SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: July 13, 1998 Commission File No.:0-9032
SONESTA INTERNATIONAL HOTELS CORPORATION
_____________________________________________________________
(Exact Name of Registrant as Specified in its Charter)
New York
__________________________________
(State or Other Jurisdiction)
13-5648107
__________________________________________
(I.R.S. Employer Identification Number)
200 Clarendon Street, Boston, Massachusetts 02116
___________________________________________
(Address of Principal Executive Offices)
Registrant's Telephone Number, Including Area Code: (617) 421-5400
Not Applicable
_______________________________________________________________
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
Item 2. Acquisition or Disposition of Assets
On July 1, 1998, the Registrant, through its subsidiary, Sonesta Beach Resort
Limited Partnership ("Purchaser") -- a Delaware limited partnership of which the
Registrant's wholly-owned subsidiaries, Florida Sonesta Corporation ("FSC") and
Key Biscayne Land Corporation are the sole general partner with a one percent
(1%) partnership interest, and a limited partner with a 98% partnership
interest, respectively -- acquired from Key Biscayne Limited Partnership
("Seller") its rights, title and interests in and to the real and personal
property known as Sonesta Beach Resort, in Key Biscayne, Florida ("the Resort").
The Seller has a one percent (1%) limited partnership interest in the Purchaser.
The Resort is a 300-room, full-service beachfront resort hotel sited on 10 acres
in Key Biscayne, Florida. FSC has continuously operated the hotel under a
management agreement since it sold the property to the Seller in 1984. The
Resort has been operated by Sonesta as a deluxe beach hotel since it opened in
the early 1970's. The Purchaser intends to continue operating the Resort as a
deluxe resort hotel.
The purchase price consisted of FSC's release of the Seller from indebtedness
owed to FSC and/or its affiliates in connection with the Registrant's sale of
the Resort to the Seller, in 1984, and loans advanced by FSC to restore the
Resort following Hurricane Andrew, in 1992. This indebtedness is carried on
Sonesta's books at approximately $10,720,000 at March 31, 1998, and the
debt had matured or otherwise become due and payable at the end of 1997 and/or
in early 1998. In addition, the Purchaser assumed a first mortgage loan in the
amount of $22,431,000; interest on this first mortgage loan is payable monthly
at 11.78% per annum until April 1999 when it increases to 12.78% per annum, and
matures in October 2000. No principal payments are due until the maturity date.
The Purchaser has also agreed to pay the Seller additional compensation if it
sells the Resort prior to January 1, 2002.
The transaction was completed pursuant to a pre-packaged bankruptcy. A Joint
Plan of Reorganization was filed by the Seller and FSC in the U.S. Bankruptcy
Court for the Southern District of Florida, Miami Division, on April 23, 1998,
and the Plan was confirmed by the Court on June 25, 1998.
Item 7. Financial Statements and Exhibits.
Financial statements and proforma financial information required by this item
have not been included in this initial report but will be filed on or before
September 14, 1998.
<PAGE>
EXHIBITS TO FORM 8-K
NUMBER DESCRIPTION
2.1 Contribution and Formation Agreement, dated as of January 30,
1998, by and among Key Biscayne Limited Partnership ("KBLP"),
Florida Sonesta Corporation and Key Biscayne Land Corporation
("Sonesta II"), and joined in by Key Biscayne Hotel Associates,
LTD. ("KBHA"), Partners Liquidating Trust, ("PLT"), Strategic
Realty Advisors, Inc., ("SRAI") and Sonesta International Hotels
Corporation ("Sonesta International").
2.2 First Amendment to Contribution and Formation Agreement, dated as
of April 3, 1998, by and among KBLP, FSC and Sonesta II, and
joined in by KBHA, PLT, SRAI and Sonesta International.
2.3 Agreement of Limited Partnership of Sonesta Beach Resort Limited
Partnership, dated April 1998, by and between FSC, Sonesta II and
KBLP.
4.1 Assumption Agreement, dated as of July 1, 1998, by and between
Sonesta Beach Resort Limited Partnership ("SBRLP") and State
Street Bank and Trust Company, Trustee ("State Street").
4.2 Amendment to and Assignment of KBHA/PLT Indebtedness, dated as of
July 1, 1998, by and between KBLP, KBHA, PLT and SBRLP, including
KBHA/PLT Note, dated July 1, 1998.
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SONESTA INTERNATIONAL HOTELS CORPORATION
By: _____________________________
Peter J. Sonnabend
Vice President and Secretary
July 13, 1998
CONTRIBUTION AND FORMATION AGREEMENT
AMONG
KEY BISCAYNE LIMITED PARTNERSHIP,
a Florida limited partnership,
FLORIDA SONESTA CORPORATION,
a Florida corporation
and
KEY BISCAYNE LAND CORPORATION,
a Florida corporation
and joined in by
KEY BISCAYNE HOTEL ASSOCIATES, LTD.,
a Florida limited partnership,
PARTNERS LIQUIDATING TRUST,
a Delaware trust
STRATEGIC REALTY ADVISORS, INC.,
an Illinois corporation
SONESTA INTERNATIONAL HOTELS CORPORATION,
a New York corporation
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C> <C>
Article I Definitions...................................................................1
1.1 Definitions...................................................................1
1.2 References....................................................................8
Article II Formation of Partnership......................................................8
2.1 Formation and Contribution....................................................8
2.2 Assumption of Liabilities.....................................................9
2.3 Matters Relating to Existing Indebtedness...................................10
2.4 Matters Relating to Management Agreement and Asset Management Fee............11
Article III Closing......................................................................12
3.1 Closing......................................................................12
3.2 KBLP Closing Documents.......................................................12
3.3 Sonesta Closing Documents....................................................13
3.4 The Partnership Closing Documents............................................13
3.5 Form of Documents............................................................14
Article IV Representations and Warranties...............................................14
4.1 Sonesta Partner Representations and Warranties...............................14
4.2 KBLP Representations and Warranties..........................................15
Article V Conditions to Closing........................................................19
5.1 Conditions to KBLP's Obligations.............................................19
5.2 Conditions to Sonesta Partners' Obligations..................................20
Article VI Additional Covenants.........................................................20
6.1 Indemnification..............................................................20
6.2 Matters Relating to the Plan.................................................22
6.3 Books and Records............................................................22
6.4 Transaction Costs and Expenses...............................................22
6.5 Bulk Sales...................................................................23
6.6 [Intentionally Deleted]......................................................23
6.7 Contract Party Consents......................................................23
6.8 Forbearance..................................................................23
6.9 Further Assurances...........................................................23
6.10 Prorations and Apportionments................................................23
6.11 Tax Reporting................................................................24
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Article VII Default......................................................................24
7.1 Events of Default............................................................24
7.2 Remedies.....................................................................24
Article VIII Miscellaneous................................................................24
8.1 Survival.....................................................................24
8.2 Notices......................................................................24
8.3 Counterparts.................................................................25
8.4 Amendments...................................................................25
8.5 Waiver.......................................................................25
8.6 Successors and Assigns.......................................................25
8.7 Third Party Beneficiaries....................................................26
8.8 Partial Invalidity...........................................................26
8.9 Governing Law................................................................26
8.10 Assignment...................................................................26
8.11 Headings.....................................................................26
8.12 Gender and Number............................................................26
8.13 Time of Essence..............................................................26
8.14 Schedules....................................................................26
</TABLE>
Exhibit A - Legal Description of the Land
Exhibit B - Partnership Agreement
Exhibit C - Permitted Exceptions
Schedule 2.1 - Capital Contributions
Schedule 2.2(a) - Payables
Schedule 2.3(d) - Mortgage Amendments
Schedule 4.2(f) - Existing Indebtedness
Schedule 4.2(g) - Contracts
Schedule 4.2(i) - Insurance
Schedule 4.2(j) - Employee Benefit Plan
Schedule 4.2(k) - Licenses and Permits
Schedule 4.2(n) - Intellectual Property
ii
<PAGE>
CONTRIBUTION AND FORMATION AGREEMENT
THIS CONTRIBUTION AND FORMATION AGREEMENT (the "Agreement") is entered
into as of January 30, 1998, by and among KEY BISCAYNE LIMITED PARTNERSHIP, a
Florida limited partnership ("KBLP"), FLORIDA SONESTA CORPORATION, a Florida
corporation, ("FSC") and KEY BISCAYNE LAND CORPORATION, a Florida corporation
("Sonesta II") and joined in by KEY BISCAYNE HOTEL ASSOCIATES, LTD., a Florida
limited partnership ("KBHA"), PARTNERS LIQUIDATING TRUST, a Delaware trust
("PLT"), STRATEGIC REALTY ADVISORS, INC., an Illinois corporation ("SRAI") and
SONESTA INTERNATIONAL HOTELS CORPORATION, a New York corporation.
PRELIMINARY STATEMENT
A. The parties hereto desire to form a limited partnership under the
provisions of the Delaware Revised Uniform Limited Partnership Act, as amended,
to be known as SONESTA BEACH RESORT LIMITED PARTNERSHIP (the "Partnership").
B. KBLP is the owner of a 293-room hotel located in Key Biscayne,
Florida and commonly known as the Sonesta Beach Resort and desires to contribute
the same to the Partnership as its initial capital contribution thereto.
C. The parties desire to set forth herein their understandings with
regard to the formation of the Partnership.
NOW, THEREFORE, the parties hereby agree as follows:
ARTICLE I
Definitions
1.1 Definitions. For purposes of this Agreement, the following terms
shall have the meanings indicated below:
"Aetna" shall mean Aetna Life Insurance Company, one of the Existing
Lenders.
"Aetna Indebtedness" shall mean the Existing Indebtedness held by Aetna
and marked with an "A" on Schedule 4.2(f).
"Aetna Consent/Estoppel" shall have the meaning set forth in Section
2.3(a).
"Affiliate" shall mean, with respect to any party or other person, an
affiliate of such party or other person as determined under the Securities Act
and the regulations promulgated thereunder.
"Agreement" shall mean this Agreement, as amended or modified from time
to time hereafter in accordance with the terms hereof.
<PAGE>
"Asset Management Fee" shall mean the "SRA Fee" payable to SRAI pursuant
to Section 7.1(g) of the Management Agreement, as added by the Second Amendment
to Management Agreement referred to in the definition of "Management Agreement".
"Assumed Liabilities" shall have the meaning set forth in Section
2.2(a).
"Books and Records" shall mean all records, books of account and papers
of KBLP relating to the construction, ownership and operation of the Property,
including without limitation any architect's drawings, blue prints, and
originals and/or copies of Contracts.
"Bulk Sales Releases/Directions" shall have the meaning set forth in
Section 6.5.
"Closing" shall have the meaning set forth in Section 3.1.
"Closing Date" shall have the meaning set forth in Section 3.1.
"Closing Documents" shall mean the KBLP Closing Documents, the Sonesta
Closing Documents and the Partnership Closing Documents, or any of them.
"Consumables" shall mean all food and beverages; engineering,
maintenance and housekeeping supplies, including soap, cleaning materials and
mattresses, fuel, draperies, materials and carpeting; stationery and printing;
and all other supplies of all kinds, whether used, unused or held in reserve
storage for future use in connection with the maintenance and operation of the
Hotel or the Real Property, which are owned by KBLP on the date hereof subject
to such depletion and including such re-supplies as shall occur and be made in
the normal course of business, whether issued or held in operating departments
or held in reserve storage.
"Contract Party Consents" shall have the meaning set forth in Section
6.7.
"Contracts" shall mean the space leases, occupancy agreements,
concession agreements, license agreements, loan documents, management
agreements, service, maintenance and other contracts and concessions and
equipment leases relating to the Hotel or Real Property or any portion thereof,
including without limitation the Existing Indebtedness Documents and the
Management Agreement.
"Deadlines" shall have the meaning set forth in Section 6.2.
"Default" shall have the meaning set forth in Section 7.1.
"Environmental Laws" shall mean all federal, state and local statutes,
ordinances, codes, rules, regulations, guidelines, orders and decrees
regulating, relating to or imposing liability or standards concerning or in
connection with Hazardous Materials, underground storage tanks or the protection
of human health or the environment, as the same may be amended from time to
time.
"Excess Expenditures" shall have the meaning set forth in Partnership
Agreement.
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"Existing Indebtedness" shall mean those certain loans to KBLP described
on Schedule 4.2(f).
"Existing Indebtedness Documents" shall mean the instruments and
documents which are listed on Schedule 4.2(f) and evidence or secure the
Existing Indebtedness.
"Existing Lenders" shall mean the Persons set forth on Schedule 4.2(f).
"Fair Market Value" shall have the meaning set forth in the Partnership
Agreement.
"FF&E" shall mean all fixtures, furniture, furnishings, fittings,
equipment, machinery, apparatus, appliances and other articles of tangible
personal property now owned by KBLP and used or usable, or intended for use, in
connection with any present or future occupation or operation of all or any part
of the Hotel or Real Property, whether located on or in the Hotel or Real
Property or stored off site, subject to such depletions, re-supplies,
substitutions and replacements as shall occur and be made in the normal course
of business.
"Financial Transaction" shall have the meaning set forth in Section 6.2.
"FSC Guaranty" shall have the meaning set forth in Section 2.3(c).
"FSC Indebtedness" shall mean the Existing Indebtedness held by FSC and
marked with an "FSC" on Schedule 4.2(f).
"Gross Asset Value" shall mean the gross asset value of the Property,
which equals at least $36,000,000. The parties agree that the Gross Asset Value
may not equal the Fair Market Value of the Property on the date hereof and that
there shall be no presumption that the Gross Asset Value equals the Fair Market
Value of the Property on the date hereof.
"Hazardous Materials" shall mean any substance, material, waste, gas or
particulate matter which (a) is now, or at any future time may be, regulated by
the United States Government, the State of Florida any other state with
jurisdiction or any local governmental authority, (b) the exposure to, or
manufacture, possession, presence, use, generation, storage, transportation,
treatment, release, disposal, abatement, cleanup, removal, remediation or
handling of is prohibited, controlled or regulated by any Environmental Law, (c)
requires investigation or remediation under any Environmental Law or common law,
(d) is toxic, explosive, corrosive, flammable, infectious, radioactive,
carcinogenic, mutagenic or otherwise hazardous or (e) causes or threatens to
cause a nuisance upon the Property or to adjacent properties or poses or
threatens to pose a hazard to the health or safety of persons on or about the
Property.
"Hotel" shall mean the Sonesta Beach Resort, together with related
amenities and facilities, currently being operated on the Real Property.
"Improvements" shall mean all buildings, structures (surface and
subsurface) and other improvements located on the Land, including any fixtures
as shall constitute real property under applicable provisions of law.
3
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"KBHA Indebtedness" shall mean the Existing Indebtedness indicated with
an "K" on Schedule 4.2(f).
"KBHA/PLT Indebtedness" shall mean the combined obligations of KBLP
under the KBHA Indebtedness and the PLT Indebtedness.
"KBHA/PLT Indebtedness Amendments" shall have the meaning given it in
Section 2.3(c).
"KBHA/PLT Note" shall have the meaning set forth in Section 2.3(c).
"KBLP Closing Documents" shall have the meaning set forth in Section
3.2.
"KBLP Distribution" shall have the meaning set forth in the Partnership
Agreement.
"KBLP Liabilities" shall have the meaning set forth in Section 2.2(b).
"KBLP Party(ies)" shall have the meaning set forth in Section 6.2.
"Land" shall mean those certain parcels of real estate and interests
therein listed and described on Exhibit A.
"Loss" shall have the meaning set forth in Section 6.1.
"Lien" shall mean any mortgage, lien, pledge, security interest, charge,
claim, restriction or other encumbrance of any nature whatsoever.
"Liquidated Damages" shall mean, as of the date of calculation, an
amount equal to the present value (discounted at twelve percent (12%) per annum)
of the amount of interest (at twelve percent (12%) per annum) that would be
earned from the date of calculation to the Measurement Date on an amount equal
to the aggregate amount of federal and state income taxes that would be payable
by all of the constituent partners of KBLP if the Property were sold on the
Measurement Date (the "Aggregate Tax Liability"). The intent of the calculation
of Liquidated Damages is to compensate each KBLP partner for the loss he
sustains as a consequence of having to pay recapture taxes prior to the
Measurement Date, such loss being deemed to equal the present value of the
interest that the partner would have earned on the amount of taxes paid by it
between the date the taxes are paid and the Measurement Date. KBLP's good faith
estimate of the maximum amount of the Aggregate Tax Liability is $8,469,000 (the
"Maximum Aggregate Tax Liability"). Accordingly, based upon the foregoing, the
maximum amount of Liquidated Damages for calendar year (i) 1998 shall equal
$3,086,000; (ii) 1999 shall equal $2,441,000; (iii) 2000 shall equal $1,718,000;
(iv) 2001 shall equal $907,000; and (v) 2002 and thereafter shall equal $0. Each
partner of KBLP shall prepare his own calculation of Liquidated Damages and this
amount shall be certified by a certified public accountant or such other party
as actually prepares that partner's tax return, and said certified amount shall
be delivered to the Partnership. The Partnership shall then be obligated to pay
said partner the amount so certified; provided, however, that in no event shall
Liquidated Damages payable exceed the amounts set forth in (i) - (v) for the
respective year and no partner shall be entitled to receive more than his
proportionate share of the amounts set
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forth in (i) - (v) for the respective year based on said partner's partnership
percentage of KBLP as certified to the Partnership by KBLP's general partner. In
the event a KBLP partner fails to so submit such a statement, such partner shall
be entitled to receive his proportionate share of the amounts set forth in (i) -
(v) for the respective year based on said partner's partnership percentage of
KBLP as certified to the Partnership by KBLP's general partner (or such lesser
amount as the accountant for the Partnership reasonably calculates as Liquidated
Damages for such partner, less the costs reasonably incurred by the Partnership
in connection therewith); provided, however, that the obligation to pay any
person any Liquidated Damages shall terminate as of the date that is two years
after the date of the occurrence of the event that gave rise to the obligation
to pay Liquidated Damages.
Notwithstanding anything construed herein to the contrary, the Maximum
Aggregate Tax Liability is based upon tax laws as in effect as of the date of
the Agreement and shall be adjusted in the event of any changes in the tax laws
which are effective as of the date of the occurrence of the event that gave rise
to the obligation to pay Liquidated Damages.
"Management Agreement" shall mean that certain Management Agreement
dated as of December 27, 1984, by and between FSC and KBLP (as successor to
Biscayne Beach Hotel Associates, Ltd.), as amended by that certain First
Amendment to Management Agreement dated September 12, 1991 and that certain
Second Amendment to Management Agreement dated December 31, 1993 and as further
amended as described in Section 2.4.
"Measurement Date" shall mean January 1, 2002.
"Miscellaneous Property Assets" shall mean all tangible and intangible
assets of KBLP relating to or used in connection with the Hotel (other than the
Real Property, the FF&E, the Operating Equipment, and the Consumables),
including without limitation all right, title and interest of KBLP in and to
contract rights, leases, concessions, trademarks, service marks, trade names
(including the names of restaurants, lounges and meeting rooms), logos,
copyrights, rights under guaranties or warranties relating to goods, merchandise
or services, insurance claims, the rights to receive the proceeds of any
condemnation or taking of the Property or a deed in lieu thereof, goodwill, any
goods, merchandise or services either in transit, under fabrication or otherwise
ordered but not yet received at the Hotel on or prior to the Closing Date, all
accounts and other receivables, all unpaid rents, guest ledger receivables, cash
or other funds on deposit in bank accounts or in transit for deposit, petty
cash, house banks, advance payments, outstanding checks, refunds, rebates or
other claims or interest thereon, utility and similar deposits, prepaid
insurance and other prepaid items, bookings and advance booking deposits,
computer software and sales data.
"Mortgage Amendments" shall have the meaning given it in Section 2.3(d).
"Mortgages" shall mean the mortgages and deeds of trust marked with an
"M" on Schedule 4.2(f).
5
<PAGE>
"New Asset Management Fee Expiration Date" shall have the meaning set
forth in Section 2.4(d).
"Operating Equipment" shall mean all china, glassware, linens,
silverware and uniforms, whether in use or held in reserve storage for future
use, in connection with the operation of the Hotel, which are owned by KBLP and
on hand on the date hereof subject to such depletion and including such
re-supplies as shall be made in the normal course of business.
"Partnership" shall have the meaning set forth in Recital A.
"Partnership Agreement" shall mean the Agreement of Limited Partnership
of the Partnership the form of which is attached hereto as Exhibit B.
"Partnership Closing Documents" shall have the meaning set forth in
Section 3.4.
"Partnership Interest" shall mean any general or limited partnership
interest in the Partnership.
"Permits" shall mean all licenses, franchises and permits used in or
relating to the ownership, occupancy or operation of the Hotel or Real Property
or any facilities located thereon or any part thereof.
"Permitted Exceptions" shall mean those title exceptions, defects and
other matters set forth on Exhibit C, including without limitation the Liens
created by the Mortgages.
"Person" or "person" shall have the meaning set forth in the Partnership
Agreement.
"Personalty" shall mean all Property other than the Real Property.
"Plan" shall mean that certain Plan to be filed in the United States
Bankruptcy Court, District of Delaware (or in the event that Delaware is not a
legally available venue, such other legal venue upon which the parties may
agree), in the matter of Key Biscayne Limited Partnership, d/b/a Sonesta Beach
Resort.
"PLT Indebtedness" shall mean the Existing Indebtedness indicated with
an "P" on Schedule 4.2(f).
"Property" shall mean (a) the Real Property, (b) the FF&E, (c) the
Operating Equipment, (d) the Consumables, (e) the rights and interests of KBLP
in, to and under all Contracts, (f) the rights and interests of KBLP in, to and
under any Permits, and (g) all other Miscellaneous Property Assets,
collectively, without distinction among the various classes of property.
"Rate" shall have the meaning set forth in the Partnership Agreement.
"Real Property" shall mean the Land and the Improvements, together with
(a) all of the estate, right, title and interest of KBLP therein and in and to
any land lying in the beds of any streets, roads or avenues, open or proposed,
public or private, in front of or adjoining the Land to
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the center lines thereof and in and to any awards made or to be made in lieu
thereof and in and to any unpaid awards for damage to the foregoing by reason of
the change of grade of any such streets, roads or avenues; and (b) all
easements, rights, licenses, privileges, rights-of-way, strips and gores,
hereditaments and other such rights and interests appurtenant to the foregoing.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Senior Indebtedness" shall mean the Existing Indebtedness marked with
an "SD" on Schedule 4.2(f), including all advances for legal and accounting fees
incurred in connection herewith and all Transaction Costs, plus interest thereon
at the per annum rate equal to the Rate until paid.
"Sonesta Closing Documents" shall have the meaning set forth in Section
3.3.
"Sonesta Guaranty" shall have the meaning set forth in Section 2.3(c).
"Sonesta International" shall mean Sonesta International Hotels
Corporation.
"Sonesta Partner" shall mean either FSC or Sonesta II and "Sonesta
Partners" shall mean both of them.
"Special Final Distribution" shall have the meaning set forth in Section
2.1(b).
"Title Policy" shall mean an owners' title insurance policy issued by
the Title Company in an amount reasonably acceptable to FSC insuring the
Partnership as owner of good, marketable and indefeasible title to the Property
subject only to the Permitted Exceptions, which title policy shall be in form
satisfactory to, and contain endorsements requested by, the Sonesta Partners.
"Transaction Costs" shall have the meaning set forth in Section 6.4.
"Transactions" shall mean the transactions contemplated hereby.
"Transfer Basis" shall have the meaning set forth in the Partnership
Agreement (i.e., the sum of (a) the outstanding principal amount of all secured
and unsecured indebtedness of the Partnership on the Closing Date, including the
Assumed Liabilities, as set forth on Schedule 4.2(f), plus all unpaid interest
accrued or deemed to have accrued thereon through the Measurement Date (or the
date of the Special Final Distribution or applicable Realization Event, as
applicable), less amounts applied in repayment thereof in accordance with the
terms of such debt (as modified by the Second Amendment to Management Agreement
in the case of the FSC Indebtedness), and (b) the sum of the Excess Expenditures
for the calendar years or portion thereof through the Measurement Date (or the
date of the Special Final Distribution or applicable Realization Event, as
applicable), and the Transaction Costs, plus interest thereon through the
Measurement Date (or the date of the Special Final Distribution or applicable
Realization Event, as applicable), at the per annum rate equal to the Rate.).
7
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1.2 References. All references in this Agreement to particular sections
or articles shall, unless expressly otherwise provided, or unless the context
otherwise requires, be deemed to refer to the specific sections or articles in
this Agreement, and any references to "Exhibit" or "Schedule" shall, unless
otherwise specified, refer to one of the exhibits or schedules annexed hereto
and, by such reference, made a part hereof. The words "herein", "hereof",
"hereunder", "hereinafter", "hereinabove" and other words of similar import
refer to this Agreement as a whole and not to any particular section, subsection
or article hereof.
ARTICLE II
Formation of Partnership
2.1 Formation and Contribution.
(a) Upon the terms and subject to the conditions contained
herein, the parties shall form the Partnership upon the terms and
conditions set forth in the Partnership Agreement and, at Closing, (a)
KBLP shall contribute to the capital of the Partnership all of KBLP's
right, title and interest in and to the Property, free and clear of all
Liens other than the Permitted Exceptions, and (b) each Sonesta Partner
shall contribute to the capital of the Partnership cash in the amount
set forth opposite its name on Schedule 2.1. The parties agree that, at
Closing, the Gross Asset Value of the Property less the principal amount
of the Existing Indebtedness shall be deemed to be $1.00. FSC shall be
the general partner of the Partnership. KBLP's rights to distributions
under the Partnership Agreement upon the occurrence of a Realization
Event (as defined in the Partnership Agreement) or in the event of a
liquidation or dissolution shall be to receive the KBLP Distribution.
(b) The Partnership Agreement shall provide that the Partnership
may at any time on or after January 1, 2002 by written notice (the
"Notice") delivered to KBLP or its successors or legal representatives,
make a special final distribution ("Special Final Distribution") to KBLP
equal to the greater of (i) $10.00 and (ii) the product of the
Partnership Percentage (as defined in the Partnership Agreement) of KBLP
multiplied by the excess of (A) the Fair Market Value of the Property on
the date the Notice is delivered over (B) the Transfer Basis. The
Special Final Distribution shall be made on the twentieth (20th) day
following the date of the Notice and shall be paid in cash (and, in the
event that the Fair Market Value has not been determined, the
Partnership shall pay to KBLP the amount to be paid pursuant to this
Section based on the amount designated by the Sonesta Partners as the
Fair Market Value pursuant to the definition of "Fair Market Value," and
a subsequent adjustment shall be made between the Partnership and KBLP
upon the determination of Fair Market Value in accordance with the terms
of the Partnership Agreement if the amount owing based on the final
determination of Fair Market Value differs from the sum originally
paid). Upon payment of the Special Final Distribution, KBLP shall be
deemed to have (x) relinquished its interest in the Partnership, and all
rights and privileges pertaining thereto or hereunder, including any
right to vote on Partnership matters or to receive any further
distributions from the Partnership whatsoever (except as provided in
Section 10.2 of the Partnership
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Agreement), and (y) assigned to FSC all of its right, title and interest
in, to and under the Partnership Agreement.
(c) If prior to January 1, 2002, (i) the Partnership sells,
exchanges or otherwise disposes of the Property, or (ii) for any reason
(other than a refinancing of the Aetna Indebtedness or its replacement,
the consummation of the Transactions, or a condemnation or casualty of
the Property where the restoration of the Property is not commercially
practicable) the Partnership is otherwise liquidated or dissolved in a
manner that results in income or gain for federal income tax purposes by
KBLP or is treated as a sale or exchange of all or substantially all of
the Property for federal income tax purposes, or (iii) there is any
other occurrence (other than a refinancing of the Aetna Indebtedness or
its replacement, the consummation of the Transactions or a condemnation
or casualty of the Property where the restoration of the Property is not
commercially practicable or other circumstance not reasonably avoidable
by the Partnership) that results in income or gain for federal income
tax purposes by KBLP or is treated as a sale or exchange of all or
substantially all of the Property for federal income tax purposes, then
the Partnership shall, concurrent with the occurrence of any such event,
pay to KBLP an amount equal to the Liquidated Damages. The FSC Guaranty
shall also guaranty (i) the Partnership's obligation to pay Liquidated
Damages, and (ii) in the event FSC assigns its interest as General
Partner in accordance with Sections 8.1(a) or (b) of the Partnership
Agreement, the Assumed Liabilities.
2.2 Assumption of Liabilities.
(a) At the Closing, the parties shall cause the Partnership to
assume, and after Closing the Partnership shall pay as and when due
(subject to the right, in good faith, to contest amounts due) the
following: (i) the obligations of KBLP under the Existing Indebtedness
(other than the KBHA Indebtedness and the PLT Indebtedness) pursuant to
the applicable Existing Indebtedness Documents (with the liability of
the Partnership being limited to the same extent, if any, as KBLP's
liability is limited thereunder), (ii) the liabilities and obligations
of KBLP under the other Contracts (with the liability of the Partnership
being limited to the same extent, if any, as KBLP's liability is limited
thereunder), (iii) environmental liabilities relating to the ownership,
use, management or operation of the Property, (iv) real property, sales,
occupancy, use and other taxes and assessments relating to the
ownership, use, management or operation of the Property (other than
taxes in the nature of income taxes of KBLP or any of its constituent
partners), (v) the liabilities set forth on Schedule 2.2(a), (vi) the
Asset Management Fee; and (vii) all other liabilities of KBLP relating
to the use, management or operation of the Property other than the KBLP
Liabilities (collectively, the "Assumed Liabilities").
(b) Except as otherwise herein expressly provided, the
Partnership shall not by virtue of the consummation of the Transactions
be deemed to have assumed any KBLP Liabilities. "KBLP Liabilities" means
(i) any liabilities or obligations of KBLP that do not relate to the
use, management or operation of the Property, or (ii) the KBHA
Indebtedness or the PLT Indebtedness, or (iii) any liabilities or
obligations to Affiliates of
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KBLP (other than the Asset Management Fee), regardless of whether any of
the same otherwise relate to the Property, and KBLP shall pay the KBLP
Liabilities as and when they become due (subject to the right, in good
faith, to contest amounts due).
2.3 Matters Relating to Existing Indebtedness.
(a) KBLP shall use reasonable best efforts to obtain, at or prior
to Closing, the unconditional consent of Aetna to the consummation of
the Transactions (including without limitation the amendment of the
Management Agreement described in Section 2.4), together with an
estoppel certificate from Aetna, in form and substance reasonably
acceptable to the Sonesta Partners (the "Aetna Consent/Estoppel").
(b) At Closing, the Sonesta Partners shall cause FSC to release
KBLP and its partners from any and all personal liability in respect of
the FSC Indebtedness and the Existing Indebtedness Documents relating
thereto (the "FSC Indebtedness Waiver").
(c) At Closing, the Sonesta Partners shall cause the Partnership
and KBLP shall cause KBHA and PLT to enter into an agreement (the
"KBHA/PLT Indebtedness Amendments") modifying the provisions of the KBHA
Indebtedness and the PLT Indebtedness as follows: (i) the KBHA/PLT
Indebtedness shall be exchanged for a note from the Partnership in the
principal amount equal to $500,000, payable on the Measurement Date,
with no interest thereon unless paid after the Measurement Date, in
which event simple interest shall accrue from the Measurement Date at
twelve percent (12%) per annum until paid in full (the "KBHA/PLT Note"),
(ii) at the option of the Sonesta Partners, all security interests of
KBHA and PLT with respect to the KBHA Indebtedness and the PLT
Indebtedness shall be released and/or assigned to FSC pursuant to
instruments of assignment, in recordable form, in form and substance
reasonably acceptable to FSC, KBHA and PLT, (iii) payments made in
respect of the KBHA/PLT Note shall be paid to KBHA, (iv) FSC shall
guaranty the obligations of the Partnership under the KBHA/PLT Note in
form and substance reasonably acceptable to KBLP and FSC (the "FSC
Guaranty") and (v) FSC shall cause Sonesta International to issue a
back-up guaranty of collection to KBHA, which guarantees the obligations
of FSC under the FSC Guaranty only with respect to the KBHA/PLT Note
(and not with respect to the obligation to pay Liquidated Damages or
Assumed Liabilities) (the "Sonesta Guaranty"), which guaranty shall be
in form and substance reasonably acceptable to Sonesta International,
KBHA and KBLP.
(d) Upon execution hereof, KBLP shall execute and deliver to FSC
in recordable form the amendments to the mortgages from KBLP to FSC set
forth as Schedule 2.3(d) (the "Mortgage Amendments"). The Mortgage
Amendments shall be promptly recorded but shall only be effective in the
event of a KBLP Default, and, absent a KBLP Default, shall be deemed
null and void and of no force or effect.
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2.4 Matters Relating to Management Agreement and Asset Management
Fee.
(a) [Intentionally Deleted]
(b) Each of FSC, KBLP, PLT and KBHA hereby waives and releases
any and all claims and causes of action that it may have for breach of
the Management Agreement by the other, whether known or unknown or
anticipated or unanticipated, which arise out of or result from any
acts, occurrences, transactions or omissions occurring on or prior to
the date hereof. The waivers and releases described in this subparagraph
(b) shall be null and void in the event of a termination of this
Agreement whether resulting from a default by any party hereto or
otherwise.
(c) Upon execution hereof, the Management Agreement shall be
deemed modified (i) to provide that neither the Transactions, the Plan,
any notice of default issued by Aetna under or in connection with the
Aetna Indebtedness, nor termination of the Management Agreement shall be
cause for termination of the payment of the Asset Management Fee to SRAI
thereunder, and (ii) to extend the term thereof for an additional five
years (5). The amendments described in subparagraph (c)(i) shall be null
and void in the event of a termination of this Agreement due solely to
(A) the failure to meet the Deadlines or (B) a Default by KBLP
hereunder. The amendments described in subparagraph (c)(ii) shall be
null and void effective as of the Closing or in the event of a
termination of this Agreement due solely to (A) the failure to meet the
Deadlines (unless due to a KBLP Default) or (B) a Default by one or more
of the Sonesta Partners hereunder.
(d) At Closing, the Management Agreement shall be deemed modified
to (i) extend the term thereof for an additional fifteen years (15)
years; (ii) provide for the continued payment of the Asset Management
Fee upon the terms set forth in the Management Agreement except that (A)
the Asset Management Fee shall, subject to the provisions for earlier
termination or deferral provided in the Management Agreement, continue
to be paid only until the later of the relinquishment of KBLP's
Partnership Interest pursuant to Section 2.1(b) hereof or the
Measurement Date (the "New Asset Management Fee Expiration Date") and
(B) one-third of the Asset Management Fee shall be deferred and paid to
SRAI only upon the Measurement Date; and (iii) provide that FSC shall
guaranty to SRAI payment of the Asset Management Fee. FSC shall cause
the deferred portion of the Asset Management Fee described in (B) above
to be deposited on its due date in an escrow (the terms of which are
reasonably acceptable to FSC and KBLP) established with the law firm
Broad & Cassel in Boca Raton, Florida, or such other escrow agent
reasonably acceptable to FSC and KBLP.
(e) Other than amendments expressly provided for elsewhere
herein, the Management Agreement shall not be amended or modified in any
way without KBLP's consent if the effect of the amendment or
modification would be to alter any economic term or provision thereof in
a manner that would adversely affect KBLP's rights to payment.
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ARTICLE III
Closing
3.1 Closing. The closing of the Transactions (the "Closing") shall take
place at the offices of Bell, Boyd & Lloyd, Chicago, Illinois, at 10:00 a.m.,
local time, on the first business day after the effective date of the
confirmation of the Plan, or as soon as practicable thereafter, but in no event
later than ten (10) business days after confirmation of the Plan (the "Closing
Date").
3.2 KBLP Closing Documents. At or prior to the Closing, KBLP shall
deliver, or cause to be delivered, to the Sonesta Partners the following
documents (collectively, the "KBLP Closing Documents"), duly executed by KBLP
and, as appropriate, KBHA, PLT or SRAI unless otherwise specified:
(a) A quit claim deed in proper statutory form for recording, so
as to convey the entire fee simple estate in the Land and Improvements
and all other items of Real Property to the Partnership.
(b) An assignment or assignments of Contracts so as to assign to
the Partnership all of the right, title and interest of KBLP and SRAI in
and to the Contracts, including without limitation the Management
Agreement (other than the provisions thereof relating to the right of
SRAI to receive the Asset Management Fee).
(c) A bill of sale so as to transfer to the Partnership such
items of Personalty which have not been transferred pursuant to any
other KBLP Closing Document.
(d) Such instruments, documents or certificates as may be
required by the Title Company as a condition to the issuance of the
Title Policy, including without limitation, an ALTA statement and a
so-called "gap" undertaking required in order to effect a "New
York-style" closing.
(e) KBHA/PLT Indebtedness Amendments.
(f) All Books and Records.
(g) If requested by FSC, an opinion of counsel for KBLP, dated as
of the Closing Date, in form and substance reasonably acceptable to the
Sonesta Partners, with regard to existence, due authority, execution and
delivery and enforceability.
(h) The Aetna Consent/Estoppel.
(i) If requested by the Sonesta Partners, releases of all
collateral securing the KBHA Indebtedness and the PLT Indebtedness.
(j) The Partnership Agreement.
(k) Assignments of Hotel bank accounts.
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(l) Such other documents, instruments or agreements which KBLP is
required to deliver to the Sonesta Partners pursuant to the other
provisions of this Agreement or which either Sonesta Partner reasonably
may request in order to consummate the Transactions contemplated by this
Agreement or to better vest in the Partnership title to the Property.
3.3 Sonesta Closing Documents. At or prior to the Closing, the Sonesta
Partners shall deliver to KBLP the following documents (herein referred to
collectively as the "Sonesta Closing Documents"), duly executed by the Sonesta
Partners unless otherwise specified:
(a) If an opinion is required under Section 3.2(g) above, an
opinion of counsel for the Sonesta Partners, dated as of the Closing
Date, in form and substance reasonably satisfactory to KBLP, with regard
to existence, due authority, execution and delivery and enforceability.
(b) FSC Indebtedness Waiver.
(c) The Partnership Agreement.
(d) The FSC Guaranty.
(e) The Sonesta Guaranty.
(f) Such other documents, instruments or agreements which the
Sonesta Partners are required to deliver to KBLP pursuant to the other
provisions of this Agreement or which KBLP reasonably may request in
order to consummate the Transactions.
3.4 The Partnership Closing Documents. At or prior to the Closing, the
Sonesta Partners shall cause the Partnership to deliver to KBLP the following
documents (collectively, the "Partnership Closing Documents"), duly executed by
the Partnership unless otherwise specified:
(a) An agreement or agreements pursuant to which the Partnership
assumes the Assumed Liabilities (subject to any exculpation from
liability contained therein).
(b) [Intentionally Deleted]
(c) [Intentionally Deleted]
(d) The KBHA/PLT Note.
(e) Such other documents, instruments or agreements which the
Sonesta Partners shall be required to cause the Partnership to deliver
to KBLP pursuant to the other provisions of this Agreement or which KBLP
reasonably may request in order to consummate the Transactions.
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3.5 Form of Documents. All documents required to be delivered at or
prior to the Closing in accordance with the provisions of this Agreement (other
than the documents attached hereto) shall be in form reasonably satisfactory to
each of the parties hereto. Any documents, including deeds or other instruments
of assignment or conveyance, intended to be recorded in any public office, shall
be in recordable form and shall be recorded concurrently with, or as soon as
reasonably practicable after, the Closing.
ARTICLE IV
Representations and Warranties
4.1 Sonesta Partner Representations and Warranties.
(a) The Sonesta Partners represent and warrant to KBLP as follows:
(i) (A) FSC is a corporation duly organized, validly existing and
in good standing under the laws of the State of Florida, with full
right, power and authority to execute, deliver and perform this
Agreement, and (B) Sonesta II is a corporation duly organized, validly
existing and in good standing under the laws of the State of Florida,
with full right, power and authority to execute, deliver and perform
this Agreement.
(ii) The execution, delivery and performance of this Agreement
have been duly authorized by all requisite action on the part of each of
the Sonesta Partners. This Agreement has been, and the Sonesta Closing
Documents will be, duly executed and delivered by the Sonesta Partners.
This Agreement constitutes, and when so executed and delivered the
Sonesta Closing Documents will constitute, the legal, valid and binding
obligations of the Sonesta Partners, enforceable against them in
accordance with their terms.
(iii) None of the execution, delivery or performance of this
Agreement by the Sonesta Partners does or will, with or without the
giving of notice, lapse of time or both, violate, conflict with or
constitute a default or result in a loss of rights or require the
consent of or filing with any person (including without limitation any
governmental authority) under any term or condition of (A) the
organizational documents of either Sonesta Partner or any material
agreement to which either Sonesta Partner is a party or by which either
Sonesta Partner is bound or (B) any terms or provisions of any judgment,
decree, order, statute, injunction, rule or regulation of a governmental
unit applicable to either Sonesta Partner.
(iv) No broker, finder, investment banker or other person is
entitled to any brokerage, finder's or other fee or commission in
connection with the Transactions based upon arrangements made by or on
behalf of either Sonesta Partner.
(b) Each of FSC and Sonesta II represents and warrants as follows:
(i) It is aware that the Partnership Interest to be acquired by
it pursuant hereto will not be registered under the Securities Act or
under the securities laws of any state or
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other jurisdiction; that the Partnership shall not have any obligation
to register the same in connection with the offering, sale or issuance
thereof to it pursuant hereto or at any time thereafter; that such
Partnership Interest is subject to restrictions on transfer contained in
the Partnership Agreement and, in any event, cannot be sold unless such
Partnership Interest is subsequently registered under the Securities Act
or an exemption from such registration is available; and that the
Partnership, in issuing such Partnership Interest in accordance with the
provisions hereof, is relying upon the representations and warranties of
FSC or Sonesta II, as the case may be, contained herein.
(ii) It has been advised to consult, and has consulted, with
independent tax counsel regarding the tax consequences of the
Transactions, including without limitation the acquisition of the
Partnership Interest to be acquired by it pursuant hereto and the
Partnership Agreement, and it is not relying on tax advice provided by
or through KBLP or any other party.
(iii) It has been provided with such other information regarding
KBLP as it has requested and has had an opportunity to meet with and ask
questions of representatives of KBLP.
(iv) The Partnership Interest to be acquired by it pursuant to
this Agreement is being acquired by it for its own account for
investment purposes only and not with a view to, and with no present
intention of, distributing the same.
(v) It acknowledges that an investment in the Partnership
involves a substantial amount of risk, that it does not expect to
receive any distributions from the Partnership and that it is able to
bear the economic risk of such ownership, including the risk of losing
its entire investment in the Partnership.
4.2 KBLP Representations and Warranties. KBLP represents and warrants to
the Sonesta Partners as follows:
(a) KBLP is a limited partnership duly formed, validly existing
and in good standing under the laws of the State of Florida with full
power and authority to execute, deliver and perform this Agreement.
(b) The execution, delivery and performance of this Agreement by
KBLP has been duly and validly authorized by all necessary action on the
part of KBLP. This Agreement has been, and the KBLP Closing Documents
will be, duly executed and delivered by KBLP. This Agreement
constitutes, and when so executed and delivered the KBLP Closing
Documents will constitute, the legal, valid and binding obligations of
KBLP, enforceable against KBLP in accordance with their terms.
(c) Subject to obtaining the Aetna Consent/Estoppel and the
Contract Party Consents, none of the execution, delivery or performance
of this Agreement by KBLP does or will, with or without the giving of
notice, lapse of time or both, violate, conflict with or constitute a
default or result in a loss of rights or acceleration of payments due or
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require the consent of or filing with any person (including without
limitation any governmental authority) under (A) the organizational
documents of KBLP, the Existing Indebtedness Documents or, to KBLP's
knowledge, any other agreement to which KBLP is a party or by which it
is bound, including without limitation the Contracts, or (B) any
judgment, decree, order, statute, injunction, rule or regulation of a
governmental unit applicable to KBLP.
(d) To KBLP's knowledge, KBLP has, and upon conveyance to the
Partnership at Closing in accordance with the terms hereof, the
Partnership will have, good, valid and marketable title to the Property
(other than the Real Property), free and clear of all Liens other than
the Permitted Exceptions and Liens created by, through or under the
Partnership. To KBLP's knowledge, there are no leases or other rights of
occupancy or use of or rights to purchase (including without limitation
rights of first refusal or first offer in respect of the purchase or
disposition of) any portion of the Property other than rights of persons
who are hotel guests or the rights of persons arising under the
Contracts or instruments or agreements which comprise Permitted
Exceptions.
(e) To KBLP's knowledge, neither KBLP nor any other Person has
caused or permitted any Hazardous Material to be maintained, disposed
of, stored, released or generated on, under or at the Property or any
part thereof or any real property adjacent thereto except for the
storage and use of substances commonly present at or used in the
operation and maintenance of hotels in quantities commonly present at
hotels and in compliance with applicable laws, including, without
limitation, Environmental Laws. To KBLP's knowledge, KBLP is in
compliance with all Environmental Laws with respect to the Property and
all other occupants of the Property are in compliance with the
Environmental Laws. To KBLP's knowledge, KBLP has received no notice
from any governmental unit or other person that KBLP or the Property is
not in compliance with any Environmental Law. KBLP has not installed any
underground or above ground storage tanks on, under or about the
Property and, to KBLP's knowledge, there are no such tanks located upon
the Property.
(f) Schedule 4.2(f) sets forth a list of all Existing
Indebtedness Documents, including without limitation all amendments,
exhibits, attachments, waivers and other changes thereto (including
without limitation side letters) and the Sonesta Partners have been
supplied with true and correct copies of the same. Such documents
constitute the entire agreement between KBLP and each other party
thereto and there are no oral promises or agreements amending,
supplementing or modifying the same. The Existing Indebtedness Documents
(other than those relating to the FSC Indebtedness) are in full force
and effect and no material breach or default by KBLP or any other party
has occurred with respect to any of them and KBLP has received no notice
of any such default. The outstanding principal amount of the Existing
Indebtedness (other than the FSC Indebtedness) and all accrued but
unpaid interest thereon is set forth in Schedule 4.2(f) and, except as
set forth on Schedule 4.2(f), there are no deposits or other amounts
held in escrow or otherwise under the Existing Indebtedness Documents
(other than those relating to the FSC Indebtedness).
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(g) To KBLP's knowledge, Schedule 4.2(g) sets forth a list of all
other Contracts, including without limitation all amendments, exhibits,
attachments, waivers and other changes thereto (including without
limitation side letters), the Sonesta Partners have been supplied with
true and correct copies of the same and such documents constitute the
entire agreement between KBLP and each other party thereto and there are
no oral promises or agreements amending, supplementing or modifying the
same. To KBLP's knowledge, all Contracts (other than the Existing
Indebtedness Documents) are in full force and effect, no material breach
or default by KBLP or any other party has occurred with respect to any
of them, and KBLP has received no notice of any such default. To KBLP's
knowledge, no rents or other payments or deposits are held by KBLP or
its agent except the security and other deposits described on Schedule
4.2(g) and rents prepaid for the current month.
(h) No Affiliate (past or present) of KBLP or KBHA owns any
assets relating to the Hotel and, to KBLP's knowledge, the Property
comprises all of the assets and property necessary for the Partnership
to conduct KBLP's business as it currently is being conducted.
(i) To KBLP's knowledge, Schedule 4.2(i) sets forth a true and
complete list of all liability, property, workers' compensation and
other insurance policies currently in effect that insure KBLP, KBLP's
business or the Property, listing for each policy the identity of the
insurance carrier, the policy period, the limits and retentions and any
special exclusions, and a description of any self-insurance arrangement,
including any reserves established thereunder. To KBLP's knowledge, each
such policy is valid and binding and in full force and effect, all
premiums thereunder have been paid and KBLP has received no notice of
cancellation or termination thereof and is not in default thereunder. To
KBLP's knowledge, KBLP has not received notice that any insurer of KBLP
is denying liability with respect to a claim made by or against KBLP or
defending under a reservation of rights clause.
(j) KBLP is not a party to any collective bargaining or union
agreements and has not encountered any labor union organizing activity
or any actual or threatened employee strikes, work stoppages, slowdowns
or lock-outs. To KBLP's knowledge, KBLP has no employees and, except as
set forth on Schedule 4.2(j), does not maintain or sponsor any employee
benefit plans, including, without limitation, any plans subject to the
Employer Retirement Income Security Act of 1974, as amended.
(k) KBLP has received no notices from governmental authorities or
other persons that it is not in compliance with all laws, ordinances,
rules, regulations, decrees, orders, permits, licenses or other
authorizations applicable to it and, to KBLP's knowledge, KBLP is in
compliance with all such laws, ordinances, rules, regulations, decrees,
orders, permits, licenses or other authorizations. To KBLP's knowledge,
Schedule 4.2(k) sets forth a true and complete list of all licenses,
permits and other authorizations held by KBLP with respect to the
construction, operation or maintenance of the Property (other than those
held by FSC in its own name).
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(l) There is no litigation, including any arbitration,
investigation or other proceeding by or before any court, arbitrator or
governmental or regulatory official, body or authority which is pending
and with respect to which notice has been served on KBLP or which, to
KBLP's knowledge, is otherwise pending or threatened against KBLP
relating to the Property or the Transactions, and there are no
unsatisfied arbitration awards or judicial orders against KBLP.
(m) No condemnation proceeding or other proceeding or action in
the nature of eminent domain is pending with respect to all or any part
of the Property as to which notice has been served on KBLP, and, to
KBLP's knowledge, no condemnation proceeding or other proceeding or
action in the nature of eminent domain is otherwise pending or
threatened with respect to all or any part of the Property.
(n) To KBLP's knowledge, Schedule 4.2(n) lists the patents,
trademarks (including registrations thereof), and trade names which are
used by KBLP in connection with its business other than those that
belong to FSC or its Affiliates. To KBLP's knowledge, the use of such
intellectual property does not infringe upon the patents, trademarks,
copyrights or other intellectual property rights of any third party,
KBLP has received no notice asserting any such infringements and no
third parties are currently infringing upon the patents, copyrights,
trademarks or other intellectual property rights of KBLP.
(o) KBLP is aware that the Partnership Interest to be acquired by
it pursuant hereto will not be registered under the Securities Act or
under the securities laws of any state or other jurisdiction; that the
Partnership shall not have any obligation to register the same in
connection with the offering, sale or issuance thereof to it pursuant
hereto or at any time thereafter; that such Partnership Interest is
subject to restrictions on transfer contained in the Partnership
Agreement and, in any event, cannot be sold unless such Partnership
Interest is subsequently registered under the Securities Act or an
exemption from such registration is available; and that the Partnership,
in issuing such Partnership Interest in accordance with the provisions
hereof, is relying upon the representations and warranties of KBLP
contained herein.
(p) KBLP has been advised to consult, and has consulted, with
independent tax counsel regarding the tax consequences of the
Transactions, including without limitation the acquisition of the
Partnership Interest to be acquired by it pursuant hereto and the
Partnership Agreement, KBLP is not relying (and will not in the future
rely) on tax advice provided by or through the Sonesta Partners or the
Partnership and KBLP acknowledges that, except as specifically provided
herein or in the Partnership Agreement, neither of the Sonesta Partners
nor the Partnership is guarantying any particular tax result or results
for KBLP on account of the Transactions or the operation of the
Partnership.
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(q) KBLP has been provided with such other information regarding
the Partnership as KBLP has requested and has had an opportunity to meet
with and ask questions of representatives of Sonesta Partners.
(r) The Partnership Interest to be acquired by KBLP pursuant to
this Agreement is being acquired by KBLP for its own account for
investment purposes only and not with a view to, and with no present
intention of, distributing the same.
(s) KBLP acknowledges that an investment in the Partnership
involves a substantial amount of risk, that KBLP does not expect to
receive any distributions from the Partnership and that KBLP is able to
bear the economic risk of such ownership, including the risk of losing
its entire investment in the Partnership.
(t) No broker, finder, investment banker or other person is
entitled to any brokerage, finder's or other fee or commission in
connection with the transactions contemplated by this Agreement based
upon arrangements made by or on behalf of KBLP or its affiliates.
For purposes of this Agreement, the knowledge of FSC or the Sonesta
Partners shall not be imputed to KBLP. Each reference to "KBLP's knowledge"
shall be deemed to refer to the personal knowledge of Joel Stone and/or Richard
A. Berman without any obligation on their part to conduct any further or
additional investigation. Neither Joel Stone nor Richard A. Berman shall have
any personal liability by reason of any breach of a representation or warranty
of KBLP hereunder, regardless of whether the applicable representation and
warranty was to KBLP's knowledge or otherwise. In any event, if as of the
execution of this Agreement either Sonesta Partner or FSC is aware of facts or
circumstances which are inconsistent with any representations or warranties of
KBLP under this Agreement, then under no circumstances shall KBLP be deemed to
have breached the representation or warranty (and such representation or
warranty shall be deemed to be true and complete despite any such inconsistency)
to the extent such inconsistent facts or circumstances were known to such
Sonesta Partner or FSC.
ARTICLE V
Conditions to Closing
5.1 Conditions to KBLP's Obligations. KBLP's obligation to close is
subject to satisfaction of each of the following conditions (any of which may be
waived by KBLP in its sole discretion):
(a) Compliance with Agreement. On the Closing Date, all of the
covenants and agreements to be complied with or performed by the
Partnership and the Sonesta Partners under this Agreement on or before
the Closing shall have been complied with or performed in all material
respects.
(b) Accuracy of Representations and Warranties. The
representations and warranties made by the Sonesta Partners in this
Agreement shall be true and complete in all material respects on and as
of the Closing Date.
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(c) Aetna Consent/Estoppel. The Aetna Consent/Estoppel shall have
been obtained.
(d) Plan. The Plan shall have been confirmed.
(e) [Intentionally Deleted]
5.2 Conditions to Sonesta Partners' Obligations. The Sonesta Partners'
obligation to close is subject to satisfaction of each of the following
conditions (any of which may be waived by the Sonesta Partners in their sole
discretion):
(a) Compliance with Agreement. On the Closing Date, all of the
covenants and agreements to be complied with or performed by KBLP under
this Agreement on or before the Closing shall have been complied with or
performed in all material respects.
(b) Accuracy of Representation and Warranties. The
representations and warranties made by KBLP in this Agreement shall be
true and complete in all material respects on and as of the Closing
Date.
(c) Aetna Consent/Estoppel. The Aetna Consent/Estoppel shall have
been obtained.
(d) Issuance of Title Policy. The Title Company shall issue, or
be irrevocably committed to issue, the Title Policy.
(e) Bulk Sales Releases/Directions. The Bulk Sales
Releases/Directions shall have been obtained.
(f) Licenses and Permits. The Partnership shall have obtained all
licenses or permits (including without limitation liquor licenses) set
forth on Schedule 4.2(f), where comparable permits and licenses held by
KBLP are not transferable to the Partnership, and such licenses and
permits shall be in full force and effect.
(g) Plan. The Plan shall have been confirmed.
(h) [Intentionally Deleted]
(i) [Intentionally Deleted]
ARTICLE VI
Additional Covenants
6.1 Indemnification.
(a) Indemnification by KBLP. From and after the Closing, KBLP shall
indemnify, defend and hold harmless the Sonesta Partners, the Partnership, their
respective successors and assigns and their respective officers, directors,
shareholders, partners, employees and agents (the
20
<PAGE>
"Indemnified Sonesta Persons") from and against any claim, action, demand, loss,
cost, expense, liability, penalty or damages, including, without limitation,
reasonable attorneys' fees and expenses (a "Loss"), incurred or suffered by any
Indemnified Sonesta Person that results from, relates to or arises out of (i)
the breach or inaccuracy of any representation or warranty made by KBLP in this
Agreement or the KBLP Closing Documents, (ii) the breach or non-fulfillment by
KBLP of any of the covenants or agreements of KBLP under this Agreement or the
KBLP Closing Documents, (iii) KBLP's failure to pay the KBLP Liabilities as and
when due (subject to the right, in good faith, to contest amounts due), or (iv)
the breach or nonfulfillment by KBLP or any of its Affiliates of any fiduciary
or other duty or obligation to any limited partner or other equity investor of
KBLP or any partner of KBLP. The liability of KBLP under this indemnity and any
other of its indemnification obligations set forth in this Agreement shall be
limited to the assets of KBLP, and none of KBLP's constituent partners,
shareholders, subsidiaries or affiliates shall have any liability with respect
thereto.
(b) Indemnification by the Sonesta Partners. From and after the Closing,
the Sonesta Partners shall jointly and severally indemnify, defend and hold
harmless KBLP, its successors and assigns and their respective partners,
employees and agents (the "Indemnified KBLP Persons") from and against any Loss
incurred or suffered by any Indemnified KBLP Person that results from, relates
to or arises out of (i) the breach or inaccuracy of any representation or
warranty made by either Sonesta Partner in this Agreement or the Sonesta Closing
Documents, (ii) the breach or non-fulfillment by either Sonesta Partner or the
Partnership of any of the covenants or agreements of either Sonesta Partner or
the Partnership under this Agreement, the Partnership Closing Documents or the
Sonesta Closing Documents, or (iii) the Partnership's failure to pay the Assumed
Liabilities as and when due (subject to the right, in good faith, to contest
amounts due). The liability of the Sonesta Partners under this indemnity and any
other of their respective indemnification obligations set forth in this
Agreement shall be limited to their respective assets, and none of their
respective constituent partners, shareholders, subsidiaries or affiliates
(except the Partnership) shall have any liability with respect thereto.
(c) Joint Cooperation. Upon obtaining knowledge of the institution of
any action or proceeding or other event which could give rise to a claim for
indemnity hereunder, the party seeking indemnification shall promptly give
written notice thereof to the party from whom indemnification may be sought. If
such claim or demand relates to a claim or demand asserted by a third party, the
indemnifying party shall have the right, at its expense, to employ counsel to
defend such claim or demand and the indemnified party shall have the right, but
not the obligation, to participate in the defense of any such claim or demand.
So long as the indemnifying party is defending such claim or demand in good
faith, the indemnified party will not settle such claim or demand without the
indemnifying party's consent. The indemnified party shall make available to the
indemnifying party all records and other materials reasonably required by it in
contesting a claim or demand asserted by a third party against the indemnified
party and shall cooperate in the defense thereof.
21
<PAGE>
6.2 Matters Relating to the Plan
(a) Reasonable Best Efforts. The parties hereto shall use their
reasonable best efforts in good faith to file a petition for relief, disclosure
statement and all required schedules and to obtain entry of an order by a court
of competent jurisdiction confirming the Plan before the respective Deadlines
set forth in subparagraph (b) below.
(b) Deadlines. This Agreement shall be null and void unless (i) on or
before March 1, 1998, KBLP has filed a petition for relief under the Bankruptcy
Code, together with the Plan and its disclosure statement and all required
schedules in connection therewith, in form and substance reasonably acceptable
to the Sonesta Partners and KBLP; and (ii) on or before July 1, 1998, a court of
competent jurisdiction has entered an order confirming the Plan (the foregoing
dates are referred to as the "Deadlines").
(c) No Solicitation. So long as this Agreement has not become null and
void pursuant to subparagraph (b) above or otherwise terminated, neither KBLP
nor its successors, assigns, employees, affiliates, agents or others purporting
to act on its behalf (the "KBLP Parties") shall solicit or initiate contact with
any other person with respect to the sale, transfer or refinancing of KBLP or
the Property (a "Financial Transaction").
(d) Confidentiality. So long as the obligations of KBLP remain in effect
pursuant to subparagraph (c) above, the response of any KBLP Party to any
third-party inquiry regarding a Financial Transaction shall be limited to
acknowledgment of the existence of this Agreement and notification that copies
of any documents filed with the Bankruptcy Court may be obtained from the
Bankruptcy Court. So long as the obligations of KBLP remain in effect pursuant
to subparagraph (c) above, no persons other than the parties hereto shall be
allowed to inspect the Property or its financial records other than as filed
with the Bankruptcy Court.
(e) No Other Agreements. So long as the obligations of KBLP remain in
effect pursuant to subparagraph (c) above, no KBLP Party shall enter into any
Financial Transaction with any person other than as set forth herein.
6.3 Books and Records. Upon execution hereof, KBLP shall (a) make
available to FSC, its Affiliates and their respective agents, counselors,
accountants and representatives the Books and Records for inspection, audit and
copying, and (b) use its reasonable best efforts (without incurring liability in
excess of that contemplated by the Transactions) to assist FSC in the
preparation of an audit letter. From and after Closing, and for so long as KBLP
is filing tax returns with respect to the Property, KBLP shall have the right,
upon reasonable prior notice to FSC (or the general partner of the Partnership,
as the case may be) and during normal business hours, to examine and make copies
of the books and records of the Property at the location at which such books and
records are ordinarily kept, such examination and copying to be made at the
expense of KBLP. KBLP shall keep all such information confidential.
6.4 Transaction Costs and Expenses. The Sonesta Partners shall pay (a)
all reasonable legal and accounting fees reasonably incurred by FSC or its
Affiliates, KBLP and/or the general partner of KBLP in connection with the
negotiation and preparation of this
22
<PAGE>
Agreement and the Partnership Agreement and the consummation of the
Transactions, including the preparation, confirmation and implementation of the
Plan and any third-party costs related thereto, and (b) title insurance and
recording charges, survey costs and transfer taxes, if any, incurred in
connection with the Transaction (such costs paid by the Sonesta Partners, are
hereinafter referred to the "Transaction Costs"). Otherwise, each of the Sonesta
Partners, on the one hand, and KBLP, on the other hand, shall bear its or their
own legal, accounting and other fees incurred in connection with the negotiation
and preparation of this Agreement and the consummation of the Transactions.
6.5 Bulk Sales. If, under applicable law, any notification is required
to be given to, or a clearance is required to be obtained from, any state or
local taxing authorities in order to permit the transfer of the Property as
herein contemplated without a Lien attaching to the assets transferred or
liability being incurred by the Partnership for any state or local taxes
required to be paid or collected by KBLP relating to periods prior to the
Closing Date, the Sonesta Partners shall obtain appropriate clearances or
releases (and/or statements that no clearances or releases are required) from
the applicable taxing authorities (the "Bulk Sales Releases/Directions).
6.6 [Intentionally Deleted].
6.7 Contract Party Consents. KBLP shall use reasonable efforts to obtain
(and the Sonesta Parties shall cause FSC to cooperate with KBLP in obtaining)
the consent of the other parties to the Contracts marked with a "C" on Schedule
4.2(g) (the "Contract Party Consents"), and KBLP shall cooperate with the
Sonesta Partners in connection with obtaining the licenses and permits described
in Section 5.2(f), including, if required, surrendering any comparable licenses
or permits currently held by KBLP to the Partnership at the Closing, granting to
governmental agents or representatives access to the Property for the purpose of
inspecting the same, and authorizing its management personnel to disclose to
such governmental agents or representatives such information with respect to the
Property, and the conduct of the business therefrom, as such agents or
representatives shall require.
6.8 Forbearance. In consideration of KBLP's execution of this Agreement,
and the performance of its obligations hereunder, FSC agrees to forbear from
foreclosing the mortgages and realizing upon the other collateral securing the
FSC Indebtedness until March 1, 1998.
6.9 Further Assurances. The Sonesta Partners, on the one hand, and KBLP,
on the other hand, agree, at any time and from time to time after the Closing,
to execute, acknowledge where appropriate and deliver such further instruments
and documents (and to bear their own costs and expenses incidental thereto) and
to take such other actions (without incurring liability in excess of that
contemplated by the Transactions) as the other of them may reasonably request in
order to carry out the intents and purposes of this Agreement.
6.10 Prorations and Apportionments. There shall be no prorations or
apportionments of rents, real estate taxes or other amounts between the Sonesta
Partners and/or the Partnership, on the one hand, and KBLP, on the other hand.
23
<PAGE>
6.11 Tax Reporting. The Sonesta Partners shall cause the Partnership to
report the transfer of the Property to the Partnership in accordance with this
Agreement as a contribution of the Property to the capital of the Partnership
pursuant to Section 721(a) of the Internal Revenue Code of 1986, as amended (the
"Code").
ARTICLE VII
Default
7.1 Events of Default. A party shall be deemed to be in "Default"
hereunder in the event (a) it fails to perform any of its obligations hereunder
within five (5) business days after its receipt of notice thereof from a party
hereto; (b) any of its representations or warranties is false or misleading in
any material respect at the time it was made or at the Closing, and, in the
event the facts upon which such representation or warranty was based is subject
to cure, the failure to cure the same within five (5) business days after its
receipt of notice thereof from a party hereto; or (c) it breaches any of its
covenants hereunder and fails to cure the same within five (5) business days
after its receipt of notice thereof from a party hereto. Notwithstanding the
foregoing, no party shall be deemed to be in Default solely by reason of failure
to meet Deadlines.
7.2 Remedies. Upon the occurrence of a Default by a party, any other
party not in Default shall have all rights and remedies provided hereunder and
under applicable law with respect thereto.
ARTICLE VIII
Miscellaneous
8.1 Survival. The covenants, representations and warranties contained
herein shall survive Closing indefinitely and the representations and warranties
shall not be deemed to have been waived at the Closing or merged into any of the
documents of conveyance or transfer to be delivered at the Closing.
8.2 Notices. Notices must be in writing and sent to the party to whom or
to which such notice is being sent, by certified or registered mail, return
receipt requested, commercial overnight delivery service or facsimile or
delivered by hand with receipt acknowledged in writing, as follows:
(a) To either Sonesta Partner:
c/o Sonesta International Hotels Corporation
200 Clarendon Street, Floor 41
Boston, Massachusetts 02116
Attention: Peter J. Sonnabend
24
<PAGE>
with a copy thereof to:
Bell, Boyd & Lloyd
Three First National Plaza
Suite 3300
Chicago, Illinois 60602
Attention: David F. Heroy
(b) To KBLP:
c/o Strategic Realty Advisors, Inc.
630 Dundee Road, Suite 220
Northbrook, Illinois 60062
Attention: Joel Stone
with a copy thereof to:
Sonnenschein Nath & Rosenthal
8000 Sears Tower
233 S. Wacker Drive
Chicago, Illinois 6060
Attention: Mark Mehlman
All notices (i) shall be deemed given when received and (ii) may be
given either by a party or by such party's attorneys. The cost of delivery shall
be borne by the party delivering the notice.
8.3 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and all of which
together shall constitute a single document.
8.4 Amendments. This Agreement may only be changed, modified,
supplemented or terminated by a document executed by the parties hereto.
8.5 Waiver. No waiver by any party hereto of any failure or refusal by
another party hereto to comply with its obligations hereunder shall be deemed a
waiver of any other or subsequent failure or refusal to so comply. All waivers
hereunder must be in writing.
8.6 Successors and Assigns. The terms, covenants, agreements,
conditions, representations and warranties contained in this Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective successors and assigns.
25
<PAGE>
8.7 Third Party Beneficiaries. The provisions of this Agreement are made
for the benefit of the parties hereto and the Partnership, and their respective
successors in interest and assigns and are not intended for, and may not be
enforced by, any other person or entity.
8.8 Partial Invalidity. If any term or provision of this Agreement or
the application thereof to any person or circumstance shall, to any extent, be
invalid or unenforceable, the remainder of this Agreement, or the application of
such term or provision to persons or circumstances other than those as to which
it is held invalid or unenforceable, shall not be affected thereby and each term
and provision of this Agreement shall be valid and enforced to the fullest
extent permitted by law.
8.9 Governing Law. This Agreement has been made pursuant to and shall be
governed by the laws of the State of Illinois (without regard to conflicts of
law rules).
8.10 Assignment. This Agreement may not be assigned by any party without
the prior written consent of the other.
8.11 Headings. The headings of the various Article and Sections of this
Agreement have been inserted solely for purposes of convenience, are not part of
this Agreement and shall not be deemed in any manner to modify, explain, expand
or restrict any of the provisions of this Agreement.
8.12 Gender and Number. Words of any gender shall include the other
gender and the neuter. Whenever the singular is used, the same shall include the
plural wherever appropriate, and whenever the plural is used, the same also
shall include the singular where appropriate.
8.13 Time of Essence. Time shall be of the essence with respect to all
of the time periods contained herein.
8.14 Schedules. The parties shall negotiate in good faith to agree upon,
complete and attach to this Agreement any Schedule provided for in this
Agreement that is not included as of the date hereof.
26
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto, and joined in by KBHA, PLT, SRAI and Sonesta International, on the day
and year first above written.
KEY BISCAYNE LIMITED PARTNERSHIP, a
Florida limited partnership
By: _____________________________
Its ________________________
FLORIDA SONESTA CORPORATION,
a Florida corporation
By: _____________________________
Its ________________________
KEY BISCAYNE LAND CORPORATION,
a Florida corporation
By: _____________________________
Its ________________________
Each of the undersigned joins in the execution of this Agreement for purposes of
agreeing with the provisions of Sections 2.3(c), 2.4, 3.2(e) and 3.2(i) hereof
and other provisions of this Agreement that relate to it.
KEY BISCAYNE HOTEL ASSOCIATES, LTD.,
a Florida limited partnership,
By: ________________________________
Its __________________________
PARTNERS LIQUIDATING TRUST,
a Delaware trust
By: ________________________________
Its __________________________
27
<PAGE>
The undersigned joins in the execution of this Agreement for purposes of
agreeing with the provisions of Sections 2.4 and 3.2(b) hereof and other
provisions of this Agreement that relate to it.
STRATEGIC REALTY ADVISORS, INC.,
an Illinois corporation
By: ________________________________
Its __________________________
The undersigned joins in the execution of this Agreement for purposes of
agreeing to deliver the Sonesta Guaranty.
SONESTA INTERNATIONAL HOTELS CORPORATION,
a New York corporation
By: ________________________________
Its __________________________
28
<PAGE>
Exhibit A - Legal Description of the Land
<PAGE>
Exhibit B - Partnership Agreement
<PAGE>
Exhibit C - Permitted Exceptions
<PAGE>
Schedule 2.1 - Capital Contributions
<TABLE>
<CAPTION>
Partner Capital Contribution
------- --------------------
<S> <C>
FLORIDA SONESTA
CORPORATION $1.00
KEY BISCAYNE LAND
CORPORATION $98.00
KEY BISCAYNE LIMITED
PARTNERSHIP $1.00
</TABLE>
<PAGE>
Schedule 2.2(a) - Payables
<PAGE>
Schedule 2.3(d) - Mortgage Amendments
<PAGE>
Schedule 4.2(f) - Existing Indebtedness
<PAGE>
Schedule 4.2(g) - Contracts
<PAGE>
Schedule 4.2(i) - Insurance
<PAGE>
Schedule 4.2(j) - Employee Benefit Plan
<PAGE>
Schedule 4.2(k) - Licenses and Permits
<PAGE>
Schedule 4.2(n) - Intellectual Property
NONE
FIRST AMENDMENT TO CONTRIBUTION AND FORMATION AGREEMENT
THIS FIRST AMENDMENT TO CONTRIBUTION AND FORMATION AGREEMENT (the
"Amendment") is made as of April 3, 1998 among KEY BISCAYNE LIMITED PARTNERSHIP,
a Florida limited partnership ("KBLP"), FLORIDA SONESTA CORPORATION, a Florida
corporation, ("FSC"), KEY BISCAYNE LAND CORPORATION, a Florida corporation
("Sonesta II"), KEY BISCAYNE HOTEL ASSOCIATES, LTD., a Florida limited
partnership ("KBHA"), PARTNERS LIQUIDATING TRUST, a Delaware trust ("PLT"),
STRATEGIC REALTY ADVISORS, INC., an Illinois corporation ("SRAI") and SONESTA
INTERNATIONAL HOTELS CORPORATION, a New York corporation.
Recitals
A. The parties hereto have executed and delivered (or joined in) that
certain CONTRIBUTION AND FORMATION AGREEMENT dated as of January 30, 1998 (the
"Agreement"), pursuant to which, inter alia, KBLP agreed to contribute certain
of its real property and improvements to a partnership to be formed by FSC.
B. The parties desire to revise the Agreement with respect to rights of
KBLP to certain distributions under the partnership agreement and other matters,
all as further set forth herein.
Agreements
NOW THEREFORE, for and in consideration of the foregoing recitals, the
mutual covenants and agreements hereinafter set forth, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
ARTICLE I
Section 1.1. Definitions. Initially capitalized terms used but not
otherwise defined herein have the same meanings given them in the Agreement.
Section 1.2. Amended Definitions. The following definitions are amended
and restated as follows:
"Fair Market Value" shall have the meaning set forth in the Partnership
Agreement; provided that the Fair Market Value of the Property cannot exceed an
amount equal to ten times the average cash flow from the Property for the two
calendar years prior to the date of determination. Cash flow will equal revenues
less expenses and fixed expenses, including without limitation, all management
fees (including the Asset Management Fee), capital expenditures (up to four
percent of revenues per annum), insurance and real estate taxes; interest
payments on debt service shall not be an item of expense or fixed expense for
purposes of calculating the cash flow used to determine fair market value.
Section 1.3. Amended Deadlines. The deadlines set forth in sections
6.2(b)(i) and (ii) are amended to be April 15, 1998 and August 15, 1998,
respectively.
Section 1.4. New Definitions. The following defined terms are hereby
added to the Agreement:
"KBLP Excess" means (i) in the event of a Realization Event, an amount
equal to the Net Realization Proceeds from such Realization Event, less the
Transfer Basis, and (ii) in the event of a Special Final KBLP Distribution, an
amount equal to the Fair Market Value of the Property on the date the Notice (as
defined in the Partnership Agreement) is given, less the Transfer Basis.
"Special KBLP Distribution" means an amount distributable to KBLP in the
event of a Realization Event or a Special Final KBLP Distribution equal to a
portion of the KBLP Excess determined, on the date of calculation, as follows:
<TABLE>
<CAPTION>
Percentage of Cumulative Dollar
Excess Allocable Amount of KBLP
Amount of Excess to KBLP Special Distribution
---------------- ------- --------------------
<S> <C> <C>
Less than $10.0 million 0% $ 0
Between $10.0 million and $10.1 million 100 up to 100,000
Between $10.1 million and $12.5 million 0 100,000
Between $12.5 million and $12.65 million 100 up to 250,000
Between $12.650 million and $15.0 million 0 250,000
Between $15.0 million and $15.25 million 100 up to 500,000
Between $15.250 million and $17.5 million 0 500,000
Between $17.5 million and $17.75 million 100 up to 750,000
Between $17.750 million and $20.0 million 0 750,000
Between $20.0 million and $20.25 million 100 up to 1,000,000
In excess of $20.25 million 0 1,000,000
</TABLE>
In no event shall the total amount paid or payable to KBLP with respect to the
Special KBLP Distribution exceed $1,000,000.
ARTICLE II
2.1 Special KBLP Distribution. Notwithstanding anything contained in the
Agreement to the contrary, and in addition to the other distributions to which
KBLP is entitled, in the event of a Realization Event or a Special Final KBLP
Distribution, the Partnership shall make the Special KBLP Distribution to KBLP.
The Partnership shall pay to KBLP the Special KBLP Distribution in the form of
an unsecured non-interest bearing promissory note payable in five equal annual
installments beginning one year after the Realization Event or the Special Final
KBLP Distribution, as applicable (provided that the Partnership may, in its sole
discretion, prepay all or any portion of the note).
2
<PAGE>
2.2 Bankruptcy Plan. KBLP and FSC shall be co-proponents of a chapter 11
plan in substantially the form attached as Exhibit A (the "Plan"), and either
KBLP or FSC may seek confirmation of the Plan in accordance with its terms
except as specifically set forth herein. FSC acknowledges that its acting as a
proponent of the Plan, including the right to solicit acceptances and seek
confirmation of the Plan, will not otherwise impair KBLP's exclusive periods to
propose and solicit acceptance of a plan as provided in title 11 of the United
States Code, 11 U.S.C. ss.ss. 101 et seq., as the same may be amended or
modified by court order ("KBLP's Exclusivity Rights"). In the event that
circumstances arise or additional factors become known which KBLP believes in
its good faith judgment require withdrawal, material delay or modification of
the Plan (a "Change"), then FSC may not seek confirmation of the Plan or any
other plan except as may be permitted by KBLP's Exclusivity Rights, and KBLP may
withdraw, delay or modify the Plan or any other plan it seeks to propose,
without FSC's consent; provided, however, that KBLP will consult in good faith
with FSC for a five business day period regarding any such Change before
materially delaying, modifying or withdrawing the Plan or seeking confirmation
of an alternative plan; provided further, however, that in the event of a
Change, any ballot cast by Sonesta, KBHA, PLT or Aetna accepting the Plan may,
at such party's sole option, be considered null and void, and nothing herein
shall prejudice such party's rights to object to any modified plan, other plan
or action in KBLP's chapter 11 case. An offer or expression of interest by a
potential buyer of KBLP's property or unrelated third party funder of an
alternative plan shall not be sufficient grounds for a Change.
2.3 FSC Indebtedness. At Closing, the FSC Indebtedness shall be deemed
to be amended to provide that no portion of the FSC Indebtedness shall mature
prior to the date that is one day after the Measurement Date.
2.4 KBHA/PLT Debt. Prior to the Measurement Date, FSC shall not release
the security interests, if any, securing the KBHA/PLT Indebtedness (other than
in connection with a refinancing of the Aetna Indebtedness or its replacement),
without KBLP's consent.
2.5 Transaction Costs. Notwithstanding Section 6.4 of the Agreement, the
Sonesta Partners shall not be obligated to pay any Transaction Costs incurred by
KBLP and/or the general partner of KBLP or any of their Affiliates (including
KBHA and PLT) except in the event (a) the Closing occurs based upon the Plan (i)
in substantially the form attached or (ii) with a Change acceptable to the
Sonesta Partners in their sole discretion, or (b) the Closing fails to occur due
solely to an uncured Default by the Sonesta Partners under the Agreement.
Notwithstanding the foregoing, except in the event of a Default by KBLP and/or
the general partner of KBLP or any of their Affiliates (including KBHA), the
Sonesta Partners shall pay the fees of the debtor's counsel (Greenberg, Traurig,
et al, Miami Florida).
2.6 Partnership Agreement. The Partnership Agreement attached as Exhibit
B to the Agreement shall be amended as indicated on the attached Exhibit B.
3
<PAGE>
2.7 Defaults. Each of the covenants, representatives and warranties
contained herein shall, with those covenants, representations and warranties
contained in the Agreement, constitute covenants, representations and warranties
for all purposes set forth therein, including without limitation Article VII
"Defaults."
ARTICLE III
3.1 Notice. All notices, waivers, demands, requests or other
communications required or permitted hereunder shall be given in accordance with
the Agreement.
3.2 Entire Agreement. This Amendment and the Agreement embody the entire
agreement of the parties in relation to the subject matter hereof, and
supersedes prior agreements of the parties with respect to the subject matter
hereof. No change or modification of this Amendment or the Agreement shall be
valid unless the same is in writing and signed by both of the parties hereto.
3.3 Headings. The subject headings of the Sections of this Amendment are
included for purposes of convenience only, and shall not affect the construction
or interpretation of any of its provisions.
3.4 Governing Law. The validity and interpretation of this Amendment and
of each and every clause, term and part hereof shall be governed by and
construed in accordance with the laws of the State of Illinois applicable to
contracts made and to be performed therein.
3.5 Severability. If any provision hereof is held or finally determined
to be invalid or unenforceable to any extent for any reason, to the extent that
such provision is valid and enforceable, the arbiters or court of competent
jurisdiction, as the case may be, shall construe and interpret said provision to
provide for maximum validity and enforceability.
3.6 Binding Agreement. This Amendment and the Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors, assigns, heirs and legal representatives as one agreement,
notwithstanding the terms of the Agreement, including the deadlines originally
set forth in section 6.2 (b) thereof.
3.7 Counterparts. This Amendment may be executed in any number of
counterparts, each of which shall be deemed an original.
4
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Amendment to be
duly executed as of the day and year first above written.
KEY BISCAYNE LIMITED PARTNERSHIP, a
Florida limited partnership
By:
-------------------------------
Its
----------------------------
FLORIDA SONESTA CORPORATION,
a Florida corporation
By:
-------------------------------
Its
----------------------------
KEY BISCAYNE LAND CORPORATION,
a Florida corporation
By:
-------------------------------
Its
----------------------------
KEY BISCAYNE HOTEL ASSOCIATES, LTD.,
a Florida limited partnership,
By:
-------------------------------
Its
----------------------------
PARTNERS LIQUIDATING TRUST,
a Delaware trust
By:
-------------------------------
Its
----------------------------
5
<PAGE>
STRATEGIC REALTY ADVISORS, INC.,
an Illinois corporation
By:
-------------------------------
Its
----------------------------
SONESTA INTERNATIONAL HOTELS
CORPORATION,
a New York corporation
By:
-------------------------------
Its
----------------------------
6
<PAGE>
EXHIBIT A
THE PLAN
<PAGE>
EXHIBIT B
THE PARTNERSHIP AGREEMENT AMENDMENTS
AGREEMENT OF LIMITED PARTNERSHIP
OF
SONESTA BEACH RESORT LIMITED PARTNERSHIP
<PAGE>
AGREEMENT OF LIMITED PARTNERSHIP
OF SONESTA BEACH RESORT LIMITED PARTNERSHIP
Agreement of Limited Partnership, dated _____________, 1998, among
FLORIDA SONESTA CORPORATION, a Florida corporation ("FSC"), as general partner,
and KEY BISCAYNE LAND CORPORATION, a Florida corporation ("Sonesta II") and KEY
BISCAYNE LIMITED PARTNERSHIP, a Florida limited partnership ("KBLP"), as limited
partners.
PRELIMINARY STATEMENT
The parties desire to form a limited partnership under the Delaware
Revised Uniform Limited Partnership Act, as amended, and upon the terms and
subject to the conditions contained herein.
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
and conditions hereinafter set forth, and other good and valuable consideration,
the parties do hereby agree as follows:
ARTICLE I
Definitions
For purposes of this Agreement, unless otherwise specifically herein
provided, the following terms shall have the respective meanings indicated
below. Any references in this Agreement to particular sections, articles,
schedules or exhibits shall, unless expressly otherwise provided or unless the
context otherwise requires, be deemed to refer to the specific sections,
articles, schedules or exhibits in this Agreement. In addition, the words
"hereof", "herein", "hereunder" and words of similar import refer to this
Agreement as a whole, and not to any particular article.
"Act" shall mean the Revised Uniform Limited Partnership Act of the
State of Delaware, as such Act has been amended or is amended from time to time
hereafter.
"Additional Units" shall have the meaning set forth in Section 3.6.
"Adjusted Capital Account Deficit" shall mean, with respect to any
Limited Partner, the deficit balance, if any, in such Limited Partner's Capital
Account as of the end of any relevant Fiscal Year, after giving effect to the
following adjustments:
(a) credit to such Capital Account any amounts which such Limited
Partners are obligated or treated as obligated to restore with respect
to any deficit balance in such Capital Account pursuant to Section
1.704-l(b)(2)(ii)(c) of the Regulations, or is deemed to be obligated to
restore with respect to any deficit balance pursuant to the penultimate
sentences of Sections 1.704-2(g)(1) and 1.704-2(i)(5) of the
Regulations; and
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(b) debit to such Capital Account the items described in Sections
1.704-l(b)(2)(ii)(d)(4), (5) and (6) of the Regulations.
The foregoing definition of Adjusted Capital Account Deficit is intended to
comply with the requirements of the alternate test for economic effect contained
in Section 1.704-l(b)(2)(ii)(d) of the Regulations and shall be interpreted
consistently therewith.
"Aetna Indebtedness" shall have the meaning set forth in the
Contribution Agreement.
"Affected Gain" shall have the meaning set forth in Section 4.5(b).
"Affiliate" shall mean, as to any Partner (or as to any other person the
affiliates of whom are relevant for purposes of any of the provisions of this
Agreement), the affiliate of such person as determined under the Securities Act
of 1933, as amended.
"Agreement" shall mean this Agreement of Limited Partnership, as it may
hereafter be amended from time to time.
"Appraiser" shall mean such qualified real estate appraiser as the
General Partner and KBLP may agree upon in writing or shall otherwise be deemed
to agree upon as provided herein. In the event the General Partner and KBLP
cannot agree upon a single appraiser within ten (10) business days following
receipt by KBLP of notice proposing an appraiser, each of the General Partner
and KBLP shall select its own appraiser within an additional ten (10) business
days, and those two appraisers shall select a third appraiser within an
additional ten (10) business days. If the two appraisers fail to select a third
appraiser within such 10 business-day period, either party may request the
American Arbitration Association, or any equivalent successor organization, to
select a third appraiser within ten (10) business days after receiving such
request, and the parties shall be bound by any such selection made within such
10 business-day period. If the American Arbitration Association, or any such
successor organization, fails to select the third appraiser within such 10-day
period, either party may apply to any court having jurisdiction to make such
selection. Any appraiser selected by the first two appraisers, by the American
Arbitration Association or such successor organization or by such court shall be
deemed the Appraiser for purposes of this Agreement.
"Bankruptcy" or "Bankrupt" shall mean, as to any person (including,
without limitation, any Partner, the Partnership or other relevant person), (i)
any proceeding brought by or against such person under the United States
Bankruptcy Code, or any successor thereto, as amended, or any state laws
providing for the relief of debtors, except that, in the case of an involuntary
proceeding brought against any such person, only if such proceeding shall not
have been withdrawn, stayed or discharged within sixty (60) days after the
institution thereof, unless, within such sixty (60) day period, such person
shall have consented to the institution thereof; (ii) admission in writing of
the inability of such person to pay its debts as they come due; (iii) the making
of an assignment for the benefit of the creditors of such person; (iv) if such
person shall become insolvent (except that, for purposes hereof, no Partner
shall be deemed insolvent merely by reason of the fact that it has a negative
balance in its Capital Account or by reason of the fact that the amount of its
liabilities exceeds the amount of its assets by an amount equal to or less
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than the negative balance of such Partner's Capital Account); or (v) the entry
of an order, judgment or decree against such person in an amount in excess of
$100,000 which continues unpaid, unstayed or undischarged for more than sixty
(60) days after the entry thereof.
"Capital Account" shall mean, with respect to any Partner, the separate
"book" account established and maintained for such Partner in accordance with
Section 704(b) of the Code and Section 1.704-l(b)(2)(iv) of the Regulations and
in accordance with such other provisions of Section 1.704-l(b) of the
Regulations that must be complied with in order for the Capital Accounts to be
determined in accordance with the provisions of said Regulations. In furtherance
of the foregoing, the Capital Accounts shall be maintained in compliance with
Section 1.704-l(b)(2)(iv) of the Regulations, and the provisions hereof shall be
interpreted and applied in a manner consistent therewith.
"Closing Date" shall have the meaning set forth in the Contribution
Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as amended, or any
replacement or successor Code thereto.
"Contribution Agreement" shall mean that certain Contribution and
Formation Agreement dated the date hereof, among FSC, Sonesta II and KBLP, and
joined in by certain other parties.
"Depreciation" shall mean, if there is no difference between the fair
market value and the adjusted tax basis of property upon the contribution of
such property to the Partnership or upon the revaluation of such property
pursuant to Treas. Reg. Section 1.704-l(b)(2)(iv)(f), depreciation, depletion or
amortization, as the case may be, allowed or allowable for federal income tax
purposes ("Tax Depreciation"); otherwise, Depreciation shall mean book
depreciation, depletion or amortization as determined under Treas. Reg. Section
1.704-l(b)(2)(iv)(g) ("Book Depreciation") and the Partners' Capital Accounts
shall be adjusted in accordance with said Treasury Regulation.
"Excess Expenditures" shall mean, for each calendar year (commencing
with 1998) or portion thereof, the excess of (a) the capital expenditures
(including without limitation interest) made by the Partnership as reasonably
determined by the General Partner to be reasonably required in respect of the
Property for such calendar year or portion thereof over (b) four (4) percent of
the Gross Revenues (as defined in the Management Agreement) from the Property
for such calendar year or portion thereof (annualized for partial years).
"Existing Indebtedness" shall have the meaning set forth in the
Contribution Agreement.
"Existing Indebtedness Documents" shall have the meaning set forth in
the Contribution Agreement.
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"Fair Market Value" shall mean the price at which parties dealing at
arm's length and without any compulsion or duress to either purchase or sell the
Property would agree to purchase or sell the Property subject to the Management
Agreement (without regard to the provisions of the Third Amendment). The Fair
Market Value shall be determined by the Partnership and KBLP within twenty (20)
days after delivery of the Notice provided for in Section 2.1(b) of the
Contribution Agreement. In the event that the Partnership and KBLP cannot agree
as to the Fair Market Value, each shall designate its belief as to Fair Market
Value within ten (10) days after written notice calling for such designation is
given by either to the other, and the Appraiser shall, no later than twenty (20)
days following the expiration of such ten (10) day period, determine which of
the designated fair market values is closer to the Fair Market Value, in which
case such closer designated Fair Market Value shall be the Fair Market Value. In
the event that either the Sonesta Partners or KBLP does not designate a Fair
Market Value within such ten (10) day period, the Fair Market Value designated
by the other shall be deemed the Fair Market Value. In making such determination
of Fair Market Value, the Appraiser shall be instructed to include the Asset
Management Fee (as defined in the Contribution Agreement), and exclude from the
Partnership's expenses that portion of expenses paid or incurred by the
Partnership representing amounts paid to FSC or its Affiliates that are in
excess of the greater of (i) amounts as are contemplated under the Management
Agreement, as amended as contemplated by the Contribution Agreement, (ii)
amounts that would customarily be payable for similar services in connection
with a first-class hotel, or (iii) amounts properly paid to FSC or its
Affiliates during the time KBLP owned the Property. The costs of the Appraiser
shall be borne equally by the Sonesta Partners and KBLP. Notwithstanding the
foregoing, the Fair Market Value of the Property shall not exceed an amount
equal to ten times the average cash flow from the Property for the two calendar
years prior to the date of determination (cash flow equals revenues less
expenses and fixed expenses, including without limitation, all management fees
(including the Asset Management Fee), capital expenditures (up to four percent
of revenues per annum), insurance and real estate taxes; interest payments on
debt service shall not be an item of expense or fixed expense for purposes of
calculating the cash flow used to determine fair market value).
"FF&E" shall mean all fixtures, furniture, furnishings, fittings,
equipment, machinery, apparatus, appliances and other articles of tangible
personal property used or usable, or intended for use, in connection with any
present or future occupation or operation of all or any part of the Property,
whether located on or in the Property or stored off site, subject to such
depletions, re-supplies, substitutions and replacements as shall occur and be
made in the normal course of business.
"General Partner" shall mean FSC, its duly admitted successors or
assigns or any person who is a general partner of the Partnership at the time of
reference thereto.
"Gross Asset Value" shall mean, with respect to any asset of the
Partnership, the asset's adjusted basis for federal income tax purposes, except
as follows:
(a) the initial Gross Asset Value of any asset contributed by a
Partner to the Partnership shall be the gross fair market value of such
asset, as reasonably determined by the General Partner and the
contributing Partner;
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(b) if the General Partner reasonably determines that such
adjustment is necessary or appropriate to reflect the relative economic
interests of the Partners in the Partnership, the Gross Asset Values of
all Partnership assets shall be adjusted to equal their respective gross
fair market values, as reasonably determined by the Partners, as of the
following times: (i) the acquisition of an additional Partnership
Interest in the Partnership by any new or existing Partner in exchange
for more than a de minimis Capital Contribution; (ii) the distribution
by the Partnership to a Partner of more than a de minimis amount of
Partnership property as consideration for a Partnership Interest in the
Partnership; and (iii) the liquidation of the Partnership within the
meaning of Regulation Section 1.704-l(b)(2)(ii)(g);
(c) the Gross Asset Values of Partnership assets distributed to
any Partner shall be the gross fair market values of such assets (taking
Code Section 7701(g) into account) as reasonably determined by the
Partners as of the date of distribution; and
(d) the Gross Asset Values of Partnership assets shall be
increased (or decreased) to reflect any adjustments to the adjusted
basis of such assets pursuant to Code Section 734(b) or Code Section
743(b), but only to the extent that such adjustments are taken into
account in determining Capital Accounts pursuant to Regulation Section
1.704-l(b)(2)(iv)(m) and Section 4.3(f); provided, however, that Gross
Asset Values shall not be adjusted pursuant to this paragraph to the
extent the Partners reasonably determine that an adjustment pursuant to
Paragraph (b) above is necessary or appropriate in connection with a
transaction that would otherwise result in an adjustment pursuant to
this Paragraph.
At all times, Gross Asset Values shall be adjusted by Depreciation, which
Depreciation is taken into account with respect to the Partnership's assets for
purposes of computing Net Profits or Net Losses. Any adjustment to the Gross
Asset Values of Partnership property shall require an adjustment to the
Partners' Capital Accounts; as for the manner in which such adjustments are
allocated to the Capital Accounts, see Paragraph (d) of the definition of Net
Profits and Net Losses in the case of adjustments by Depreciation, and see
Paragraph (c) of said definition in all other cases.
"KBLP Distribution" shall mean an amount equal to the greater of (i)
$10.00 and (ii) the product of the Partnership Percentage of KBLP multiplied by
the excess of (A) the Net Realization Proceeds from a Realization Event over (B)
the Transfer Basis.
"KBLP Excess" shall mean (i) in the event of a Realization Event, an
amount equal to the Net Realization Proceeds from such Realization Event, less
the Transfer Basis, and (ii) in the event of a Special Final KBLP Distribution,
an amount equal to the Fair Market Value of the Property on the date the Notice
(as defined herein) is given, less the Transfer Basis.
"Liens" shall have the meaning set forth in Section 9.5(c).
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"Limited Partners" shall mean Sonesta II, KBLP, their duly admitted
successors and assigns or any person who is a limited partner of the Partnership
at the time of reference thereto.
"Liquidated Damages" shall have the meaning set forth in the
Contribution Agreement.
"Liquidation Committee" shall have the meaning set forth in Section
10.1.
"Management Agreement" shall have the meaning set forth in the
Contribution Agreement.
"Net Cash Flow" shall mean, with respect to any fiscal period of the
Partnership, the excess, if any, of "Receipts" over "Expenditures." For purposes
hereof, the term "Receipts" shall mean the sum of all cash receipts of the
Partnership from all sources for such period, including capital contributions
and loan and sale proceeds, and any amount of previously established Reserves
which the General Partner, in its sole and absolute discretion, determines is no
longer to be held as Reserves. The term "Expenditures" means the sum of (a) all
cash expenses (including without limitation capital expenditures) of the
Partnership for such period, (b) the amount of all payments of principal and
interest on account of any indebtedness of the Partnership, including the
Existing Indebtedness (including without limitation any prepayments thereof),
and (c) such additional cash Reserves as of the last day of such period as the
General Partner, in its sole and absolute discretion, deems necessary for any
capital or operating expenditure permitted hereunder. The Partners acknowledge
that the amount of Existing Indebtedness that must be repaid prior to any
distribution of Net Cash Flow is at least $50,000,000.
"Net Profits" or "Net Losses" shall mean the taxable income or loss of
the Partnership for Federal income tax purposes determined in accordance with
Section 703(a) of the Code as of the close of the Partnership's fiscal year (or
such other time as may be required by this Agreement), inclusive of all items of
income, gain, loss or deduction required to be separately taxed pursuant to said
Section 703(a) of the Code, with the following adjustments:
(a) any income of the Partnership that is exempt from federal
income tax and not otherwise taken into account in computing Net Profits
or Net Losses shall be added to such taxable income or loss;
(b) any expenditures of the Partnership described in Section
705(a)(2)(B) of the Code or treated as Section 705(a)(2)(B) expenditures
under Section 704(b) of the Code and not otherwise taken into account in
computing Net Profits or Net Losses shall be subtracted from such
taxable income or loss;
(c) gain or loss resulting from any disposition of Partnership
property with respect to which gain or loss is recognized for federal
income tax purposes shall be computed by reference to the Gross Asset
Value of such property rather than its adjusted tax basis;
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(d) in lieu of the depreciation, depletion, amortization and
other cost recovery deductions taken into account in computing taxable
income or loss, there shall be taken into account Depreciation; and
(e) in the event of an adjustment of the Gross Asset Value of any
Partnership asset which requires that the Capital Accounts of the
Partnership be adjusted pursuant to Treas. Reg. Sections
1.704-l(b)(2)(iv)(e), (f) and (m), the amount of such adjustments are,
in the case of Treas. Reg. Section 1.704-l(b)(2)(iv) (e) and (f), to be
taken into account as gain or loss from a taxable disposition of
Partnership property pursuant to Paragraph (c) above, and, in the case
of Treas. Reg. Section 1.704-l(b)(2)(iv)(m), to be taken into account as
additional Net Profits or Net Losses.
"Net Realization Proceeds" shall mean (i) in the event of a Realization
Event (other than one described in clause (ii) below), all cash received by the
Partnership from such Realization Event, less all expenses paid or incurred in
connection with such Realization Event, or (ii) in the event of a Realization
Event giving rise to a liquidation distribution under Section 10.2, the net
proceeds resulting from the liquidation of the Property following a dissolution
of the Partnership, less all expenses paid or incurred in connection with such
liquidation.
"Nonrecourse Deductions" shall mean, for a Partnership fiscal year, the
net increase in the amount of Partnership Minimum Gain during such Partnership
fiscal year, less the aggregate amount of any distributions (whether actual or
deemed) during such fiscal year of proceeds of Nonrecourse Liabilities (other
than Partner Nonrecourse Deductions) that are allocable to an increase in
Partnership Minimum Gain, determined in accordance with Section 1.704-2(b)(1)
and (c) of the Regulations.
"Nonrecourse Liabilities" shall have the meaning ascribed to it in
Section 1.704-2(b)(3) of the Regulations.
"Partner Nonrecourse Deductions" shall have the meaning set forth in
Section 1.704-2(i)(2) of the Regulations.
"Partners" shall mean the General Partner, the Limited Partners, and
their respective duly admitted successors or assigns, or any person who is a
Partner of the Partnership at the time of reference thereto.
"Partnership" shall mean the Delaware limited partnership formed
pursuant hereto.
"Partnership Interest" shall mean the ownership interest of a Partner in
the Partnership from time to time including the right of such Partner to any and
all benefits to which such Partner may be entitled under this Agreement,
together with the obligations of such Partner to comply with all of the terms
and provisions of this Agreement and of applicable law, and shall include,
without limitation, each Partner's Partnership Percentage and Capital Account.
Whenever in this Agreement reference is made to a particular percentage of a
Partner's Partnership Interest it shall be deemed to refer to such Partner's
Partnership Percentage.
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"Partnership Minimum Gain" shall have the meaning set forth in Section
1.704-2(b)(2) of the Regulations.
"Partnership Percentages" shall mean the percentage interests of each of
the Partners as set forth in Section 3.7, as the same may be adjusted from time
to time in accordance with the provisions of this Agreement.
"Person" or "person" shall mean any individual, trust, corporation,
partnership, limited liability company, business trust or other entity.
"Prohibited Sale" shall have the meaning set forth in Section 5.8(a).
"Property" shall mean the real property commonly known as the Sonesta
Beach Hotel, Key Biscayne, Florida and legally described on Exhibit A, together
with all improvements thereon and all personal property relating thereto and
owned by the Partnership.
"Qualified Person" shall mean a Person that is experienced in the
ownership and operation of hotels similar to the Property and that, together
with the Affiliates of such Person, has a net worth of at least $10,000,000. Any
Affiliate of Sonesta International Hotels Corporation shall be a Qualified
Person.
"Rate" shall mean the prime rate as announced from time to time by
United States Trust Company, Boston, plus one percent (1.0%).
"Realization Event" shall mean (i) a sale, exchange, or other
disposition of the Property by the Partnership for value, including an
involuntary conversion by condemnation, casualty or otherwise, on which gain or
loss is recognized by the Partners for federal income tax purposes, and (ii) an
event giving rise to a liquidation distribution under Section 10.2.
"Regulations" or "Treas. Regs." shall mean the proposed, temporary and
final regulations promulgated by the Treasury Department pursuant to the Code.
"Reserves" shall mean payments made or amounts allocated during any
period to reserves which shall be maintained in amounts deemed sufficient by the
General Partner, in its sole and absolute discretion, for working capital, to
pay taxes, insurance, debt service or to pay for repairs, replacements, capital
improvements or renewals or other costs and expenses incident to the business of
the Partnership.
"Section 704(c) Tax Items" shall have the meaning set forth in Section
4.5(c).
"Substitute Limited Partner" shall mean any assignee of a Partner's
Partnership Interest admitted as a substitute limited partner pursuant to
Article IX hereof.
"Sonesta Partners" shall mean FSC or Sonesta II and "Sonesta Partners"
shall mean both of them.
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"Special KBLP Distribution" means an amount distributable to KBLP in the
event of a Realization Event or a Special Final KBLP Distribution equal to a
portion of the KBLP Excess determined, on the date of calculation, as follows:
<TABLE>
<CAPTION>
Percentage of Cumulative Dollar
Excess Allocable Amount of KBLP
Amount of Excess to KBLP Special Distribution
---------------- ------- --------------------
<S> <C> <C>
Less than $10.0 million 0% $ 0
Between $10.0 million and $10.1 million 100 up to 100,000
Between $10.1 million and $12.5 million 0 100,000
Between $12.5 million and $12.65 million 100 up to 250,000
Between $12.650 million and $15.0 million 0 250,000
Between $15.0 million and $15.25 million 100 up to 500,000
Between $15.250 million and $17.5 million 0 500,000
Between $17.5 million and $17.75 million 100 up to 750,000
Between $17.750 million and $20.0 million 0 750,000
Between $20.0 million and $20.25 million 100 up to 1,000,000
In excess of $20.25 million 0 1,000,000
</TABLE>
In no event shall the total amount paid or payable to KBLP with respect to the
Special KBLP Distribution exceed $1,000,000.
"Special Final Distribution" shall have the meaning set forth in Section
4.9.
"Tax Items" shall have the meaning set forth in Section 4.5(a).
"Timing Requirement" shall have the meaning set forth in Section 10.2.
"Transaction Costs" shall have the meaning set forth in the Contribution
Agreement.
"Transfer Basis" shall mean, as of any date, the sum of (a) the
outstanding principal amount of all secured and unsecured indebtedness of the
Partnership on the Closing Date, including the Assumed Liabilities (as defined
in the Contribution Agreement), plus all unpaid interest accrued or deemed to
have accrued thereon through the Measurement Date (or the date of the Special
Final Distribution or applicable Realization Event, as applicable), less amounts
applied in repayment thereof in accordance with the terms of such debt (as
modified by the Second Amendment to Management Agreement in the case of the FSC
Indebtedness, as defined in the Contribution Agreement), and (b) the sum of the
Excess Expenditures for the calendar years or portion thereof through the
Measurement Date (or the date of the Special Final Distribution or applicable
Realization Event, as applicable), and the Transaction Costs, plus interest
thereon through the Measurement Date (or the date of the Special Final
Distribution or applicable Realization Event, as applicable), at the per annum
rate equal to the Rate.
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ARTICLE II
Formation of Partnership
2.1 Formation. Effective as of, but not before, the Closing Date, the
parties hereto hereby agree to and hereby form the Partnership as a limited
partnership under the Act and the terms hereof.
2.2 Name. The name of the Partnership shall be "SONESTA BEACH RESORT
LIMITED PARTNERSHIP," or such other name as the General Partner may from time to
time determine in its sole and absolute discretion.
2.3 Place of Business. The principal place of business of the
Partnership shall be located at 200 Clarendon Street, Boston, Massachusetts
02116, or at such other place or places as the General Partner may hereafter
determine in its sole and absolute discretion.
2.4 Purpose and Business. The purpose and business of the Partnership
shall be to own, hold, sell, exchange, transfer or otherwise dispose of (in
whole or in part), finance, manage, operate, renovate, expand, redevelop and
otherwise deal with the Property and to conduct any other business or businesses
permissible under the Act. The Partnership shall have all powers necessary or
desirable to accomplish these purposes.
2.5 Filing of Partnership Documents. Promptly upon the Closing Date, the
General Partner shall cause an executed Certificate of Limited Partnership (the
"Certificate") which is consistent with the provisions of this Agreement and in
the form required by the Act to be filed for record in the Office of the
Secretary of State of Delaware and in such additional offices as may be
designated by the Act or other applicable law. The Partners shall sign,
acknowledge and verify such applications, affidavits and other documents as may
be required by the Act or other applicable law to be signed, acknowledged or
verified in connection with the conduct of the Partnership business and shall
cause them to be filed or recorded, as required, in the appropriate governmental
offices.
2.6 Term. The Partnership shall continue in existence until the first to
occur of the following:
(a) the disposition by the Partnership of all, or substantially all, of
its assets;
(b) subject to the provisions of Section 5.8, the decision of the
General Partner, KBLP and sufficient numbers of other Limited Partners, such
that, together with KBLP, they represent a majority in interest of the
Partnership Percentages then held by the Limited Partners to dissolve the
Partnership;
(c) a dissolution required by law; or
(d) December 31, 2050.
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ARTICLE III
Capital Contributions
3.1 Initial Capital Contributions. On the Closing Date, the General
Partner and the Limited Partners shall contribute capital to the Partnership as
more particularly described in the Contribution Agreement.
3.2 Additional Capital Contributions. In the event that the General
Partner from time to time shall determine that additional funds are necessary or
desirable for any partnership purpose, in excess of other funds anticipated to
be available to the Partnership, then the General Partner may, but shall not be
obligated to, make an additional capital contribution to the Partnership either
in cash or property. Upon any such additional contribution, the Partnership
Percentages of the Partners shall be adjusted in the manner provided in Section
3.6. No Partner shall be required or permitted to make any additional capital
contribution to, or other financial accommodation for the benefit of, the
Partnership except as expressly provided herein.
3.3 Limitation of Liability. The Limited Partners shall not be bound by,
or be personally liable for, the expenses, liabilities or obligations of the
Partnership or the General Partner and the liability of the Limited Partners
shall be limited solely to the amount of their respective contributions to the
capital of the Partnership as provided in this Agreement and, to the extent
provided by applicable law, any distributions made to any Limited Partner that
are deemed to be a return or withdrawal of capital.
3.4 No Withdrawal. Except as provided herein, The Partnership shall not
be obligated to redeem or repurchase any Partnership Interest; no capital
contribution or portion thereof may be withdrawn by any Partner and no Partner
may withdraw from the Partnership except as provided herein; and no distribution
is required to be made to any Partner except in accordance with the provisions
of this Agreement. No Partner shall be entitled to demand any property from the
Partnership other than cash.
3.5 Capital Accounts. An individual Capital Account shall be maintained
for each Partner. No interest shall be paid or accrued on the Capital Account of
any Partner.
3.6 Additional Partners. Whenever the General Partner shall, in its sole
and absolute discretion, determine that additional funds are required for the
purposes contemplated herein which the General Partner is unwilling to provide
pursuant to Section 3.2, the General Partner shall have the right to issue
additional units of general or limited partnership interests (the "Additional
Units") to any person, including without limitation an Affiliate of the General
Partner. The Additional Units shall have such rights with respect to Partnership
Percentages, distributions of cash or property and allocations of Net Profits
and Net Losses, and otherwise shall have such rights, benefits and obligations
as the General Partner shall, in its sole and absolute discretion, determine.
Upon issuance of Additional Units, an appropriate amendment to this
Agreement shall be entered into among all Partners, including, without
limitation, those Partners admitted to the
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Partnership in connection with the issuance of Additional Units. Anything in
Article VII to the contrary notwithstanding, the Power of Attorney granted
pursuant to Article VII shall include the power and authority to execute,
acknowledge and deliver in the name and on behalf of the Limited Partners any
such amendment which the General Partner deems necessary or advisable in
connection with the issuance of Additional Units. Any amendments entered into in
connection with the issuance of Additional Units shall provide for a
proportionate dilution of Partnership Interests between the General Partner and
the Limited Partners based on their respective relative Partnership Percentages
immediately prior to the issuance of the Additional Units to the extent of the
Partnership Percentages applicable to the Additional Units (but the rights of
KBLP to allocations of Net Profits and Net Losses and distributions of Net Cash
Flow may not be diluted on the account of the issuance of the Additional Units).
3.7 Partnership Percentages. Subject to adjustment as herein provided,
the initial Partnership Percentages of the Partners shall be 1.00% for FSC,
98.00% for Sonesta II, and 1.00% for KBLP.
3.8 No Third Party Beneficiaries. The right of any Partner to make a
capital contribution or otherwise to do, perform, satisfy or discharge any
liability or obligation of such Partner hereunder, or to pursue any other right
or remedy hereunder or at law or in equity, shall not confer any right or claim
upon or otherwise inure to the benefit of any creditor or other third party
having dealings with the Partnership, 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. The rights or obligations of the Partners herein set forth, including,
without limitation, the right to make additional capital contributions, shall
not be deemed an asset of the Partnership, may not be sold, transferred or
assigned by the Partnership and may not be pledged or encumbered to secure any
debt or other obligation of the Partnership or of the Partners.
ARTICLE IV
Allocation of Partnership Items; Distributions
4.1 Net Profits Allocations. After giving effect to the allocations set
forth in Sections 4.3 and 4.4, Net Profits for any fiscal year shall then be
allocated as follows:
(a) first, among the Partners to the extent necessary to reverse
any prior allocations of Losses under Section 4.2, taking into account
the Partners' respective rights to receive distributions under Section
4.7 and 4.9; and
(b) the balance, in accordance with the Partners' respective
rights to receive distributions under Sections 4.7, 4.9 or 4.10.
4.2 Net Losses Allocations. After giving effect to the allocations set
forth in Sections 4.3 and 4.4, Net Losses for any fiscal year shall be allocated
as follows:
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(a) first, among the Partners to the extent necessary to reverse
any prior allocations or Profits under Section 4.1(a), taking into
account the Partners' respective rights to receive distributions under
Section 4.7 and 4.9; and
(b) the balance, in accordance with the Partners' Percentage
Interests.
4.3 Special Allocations. Notwithstanding any other provision of this
Article IV, the following special allocations shall be made in the following
order:
(a) Minimum Gain Chargeback (Nonrecourse Liabilities). If there
is a net decrease in Partnership Minimum Gain for any Partnership fiscal
year (except as a result of the conversion or refinancing of any
Nonrecourse Liabilities, certain capital contributions, or a revaluation
of the Partnership property as further outlined in Regulation Section
1.704-2(d)(4), (f)(2), or (f)(3)), each Partner shall be specially
allocated items of Partnership income and gain for such year (and, if
necessary, subsequent years) in an amount equal to that Partner's share
of the net decrease in Partnership Minimum Gain. The items to be so
allocated shall be determined in accordance with Regulation Section
1.704-2(f). This Section 4.3(a) is intended to comply with the minimum
gain chargeback requirement in said section of the Regulations and shall
be interpreted consistently therewith. Allocations pursuant to this
paragraph shall be made in proportion to the respective amounts required
to be allocated to each Partner pursuant hereto.
(b) Minimum Gain Attributable to Partner Nonrecourse Debt. If
there is a net decrease in Minimum Gain Attributable to Partner
Nonrecourse Debt during any fiscal year (other than due to the
conversion, refinancing or other change in the debt instrument causing
it to become partially or wholly non-recourse, certain capital
contributions, or certain revaluations of Partnership property as
further outlined in Regulation Section 1.704-2(i)(4)), each Partner
shall be specially allocated items of Partnership income and gain for
such year (and, if necessary, subsequent years) in an amount equal to
that Partner's share of the net decrease in the Minimum Gain
Attributable to Partner Nonrecourse Debt. The items to be so allocated
shall be determined in accordance with Regulation Section 1.704-2(i)(4)
and (j)(2). This Section 4.3(b) is intended to comply with the minimum
gain chargeback requirement with respect to Partner Nonrecourse Debt
contained in said section of the Regulations and shall be interpreted
consistently therewith. Allocations pursuant to this paragraph shall be
made in proportion to the respective amounts required to be allocated to
each Partner pursuant hereto.
(c) Qualified Income Offset. In the event that any Limited
Partner unexpectedly receives any adjustments, allocations or
distributions described in Regulation Section 1.704-l(b)(2)(ii)(d)(4),
(5), or (6), and such Limited Partner has an Adjusted Capital Account
Deficit, items of Partnership income and gain shall be specially
allocated to such Partner in an amount and manner sufficient to
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eliminate the Adjusted Capital Account Deficit as quickly as possible.
This Section 4.3(c) is intended to constitute a "qualified income
offset" under Regulation Section 1.704-l(b)(2)(ii)(d) and shall be
interpreted consistently therewith.
(d) Nonrecourse Deductions. Nonrecourse Deductions for any fiscal
year or other applicable period shall be specially allocated to the
Partners in accordance with their Partnership Percentages.
(e) Partner Nonrecourse Deductions. Partner Nonrecourse
Deductions for any fiscal year or other applicable period shall be
specially allocated to the Partner that bears the economic risk of loss
for the debt (i.e., the partner nonrecourse debt) in respect of which
such Partner Nonrecourse Deductions are attributable (as determined
under Regulation Section 1.704-2(b)(4) and (i)(1).
(f) Section 754 Basis Adjustments. To the extent an adjustment to
the adjusted tax basis of any Partnership asset pursuant to Sections
732, 734 or 743 of the Code is required, pursuant to Regulation Section
1.704-l(b)(2)(iv)(m), to be taken into account in determining Capital
Accounts, the amount of such adjustment to the Capital Accounts shall be
treated as an item of gain (if the adjustment increases the basis of the
asset) or loss (if the adjustment decreases such basis) and such gain or
loss shall be specially allocated to the Partners in a manner consistent
with the manner in which their Capital Accounts are required to be
adjusted pursuant to said section of the Regulations.
(g) Allocation of Excess Nonrecourse Liabilities. Any "excess
nonrecourse liabilities" (as defined within Regulations Section
1.752-3(a)) shall be allocated in the same manner as Nonrecourse
Deductions are allocated to the Partners in accordance with their
Partnership Percentages.
4.4 Curative Allocations. Notwithstanding any other provision of this
Article IV to the contrary, the allocations set forth in Sections 4.3(a),
4.3(b), 4.3(c), 4.3(d), 4.3(e) and 4.3(f) hereof (the "Regulatory Allocations")
shall, to the extent necessary and possible, be offset with other Regulatory
Allocations or with special allocations of other items of Partnership income,
gain, loss, and deduction so that the cumulative net amount of allocations of
Partnership items under this Article IV shall be equal to the net amount that
would have been allocated to each Partner if the Regulatory Allocations had not
occurred. This Section 4.4 is intended to minimize to the extent possible and to
the extent necessary any economic distortions which may result from application
of Section 1.704-l(b) of the Regulations and shall be interpreted in a manner
consistent therewith.
4.5 Tax Allocations.
(a) Generally. Subject to paragraphs (b) and (c) of this Section
4.5, items of income, gain, loss, deduction and credit to be allocated
for income tax
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purposes (collectively, "Tax Items") shall be allocated among the
Partners on the same basis as the respective book items.
(b) Sections 1245/1250 Recapture. If any portion of gain from the
sale of property is treated as gain which is ordinary income by virtue
of the application of Code Sections 1245 or 1250 ("Affected Gain"), then
(A) such Affected Gain shall be allocated among the Partners in the same
proportion that the depreciation and amortization deductions giving rise
to the Affected Gain were allocated and (B) other Tax Items of gain of
the same character that would have been recognized, but for the
application of Code Sections 1245 and/or 1250, shall be allocated away
from those Partners who are allocated Affected Gain pursuant to Clause
(A) so that, to the extent possible, the other Partners are allocated
the same amount, and type, of capital gain that would have been
allocated to them had Code Sections 1245 and/or 1250 not applied. For
purposes hereof, in order to determine the proportionate allocations of
depreciation and amortization deductions for each fiscal year or other
applicable period, such deductions shall be deemed allocated on the same
basis as Net Profits and Net Losses for such respective period.
(c) Allocations Respecting Section 704(c) and Revaluations.
Notwithstanding paragraph (b) hereof, Tax Items with respect to
Partnership property that is subject to Code Section 704(c) and/or
Regulation Section 1.704-3 (collectively "Section 704(c) Tax Items")
shall, to the extent so required, be allocated in accordance with said
Code section and Regulation Section 1.704-3(b)(1).
4.6 Allocations Subsequent to Assignment or Admission of Additional
Partners. To the extent permitted by the Code, Net Profits or Net Losses and
other items attributable to a Partnership Interest acquired by reason of an
assignment from a Partner shall be allocated or adjusted between the assignor
and the assignee based upon either (a) the length of time in any fiscal period
of the Partnership during which the assigned Partnership Interest was owned by
each of them, determined with reference to the effective date of the assignment,
or (b) an interim closing of the Partnership's books (at assignor's sole
expense), such manner of allocation or adjustment to be determined by the
General Partner in its sole and absolute discretion.
4.7 Distributions.
(a) The Partnership shall make distributions of Net Cash Flow: (i)
resulting from any source (other than in connection with a Realization Event) to
the Partners (other than KBLP if the Partnership has previously made the Special
Final Distribution to KBLP) at such time and in such amounts as are determined
in the sole and absolute discretion of the General Partner; any such
distributions shall be made to the Partners (other than KBLP if the Partnership
has previously made the Special Final Distribution to KBLP) in accordance with
their respective Partnership Percentages; and (ii) resulting from a Realization
Event to the Partners (other than KBLP if the Partnership has previously made
the Special Final Distribution to KBLP), except
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that to the extent KBLP is entitled to a distribution resulting from a
Realization Event, the amount of such distribution shall be determined as set
forth in subparagraph (b) below, at such time and in such amounts as are
determined in the sole and absolute discretion of the General Partner; any such
distributions shall be made to the Partners (other than KBLP if the Partnership
has previously made the Special Final Distribution to KBLP) in accordance with
their respective Partnership Percentages.
(b) Unless the Partnership has made the Special Final Distribution to
KBLP, within thirty (30) days after a Realization Event, the Partnership shall
make the KBLP Distribution to KBLP. Upon payment of the KBLP Distribution, KBLP
shall be deemed to have (i) relinquished its interest in the Partnership, and
all rights and privileges pertaining thereto or hereunder, including any right
to vote on Partnership matters or to receive any further distributions from the
Partnership whatsoever (except as provided in Section 10.2(e)), including the
Special Final Distribution, and (ii) assigned to FSC all of its right, title and
interest in, to and under this Agreement.
4.8 Allocation of Nonrecourse Liabilities. Subject to the provisions of
Section 5.8, Nonrecourse Liabilities shall be allocated to the Partners in
accordance with their respective Partnership Percentages; provided that
notwithstanding the foregoing or Section 5.8 to the contrary, prior to the KBLP
Distribution or the Special Final Distribution, the Aetna Indebtedness (and any
nonrecourse indebtedness that replaces or refinances the Aetna Indebtedness)
shall be allocated 100 percent to KBLP, and after the KBLP Distribution or the
Special Final Distribution, such indebtedness shall be allocated to the Partners
in accordance with their respective Partnership Percentages.
4.9 Special Final Distribution to KBLP. The Partnership may elect (in
its sole discretion) at any time on or after January 1, 2002 by written notice
(the "Notice") delivered to KBLP or its successors or legal representatives, to
make a special final distribution (the "Special Final Distribution") to KBLP
equal to the greater of (i) $10.00 and (ii) the product of the Partnership
Percentage of KBLP multiplied by the excess of (A) the Fair Market Value of the
Property on the date the Notice is delivered over (B) the Transfer Basis. The
Special Final Distribution shall be made on the twentieth (20th) day following
the date of the Notice and shall be paid in cash (and, in the event that the
Fair Market Value has not been determined, the Partnership shall pay to KBLP the
amount to be paid pursuant to this Section based on the amount designated by the
Sonesta Partners as the Fair Market Value pursuant to the definition of "Fair
Market Value," and a subsequent adjustment shall be made between the Partnership
and KBLP upon the determination of Fair Market Value if the amount owing based
on the final determination of Fair Market Value differs from the sum originally
paid ). Upon payment of the Special Final Distribution, KBLP shall be deemed to
have (i) relinquished its interest in the Partnership, and all rights and
privileges pertaining thereto or hereunder, including any right to vote on
Partnership matters or to receive any further distributions from the Partnership
whatsoever (except as provided in Section 10.2(e)), and (ii) assigned to FSC all
of its right, title and interest in, to and under this Agreement.
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On the Closing Date, KBLP shall execute and deposit in an escrow (the
terms of which are reasonably acceptable to FSC and KBLP) established with the
law firm Broad & Cassel in Boca Raton, Florida, or such other escrow agent
reasonably acceptable to FSC and KBLP, an assignment of its interest in the
Partnership to FSC. The terms of the escrow shall provide for the release of the
assignment to FSC upon the escrowee's receipt of evidence that the Special Final
Distribution or the KBLP Distribution has been paid to KBLP. Notwithstanding the
foregoing, the failure of such assignment to be so deposited into, or released
from, the escrow shall not vitiate the effectiveness of KBLP's relinquishment of
its interest in the Partnership, and all rights and privileges pertaining
thereto or hereunder, as further described above in this Section or Section
4.7(b), upon the payment of the Special Final Distribution or the KBLP
Distribution to KBLP.
4.10 Special KBLP Distribution. Notwithstanding anything contained in
this Agreement to the contrary, and in addition to the other distributions to
which KBLP is entitled, in the event of a Realization Event or a Special Final
KBLP Distribution, the Partnership shall make the Special KBLP Distribution to
KBLP. The Partnership shall pay to KBLP the Special KBLP Distribution in the
form of an unsecured non-interest bearing promissory note payable in five equal
annual installments beginning one year after the Realization Event or the
Special Final KBLP Distribution, as applicable (provided that the Partnership
may, in its sole discretion, prepay all or any portion of the note).
4.11 Liquidated Damages. If prior to January 1, 2002, the Partnership
sells, exchanges or otherwise disposes of the Property, or the Partnership is
otherwise liquidated or dissolved in a manner that results in income or gain for
federal income tax purposes by KBLP or is treated as a sale or exchange of all
or substantially all of the Property for federal income tax purposes, or there
is any other occurrence (other than a refinancing of the Aetna Indebtedness or
its replacement or the consummation of the Transactions, as defined in the
Contribution Agreement) that results in income or gain for federal income tax
purposes by KBLP or is treated as a sale or exchange of all or substantially all
of the Property for federal income tax purposes, then the Partnership shall,
concurrent with the occurrence of any such event, pay to KBLP an amount equal to
the Liquidated Damages.
ARTICLE V
Management of the Partnership
5.1 Management. Subject to the provisions of Section 5.8, the General
Partner shall have exclusive authority to manage and control the Partnership
business. Except as otherwise expressly provided herein, the General Partner
shall have the right, authority and power to do any and all acts and things
necessary, proper, convenient or advisable in its sole and absolute discretion
to accomplish the purposes of the Partnership and manage the business and assets
of the Partnership, without the consent or approval of any Limited Partner,
including without limitation the following:
(a) To expend Partnership funds (whether derived from capital or income
or loans) in the exercise of any rights or powers possessed by the General
Partner under this Agreement;
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(b) To own, acquire, hold, develop, lease, manage, operate, encumber,
exchange, convert, sell or otherwise dispose of the Partnership property in
whole or in part (including the creation of joint venture or tenancy-in-common
interests), or to authorize the sale, exchange or other disposition of the
Partnership property in whole or in part (including the creation of joint
venture or tenancy-in-common interests), or any interest therein, whether or not
such sale results in the dissolution of the Partnership or makes it impossible
to carry on its ordinary business, at such prices or amounts for cash or
securities (including without limitation promissory notes, whether secured or
unsecured) and upon such other terms, as the General Partner deems in its sole
and absolute discretion to be in the best interests of the Partnership;
(c) To invest and reinvest Partnership funds or pool Partnership funds
for the purpose of investing;
(d) To borrow money which the General Partner deems necessary or
advisable, in its sole and absolute discretion, in connection with the business
and affairs of the Partnership, including borrowings from the General Partner,
its Affiliates or others, to be evidenced by notes or debentures and to secure
the repayment of such borrowing by executing mortgages or deeds of trust,
assignments, or security agreements pledging or otherwise encumbering or
subjecting to security interests all or any part of the property of the
Partnership, and to refund, refinance, increase, modify, consolidate or extend
the maturity and/or other terms of any indebtedness created by such borrowing,
or any such mortgage, deed of trust, assignment, security agreement, pledge,
encumbrance or other security device;
(e) To enter into such agreements, contracts, documents and instruments
with such parties and to give such receipts, releases and discharges with
respect to all of the foregoing and any matters incident thereto as the General
Partner, in its sole and absolute discretion, may deem advisable, appropriate or
convenient in connection with the business of the Partnership;
(f) To place record title to, or the right to use, Partnership assets in
the name or names of a nominee or nominees for any purpose convenient or
beneficial to the Partnership;
(g) To employ from time to time persons or companies (which may be
Affiliates) in connection with the operation and management of the Partnership
business or assets including, but not limited to, developers, supervisory and
managing agents, consultants, building management agents, insurance brokers,
sales agents, real estate brokers, loan brokers, independent contractors,
attorneys and accountants, on such terms and for such compensation as the
General Partner shall determine in its sole and absolute discretion;
(h) To manage the Partnership property or to contract, either totally or
partially, for management services by another person or company (which may be an
Affiliate).
(i) To pay, collect, compromise, litigate, arbitrate or otherwise adjust
any and all claims or demands of or against the Partnership;
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(j) To establish, maintain and draw upon checking, savings and other
accounts in the name of the Partnership in such bank or banks as the General
Partner may from time to time select in its sole and absolute discretion and to
designate others to draw upon such accounts;
(k) To execute, acknowledge or verify and file any notification,
application, statement and other filing in the name of or on behalf of the
Partnership that the General Partner, in its sole and absolute discretion,
consider to be required or desirable to be filed with any local, state or
federal agency, department or authority;
(l) To admit additional Partners from time to time and determine the
rights and interests of such Partners (subject, however, to the provisions of
Section 3.6);
(m) To permit the withdrawal and/or substitution or succession of
Partners (which may be Affiliates);
(n) To develop, redevelop or improve the Partnership property and to
determine the nature and scope, design and/or expenditures therefor and to
determine if and when to proceed with any phase of development or redevelopment
and to enter into agreements or contracts with respect thereto with Affiliates
or others;
(o) To select or vary depreciation or accounting methods, change the
Partnership fiscal year or make other material decisions regarding the treatment
of transactions for bookkeeping or tax purposes;
(p) With the written approval of all Partners, to file a petition for
Bankruptcy or other similar reorganization under applicable statutes;
(q) With the written approval of all Partners, to assign Partnership
property in trust for creditors or on the assignee's promise to pay the debts of
the Partnership;
(r) To confess a judgment or submit a Partnership claim or liability to
arbitration;
(s) To acquire assets and property for and on behalf of the Partnership,
including the acquisition of property for the purpose of reinvesting
condemnation proceeds in accordance with Section 1033 of the Code;
(t) To delegate any authority granted hereunder;
(u) To exercise and enforce the rights of the Partnership under any
agreement, including without limitation the rights of the Partnership to
terminate any agreement;
(v) To take all actions and execute all documents and instruments
necessary or advisable in the sole and absolute discretion of the General
Partner to implement and further the purposes and operate the business of the
Partnership in accordance with the terms hereof; and
(w) To do any and all of the foregoing for such consideration and upon
such other terms and conditions as the General Partner in its sole and absolute
discretion determines to be
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appropriate, and in no event shall any purchaser, lender, title company or other
third party be required to ascertain whether any action of the General Partner
has in fact been duly authorized, and the failure of the General Partner to
obtain such authorization shall in no way affect the validity of any sale,
conveyance, mortgage, deed of trust, lease, loan extension or renewal made by
the General Partner.
5.2 Independent Activities; Other Businesses. Each party recognizes that
the Partners (including without limitation the General Partner), and their
Affiliates, have or may have other business interests, activities and
investments, some of which may now or hereafter be in conflict or competition
with the business of the Partnership, and that each Partner (including without
limitation the General Partner) and its respective Affiliates are entitled to
carry on such other business activities, interests and investments without any
accountability therefor to the Partnership or any other Partner. Each Partner
(including without limitation the General Partner), and each Affiliate of each
Partner (including without limitation the General Partner), may engage in or
possess an interest in any other business or venture of any kind, independently
or with others, including, without being limited to, owning, financing,
acquiring, leasing, promoting, developing, improving, constructing, operating or
managing other real or personal properties on its own behalf or on behalf of
other entities with which it is affiliated or associated, and any Partner
(including without limitation the General Partner) and each Affiliate of any
Partner (including without limitation the General Partner) may engage in any
activities, whether or not competitive to the Partnership, including without
limitation the management of the Property by an Affiliate of the General
Partner, without any obligation to offer any interest in such activities to the
Partnership or to any Partner or to any Affiliate of any Partner. Neither the
Partnership nor any Partner nor any Affiliate of any Partner shall have any
right by virtue of this Agreement or by virtue of the relationship between the
Partners as partners, in or to such other activities, or to the income or
profits derived therefrom, and the pursuit of such activities, even if
competitive with the business of the Partnership, shall not be deemed wrongful
or improper or a breach of any joint venture or fiduciary duties owed by one
party to the other, or entitle either party to any interest in or sharing in the
profits or losses from any such other activities.
5.3 Duties; Reimbursement. The General Partner shall provide services to
the Partnership as it shall deem to be appropriate in its sole and absolute
discretion in connection with the day-to-day operations of the Partnership and
shall be entitled to such compensation (in addition to the compensation payable
under the Management Agreement) as the General Partner determines in good faith
is reasonable based on the nature and scope of services provided by it to the
Partnership from time to time and consistent with compensation paid in the
marketplace to independent third parties for similar services rendered with
respect to comparable properties; provided that any compensation payable to the
General Partner (or its Affiliates) in addition to that payable under the
Management Agreement shall be subordinate to amounts due with respect to the
KBHA/PLT Indebtedness (as defined in the Contribution Agreement). In addition,
the Partnership shall pay or reimburse the General Partner for all reasonable
out-of-pocket expenses incurred by it in connection with the Partnership's
business, which reimbursement may include a reasonable allocation of overhead or
general administrative expenses. The General Partner shall devote itself to the
business of the Partnership to the extent it, in its sole and absolute judgment,
deems necessary for the efficient carrying on thereof. The General Partner shall
have no
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obligation to conduct the business of the Partnership so as to accommodate the
personal or business circumstances of the Limited Partners.
5.4 Additional Compensation to the General Partner;
Transactions with Affiliates.
(a) The General Partner and/or its Affiliates shall be entitled to
receive, in addition to the amounts described in Section 5.3 and elsewhere
herein and the amounts provided in the Management Agreement, fees and other
compensation for services rendered or goods provided from time to time to or on
behalf of the Partnership as would be payable to third parties providing
comparable goods or services to the Partnership.
(b) No contract or agreement entered into between the Partnership and
the General Partner or any Affiliate of the General Partner shall be void,
violable or in violation of any rights, duties, liabilities or responsibilities
of the General Partner, whether or not approved by the Limited Partners, so long
as any such transaction shall be in compliance with the provisions of this
Agreement.
(c) The General Partner shall be permitted to engage attorneys,
accountants and other advisors and professionals which may have current or prior
relationships with the General Partner or its Affiliates. No such relationship,
even if continuing and ongoing, shall be deemed a conflict of interest by any
such professionals.
5.5 Limitation of liability. Neither the General Partner nor any
officer, shareholder, director, employee, agent or Affiliate of the General
Partner shall be liable, responsible or accountable in damages or otherwise to
the Partnership or any Limited Partner for any action taken or failure to act on
behalf of the Partnership within the scope of the authority conferred on the
General Partner by this Agreement or by law unless such action or omission
constituted gross negligence or willful misconduct.
5.6 Indemnification. The Partnership shall indemnify and hold harmless
the General Partner and each of its officers, directors, shareholders,
employees, agents and Affiliates, and their respective successors and assigns
(collectively the "Indemnified Parties") from and against any loss, expense,
damage or injury suffered or sustained by any such person by reason of any acts,
omissions or alleged acts or omissions arising out of their activities on behalf
of the Partnership or in furtherance of the interests of the Partnership
including, but not limited to, any judgment, award, settlement, reasonable
attorney's fees and other costs or expenses incurred in connection with the
defense of any actual or threatened action, proceeding or claim (which
attorney's fees and defense costs shall be paid as incurred upon receipt of an
undertaking by the Indemnified Party to repay the same if the Indemnified Party
is found not to be entitled thereto), provided that the acts, omissions or
alleged acts or omissions upon which such actual or threatened action,
proceeding or claim is based are not found in a non-appealable order by a court
of competent jurisdiction to have been performed or omitted in bad faith or as a
result of gross negligence by or the willful misconduct of such Indemnified
Party.
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5.7 Authority to Bind Partnership. Except as otherwise provided herein
or in the Act, the General Partner shall have authority to act on behalf of the
Partnership and to bind it under this Agreement and in no event shall any third
party be required to ascertain whether any action of the General Partner has in
fact been duly authorized by the Limited Partners. The Limited Partners shall
take no part in the management and operation of the business of the Partnership
and shall have no authority to act on behalf of or bind the Partnership.
5.8 Restrictions on General Partner Authority; Etc. Notwithstanding
anything to the contrary contained herein but subject to Section 4.9 hereof, the
following restrictions shall apply as long as any Partnership Interest in the
Partnership is owned by KBLP:
(a) Without the prior written consent of KBLP, the Partnership shall not
voluntarily dispose of all or substantially all of the Property prior to January
1, 2002. The provisions of Section 5.8(a) shall not apply to (i) transactions,
such as like-kind exchanges, which would not result in the recognition of income
or gain to KBLP for federal income tax purposes by reason of the application of
Section 704(c) or Section 737 of the Code (but, in the event of any disposition
permitted by the preceding clause, the disposition of any carryover basis real
property or other successor real property shall be subject to the provisions of
this Section 5.8), (ii) the mortgage of or the granting of security interests in
any and all property of the Partnership provided the same is not a sale or
exchange for federal income tax purposes of all or substantially all of the
Property (and the conveyance of such property in connection with foreclosure of
any such mortgage or security interest or by deed in lieu thereof), (iii) the
lease of the Property or portions thereof provided the same is not a sale or
exchange for federal income tax purposes of all or substantially all of the
Property, (iv) the exercise of all other rights of an owner with respect to the
Property provided the same is not a sale or exchange for federal income tax
purposes of all or substantially all of the Property, and (v) the sale, exchange
or other disposition of the Property so long as the Partnership shall,
concurrent with the occurrence of such an event, pay to KBLP an amount equal to
the Liquidated Damages. If the Partnership shall have obtained an opinion of
counsel (reasonably acceptable to KBLP) with respect to the determination as to
whether a particular transaction will result in income or gain for federal
income tax purposes by KBLP or is treated as a sale or exchange of all or
substantially all of the Property for federal income tax purposes(although the
Partnership shall not be required to do so), the determination set forth in such
opinion shall be deemed conclusive for purposes of this Agreement. Any
transaction prohibited pursuant to the provisions of this Section 5.8(a) is
hereinafter referred to as a "Prohibited Sale".
(b) In no event shall the Property be used other than as a resort or
hotel prior to January 1, 2002 without the written consent of KBLP. Subject to
the provisions of Section 5.8(a), no sale, exchange, lease or other disposition
relating to the Property or any portion of it shall be entered into between the
General Partner and any Affiliate of the General Partner if the same would
adversely affect the value of KBLP's Partnership Interest.
(c) Nonrecourse Liabilities shall be allocated to KBLP to the maximum
extent permissible under Treasury Regulation ss. 1.752-3 and Revenue Ruling
95-41, 1995-23 I.R.B.5., and the Partnership shall at all times have nonrecourse
indebtedness (as described in Treasury
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Regulation ss. 1.752-l(a)(2)) so that KBLP is allocated indebtedness equal at
least to the aggregate negative Capital Account of KBLP from time to time, but
in no event less than the negative Capital Account of KBLP at the time of the
contribution of the Property to the Partnership.
(d) Prior to the Special Final Distribution to KBLP and the payment of
the KBHA/PLT Note (as defined in the Contribution Agreement), the Partnership
shall not incur secured debt that, in the aggregate, exceeds eighty percent
(80%) of the fair market value of the Property from time to time, excluding debt
to the Sonesta Partners or any of their Affiliates.
ARTICLE VI
Financial Matters
6.1 Books and Accounts. The General Partner shall, at the expense of the
Partnership, keep or cause to be kept adequate books of account of the
Partnership, which shall record and reflect all of the contributions to the
capital of the Partnership and all of the income, expenses and transactions of
the Partnership or at the Property. Such books of account shall be kept at the
principal place of business of the Partnership. The General Partner shall
determine the method of accounting utilized by the Partnership. The Limited
Partners shall have the right, upon reasonable notice to the General Partner and
during normal business hours, to examine and make copies of the books and
records of the Partnership to the extent provided by the Act at the location at
which such books and records are ordinarily kept, such examination and copying
to be made at the expense of the Limited Partners.
6.2 Accounting and Reports. At least once a year, the General Partner
shall, at the expense of the Partnership, cause to be prepared and transmitted
to each Partner a balance sheet and profit and loss statement of the Partnership
relating to the prior fiscal year, which statements may be audited or unaudited
in the sole and absolute discretion of the General Partner.
6.3 Fiscal Year. The Partnership's fiscal year shall be the year, or
portion thereof in the event of a partial year, ending December 31.
6.4 Banking. All funds of the Partnership shall be deposited in a
separate bank account or accounts as shall be determined by the General Partner.
All withdrawals therefrom shall be made upon checks signed by the General
Partner or by any person authorized to do so by the General Partner, or by wire
transfer or cashier's checks effected by the General Partner or persons
authorized to do so by the General Partner.
6.5 Tax Returns. The General Partner shall cause to be prepared at the
Partnership's expense the required Federal, state and local tax returns. As soon
as practicable after the close of each fiscal year of the Partnership, the
General Partner shall furnish a copy of Internal Revenue Service Form K-1 for
such fiscal year to each Partner.
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6.6 Tax Elections. The General Partner shall be authorized to make on
behalf of the Partnership any and all elections under the Code which are
permitted to be made by the Partnership, including without limitation an
election pursuant to Section 754 of the Code, but nothing herein shall be deemed
to obligate the General Partner to make any such election.
6.7 Tax Audits. The Partnership, through the General Partner, is
authorized to cooperate with and to monitor the Internal Revenue Service in any
audit that the Internal Revenue Service may conduct of the Partnership books and
records and information or other returns filed by the Partnership for Federal
income tax purposes. The Partnership, through the General Partner, may similarly
cooperate with and monitor any audit by any state tax or other state or local
governmental authority. The Partnership may prepare and file protests or other
appropriate responses to such audits. All costs incurred in connection with the
foregoing activities, including legal and accounting costs, shall be Partnership
expenses. Neither the Partnership nor the General Partner shall be obligated to
defend any Partner against any claim asserted by the Internal Revenue Service or
state or local tax authority of additional tax liability arising out of the
ownership of its Partnership Interest.
6.8 Designation of Tax Matters Partner. The General Partner is hereby
authorized to designate the Tax Matters Partner of the Partnership (which could
be the General Partner) as provided in regulations pursuant to Section 6231 of
the Code. Each Partner by the execution of this Agreement consents to such
designation of the Tax Matters Partner and agrees to execute, certify,
acknowledge, deliver, swear to, file and record at the appropriate public
offices such documents as may be necessary or appropriate to evidence such
consent.
6.9 Duties of Tax Matters Partner.
(a) To the extent and in the manner provided by applicable law and
regulations, the Tax Matters Partner shall furnish the name, address, profits,
interest and taxpayer identification number of each Partner, including any
Substitute Limited Partner, to the Secretary of the Treasury or his delegate
(the "Secretary").
(b) To the extent and in the manner provided by applicable law and
regulations, the Tax Matters Partner shall keep each Partner informed of the
administrative and judicial proceedings for the adjustment at the Partnership
level of any item required to be taken into account by a Partner for income tax
purposes (such administrative proceedings referred to hereinafter as a "tax
audit" and such judicial proceeding referred to hereinafter as "judicial
review").
(c) If the Tax Matters Partner, on behalf of the Partnership, receives a
notice with respect to a Partnership tax audit, the Tax Matters Partner shall
forward a copy of such notice to the Partners who hold or held an interest in
the profits or losses of the Partnership for the taxable year to which the
notice relates.
6.10 Authority of Tax Matters Partner. The Tax Matters Partner is hereby
authorized, but not required:
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(a) To enter into any settlement with the Internal Revenue Service or
the Secretary with respect to any tax audit or judicial review in which
agreement the Tax Matters Partner may expressly state that such agreement shall
bind the other Partners except that such settlement agreement shall not bind any
Partner who (within the time prescribed pursuant to the Code) files a statement
with the Secretary that the Tax Matters Partner shall not have the authority to
enter into a settlement agreement on the behalf of such Partner;
(b) In the event that a notice of a final administrative adjustment of
any item required to be taken into account by a Partner for tax purposes (a
"final adjustment") is mailed to the Tax Matters Partner, to seek judicial
review of such final adjustment including, but not limited to, the filing of a
petition for readjustment with the Tax Court, the District Court of the United
States for the district in which the Partnership's principal place of business
is located or the United States Court of Claims;
(c) To intervene in any action brought by another Partner for judicial
review of a final adjustment;
(d) To file a request for an administrative adjustment with the
Secretary at any time and, if any part of such request is not allowed by the
Secretary, to file a petition for judicial review with respect to such request;
(e) To enter into an agreement with the Internal Revenue Service to
extend the period for assessing any tax which is attributable to any item
required to be taken into account by a Partner for tax purposes or an item
affected by such item; and
(f) To take any other action on behalf of the Partners or the
Partnership in connection with any tax audit or judicial review to the extent
permitted by applicable law or regulations.
6.11 Expenses of Tax Matters Partner; Conflicts of Interest. The
Partnership shall indemnify and reimburse the Tax Matters Partner for all
claims, liabilities, losses, expenses and damages (including but not limited to
legal and accounting fees) incurred in connection with any administrative or
judicial proceeding with respect to the Partnership or the tax liability of the
Partners relating thereto. Neither the General Partner, nor any Affiliate, nor
any other person, shall have any obligation to provide funds for such purpose.
The taking of any action and the incurring of any expense by the Tax Matters
Partner in connection with any such proceeding, except to the extent required by
law, is a matter in the sole discretion of the Tax Matters Partner and the
provisions on limitation of liability and indemnification set forth in Sections
5.5 and 5.6 shall be fully applicable to the Tax Matters Partner with respect to
any actions taken or required to be taken by it in its capacity as such. It is
further acknowledged that the interests of the Limited Partners may from time to
time be inconsistent with the interests of other Partners, including the Tax
Matters Partner, and nothing herein shall be deemed to create any obligation on
the part of the Tax Matters Partner to take into account any such inconsistent
or conflicting interests except as expressly provided herein.
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ARTICLE VII
Power of Attorney
7.1 Grant of Power. Each Limited Partner (including any Substitute
Limited Partner) hereby designates and appoints the General Partner and, with
respect to any corporate General Partner (or the corporate general partner or
manager of any General Partner), the President (or the chief executive officer,
however designated), Vice President and the Secretary thereof, and each of them,
as his or its attorney-in-fact with power of substitution to act in his or its
name and on his or its behalf in the execution, acknowledgment and filing of
documents as follows:
(a) Certificates of Limited Partnership, as well as amendments thereto,
under the laws of the State of Delaware and the laws of any other states in
which such a certificate is required to be filed;
(b) Any other instrument that may be required to be filed, or that the
General Partner deems advisable to file, by the Partnership under applicable
law;
(c) Any documents that may be required to effect the reorganization and
continuation of the Partnership, the amendment of this Agreement, the admission
of any additional or Substitute Limited Partner or the dissolution and
termination of the Partnership, provided such reorganization, continuation,
amendment, admission or dissolution and termination is in accordance with the
terms of this Agreement; and
(d) Any and all such other documents and instruments as may be deemed
necessary or desirable by the General Partner to carry out fully the provisions
of this Agreement in accordance with its terms and any amendments or
modifications thereof and any certificates, instruments or other documents
relating thereto.
7.2 Nature of Power. The power of attorney granted by each Limited
Partner in Section 7.1:
(a) Is a special power of attorney coupled with an interest and is
irrevocable and shall survive the disability, dissolution, liquidation or
cessation of the existence as a legal entity of a Limited Partner;
(b) May be exercised by the General Partner, or appropriate officer
thereof or of the general partner or manager thereof, for each Limited Partner
by a facsimile signature of such person or by listing each Limited Partner
executing any instrument with a facsimile signature of such person acting as
attorney-in-fact for all of them; and
(c) Shall survive the delivery of any assignment by a Limited Partner of
the whole or any portion of his or its Partnership Interest in the Partnership
except that where the assignee thereof has been approved by the General Partner
for admission to the Partnership as a Substitute Limited Partner the power of
attorney shall survive the delivery of such assignment for the sole
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purpose of enabling the General Partner to execute, acknowledge and file any
instrument necessary to effect such substitution.
7.3 Effect of this Article. This Article VII does not supersede any
other section of this Agreement, nor is it to be used to deprive any Limited
Partner of its rights under this Agreement, but is intended only to provide a
simplified system for the execution of documents.
ARTICLE VIII
Transfer of General Partnership Interest
8.1 Withdrawal of General Partner.
(a) Subject to the provisions of Sections 4.11, 5.8 and 8.3, a General
Partner shall be entitled to sell, transfer or assign its Partnership Interest
as General Partner to a Qualified Person at any time with the consent of the
other General Partner(s), if any (without Limited Partner approval).
(b) Subject to the provisions of Section 4.11 and 5.8, substitutions of
one person for another person as a General Partner may be made by the General
Partner at any time with the consent of the other General Partner(s), if any
(without Limited Partner approval) provided the substituted person is a
Qualified Person.
(c) In the event that a General Partner withdraws from the Partnership
or sells, transfers or assigns its entire Partnership Interest, the withdrawing,
selling, transferring or assigning General Partner shall be, and shall remain,
liable for all obligations and liabilities incurred by the Partnership for which
the General Partners were liable before such withdrawal, sale, transfer or
assignment shall have become effective but shall be free of any obligation or
liability incurred on account of the activities of the Partnership from and
after the time such withdrawal, sale, transfer or assignment shall have become
effective.
(d) Subject to the provisions of Section 3.6, the General Partner may at
any time designate additional persons to be General Partners, whose Partnership
Interest shall be such as are agreed upon by the General Partner and such
additional persons. Such additional persons shall become successor or additional
General Partners only upon meeting the conditions provided in Sections 8.2(a)
and (b).
8.2 Admission of a Successor or Additional General Partner. A person
shall be admitted as a General Partner of the Partnership only if the following
terms and conditions are satisfied:
(a) The successor person shall have accepted and agreed to be bound by
the terms and provisions of this Agreement by executing a counterpart hereof and
such other documents or instruments as the General Partner deems required or
appropriate in order to effect the admission of such person as a General
Partner; and
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(b) If the successor person is a corporation, partnership or other
entity, it shall have provided the Partnership with evidence satisfactory to
counsel for the Partnership of its authority to become a General Partner and to
be bound by the terms and provisions of this Agreement.
8.3 Effect of Bankruptcy, Death, Withdrawal, Dissolution or
Incompetency of a General Partner.
(a) In the event of the Bankruptcy, death, withdrawal, dissolution or
incompetency of the General Partner, the Partnership shall be dissolved unless
those Partners holding a majority in interest of the remaining Partnership
Percentages elect to continue the business of the Partnership within ninety (90)
days after such event.
(b) Upon the Bankruptcy, death, withdrawal, dissolution or incompetency
of the General Partner where the business of the Partnership is continued in
accordance with Section 8.3(a), such General Partner shall immediately cease to
be a General Partner and its Partnership Interest shall be converted to that of
a Limited Partner with the same rights under Article IV to share in the Net
Profits and Losses, Net Cash Flow and proceeds from liquidation of the
Partnership. Nothing in this Section 8.3(b) shall affect any rights or
liabilities of the Bankrupt, deceased, withdrawn, dissolved or incompetent
General Partner which matured prior to the Bankruptcy, death, withdrawal,
dissolution or incompetency of such General Partner.
(c) If, at the time of the Bankruptcy, death, withdrawal, dissolution or
incompetency of a General Partner, such General Partner was not the sole General
Partner of the Partnership, the remaining General Partner or Partners shall (i)
give Notice to the Limited Partners of such Bankruptcy, death, withdrawal,
dissolution or incompetency and (ii) make such amendments of this Agreement and
execute and file for recordation such other documents or instruments as are
necessary to reflect the conversion of the Partnership Interest of the Bankrupt,
deceased, withdrawing, dissolved or incompetent General Partner in accordance
with Section 8.3(b).
ARTICLE IX
Transfer of Limited Partnership Interest
9.1 Restrictions on Transfer of Limited Partners' Interests.
(a) Except as provided in Section 9.4, no Limited Partner shall offer,
sell, assign, hypothecate, pledge or otherwise transfer in whole or in part its
Partnership Interest without the prior written consent of the General Partner,
which may be given or withheld in the sole discretion of the General Partner.
(b) As a condition to the granting of its consent to a sale, transfer,
assignment, hypothecation or pledge of any Partnership Interest, the General
Partner may, but shall not be obligated to, require that it receive an opinion
of counsel satisfactory to it that such proposed disposition or hypothecation
(i) may be effected without registration of the Partnership Interest under the
Securities Act of 1933, as amended, (ii) would not be in violation of any
applicable State securities or "Blue Sky" law (including investment suitability
standards), and (iii) would
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not cause a termination of the Partnership for Federal income tax purposes or
result in the imposition of any transfer tax pursuant to applicable law.
(c) In no event shall a Limited Partner's Partnership Interest or any
portion thereof be sold, assigned or transferred to a minor or incompetent
unless by will or intestate succession.
9.2 Admission of Substitute Limited Partner.
(a) Notwithstanding the other provisions of this Article IX, an assignee
of the Partnership Interest of a Limited Partner (which shall be understood to
include any purchaser, transferee, donee or other recipient of any disposition
of such Partnership Interest) shall be deemed admitted as a Limited Partner of
the Partnership (sometimes referred to as a "Substitute Limited Partner") only
upon the satisfactory completion of the following:
(i) Consent of the General Partner shall have been given, which
consent may be evidenced by the execution by the General Partner of a
Certificate evidencing the admission of such person as a Limited Partner
and which consent may be given or withheld in the General Partner's sole
discretion;
(ii) The assignee shall have accepted and agreed to be bound by
the terms and provisions of this Agreement by executing a counterpart
hereof 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;
(iii) The assignee shall have delivered a letter containing a
representation that acquisition of its Partnership Interest is made as a
principal for its own account for investment purposes only and not with
a view to the resale or distribution of such Partnership Interest.
(iv) If the assignee is a corporation, partnership or other
entity, the assignee shall have provided the General Partner with
evidence satisfactory to counsel for the Partnership of its authority to
become a Limited Partner under the terms and provisions of this
Agreement;
(v) The assignee shall have executed a power of attorney
acceptable to the General Partner containing the terms and provisions
set forth in Article VII; and
(vi) The assignee shall have paid all reasonable legal fees and
administrative costs of the Partnership and the General Partner and
filing and publication costs in connection with his or its substitution
as a Limited Partner.
(b) A Substitute Limited Partner shall be treated as having become, and
appearing in the records of the Partnership as, a Partner as of the day the
conditions set forth in Section 9.2(a) are satisfied.
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(c) Any Limited Partner who shall assign all of his or its Partnership
Interest shall cease to be a Limited Partner of the Partnership except that
unless and until a Substitute Limited Partner is admitted in his or its stead
and place such assigning Limited Partner shall retain the statutory rights of an
assignor of a limited Partnership Interest under the Act (as modified by this
Agreement) and retain the obligations of a Limited Partner under the Act and
this Agreement.
9.3 Rights of Assignee of Partnership Interest.
(a) The rights of an assignee of his or its Partnership Interest who
does not become a Substitute Limited Partner shall be limited to receipt of his
or its share of Net Profits and Net Losses and Net Cash Flow pursuant to Article
IV and distributions upon liquidation and dissolution as determined under
Article X.
(b) The Partnership shall not be obligated for any purposes whatsoever
to recognize the assignment by any Limited Partner of his or its Partnership
Interest as permitted hereunder unless and until the Partnership has received
notice thereof, which notice must include such information and documentation
with respect to the assignment as the General Partner may reasonably require.
(c) 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 Partnership Interest shall be
subject to all the provisions of this Article IX to the same extent and in the
same manner as any Limited Partner desiring to make an assignment of his or its
Partnership Interest.
9.4 Effect of Bankruptcy, Death or Incompetence of a Limited Partner.
The Bankruptcy of a Limited Partner or the death of a Limited Partner or an
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, in such case, the business of the Partnership shall
continue. If a Limited Partner becomes Bankrupt, the trustee or receiver of his
or its estate or, if he dies, his executor, administrator or trustee or if he is
adjudicated incompetent, his committee, guardian or conservator, shall have the
rights of an assignee hereunder but shall not become a Substitute Limited
Partner except in accordance with the terms of Section 9.2.
ARTICLE X
Dissolution and Liquidation
10.1 Liquidation. In the event of the termination of the Partnership
pursuant to Section 2.6, the General Partner (or if there be none, then a
liquidation committee ("Liquidation Committee") appointed by the Limited
Partners owning, in the aggregate, a majority in interest of the Partnership
Percentages then held by the Limited Partners), shall commence to wind up the
affairs of the Partnership and to liquidate its assets. Subject to the
provisions of Section 5.8, the General Partner (or the Liquidation Committee)
shall have full right and unlimited discretion to determine the time, manner and
terms of any sale or sales of Partnership property pursuant to
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such liquidation, having due regard to the activity and condition of the
relevant market and general financial and economic conditions. In the event that
the General Partner (or the Liquidation Committee) determines, in its sole and
absolute discretion, that it is necessary or (subject to the provisions of
Section 5.8) desirable to make a distribution of Partnership property in kind,
such property shall be transferred and conveyed to the Partners so as to vest in
each as a tenant in common an undivided interest in the whole of said property
equal to his or its interest in the distribution of proceeds pursuant to Section
10.2. Subject to the provisions of Section 10.2, in the event of the sale of
Partnership assets for a consideration including, in whole or in part, deferred
obligations, the liquidation of the Partnership shall not be deemed finally
terminated until the Partnership shall have sold all or substantially all of its
assets for cash or received cash payments in full with respect to all deferred
obligations received by the Partnership in connection with the sale of
Partnership assets.
10.2 Distribution of Proceeds. The net proceeds resulting from the
liquidation of the Partnership's properties following a dissolution of the
Partnership shall be distributed to the Partners and applied in the following
order of priority (except as provided in Section 4.9):
(a) first, to the payment of the debts and liabilities of the
Partnership (other than debts and liabilities owed to the General Partner or any
of its Affiliates);
(b) second, to the payment of Liquidated Damages, if any;
(c) third, to the payment of the debts and liabilities of the
Partnership to the General Partner or any of its Affiliates;
(d) fourth, to the setting up of any Reserves that the General Partner
or the Liquidation Committee deems reasonably necessary, in its sole and
absolute discretion, to provide for any contingent or unforeseen liabilities or
obligations of the Partnership (it being understood however, that any funds so
reserved shall be distributed in accordance with the provisions of this Section
10.2 after the obligation for which the Reserve was established has been
satisfied); and
(e) the balance, if any, to the Partners in accordance with their
positive Capital Account balances determined after (i) taking into account all
Capital Account adjustments for the taxable year during which the dissolution
occurs (other than those made pursuant to this Section 10.2(c)) and (ii)
revaluing all Partnership property to be distributed to the Partners at its
Gross Asset Values in accordance with the rules of Treas. Reg. Section
1.704-l(b)(2)(iv)(f) (except that for purposes hereof, KBLP shall be entitled to
no more than an amount equal to the KBLP Distribution plus KBLP's share of
undistributed Net Profits previously allocated to KBLP).
In the event the Partnership is "liquidated" within the meaning of
Section 1.704-l(b)(2)(ii)(g) of the Regulations, such amounts shall be
distributed by the end of the taxable year in which the liquidation occurs or,
if later, within 90 days of such liquidation (the "Timing Requirement") and no
Partner shall have any obligation to restore a deficit in its Capital Account
(after giving effect to all contributions, distributions and allocations for all
taxable years,
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including the year during which such liquidation occurs), no such deficit being
considered a debt owed to the Partnership or any other person for any purpose
whatsoever.
If the General Partner (or the Liquidating Committee, as the case may
be) in its sole and absolute discretion determines that the Timing Requirement
shall not be met, all or any portion of the distributions that would otherwise
be made to the Partners pursuant to Section 10.2 may be distributed to the
General Partner (or the Liquidating Committee, as the case may be) in trust for
the benefit of the Partners for the purposes of liquidating Partnership assets,
collecting amounts owed to the Partnership, and paying any contingent or
unforeseen liabilities or obligations of the Partnership. The assets of any such
trust shall be distributed to the Partners from time to time, in the sole and
absolute discretion of the General Partner (or the Liquidating Committee, as the
case may be), in the same proportions as the amount distributed to such trust by
the Partnership would otherwise have been distributed to the Partners pursuant
to this Agreement.
10.3 Accounting. Within a reasonable time following the completion of
the liquidation of the Partnership's properties, the General Partner (or the
Liquidation Committee) shall supply to each of the Partners a statement setting
forth the assets and the liabilities of the Partnership as of the date of
completion of liquidation and each Partner's pro rata portion of distribution
pursuant to Section 10.2.
10.4 Certificate of Cancellation. Upon the completion of the liquidation
of the Partnership and the distribution of all Partnership funds, the
Partnership shall terminate and the General Partner (or the Liquidation
Committee) shall have the authority to execute and file a Certificate of
Cancellation of the Partnership as well as any and all other documents required
to effectuate the dissolution and termination of the Partnership.
10.5 Right Limited To Partnership Assets. Each Partner shall look solely
to the assets of the Partnership for all distributions with respect to the
Partnership, the return of his or its capital contribution thereto and his or
its share of Net Cash Flow and shall have no recourse therefor, upon dissolution
or otherwise, against any other Partner except as provided in the last paragraph
of Section 10.2. No Partner shall have any right to demand or receive property
other than cash upon dissolution and termination of the Partnership.
ARTICLE XI
Amendments
11.1 Right of General Partner to Amend. Subject to Sections 3.6, 5.8 and
11.2, the General Partner may from time to time amend this Agreement as the
General Partner deems advisable, in its sole and absolute discretion, without
seeking or obtaining the approval or consent of any Limited Partner and may
execute counterparts to this Agreement, and such other documents as it deems
appropriate to reflect such amendment on behalf of each Limited Partner pursuant
to the Power of Attorney granted by Article VII hereof.
11.2 Limitations on Amendments. Notwithstanding the provisions of
Section 11.1, no amendment to this Agreement may:
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(i) enlarge the obligations of any Partner under this Agreement
or convert the Partnership Interest of any Limited Partner into the
Partnership Interest of a General Partner or modify the limited
liability of any Limited Partner without the consent of such Partner;
(ii) subject to the provisions of Section 3.6, alter the rights
of any Partner in Net Profits and Net Losses, Net Cash Flow or
liquidation proceeds, without the consent of such Partner;
(iii) cause the Partnership to be taxable as a corporation
without the consent of all Partners;
(iv) amend Sections 4.11, 5.8, 11.1 or 11.2 without the consent
of KBLP;
(v) amend this Article XI without the consent of all Partners; or
(vi) amend this Agreement in any other respect if the effect of
such amendment would materially adversely effect KBLP's rights and
benefits hereunder.
11.3 Amendments on Admission or Withdrawal of Partners.
(a) If this Agreement shall be amended as a result of adding or
substituting a Limited Partner, the amendment to this Agreement shall be signed
by the General Partner and by the person to be substituted or added.
(b) If this Agreement shall be amended to reflect the designation of an
additional or successor General Partner, such amendment shall be signed by the
other General Partner(s), if any, and by such additional or successor General
Partner.
(c) If this Agreement shall be amended to reflect the withdrawal of a
General Partner and the business of the Partnership is continued, such amendment
shall be signed by the remaining or successor General Partner(s).
(d) Notwithstanding the foregoing, no amendment to this Agreement shall,
without KBLP's consent, adversely affect KBLP's rights to Liquidated Damages in
the circumstances described in Sections 4.11 and 5.8, or to receive the Special
Final Distribution in the event of an election by the Partnership to make such a
distribution as set forth in Section 4.9.
11.4 Management of the Partnership. No Limited Partner shall take part
in the management or control of the business of the Partnership or transact any
business in the name of the Partnership. No Limited Partner shall have the power
or authority to bind the Partnership or to sign any Agreement or document in the
name of the Partnership. No Limited Partner shall have any power or authority
with respect to the Partnership except insofar as the consent of the Limited
Partner shall be expressly required herein.
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ARTICLE XII
General Provisions
12.1 Notices. All notices required or permitted to be given hereunder
shall be in writing and addressed to the addressee at the addresses set forth on
the signature pages hereto or to such other address as the addressee shall have
previously notified the sender of in writing. Personal or overnight mail
delivery, facsimile communication or the mailing of a notice by registered or
certified mail, return receipt requested, shall be sufficient service and shall
be effective as of the date upon which it is delivered (or delivery is refused
or postal authorities designate the notice as non-deliverable, as the case may
be) in the case of personal or overnight mail delivery or certified or
registered mail or upon receipt of confirmed answerback in the case of facsimile
transmission.
12.2 Governing Law. This Agreement shall be governed by the laws of the
State of Delaware, without regard to its conflicts of law principles.
12.3 Headings. The headings of the articles and sections of this
Agreement are inserted for convenience only and are not to be deemed to
constitute a part of this Agreement.
12.4 Additional Documents. Each of the parties hereto agrees to execute,
acknowledge and verify, if required to do so, any and all further or additional
documents as may be reasonably necessary to fully effectuate the terms of this
Agreement.
12.5 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same document.
12.6 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the executors, administrators, heirs or other successors
and the permitted assigns of the respective Partners.
12.7 Waiver. The waiver of any breach of any term, covenant or condition
of this Agreement by any of the parties hereto shall not constitute a continuing
waiver or a waiver of any subsequent breach, either of the same or any other
additional or different term, covenant or condition of this Agreement.
12.8 Severability. The parties hereby agree that in the event any court
of competent jurisdiction determines that any provision of this Agreement is
unlawful or unenforceable then, in that event, each and all remaining provisions
shall remain in full force and effect.
12.9 Merger. This Agreement, together with the Contribution Agreement,
sets forth (and is intended by all parties to be an integration of) all of the
promises, agreements and understandings among the parties hereto with respect to
the Partnership, the Partnership business and the property and assets of the
Partnership, and there are no promises, agreements or understandings, oral or
written, express or implied, among them other than as set forth or therein.
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12.10 Pronouns. All the pronouns and variations thereof shall be deemed
to refer to the masculine, feminine, neuter, singular or plural as the identity
of the person or persons may require.
12.11 Certificate of Limited Partnership and Amendments. Upon written
request of any Limited Partner, the General Partner shall deliver to such
Limited Partner copies of any Certificate of Limited Partnership, Certificate of
Amendment, Restated Certificate of Limited Partnership or Certificate of
Cancellation filed pursuant to the Act in respect of
the Partnership.
12.12 [Intentionally Deleted]
12.13 Signatures. Each Limited Partner, Substitute Limited Partner,
additional General Partner and successor General Partner shall become a
signatory hereto by signing such number of counterpart signature pages to this
Agreement and such other instrument or instruments in such manner and at such
time as the General Partner shall determine. By so signing, each Limited
Partner, Substitute Limited Partner, successor General Partner or additional
General Partner, as the case may be, shall be deemed to have adopted and be
bound by all provisions of this Agreement, as amended from time to time;
provided, however, no such counterpart shall be binding unless and until it
shall have been accepted by the General Partner.
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IN WITNESS WHEREOF the undersigned have executed this Agreement on the
day and year first above written.
GENERAL PARTNER:
FLORIDA SONESTA CORPORATION, 200 Clarendon Street
a Florida corporation Boston, Massachusetts 02116
Attn: Peter J. Sonnabend
Facsimile No.: (617) 421-5402
By:
-----------------------------
Its
----------------------
With a copy to:
Bell, Boyd & Lloyd
Three First National Plaza
Suite 3300
Chicago, Illinois 60602
Attn: David F. Heroy
Facsimile No.: (312) 372-2098
LIMITED PARTNERS:
KEY BISCAYNE LAND CORPORATION, 200 Clarendon Street
a Florida corporation Boston, Massachusetts 02116
Attn: Peter J. Sonnabend
Facsimile No.: (617) 421-5402
By:
-----------------------------
Its
----------------------
With a copy to:
Bell, Boyd & Lloyd
Three First National Plaza
Suite 3300
Chicago, Illinois 60602
Attn: David F. Heroy
Facsimile No. (312) 372-2098
37
<PAGE>
KEY BISCAYNE LIMITED c/o Strategic Realty Advisors, Inc.
PARTNERSHIP, 630 Dundee Road
a Florida limited partnership Suite 220
Northbrook, Illinois 60062
By: Key Biscayne Beach Hotel Attn: Joel A. Stone,
Associates, Ltd., a President and Chief
Florida limited Executive Officer
partnership Facsimile No. (847) 714-9696
By: VMS Realty Investment, With a copy to:
Ltd., an Illinois limited
partnership, a general Mr. Mark Mehlman
partner Sonnenschein, Nath & Rosenthal
8000 Sears Tower
By: 233 South Wacker Drive
----------------------- Chicago, Illinois 60606
Facsimile No. (312) 876-7934
38
RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:
Dechert, Price and Rhoads
90 State House Square
Hartford, Connecticut 06103
Attention: Katherine A. Burroughs, Esq.
Space Above This Line For Recorder's Use
- --------------------------------------------------------------------------------
Loan # 1-001-571
ASSUMPTION AGREEMENT
This ASSUMPTION AGREEMENT (this "Agreement") is dated as of July
1, 1998, by and between SONESTA BEACH RESORT LIMITED PARTNERSHIP, a Delaware
limited partnership having a mailing address of c/o Sonesta International Hotels
Corporation, T-41, 200 Clarendon Street, Boston, MA 02116, Office of the
Treasurer ("Borrower"), and STATE STREET BANK AND TRUST COMPANY, TRUSTEE
("Lender"), having a mailing address of 2 International Plaza, 5th Floor,
Boston, MA 02117.
RECITALS
A. Lender is the owner and holder of certain indebtedness (the "Loan")
evidenced, inter alia, by that Second Renewal Promissory Note (the "Note") dated
December 1, 1993 from Key Biscayne Limited Partnership (the "Debtor"), as maker,
which Note is payable to the order of Aetna Life Insurance Company ("Aetna") in
the original principal amount of $24,142,088.26 and which Note was endorsed to
the order of Lender by way of a separate Allonge executed by Aetna and attached
to the Note, as well as the following documents and instruments evidencing and
securing the Loan (collectively with the Note, the "Loan Documents"):
(i) That certain Promissory Note dated December 28, 1984,
evidencing a loan to Debtor from Southeast Bank, N.A. in the original
principal amount of $22,000,000 (the "Original Note") and a Mortgage and
Security Agreement dated December 28, 1984, from Debtor to Southeast
Bank, N.A., which secures the Original Note and which is recorded in the
Public Records of Dade County, Florida in Official Records Book 12369,
Page 6689 (the "Original Mortgage"), which (i) Original Note, (iii)
Original Mortgage, and (iii) Assignment of Lessor's Interest in Leases
appurtenant thereto and recorded in the Public Records of Dade County,
Florida in Official Records Book 12369, Page 6716 (the "Original
Assignment"), were assigned to Aetna pursuant to that certain Assignment
recorded in the Public Records of Dade County, Florida in Official
Records Book 12514, Page 2826, and which Original Note was endorsed to
the order of Aetna pursuant to that certain endorsement affixed to the
Original Note and executed by Southeast Bank, N.A. The Original Note was
amended and restated by that certain Note Modification
- -------------------------------
NO DOCUMENTARY STAMP TAX IS DUE UPON THE RECORDATION OF THIS AGREEMENT
PURSUANT TO SECTION 1146(C) OF THE UNITED STATES BANKRUPTCY CODE AND
PARAGRAPH 7 OF THE CONFIRMATION ORDER DATED JUNE 25, 1998, ENTERED IN CASE
#98-13500 IN THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT
OF FLORIDA.
<PAGE>
Agreement by and between Aetna and Debtor dated May 17, 1985, and the
Original Mortgage was amended and restated by that certain Mortgage
Modification and Extension Agreement dated May 17, 1985 and recorded in
the Public Records of Dade County, Florida in Official Records Book
12514, Page 2827. As additional security for the Original Note, as
amended and restated, as aforesaid, Debtor executed in favor of Aetna
that certain Assignment of Rents and Leases dated May 17, 1985 and
recorded in the Public Records of Dade County, Florida in Official
Records Book 12514, Page 2847 (the "Second Assignment"). Debtor and
Aetna also entered into (i) that certain Note and Mortgage Modification
Agreement dated July 29, 1988 and recorded in the Public Records of Dade
County, Florida in Official Records Book 13804, Page 1027, (ii) that
certain Second Note and Mortgage Modification Agreement dated October 9,
1989 and recorded in the Public Records of Dade County, Florida in
Official Records Book 14290, Page 861, and (iii) that certain Third Note
and Mortgage Modification Agreement dated February 22, 1990 and recorded
in the Public Records of Dade County, Florida in Official Records Book
14461, Page 697. In addition, Debtor executed and delivered to Aetna its
Accrual Promissory Note dated as of October 1, 1991, in the original
principal amount of $953,333.33, which was consolidated with Debtor's
indebtedness evidenced by the aforesaid Third Note and Mortgage
Modification Agreement pursuant to a Consolidating Note Agreement dated
as of October 1, 1991 between Debtor and Aetna, and renewed pursuant to
Debtor's Renewal Promissory Note dated as of October 1, 1991, and
further modified by Mortgage Modification Agreement dated as of October
1, 1991 and recorded in the Public Records of Dade County, Florida in
Official Records Book 16242, Page 1563, and which Accrual Promissory
Note and Renewal Promissory Note were each endorsed to the order of the
Lender for the registered holders of Aetna Commercial Mortgage Trust
Multiclass Pass-Through Certificates, Series 1997-ALIC by way of
separate Allonges executed by Aetna and attached to each of the
aforesaid Accrual Promissory Note and Renewal Promissory Note. The
Original Mortgage, as restated and subsequently assigned, amended,
modified and renewed, as aforesaid, is hereinafter referred to as the
"Mortgage."
(ii) The Lender is also the holder of (i) that certain Accrual
Promissory Note dated as of December 1, 1993 (the "Accrual Note") from
Debtor, in the principal amount of $2,192,906.23, and (ii) that certain
Promissory Note dated December 1, 1993 (the "Capitalized Interest Note")
from Debtor, in the principal amount of $2,142,088.26. The Note, the
Accrual Note and the Capitalized Interest Note have been consolidated
pursuant to the terms of a Consolidating Note Agreement dated effective
as of December 1, 1993, between Debtor and Aetna, and said notes, as
consolidated, have been renewed pursuant to the provisions of the Note
effective as of December 1, 1993, in favor of Aetna. The Accrual
Promissory Note, the Capitalized Interest Note and the Note were each
endorsed to the order of the Lender by way of separate Allonges executed
by Aetna and attached to each of the aforesaid Accrual Promissory Note,
Capitalized Interest Note and Note. The Accrual Promissory Note and the
Capitalized Interest Note are secured by a Mortgage Deed (the "Mortgage
Deed") dated as of December 1, 1993, from Debtor to Aetna and recorded
in the Public Records of Dade County, Florida in Official Records Book
16242, Page 1581. The Mortgage and the Mortgage Deed have been further
-2-
<PAGE>
consolidated and modified, and the Original Assignment and the Second
Assignment have been ratified and confirmed, pursuant to that certain
Mortgage Modification Agreement dated as of December 1, 1993, and
recorded in the Public Records of Dade County, Florida in Official
Records Book 16242, Page 1589. The aforesaid Mortgage, the Mortgage
Deed, the Original Assignment and the Second Assignment, each as
restated, assigned, amended, modified and renewed, as aforesaid,
together with the note or notes described in said documents, and all
other documents or instruments which may have been executed in favor of
Aetna in connection with the aforesaid documents were assigned by Aetna
to the Lender pursuant to that certain Assignment of Mortgage Loan dated
as of December 22, 1997 and recorded in the Public Records of Dade
County, Florida in Official Records Book 17976, Page 980.
B. The Loan is secured by, inter alia, a first priority lien on and in
that certain real property with improvements thereon and certain personalty
related thereto, commonly known as Sonesta Beach Resort located in Key Biscayne,
Florida and more fully described on the attached Exhibit A (the "Mortgaged
Property").
C. On or about April 23, 1998 (the "Petition Date"), Debtor filed a
petition for relief under Chapter 11 of the United States Bankruptcy Code, Case
#98-13500, (the "Bankruptcy Proceeding") in the United States Bankruptcy Court
for the Southern District of Florida (the "Bankruptcy Court").
D. On or about the Petition Date, Debtor filed that certain Joint Plan
of Reorganization dated April 23, 1998 (the "Plan") in the Bankruptcy
Proceeding.
E. On or about June 25, 1998, the Bankruptcy Court entered an order
confirming the Plan (the "Confirmation Order").
F. The Plan provides, inter alia, for: (i) the transfer of the Mortgaged
Property to Borrower; and (ii) the assumption of the Loan by the Borrower.
G. Lender has consented to the terms of the Plan.
NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, it is agreed as follows:
1. Borrower hereby assumes and agrees to pay, perform and be
bound by all obligations of Debtor under, arising from or related to, and all
terms and conditions of, the Loan and the Loan Documents and the indebtedness
evidenced and secured thereby.
2. All references in the Loan Documents to "Maker", "Mortgagor",
"Assignor", "Borrower" or other similar references shall hereafter be deemed to
refer to and describe Borrower. All representations, covenants and warranties of
Debtor set forth in any of the Loan Documents are affirmed and remade by
Borrower herein. Borrower (as debtor) hereby grants to Lender (as creditor) a
security interest in all personal property and fixtures related to the
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<PAGE>
Mortgaged Property, and in any other personal property or fixtures constituting
part of the Mortgaged Property.
3. The parties hereto hereby acknowledge and agree that none of
the Loan Documents has been modified, amended, cancelled, terminated, released,
superseded or otherwise rendered of no force and effect.
4. Each of the Loan Documents are hereby ratified and confirmed
by the parties hereto, and every provision, covenant, condition, obligation,
right and power contained in and under each of the Loan Documents shall continue
in full force and effect, affected by this Agreement only to the extent of the
assumption set forth herein.
5. Lender hereby consents to the assumption of the Loan Documents
by Borrower.
6. Representations and Warranties of Borrower:
(A) Organization. Borrower (i) is a duly organized and
validly existing limited partnership in good standing under the laws of
the State of its formation, (ii) is duly qualified as a foreign entity
in each jurisdiction in which the nature of its business, or the
location of the Mortgaged Property makes such qualification necessary or
desirable, (iii) has the requisite power and authority to carry on its
business as now being conducted, and (iv) has the requisite power to
execute and deliver, and perform its obligations under, this Agreement
and the Loan Documents.
(B) Authorization. The execution and delivery by Borrower
of this Agreement, Borrower's performance of its obligations thereunder
and under the Loan Documents and the security interests and liens
provided for in the Loan Documents (i) have been duly authorized by all
requisite entity action on the part of Borrower, (ii) will not violate
any provision of the Plan, any applicable legal requirements, any order,
writ, decree, injunction or demand of any court or other governmental
authority, any organizational document of Borrower or any indenture or
agreement or other instrument to which Borrower is a party or by which
Borrower is bound, and (iii) will not be in conflict with, result in a
breach of, or constitute (with due notice or lapse of time or both) a
default under, or result in the creation or imposition of any lien of
any nature whatsoever upon any of the property or assets of Borrower
pursuant to any indenture or agreement or instrument. Except for those
obtained or filed on or prior to the date hereof, Borrower is not
required to obtain any consent, approval or authorization from, or to
file any declaration or statement with, any governmental authority or
other agency in connection with or as a condition to the execution,
delivery or performance of this Agreement.
(C) Litigation. There are no actions, suits or proceedings
at law or in equity by or before any governmental authority or other
agency now pending and served
-4-
<PAGE>
or, to the knowledge of Borrower, threatened against Borrower, or the
Mortgaged Property except the Bankruptcy Proceeding.
(D) Agreements. Borrower is not a party to any agreement
or instrument or subject to any restriction which is likely to have a
material adverse effect on ability to perform obligations hereunder or
under the Loan Documents. Borrower is not in default in any respect in
the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any indenture, agreement or
instrument to which it is a party or by which Borrower or the Mortgaged
Property is bound.
(E) No Bankruptcy Filing. Borrower is not contemplating
either the filing of a petition by Borrower under any state or federal
bankruptcy or insolvency laws or the liquidation of all or a major
portion of Borrower's assets or property, and Borrower has no knowledge
of any person contemplating the filing of any such petition against
Borrower.
(F) Location of Chief Executive Offices. The location of
Borrower's principal place of business is 350 Ocean Drive, Key Biscayne,
Florida 33149, and the location of Borrower's chief executive office is
c/o Sonesta International Hotels Corporation, T-41, 200 Clarendon
Street, Boston, Massachusetts 02116, and Borrower has no other places of
business.
(G) Compliance. Borrower, the Mortgaged Property and
Borrower's use thereof and operations thereat comply in all material
respects with all applicable legal requirements. Borrower is not in
default or violation of any order, writ, injunction, decree or demand of
any governmental authority, the violation of which is reasonably likely
to have a material adverse effect on Borrower or the Mortgaged Property.
(H) Solvency. Borrower (i) has not entered into this
Agreement with the actual intent to hinder, delay, or defraud any
creditor, and (ii) has received reasonably equivalent value in exchange
for its obligations under this Agreement and under the Plan. Borrower's
assets do not and, immediately following the execution and delivery of
this Agreement and the consummation of the Plan, will not, constitute
unreasonably small capital to carry out its business as conducted or as
proposed to be conducted. Borrower does not intend to, and does not
believe that it will, incur debts and liabilities (including, without
limitation, contingent obligations and other commitments) beyond its
ability to pay such debts as they mature (taking into account the timing
and amounts to be payable on or in respect of obligations of Borrower).
(I) Title to the Mortgaged Property. Borrower owns good,
indefeasible, marketable and insurable fee simple title to the Mortgaged
Property, free and clear of all liens, other than the liens created by
the Loan Documents and those set forth on Exhibit B (the "Permitted
Encumbrances"). There are no outstanding options to purchase or rights
of first refusal affecting the Facility. The Permitted Encumbrances do
not and will not materially and adversely affect (i) the ability of
Borrower to pay in
-5-
<PAGE>
full all sums due under the Note and other Loan Documents, or any of
its other obligations in a timely manner or (ii) the use of the
Mortgaged Property for the use currently being made thereof or the
operation of the Mortgaged Property as currently being operated.
(J) Enforceability. This Agreement and the Loan Documents
are the legal, valid and binding obligations of Borrower, enforceable
against Borrower in accordance with their terms. The Mortgage and other
Loan Documents create a valid and enforceable first mortgage lien and
security interest in the Mortgaged Property as security for the
repayment of the Loan. The Loan Documents are, as of the date hereof,
not subject to any right of rescission, set-off, counterclaim or defense
by Borrower, including the defense of usury, nor will the operation of
any of the terms of the Note, the Mortgage, or such other Loan
Documents, or the exercise of any right thereunder, render the Loan
Documents unenforceable against Borrower, in whole or in part, or
subject to any right of rescission, set-off, counterclaim or defense by
Borrower, including the defense of usury, and Borrower has not asserted
any right of rescission, set-off, counterclaim or defense with respect
thereto.
(K) Conduct of Business. Borrower does not conduct its
business "also known as", "doing business as" or under any name other
than Sonesta Beach Resort-Key Biscayne.
(L) Survival of Representations and Warranties. Borrower
agrees that (i) all of the representations and warranties of Borrower
set forth in this Agreement and in the other Loan Documents are made as
of the date hereof (except as expressly otherwise provided) and (ii) all
representations and warranties made by Borrower shall survive the
delivery of this Agreement and continue for so long as any amount
remains owing to Lender under this Agreement, the Note or any other Loan
Document.
7. All provisions of this Agreement shall be effective as of the
date hereof, and shall be binding upon and inure to the benefit of the
respective heirs, legal representatives, successors and assigns of the parties
hereto.
8. Matters of construction, validity and performance of this
Agreement and the obligations arising hereunder shall be governed by the
internal laws of the State of Florida.
9. No modification, amendment, extension, discharge, termination
or waiver of any provision of this Agreement, the Note or any other Loan
Document, or consent to any departure by Borrower therefrom, shall in any event
be effective unless the same shall be in a writing signed by the party against
whom enforcement is sought, and then such waiver or consent shall be effective
only in the specific instance, and for the purpose, for which given.
10. All notices, consents, approvals and requests required or
permitted hereunder or under any other Loan Document shall be given in
accordance with the terms of the Loan Documents and addressed, if to Lender, at
its address set forth on the first page hereof, and, if to Borrower, at its
designated address set forth on the first page hereof, or to such other address
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<PAGE>
as either party shall provide written notice to the other. A copy of all
notices, consents, approvals and requests, if directed to Lender, shall be
delivered concurrently to Dechert Price & Rhoads, 90 State House Square, 12th
Floor, Hartford, Connecticut 06103-3702, Attention: Katherine A. Burroughs,
Esq., Telefax Number 860/524-3930, and if directed to Borrower, shall be
delivered concurrently to: Sonesta International Hotels Corporation, T-41, 200
Clarendon Street, Boston, MA 02116, Office of the Treasurer.
11. BORROWER AND LENDER, TO THE FULLEST EXTENT THAT THEY MAY
LAWFULLY DO SO, HEREBY WAIVE TRIAL BY JURY IN ANY ACTION OR PROCEEDING,
INCLUDING, WITHOUT LIMITATION, ANY TORT ACTION, BROUGHT BY ANY PARTY HERETO WITH
RESPECT TO THIS AGREEMENT, THE NOTE OR THE OTHER LOAN DOCUMENTS.
12. Borrower shall pay all transaction costs, which shall
include, without limitation, reasonable fees, costs, expenses, and disbursements
of Lender and its attorneys, including local counsel, in connection with (i) the
negotiation, preparation, execution and delivery of this Agreement, including
opinions of counsel required in connection therewith, (ii) the creation,
perfection or protection of Lender's liens in the Mortgaged Property (including,
without limitation, fees and expenses for title and lien searches and filing and
recording fees, intangibles taxes, personal property taxes), mortgage recording
taxes, and (iv) the costs and expenses of obtaining an endorsement and down
dating of the title policy issued in connection with the Loan.
13. This Agreement, together with the Exhibits hereto and the
other Loan Documents, constitutes the entire agreement among the parties hereto
with respect to the subject matter contained in this Agreement, the Exhibits
hereto and the other Loan Documents and supersedes all prior agreements,
understandings and negotiations between the parties.
14. Borrower and the general partner(s) of Borrower, upon request
from Lender, agree to execute such other and further documents as may be
reasonably necessary or appropriate to consummate the transactions contemplated
by the Loan Documents or this Agreement or to perfect the liens and security
interests intended to secure the payment of the Loan.
15. This Agreement may be executed in any number of identical
counterparts, each of which shall be deemed to be an original, and all of which
shall collectively constitute a single agreement, fully binding upon and
enforceable against the parties hereto.
Remainder of Page Intentionally Left Blank; Signature Page Follows
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<PAGE>
IN WITNESS WHEREOF, the parties have hereunto executed this Agreement as
of the date first written above.
Borrower:
Witnessed By: SONESTA BEACH RESORT
LIMITED PARTNERSHIP
By: Florida Sonesta Corporation
General Partner
By:
- ------------------------------------ ----------------------------
Name: Name:
Title:
- ------------------------------------
Name:
Lender:
Witnessed By: STATE STREET BANK AND TRUST
COMPANY, TRUSTEE
By:
- ------------------------------------ ----------------------------
Name: Name:
Title:
- ------------------------------------
Name:
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<PAGE>
STATE OF )
------------------------------------
) ss. ___________ ____, 1998
COUNTY OF )
-----------------------------------
Personally appeared , _______,_________________ of Florida Sonesta
Corporation, a Florida corporation and general partner of SONESTA BEACH RESORT
LIMITED PARTNERSHIP, a Delaware limited partnership, and acknowledged the
execution of this instrument to be his/her free act and deed and the free act
and deed of the corporation and limited partnership, before me this day.
----------------------------------
Name:
Commissioner of the Superior Court
Notary Public
My Commission Expires:
[NOTARY SEAL]
STATE OF )
------------------------------------
) ss. ___________ ____, 1998
COUNTY OF )
-----------------------------------
Personally appeared , _______,______________________ of STATE STREET
BANK AND TRUST COMPANY, TRUSTEE and acknowledged the execution of this
instrument to be his/her free act and deed and the free act and deed of the
corporation, before me this day.
----------------------------------
Name:
Commissioner of the Superior Court
Notary Public
My Commission Expires:
[NOTARY SEAL]
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<PAGE>
EXHIBIT A
[Legal Description]
- -------------------------------
NO DOCUMENTARY STAMP TAX IS DUE UPON THE RECORDATION OF THIS AGREEMENT
PURSUANT TO SECTION 1146(C) OF THE UNITED STATES BANKRUPTCY CODE AND
PARAGRAPH 7 OF THE CONFIRMATION ORDER DATED JUNE 25, 1998, ENTERED IN CASE
#98-13500 IN THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT
OF FLORIDA.
<PAGE>
EXHIBIT B
[Permitted Encumbrances]
- -------------------------------
NO DOCUMENTARY STAMP TAX IS DUE UPON THE RECORDATION OF THIS AGREEMENT
PURSUANT TO SECTION 1146(C) OF THE UNITED STATES BANKRUPTCY CODE AND
PARAGRAPH 7 OF THE CONFIRMATION ORDER DATED JUNE 25, 1998, ENTERED IN CASE
#98-13500 IN THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT
OF FLORIDA.
This document prepared by:
Lawrence C. Eppley
Bell, Boyd & Lloyd
Three First National Plaza
70 West Madison Street
Suite 3300
Chicago, Illinois 60602
After recording return to:
Arvin Jaffe
Broad and Cassel
Corporate Centre at Boca Raton
7777 Glades Road
Suite 300
Boca Raton, Florida 33434
AMENDMENT TO AND ASSIGNMENT OF KBHA/PLT INDEBTEDNESS
THIS AMENDMENT TO AND ASSIGNMENT OF KBHA/PLT INDEBTEDNESS (the
"Amendment") is made as of July 1, 1998 among KEY BISCAYNE LIMITED PARTNERSHIP,
a Florida limited partnership ("KBLP"), KEY BISCAYNE BEACH HOTEL ASSOCIATES,
LTD., a Florida limited partnership ("KBHA"), PARTNERS LIQUIDATING TRUST, a
Delaware trust ("PLT") and SONESTA BEACH RESORT LIMITED PARTNERSHIP, a Delaware
limited partnership (the "Partnership").
Recitals
A. KBLP, KBHA (referred to as "Key Biscayne Hotel Associates,
Ltd."), PLT, FLORIDA SONESTA CORPORATION, a Florida corporation ("FSC"), KEY
BISCAYNE LAND CORPORATION, a Florida corporation ("Sonesta II"), STRATEGIC
REALTY ADVISORS, INC., an Illinois corporation ("SRAI") and SONESTA
INTERNATIONAL HOTELS CORPORATION, a New York corporation ("Sonesta
International") have executed and delivered (or joined in) that certain
CONTRIBUTION AND FORMATION AGREEMENT dated as of January 30, 1998 and First
Amendment to Contribution and Formation Agreement dated as of April 3, 1998
(collectively, the "Agreement"), pursuant to which, inter alia, KBLP agreed to
contribute certain of its real property and improvements, commonly known as the
Sonesta Beach Resort and legally described on Exhibit A hereto (the "Property")
to the Partnership.
B. KBLP is the borrower under certain loans from (i) KBHA
(such indebtedness, which is indicated on Exhibit B attached hereto and
incorporated herein, is referred to as the "KBHA Indebtedness"), and (ii) PLT
(such indebtedness, which is indicated on Exhibit B attached hereto and
incorporated herein, is referred to as the "PLT Indebtedness"). The
<PAGE>
combined obligations of KBLP under the KBHA Indebtedness and the PLT
Indebtedness is referred to herein and the Agreement as the "KBHA/PLT
Indebtedness").
C. The Agreement requires certain amendments to the KBHA/PLT
Indebtedness.
Agreements
NOW THEREFORE, for and in consideration of the foregoing
recitals, the mutual covenants and agreements hereinafter set forth, and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
1. Definitions. Initially capitalized terms used but not
otherwise defined herein have the same meanings given them in the Agreement or
in the documents evidencing or securing the KBHA/PLT Indebtedness, as the
context requires.
2. KBHA/PLT Indebtedness Amendments and Assignment. (a) In
exchange for a note from the Partnership in the principal amount of $500,000 in
the form attached hereto as Exhibit C (the "KBHA/PLT Note"), a guaranty from FSC
in the form attached hereto as Exhibit D (the "FSC Guaranty"), pursuant to which
FSC shall guaranty the obligations of the Partnership under the KBHA/PLT Note,
and a back-up guaranty of collection from Sonesta International in the form
attached hereto as Exhibit E (the "Sonesta Guaranty"), pursuant to which Sonesta
International shall guaranty the obligations of FSC under the FSC Guaranty to
guaranty the KBHA/PLT Note (the "Sonesta Guaranty"), KBHA and PLT hereby assign
all of their respective right, title and interest in, to and under the KBHA/PLT
Indebtedness (including all security interests of KBHA and PLT with respect to
the KBHA Indebtedness and the PLT Indebtedness) to the Partnership, free and
clear of all claims, liens and encumbrances. Certain of the security interests
being assigned are set forth on Exhibit F attached hereto.
(b) Payments made in respect of the KBHA/PLT Note shall be
paid to KBHA.
(c) Prior to the Measurement Date, the Partnership shall not
release the security interests, if any, securing the KBHA/PLT Indebtedness
(other than in connection with a refinancing of the Aetna Indebtedness or its
replacement), without KBLP's consent.
(d) This Amendment, the KBHA/PLT Note, the FSC Guaranty and
the Sonesta Guaranty constitute the "KBHA/PLT Indebtedness Amendments" defined
in Section 2.3(c) of the Agreement.
3. Headings. The subject headings of the Sections of this
Amendment are included for purposes of convenience only and shall not affect the
construction or interpretation of any of its provisions.
4. Governing Law. The validity and interpretation of this
Amendment and of each and every clause, term and part hereof shall be governed
by and construed in accordance with the laws of the State of Florida applicable
to contracts made and to be performed therein.
<PAGE>
5. Severability. If any provision hereof is held or finally
determined to be invalid or unenforceable to any extent for any reason, to the
extent that such provision is valid and enforceable, the arbiters or court of
competent jurisdiction, as the case may be, shall construe and interpret said
provision to provide for maximum validity and enforceability.
6. Binding Agreement. This Amendment shall be binding upon and
inure to the benefit of the parties hereto and their respective successors,
assigns, heirs and legal representatives.
7. Counterparts. This Amendment may be executed in any number
of counterparts, each of which shall be deemed an original.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Amendment to
be duly executed as of the day and year first above written.
<TABLE>
<S> <C>
Signed, sealed and delivered KEY BISCAYNE LIMITED PARTNERSHIP, a
in the presence of: Florida limited partnership, its general partners
_____________________________________________ By: KEY BISCAYNE BEACH HOTEL
ASSOCIATES, LTD., a Florida limited
Print Name: _________________________________ partnership
_____________________________________________ By: _____________________________________________
Richard A. Berman, Authorized Signatory
Print Name: _________________________________
and
_____________________________________________ By: VMS REALTY INVESTMENT, LTD., an
Illinois limited partnership
Print Name: _________________________________
_____________________________________________ By: _____________________________________________
Richard A. Berman, Authorized Signatory
Print Name: _________________________________
_____________________________________________ KEY BISCAYNE BEACH HOTEL
ASSOCIATES, LTD., a Florida limited
Print Name: _________________________________ partnership, its general partner
_____________________________________________ By: _____________________________________________
Richard A. Berman, Authorized Signatory
Print Name: _________________________________
PARTNERS LIQUIDATING TRUST,
Print Name: _________________________________ a Delaware trust
_____________________________________________ By: _____________________________________________
Print Name: _________________________________ Its ________________________________________
SONESTA BEACH RESORT LIMITED PARTNERSHIP,
a Delaware limited partnership
_____________________________________________ By: FLORIDA SONESTA CORPORATION, a
Florida corporation, its general partner
_____________________________________________ By: _____________________________________________
Peter J. Sonnabend, its Vice President
Print Name: _________________________________
</TABLE>
<PAGE>
STATE OF ______________)
) SS.
COUNTY OF ______________)
I, the undersigned, a Notary Public, in and for the County and
State aforesaid, DO HEREBY CERTIFY, that Richard A. Berman, the authorized
signatory of VMS REALTY INVESTMENTS, LTD., an Illinois limited partnership and
of KEY BISCAYNE BEACH HOTEL ASSOCIATES, LTD., a Florida limited partnership, a
general partner of KEY BISCAYNE LIMITED PARTNERSHIP, a Florida limited
partnership, personally known to me to be the same person whose name is
subscribed to the foregoing instrument, appeared before me this day in person
and acknowledged that as such authorized signatory, he/she signed and delivered
the said instrument as his/her free and voluntary act, and as the free and
voluntary act and deed of said entity, for the uses and purposes therein set
forth.
Given under my hand and official seal, this ____ day of _________.
My commission expires _________
_____________________________________________
Notary Public
<PAGE>
STATE OF ______________)
) SS.
COUNTY OF ______________)
I, the undersigned, a Notary Public, in and for the County and
State aforesaid, DO HEREBY CERTIFY, that Richard A. Berman, the authorized
signatory of KEY BISCAYNE BEACH HOTEL ASSOCIATES, LTD., personally known to me
to be the same person whose name is subscribed to the foregoing instrument,
appeared before me this day in person and acknowledged that as such authorized
signatory, he/she signed and delivered the said instrument as his/her free and
voluntary act, and as the free and voluntary act and deed of said entity, for
the uses and purposes therein set forth.
Given under my hand and official seal, this ____ day of _________.
My commission expires _________
_____________________________________________
Notary Public
<PAGE>
STATE OF ______________)
) SS.
COUNTY OF ______________)
I, the undersigned, a Notary Public, in and for the County and
State aforesaid, DO HEREBY CERTIFY, that _________________________, the
authorized signatory of PARTNERS LIQUIDATING TRUST, personally known to me to be
the same person whose name is subscribed to the foregoing instrument, appeared
before me this day in person and acknowledged that as such authorized signatory,
he/she signed and delivered the said instrument as his/her free and voluntary
act, and as the free and voluntary act and deed of said entity, for the uses and
purposes therein set forth.
Given under my hand and official seal, this ____ day of _________.
My commission expires _________
_____________________________________________
Notary Public
<PAGE>
STATE OF ______________)
) SS.
COUNTY OF ______________)
I, the undersigned, a Notary Public, in and for the County and
State aforesaid, DO HEREBY CERTIFY, that Peter J. Sonnabend, the authorized
signatory of FLORIDA SONESTA CORPORATION, the general partner of SONESTA BEACH
RESORT LIMITED PARTNERSHIP, personally known to me to be the same person whose
name is subscribed to the foregoing instrument, appeared before me this day in
person and acknowledged that as such authorized signatory, he/she signed and
delivered the said instrument as his/her free and voluntary act, and as the free
and voluntary act and deed of said entities, for the uses and purposes therein
set forth.
Given under my hand and official seal, this ____ day of ________.
My commission expires _________
_____________________________________________
Notary Public
<PAGE>
EXHIBIT A
LEGAL DESCRIPTION
<PAGE>
EXHIBIT B
KBHA/PLT INDEBTEDNESS
<PAGE>
EXHIBIT C
KBHA/PLT NOTE
$500,000 July 1, 1998
For Value Received, SONESTA BEACH RESORT LIMITED PARTNERSHIP,
a Delaware limited partnership hereby promises to pay to the order of KEY
BISCAYNE BEACH HOTEL ASSOCIATES, LTD., a Florida limited partnership ("KBHA")
and PARTNERS LIQUIDATING TRUST, a Delaware trust ("PLT"), the principal sum of
FIVE HUNDRED THOUSAND DOLLARS ($500,000).
This Note shall be due and payable on the Measurement Date. No
interest shall accrue on amounts due hereunder unless this Note is paid after
the Measurement Date, in which event the amount unpaid shall bear simple
interest from the Measurement Date at twelve percent (12%) per annum until this
Note is paid in full.
This Note may be prepaid in whole or in part at any time
without penalty. Payment shall be made by check to KBHA sent to KBHA c/o KBHA,
c/o Strategic Realty Advisors, Inc., 630 Dundee Road, Suite 220, Northbrook,
Illinois 60662, or to such other address as KBHA shall provide to the
Partnership.
If this Note is placed in the hands of an attorney for
collection, the Partnership agrees to pay KBHA's reasonable attorney fees and
costs reasonably incurred in connection therewith whether or not an action is
filed. If an action is filed, the amount of such fees and costs shall be fixed
by the court and shall include fees and costs on any appeal.
This Note and the rights of the parties shall be governed
solely by the laws of the State of Florida.
The undersigned waives presentment, protest and demand, and
notice of protest, demand and dishonor.
This Note is being delivered pursuant to, subject to and in
accordance with (i) that certain CONTRIBUTION AND FORMATION AGREEMENT dated as
of January 30, 1998 and FIRST AMENDMENT TO CONTRIBUTION AND FORMATION AGREEMENT
dated as of April 3, 1998 (collectively, the "Agreement") among KEY BISCAYNE
LIMITED PARTNERSHIP, a Florida limited partnership ("KBLP"), KEY BISCAYNE BEACH
HOTEL ASSOCIATES, LTD., a Florida limited partnership ("KBHA"), PARTNERS
LIQUIDATING TRUST, a Delaware trust ("PLT"), FLORIDA SONESTA CORPORATION, a
Florida corporation, KEY BISCAYNE LAND CORPORATION, a Florida corporation,
STRATEGIC REALTY ADVISORS, INC., an Illinois corporation and SONESTA
INTERNATIONAL HOTELS CORPORATION, a New York corporation, and (ii) that certain
AMENDMENT TO AND ASSIGNMENT OF KBHA/PLT INDEBTEDNESS of even date herewith among
KBLP, KBHA, PLT and the Partnership. Initially capitalized terms used but not
otherwise defined herein have the same meanings given them in the Agreement.
<PAGE>
SONESTA BEACH RESORT LIMITED PARTNERSHIP,
a Delaware limited partnership
By: FLORIDA SONESTA CORPORATION, a
Florida corporation, its general partner
By: ____________________________________
Peter J. Sonnabend, its Vice President
<PAGE>
EXHIBIT D
FSC GUARANTY
<PAGE>
EXHIBIT E
SONESTA GUARANTY
<PAGE>
EXHIBIT F
CERTAIN ASSIGNED SECURITY INTERESTS
1) Mortgage and Security Agreement from Biscayne Beach Hotel Associates, Ltd.,
a Florida Limited Partnership, to VMS Mortgage Company II, an Illinois
Partnership, filed December 31, 1984, in Official Records Book 12369, Page
6889, in the amount of $2,000,000.00, as modified by Non-Disturbance and
Attornment Agreement filed December 31, 1984, in Official Records Book
12369, page 6942; Modification Agreement filed May 10, 1985, in Official
Records Book 12506, page 769; Amendment of Note and Fourth Mortgage filed
June 7, 1993, in Official Records Book 15941, page 83. Said mortgage,
through mesne assignments, was assigned to Partners Liquidating Trust, by
instrument filed January 21, 1994, in Official Records Book 16220, page
4140, together with that UCC-1 Financing Statement in favor of VMS Mortgage
Company II, filed December 31, 1984 in Official Records Book 12369, page
6938; and
2) Mortgage from Key Biscayne Limited Partnership to Key Biscayne Beach Hotel
Associates, Ltd., dated February 4, 1994, filed February 8, 1994, in
Official Records Book 16242, page 1680, securing the original principal sum
of $1,317,426.00, as modified by Non-Disturbance and Attornment Agreement
filed February 8, 1994, in Official Records Book 16242, page 1709, together
with that UCC-1 Financing Statement in favor of Key Biscayne Beach Hotel
Associates, Ltd., filed February 8, 1994, in Official Records Book 16242,
page 1717, as modified by UCC-3, Statement of Change, filed July 8, 1994,
in Official Records Book 16431, page 3367; and UCC-3, Statement of Change,
filed July 8, 1994, in Official Records Book 16431, page 3368.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Amendment to be duly
executed as of the day and year first above written.
<TABLE>
<S> <C>
Signed, sealed and delivered KEY BISCAYNE LIMITED PARTNERSHIP, a
in the presence of: Florida limited partnership, its general partners
_____________________________________________ By: KEY BISCAYNE BEACH HOTEL
ASSOCIATES, LTD., a Florida limited
Print Name: _________________________________ partnership
_____________________________________________ By: _____________________________________________
Richard A. Berman, Authorized Signatory
Print Name: _________________________________
and
_____________________________________________ By: VMS REALTY INVESTMENT, LTD., an
Illinois limited partnership
Print Name: _________________________________
_____________________________________________ By: _____________________________________________
Richard A. Berman, Authorized Signatory
Print Name: _________________________________
_____________________________________________ KEY BISCAYNE BEACH HOTEL
ASSOCIATES, LTD., a Florida limited
Print Name: _________________________________ partnership, its general partner
_____________________________________________ By: _____________________________________________
Richard A. Berman, Authorized Signatory
Print Name: _________________________________
PARTNERS LIQUIDATING TRUST, a
Delaware trust
_____________________________________________ By: Key Biscayne Beach Hotel Associates, Ltd., a
Florida limited Partnership, its attorney-in-fact
Print Name: _________________________________
_____________________________________________ By: _____________________________________________
Richard A. Berman, Authorized Signatory
Print Name: _________________________________
SONESTA BEACH RESORT LIMITED
PARTNERSHIP, a Delaware limited partnership
_____________________________________________ By: FLORIDA SONESTA CORPORATION, a
Florida corporation, its general partner
Print Name: _________________________________
_____________________________________________ By: _____________________________________________
Peter J. Sonnabend, its Vice President
Print Name: _________________________________
</TABLE>
