partner who is exercising the
Redemption Right (the "Redeeming Partner"). A Limited Partner may not exercise
the Redemption Right for (i) less than one thousand (1,000) Partnership Units
or, if such Limited Partner holds less than one thousand (1,000) Partnership
Units, all of the Partnership Units held by such Partner and (ii) more than the
number of Partnership Units that would, upon redemption, entitle such Limited
Partner to 9.9% of the REIT Shares. The Redeeming Partner shall have no right,
with respect to any Partnership Units so redeemed, to receive any distribution
paid with respect to Partnership Units if the record date for such distribution
is on or after the Specified Redemption Date.
(b) Notwithstanding the provisions of Section 8.05(a), the
General Partner or HHTI may, in its sole and absolute discretion, assume
directly and satisfy a Redemption Right within the maximum and minimum limits
provided in Section 8.05(a) by paying to the Redeeming Partner the Redemption
Amount on the Specified Redemption Date, whereupon the General Partner or HHTI,
as applicable, shall acquire the Partnership Units offered for redemption by the
Redeeming Partner and shall be treated for all purposes of this Agreement as the
owner of such Partnership Units. In the event the General Partner or HHTI shall
exercise its right to satisfy the Redemption Right in the manner described in
the preceding sentence, the Partnership shall have no obligation to pay any
amount to the Redeeming Partner with respect to such Redeeming Partner's
exercise of the Redemption Right, and each of the Redeeming Partner, the
Partnership, and the General Partner shall treat the transaction between the
General Partner or HHTI, applicable, and the Redeeming Partner as a sale of the
Redeeming Partner's Partnership Units to the General Partner or HHTI, as
applicable, for federal income tax purposes. Each Redeeming Partner agrees to
execute such documents as the General Partner may reasonably require in
connection with the issuance of REIT Shares upon exercise of the Redemption
Right.
(c) Except as provided in Section 8.05(e), the Partnership,
the General Partner or HHTI, as the case may be, shall pay the Cash Amount to a
Redeeming Partner as the Redemption Amount for such Partner if (i) the
acquisition of REIT Shares by such Partner on the Specified Redemption Date
would (A) result in such Partner or any other person owning, directly or
indirectly, REIT Shares in excess of the "Ownership Limit," as defined in the
Articles of Incorporation and calculated in accordance therewith, except as
provided in the Articles of Incorporation, (B) result in REIT Shares being owned
by fewer than 100 persons (determined without reference to any rules of
attribution), except as provided in the Articles of Incorporation, (C) result in
HHTI being "closely held" within the meaning of Section 856(h) of the Code, (D)
cause the General Partner or HHTI to own, directly or constructively, 10% or
more of the ownership interests in a tenant of the General Partner's, HHTI's,
the Partnership's or the Subsidiary Partnership's real property, within the
meaning of Section 856(d)(2)(B) of the Code, or (E) cause the acquisition of
REIT Shares by such Partner to be "integrated" with any other distribution of
REIT Shares for purposes of complying with the registration provisions of the
Securities Act of 1933, as amended, or (ii) the Partnership, the General Partner
or HHTI, as the case may be, so elects in its sole discretion, unless the
Redeeming Partner delivers an opinion of counsel satisfactory to the Partnership
or HHTI, as the case may be, in its sole discretion, opining that the
acquisition of REIT Shares would not adversely affect HHTI's status as a REIT
under Sections 856-860 of the Code. Any Cash Amount to be paid to a redeeming
Limited Partner pursuant to this Section 8.05 shall be paid within sixty (60)
days after the initial date of receipt by the General Partner of the Notice of
Redemption relating to the Partnership Units to be redeemed; provided, however,
that such sixty (60) day period may be extended for up to an additional one
hundred eighty (180) day period to the extent required for the General Partner
and HHTI to cause additional REIT Shares to be issued to provide financing to be
used to make such payment of the Cash Amount. Notwithstanding the foregoing, the
General Partner and HHTI and the Partnership agree to use their best efforts to
cause the closing of the acquisition of redeemed Partnership Units hereunder to
occur as quickly as reasonably possible.
(d) Each certificate, if any, evidencing REIT Shares that may
be issued in redemption of Partnership Units under Section 8.05 above (the
"Redemption Shares") shall bear a restrictive legend in substantially the
following form:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or
any state securities law. No transfer of the Shares
represented by this certificate shall be valid or effective
unless (A) such transfer is made pursuant to an effective
registration statement under the Securities Act of 1933, as
amended (the "Act"), or (B) the holder of the securities
proposed to be transferred shall have delivered to the company
either a no-action letter from the Securities and Exchange
Commission or an opinion of counsel (who may be an employee of
such holder) experienced in securities matters to the effect
that such proposed transfer is exempt from the registration
requirements of the Act which opinion shall be reasonably
satisfactory to the Company."
(e) Notwithstanding any other provision of this Agreement, the
General Partner shall place appropriate restrictions on the ability of the
Limited Partners to exercise their Redemption Rights as and if deemed necessary
to ensure that the partnership does not constitute a "publicly traded
partnership" under Section 7704 of the Code.
8.06 Registration.
(a) Shelf Registration. Within two weeks of any First
Redemption Date, HHTI agrees to file with the Commission a shelf registration
statement under Rule 415 of the Securities Act, or any similar rule that may be
adopted by the Commission (the "Shelf Registration"), with respect to all of the
Redemption Shares that are first eligible for redemption on such date. HHTI will
use its best efforts to have the Shelf Registration declared effective under the
Securities Act as soon as practicable after such filing and to keep the Shelf
Registration continuously effective until the earlier of (i) the date when all
of the Redemption Shares registered thereby are sold, or (ii) the date on which
all of the holders of Redemption Shares registered thereunder may sell such
Redemption Shares without registration under the Securities Act pursuant to Rule
144(k) under the Securities Act. HHTI further agrees to supplement or make
amendments to the Shelf Registration, if required by the rules, regulations or
instructions applicable to the registration form utilized by the Company or by
the Securities Act or rules and regulations thereunder for the Shelf
Registration. Notwithstanding the foregoing, if for any reason the effectiveness
of the Shelf Registration is delayed or suspended or its ceases to be available
for sales of Redemption Shares thereunder, the Shelf Registration period shall
be extended by the aggregate number of days of such delays, suspension or
unavailability.
(b) Registration and Qualification Procedures. HHTI is
required by the provisions of Section 8.06(a) hereof to use its best efforts to
have a Shelf Registration relating to the Redemption Shares declared effective
under the Securities Act as soon as practicable after each applicable First
Redemption Date. Accordingly, HHTI, as soon as practical after a First
Redemption Date, shall with respect to the Redemption Shares first eligible for
redemption on such date:
(i) prepare and file with the
Commission a registration statement, including amendments thereof and
supplements relating thereto, with respect to such Redemption Shares, in
connection with which HHTI will give each holder of such Redemption Shares,
their underwriters, if any, and their counsel and accountants a reasonable
opportunity to participate in the preparation thereof and will give such persons
reasonable access to its books, records, officers and independent public
accountants;
(ii) use its best efforts to cause
the registration statement to be declared effective by the Commission;
(iii) keep the registration statement
effective and the related prospectus current throughout the Shelf Registration
period; provided, however, that HHTI shall have no obligation to file any
amendment or supplement at its own expense or the Partnership's expense more
than ninety (90) days after the effective date of the registration statement;
(iv) furnish to each holder of such Redemption
Shares such numbers of copies of prospectuses, and supplements or amendments
thereto, and such other documents as such holder reasonably requests;
(v) register or qualify such
Redemption Shares covered by the registration statement under the
securities or blue sky laws of such jurisdictions within the United States as
any holder of the such Redemption Shares shall reasonably request, and do such
other reasonable acts and things as may be required of it to enable such holders
to consummate the sale or other disposition in such jurisdictions of such
Redemption Shares; provided, however, that HHTI shall not be required to (i)
qualify as a foreign corporation or consent to a general and unlimited service
or process in any jurisdictions in which it would not otherwise be required to
be qualified or so consent or (ii) qualify as a dealer in securities;
(vi) furnish, at the request of the
holders of such Redemption Shares, on the date such Redemption Shares are
delivered to the underwriters for sale pursuant to such registration, or, if
such Redemption Shares are not being sold through underwriters, on the date the
Shelf Registration relating to such Redemption Shares becomes effective, (A) a
securities opinion of counsel representing HHTI for the purposes of such
registration covering such legal matters as are customarily included in such
opinions and (B) letters of the firm of independent public accountants that
certified the financial statements included in the registration statement,
addressed to the underwriters, covering substantially the same matters as are
customarily covered in accountant's letters delivered to underwriters in
underwritten public offerings of securities and such other financial matters as
such holders (or the underwriters, if any) may reasonably request;
(vii) otherwise use its best efforts to
comply with all applicable rules and regulations of the Commission, and make
available to its shareholders as soon as reasonably practicable, but not later
than sixteen (16) months after the effective date of the Shelf Registration, an
earnings statement covering a period of at least twelve (12) months beginning
after the effective date of the Shelf Registration, which earnings statement
shall satisfy the provisions of Section 11(a) of the Securities Act;
(viii) enter into and perform an
underwriting agreement relating to the related Redemption Shares with the
managing underwriter, if any, selected as provided herein, containing customary
(A) terms of offer and sale of the securities, payment provisions, underwriting
discounts and commissions and (B) representations, warranties, covenants,
indemnities, terms and conditions; and
(ix) keep the holders of such
Redemption Shares advised as to the initiation and progress of the
registration.
(c) Allocation of Expenses. The Partnership shall pay all
expenses in connection with the Shelf Registration, including without limitation
(i) all expenses incident to filing with the National Association of Securities
Dealers, Inc., (ii) registration fees, (iii) printing expenses, (iv) accounting
and legal fees and expenses, except to the extent holders of Redemption Shares
elect to engage accountants or attorneys in addition to the accountants and
attorneys engaged by HHTI, (v) accounting expenses incident to or required by
any such registration or qualification and (vi) expenses of complying with the
securities or blue sky laws of any jurisdictions in connection with such
registration or qualification; provided, however, the Partnership shall not be
liable for (A) any discounts or commissions to any underwriter or broker
attributable to the sale of Redemption Shares, or (B) any fees or expenses
incurred by holders of Redemption Shares in connection with such registration
which, according to the written instructions of any regulatory authority, the
Partnership is not permitted to pay.
(d) Indemnification.
(i) In connection with the Shelf
Registration, HHTI and the Partnership agree to indemnify holders of
Redemption Shares within the meaning of Section 15 of the Securities Act,
against all losses, claims, damages, liabilities and expenses (including
reasonable costs of investigation) caused by any untrue, or alleged untrue,
statement of a material fact contained in the Shelf Registration, preliminary
prospectus or prospectus (as amended or supplemented if HHTI shall have
furnished any amendments or supplements thereto) or caused by any omission, or
alleged omission, to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except insofar as
such losses, claims, damages, liabilities or expenses are caused by any untrue
statement, alleged untrue statement, omission or alleged omission based upon
information furnished to HHTI expressly for use therein. HHTI and each officer,
director and controlling person of HHTI shall be indemnified by each holder of
Redemption Shares covered by the Shelf Registration for all such losses, claims,
damages, liabilities and expenses (including reasonable costs of investigation)
caused by any such untrue, or alleged untrue, statement or any such omission, or
alleged omission, based upon information furnished to HHTI expressly for use
therein in a writing signed by the holder.
(ii) Promptly upon receipt by a party
indemnified under this Section 8.06(d) of notice of the commencement of any
action against such indemnified party in respect of which indemnity or
reimbursement may be sought against any indemnifying party under this Section
8.06(d), such indemnified party shall notify HHTI in writing of the commencement
of such action, but the failure to so notify HHTI shall not relieve it of any
liability which it may have to any indemnified party otherwise than under this
Section 8.06(d) unless such failure shall materially adversely affect the
defense of such action. In case notice of commencement of any such action shall
be given to HHTI as above provided, HHTI shall be entitled to participate in
and, to the extent it may wish, jointly with any other indemnifying party
similarly notified, to assume the defense of such action at its own expense,
with counsel chosen by it and reasonably satisfactory to such indemnified party.
The indemnified party shall have the right to employ separate counsel in any
such action and participate in the defense thereof, but the fees and expenses of
such counsel (other than reasonable costs of investigation) shall be paid by the
indemnified party unless (i) HHTI or the Partnership agrees to pay the same,
(ii) HHTI fails to assume the defense of such action with counsel reasonably
satisfactory to the indemnified party or (iii) the named parties to any such
action (including any impleaded parties) have been advised to such counsel that
representation of such indemnified party and HHTI by the same counsel would be
inappropriate under applicable standards of professional conduct (in which case
HHTI shall not have the right to assume the defense of such action on behalf of
such indemnified party). No indemnifying party shall be liable for any
settlement entered into without its consent.
(e) Contribution.
(i) If for any reason the
indemnification provisions contemplated by Section 8.06(d) are either
unavailable or insufficient to hold harmless an indemnified party in respect of
any losses, claims, damages or liabilities referred to therein, then the party
that would otherwise be required to provide indemnification or the indemnifying
party (in either case, for purposes of this Section 8.06(e), the "Indemnifying
Party") in respect of such losses, claims, damages or liabilities, shall
contribute to the amount paid or payable by the party that would otherwise be
entitled to indemnification or the indemnified party (in either case, for
purposes of this Section 8.06(e), the "Indemnified Party") as a result of such
losses, claims, damages, liabilities or expense, in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party and the
Indemnified Party, as well as any other relevant equitable considerations. The
relative fault of the Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or omission or alleged omission to state a
material fact related to information supplied by the Indemnifying Party or
Indemnified Party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be deemed to include
any legal or other fees or expenses reasonably incurred by such party. In no
event shall any holder of Redemption Shares covered by the Shelf Registration be
required to contribute an amount greater than the dollar amount of the proceeds
received by such holder from the sale of Redemption Shares pursuant to the
registration giving rise to the liability.
(ii) The parties hereto agree that it would not
be just and equitable if contribution pursuant to this Section 8.06(e) were
determined by pro rata allocation (even if the holders or any underwriters or
all of them were treated as one entity for such purpose) or by any other method
of allocation which does not take account of the equitable considerations
referred to in the immediately preceding paragraph. No person or entity
determined to have committed a fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person or entity who was not guilty of such fraudulent misrepresentation.
(iii) The contribution provided for in this
Section 8.06(e) shall survive the termination of this Agreement and shall remain
in full force and effect regardless of any investigation made by or on behalf of
any Indemnified Party.
(f) Listing on Securities Exchange. If HHTI shall list or
maintain the listing of any shares of Common Stock on any securities exchange or
national market system, it will at its expense and as necessary to permit the
registration and sale of the Redemption Shares hereunder, list thereon, maintain
and, when necessary, increase such listing to include such Redemption Shares.
8.07 Outside Activities of Limited Partners. Except as otherwise
provided in this Agreement or as otherwise agreed to by the Partners, any
Limited Partner or its Affiliate may engage in or possess an interest in other
business ventures of every nature and description, independently or with others,
including, but not limited to, enterprises engaged in the same business as the
Partnership, and neither the Partnership nor the other Partners shall have any
right by virtue of this Agreement in or to such independent ventures or to the
income or profits derived therefrom.
ARTICLE IX
TRANSFERS OF PARTNERSHIP INTERESTS
9.01 Purchase for Investment.
(a) Each Limited Partner hereby represents and warrants to the
General Partner and to the Partnership that the acquisition of his Partnership
Interest is made as a principal for his account for investment purposes only and
not with a view to the resale or distribution of such Partnership Interest.
(b) Each Limited Partner agrees that he will not sell, assign
or otherwise transfer his Partnership Interest or any fraction thereof, whether
voluntarily or by operation of law or at judicial sale or otherwise, to any
Person who does not make the representations and warranties to the General
Partner set forth in Section 9.01(a) above and similarly agree not to sell,
assign or transfer such Partnership Interest or fraction thereof to any Person
who does not similarly represent, warrant and agree.
9.02 Restrictions on Transfer of Limited Partnership Interests.
(a) Except as otherwise provided in Section 9.02(d) hereof, no
Limited Partner may offer, sell, assign, hypothecate, pledge or otherwise
transfer his Limited Partnership Interest, in whole or in part, whether
voluntarily or by operation of law or at judicial sale or otherwise
(collectively, a "Transfer") without the written consent of the General Partner,
which consent may be withheld in the sole discretion of the General Partner. The
General Partner may require, as a condition of any Transfer, that the transferor
assume all costs incurred by the Partnership in connection therewith.
(b) No Limited Partner may effect a Transfer of his Limited
Partnership Interest, in whole or in part, if, in the opinion of legal counsel
for the Partnership, such proposed Transfer would require the registration of
the Limited Partnership Interest under the Securities Act of 1933, as amended,
or would otherwise violate any applicable federal or state securities or "Blue
Sky" law (including investment suitability standards).
(c) No transfer by a Limited Partner of his Partnership Units,
in whole or in part, may be made to any Person if (i) in the opinion of legal
counsel for the Partnership, the transfer would result in the Partnership's
being treated as an association taxable as a corporation (other than a qualified
REIT subsidiary within the meaning of Section 856(i) of the Code), or (ii) such
transfer is effectuated through an "established securities market" or a
"secondary market" (or the substantial equivalent thereof) within the meaning of
Section 7704 of the Code.
(d) Section 9.02(a) shall not apply to the following
transactions, except that the General Partner may require that the transferor
assume all costs incurred by the Partnership in connection therewith:
(i) any Transfer by a Limited Partner
pursuant to the exercise of its Redemption Right under Section 8.05 hereof;
(ii) any Transfer by a Limited
Partner that is a corporation or other business entity to any of its
Affiliates or subsidiaries or to any successor in interest of such Limited
Partner; or
(iii) any donative Transfer by an
individual Limited Partner to his immediate family members or any trust in
which the individual or his immediate family members own, collectively, 100% of
the beneficial interests. For purposes of this Section 9.02(d)(iii), the term
"immediate family member" shall be deemed to include only an individual Limited
Partner's spouse children and grandchildren.
(e) Any Transfer in contravention of any of the provisions of
this Article IX shall be void and ineffectual and shall not be binding upon, or
recognized by, the Partnership.
9.03 Admission of Substitute Limited Partner.
(a) Subject to the other provisions of this Article IX, an
assignee of the Limited Partnership Interest of a Limited Partner (which shall
be understood to include any purchaser, transferee, donee, or other recipient of
any disposition of such Limited Partnership Interest) shall be deemed admitted
as a Limited Partner of the Partnership only upon the satisfactory completion of
the following:
(i) The assignee shall have accepted
and agreed to be bound by the terms and provisions of this Agreement by
executing a counterpart or an amendment thereof, including a revise Exhibit A,
and such other documents or instruments as the General Partner may require in
order to effect the admission of such Person as a Limited Partner.
(ii) To the extent required, an
amended Certificate evidencing the admission of such Person as a Limited
Partner shall have been signed, acknowledged and filed for record in accordance
with the Act.
(iii) The assignee shall have
delivered a letter containing the representation set forth in Section
9.01(a) hereof and the agreement set forth in Section 9.01(b) hereof.
(iv) If the assignee is a
corporation, partnership, limited liability company or trust, the assignee
shall have provided the General Partner with evidence satisfactory to counsel
for the Partnership of the assignee's authority to become a Limited Partner
under the terms and provisions of this Agreement.
(v) The assignee shall have executed a
power of attorney containing the terms and provisions set forth in Section
8.02 hereof.
(vi) The assignee shall have paid all reasonable
legal fees of the Partnership and the General Partner and filing and publication
costs in connection with his substitution as a Limited Partner.
(vii) The assignee has obtained the
prior written consent of General Partner to its admission as a Substitute
Limited Partner, which consent may be given or denied in the exercise of General
Partner's sole and absolute discretion.
(b) For the purpose of allocating profits and losses and
distributing cash received by the Partnership, a Substitute Limited Partner
shall be treated as having become, and appearing in the records of the
Partnership as, a Partner upon the filing of the Certificate described in
Section 9.03(a)(ii) hereof or, if no such filing is required, the later of the
date specified in the transfer documents or the date on which the General
Partner has received all necessary instruments of transfer and substitution.
(c) The General Partner shall cooperate with the Person
seeking to become a Substitute Limited Partner by preparing the documentation
required by this Section and making all official filings and publications. The
Partnership shall take all such action as promptly as practicable after the
satisfaction of the conditions in this Article IX to the admission of such
Person as a Limited Partner of the Partnership.
9.04 Rights of Assignees of Partnership Interests.
(a) Subject to the provisions of Section 9.01 and 9.02 hereof,
except as required by operation of law, the Partnership shall not be obligated
for any purposes whatsoever to recognize the assignment by any Limited Partner
of his Partnership Interest until the Partnership has received notice thereof.
(b) Any Person who is the assignee of all or any portion of a
Limited Partner's Partnership Interest, but does not become a Substitute Limited
Partner and desires to make a further assignment of such Limited Partnership
Interest, shall be subject to all of the provisions to this Article IX to the
same extent and in the same manner as any Limited Partner desiring to make an
assignment of his Limited Partnership Interest.
9.05 Effect of Bankruptcy, Death, Incompetence or Termination of a
Limited Partner. The occurrence of an Event of Bankruptcy as to a Limited
Partner, the death of a Limited Partner or a final adjudication that a Limited
Partner is incompetent (which term shall include, but not be limited to,
insanity) shall not cause the termination or dissolution of the Partnership, and
the business of the Partnership shall continue if an order for relief in a
bankruptcy proceeding is entered against a Limited Partner, the trustee or
receiver of his estate or, if he dies, his executor, administrator or trustee,
or, if he is finally adjudicated incompetent, his committee, guardian or
conservator, shall have the rights of such Limited Partner for the purpose of
settling or managing his estate property and such power as the bankrupt,
deceased or incompetent Limited Partner possessed to assign all or any part of
his Partnership Interest and to join with the assignee in satisfying conditions
precedent to the admission of the assignee as a Substitute Limited Partner.
9.06 Joint Ownership of Interests. A Partnership Interest may be
acquired by two individuals as joint tenants with right of survivorship,
provided that such individuals either are married or are related and share the
same home as tenants in common. The written consent or vote of both owners of
any such jointly held Partnership Interest shall be required to constitute the
action of the owners of such Partnership Interest; provided, however, that the
written consent of only one joint owner will be required if the Partnership has
been provided with evidence satisfactory to the counsel for the Partnership that
the actions of a single joint owner can bind both owners under the applicable
laws of the state of residence of such joint owners. Upon the death of one owner
of a Partnership Interest held in a joint tenancy with a right of survivorship,
the Partnership Interest shall become owned solely by the survivor as a Limited
Partner and not as an assignee. The Partnership need not recognize the death of
one of the owners of a jointly-held Partnership Interest until it shall have
received notice of such death. Upon notice to the General Partner from either
owner, the General Partner shall cause the Partnership Interest to be divided
into two equal Partnership Interests, which shall thereafter be owned separately
by each of the former owners.
ARTICLE X
BOOKS AND RECORDS; ACCOUNTING; TAX MATTERS
10.01 Books and Records. At all times during the continuance of the
Partnership the Partners shall keep or cause to be kept at the Partnership's
specified office true and complete books of account in accordance with generally
accepted accounting principles, including: (a) a current list of the full name
and last known business address of each Partner, (b) a copy of the Certificate
of Limited Partnership and all certificates of amendment thereto, (c) copies of
the Partnership's federal, state and local income tax returns and reports, (d)
copies of the Agreement and any financial statements of the Partnership for the
three most recent years and (e) all documents and information required under the
Act. Any Partner or his duly authorized representative, upon paying the cost of
collection, duplication and mailing, shall be entitled to inspect or copy such
records during ordinary business hours.
10.02 Custody of Partnership Funds; Bank Accounts.
(a) All funds of the Partnership not otherwise invested shall
be deposited in one or more accounts maintained in such banking or brokerage
institutions as the General Partner shall determine, and withdrawals shall be
made only on such signature or signatures as the General Partner may, from time
to time, determine.
(b) All deposits and other funds not needed in the operation
of the business of the Partnership may be invested by the General Partner in
investment grade instruments (or investment companies whose portfolio consists
primarily thereof), government obligations, certificates of deposit, bankers'
acceptances and municipal notes and bonds. The funds of the Partnership shall
not be commingled with the funds of any other Person except for such commingling
as may necessarily result from an investment in those investment companies
permitted by this Section 10.02(b).
10.03 Fiscal and Taxable Year. The fiscal and taxable year of the
Partnership shall be the calendar year.
10.04 Annual Tax Information and Report. Within 75 days after the end
of each fiscal year of the Partnership, the General Partner shall furnish to
each person who was a Limited Partner at any time during such year the tax
information necessary to file such Limited Partner's individual tax returns as
shall be reasonably required by law.
10.05 Tax Matters Partner; Tax Elections; Special Basis Adjustments.
(a) The General Partner shall be the Tax Matters Partner of
the Partnership within the meaning of Section 6231(a)(7) of the Code. As Tax
Matters Partner, the General Partner shall have the right and obligation to take
all actions authorized and required, respectively, by the Code for the Tax
Matters Partner subject to Section 5.01(f) of this Agreement. The General
Partner shall have the right to retain professional assistance in respect of any
audit of the Partnership by the Service and all out-of-pocket expenses and fees
incurred by the General Partner on behalf of the Partnership as Tax Matters
Partner shall constitute Partnership expenses. In the event the General Partner
receives notice of a final partnership adjustment under Section 6223(a)(2) of
the Code, the General Partner shall either (i) file a court petition for
judicial review of such final adjustment within the period provided under
Section 6226(a) of the Code, a copy of which petition shall be mailed to all
Limited Partners on the date such petition is filed, or (ii) mail a written
notice to all Limited Partners, within such period, that describes the General
Partner's reasons for determining not to file such a petition.
(b) All elections required or permitted to be made by the
Partnership under the Code shall be made by the General Partner in its sole
discretion; provided, however, that the Partnership's election to use the
traditional method as specified by Section 5.01(f) of this Agreement shall not
be revoked without the consent of the holders of 75% of the Percentage Interests
of the Limited Partners (excluding the General Partner).
(c) In the event of a transfer of all or any part of the
Partnership Interest of any Partner, the Partnership, at the option of the
General Partner, may elect pursuant to Section 754 of the Code to adjust the
basis of the Properties. Notwithstanding anything contained in Article IV of
this Agreement, any adjustments made pursuant to Section 754 shall affect only
the successor in interest to the transferring Partner and in no event shall be
taken into account in establishing, maintaining or computing Capital Accounts
for the other Partners for any purpose under this Agreement. Each Partner will
furnish the Partnership with all information necessary to give effect to such
election.
10.06 Reports to Limited Partners.
(a) The books of the Partnership shall be audited annually as
of the end of each fiscal year of the Partnership by accountants selected by the
General Partner, who shall be the same accountants responsible for the
examination of the General Partner's books. The General Partner shall determine
and prepare an annual balance sheet, a statement of partners' capital as of the
end of such year, as well as statements of cash flow and income, all in
accordance with generally accepted accounting principles and accompanied by an
independent auditor's report (collectively, the "Financial Statements"),
together with all supplementary schedules and information prepared by the
accountants related thereto. As a note to such Financial Statements, the General
Partner shall prepare a schedule of all loans to the Partnership. Such schedule
shall demonstrate that loans have been made, used, carried on the books of the
Partnership (and repaid, if applicable) in accordance with the provisions of
this Agreement. Within 90 days after the end of each fiscal year, the General
Partner shall transmit the Financial Statements to the Limited Partners. The
General Partner also shall prepare quarterly unreviewed Financial Statements and
shall transmit such statements to the Limited Partners within 45 days of the end
of each fiscal quarter of the Partnership.
(b) Any Partner shall further have the right to a private
audit of the books and records of the Partnership, provided such audit is made
for Partnership purposes, at the expense of the Partner desiring it and is made
during normal business hours.
ARTICLE XI
AMENDMENT OF AGREEMENT
The General Partner, without the consent of the Limited Partners, may
amend this Agreement in any respect to the benefit of and not adverse to the
interests of the Limited Partners; provided, however, that any other amendments
to the Agreement shall require the consent of Limited Partners (other than the
General Partner) holding more than 50% of the Percentage Interests of the
Limited Partners (other than the General Partner).
ARTICLE XII
GENERAL PROVISIONS
12.01 Notices. All communications required or permitted under this
Agreement shall be in writing and shall be deemed to have been given when
delivered personally or upon deposit in the United States mail, registered,
postage prepaid return receipt requested, to the Partners at the addresses set
forth in Exhibit B attached hereto; provided, however, that any Partner may
specify a different address by notifying the General Partner in writing of such
different address. Notices to the Partnership shall be delivered at or mailed to
its specified office.
12.02 Survival of Rights. Subject to the provisions hereof limiting
transfers, this Agreement shall be binding upon and inure to the benefit of the
Partners and the Partnership and their respective legal representatives,
successors, transferees and assigns.
12.03 Additional Documents. Each Partner agrees to perform all further
acts and execute, swear to, acknowledge and deliver all further documents which
may be reasonable, necessary, appropriate or desirable to carry out the
provisions of this Agreement or the Act.
12.04 Severability. If any provision of this Agreement shall be
declared illegal, invalid, or unenforceable in any jurisdiction, then such
provision shall be deemed to be severable from this Agreement (to the extent
permitted by law) and in any event such illegality, invalidity or
unenforceability shall not affect the remainder hereof.
12.05 Entire Agreement. This Agreement and exhibits attached hereto
constitute the entire Agreement of the Partners and supersede all prior written
agreements and prior and contemporaneous oral agreements, understandings and
negotiations with respect to the subject matter hereof.
12.06 Pronouns and Plurals. When the context in which words are used in
the Agreement indicates that such is the intent, words in the singular number
shall include the plural and the masculine gender shall include the neuter or
female gender as the context may require.
12.07 Headings. The Article headings or sections in this Agreement are
for convenience only and shall not be used in construing the scope of this
Agreement or any particular Article.
12.08 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original copy and all of
which together shall constitute one and the same instrument binding on all
parties hereto, notwithstanding that all parties shall not have signed the same
counterpart.
12.09 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the Commonwealth of Virginia.
IN WITNESS WHEREOF, the parties hereto have hereunder affixed their
signatures to this Second Amended and Restated Agreement of Limited Partnership,
all as of the _____ day of ___________, 1997.
WITNESS: GENERAL PARTNER:
▇▇▇▇▇▇▇▇ HOSPITALITY REIT TRUST,
a Maryland real estate investment trust
_____________________________ By: _____________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
President
LIMITED PARTNERS:
----------------------------- --------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
▇▇▇▇▇▇▇▇ ASSOCIATES, INC.
_____________________________ By: ______________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
President
FARMVILLE LODGING ASSOCIATES, LLC
_____________________________ By: ______________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Authorized Member
▇▇▇▇▇▇▇▇-KEY LARGO ASSOCIATES, L.P.
By: ▇▇▇▇▇▇▇▇ Development, Inc.
_____________________________ By: _______________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
President
SPECIAL CONSENT
▇▇▇▇▇▇▇▇ Hospitality Trust, Inc. hereby executes this Special Consent
for the purpose of acknowledging and agreeing to its rights and obligations as
set forth in the Second Amended and Restated Agreement of Limited Partnership of
▇▇▇▇▇▇▇▇ Hospitality Limited Partnership.
WITNESS/ATTEST: ▇▇▇▇▇▇▇▇ HOSPITALITY TRUST, INC., a Virginia corporation
_____________________________ By: ______________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
President
EXHIBIT A
Agreed Value
of Non-Cash
Partner Cash Capital Partnership Percentage
and Address Contribution Contribution Units Interest
General
Partner:
▇▇▇▇▇▇▇▇ Hospitality $24,356,487 3,481,700 84.12%
REIT Trust
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Limited Partners:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. $3,130,921 522,587 12.63%
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ Associates, Inc. $ 31,628 5,279 0.13%
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Farmville Lodging Associates, LLC $ 740,001 95,484 2.30%
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇-Key Largo Associates, $ 370,000 34,023 0.82%
L.P.
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
---------- --------- ---------- ----------
$24,356,487 $4,272,550 $4,139,073 100.00000%
=========== ========== ========== ==========
Except as amended hereby, the terms and provisions of the Partnership
Agreement which are incorporated herein by this reference are hereby reaffirmed
and shall remain in full force and effect and shall be binding upon the parties
hereto.
This Agreement may be executed in several counterparts and all so
executed shall constitute one agreement binding on all parties hereto.
EXHIBIT B
NOTICE OF EXERCISE OF REDEMPTION RIGHT
In accordance with Section ____ of the Second Amended and Restated
Agreement of Limited Partnership of ▇▇▇▇▇▇▇▇ Hospitality Limited Partnership
(the "Agreement"), the undersigned hereby irrevocably (i) presents for
redemption _____ Partnership Units in ▇▇▇▇▇▇▇▇ Hospitality Limited Partnership
in accordance with the terms of the Agreement and the Redemption Right referred
to in Section 8.05 thereof, and surrenders such Limited Partnership Units and
all right, title and interest therein, and directs that the Cash Amount or REIT
Shares (as defined in the Agreement) as determined by the General Partner
deliverable upon exercise of the Redemption Right be delivered to the address
specified below, and if REIT Shares are to be delivered, such REIT Shares be
registered or placed in the name(s) and at the address(es) specified below.
Dated: ______________________
Name of Limited Partner:
---------------------------------------------
(Signature of Limited Partner)
---------------------------------------------
(Mailing Address)
---------------------------------------------
(City) (State) (Zip Code)
Signature Guaranteed by:
----------------------------------------------
If REIT Shares are to be issued, issue to:
Name:
Please insert Social Security or identifying number: