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Exhibit 10.41
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR THE REDACTED
PORTIONS. THE CONFIDENTIAL REDACTED PORTIONS HAVE BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS
DENOTE SUCH REDACTIONS.
AMENDED AND RESTATED AGREEMENT
OF LIMITED
PARTNERSHIP
of
HHR EURO CV
Dated as of December 8, 2006
TABLE OF
CONTENTS
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PAGE
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ARTICLE 1
G ENERAL P ROVISIONS
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1
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2
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3
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4
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6
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ARTICLE 2
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M ANAGEMENT AND O PERATIONS OF THE P
ARTNERSHIP
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ARTICLE 3
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I NVESTMENTS
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ARTICLE 4
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E XPENSES
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ARTICLE 5
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C APITAL C OMMITMENTS AND C APITAL C
ONTRIBUTIONS
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ARTICLE 6
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D ISTRIBUTIONS ; A LLOCATIONS ; C APITAL A CCOUNTS
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45
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ARTICLE 7
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R EPORTS TO L
IMITED P ARTNERS ; O PERATIONAL A UDIT
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56
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ARTICLE 8
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I NDEMNIFICATION
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PAGE
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ARTICLE 9
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D URATION AND D ISSOLUTION OF THE P
ARTNERSHIP
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60
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ARTICLE 10
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T RANSFERABILITY OF A P ARTNER
’ S I NTEREST ;
W ITHDRAWAL BY
A P ARTNER
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64
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ARTICLE 11
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M ISCELLANEOUS
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iii
iv
AMENDED AND
RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
HHR EURO CV
AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP dated as
of December 8, 2006 (this " Agreement ") of HHR Euro CV
(the " Partnership ").
WITNESSETH:
WHEREAS, the parties are party to that certain Agreement of
Limited Partnership dated as of March 24, 2006 (the "
Original Partnership Agreement "), as amended by that
certain First Amendment to Agreement of Limited Partnership dated
as of July 21, 2006 (" Amendment No. 1 ") and that
certain Second Amendment to Agreement of Limited Partnership dated
as of December 8, 2006 but effective July 21, 2006 ("
Amendment No. 2 ");
WHEREAS, the parties desire to enter into this Agreement to
continue the Partnership and to make certain amendments to the
Original Partnership Agreement, including to Schedule A (Capital
Commitments) and to certain other provisions, including those
relating to the governance of the operations of the Partnership;
and
WHEREAS, HST GP Euro B.V., a private company with limited
liability ( besloten vennootschap met beperkte
aansprakelijkheid ) with its corporate seat in Amsterdam, The
Netherlands, is the general partner of the Partnership.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1
G ENERAL P ROVISIONS
Section 1.01 . Definitions; Interpretation.
(a) Capitalized terms used herein without definition have the
meanings assigned to them in Appendix A hereto.
(b) In construing this Agreement, unless otherwise
specified:
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(i) references to sections, parties, schedules
and recitals are to sections of, and the parties,
schedules and recitals to, this Agreement;
(ii) use of any gender includes the other genders;
(iii) words denoting the singular include the
plural and vice versa;
(iv) a reference to any statute or statutory provision shall be
construed as a reference to the same as it may have been, or may
from time to time be, amended, modified or re-enacted;
(v) a reference to a date which is not a Business Day is to be
construed as a reference to the next succeeding Business Day;
(vi) a reference to an agreement or other document is a
reference to that agreement or document as supplemented, amended or
novated from time to time;
(vii) headings and titles are for convenience only and do not
affect the interpretation of this Agreement;
(viii) the rule known as the ejusdem generis rule shall
not apply and accordingly general words introduced by the word
"other" shall not be given a restrictive meaning by reason of the
fact that they are preceded by words indicating a particular class
of acts, matters or things;
(ix) general words shall not be given a restrictive meaning by
reason of the fact that they are followed by particular examples
intended to be embraced by the general words (and accordingly
"including" means including without limitation); and
(x) references to "writing" include fax transmission and,
include email and similar electronic means of communication.
Section 1.02 . Partnership Name. The name of the
Partnership is HHR Euro CV.
Section 1.03 . Seat. (a) The seat of the
Partnership will be located in Amsterdam, The Netherlands. To the
extent necessary, the parties declare that when the Partnership was
formed, the center of its external activities ( centrum van
optreden naar buiten ) was located in the Netherlands.
(b) The address of the Partnership and of the General Partner
shall be Rokin 55, 1012 KK Amsterdam, The Netherlands, or such
other place in The Netherlands as the General Partner shall
determine in its discretion. If the General Partner shall determine
to change its business address, it shall notify the Limited
Partners in advance in writing.
Section 1.04 . Formation of the Partnership. The
parties hereby agree to continue the Partnership as a limited
partnership ( commanditaire vennootschap ) under and
pursuant to Dutch law. This Agreement amends and restates the
2
Original Partnership Agreement, as amended by
Amendment No. 1 and Amendment No. 2. Legal title to
assets of the Partnership shall be formally held (
goederenrechtelijk ) by the General Partner for the benefit
of all the Partners. All Partners are beneficially entitled to the
assets. This Agreement is to be construed such that the Partnership
does not qualify as an open limited partnership ( open
commanditaire vennootschap ) as defined in article 2, paragraph
3, sub c of the General Tax Act ( Algemene wet inzake
rijksbelastingen ). The Partnership is a closed limited
partnership ( besloten commanditaire vennootschap ) for
Dutch tax purposes.
Section 1.05 . Purposes of the Partnership. The
purposes of the Partnership are (a) to identify potential
Partnership Investments, (b) to acquire, improve, maintain,
hold, operate, manage, supervise, lease, finance, mortgage, pledge,
exchange, divide, combine, sell, transfer, convey, assign, grant
options with respect to, dispose of or otherwise deal in and
transact business with respect to Partnership Investments,
(c) pending utilization or disbursement of funds, to invest
such funds in accordance with the terms of this Agreement,
(d) to participate in and to otherwise acquire or maintain an
interest in the management of other business enterprises that deal
in and transact business with respect to Real Estate Assets,
(e) to provide financing to affiliates and third parties in
connection with Real Estate Assets, (f) to provide security,
guaranty or otherwise undertake the obligations of third parties in
connection with Real Estate Assets, and (g) to conduct all
activities which are incidental to any of the foregoing. The
Partnership shall have the power to do any and all acts necessary,
appropriate, desirable, incidental or convenient to or for the
furtherance of the purposes described in this Section 1.05,
including any and all of the powers that may be exercised on behalf
of the Partnership by the General Partner pursuant to this
Agreement.
Section 1.06 . Liability of the Partners Generally.
(a) The General Partner shall have unlimited liability to
third parties for any and all liabilities of the Partnership as its
general partner ( beherend vennoot ). All obligations of the
Partnership to third parties shall be in the General
Partner’s name.
(b) Except as otherwise provided in this Agreement or under the
CV Law, no Limited Partner (or former Limited Partner) shall be
obligated to make any contribution to the Partnership or have any
liability for the debts and obligations of the Partnership.
(c) The General Partner shall at all times act in good faith and
in the best interests of the Partnership. In managing the affairs
of the Partnership, subject to the rights of the Limited Partners,
and in its dealing with the Limited Partners, the General Partner
shall be subject to the standard of care a general partner is
required to use with respect to a limited partnership and its
limited partners under the CV Law, which standard of care shall
include: (a) a duty of loyalty, which requires the General
Partner to carry out its responsibilities with
3
loyalty, honesty, good faith and fairness toward
the Partnership and the Limited Partners and (b) a duty of
care, which requires the General Partner to discharge its duties
with the diligence, care and skill that a general partner would be
required under the CV Law to exercise under similar circumstances,
including actions with respect to the safekeeping of and use of all
funds, assets and records of the Partnership. Unless expressly
stated otherwise, the standard of performance applicable to the
General Partner as set forth in this Section 1.06(c) shall be
applicable to the General Partner in performing its obligations
under each provision of this Agreement. The General Partner has not
engaged and will not engage in any activities unrelated to the
Partnership or the Partnership Investments.
Section 1.07 . Admission of Limited Partners; Additional
Limited Partners; Increase of Capital Commitments. (a) On
the date of the Original Partnership Agreement, counterparts of the
Original Partnership Agreement were executed and delivered by (or,
pursuant to a power of attorney, on behalf of) each of HST LP Euro
B.V., a private company with limited liability ( besloten
vennootschap met beperkte aansprakelijkheid ) with its
corporate seat in Amsterdam, The Netherlands (" Host "),
Stichting Pensioenfonds ABP, a Dutch foundation ( stichting
) (" ABP "), and Jasmine Hotels Pte Ltd, a Singapore private
company limited by shares (" JHPL "), each such
party’s subscription for a limited partner interest in the
Partnership was accepted by the General Partner and approved by the
Limited Partners, and each such party became a Limited Partner (and
was shown as such on the books and records of the Partnership).
(b) At any time, subject to the prior written unanimous consent
of the Partners, the General Partner may cause the Partnership to
admit additional Limited Partners or to allow any existing Limited
Partner to increase its original Capital Commitment, and in
connection therewith, shall cause the value of the assets of the
Partnership to be determined pursuant to Section 11.02. The
General Partner shall deliver to each Limited Partner a notice (a "
NCP Notice ") setting forth (i) the value of the
Partnership’s assets giving effect to the admission of the
New Commitment Partner or increase in Capital Commitment of an
existing Limited Partner, minus the Partnership’s liabilities
(the " Partnership Net Asset Value "), (ii) the amount
of the Capital Contribution to be made by the New Commitment
Partner, and (iii) the resulting Capital Commitment,
Investment Percentages, Commitment Percentages, Available
Commitment Percentages, Capital Commitments and Capital
Contributions taking into account the proposed admission of an
additional Limited Partner (or an increase in any existing Limited
Partner’s Capital Commitment). The resulting Investment
Percentage for the New Commitment Partner (defined below) is herein
referred to as the " NCP Investment Percentage ". *********
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A Person shall become an additional Limited Partner (and shall be
shown as such on the books and records of the Partnership) upon
execution and delivery by (or, pursuant to a power of attorney, on
behalf of) such Person and the General Partner of counterparts of
this Agreement, subject to the terms of this
Section 1.07.
(c) Any Limited Partner admitted to the Partnership pursuant to
Section 1.07(b) on any Closing Date other than the First
Closing Date (and, including, other than in the case of a pro rata
increase by all Limited Partners in their Commitments, any Limited
Partner so increasing its Capital Commitment to the extent of any
increase in its Capital Commitment on any such subsequent Closing
Date) (each such Limited Partner, a " New Commitment Partner
") shall:
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(i) make a Capital Contribution in the amount set forth in the
NCP Notice;
(ii) make a Capital Contribution in an amount equal to the
aggregate amount of Capital Contributions that would have been made
by such New Commitment Partner pursuant to Section 4.02(a) in
respect of Organizational Expenses had such New Commitment Partner
been admitted to the Partnership on the First Closing Date
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(iii) make a Capital Commitment equal to the Capital Commitment
set forth in the NCP Notice;
provided that, with respect to any New Commitment Partner
that is a Limited Partner increasing its Capital Commitment on such
Closing Date, the amount payable by such New Commitment Partner
pursuant to Section 1.07(c)(i) or 1.07(c)(ii) shall be
decreased by the aggregate amount of Capital Contributions
theretofore made by such New Commitment Partner.
(d) The amount contributed by each New Commitment Partner
pursuant to Section 1.07(c)(i) on any Closing Date other than
the First Closing Date shall not be available for distribution to
the Partners until the second anniversary of such subsequent
Closing Date but shall be available to the General Partner for
application to Partnership Expenses and investment in Partnership
Investments.
5
(e) As promptly as practicable after any Closing
Date after the First Closing Date, the Partnership shall distribute
to the Limited Partners their pro rata share of the aggregate
amounts contributed by the New Commitment Partners pursuant to
Section 1.07(c)(ii) on such subsequent Closing
Date.
(f) It is a condition to the admission of any New Commitment
Partner that such New Commitment Partner shall be simultaneously
admitted to the TRS CV pursuant to the Corresponding Provision.
Section 1.08. Transparency . Notwithstanding
anything in this Agreement to the contrary, each Partner
represents, as of the date hereof, that it is not an entity which
is transparent for Dutch corporate income and dividend tax
purposes and covenants that it will not transfer any interest to
such an entity, it being agreed that no partner in this Partnership
may be an entity which is transparent for Dutch corporate income
and dividend tax purposes. Each Partner agrees that in the event
that, if, as a result of any change in Dutch tax law or otherwise,
it may become or becomes an entity that is transparent for Dutch
corporate income and dividend tax purposes, it shall promptly take
all necessary action to continue to be or become again
non-transparent, including a transfer of its interest in the
Partnership to a wholly-owned entity that is non-transparent from a
Dutch tax perspective. Prior to such transfer, the Partner shall
consult with the General Partner and external Dutch tax counsel to
review and confirm that this transfer does not cause the
Partnership to become non-transparent from a Dutch tax perspective,
it being understood that such transfer is subject to the transfer
restrictions set forth in this Agreement.
ARTICLE 2
M ANAGEMENT AND O PERATIONS OF THE P ARTNERSHIP
Section 2.01 . Management Generally. (a) The
management and control of the Partnership shall be vested in the
General Partner; however, the Limited Partners shall have certain
rights with respect to certain matters of the Partnership as
described in this Agreement. The Limited Partners shall have no
authority or right to act on behalf of the Partnership in
connection with any matter and shall not engage in any way in the
day-to-day business of the Partnership.
(b) The General Partner shall have the right to delegate certain
management and administrative responsibilities set forth in
Section 2.02 to one or more of its Affiliates, which in no
event shall be a Limited Partner. Any delegation of management and
administrative responsibilities by the General Partner to a Person
who is not an Affiliate of the General Partner shall be subject to
the unanimous consent of the Limited Partners.
Section 2.02 . Authority and Duties of the General
Partner. The General Partner shall have the power and, to the
extent the following are necessary or
6
advisable to further the purposes of the
Partnership described in Section 1.05, the duty, on behalf of
and in the name of the Partnership, subject to the limitations
contained in this Agreement, to:
(a) identify, acquire, improve, maintain, renovate,
rehabilitate, reposition, own, hold, operate, manage, lease,
finance, mortgage, pledge, exchange, divide, combine, sell,
transfer, convey, assign, grant options with respect to, dispose of
or otherwise deal in and transact business with respect to
Partnership Investments;
(b) borrow money, issue (or guarantee) evidences of recourse and
non-recourse indebtedness and obtain lines of credit, loan
commitments and letters of credit for the account of the
Partnership, or any Person in which it has a direct or indirect
ownership interest; provided the indebtedness incurred by
the General Partner for the benefit of the Partnership, by any
Portfolio Company or by any Partnership Investment Vehicle may be
secured by pledges, mortgages or other liens on any and all of the
assets (excluding a pledge by the General Partner of all or a
portion of the aggregate Available Capital Commitments of the
Limited Partners, other than in connection with a Credit Facility)
held by the General Partner for the benefit of the Partners, by any
Portfolio Company or by any Partnership Investment Vehicle, and may
be supported by guarantees made by the General Partner for the
benefit of the Partners, by any Portfolio Company or Partnership
Investment Vehicle in accordance with this Agreement;
(c) prepay in whole or in part, refinance, recast, increase,
modify or extend any existing liabilities affecting any Partnership
Investment (or any underlying assets) and in connection therewith
execute any extensions or renewals of encumbrances on any or all of
the Partnership Investments (or any underlying assets);
(d) negotiate, execute and take any action under any deed,
lease, easement, mortgage, deed of trust, mortgage note, promissory
note, bill of sale, contract, certificate or other instrument or
undertaking in connection with the acquisition, holding, financing,
management, maintenance, operation, lease, pledge, sale or other
disposition of a Partnership Investment (or any underlying assets)
or as the General Partner shall determine, in its discretion, to be
necessary or desirable to further the purposes of the Partnership,
including granting or refraining from granting any waivers,
consents and approvals with respect to any of the foregoing and any
matters incident thereto;
(e) subsequent to the Partnership’s initial investment in
any Partnership Investment, make additional investments in the
assets comprising such Partnership Investment (including
investments for capital improvements or other improvements or
alterations to any property constituting a Partnership Investment
or otherwise to protect the Partnership’s investment in any
Partnership Investment or to provide working capital for any
Partnership Investment) (the " Follow-On Investments ");
7
(f) hold Partnership Investments in its name for
the benefit of the Partnership and its Partners;
(g) obtain representation in the management of Portfolio
Companies (and otherwise, if applicable, in connection with other
Partnership Investments), which may involve, without limitation,
securing representation on boards of directors of Portfolio
Companies, creditors’ committees, management committees of
partnerships, property owners’ associations or other entities
or other similar boards, committees or other governing bodies in
respect of such companies or investments, or the employment on
behalf of the Partnership of experts to render managerial
assistance to such companies or investments;
(h) lend money or other assets of the Partnership upon such
terms and with (or without) such security as the General Partner
shall deem appropriate to any Portfolio Company or Partnership
Investment Vehicle;
(i) use the services of any and all persons providing legal,
accounting, engineering, brokerage, consulting, appraisal,
investment advisory, financial advisory, property management,
leasing brokers, artisan, construction, repair or custodian
services to the Partnership, or such other Persons as the General
Partner deems necessary or desirable for the management and
operation of the Partnership and its Partnership Investments (and
any underlying assets), including the General Partner and the
Affiliates of the General Partner and Persons who are also
otherwise employed or hired by any Affiliate of the General
Partner; provided , however, this shall not include the
power to employ or hire persons for or on behalf of the
Partnership, provided, further , nothing herein shall
preclude any Portfolio Company from hiring employees, including as
may be necessary or recommended in any jurisdiction in which a
Hotel Property is located or such Portfolio Company is a resident,
including in order to establish tax residency in a
jurisdiction;
(j) incur and pay all expenses, fees and obligations incident to
the operation and management of the Partnership, any Portfolio
Company or Partnership Investment Vehicle or that may be applicable
in connection with any transactions entered into by or on behalf of
the Partnership, any Portfolio Company or Partnership Investment
Vehicle, including the services referred to in clause (i), taxes,
interest, travel, rent, insurance and supplies;
(k) make interim investments (which may be made through an
agent) of cash reserves and other liquid assets of the Partnership
as provided in Section 2.10 prior to their use for Partnership
purposes or distribution to the Partners;
8
(l) acquire and enter into any contract of
insurance necessary or desirable for the protection or conservation
of the Partnership and its assets or otherwise in the interest of
the Partnership as the General Partner shall determine, in respect
of any liabilities for which the General Partner or any other
Indemnified Person would be entitled to indemnification under this
Agreement;
(m) open and close accounts and deposit, maintain and withdraw
funds in the name of the Partnership, any Portfolio Company and any
Partnership Investment Vehicle in banks, savings and loan
associations, brokerage firms or other financial institutions and
draw checks or other orders for the payment of monies;
(n) distribute funds to the General Partner and the Limited
Partners by way of cash or otherwise, all in accordance with the
provisions of this Agreement;
(o) bring and defend actions and proceedings at law or equity
before any court or governmental, administrative or other
regulatory agency, body or commission or otherwise;
(p) prepare and cause to be prepared reports, statements and
other relevant information for distribution to the General Partner
and the Limited Partners;
(q) prepare and file all necessary tax returns, elections and
statements and pay all taxes, assessments and other impositions
applicable to the assets of the Partnership and withhold amounts
with respect thereto from funds otherwise distributable to the
General Partner or any Limited Partner;
(r) effect a dissolution of the Partnership and carry out the
liquidation of the Partnership following such dissolution;
(s) make all elections, investigations, evaluations and
decisions, binding the Partnership thereby, that may, in the
discretion of the General Partner, be necessary or desirable for
the acquisition, management or disposition of investments by the
Partnership;
(t) maintain records and accounts of all operations and
expenditures of the Partnership;
(u) determine the accounting methods and conventions to be used
in the preparation of any accounting or financial records of the
Partnership, provided that such records shall be maintained
in Euros and in accordance with international financial reporting
standards (" IFRS ");
(v) convene meetings of the Limited Partners for any
purpose;
9
(w) form and structure Partnership Investments
through Partnership Investment Vehicles pursuant to
Section 3.03 and incorporate or form additional subsidiaries
and transfer the shares or interests in any existing subsidiary or
subsidiaries to such newly-formed subsidiaries, provided
that without the prior written consent of the Limited Partners, no
transfer of shares or interests in any existing subsidiary shall be
made to any subsidiary that is not wholly owned (directly or
indirectly) by the Partnership (or the General Partner on behalf of
the Partners);
(x) enter into any hedging transaction for interest rate risk as
the General Partner shall determine to be necessary or desirable to
further the purposes of the Partnership;
(y) enter into any hedging transaction, including any forward
contracts, for currency risk as is necessary or desirable to
further the purposes of the Partnership;
(z) assume liabilities on behalf of the Partnership in respect
of Real Estate Assets;
(aa) enforce the Asset Management Agreement on behalf of the
Partners; and
(bb) act for and on behalf of the Partnership in all matters
incidental to the foregoing.
Section 2.03 . Other Authority; Major Decisions,
Etc. (a) The General Partner agrees to use its
commercially reasonable efforts to operate the Partnership in such
a way that (i) the Partnership will not be an "investment
company" within the meaning of the Investment Company Act (except
for purposes of Sections 12(d)(1)(A)(i) and (B)(i) thereunder),
(ii) the General Partner will be in compliance with the
Advisers Act, (iii) none of the Partnership’s assets
would be deemed "plan assets" for purposes of ERISA, and
(iv) each of the Partnership and the General Partner will be
in compliance with any applicable law, regulation or guideline,
issued by a regulatory authority, government body or recognized
securities exchange, in each case a violation of which would have a
material adverse effect on the Partnership. The General Partner is
hereby authorized to take any action it has determined to be
necessary or desirable in order for (i) the Partnership not to
be in violation of the Investment Company Act, (ii) the
General Partner not to be in violation of the Advisers Act,
(iii) the Partnership’s assets not to be deemed "plan
assets" for purposes of ERISA, or (iv) each of the Partnership
and the General Partner not to be in violation of any applicable
material law, regulation or guideline, issued by a regulatory
authority, government body or recognized securities exchange,
including (A) making structural, operating or other changes in
the Partnership by amending this Agreement or otherwise,
(B) requiring the sale in whole or in part
10
of any Partnership Investment or other asset or
(C) dissolving the Partnership ( provided that any such
amendment, sale or dissolution to cure any violation of such law,
regulation or guideline of the Partnership may only be made if such
amendment, sale or dissolution of the Partnership is necessary or
advisable to cure the items described in clauses
(i)-(iv) above and such amendment, sale or dissolution of the
Partnership does not (x) increase or lead to violation of the
obligations (including regulatory obligations) or liabilities
(including with respect to tax exposure) of any Limited Partner,
(y) adversely affect any Limited Partner’s economic
rights hereunder or (z) adversely affect its status as a
tax-exempt entity or pension fund (if appropriate); provided,
further, that the General Partner shall consult with the
Limited Partners (other than any Host Limited Partner) to determine
if the consequences described in the foregoing clauses
(x)-(z) would result). The General Partner shall notify the
Limited Partners of any action taken pursuant to this
Section 2.03(a).
(b) In addition to any other matters for which the Partners are
provided with voting rights under this Agreement, the following
powers of the Partnership shall be exercised by the General Partner
only with the required vote of the Partners:
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(F) causing in one or more transactions a
Disposition of all or substantially all of the Partnership
Investments (including shares of any Portfolio Company or
Partnership Investment Vehicle);
(G) the General Partner commencing (on its own behalf or on
behalf of the Partnership) a voluntary case or other proceeding
seeking liquidation, reorganization or other relief with respect to
the General Partner, the Partnership or debts of the General
Partner or the Partnership under any bankruptcy, insolvency,
reorganization or other similar law; or the appointment of a
trustee, administrator, receiver or other entity for the purpose of
disposing of the Partnership Investments for the benefit of
creditors; or any other transfer of Partnership Investments,
whether voluntary or involuntary, for the benefit of creditors;
(H) transfers of limited partnership interests as described in
Section 5.03, Section 5.04, Section 10.01,
Section 10.02 and Section 10.05 of this Agreement (it
being understood that any admission or substitution, whether in
full or in part, absolute or relative, of a limited partnership
interest requires the prior written consent of all Partners (except
for the consent of a Defaulting Limited Partner pursuant to
Section 5.03), and transactions not compliant with this
approval requirement are void);
(I) the admission of New Commitment Partners as described in
Section 1.07(b) (it being understood that any such admission
requires the prior written consent of all Partners (except for the
consent of a Defaulting Limited Partner pursuant to
Section 5.03), and transactions not compliant with this
approval requirement are void);
(J) the deviation from investment and/or leverage limitations
and guidelines as described in Section 3.02;
(K) the acquisition of real property that is not a Real Estate
Asset;
(L) confessing, consenting to or appealing against a judgment
against the Partnership in connection with any threatened or
pending Proceeding; or commencing or settling any Proceeding in the
name of the Partnership or with respect to the Partnership
Investments, in each case if the amount in dispute is in excess
************;
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(E) approval or disapproval of an Approved
Accountant, Approved Appraiser, Approved Industry Consultant or
Approved Investment Bank; and
(F) the dissolution of the Partnership as described in
Section 9.02(a), provided if a Consolidation Event
shall occur, the dissolution of the Partnership shall require the
prior written unanimous consent of the Partners pursuant to clause
(i) above; and
(G) any currency hedging transaction, other than as required by
a third-party lender to (1) the Partnership, (2) any
Portfolio Company or (3) any Partnership Investment
Vehicle.
(c) In this Agreement, the words "approval" and "consent" shall
mean the prior written consent or approval of the Partners having
the right to consent or approve, which consent or approval shall
not be, other than as provided in this Agreement, unreasonably
withheld or delayed, unless in connection with any transfer of
limited partnership interest, (relative or absolute) substitution
of a limited partner, deemed capital contribution or forced sale of
a limited partnership interest or admission of a New Commitment
Partner or Substituted Limited Partner. It is understood that in
determining whether to withhold or delay its consent or approval, a
Limited Partner shall be entitled to consider its own interest as a
partner in the Partnership.
(d) The General Partner shall cause the Manager to employ or
cause its sub-asset manager to employ a managing director, or an
individual in such capacity,
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the employment of the managing director ends or terminates, the
General Partner shall cause the Manager to engage or cause its
sub-asset manager to engage a replacement managing director within
ninety (90) days of such time, provided without the
prior written consent of the Limited Partners, no sub-asset manager
shall be other than a wholly-owned subsidiary of the Manager.
(e) The Partners acknowledge that each of Host and the General
Partner is or will be an indirect subsidiary or Affiliate of Host
Euro Business Trust, Host Holding Corporation and Host
Hotels & Resorts, Inc. (each, a " Host REIT "),
each a "real estate investment trust" under the Code (a "
REIT "). The Partnership will conduct its activities in a
manner consistent with each Host REIT’s status as a REIT and
so as to permit such Host REIT (i) to maintain continuous
compliance with the requirements of REIT status and (ii) to
minimize any U.S. federal income or excise tax in respect of
operations. Without limiting the generality of the foregoing, it is
understood that the Partnership’s hotel properties will
generally be
14
leased to separate entities that will constitute
"taxable REIT subsidiaries" for purposes of the REIT requirements
(each, a " TRS " and collectively, the " TRS ") and
will be operated in a manner consistent with those
requirements.
(f) As between the General Partner, on the one hand, and the
Partnership, on the other hand, the General Partner shall be solely
responsible for and shall pay any and all expenses incurred by Host
or by the General Partner (whether or not on behalf of the
Partnership) to maintain the REIT status of any Host REIT.
(g) In the event of a change in law, regulation or other form of
binding guidance with respect to REITs, issued by a regulatory
authority or governmental body, the General Partner shall have the
right to restructure the Partnership and any Partnership Investment
consistent with the purposes of the Partnership described in
Section 1.05, provided such restructuring does not
(i) increase or lead to violation of the obligations
(including regulatory obligations) or liabilities (including with
respect to tax exposure) of any Limited Partner,
(ii) adversely affect any Limited Partner’s economic
rights hereunder, (iii) adversely affect its status as a
tax-exempt entity or pension fund (if appropriate), or
(iv) lead to the involuntary substitution or removal of any
Limited Partner. The Limited Partners agree to cooperate reasonably
with the General Partner in effecting such a restructuring. The
General Partner shall pay any expenses incurred by the Partnership
or the Limited Partners in connection with such a restructuring. To
the extent such restructuring entails the (absolute or relative)
substitution of a Limited Partner or the admission of a New
Commitment Partner or Substituted Limited Partner, the prior
written unanimous consent of all Partners is required.
Section 2.04 . Exclusivity. (a) The General
Partner shall devote such time and attention to the business or
affairs of the Partnership as is necessary effectively to carry out
the operations of the Partnership and perform its duties to the
Partnership.
(b) The General Partner and each Limited Partner acknowledge and
agree that:
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(ii) except in connection with the transactions contemplated by
the Implementation Agreement, the Asset Management Agreement or in
connection with the acquisition of the Initial Hotel Properties
pursuant to the Master Agreement, without the unanimous consent of
the Partners, the Partnership and the General Partner shall not
purchase property or obtain services from, sell property or provide
services to, or otherwise enter into any transaction, with the
General Partner, any Affiliate of the General Partner, any Limited
Partner, any Portfolio Company, or any Affiliate of any of the
foregoing Persons.
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(c) Nothing contained in this Agreement shall be deemed to limit
in any respect the ability of any Limited Partner (or Affiliate
thereof), in its individual capacity, from making investments in
any Portfolio Company or in any Person in which Investments are
proposed to be made or in any Affiliate of any such Person or from
providing financing thereto, in addition to such Limited
Partner’s Capital Contributions, if any, pursuant to this
Agreement.
(d) Each of the parties to this Agreement shall use commercially
reasonable efforts to advise each other on all potential
transactions covered by Section 2.04(b)(i)(A),
Section 2.04(b)(i)(C), Section 2.04(b)(i)(D),
Section 2.04(b)(i)(E) and Section 2.04(b)(i)(F) subject
to any confidentiality requirements then binding on such party.
Section 2.05 . Books and Records; Fiscal Year.
(a) The General Partner shall keep or cause to be kept at the
address of the General Partner (or at such other place as the
General Partner shall advise the other Partners in writing) the
books and records of the Partnership. Each Limited Partner shall be
shown as a limited partner of the Partnership on such books and
records. Such books and records shall be available, upon five
(5) Business Days’ notice to the General
17
Partner, for inspection at the offices of the
General Partner (or such other location designated by the General
Partner, in its reasonable discretion) at reasonable times during
business hours on any Business Day by each Limited Partner for a
purpose reasonably related to such Limited Partner’s interest
in the Partnership. Each Limited Partner agrees that such books and
records contain confidential information relating to the
Partnership and its affairs and the affairs of each Limited
Partner.
(b) Unless otherwise required by law, the taxable year of the
Partnership shall end on December 31st. Except as otherwise
determined by the General Partner in its reasonable discretion, the
fiscal year of the Partnership (the " Fiscal Year ") for
purposes of its financial statements shall be the same as the
taxable year of the Partnership.
Section 2.06 . Partnership Tax Returns. (a) The
General Partner shall cause to be prepared and filed on a timely
basis all tax returns required to be filed for the Partnership. The
General Partner shall send such information as a Limited Partner
may reasonably request for the filing of any required tax returns
or reports in respect of such Limited Partner’s interest in
the Partnership and the Partnership Investments, including the
French three percent (3%) annual tax imposed pursuant to
Sections 990D et seq. of the French General Tax Code. As part of
its investigation of any proposed Partnership Investment, the
General Partner shall investigate with reasonable diligence any tax
filing requirements imposed on the Partners solely as a result of
investing in such proposed Partnership Investment and shall furnish
to the Limited Partners any such information acquired.
(b) The Limited Partners agree to cooperate reasonably with the
General Partner regarding the filing of forms (including, without
limitation, Forms 8832 and 8875) and U.S. partnership returns with
the Internal Revenue Service, provided that, in connection
with the foregoing, (i) the General Partner shall bear all
out-of-pocket costs of preparing and filing such documents and
(ii) no Limited Partner will be required to disclose any
proprietary information ( provided that the Limited
Partners’ name, address, and other identifying information
shall not be considered proprietary for purposes of this
Section 2.06(b)).
(c) Each Partner shall cause to be prepared and filed on a
timely basis all tax returns required by law to be filed by such
Partner. Each Partner shall, to the fullest extent permitted by
applicable law, indemnify and hold harmless the other Partners
against any losses, claims, damages or liabilities arising from,
related to or in connection with such Partner’s failure to
make such filings.
(d) The General Partner is hereby designated as the
Partnership’s "tax matters partner." The General Partner is
specifically directed and authorized to take whatever steps the
General Partner, in its discretion, deems necessary or desirable to
perfect such designation, including filing any forms or documents
and taking such other action as may from time to time be required
under applicable
18
tax law. Expenses of any administrative
proceedings undertaken by the Tax Matters Partner shall be
Partnership Expenses. Each Limited Partner who elects to
participate in such proceedings shall be responsible for any
expenses incurred by such Limited Partner in connection with such
participation. The cost of any resulting audits or adjustments of a
Limited Partner’s tax return shall be borne solely by the
affected Limited Partner. Notwithstanding the foregoing, the
General Partner shall not bind any Limited Partner to an extension
of such Limited Partner’s statute of limitations or to a
closing agreement or settlement agreement for tax purposes without
such Limited Partner’s prior written consent.
Section 2.07 . Confidentiality; Press Release.
(a) Each Partner agrees to keep confidential, and not to make
any use of (other than for purposes reasonably related to its
interest in the Partnership or for purposes of filing such
Partner’s tax returns or for other routine matters required
by law) nor to disclose to or discuss with any Person (including
any co-venturers or managers of other investments in real property
but other than Affiliates of such Partner), any information or
matter relating to the Partnership, the TRS CV, the Partners and
their affairs, or any information obtained in relation to the other
Partners, and any information or matter related to any Partnership
Investment, including, among other things, the estimated value or
terms and conditions of any potential transaction which the
Partnership is actively pursuing (other than disclosure to such
Partner’s employees, agents, accountants, advisors (including
financial advisors) or representatives responsible for matters
relating to the Partnership (each such Person being hereinafter
referred to as an " Authorized Representative "));
provided that such Partner and its Authorized
Representatives may make such disclosure to the extent that
(i) the information being disclosed is publicly known at the
time of proposed disclosure by such Partner or Authorized
Representative, (ii) such disclosure is required by law or
regulation or (iii) such disclosure is required by any
regulatory authority or self-regulatory organization having
jurisdiction over such Partner, including filings with the trade
register at the Chamber of Commerce and Industry in Amsterdam, the
Netherlands (the " Chamber of Commerce "). Prior to making
any disclosure required by law, regulation, regulatory authority or
self-regulatory organization, each Partner shall (to the extent
permitted by applicable law) use its commercially reasonable
efforts to promptly notify the General Partner (and the affected
Partner, if any) of such disclosure. Prior to any disclosure to any
Authorized Representative, each Partner shall advise such
Authorized Representative of the obligations set forth in this
Section 2.07. Each Partner shall be liable for any breach of
such obligations by an Authorized Representative, unless such
Authorized Representative has executed an agreement, for the
benefit of the General Partner, to be bound by the terms of such
obligations.
(b) Without obtaining the consent of the other Partners, a
Partner will not issue any press release or make any public
statement relating to any of the matters provided for or referred
to in this Agreement or any ancillary matter, unless required by
law or by any regulatory authority, government body or recognized
securities exchange.
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Section 2.08 . Meetings of the
Partners. (a) The General Partner shall meet with the
Limited Partners at least twice annually on dates convenient to the
Limited Partners. Each meeting shall take place in Amsterdam or
such other place as unanimously agreed by the Partners. For any
meeting of the Partners, the General Partner shall cause a written
notice to be sent to the Partners at least ten (10) Business
Days prior to the meeting. Such notice shall contain a detailed
list of the items on the agenda. The General Partner shall cause to
be delivered to the other Partners any materials material to the
discussion of the items on the agenda at least five
(5) Business Days prior to the meeting.
(b) Meetings of the Partners to vote upon any matters which the
Partners are authorized to vote on under this Agreement may be
called at any time by a Partner by delivering written notice to the
General Partner. Within ten (10) days following receipt of
such request, the General Partner shall cause a written notice of a
meeting to be given to the Partners entitled to vote, such meeting
to be held at a place and time fixed by the General Partner on a
date convenient to the Limited Partners. This meeting shall take
place in Amsterdam or such other place as unanimously agreed to by
the Partners. Any Partner may participate in any meeting called in
accordance with this Section 2.08(b) by telephone or other
form of telephonic communication. A detailed statement of the
proposed action, including a verbatim statement of the wording of
any resolution proposed for adoption by the Partners, shall be
included with the notice of a meeting.
(c) In lieu of a meeting called in accordance with
Section 2.08(b) to vote on any matter which the Partners are
authorized to vote under this Agreement, the General Partner shall
submit the proposed action in writing to each of the Partners
entitled to vote. Each such Partner shall give its written response
to the proposed action to the General Partner within fifteen
(15) days of the date of the giving of the General
Partner’s notice to such Partner of such proposal. Any such
notice shall specify the date upon which such fifteen (15)-day
period for response ends. Any Partner failing to respond within
such fifteen (15)-day period shall be deemed to have disapproved
such proposed action.
Section 2.09 . Reliance by Third Parties. Persons
dealing with the Partnership are entitled to rely conclusively upon
the power and authority of the General Partner as set forth in this
Agreement and as a summary of such power and authority is
registered with the trade register of the Chamber of Commerce.
Section 2.10 . Temporary Investment of Funds.
Subject to a determination by the General Partner in its discretion
as to the amount of cash required in connection with the conduct of
the Partnership’s business, the General Partner shall invest
all cash held by the Partnership in interest bearing instruments or
accounts as contemplated by the Budget or as otherwise reasonably
selected by
20
the General Partner. Cash held by the Partnership
includes all amounts being held by the Partnership for future
investment in Partnership Investments, payment of Partnership
Expenses or distribution to the Partners.
Section 2.11 . Removal of the General Partner.
(a) The Required Limited Partners (other than any Defaulting
Limited Partner or any Limited Partner that is an Affiliate of the
General Partner) may remove the General Partner if a final order of
a court of competent jurisdiction has been entered determining that
a Cause Event has occurred by delivering written notice to the
General Partner of their election pursuant to this
Section 2.11(a). The General Partner shall notify the Limited
Partners of any removal notice it receives pursuant to this
Section 2.11(a). In connection with the removal of the General
Partner pursuant to this Section 2.11(a), the Required Limited
Partners (other than any Defaulting Limited Partner or any Limited
Partner that is an Affiliate of the General Partner) shall appoint
a replacement general partner of the Partnership. Such replacement
general partner shall be admitted as a general partner of the
Partnership prior to the effective date of the removal of the
General Partner upon its execution of a counterpart to this
Agreement and shall continue the Partnership without dissolution.
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(b) In the event that the General Partner is removed pursuant to
Section 2.11(a), the removed General Partner shall cease to
have any rights, powers, obligations or duties provided to it under
this Agreement (except for its rights, powers, obligations and
duties under Article 8) and under applicable law after the
effective date of such removal. In connection with the removal of
the General Partner, the Limited Partners shall have the right to
either (A) purchase the partnership interest of the General
Partner at a price equal to ************** **************** of the
General Partner as of the effective date of such removal, such
******************************************************
******************************* and from and after the effective
date of its removal as the General Partner and following the
admission of the replacement general partner as described above,
the General Partner shall no longer be a Partner in the
Partnership, or (B) following the admission of the replacement
general partner as described above, convert the General
Partner’s interest in the Partnership into a limited partner
interest in the Partnership with a Capital Account equal to the
value set forth in clause (A) above. It is understood that the
unanimous written consent of the Partners is required in the event
the purchase of the partnership interest of the General Partner
causes a relative substitution among the Limited Partners. It is
moreover understood that the unanimous written consent of the
Partners is required in respect of the conversion of the general
partner’s interest into a limited partner interest and the
admission of the general partner as a Limited Partner. It shall be
a condition to any purchase of the General Partner’s interest
that the entire interest of the general partner under the TRS CV
Agreement shall have been simultaneously purchased under the
21
Corresponding Provision. Any amount paid to the
General Partner pursuant to clause (A) above shall be paid in
cash. In the event the General Partner’s interest is
converted into a limited partner interest, the General Partner
shall be treated for all purposes as a Limited Partner from the
date of conversion with respect to future distributions made by the
Partnership and all other rights to which the Limited Partners are
entitled under this Agreement.
Section 2.12. Business Plan and Budgets .
(a) The General Partner shall submit the draft business plan
for the operation of the Partnership Investments to the Limited
Partners for approval no later than sixty (60) days after the
First Closing Date. No later than December 15 of each Fiscal
Year the General Partner shall submit to the Limited Partners for
approval a revised and updated business plan for the period ending
on the last day of the next succeeding Fiscal Year. The business
plan shall include the following:
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(ii) a report of potential acquisition and disposition
transactions;
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(clauses (i)-(iv) collectively, the " Business Plan
").
(b) The General Partner shall prepare and present to the Limited
Partners for each Fiscal Year for their approval the following
budgets: (i) a consolidated capital budget for the
Partnership, any Partnership Investment Vehicle and any Portfolio
Company, setting forth in reasonable detail the estimated Capital
Expenses with respect to each Partnership Investment for such
Fiscal Year (the " Partnership Capital Budget ") and
(ii) a consolidated operating budget for the Partnership, any
Partnership Investment Vehicle and any Portfolio Company, setting
forth in reasonable detail the estimated operating costs and
expenses with respect to each Partnership Investment, including
estimated Partnership Investment Expenses and Partnership
Administrative Expenses (the " Partnership Operating Budget
"; together with the Partnership Capital Budget, each a "
Budget " and collectively, the " Budgets "). The
draft of each Budget for the balance of the 2006 Fiscal Year Fiscal
Year shall be presented to the Limited
22
Partners for approval prior to sixty
(60) days after the First Closing Date. Each Budget for each
subsequent Fiscal Year shall be in the form of the Budget for the
prior Fiscal Year. A first draft of each Budget for the subsequent
years shall be presented to the Limited Partners prior to
*********** of such Fiscal Year and a final draft shall be
presented to the Limited Partners prior to February 15 of such
Fiscal Year. Within twenty (20) days of its receipt of each of
the initial draft and the final draft of a Budget, each Limited
Partner shall deliver a notice to the General Partner approving or
objecting to such Budget. Any notice objecting to a proposed Budget
shall include a detailed explanation of the items to which such
Limited Partner objects. If at any time the General Partner has not
obtained the approval of the Required Limited Partners with respect
to any proposed Budget, the parties shall meet and work in good
faith to resolve such disagreement. If within thirty (30) days
a resolution to such disagreement is not reached, the dispute shall
be resolved by an Approved Industry Consultant in accordance with
Section 11.02.
(c) The Partners agree that any Business Plan or Budget required
to be delivered by the General Partner under this Agreement may be
combined with the business plan and budgets required to be
delivered pursuant to the TRS CV Agreement. The Partnership Capital
Budget and the Partnership Operating Budget shall each be updated
by the General Partner and presented to the Limited Partner for
approval in accordance with the above provisions of
Section 2.12(b) within ************ of the acquisition of a
Partnership Investment.
(d) With respect to any Budget, if the General Partner
determines at any time during a Fiscal Year that it is in the best
interests of the Partnership to incur any discretionary cost or
obligation with respect to an item of expense, contemplated by such
Budget, in an amount in excess of *** above the budgeted item of
expense, the General Partner shall, subject to
Section 2.12(e), obtain the approval of the Required Limited
Partners prior to incurring any such discretionary cost or
obligation. In addition, the General Partner shall obtain the
approval of the Required Limited Partners prior to incurring any
discretionary costs or obligations if the aggregate of the expenses
incurred is in an amount in excess of *** above the expenses
contemplated by the Budget.
(e) Notwithstanding the foregoing, the General Partner shall be
authorized to incur on behalf of the Partnership any
non-discretionary item of expense, which shall include, without
limitation, (i) an expense arising in the event of an
emergency (life-threatening or otherwise) or is necessary to comply
with legal requirements or to avoid criminal liability, civil
liability or the imposition of a fine or other penalty,
(ii) any expense required to be incurred pursuant to any Hotel
Operating Agreement or lease with a third party for any Partnership
Investment, other than in connection with any obligation to
maintain "brand" standards (which the Partners agree will need to
be approved by the Partners in a Budget or otherwise) and
(iii) any expense required to be incurred
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pursuant to a budget included as part of an
acquisition proposal approved by the Partners. For the purposes of
this Section 2.12, an "item of expense" shall refer to each
category of expense identified in the applicable Budget.
Section 2.13 . Credit Facility. (a) The General
Partner is authorized to enter into one or more credit facilities
(each, a " Credit Facility ") to pay expenses and fees, to
finance the acquisition and ownership of Partnership Investments,
including, without limitation, in lieu of, in advance of, or
contemporaneously with, Capital Contributions and otherwise to
carry out the business and activities permitted under this
Agreement. Such Credit Facilities may be secured by an assignment
and pledge by the General Partner of all or a portion of the
aggregate Available Capital Commitments of all Limited Partners,
including upon the continuance of an event of default (as defined
in a Credit Facility), the right of the lender to deliver Drawdown
Notices and enforce all remedies against any Limited Partner that
fails to fund their respective Capital Commitments pursuant to
Drawdown Notices and in accordance with the terms of this
Agreement. In connection with any such Credit Facility, all such
Capital Contributions shall be payable to the account designated by
the lender.
(b) Each Limited Partner understands, acknowledges and agrees,
in connection with any Credit Facility and for the benefit of any
lender thereunder, (i) that the General Partner may from time
to time request delivery, within ninety (90) days after the
end of such Limited Partner’s fiscal year, of a copy of such
Limited Partner’s annual report, if publicly available, or
such Limited Partner’s balance sheet as of the end of such
fiscal year and the related statements of operations for such
fiscal year, in each case to the extent publicly available,
prepared or reviewed by independent public accountants in
connection with such Limited Partner’s annual reporting
requirements; (ii) that the General Partner may from time to
time request a certificate confirming (x) the remaining amount
of such Limited Partner’s Available Capital Commitment and/or
(y) that the Limited Partner has not and will not pledge,
collaterally assign, encumber or otherwise grant a security
interest in its rights and obligations against the General Partner
or the Partnership; and (iii) that such Limited
Partner’s obligation to fund its Available Capital Commitment
is without defense, counterclaim or offset of any kind, other than
any rights or claims available to such Limited Partner under this
Agreement. In addition, each Limited Partner agrees (A) to
deliver to the lender under any Credit Facility an acknowledgement
of such Limited Partner’s Capital Commitment in such
lender’s customary form as may be negotiated between such
lender and such Limited Partner, and (B) to deliver, upon the
request of the General Partner or lender, an opinion of counsel to
the effect that this Agreement is a valid and binding agreement of
such Limited Partner (and/or an appropriate corporate or similar
resolution authorizing such Limited Partner’s investment in
the Partnership).
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ARTICLE 3
I NVESTMENTS
Section 3.01 . Partnership Investments Generally;
Initial Hotel Properties. (a) Subject to Section 3.02
and Article 6, the General Partner may cause the Partnership to
invest, directly or indirectly, in such Partnership Investments as
the General Partner shall identify based on an objective that at
the termination of the Commitment Period, the Partnership shall not
have invested
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(b) The Limited Partners acknowledge and agree that an Affiliate
of the General Partner has entered into an agreement to acquire
certain hotel properties, including those properties identified on
Schedule B (the " Initial Hotel Properties "), and that such
properties are suitable Partnership Investments for the Partnership
and acceptable to the Limited Partners notwithstanding any
investment limitations or parameters set forth in this Agreement.
The General Partner shall have the right to, or cause its Affiliate
or a third-party seller (as applicable) to, transfer the Initial
Hotel Properties to the General Partner for the benefit of the
Partners at the respective prices set forth in Schedule B (each
such price, the " Initial Hotel Property Price ");
provided that the Poland Hotel Property shall be contributed
to the Partnership pursuant to Section 5.01(b).
Section 3.02 . Investment and Leverage Limitations.
(a) With the approval of the Required Limited Partners, the
Partnership or any Partnership Investment Vehicle or any Portfolio
Company may incur debt in connection with and in order to finance
the acquisition of Partnership Investments (as well as to refinance
such debt), provided the approval of the Partners is not
required for the assumption of debt by the Partnership, any
Partnership Investment Vehicle or any Portfolio Company to the
extent all associated rights to receive payment in respect of such
debt is held by the Partnership, any Partnership Investment Vehicle
or any Portfolio Company (as applicable). With the unanimous
consent of the Partners, the Partnership, any Partnership
Investment Vehicle or any Portfolio Company may incur any other
debt with respect to Partnership Investments.
(b) Without the unanimous consent of the Limited Partners, the
aggregate amount of debt incurred by the Partnership, any
Partnership Investment Vehicle and any Portfolio Company
attributable to a single Investment shall not exceed 75% of the
fair market value on the date of such Partnership Investment based
on an appraisal by an independent third party; provided the
intent of the Partners is that the amount of debt incurred by the
Partnership, any Partnership Investment Vehicle and any Portfolio
Company to finance, operate or own Partnership Investments shall
not exceed, as of the last day of the Commitment Period and
thereafter, 65% of the aggregate fair market value of the
Partnership
25
Investments taken as a whole (without deduction
for any debt to which such Investments are subject) based on the
last annual appraisal; provided further , if such 65% limit
is exceeded, the Partners shall confer and agree on the course of
action with respect to such debt.
(c) Unless otherwise agreed to by the unanimous consent of the
Limited Partners, with respect to a Partnership Investment in a
single asset, the minimum gross asset value of such Partnership
Investment shall not be less than ************ Unless otherwise
agreed to by the unanimous consent of the Partners, with respect to
a Partnership Investment consisting of a portfolio of assets, the
minimum gross asset value of such portfolio shall not be less than
************ (with no minimum gross asset value required for any
single asset within such portfolio).
(d) Without the unanimous consent of the Limited Partners, the
Partnership shall not invest in Real Estate Assets with (i) a
projected stabilized Yield of less than *** per annum or
(ii) a projected IRR of less than ***********
**********************
************************************************************************************************
in each case as reasonably projected by the General Partner. For
the purpose of this Section 3.02(d), a Hotel Property shall be
considered operating on a "stabilized" basis when the cash flow
from operations (on a pro forma basis) is projected to increase at
an annual rate that is not materially greater than the applicable
rate of inflation.
****************************************************************
************************************************************************************************************
*****************************************************.
Section 3.03 . Structuring of Investments Generally
. Except as expressly provided otherwise in this Agreement, any
Partnership Investment under this Agreement pursuant to any
investment opportunity shall be made by the Partnership directly or
through one or more Partnership Investment Vehicles.
Section 3.04 . Parallel Investments Generally. With
the unanimous consent of the Limited Partners, the General Partner
may structure an investment outside the Partnership as a parallel
or co-investment either directly or indirectly through any entity
formed for such purpose (a " Parallel Investment Vehicle ").
The specific terms applicable to each parallel investment shall be
set forth in an agreement or agreements among the Partnership, the
General Partner and any investors participating in such parallel
investment.
26
ARTICLE 4
E XPENSES
Section 4.01 . Definition and Payment of General Partner
Expenses. As between the General Partner, on the one hand, and
the Partnership, on the other hand, the General Partner shall be
solely responsible for and shall pay all General Partner Expenses
pursuant to this Agreement. As used herein, the term " General
Partner Expenses " means:
(a) all Organizational Expenses and Partnership Investment
Expenses in excess of the amount payable by the Partnership
pursuant to Sections 4.02(a)(i) and 4.02(a)(ii), respectively;
(b) all salaries and employee benefit expenses of employees
caused by the General Partner to be hired by the Manager and
related overhead expenses (including rent, utilities, office
equipment, necessary administrative and clerical functions and
other similar overhead expenses, including internal costs
associated with the preparation of reports required hereunder) and
travel expenses (excluding travel expenses described in
Section 4.02(b)(i)) resulting from the activities of such
employees on behalf of the Partnership or in connection with this
Agreement;
(c) costs payable by the General Partner pursuant to
Section 7.02(b);
(d) any expenses to be paid by the General Partner pursuant to
Section 2.03(f), Section 2.03(g) and
Section 2.06(b);
(e) with respect to any contemplated financing, to the extent
required by a lender to the Partnership, any Partnership Investment
Vehicle or any Portfolio Company, any currency hedging costs in
connection with any hedge relating to the currency exchange risk
due to the fact that such loan would be denominated in Euros but
the cash to be received from hotel operations will be in the
currency of the country in which such Hotel Property is located;
and
(f) Partnership Investment Expenses to the extent directly
attributable to the Initial Hotel Properties and incurred by the
General Partner or any Affiliate of the General Partner prior to
the date hereof.
Section 4.02 . Definition and Payment of Partnership
Expenses. (a) The Partnership shall be responsible for and
shall pay all Partnership Expenses. As used herein, the term "
Partnership Expenses " means all expenses or obligations of
the Partnership or otherwise reasonably incurred by the General
Partner in connection with this Agreement (other than General
Partner Expenses and the obligation of the Partnership to pay the
purchase price for any Partnership Investment), including:
27
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(i) all expenses of organizing, registering,
qualifying, exempting and otherwise in connection with the
Partnership, the General Partner, and any Partnership Investment
Vehicle and any Portfolio Company related to the acquisition of the
Initial Properties (the " Organizational Expenses "),
********************* (aggregated with any expenses under any
Corresponding Provision);
(ii) all expenses directly attributable to, and reasonably
incurred in respect of, (A) any Partnership Investment and
(B) any proposed Partnership Investment that is ultimately not
made by the Partnership, including, in each case, all expenses
incurred in connection with the making (including sales
commissions, brokerage fees and legal and diligence costs),
structuring, holding, managing, financing, refinancing, pledging,
hedging, sale or other disposition or proposed financing,
refinancing, pledging, hedging, sale or other disposition of all or
any portion of such Partnership Investment, and any Borrowing
Costs, Partnership Investment Vehicle Expenses, and Indemnification
Obligations arising with respect to such Partnership Investment
(collectively, " Partnership Investment Expenses "), not to
exceed, ***********************************************************
****************************************************************************************************
**************************************************************************************************
*************************************;
(iii) all other expenses of the Partnership reasonably incurred
in connection with the ongoing operation and administration of the
Partnership (collectively, " Partnership Administrative
Expenses "), including (A) expenses reasonably incurred in
connection with the maintenance of the Partnership’s books
and records; the preparation and delivery to the Limited Partners
of financial reports and other information pursuant to this
Agreement; and the holding of annual meetings of the Partnership,
(B) expenses reasonably incurred in connection with the
dissolution and liquidation of the Partnership, (C) any
Indemnification Obligation arising other than with respect to any
Partnership Investment, (D) the Management Fee,
(E) Borrowing Costs that do not constitute Partnership
Investment Expenses, (F) amounts of principal and other
amounts, if any, due and owing under any loan to the Partnership,
any Portfolio Company or any Partnership Investment Vehicle,
including under a Credit Facility, (G) subject to approval by
the Required Limited Partners any extraordinary expenses that would
not otherwise be Partnership Investment Expenses, (H) expenses
consisting of salaries of employees of any Portfolio Company as may
be necessary or recommended pursuant to the applicable laws of any
jurisdiction in which such Portfolio Company is a resident, as
approved by the Required
28
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Limited Partners or as contemplated in the
Budgets, and (I) any expense identified as a Partnership
Expense in a Budget approved by the Limited Partners in accordance
with Section 2.12; and
(iv) any costs payable by the Partnership pursuant to
Section 7.02(b).
(b) The parties agree that all of the following constitute
Partnership Expenses, and are some, but not necessarily all, of the
types of expenses that may constitute Partnership Investment
Expenses, Partnership Administrative Expenses or Organizational
Expenses, depending upon the context in which such expenses are
incurred:
-
(i) reasonable travel expenses directly attributable to
(A) any Partnership Investment and (B) any proposed
Partnership Investment that is ultimately not made by the
Partnership, it
****************************************************
***************************************************************************;
(ii) expenses reasonably incurred in connection with obtaining
legal, tax, and accounting advice and the advice of other
consultants and experts on behalf of the Partnership;
(iii) out-of-pocket expenses reasonably incurred in connection
with the collection of amounts due to the Partnership from any
Person;
(iv) expenses reasonably incurred in connection with the
preparation of amendments or waivers to this Agreement;
(v) any taxes imposed on the Partnership, excluding the taxes
described in Section 6.02(c), but including any taxes imposed
on the Partnership or the General Partner in the capacity of
withholding agent with respect to a Limited Partner (and any
interest, penalties or expenses relating to any such taxes), but
only to the extent such Limited Partner has not paid such amounts
pursuant to Section 8.01 and the General Partner has been
unable to withhold such amounts pursuant to Section 6.05(c)
and any expenses incurred in connection with tax proceedings that
are not characterized as General Partner Expenses pursuant to
Section 2.06(b);
(vi) expenses reasonably incurred in connection with any
Proceeding involving the Partnership (including the cost of any
investigation and preparation) and the amount of any judgment or
settlement paid in connection therewith; provided that any
such expenses which, if incurred by any Indemnified Person, would
not be indemnifiable under Article 8, shall not constitute
Partnership Expenses;
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(vii) any Indemnification Obligation and any
other indemnity, contribution, or reimbursement obligations of the
Partnership with respect to any Person, whether payable in
connection with a Proceeding involving the Partnership or
otherwise, unless such Indemnification Obligation arises as a
result of the willful misconduct or gross negligence of any
Indemnified Person or as a result of an Uncured Breach or an
Uncured Material Violation of Law by any Indemnified
Person;
(viii)
*********************************************************************************************
******************************************************************************************************
*****************************************************************************************************
*****************************************; and
(ix) any post-closing working capital adjustment amount required
to be paid in connection with any Partnership Investment, including
with respect to the Initial Hotel Properties.
(c) If an audit is conducted pursuant to Section 7.02 and
such audit determines that there has been an overcharge and/or
overallocation of costs to the Partnership, the General Partner
shall pay or cause to be paid such overcharge and/or overallocation
in accordance with Section 7.02(c). If such audit determines
that there has been an undercharge and/or underallocation of costs
to the Partnership, each Limited Partner shall pay to the General
Partner or its designee its pro rata share of such undercharge
and/or underallocation in accordance with Section 7.02(c).
Section 4.03 . Responsibility for Partnership Expenses
Among the Partners. The Partners agree that, as among the
Partners, responsibility for Partnership Expenses shall be
determined as set forth in this Section 4.03 and shall be paid
out of the funds set forth in Section 4.04 at such time after
such Partnership Expenses arise as the General Partner determines
in its discretion:
(a) General Rule for Funding of Partnership Expenses.
Except as set forth in Section 4.03(b), any Partnership
Expense shall be funded by the Partners pro rata in
accordance with their respective Commitment Percentages.
(b) Exceptions to the General Rule for Funding of Partnership
Expenses. Notwithstanding Section 4.03(a):
-
(i) [intentionally omitted]
(ii) in the event that any Limited Partner initiates any
Proceeding against the Partnership or any Indemnified Person and a
judgment or order not subject to further appeal or discretionary
review is
30
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rendered in respect of such Proceeding in favor
of the Partnership or such Indemnified Person, as the case may be,
such Limited Partner shall be solely liable for all reasonable
legal fees and expenses of the Partnership or such Indemnified
Person, as the case may be, attributable thereto;
(iii) subject to clause (iv), the Partners’ respective
shares of Partnership Expenses shall be adjusted to reflect the
share of Partnership Expenses of any New Commitment Partner
pursuant to Section 1.07(c); and
(iv) with the unanimous consent of the Limited Partners, the
Limited Partners may agree that any Partnership Expense shall be
funded by the Partners on a basis other than that set forth in the
foregoing provisions of this Section 4.03.
Section 4.04 . Sources of Funds for Funding by the
Partners of Partnership Expenses. The Partners acknowledge that
Partnership Expenses shall be funded by or for the account of the
Partners, to the extent provided in Section 4.03, through any
one or more of the following sources of funds of the Partnership,
determined by the General Partner in its discretion:
-
(i) Capital Contributions by the Partners in accordance with
Article 5;
(ii) the withholding, pursuant to Section 6.05(c), of
amounts (whether realized through the sale of Partnership assets or
otherwise) distributable to the Partners;
(iii) reserves set aside pursuant to Section 6.05(e);
and
(iv) amount borrowed by the General Partner for the benefit of
the Partners pursuant to a Credit Facility in accordance with
Section 2.13.
ARTICLE 5
C APITAL C OMMITMENTS AND C APITAL
C ONTRIBUTIONS
Section 5.01 . Capital Commitments. (a) Each
Limited Partner hereby agrees to make Capital Contributions
required to be made in respect of Partnership Investments and
Partnership Expenses from time to time as hereinafter set forth in
this Article 5; provided that the applicable Drawdown Notice
with respect to any Capital Contribution by a Limited Partner in
respect of a Partnership Investment is delivered to such Limited
Partner prior to the termination of the Commitment Period, except
that such Drawdown Notice may be delivered to such Limited Partner
after the termination of the Commitment Period if such Drawdown
Notice (A) relates to a Partnership Investment that the
Partnership committed to make prior to the termination of the
Commitment
31
Period as evidenced by a letter of intent,
agreement in principle or definitive agreement to invest or
(B) relates to Follow-On Investments to the extent such
Follow-On Investments have been disclosed to and approved by the
Limited Partners prior to the last day of the Commitment Period.
The General Partner shall not deliver any Drawdown Notice until the
First Closing Date other than with respect to the payment of
Organizational Expenses described in
Section 4.02(a)(i).
(b) Host contributed to the Partnership (x) all of its
interest in and to the Poland Hotel Property, which contribution
was effected through a transfer of the beneficial interest in HHR
Warsaw B.V., and (y) the Poland Hotel Property Note, and in
exchange therefore, Host received a limited partner interest with a
Capital Account equal to the Initial Hotel Property Price for the
Poland Hotel Property plus the net asset value of HHR Warsaw B.V.
equal to €18,151. Each of the General Partner and each
Limited Partner hereby consents to the admission of Host as Limited
Partner.
(c) Notwithstanding anything contained in this Agreement, no
Limited Partner shall be required to make any Capital Contribution
if, at the time such Capital Contribution is to be made, such
Capital Contribution exceeds such Limited Partner’s then
Available Capital Commitment.
(d) Subject to the unanimous consent of the Partners, the
General Partner may extend the Commitment Period for ********
period, provided it shall be a condition to any extension by
a Limited Partner of the Commitment Period that such Limited
Partner shall have simultaneously extended the commitment period
under the Corresponding Provision. Subject to Section 10.03, a
Limited Partner may terminate the Commitment Period with respect to
its Capital Commitment, ************************************
***********************************************************************************************************
******************************************************************************
by notice to the General Partner (the " Commitment Period
Termination Notice "), provided it shall be a condition
to any termination by a Limited Partner of the Commitment Period as
described above that such Limited Partner shall have simultaneously
terminated the commitment period of the TRS CV under the
Corresponding Provision.
(e) The General Partner shall contribute to the Partnership the
economic ownership of all shares or ownership interests in the
capital of any subsidiaries formed by it and receive credit for
such contribution (as a deemed capital contribution) in an amount
equal to the paid-up capital of each such direct subsidiary as well
as the paid-up capital of any indirect subsidiaries. Without
limiting the generality of the foregoing, in connection with the
financing of the Initial Hotel Properties, the Limited Partners
acknowledge that the General Partner (A) formed HHR Euro
Funding B.V., a private company with limited liability (
besloten vennootschap met beperkte aansprakelijkheid ) with
a corporate
32
seat in Amsterdam, the Netherlands (the "
Original Dutch Subsidiary Shares "), (B) incorporated
an additional subsidiary, HHR Euro Holding B.V., a private company
with limited liability ( besloten vennootschap met beperkte
aansprakelijkheid ) with its corporate seat in Amsterdam, The
Netherlands (" HHR Holding "), (C) contributed to the
Partnership the economic ownership of all shares in the share
capital of HHR Holding, and (D) transferred the Original Dutch
Subsidiary Shares to HHR Holding. For the avoidance of doubt, the
General Partner shall be deemed to have contributed to the
Partnership the nominal issued and paid-up capital of HHR Euro
Funding B.V., HHR Holding and of the following subsidiaries of HHR
Euro Funding B.V.: HHR Italy B.V., HHR U.K. B.V. and HHR Spain B.V.
For the avoidance of doubt, the foregoing shall not mean that the
Original Dutch Subsidiary Shares, the shares in HHR Holding after
the transfers referred to above, or the shares or interests in any
other direct or indirect subsidiary will be legally owned by the
Limited Partners. The Capital Commitment of the General Partner at
any time shall be equal to 0.100556% of the aggregate amount of the
Capital Commitments of the Partners at such time. The Capital
Commitment of the General Partner is set forth on Schedule
A.
(f) The Capital Commitment of each Partner is set forth on
Schedule A (it being understood and confirmed by all Partners that
Schedule A is being amended and restated to increase the Capital
Commitments of the Partners, correct certain typographical errors
and set forth unrounded Capital Commitments to the nearest Euro and
the related unrounded Commitment Percentages).
(g) Host shall be permitted to reduce its initial Capital
Commitment in accordance with Section 5.04.
Section 5.02 . Drawdown Procedures. (a)
Generally . Each Limited Partner shall make Capital
Contributions in such amounts and at such times as the General
Partner shall specify in notices (" Drawdown Notices ")
delivered from time to time to such Limited Partner. All Capital
Contributions shall be paid to the Partnership in immediately
available funds in Euros (and/or U.S. Dollars with respect to the
Initial Hotel Properties, as specifically set forth in Schedule A)
by noon (Amsterdam time) on the date specified in the applicable
Drawdown Notice (the " Drawdown Date ") which date shall be
at least ten (10) Business Days from and including the date of
delivery of the Drawdown Notice. If any Limited Partner fails to
pay by the Drawdown Date the required Capital Contribution to be
made by such Limited Partner, the General Partner shall provide
notice of such failure to such Limited Partner on the Drawdown
Date. Capital Contributions may include amounts that the General
Partner determines, in its reasonable discretion, are necessary or
desirable to establish reserves in respect of Partnership
Investments or Partnership Expenses. To the extent a Capital
Contribution made under this Article 5 will cause a relative change
(relative substitution) in the amount credited on the Limited
Partners’ Capital Accounts, the prior written unanimous
consent of all Partners is required.
33
The Partners acknowledge and agree that their
respective initial Capital Commitments as set forth on Schedule A
are denominated in U.S. Dollars and will be funded to the General
Partner in U.S. Dollars, provided that ABP may, at its option elect
to contribute its cash contribution in Euros notwithstanding that
all or a portion of ABP’s Capital Commitment is denominated
in U.S. Dollars (any such actual contribution of Euros, being
referred to as an " ABP Euro Exchanged Contribution "). With
respect to any ABP Euro Exchanged Contribution, ABP agrees that it
shall contribute an amount of Euros sufficient for the General
Partner to immediately exchange on such Drawdown Date for U.S.
Dollars in the amount of the Drawdown for ABP (the " U.S.
Dollar Equivalent Contribution Amount "). To the extent
any Drawdown Notice requires a Drawdown of a portion of a Limited
Partner’s Available Capital Commitment that is denominated in
U.S. Dollars, the Capital Contribution of U.S. Dollars by any
Partner other than ABP and the U.S. Dollar Equivalent
Contribution Amount for ABP shall be deemed converted to Euros upon
contribution to the Partnership using the exchange rate quoted on
www.bloomberg.com as of the close of trading in New York on the
closing date of the contribution to the Partnership or the
acquisition by the Partnership (as applicable) of the relevant Real
Estate Asset (ie., May 3, 2006 for the contribution of the
Poland Hotel Property and for the acquisition by the Partnership of
Sheraton Skyline, Sheraton Roma, Westin Palace Madrid and Westin
Palace Milan and June 13, 2006 for the acquisition of Westin
Europa & Regina), provided that, for purposes of
determining the contributing Partner’s Available Capital
Commitment, such contribution shall be deemed converted to Euros
upon contribution to the Partnership using the exchange rate of
€1.00 to U.S. $1.195.
For the avoidance of doubt, the Partners acknowledge that only
the initial Capital Commitments (set forth in the first column of
Schedule A) were denominated in U.S. Dollars and that as of the
date of this Agreement, all remaining Capital Commitments are
denominated solely in Euros.
The General Partner shall make Capital Contributions in such
amounts as hereinafter set forth in this Article 5 and at the same
times and in the same manner as the Limited Partner who are
required to make related Capital Contributions.
(b) Regular Drawdowns .
34
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(B) With respect to each Follow-On Investment
covered by any Drawdown, each Partner in the original Partnership
Investment to which such Follow-On Investment relates shall be
required to make a Capital Contribution equal to the product of
(x) such Partner’s Commitment Percentage in respect of
such original Partnership Investment and (y) the
Investment Drawdown Amount in respect of such Follow-On
Investment.
(iii) Amount of Required Capital Contributions in Respect of
Expenses . With respect to the portion of the Expenses Drawdown
Amount to be applied to pay Partnership Expenses, each Partner
(including the General Partner) shall be required to make a Capital
Contribution equal to the amount of such Partnership Expenses
payable by such Partner as determined pursuant to
Section 4.03.
(iv) Limitation on Drawdowns .
**********************************************************************
***************************************************************************************************
***************************************************************************************************
****************************************************************************************************
***************************************************************************************************
****************************************************************************************************
****************************************************************************************************
****************************************************************************************************
****************************************************************************************************
*******************************************************************
(c) Intentionally Omitted.
(d) Special Drawdowns . If, in connection with the making
of any Partnership Investment or the payment of any Partnership
Investment Expense in respect of which a Drawdown Notice has been
delivered, the General Partner shall determine, in its discretion,
that it is necessary or desirable to increase the required Capital
Contribution to be made by any Limited Partner in connection
therewith, the General Partner shall deliver an additional Drawdown
Notice to such Limited Partner amending the original Drawdown
Notice and specifying:
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(ii) the amount of the increase in the required
Capital Contribution to be made by such Limited Partner;
(iii) the Drawdown Date with respect to the amount of the
increase in the required Capital Contribution if different from the
Drawdown Date specified in the original Drawdown Notice;
provided that the Drawdown Date with respect to the amount
of such increase shall be at least ten Business Days after delivery
of such additional Drawdown Notice; and
(iv) the reason for such increase.
For the avoidance of doubt, the Partners agree that a Limited
Partner shall never be required to make Capital Contributions
pursuant to this Section 5.02(c) in excess of its then
Available Capital Commitment. Any increase in the required Capital
Contribution of any Limited Partner pursuant to Section 5.03
shall be calculated in the manner set forth therein. Any increase
in the required Capital Contribution of the General Partner and
each Limited Partner due to an increase in any Investment Drawdown
Amount or the Expenses Drawdown Amount, as the case may be,
specified in the original Drawdown Notice shall be calculated in
accordance with Section 5.02(b)(ii) and
Section 5.02(b)(iii) (after giving effect to
Section 5.03, as appropriate) with respect to the amount of
such increase.
Section 5.03 . Default by Limited Partners.
(a) Each of the General Partner and each Limited Partner
agrees that time is of the essence as to the payment of its
required Capital Contributions, that any Default by any Limited
Partner would cause injury to the Partnership and to the General
Partner and the Limited Partners and that the amount of damages
caused by any such injury would be extremely difficult to
calculate. Accordingly, the amount of such Default (the "
Default Amount ") shall accrue interest commencing on the
Drawdown Date at the Default Rate and ending on the date paid or
contributed as a Default Contribution or loaned as a Total Drawdown
Default Loan or Default Loan. Upon the occurrence of any Default,
the General Partner shall promptly notify the Limited Partner who
has committed such Default (the " Defaulting Limited Partner
") of the occurrence of such Default. Upon the occurrence of any
Event of Default, the General Partner shall promptly notify all
Limited Partners other than the Defaulting Limited Partner (the "
Non-Defaulting Limited Partners ") of the occurrence of such
Event of Default and of the course or courses of action it is
electing to take as provided below.
(b) Upon the occurrence of an Event of Default, the General
Partner, in its sole discretion, may elect to exercise one or more
of the following remedies:
37
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(ii) request the Non-Defaulting Limited Partners
to provide a loan to the Partnership (each, a " Total Drawdown
Default Loan ") in the aggregate amount of the Drawdown
required in the applicable Drawdown Notice (the " Total Drawdown
Amount "), and which shall bear interest from the date the sum
is paid into the Partnership until the date it is repaid at the
Default Rate (or such lower rate as is the maximum rate permitted
by law); provided that notwithstanding Article 6, Proceeds
shall be utilized first to pay any outstanding Total Drawdown
Default Loans (and any accrued interest thereon) and there shall be
no distributions to the Partners pursuant to Article 6 until the
principal of and interest on all outstanding Total Drawdown Default
Loans have been paid in full by the Partnership; provided
further , to the extent a Non-Defaulting Limited Partner has
made a Capital Contribution prior to making a Total Drawdown
Default Loan, subject to such Non-Defaulting Limited
Partner’s consent, such Capital Contribution shall be deemed
to be its pro rata share of funding such Total Drawdown Default
Loan. For the avoidance of doubt, the Partners agree that a Limited
Partner shall never be required to make a loan to the
Partnership;
(iii) request the Non-Defaulting Limited Partners to provide a
loan to the Partnership in the amount of the Default Amount (the "
Default Loan ") and which shall bear interest from the date
the sum is paid into the Partnership until the date it is repaid at
the Default Rate (or such lower rate as is the maximum rate
permitted by law); provided that:
-
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(A) subject to the prior written unanimous consent of the
Partners (other than the Defaulting Limited Partner), such
Non-Defaulting Limited Partners shall be deemed to have purchased
for their respective accounts (as provided in
Section 5.03(d)), a percentage of the Defaulting Limited
Partner’s partnership interest equal to the percentage
derived by dividing an amount equal to *********************** (and
any unpaid interest thereon accrued to the date of such deemed
purchase) by the aggregate *********************** made by the
Defaulting Limited Partner as of such date plus the *************;
provided that in no instance shall the Defaulting Limited
Partner be deemed to have sold more than all of its partnership
interest. For illustrative purposes only,
********************************
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38
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