PARTNERSHIP AGREEMENT
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OF
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RSTP HOTEL LTD.
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BY THIS PARTNERSHIP AGREEMENT(the "Agreement") made and entered into
effective as of the _ day of August, 19966 by and Fairdan Suites, Inc.
(here-in-after "FSI") 00 Xxxxx Xxxxxxxx Xxxxx, Xxxxx Xxxxx, Xxxxxxx 00000, and
The R&S Group, (here-in-after "R&S") a common law business associations, with
offices at 0000 Xxxxx Xxxxxxxxx, Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000, all of whom
do hereby agree to the following terms and conditions
Section 1.
Definitions.
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As used herein the following terms shall have the meanings set forth
below:
"Act" means the Securities Act of 1933 and/or the Securities Exchange
Act of 1934, as now or hereafter amended.
"Affiliate" means when used with reference to any specified Person: (i) any
person directly or indirectly controlling, controlled by or under common control
with the specified Person (ii) any Person directly or indirectly owning,
controlling or holding with power to vote ten (10%) percent or more of the
outstanding voting securities of the specified Person, and (iii) any officer,
director, Partner, of the specified Person, and (iv) if the specified Person is
an officer, director or Partner, any company or firm for which the specified
Person acts in any such capacity
"Annual Business Plan" memos any plan approved by the Partners
pursuant to Section 6.03 hereof.
"Capital Account", as to any Partner, means the capital account
maintained for such Partner in accordance with the provisions of Section 5,04.
"Cash Flow" means, with respect to any fiscal period, all cash
receipts from operations, without deduction for depreciation, but after
deducting cash funds used to pay all other expenses, debt payments, capital
improvements and replacements, and includes proceeds from refinancing
"Agreement" means the Partnership Agreement of RSTP HOTEL LIMITED
PARTNERSHIP, a limited partnership duly filed and amended, as herein required,
in accordance with (and in all respects sufficient in form and substance under)
the laws of the State.
"Code" means the Internal Revenue Code of 1996, as now or hereafter
amended.
"Distributable Cash" means, 'with respect to any fiscal period, Cash Flow
less any Amounts Set aside for the restoration, increase or creation of reserves
in accounts deemed sufficient by the Managing Partner for working capital, debt
service, replacements, renewals, or other costs or
"Hotel Purchase Agreement" means the Land Purchase Contract attached hereto
as Exhibit A
"Interest" means, as the requires, the interest of Partner in the Limited
Partnership, including the rights and obligations of such Partner under the
Limited Partnership Act and this Agreement.
"Managing Partner" means FSI or any other Person who becomes its successor.
"Partners" shall infer, collectively, to the Managing Partner and the
Partner. Reference to a "Partner" shall be to any one of the Partners.
"Limited Partnership" means the Limited Partnership subject to this
Agreement and the Certificate.
"Limited Partnership Act" means the Florida Uniform Partnership , as now or
hereafter amended.
"Option " means the Option to purchase the Second Hotel Site, attached
hereto as Exhibit B.
Person means any neural person, corporation, association or other legal
entity.
"Primary Hotel " means the first hotel to be developed, located in Dania,
Florida on real property, the legal description of which is attached hereto as
Exhibit "C".
"Primary Hotel Site' means the land on which the Primary hotel is to be
developed, located in Dania, Florida, legal description of which is attached
hereto as Exhibit "C".
"Second Hotel" means the second hotel to be developed, located in Dania;
Florida on real property, the legal description of which is attached hereto as
Exhibit "D".
"Second Hotel Site" means the land on which the Second Hotel is to be
developed, located its Dania, Florida, legal description of which is attached
hereto as Exhibit "D".
"State? means the State Florida.
"Transfer" means any sale, assignment, pledge, encumbrance, disposition or
outer transfer (or the sufferance of any of the foregoing to occur, whether
voluntarily or involuntarily, or by operation of law or otherwise.)
"Withdrawal." when used with reference to a Partner, shall occur upon (i)
the Transfer of such Partners Interest, (but not any assignment by a Partner of
its beneficial interest in airy fees or distributions due or which become due
to such Partner under this Agreement), provided however that R&S may assign its
interest to a successor, related, or affiliated entity, and a any such transfer
by R&S shall not constitute a withdrawal as defined herein or (ii) the
dissolution, liquidation or bankruptcy of such Partner. For purposes of this
definition, bankruptcy of a Partner shall be did to occur when such Partner is
voluntarily adjudicated a bankrupt or insolvent, or seeks, consents to or does
not contest the appointment of a receiver or trustee for itself or for all or
any part of its property, or files a petition seeking relief under the
bankruptcy, arrangement, reorganization or other debtor relief laws of the
United States or any state or in any other competent jurisdiction, or makes a
general assignment for the benefit of creditors, or admits in writing an
inability to pay his or its debts as they may mature, or a petition is filed
against such Partner seeking relief under the bankruptcy, arrangement,
reorganization or other debtor relief laws of the United States or any competent
jurisdiction, or a court of competent jurisdictions enters an order, judgment or
decree appointing, without the consent of such Partner, a receiver or trustee
for it or for all or any material part of its property, and such petition shall
not be dismissed or such order, judgment or decree shall not be discharged or
stayed within a Period of ninety (90) days after its entry. ?Withdrawn? means
the taking or suffering of any action. constituting a Withdrawal. "Withdrawn?
means having taken or suffered any action constituting a Withdrawal.
"Withdrawal" shall not include a permitted pledge oar encumbrance of a Partner's
interest in the Limited Partnership as collateral security for any loans made to
the Limited Partnership, directly or indirectly, by the pledgee.
Section 2.
Continuation: Name; Principal Office
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2.01 Continuation
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Upon the admission of the Partners into the Limited Partnership, the
Partners shall continue the Limited Partnership as a Limited Partnership
pursuant to the provisions of the Limited Partnership Act and other applicable
laws of the State. The Partners shall promptly amend the Certificate and such
other documents in such public offices in the State as shall be required under
the law of the State to give effect to the provisions of this Agreement and to
preserve the character of the Limited Partnership as a Limited Partnership.
2.02 Name.
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The Limited Partnership shall be conducted under the name RSTP HOTEL
LTD. or such other name as the Partners shad hereafter designate by amendment.
2.03 Principal Office.
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The principal office of the Limited Partnership shall be located at 00
Xxxxx Xxxxxxxx Xxxxx, Xxxxx Xxxxx, Xxxxxxx 00000.
Section 3.
The purposes of the Limited Partnership are (i) to purchase the land
described in Exhibit C hereto and made a part hereof pursuant to the Hotel Land
Purchase Agreement (ii) to develop the Primary Hotel, and Second Hotel, if
feasible, on the portion of the land described in Exhibit D hereto, and (iii) in
connection therewith to obtain all necessary government and regulatory
approvals, franchises and other activities as may be necessary or advisable in
connection with the development, management and disposition of the Primary and
Second Hotel.
Section 4.
Term
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The term of the Limited Partnership shall continue until December 31, 2016,
unless sooner terminated in accordance with the provisions of Section 15 hereof
or as otherwise provided bylaw.
Section 5.
Partners; Interests in the Limited Partnership:
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5.01 Partners
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The names and addresses of the Partners of the Limited Partnership are:
FSI
00 Xxxxx Xxxxxxxx Xxxxx
Xxxxx Xxxxx, Xxxxxxx 00000
The R&S Group
X/x Xxxxxx Xxxx Xxxxxxx xx Xxxxxxx, Inc.
0000 Xxxxx Xxxxxxxxx
Xxxxx Xxxxx
Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000
5.2 Capital Contributions of the Partners.
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PARTNER CAPITAL CONTRIBUTION
Each Partner shall contribute $5,000.00 to the capital of the
Partnership. R&S Group shall also contribute the necessary cross parking and
other easements necessary to develop the Sites as hotels in lieu of unity of
title.
5.3 Other Obligations of the Partners
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A. In addition to the capital contn'butioa afore mentioned, FST shall contribute
its efforts and know how to determine the feasibility of a IoW or hoWs at the
site and the appe;araace, size and location thereof, and use its best efforts a)
to obtain a franchise agreement with Marriott Hotels on terms acceptable to bath
partners; b} drain financing guilftcient far the development and construction of
tile hotel and for the irtfrastruct9tre necessary to bring sewer, water, other
ut, ingress arid egress, to tbc site: G) retain, and ads payment to, engineers
to prepare necessary plans and specifications for the ronstructiart of the
required infrastructure; d) retain, and advance payment to, an architect to
prepare drawings as shall be needed initially to obtain a franchise and
financing, and if successful, to prepare drawings for the construc:tian of the
hotel; e) retain,, ,with the approve! of the other Xxxxxx, a consrucxioa
contractor and err into a construction contract far the erection of the hotc3,
which approval will not be unreasonably witbhdd: #) retain an isrterior
designer, if necessary, for design of the interior of the hotel; axed S) acquire
the necessary 1fctrniture, fixtures and oquipnm and laadscsping for the hotel,
8. The obligations ofR 8c S in addition to the capital conttibution above set
Earth, shall be: a) to cause the title bolder to the Hotel Sites to cnta onto
cad perform a contract of sale of the hotel ate or sites to the l:.irrdted
Partnership, which contract shall be ire the form attached hereto a5 Exhibit A;
b) cause the title holder to sul~ecx the primary hotel site to the lien ofa
first mortgage to obtain the funds required to construct the necessary
infrastructure for the hotel site acid to construct; furnish and equip the
hotel, pursuant to plans and sins to be agrood upon by both Partners; and c) to
provide all necessary casements on the Krilich plat.
5.04 Loans by the Partners.
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In addition to the above specific; advances , FSI shall loan or cause to be
loaned to the Limited Partnership such sums as the Partners deem appropriate and
necessary for the conduct of the Limited Pat2uarship's business. Loans made bar
FSI shelf be due upon the closing of the Purchase Agreecne>2t for the Hotel
Land. Upon full payment of the Land Purchase Agrt. no fUrtler advances shall be
required. Either Partner tray ads say funds required at 2'%6 over LIBOR
5.05Franchise and Mortgage Obligations.
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In the event that within seven (7) months after the date hereof, a)
FSI does not obtain, a franchise a,natt for the prisraary hotel site with
hrlarriott International Inc. or such alternate franchise aSrecmerrt as shall be
agreeable to boot parts, which agreement shall not be unreasonably withheld, or
b) the Partnerstrip does not obtain a comnxittttent for financing of the
Priknary Rote! Site sufficient to pay all development expenses and tile cost of
erection of such hotel arid fixrniishang and fixtures thereof, this Partnership
shall terminate cad neither party sha11 bane any further obligation to the
other, except that R&8 shall repay PSI expanses as provided is Section 5.6
below, provided, however, that if FSI shalt undertake to advance any necessary
short fell, this agreement shall not termi,aaae. It is agreed that R&S will have
the right of approval of the temts and conditions of the mortgage, which
approval shall not be unreasonably withheld.
5.5 Development Expenses
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The parties acknowledge that R&S is, or has power of attorney to act
on behalf of, the owner of property of which the hotel site forms a part known
generally as the property described on the Krilich plats, copies of which plats
are attached hereto as Exhibits and R & S and FSI agree that it is to be the
obligation of each site on the plats to bear total infastructure costs
proportionally on a per square foot basis. It is antcipated that development of
the infastructure necessary for the hotel site itself will result in expenditure
of funds for improvements beneficial to the entire property. It is therefore
agreed that upon completion of the infrastructure for the entire site, a
determination shall be made of the appropriate share of the hotel site of such
infrastructure costs and, to the extent that the hotel site, through this
partnership, has paid funds in excess of the proprotionate share of this
partnership, said funds shall be repaid to the partnership . To the extent that
said funds were advanced by FSI and have not been repaid, the partnership shall
promptly repay FSI. To the extent that said funds were included in the
development and construction mortgage on the hotel sites the mortgage shall be
prepaid to the extent of such amount. The repayment required herein shall be
made at the earliest of the following: a) sale or lease of the first non hotel
lot located on the overall site; b) closing of the purchase agreement of the
Second Hotel Site; or c) five years after completion of the total development
work, excluding the placing of the final lift of asphalt on the streets in and
abutting the site where such streets are the responsibility of the developer.
The cost will be included in the overall determination of cost to be apportioned
shall include all on-site work, such off-site work as is necessary to bring
utilities to the site, all engineering costs, all impact costs, costs of all
permits, and plats of subdivision, if necessary, the improvement of all streets
required to be improved whether located on-site, off-site, or partially on-site,
and interest to the hotel partnersbip on the non botel portion of the cost. To
the extent that any street or utility work is performed off-site, the
partnership will use its best efforts to obtain an agreement for recapture of
such costs upon development of other property benefited by the improvements for
herein. R&S shall reimburse FSl for its loan to the Partnership for the
engineering expenses if the plans are approved and the Partnership does not
obtain financing or franchising acceptable to both Partners.
5.07 Capital Accounts
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A capital account shall be maintained for each Partner in accordance
with federal income tax accounting principals. The capital account of each
Partner shall be increased by (i) the amount of any cash and the fair market
value of any property contributed to the Limited Partnership by such Partner
(net of liability secured by such contributed property that the Limited
Partnership is considered to assume or take subject to); (ii) the amount of
Limited Partnership income and gain or items thereof allocated to such Partner;
and (iii) such Partner's prorate share (determined in the same manner as such
Partner's share of income gains, losses, deductions and credits) of any other
account received by the Limited Partnership during such year which is exempt
from federal income tax. The capital account of each Partner shall be reduced by
(i) the amount of money distributed to the Partner by the United Partnership;
(ii) the fair market value of property distributed by the Limited Partnership to
the Partner (net of liabilities secured by such distributed property that the
Partner is considered to assume or take subject to): (iii) the amount of Limited
Partnership losses and deductions or item thereof allocated to the Partner, (iv)
such Partners prorate share (determined in the same manner as such Partner's
share of income, gains, losses, deductions or credits) of any other expenditures
of the Limited Partnership which are reflected in the capital accounts.
Section 6
Rights and Duties ofthe Managing Partner
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6.01 Management of Limited Partnership Business.
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The Managing Partner shall be responsible for the management and control of
the Limited Partnership's business and shall devote so much of its time and
attention to the Limited Partnership as is reasonably necessary and advisable to
manage the affairs of the Limited Partnership. The FSI, or an affiliate of the
FSI shall manage the Primary Hotel, and Second Hotel if built, for a management
fee of five (5%) percent of gross hotel revenues pursuant to the Management
Agreement attached hereto as Exhibit E.
6.02 Specific Rights and Powers
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Among the rights and powers which the Managing Partner shall have are, by
way of illustration, but not by way of limitation, provided that such exercise
is reasonably consistent with the then applicable Annual Business Plan, the
following.
(i) to purchase, lease, exchange, trade or sell Limited Partnership
property at such price, rental or amount for cash, security or other property,
with the consent of the Limited Partner;
(ii) to execute and deliver, on behalf of the Limited Partenership all
documents as may be required to be executed and delivered as behalf of the
Limited Partnership in connection with the operation of the Primary Hotel and
Second Hotel;
(iii)subject to approval of R&S, to pay fees relating to the arrangement for any
financing,
(iv) subject to the approval of RCS, to borrow money for Limited Partnership
purposes and to refinance or modify any loan to the Limited Partnership,
provided, however, that R&S hereby agrees to subordinate the Primary Hotel Site
to a construction mortgage and permanent financing in the amount of 80% of the
total cost of the Primary Hotel, including 100% of the development costs,
working capital, and a reserve for contingencies;
(v) to invest funds of the Limited Partnership, including funds as reserves, in
certificates of deposit, interest bearing time deposits in state or national
banks. United States Government securities, bank repurchase agreements, bankers'
acceptances or money market funds.
(vi) to acquire, enter into, and pay for, any contract of insurance which it
reasonably deems necessary and proper for the protection of the Limited
Partnership, for the conservation of the assets of the Limited Partnership, or
for any purpose beneficialto the Limited Partnership, or the Partners,
including, without limitation, insurance for the purpose of enabling the Limited
Partnership to satisfy its obligation to indemnify the Partners under Section
6.04 hereof;
(vii) to bring or defend, pay, collect, or arbitrate, resort to legal action, or
otherwise adjust claimsor demands of, or against, the Limited Partnership;
(viii) tp establish reasonable reserve funds to provide for future requirements
of the Limited Partnership;
(ix) to perform or cause to be performed all of the Limited Partnership's
obligations under any agreement to which the Limited Partnership is a party,
(x) to loan, or cause to be loaned, funds to the Limited Partnership; and
(xi) to maintain the Limited Partnership's account records of all Partners, as
well as the books of account of the Limited Partnership
6.03 Annual Business Plan.
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No later than thirty 130) days prior to the end of the then current
Fiscal Year, the Managing Partner shall prepare a business plan (the "Annual
Business Plan") for the next Fiscal Year. No material changes or departures for
any item in an approved Annual Business Plan shall be made by the Managaing
Partner without the prior approval of all Partners. Each Annual Business Plan
shall include the following:
(a) A narrative description of any activities proposed to be undertaken: (b) A
projected annual income statement (accrual basis) on a quarter-by-quarter basis;
(c) A projected balance sheet as of the end of the period; (d) A schedule of
projected operating cash flow (including itemized operating revenues; Project
costs, and Project expenses) for such Fiscal Year on a quarter-by-quarter basis,
including a schedule of projected operating deficits, if any; (e) A marketing
plan indicating the portions of the Project that the Managing Partner recommends
be made available for lease and the proposed terms and conditions relating
thereto; (f) A description of any proposed construction and capital
expenditures, including projected dates for commencement and completion ofthe
forgoing; (g) A development schedule identifying the projected development
periods as well as the times for completion of the various stages of thee
Project and the costs attributable to each such stage; (h) A description of the
proposed investment of any funds of the Partnership which are (or are expected
to become) available for investment (i) A description, including the identity of
the recipient (if known) and the amount and purpose, of all fees and other
payments proposed or expected to be paid for professional services and, if a fee
or payment exceeds $10,000.00, for other services rendered to the Partmership by
third parties; and (j) A detailed. description of such other information, plans,
maps, contracts, agreements, or other matters necessary in order to inform the
Partners of all matters relevant to the development, operation, management, and
sale of thee Project or any portion thereof.
6.04 Implementation of Plan by the Managing Partner
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The Managing Partner shall, subject to the limitations contained
herein and the availability of operating revenues and other cash flow (as long
as the Managing Partner has used reasonable efforts to maximize the same),
implement the then applicable Annual Business Plan. The Managing Partner shall
promptly advise and inform the Partners of any transaction, notice, event, or
proposal directly relating to the management and operation of the Project which
does or could significantly affect, either adversely or favorably, the Project
or the Partnership or cause a significant deviation from the Annual Business
Plan.
6.05 Other Business Ventures
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Any Partner or any officer, director, employee, shareholder or other person
holding a legal or beneficial interest in any entity which is a Partner, may
engage in, or possess as interest in, other business ventures of every nature
and description, independently or with other, including, but not limited to,
acquisition, ownership, operation and sale of hotels or motels, other commercial
real estate, and neither the Limited Partnership nor the Partners shall have any
right by virtue of this Agreement or the relationship created thereby in or to
such independent ventures or to the income or profits derived therefrom.
Nether Xxxxxx Xxxxxxx, R&S Group, or any Affliate, shall develop, or sell
for development, as a hotel or motel, any portion of the Krilich Plat, during
the Option period for the Second Hotel Site. If the Partnership does not
exercise its Option to purchase and develop the Second Hotel Site as a hotel,
and does not develop two hyundred rooms in the agregate between the Primary and
Second Hotel Site, Xxxxxx Krltich, R&S Group, or an Affiliate may develop, or
sell for development, as a Hotel with no more than one hundred and fifty rooms,
a portion of the Krilich Plaat. The no additional Motels shall be developed on
the Krilich Plat without the consent of FSI, so long as FS1 is a Partner in the
Partnership,
Neither Partner, Xxxxxxx Xxxxxx or Xxxxxx Xxxxxxx or an Affiliate or any
entity in which they directly or indirectly, hold an interest, may own or manage
a hotel within two miles of the Prlnrary Hotel Site without the consent of the
other Partner, accept as set forth above, during the period that the Partner is
a Partner in this Limited Partnership. FSI ownership an management of the
Comfort Inn and Hampton Inn & Suites (and their successor hotels, if any) are
expressly excluded from this prohibition.
Section 7.
Property Management Expenses
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7.01 Management.
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The Managing Partner shall be responsible for the management of the
day-to-day operations of the Limited Partnership. The Managing Partner may
employ other parties, including Affiliates, to assist it in the performance of
such obligations, provided that the amounts paid to any affiliated parties shall
be no greater than the amount customarily charged in arms-length transactions by
others rendering similar services at comparable facilities.
7.02 Expenses.
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Except as otherwise provided herein, the Limited Partnership shall pay all
expenses of its operations (which expenses either may be billed directly to the
Limited Partnership or reimbursed to the Partners or their Affiliates) which may
include, but are not limited to:
(i) all costs of borrowed money and taxes applicable to the Limited Partnership;
(ii) all costs for goods and materials, whether purchased by the Limited
Partnership directly or by the Partners on behalf of the Limited Partnership;
(iii) legal, audit, accounting and other professional fees;
(iv) fees and expenses paid to independent contractors, mortgage bankers,
brokers and services, leasing agents, consultants, real estate brokers,
insurance brokers and others;
(v) expenses of organizing, revising, amending, converting, modifying or
terminating the Limited Partnerhip;
(vi) expenses in connection with distributions made by the Limited Partnership
to, and communications and bookkeeping work necessary in maintaining relations
with, Limited Partners, including the cost of printing and mailing to such
persons notices and reports of matters pertaining to the Limited Partnership;
(vii) costs of any accounting, statistical or bookkeeping eqwuipment necessary
for the maintainance of books arid records of the Limited Partnership;
(viii) costs incurred in connection with any litigation in which the Limited
Partnership is involved, as well as in the examination, investigation or other
proceedings conducted against the Limited Partnership by any regulatory agency,
including legal and accounting fees incurred in connection therewith; and
(ix) costs of any computer services or equipment or of services of personnel
uses for or by the Limited Partnership.
Section 8.
Allocations.
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8.01 General Rule.
Income, gain, loss, depreciation, deduction or credit of the Limited Partnership
shall be allocated fifty (50%) percent to each Partner, in accordance with tax
accounting principles applied in a consistent manner.
8.02 Allocation on Sale or Disposition.
Gain or loss on the sale or other disposition of Limited Parlnasbip property
shall be allocated fifty (50%) percent to each Partner.
Section 9.
Distributions.
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9.01 Cash Flow Distributions.
Except as provided in Section 9.02, distributions of Distributable Cash,
except proceeds of refinancing, shall be as follows:
(a) First, interest on the Hotel Land Purchase Agreernent will be paid ;
(b) Second, an amount equal to 20% of the net profits of the Partnership,
equally to each Partner;
(c) Third, 70% of the remaining Distributable cash will then be distributed to
the Seller of the Hotel Land and reduce the amount owing on the Hotel Land
Purchase Agreement;
(d) Fourth , the remaining 30% of the Distributable Cash will then be
distributed to FSI to the extent of advances made by FSI to the Partnership;
and;
(e)Fifth, to the extent the 30% distributable to FS1 in repayment of advances
exceeds the advances made by FS1, such excess shall be distributed fifty (50%)
percent to each Partner.
(f) It is agreed that until payment has been made for the land, reserves of the
hotel company shall not exceed 2% of gross income the first year, 3% the second
year, 3% the third year, and 4% the fourth year.
EXAMPLE:
For exaple, assume the outstanding amount on the Hotel Purchase Agreement
was $1,300,000.00, the FS1 had advanced $50,000.00, and the gross income of the
Partnership was $2,000,000 for the first year. The anticipated net operating
income would then be 8,000,000.00, reduced by the construction mortgage payments
of an assumed $400,000.00. which would constitute the net partnership income,
which would be reduced by the capital improvement reserve in the amount of
$40,000.00, leaving Distributable Cash in the amount of $360.000.00. Interest
would then be paid on the outatand%ng purchase price of $1,300,000.00 in the
amount of $75,000.00. Next, the R&S Group and FSI would each be distributed
$20,000.00 (20% of net partnership income, divided equally), leaving
$245,000.00, which would then be distributed 70% to the Land Owner in the amount
of $171,500.00 in reduction of the purchase price (reducing the outstanding
Purchase Price to $1.047,500.00 end 30% to the FSI to the extent of its advances
(in this example $73,500.00 would be available for distribution to the FSI, but
the advances were only $50,000.00 thus $50,000.00 would be distributed to the
FSI, leaving $23,500,00 to be distributed equally, $11,750.00 each to R&S Crioup
and the FSI.
9.02 Liquidating Distributions.
-------------------------------
The net cash proceeds of a sale, exchange or otber disposition of all or
substantially all of the Limited Partnership's assets constituting a dissolution
of the Limited Partnership shall be applied as fcAows:
(i) to payment of debts and liabilities of the Limited Partnership and
the expenses of liquidation;
(ii) to the payment of the balance of the Land Contract and the payment of
Advances proportionately;
(iii) to the setting up of such reserves as the person required by law to wind
up the Limited Partnership's affairs may reasonably deem necessary for any
contingent liabilities or obligations of the Limited Partnership, the balance of
such reserves, if any, to be distributed as hereinafter provided: and
(iv) then, the balance to the Partners equally in accordance with the positive
balances of the Capital Accounts, as adjusted for any gains or losses resulting
from such liquidating sale, exchange or other disposition as required by
Paragraphs 5.02 and 8.02.
Section 10.
Restrictions on disposition of Interests.
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10.01 Generally
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Other than a transfer to an Affiliate, except as otherwise expressly
provided in this Section 10, a Partner shall not Transfer all or any part of
such Partner's Interest, or any rights therein, to any other Person, whether or
not a Partner, unless the Transfer is effected in compliance with the following
conditions:
(a) the Transfer shall be set forth in a written instrument in form and
substance acceptable to legal counsel for the Limited Partnership, which
provides for the payment by the parties to the Transfer of all reasonable
expensese inccured by the Limited Partnership in connection with the transfer,
including but not limited to the cost of obtaining opinions of legal counsel;
(b) the written consent of the remaining Partners.
10.2 Transfer of Decedent's Interest,
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The Interest of a Partner who has died shall be assigned, at the request of
the decedent's duly qualified personal representative. subject to the
restrictions set forth in Section 10.03, to the person entitled to distribution
of the decedent's Interest under the terms of the decedent's wi1l or, if the
decedent died without a will, under the applicable intestacy statute, upon (i)
full compliance with all of the conditions set forth in Section 10.06, other
than clause (ii) thereof, (ii) delivery to the Managing Partner by the personal
representatives of waivers, release and other documents required by applicable
law, and (iii) if requested by the Managing Partner, delivery to the Managing
Partner of an opinion of counsel acceptable to the Partners to the effect that
such person is the proper beneficiary of the decedent's Interest, supported by
such assurances and documentation as the Managing Partner may, in its
discretion, require. Such represenattive shall not become a Partner without the
written consent of the other Partner.
10.03 Prohibited Transfer.
--------------------------
Any purported Transfer of an Interest otherwise than in accordance with
this Section 10 shall be of no effect as between the Limited Partnership and the
purported transferee anl shall be unenforceable as against the Limited
Partnership and the Partners. The Partners shall not be charged with actual or
constructive notice of any such Transfer and the Partners are expressly
prohibited from making allocations and distributions under this Agreement in
accordance with any such purported Transfer.
10.4 Buy and Sell Agreement
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The Partners shall have the rights of purchase and sale provided by this Section
10.4, to be exercised by delivering a notice (an "Election Notice"). The Partner
giving Election Notices as provided herein is referred to as the "Electing
Partner," and the Partner receiving the Election Notice is referred to as the
"Notice Partner.".
(a )Invocation of Buy-Sell Procedure. Commencing one year after the Primary
Hotel opens for business either Partner may, at any time, invoke the Buy-Sell
Procedure. This buy-sell procedure may be invoiced by the giving of a single
written Election Notice to the other Partner. Such Election Notice, to be valid,
shall state an amount (the "Stated Amount") to be used as the aggregate Gross
Asset Value of the Partnership Property in computing the Net Equity of the
Partnership's Interest, shall be given to the Notice Partner, accompanied by an
Xxxxxxx Money Deposit in the amount of $5% of the Net Equity to he held in a
joint direction interest bearing account by Escrow Agent, which shall be
Attorneys Title Insurance Fund, Inc.,
(b) Effect of Election Notice; Buy-Sell Price. An Election Notice shall
constitute an irrevocable offer by the Electing Partner either to (1) purhase
all, but not less than all, of the Interests of the Notice Partner. or (2) sell
all, but not less than all, of the Interests to the Notice Partner. The price at
which the Interest of any Partner is purchased and sold under this Section 10.4
(the "Buy-Sell Price" of such Interest) is the Net Equity thereof; determined as
of the Election Day ( the date of the Notice Election), as set forth in the
Election Notice.
(c) Notice Partner's Election to Purchase or Sell. For a period (the
"Election Period") ending at 11:59 P.M. (local time at the Partnership's
principal place of business) on the one hundred and eightieth day following the
Election Day, the Notice Partner shall have the right to elect to purchase the
Interest of the Electing Partner by giving Notice in writing to the Electing
Partner, accompanied by an Xxxxxxx Money Deposit in the amount of 5% of the Net
Equity, to be held in an interest bearing account by Escrow Agent, prior to the
termination of the Election Period. If the Notice Partner properly elects to be
the Purchasing Partner, the Electing Partner's Xxxxxxx Money Deposit, and
interest thereon, shall be released to him by the Escrow Agent forthwith. If the
13
Notice Partner does not timely elect to purchase the Interest of the Electing
Partner, the Notice Partner shall become a "Selling Partner" and still be
obligated to sell its Interest to the Purchasing Patner.
(d) Terms of Purchase; Closing. The Closing of the purchase and sale of the
Selling Partner's interest shall occur on a date and time mutally agreeable to
the Purchasing Partner and the Selling partner, which shall not be later than
10:00 A.M. (local time at the place of the closing) on the first Business Day
occurring on or after the ninetieth day following the last day of the Election
Period, and at such place as is mutually agreeable to the Purehasing Partner and
the Selling Partner, or upon the failure to agree, at the principal place of
business of the Partnership or the Purchasing Partner's lender, provided said
Lender's. office is in Broward or Dade County, Florida. At the closing the
Purching Partner shall pay to the Selling Partner, by cash or other immediately
available finds, the Buy-Sell Price for which such Purchasing Partner is liable,
and the Selling Partner shall deliver to each Purrhasing Partner good title,
free and clear of any liens, claims, encumbrances, security interests, or
options (other than those created by this Agreement), to the Selling Partner's
Interest thus purchased. At the closing the Partners shall execute such
documents and instruments of conveyance as may be necessary or appropriate to
effectuate the transactions contemplated hereby, including, without lien, the
Transfer of the Interest of the Selling Partner to the Purchasing Partner and
the assumption by each Purchasing Partner of each Selling Partner's obligations
with respect to the Selling Partner's Interest transferred to ,such Purchasing
Partner. The reasonable costs of such Transfer and closing, including, without
limitation, filing fees, shall be divided equally between the Selling Partner
and the Purchasing Partner. Each Partner shall pay its own attorneys' fees. If
the Purchasing Partner defaults on the Purchase of Selling Partner's Interest,
the Xxxxxxx Money, including interest thereon, shall be released to the Selling
Partner. If the Selling Partner defaults on its obligations to sell its Interest
to the Purchasing Partner, the Purchasing Partner slall be entitled to specific
performance and injunctive relief without posting a bond therfor.
(e) If the Electing Partner is the R&S Group, such election shall not accelerate
the due date of thee Hotel Land Purchase Agreement. If FS1 becomes the
purchasing Partner, then the amount outstanding on the Land Purchase Agreement
Shall accelerate and become due on the date of payment for the Selling Partner's
Interest. If the Purchasing Partner is the R&S Group, the R&S Group shall cause
FS1 to be removed as Guarantor of any or all mortgages, leases or other
financing arrangements concerning the Partnership as a condition of the election
on or before time time of Closing.
10.05 Indemnification.
----------------------
Each Partner shall, to the full extent permittied by law, indemnify and
hold harmless the Limited Partnership, and every remaining Partner who was or is
a party or is threatened to be made a party to any threatened, pending or
oompleted action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason or arising from any actual or alleged misrepresentation
or misstatement of fact or omission to state any fact made (or omitted to be
made) by such Partner in connection with any transfer of all or any part of his
interest or the admission of a substitute Partner to the Limited Partnerrship,
against all liabilities, losses, costs, damages and expenses such as shall have
been actually and reasonably incurred in connection with such action; suit or
proceeding and such as shall have been actually and reasonably incurred in
enforcing this indemnity.
14
10.06 Requirements for Substitution
-----------------------------------
No transferee of the whole or any portion o_f a Partner's Interest shall
become a substitute Partner in place of his transferor unless all of the
following conditions are satisfied:
(i)The written consent of the remaining Partners to the substitution, which may
be withheld without cause is given;
(iii) the duly executed and acknowledged written instrument of transfer which
has been filed with the Limited Partnership sets forth the intention of the
transferor that the transferee become a substitute Partner"
(iii) the transferor and transferee execute and acknowledge such other
instruments as the remaining Partners may deem necessary or desirable to effect
such admission; including the written acceptance and adoption by the transferee
of the provisions of this Agreement; and
(iv) all other requirements set forth herein to the making of any Transfer of
all or any part of an Interest, including without limitation those set forth in
Sections 10.01 and 10.02 have been satisfied.
I0-07 Amendment to Certificate.
----------------------------------
The Managing Partner is required to amend the Certificate of Limited
Partnership annually as reqwuired. Until the Certificate of Limited Partnership
is so amended, an assignee shall not become a substitute Partner.
10.08 Partner's Bankruptcy, Insolvency, etc.
--------------------------------------------
Upon the bankruptcy,insolvency, dissolution or other cessation to exist as
a 1ega1 entity of a Partner which is not an individual, the authorized
representative of such shall have all the rights and obligations of such Partner
and such power as such entity possessed to Transfer its Interest in the Limited
Partnership and to join with such transferee in making application to substitute
such transferee as a Partner. Such representative shall not become a Partner
without the consent of the remaining Partner.
10.09 Void Transfers.
---------------------
Any Transfer of an Interest, or any part thereof in contravention of any of
the provisions of this Ageement shall be null and void and shall not bind the
Limited Partnership or the Partners.
10.10 Vote of Psartners
-----------------------
In the event a vote of the Partners shall be taken pursuant to this
Agreement for any reason, a Partner shall be taken any Interest properly
transferred by him in respect of which the transferee has not become a
sugbstutute Partner.
15
Section 11
Books, Records,Accounting and Reports
-------------------------------------
11.01 Availability.
-------------------
At alt times during the existence of the Limited Partnership, the Managing
Partner shall keep or cause to be kept full and true books of account in
accordance with the accounting method followed by the Limited Partnership for
Federal income tax purposes
Such books of accounts, together with a copy of this Agreement and any
amendments thereto shall be maintained at the principal place of business of the
Limited Partnership. Any Partner or his or its duly authorized representative
shall have the rigbt at any time to inspect and copy from such books and
documents during normal business hours upon reasonable notice.
11.02 Reports
-------------
(a) The Managing Partner shall have prepared at least once annually, at the
expense of the Limited Partnership, documents containing:
(i) Form 1065 and Internal Revenue Service Form K-1 or similar form as may be
required by the Internal Revenue Service stating the Partner's allocation of
income, gains, losses, deductions or credits for the Fiscal Year.
(ii) a statement of net cash flow;
(iii) annual reviewed financial statements consisting of balance sheet,
statements of income and expense, changes in Partners' capital and changes in
financial position, provided , however, that the Managing Partner shall cause to
be prepared a certified financial statement for the year in which the
construction of the hotel is completed; provided further that the Managing
Partner will obtain a certified financial statement, at the Limited Partner's
expense (unless the certified financial statement reveals a verified discrepancy
in gross revenues or gross expenses of more that 2% unconnected to the
Management Company's report, in which event the cost of the certified financial
statement shall be borne by thee Managing Partner), if so requested;
Discrepancies arising from accounting procedures shall not be considered a
deviation.
(iv) such outer information as is necessary for the preparation by the Partners
of their federal, state and local or other tax returns. Docuuamts prepared
pursuant to subsection (i), (ii) and (iii) hereof will be distributed as soon as
practicable after the close of each Fiscal Year; and
(v) The Managing Partner shall provide quarterly profit and loss statements to
the Partners.
(b) The Managing Partner, at the expense of the Limited Partnership, will cause
to be prepared and timely filled with appropriate federal and state regulatory
and administrative bodies, all reports required to be filed with such entities
under the current applicable laws, rules and regulations. Such reports will be
prepared on the accounting or reporting basis required any such regulatory
bodies. Each Partner will be provided with a copy of any such report without
16
expense to him. The Managing Partner will cause all tax and information returns
for the Limited Partnership to be prepared and timely filed with the appropriate
authorities.
Section 12
Bank Accounts
-------------
All funds of the Limited Partnership are to be deposited in the Limited
Partnership's name in such bank account or accounts as may be designated by the
Managing Partner and shall be withdrawn on the signature of a Managing Partner,
or such other Person or Persons as the Managing Partner may authorize,, subject
to the approval of R&S, which approval shall not be unreasonably withheld.
Section 13
Meetings, Amendments
--------------------
13.01 Meetings.
---------------
(a) A Partner may at any time call a meeting of the Partners upon ten days
written notice or call for a vote of the Partners without a meeting for any
purpose authorized under the Limited Partnership Act or this Agreement. If no
meeting has been called a Partner shall notify all Partners of the Matter or
matters to be voted upon and the date upon which the votes will be counted. Any
LLimited Partnership meeting or the date upon which such votes, without a
meeting, will be counted shall be no less than ten (10) nor more than sixty (6O)
days following mailing of the notice thereof by the noticing Partner. All
expenses of the voting and such notification shall be borne by the Limited
Partnership. The Managing Partner shall preside over any such meeting.
(b) Each Partner shall be entitled to cast one vote at the meeting in the
following manner
(i) at a meeting, in person, by written proxy or by a signed writing directing
the manner in which such Partner desires that his vote be cast, which writing
must be received by the Managing Partner prior to such meeting: or
(ii) without a meeting by a signed writing directing the manner in which such
Partner desires that his vote be cast, which writing must be received by the
Managing Partner prior to the date upon which the votes of Partners are to be
counted.
Only the votes of Partners of records on the date that the Partner gives the
Partners notice of the vote, whether at a meeting or otherwise, shall be
counted. The laws, rules and regulations of the State pertaining to the validity
and use of corporate proxies shall govern the validity and use of proxies given
by the Partners.
(c) No Partner shall have the right or power to:
17
(i) withdraw or reduce its contribution to the capital of the Limited
Partnership except as a result of the dissolution of the Limited Partnership or
as otherwise provided by law or this Agreement;
(ii) cause the dissolution and termination of the Limited Partnership by court
decree or otherwise, except as set forth in this Agreement
13.02 Amendments.
(a) The Partners shall submit to the Partners the text of any proposed amendment
to this Agreement and any Statement by the proposer thereof and any Statement by
the proposer thereof relating thereto. The Partners may include in any
submission the Partners' views as to the proposed amendment. Subject to the
provisions of Section 10.02 hereof, any such proposed amendment shall be adopted
if, within ninety (90) days after the submission thereof to the Partners,
Partners owning seventy-five (75)% percent or more of the Units shall have
consented thereto, provided such amendment is not for the purpose of the
reduction of the rights or interests, or enlargement of the obligations, of the
Partners and, provided, however, that this subparagraph shall not be applicable
with respect to the addition or substitution of Partners of the reduction of
Capital Accounts upon the return of capital to the Partners. The effective date
of an amendment pursuant to this Section 15.02 shall be the date of which the
required consents shall have been given. Any proposed amendment which is not
adopted may be resubmitted, by not more than once every six (6) months.
Section 14.
14.01 Death, Insanity, Bankruptcy, Withdrawal or Expulsion of the General
--------------------------------------------------------------------------------
Partner
-------
In the event of the death, insanity, bankruptcy, withdrawal or expulsion of
the General Partner, the Partnership shall terminate unless the Limited Partner
elects to apoint a new General Partner.
14.02 Events Causing Dissolution
--------------------------------
The Limited Partnership shall be dissolbed upon the occurrence of any of
the following events:
(i) The written consent or affirmative vote to dissolve the Limited Partnership
by Partners owning more that (50%) percent of the Interests;
(ii) The disposition of all or substantially all of the Limited Partnership's
assets;
(iii) The expiration of the Limited Partnership term pursuant to Section 4
hereof; and
(iv) The happening of any other event causing the dissolution of the Limited
Partnership under the laws of the State.
18
14.03 Liquidation of Assets and Application of Proceeds
-------------------------------------------------------
(a) Upon the dissolution of the Limited Partnership, the Managing Partner (or
such other person required by law to wind up the Limited Partnership;s
affairs)shall liquidate and reduce to cash the Limited Partnership Assets as
promptly as is consistent with obtaining the fair value thereof in accordance
with the provisions of Section 9.02 hereof. In connection with any such winding
up and liquidation, the books and records of the Limited Partnarship shall be
closed as of the date of dissolution, and a report shall promptly be furnished
to all Partners.
(b) For purposes of this Section 14.03 to the extent that depreciation or
amortization deductions takern by a Partner shall cause a deficit in such
Partner's capital amount, such deficit to the extent of the amount of any
depreciation or amortization so taken shall not be deemed an assest of the
Limited Partnership or the personal liability of such Partner.
Section 15.
Miscellaneous.
--------------
15-01 Notices
-------------
Except as otherwise provided herein, all notices, demands, requests,
consents, or other communications required or permitted to be given or made
under this Agreement shall be in writing (including telex, telefax and
telegraphic communication) and shall be (as elected by the party giving notice)
either mailed by first class, certified mail, return receipt requested, hand
delivered, or by overnight Carrier to the party to whom such communication is
addressed. Notice shall be effective (i) on the date delivered if by personal
delivery, (ii) on the date telecommunicated if by telegraph or by telefax with
confirmed answer back and (iv) on the date upon which the return receipt is
signed or delivery is refused or the notice is designated by the postal
authorities as not deliverable, as the case may be, if by mail. Such
communications shall he addressed to the address set forth in this Agreement or
any other address of which prior written notice has been given to the Managing
Partner.
15.02 Serverability.
--------------------
Each provision hereof is intended to be severable and the invalidity or
illegality of any portion of this Agreement shall not effect the validity or
legality of the remainder hereof,
15.03 Captions.
---------------
Paragraph captions contained in this Agreementt are inserted only as a
matter of convenience and for reference and in no way deface, limit or extend or
describe the scope of this Agreement or the intent of any provision hereof
15.04 Person and Gender.
------------------------
The masculine gender shall include the feminine and neuter genders, the
singular shall include the plural.
15.05 Binding Agrement
----------------------
Subject to the restrictions on assignment herein contained, and provisions
of this Agreement shall be binding upon, and inure to the benefit of the
successors, assigns, personal representatives, estates, hers and legatees of the
respective Partners.
15.06 Applicable Law.
---------------------
Notwithstanding the place where this Agreement may be executed by any of
thee parties hereto, the parties expressly agree that all the terms and
provisions hereof shall be construed under the laws of this state. To the extent
permitted by governing law, this Agreement shall control over provisions of the
Limited Partnership Act which are inconsistent with the provisions of this
Agreement..
15.07 Entire Agreement
----------------------
This Agreement constitutes the entire agreement of the parties hereto with
respect to the matters set forth herein and supersedes any prior understanding
or agreement, oral or written, with respect thereto.
15.08 Agreement in Counterparts
-------------------------------
This Agreement may be executed in several counterparts and all so executed
shall constitute aon Agreement, binding on all the parties hereto,
notwithstanding that all the parties are not signatories to the original or thee
same counterpart.
IN WITNESS WHEREOF, the parties hereto have entered into and sworn to this
Agreement as of the date first above written.
WITNESS
_________________ Fairdan Suites, Inc.,
a Florida corporation
_________________ by /s/Xxxx Xxxxxx
--------------
Xxxx Xxxxxx,
President
_________________ The R&S Group
_________________ by_________________
Subject to the restrictions on assignment herein contained, and provisions
of this Agreement shall be binding upon, and inure to the benefit of, the
successors, assigns, personal representatives, estates, heirs and legatees of
the respective Partners.
15.06 Applicable Law. .
--------------------------------------------------------------------
Notwithstanding the place where this Agreement may be executed by any of
the parties hereto, the parties expressly agree that all the terms and
provisions hereof shall be construed under the laws of this State. To the extent
permitted by governing law, this Agreement shall control over provisions of the
Limiter Partnership Act which are inconsistent with the provisions of this
Agreement.
15-07 Entire Agreement.
----------------------
This Agreement constitutes the entire agreement of the parties hereto with
respect to the matters set forth herein and supersedes any prior understanding
or agreement, oral or written, with respect thereto.
15-08 Agreement in Counterparts.
-------------------------------
This Agreement may be executed in several counterparats and all so executed
shall constitute on Agreement, binding on all the parties hereto,
notwithstanding that all the parties are not signatories to the original or the
same counterpart.
IN WITNESS WHEREOF, the parties hereto have entered into and sworn to this
Agreement as of the date first above written.
WITNESS
______________ TG Group
______________ by_____________________
______________ The R&S Group
______________ by /s/Xxxxxxx Xxxxxxx
------------------
Xxxxxxx Xxxxxxx
Director