-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Ii8zIgQJYN/rNmf6y1+/V7CIOP1/H4H4Dl3T1a7dZHjRezYwiD9tZOgI0hTRsvb9 ZIuL3bQn9YTwVMnDMJ0PeQ== 0000950146-98-001214.txt : 19980720 0000950146-98-001214.hdr.sgml : 19980720 ACCESSION NUMBER: 0000950146-98-001214 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19980713 ITEM INFORMATION: FILED AS OF DATE: 19980714 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SONESTA INTERNATIONAL HOTELS CORP CENTRAL INDEX KEY: 0000091741 STANDARD INDUSTRIAL CLASSIFICATION: HOTELS & MOTELS [7011] IRS NUMBER: 135648107 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-09032 FILM NUMBER: 98665500 BUSINESS ADDRESS: STREET 1: 200 CLARENDON ST CITY: BOSTON STATE: MA ZIP: 02116 BUSINESS PHONE: 6174215400 MAIL ADDRESS: STREET 1: 200 CLARENDON ST CITY: BOSTON STATE: MA ZIP: 02116 FORMER COMPANY: FORMER CONFORMED NAME: HOTEL CORP OF AMERICA DATE OF NAME CHANGE: 19700622 FORMER COMPANY: FORMER CONFORMED NAME: CHILDS CO DATE OF NAME CHANGE: 19681121 8-K 1 FORM 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report: July 13, 1998 Commission File No.:0-9032 SONESTA INTERNATIONAL HOTELS CORPORATION _____________________________________________________________ (Exact Name of Registrant as Specified in its Charter) New York __________________________________ (State or Other Jurisdiction) 13-5648107 __________________________________________ (I.R.S. Employer Identification Number) 200 Clarendon Street, Boston, Massachusetts 02116 ___________________________________________ (Address of Principal Executive Offices) Registrant's Telephone Number, Including Area Code: (617) 421-5400 Not Applicable _______________________________________________________________ (Former Name or Former Address, if Changed Since Last Report) Item 2. Acquisition or Disposition of Assets On July 1, 1998, the Registrant, through its subsidiary, Sonesta Beach Resort Limited Partnership ("Purchaser") -- a Delaware limited partnership of which the Registrant's wholly-owned subsidiaries, Florida Sonesta Corporation ("FSC") and Key Biscayne Land Corporation are the sole general partner with a one percent (1%) partnership interest, and a limited partner with a 98% partnership interest, respectively -- acquired from Key Biscayne Limited Partnership ("Seller") its rights, title and interests in and to the real and personal property known as Sonesta Beach Resort, in Key Biscayne, Florida ("the Resort"). The Seller has a one percent (1%) limited partnership interest in the Purchaser. The Resort is a 300-room, full-service beachfront resort hotel sited on 10 acres in Key Biscayne, Florida. FSC has continuously operated the hotel under a management agreement since it sold the property to the Seller in 1984. The Resort has been operated by Sonesta as a deluxe beach hotel since it opened in the early 1970's. The Purchaser intends to continue operating the Resort as a deluxe resort hotel. The purchase price consisted of FSC's release of the Seller from indebtedness owed to FSC and/or its affiliates in connection with the Registrant's sale of the Resort to the Seller, in 1984, and loans advanced by FSC to restore the Resort following Hurricane Andrew, in 1992. This indebtedness is carried on Sonesta's books at approximately $10,720,000 at March 31, 1998, and the debt had matured or otherwise become due and payable at the end of 1997 and/or in early 1998. In addition, the Purchaser assumed a first mortgage loan in the amount of $22,431,000; interest on this first mortgage loan is payable monthly at 11.78% per annum until April 1999 when it increases to 12.78% per annum, and matures in October 2000. No principal payments are due until the maturity date. The Purchaser has also agreed to pay the Seller additional compensation if it sells the Resort prior to January 1, 2002. The transaction was completed pursuant to a pre-packaged bankruptcy. A Joint Plan of Reorganization was filed by the Seller and FSC in the U.S. Bankruptcy Court for the Southern District of Florida, Miami Division, on April 23, 1998, and the Plan was confirmed by the Court on June 25, 1998. Item 7. Financial Statements and Exhibits. Financial statements and proforma financial information required by this item have not been included in this initial report but will be filed on or before September 14, 1998. EXHIBITS TO FORM 8-K NUMBER DESCRIPTION 2.1 Contribution and Formation Agreement, dated as of January 30, 1998, by and among Key Biscayne Limited Partnership ("KBLP"), Florida Sonesta Corporation and Key Biscayne Land Corporation ("Sonesta II"), and joined in by Key Biscayne Hotel Associates, LTD. ("KBHA"), Partners Liquidating Trust, ("PLT"), Strategic Realty Advisors, Inc., ("SRAI") and Sonesta International Hotels Corporation ("Sonesta International"). 2.2 First Amendment to Contribution and Formation Agreement, dated as of April 3, 1998, by and among KBLP, FSC and Sonesta II, and joined in by KBHA, PLT, SRAI and Sonesta International. 2.3 Agreement of Limited Partnership of Sonesta Beach Resort Limited Partnership, dated April 1998, by and between FSC, Sonesta II and KBLP. 4.1 Assumption Agreement, dated as of July 1, 1998, by and between Sonesta Beach Resort Limited Partnership ("SBRLP") and State Street Bank and Trust Company, Trustee ("State Street"). 4.2 Amendment to and Assignment of KBHA/PLT Indebtedness, dated as of July 1, 1998, by and between KBLP, KBHA, PLT and SBRLP, including KBHA/PLT Note, dated July 1, 1998. Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. SONESTA INTERNATIONAL HOTELS CORPORATION By: _____________________________ Peter J. Sonnabend Vice President and Secretary July 13, 1998 EX-2.1 2 CONTRIBUTION AND FORMATION AGREEMENT CONTRIBUTION AND FORMATION AGREEMENT AMONG KEY BISCAYNE LIMITED PARTNERSHIP, a Florida limited partnership, FLORIDA SONESTA CORPORATION, a Florida corporation and KEY BISCAYNE LAND CORPORATION, a Florida corporation and joined in by KEY BISCAYNE HOTEL ASSOCIATES, LTD., a Florida limited partnership, PARTNERS LIQUIDATING TRUST, a Delaware trust STRATEGIC REALTY ADVISORS, INC., an Illinois corporation SONESTA INTERNATIONAL HOTELS CORPORATION, a New York corporation TABLE OF CONTENTS
Page ---- Article I Definitions...................................................................1 1.1 Definitions...................................................................1 1.2 References....................................................................8 Article II Formation of Partnership......................................................8 2.1 Formation and Contribution....................................................8 2.2 Assumption of Liabilities.....................................................9 2.3 Matters Relating to Existing Indebtedness...................................10 2.4 Matters Relating to Management Agreement and Asset Management Fee............11 Article III Closing......................................................................12 3.1 Closing......................................................................12 3.2 KBLP Closing Documents.......................................................12 3.3 Sonesta Closing Documents....................................................13 3.4 The Partnership Closing Documents............................................13 3.5 Form of Documents............................................................14 Article IV Representations and Warranties...............................................14 4.1 Sonesta Partner Representations and Warranties...............................14 4.2 KBLP Representations and Warranties..........................................15 Article V Conditions to Closing........................................................19 5.1 Conditions to KBLP's Obligations.............................................19 5.2 Conditions to Sonesta Partners' Obligations..................................20 Article VI Additional Covenants.........................................................20 6.1 Indemnification..............................................................20 6.2 Matters Relating to the Plan.................................................22 6.3 Books and Records............................................................22 6.4 Transaction Costs and Expenses...............................................22 6.5 Bulk Sales...................................................................23 6.6 [Intentionally Deleted]......................................................23 6.7 Contract Party Consents......................................................23 6.8 Forbearance..................................................................23 6.9 Further Assurances...........................................................23 6.10 Prorations and Apportionments................................................23 6.11 Tax Reporting................................................................24
Page ---- Article VII Default......................................................................24 7.1 Events of Default............................................................24 7.2 Remedies.....................................................................24 Article VIII Miscellaneous................................................................24 8.1 Survival.....................................................................24 8.2 Notices......................................................................24 8.3 Counterparts.................................................................25 8.4 Amendments...................................................................25 8.5 Waiver.......................................................................25 8.6 Successors and Assigns.......................................................25 8.7 Third Party Beneficiaries....................................................26 8.8 Partial Invalidity...........................................................26 8.9 Governing Law................................................................26 8.10 Assignment...................................................................26 8.11 Headings.....................................................................26 8.12 Gender and Number............................................................26 8.13 Time of Essence..............................................................26 8.14 Schedules....................................................................26
Exhibit A - Legal Description of the Land Exhibit B - Partnership Agreement Exhibit C - Permitted Exceptions Schedule 2.1 - Capital Contributions Schedule 2.2(a) - Payables Schedule 2.3(d) - Mortgage Amendments Schedule 4.2(f) - Existing Indebtedness Schedule 4.2(g) - Contracts Schedule 4.2(i) - Insurance Schedule 4.2(j) - Employee Benefit Plan Schedule 4.2(k) - Licenses and Permits Schedule 4.2(n) - Intellectual Property ii CONTRIBUTION AND FORMATION AGREEMENT THIS CONTRIBUTION AND FORMATION AGREEMENT (the "Agreement") is entered into as of January 30, 1998, by and among KEY BISCAYNE LIMITED PARTNERSHIP, a Florida limited partnership ("KBLP"), FLORIDA SONESTA CORPORATION, a Florida corporation, ("FSC") and KEY BISCAYNE LAND CORPORATION, a Florida corporation ("Sonesta II") and joined in by KEY BISCAYNE HOTEL ASSOCIATES, LTD., a Florida limited partnership ("KBHA"), PARTNERS LIQUIDATING TRUST, a Delaware trust ("PLT"), STRATEGIC REALTY ADVISORS, INC., an Illinois corporation ("SRAI") and SONESTA INTERNATIONAL HOTELS CORPORATION, a New York corporation. PRELIMINARY STATEMENT A. The parties hereto desire to form a limited partnership under the provisions of the Delaware Revised Uniform Limited Partnership Act, as amended, to be known as SONESTA BEACH RESORT LIMITED PARTNERSHIP (the "Partnership"). B. KBLP is the owner of a 293-room hotel located in Key Biscayne, Florida and commonly known as the Sonesta Beach Resort and desires to contribute the same to the Partnership as its initial capital contribution thereto. C. The parties desire to set forth herein their understandings with regard to the formation of the Partnership. NOW, THEREFORE, the parties hereby agree as follows: ARTICLE I Definitions 1.1 Definitions. For purposes of this Agreement, the following terms shall have the meanings indicated below: "Aetna" shall mean Aetna Life Insurance Company, one of the Existing Lenders. "Aetna Indebtedness" shall mean the Existing Indebtedness held by Aetna and marked with an "A" on Schedule 4.2(f). "Aetna Consent/Estoppel" shall have the meaning set forth in Section 2.3(a). "Affiliate" shall mean, with respect to any party or other person, an affiliate of such party or other person as determined under the Securities Act and the regulations promulgated thereunder. "Agreement" shall mean this Agreement, as amended or modified from time to time hereafter in accordance with the terms hereof. "Asset Management Fee" shall mean the "SRA Fee" payable to SRAI pursuant to Section 7.1(g) of the Management Agreement, as added by the Second Amendment to Management Agreement referred to in the definition of "Management Agreement". "Assumed Liabilities" shall have the meaning set forth in Section 2.2(a). "Books and Records" shall mean all records, books of account and papers of KBLP relating to the construction, ownership and operation of the Property, including without limitation any architect's drawings, blue prints, and originals and/or copies of Contracts. "Bulk Sales Releases/Directions" shall have the meaning set forth in Section 6.5. "Closing" shall have the meaning set forth in Section 3.1. "Closing Date" shall have the meaning set forth in Section 3.1. "Closing Documents" shall mean the KBLP Closing Documents, the Sonesta Closing Documents and the Partnership Closing Documents, or any of them. "Consumables" shall mean all food and beverages; engineering, maintenance and housekeeping supplies, including soap, cleaning materials and mattresses, fuel, draperies, materials and carpeting; stationery and printing; and all other supplies of all kinds, whether used, unused or held in reserve storage for future use in connection with the maintenance and operation of the Hotel or the Real Property, which are owned by KBLP on the date hereof subject to such depletion and including such re-supplies as shall occur and be made in the normal course of business, whether issued or held in operating departments or held in reserve storage. "Contract Party Consents" shall have the meaning set forth in Section 6.7. "Contracts" shall mean the space leases, occupancy agreements, concession agreements, license agreements, loan documents, management agreements, service, maintenance and other contracts and concessions and equipment leases relating to the Hotel or Real Property or any portion thereof, including without limitation the Existing Indebtedness Documents and the Management Agreement. "Deadlines" shall have the meaning set forth in Section 6.2. "Default" shall have the meaning set forth in Section 7.1. "Environmental Laws" shall mean all federal, state and local statutes, ordinances, codes, rules, regulations, guidelines, orders and decrees regulating, relating to or imposing liability or standards concerning or in connection with Hazardous Materials, underground storage tanks or the protection of human health or the environment, as the same may be amended from time to time. "Excess Expenditures" shall have the meaning set forth in Partnership Agreement. 2 "Existing Indebtedness" shall mean those certain loans to KBLP described on Schedule 4.2(f). "Existing Indebtedness Documents" shall mean the instruments and documents which are listed on Schedule 4.2(f) and evidence or secure the Existing Indebtedness. "Existing Lenders" shall mean the Persons set forth on Schedule 4.2(f). "Fair Market Value" shall have the meaning set forth in the Partnership Agreement. "FF&E" shall mean all fixtures, furniture, furnishings, fittings, equipment, machinery, apparatus, appliances and other articles of tangible personal property now owned by KBLP and used or usable, or intended for use, in connection with any present or future occupation or operation of all or any part of the Hotel or Real Property, whether located on or in the Hotel or Real Property or stored off site, subject to such depletions, re-supplies, substitutions and replacements as shall occur and be made in the normal course of business. "Financial Transaction" shall have the meaning set forth in Section 6.2. "FSC Guaranty" shall have the meaning set forth in Section 2.3(c). "FSC Indebtedness" shall mean the Existing Indebtedness held by FSC and marked with an "FSC" on Schedule 4.2(f). "Gross Asset Value" shall mean the gross asset value of the Property, which equals at least $36,000,000. The parties agree that the Gross Asset Value may not equal the Fair Market Value of the Property on the date hereof and that there shall be no presumption that the Gross Asset Value equals the Fair Market Value of the Property on the date hereof. "Hazardous Materials" shall mean any substance, material, waste, gas or particulate matter which (a) is now, or at any future time may be, regulated by the United States Government, the State of Florida any other state with jurisdiction or any local governmental authority, (b) the exposure to, or manufacture, possession, presence, use, generation, storage, transportation, treatment, release, disposal, abatement, cleanup, removal, remediation or handling of is prohibited, controlled or regulated by any Environmental Law, (c) requires investigation or remediation under any Environmental Law or common law, (d) is toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic or otherwise hazardous or (e) causes or threatens to cause a nuisance upon the Property or to adjacent properties or poses or threatens to pose a hazard to the health or safety of persons on or about the Property. "Hotel" shall mean the Sonesta Beach Resort, together with related amenities and facilities, currently being operated on the Real Property. "Improvements" shall mean all buildings, structures (surface and subsurface) and other improvements located on the Land, including any fixtures as shall constitute real property under applicable provisions of law. 3 "KBHA Indebtedness" shall mean the Existing Indebtedness indicated with an "K" on Schedule 4.2(f). "KBHA/PLT Indebtedness" shall mean the combined obligations of KBLP under the KBHA Indebtedness and the PLT Indebtedness. "KBHA/PLT Indebtedness Amendments" shall have the meaning given it in Section 2.3(c). "KBHA/PLT Note" shall have the meaning set forth in Section 2.3(c). "KBLP Closing Documents" shall have the meaning set forth in Section 3.2. "KBLP Distribution" shall have the meaning set forth in the Partnership Agreement. "KBLP Liabilities" shall have the meaning set forth in Section 2.2(b). "KBLP Party(ies)" shall have the meaning set forth in Section 6.2. "Land" shall mean those certain parcels of real estate and interests therein listed and described on Exhibit A. "Loss" shall have the meaning set forth in Section 6.1. "Lien" shall mean any mortgage, lien, pledge, security interest, charge, claim, restriction or other encumbrance of any nature whatsoever. "Liquidated Damages" shall mean, as of the date of calculation, an amount equal to the present value (discounted at twelve percent (12%) per annum) of the amount of interest (at twelve percent (12%) per annum) that would be earned from the date of calculation to the Measurement Date on an amount equal to the aggregate amount of federal and state income taxes that would be payable by all of the constituent partners of KBLP if the Property were sold on the Measurement Date (the "Aggregate Tax Liability"). The intent of the calculation of Liquidated Damages is to compensate each KBLP partner for the loss he sustains as a consequence of having to pay recapture taxes prior to the Measurement Date, such loss being deemed to equal the present value of the interest that the partner would have earned on the amount of taxes paid by it between the date the taxes are paid and the Measurement Date. KBLP's good faith estimate of the maximum amount of the Aggregate Tax Liability is $8,469,000 (the "Maximum Aggregate Tax Liability"). Accordingly, based upon the foregoing, the maximum amount of Liquidated Damages for calendar year (i) 1998 shall equal $3,086,000; (ii) 1999 shall equal $2,441,000; (iii) 2000 shall equal $1,718,000; (iv) 2001 shall equal $907,000; and (v) 2002 and thereafter shall equal $0. Each partner of KBLP shall prepare his own calculation of Liquidated Damages and this amount shall be certified by a certified public accountant or such other party as actually prepares that partner's tax return, and said certified amount shall be delivered to the Partnership. The Partnership shall then be obligated to pay said partner the amount so certified; provided, however, that in no event shall Liquidated Damages payable exceed the amounts set forth in (i) - (v) for the respective year and no partner shall be entitled to receive more than his proportionate share of the amounts set 4 forth in (i) - (v) for the respective year based on said partner's partnership percentage of KBLP as certified to the Partnership by KBLP's general partner. In the event a KBLP partner fails to so submit such a statement, such partner shall be entitled to receive his proportionate share of the amounts set forth in (i) - (v) for the respective year based on said partner's partnership percentage of KBLP as certified to the Partnership by KBLP's general partner (or such lesser amount as the accountant for the Partnership reasonably calculates as Liquidated Damages for such partner, less the costs reasonably incurred by the Partnership in connection therewith); provided, however, that the obligation to pay any person any Liquidated Damages shall terminate as of the date that is two years after the date of the occurrence of the event that gave rise to the obligation to pay Liquidated Damages. Notwithstanding anything construed herein to the contrary, the Maximum Aggregate Tax Liability is based upon tax laws as in effect as of the date of the Agreement and shall be adjusted in the event of any changes in the tax laws which are effective as of the date of the occurrence of the event that gave rise to the obligation to pay Liquidated Damages. "Management Agreement" shall mean that certain Management Agreement dated as of December 27, 1984, by and between FSC and KBLP (as successor to Biscayne Beach Hotel Associates, Ltd.), as amended by that certain First Amendment to Management Agreement dated September 12, 1991 and that certain Second Amendment to Management Agreement dated December 31, 1993 and as further amended as described in Section 2.4. "Measurement Date" shall mean January 1, 2002. "Miscellaneous Property Assets" shall mean all tangible and intangible assets of KBLP relating to or used in connection with the Hotel (other than the Real Property, the FF&E, the Operating Equipment, and the Consumables), including without limitation all right, title and interest of KBLP in and to contract rights, leases, concessions, trademarks, service marks, trade names (including the names of restaurants, lounges and meeting rooms), logos, copyrights, rights under guaranties or warranties relating to goods, merchandise or services, insurance claims, the rights to receive the proceeds of any condemnation or taking of the Property or a deed in lieu thereof, goodwill, any goods, merchandise or services either in transit, under fabrication or otherwise ordered but not yet received at the Hotel on or prior to the Closing Date, all accounts and other receivables, all unpaid rents, guest ledger receivables, cash or other funds on deposit in bank accounts or in transit for deposit, petty cash, house banks, advance payments, outstanding checks, refunds, rebates or other claims or interest thereon, utility and similar deposits, prepaid insurance and other prepaid items, bookings and advance booking deposits, computer software and sales data. "Mortgage Amendments" shall have the meaning given it in Section 2.3(d). "Mortgages" shall mean the mortgages and deeds of trust marked with an "M" on Schedule 4.2(f). 5 "New Asset Management Fee Expiration Date" shall have the meaning set forth in Section 2.4(d). "Operating Equipment" shall mean all china, glassware, linens, silverware and uniforms, whether in use or held in reserve storage for future use, in connection with the operation of the Hotel, which are owned by KBLP and on hand on the date hereof subject to such depletion and including such re-supplies as shall be made in the normal course of business. "Partnership" shall have the meaning set forth in Recital A. "Partnership Agreement" shall mean the Agreement of Limited Partnership of the Partnership the form of which is attached hereto as Exhibit B. "Partnership Closing Documents" shall have the meaning set forth in Section 3.4. "Partnership Interest" shall mean any general or limited partnership interest in the Partnership. "Permits" shall mean all licenses, franchises and permits used in or relating to the ownership, occupancy or operation of the Hotel or Real Property or any facilities located thereon or any part thereof. "Permitted Exceptions" shall mean those title exceptions, defects and other matters set forth on Exhibit C, including without limitation the Liens created by the Mortgages. "Person" or "person" shall have the meaning set forth in the Partnership Agreement. "Personalty" shall mean all Property other than the Real Property. "Plan" shall mean that certain Plan to be filed in the United States Bankruptcy Court, District of Delaware (or in the event that Delaware is not a legally available venue, such other legal venue upon which the parties may agree), in the matter of Key Biscayne Limited Partnership, d/b/a Sonesta Beach Resort. "PLT Indebtedness" shall mean the Existing Indebtedness indicated with an "P" on Schedule 4.2(f). "Property" shall mean (a) the Real Property, (b) the FF&E, (c) the Operating Equipment, (d) the Consumables, (e) the rights and interests of KBLP in, to and under all Contracts, (f) the rights and interests of KBLP in, to and under any Permits, and (g) all other Miscellaneous Property Assets, collectively, without distinction among the various classes of property. "Rate" shall have the meaning set forth in the Partnership Agreement. "Real Property" shall mean the Land and the Improvements, together with (a) all of the estate, right, title and interest of KBLP therein and in and to any land lying in the beds of any streets, roads or avenues, open or proposed, public or private, in front of or adjoining the Land to 6 the center lines thereof and in and to any awards made or to be made in lieu thereof and in and to any unpaid awards for damage to the foregoing by reason of the change of grade of any such streets, roads or avenues; and (b) all easements, rights, licenses, privileges, rights-of-way, strips and gores, hereditaments and other such rights and interests appurtenant to the foregoing. "Securities Act" shall mean the Securities Act of 1933, as amended. "Senior Indebtedness" shall mean the Existing Indebtedness marked with an "SD" on Schedule 4.2(f), including all advances for legal and accounting fees incurred in connection herewith and all Transaction Costs, plus interest thereon at the per annum rate equal to the Rate until paid. "Sonesta Closing Documents" shall have the meaning set forth in Section 3.3. "Sonesta Guaranty" shall have the meaning set forth in Section 2.3(c). "Sonesta International" shall mean Sonesta International Hotels Corporation. "Sonesta Partner" shall mean either FSC or Sonesta II and "Sonesta Partners" shall mean both of them. "Special Final Distribution" shall have the meaning set forth in Section 2.1(b). "Title Policy" shall mean an owners' title insurance policy issued by the Title Company in an amount reasonably acceptable to FSC insuring the Partnership as owner of good, marketable and indefeasible title to the Property subject only to the Permitted Exceptions, which title policy shall be in form satisfactory to, and contain endorsements requested by, the Sonesta Partners. "Transaction Costs" shall have the meaning set forth in Section 6.4. "Transactions" shall mean the transactions contemplated hereby. "Transfer Basis" shall have the meaning set forth in the Partnership Agreement (i.e., the sum of (a) the outstanding principal amount of all secured and unsecured indebtedness of the Partnership on the Closing Date, including the Assumed Liabilities, as set forth on Schedule 4.2(f), plus all unpaid interest accrued or deemed to have accrued thereon through the Measurement Date (or the date of the Special Final Distribution or applicable Realization Event, as applicable), less amounts applied in repayment thereof in accordance with the terms of such debt (as modified by the Second Amendment to Management Agreement in the case of the FSC Indebtedness), and (b) the sum of the Excess Expenditures for the calendar years or portion thereof through the Measurement Date (or the date of the Special Final Distribution or applicable Realization Event, as applicable), and the Transaction Costs, plus interest thereon through the Measurement Date (or the date of the Special Final Distribution or applicable Realization Event, as applicable), at the per annum rate equal to the Rate.). 7 1.2 References. All references in this Agreement to particular sections or articles shall, unless expressly otherwise provided, or unless the context otherwise requires, be deemed to refer to the specific sections or articles in this Agreement, and any references to "Exhibit" or "Schedule" shall, unless otherwise specified, refer to one of the exhibits or schedules annexed hereto and, by such reference, made a part hereof. The words "herein", "hereof", "hereunder", "hereinafter", "hereinabove" and other words of similar import refer to this Agreement as a whole and not to any particular section, subsection or article hereof. ARTICLE II Formation of Partnership 2.1 Formation and Contribution. (a) Upon the terms and subject to the conditions contained herein, the parties shall form the Partnership upon the terms and conditions set forth in the Partnership Agreement and, at Closing, (a) KBLP shall contribute to the capital of the Partnership all of KBLP's right, title and interest in and to the Property, free and clear of all Liens other than the Permitted Exceptions, and (b) each Sonesta Partner shall contribute to the capital of the Partnership cash in the amount set forth opposite its name on Schedule 2.1. The parties agree that, at Closing, the Gross Asset Value of the Property less the principal amount of the Existing Indebtedness shall be deemed to be $1.00. FSC shall be the general partner of the Partnership. KBLP's rights to distributions under the Partnership Agreement upon the occurrence of a Realization Event (as defined in the Partnership Agreement) or in the event of a liquidation or dissolution shall be to receive the KBLP Distribution. (b) The Partnership Agreement shall provide that the Partnership may at any time on or after January 1, 2002 by written notice (the "Notice") delivered to KBLP or its successors or legal representatives, make a special final distribution ("Special Final Distribution") to KBLP equal to the greater of (i) $10.00 and (ii) the product of the Partnership Percentage (as defined in the Partnership Agreement) of KBLP multiplied by the excess of (A) the Fair Market Value of the Property on the date the Notice is delivered over (B) the Transfer Basis. The Special Final Distribution shall be made on the twentieth (20th) day following the date of the Notice and shall be paid in cash (and, in the event that the Fair Market Value has not been determined, the Partnership shall pay to KBLP the amount to be paid pursuant to this Section based on the amount designated by the Sonesta Partners as the Fair Market Value pursuant to the definition of "Fair Market Value," and a subsequent adjustment shall be made between the Partnership and KBLP upon the determination of Fair Market Value in accordance with the terms of the Partnership Agreement if the amount owing based on the final determination of Fair Market Value differs from the sum originally paid). Upon payment of the Special Final Distribution, KBLP shall be deemed to have (x) relinquished its interest in the Partnership, and all rights and privileges pertaining thereto or hereunder, including any right to vote on Partnership matters or to receive any further distributions from the Partnership whatsoever (except as provided in Section 10.2 of the Partnership 8 Agreement), and (y) assigned to FSC all of its right, title and interest in, to and under the Partnership Agreement. (c) If prior to January 1, 2002, (i) the Partnership sells, exchanges or otherwise disposes of the Property, or (ii) for any reason (other than a refinancing of the Aetna Indebtedness or its replacement, the consummation of the Transactions, or a condemnation or casualty of the Property where the restoration of the Property is not commercially practicable) the Partnership is otherwise liquidated or dissolved in a manner that results in income or gain for federal income tax purposes by KBLP or is treated as a sale or exchange of all or substantially all of the Property for federal income tax purposes, or (iii) there is any other occurrence (other than a refinancing of the Aetna Indebtedness or its replacement, the consummation of the Transactions or a condemnation or casualty of the Property where the restoration of the Property is not commercially practicable or other circumstance not reasonably avoidable by the Partnership) that results in income or gain for federal income tax purposes by KBLP or is treated as a sale or exchange of all or substantially all of the Property for federal income tax purposes, then the Partnership shall, concurrent with the occurrence of any such event, pay to KBLP an amount equal to the Liquidated Damages. The FSC Guaranty shall also guaranty (i) the Partnership's obligation to pay Liquidated Damages, and (ii) in the event FSC assigns its interest as General Partner in accordance with Sections 8.1(a) or (b) of the Partnership Agreement, the Assumed Liabilities. 2.2 Assumption of Liabilities. (a) At the Closing, the parties shall cause the Partnership to assume, and after Closing the Partnership shall pay as and when due (subject to the right, in good faith, to contest amounts due) the following: (i) the obligations of KBLP under the Existing Indebtedness (other than the KBHA Indebtedness and the PLT Indebtedness) pursuant to the applicable Existing Indebtedness Documents (with the liability of the Partnership being limited to the same extent, if any, as KBLP's liability is limited thereunder), (ii) the liabilities and obligations of KBLP under the other Contracts (with the liability of the Partnership being limited to the same extent, if any, as KBLP's liability is limited thereunder), (iii) environmental liabilities relating to the ownership, use, management or operation of the Property, (iv) real property, sales, occupancy, use and other taxes and assessments relating to the ownership, use, management or operation of the Property (other than taxes in the nature of income taxes of KBLP or any of its constituent partners), (v) the liabilities set forth on Schedule 2.2(a), (vi) the Asset Management Fee; and (vii) all other liabilities of KBLP relating to the use, management or operation of the Property other than the KBLP Liabilities (collectively, the "Assumed Liabilities"). (b) Except as otherwise herein expressly provided, the Partnership shall not by virtue of the consummation of the Transactions be deemed to have assumed any KBLP Liabilities. "KBLP Liabilities" means (i) any liabilities or obligations of KBLP that do not relate to the use, management or operation of the Property, or (ii) the KBHA Indebtedness or the PLT Indebtedness, or (iii) any liabilities or obligations to Affiliates of 9 KBLP (other than the Asset Management Fee), regardless of whether any of the same otherwise relate to the Property, and KBLP shall pay the KBLP Liabilities as and when they become due (subject to the right, in good faith, to contest amounts due). 2.3 Matters Relating to Existing Indebtedness. (a) KBLP shall use reasonable best efforts to obtain, at or prior to Closing, the unconditional consent of Aetna to the consummation of the Transactions (including without limitation the amendment of the Management Agreement described in Section 2.4), together with an estoppel certificate from Aetna, in form and substance reasonably acceptable to the Sonesta Partners (the "Aetna Consent/Estoppel"). (b) At Closing, the Sonesta Partners shall cause FSC to release KBLP and its partners from any and all personal liability in respect of the FSC Indebtedness and the Existing Indebtedness Documents relating thereto (the "FSC Indebtedness Waiver"). (c) At Closing, the Sonesta Partners shall cause the Partnership and KBLP shall cause KBHA and PLT to enter into an agreement (the "KBHA/PLT Indebtedness Amendments") modifying the provisions of the KBHA Indebtedness and the PLT Indebtedness as follows: (i) the KBHA/PLT Indebtedness shall be exchanged for a note from the Partnership in the principal amount equal to $500,000, payable on the Measurement Date, with no interest thereon unless paid after the Measurement Date, in which event simple interest shall accrue from the Measurement Date at twelve percent (12%) per annum until paid in full (the "KBHA/PLT Note"), (ii) at the option of the Sonesta Partners, all security interests of KBHA and PLT with respect to the KBHA Indebtedness and the PLT Indebtedness shall be released and/or assigned to FSC pursuant to instruments of assignment, in recordable form, in form and substance reasonably acceptable to FSC, KBHA and PLT, (iii) payments made in respect of the KBHA/PLT Note shall be paid to KBHA, (iv) FSC shall guaranty the obligations of the Partnership under the KBHA/PLT Note in form and substance reasonably acceptable to KBLP and FSC (the "FSC Guaranty") and (v) FSC shall cause Sonesta International to issue a back-up guaranty of collection to KBHA, which guarantees the obligations of FSC under the FSC Guaranty only with respect to the KBHA/PLT Note (and not with respect to the obligation to pay Liquidated Damages or Assumed Liabilities) (the "Sonesta Guaranty"), which guaranty shall be in form and substance reasonably acceptable to Sonesta International, KBHA and KBLP. (d) Upon execution hereof, KBLP shall execute and deliver to FSC in recordable form the amendments to the mortgages from KBLP to FSC set forth as Schedule 2.3(d) (the "Mortgage Amendments"). The Mortgage Amendments shall be promptly recorded but shall only be effective in the event of a KBLP Default, and, absent a KBLP Default, shall be deemed null and void and of no force or effect. 10 2.4 Matters Relating to Management Agreement and Asset Management Fee. (a) [Intentionally Deleted] (b) Each of FSC, KBLP, PLT and KBHA hereby waives and releases any and all claims and causes of action that it may have for breach of the Management Agreement by the other, whether known or unknown or anticipated or unanticipated, which arise out of or result from any acts, occurrences, transactions or omissions occurring on or prior to the date hereof. The waivers and releases described in this subparagraph (b) shall be null and void in the event of a termination of this Agreement whether resulting from a default by any party hereto or otherwise. (c) Upon execution hereof, the Management Agreement shall be deemed modified (i) to provide that neither the Transactions, the Plan, any notice of default issued by Aetna under or in connection with the Aetna Indebtedness, nor termination of the Management Agreement shall be cause for termination of the payment of the Asset Management Fee to SRAI thereunder, and (ii) to extend the term thereof for an additional five years (5). The amendments described in subparagraph (c)(i) shall be null and void in the event of a termination of this Agreement due solely to (A) the failure to meet the Deadlines or (B) a Default by KBLP hereunder. The amendments described in subparagraph (c)(ii) shall be null and void effective as of the Closing or in the event of a termination of this Agreement due solely to (A) the failure to meet the Deadlines (unless due to a KBLP Default) or (B) a Default by one or more of the Sonesta Partners hereunder. (d) At Closing, the Management Agreement shall be deemed modified to (i) extend the term thereof for an additional fifteen years (15) years; (ii) provide for the continued payment of the Asset Management Fee upon the terms set forth in the Management Agreement except that (A) the Asset Management Fee shall, subject to the provisions for earlier termination or deferral provided in the Management Agreement, continue to be paid only until the later of the relinquishment of KBLP's Partnership Interest pursuant to Section 2.1(b) hereof or the Measurement Date (the "New Asset Management Fee Expiration Date") and (B) one-third of the Asset Management Fee shall be deferred and paid to SRAI only upon the Measurement Date; and (iii) provide that FSC shall guaranty to SRAI payment of the Asset Management Fee. FSC shall cause the deferred portion of the Asset Management Fee described in (B) above to be deposited on its due date in an escrow (the terms of which are reasonably acceptable to FSC and KBLP) established with the law firm Broad & Cassel in Boca Raton, Florida, or such other escrow agent reasonably acceptable to FSC and KBLP. (e) Other than amendments expressly provided for elsewhere herein, the Management Agreement shall not be amended or modified in any way without KBLP's consent if the effect of the amendment or modification would be to alter any economic term or provision thereof in a manner that would adversely affect KBLP's rights to payment. 11 ARTICLE III Closing 3.1 Closing. The closing of the Transactions (the "Closing") shall take place at the offices of Bell, Boyd & Lloyd, Chicago, Illinois, at 10:00 a.m., local time, on the first business day after the effective date of the confirmation of the Plan, or as soon as practicable thereafter, but in no event later than ten (10) business days after confirmation of the Plan (the "Closing Date"). 3.2 KBLP Closing Documents. At or prior to the Closing, KBLP shall deliver, or cause to be delivered, to the Sonesta Partners the following documents (collectively, the "KBLP Closing Documents"), duly executed by KBLP and, as appropriate, KBHA, PLT or SRAI unless otherwise specified: (a) A quit claim deed in proper statutory form for recording, so as to convey the entire fee simple estate in the Land and Improvements and all other items of Real Property to the Partnership. (b) An assignment or assignments of Contracts so as to assign to the Partnership all of the right, title and interest of KBLP and SRAI in and to the Contracts, including without limitation the Management Agreement (other than the provisions thereof relating to the right of SRAI to receive the Asset Management Fee). (c) A bill of sale so as to transfer to the Partnership such items of Personalty which have not been transferred pursuant to any other KBLP Closing Document. (d) Such instruments, documents or certificates as may be required by the Title Company as a condition to the issuance of the Title Policy, including without limitation, an ALTA statement and a so-called "gap" undertaking required in order to effect a "New York-style" closing. (e) KBHA/PLT Indebtedness Amendments. (f) All Books and Records. (g) If requested by FSC, an opinion of counsel for KBLP, dated as of the Closing Date, in form and substance reasonably acceptable to the Sonesta Partners, with regard to existence, due authority, execution and delivery and enforceability. (h) The Aetna Consent/Estoppel. (i) If requested by the Sonesta Partners, releases of all collateral securing the KBHA Indebtedness and the PLT Indebtedness. (j) The Partnership Agreement. (k) Assignments of Hotel bank accounts. 12 (l) Such other documents, instruments or agreements which KBLP is required to deliver to the Sonesta Partners pursuant to the other provisions of this Agreement or which either Sonesta Partner reasonably may request in order to consummate the Transactions contemplated by this Agreement or to better vest in the Partnership title to the Property. 3.3 Sonesta Closing Documents. At or prior to the Closing, the Sonesta Partners shall deliver to KBLP the following documents (herein referred to collectively as the "Sonesta Closing Documents"), duly executed by the Sonesta Partners unless otherwise specified: (a) If an opinion is required under Section 3.2(g) above, an opinion of counsel for the Sonesta Partners, dated as of the Closing Date, in form and substance reasonably satisfactory to KBLP, with regard to existence, due authority, execution and delivery and enforceability. (b) FSC Indebtedness Waiver. (c) The Partnership Agreement. (d) The FSC Guaranty. (e) The Sonesta Guaranty. (f) Such other documents, instruments or agreements which the Sonesta Partners are required to deliver to KBLP pursuant to the other provisions of this Agreement or which KBLP reasonably may request in order to consummate the Transactions. 3.4 The Partnership Closing Documents. At or prior to the Closing, the Sonesta Partners shall cause the Partnership to deliver to KBLP the following documents (collectively, the "Partnership Closing Documents"), duly executed by the Partnership unless otherwise specified: (a) An agreement or agreements pursuant to which the Partnership assumes the Assumed Liabilities (subject to any exculpation from liability contained therein). (b) [Intentionally Deleted] (c) [Intentionally Deleted] (d) The KBHA/PLT Note. (e) Such other documents, instruments or agreements which the Sonesta Partners shall be required to cause the Partnership to deliver to KBLP pursuant to the other provisions of this Agreement or which KBLP reasonably may request in order to consummate the Transactions. 13 3.5 Form of Documents. All documents required to be delivered at or prior to the Closing in accordance with the provisions of this Agreement (other than the documents attached hereto) shall be in form reasonably satisfactory to each of the parties hereto. Any documents, including deeds or other instruments of assignment or conveyance, intended to be recorded in any public office, shall be in recordable form and shall be recorded concurrently with, or as soon as reasonably practicable after, the Closing. ARTICLE IV Representations and Warranties 4.1 Sonesta Partner Representations and Warranties. (a) The Sonesta Partners represent and warrant to KBLP as follows: (i) (A) FSC is a corporation duly organized, validly existing and in good standing under the laws of the State of Florida, with full right, power and authority to execute, deliver and perform this Agreement, and (B) Sonesta II is a corporation duly organized, validly existing and in good standing under the laws of the State of Florida, with full right, power and authority to execute, deliver and perform this Agreement. (ii) The execution, delivery and performance of this Agreement have been duly authorized by all requisite action on the part of each of the Sonesta Partners. This Agreement has been, and the Sonesta Closing Documents will be, duly executed and delivered by the Sonesta Partners. This Agreement constitutes, and when so executed and delivered the Sonesta Closing Documents will constitute, the legal, valid and binding obligations of the Sonesta Partners, enforceable against them in accordance with their terms. (iii) None of the execution, delivery or performance of this Agreement by the Sonesta Partners does or will, with or without the giving of notice, lapse of time or both, violate, conflict with or constitute a default or result in a loss of rights or require the consent of or filing with any person (including without limitation any governmental authority) under any term or condition of (A) the organizational documents of either Sonesta Partner or any material agreement to which either Sonesta Partner is a party or by which either Sonesta Partner is bound or (B) any terms or provisions of any judgment, decree, order, statute, injunction, rule or regulation of a governmental unit applicable to either Sonesta Partner. (iv) No broker, finder, investment banker or other person is entitled to any brokerage, finder's or other fee or commission in connection with the Transactions based upon arrangements made by or on behalf of either Sonesta Partner. (b) Each of FSC and Sonesta II represents and warrants as follows: (i) It is aware that the Partnership Interest to be acquired by it pursuant hereto will not be registered under the Securities Act or under the securities laws of any state or 14 other jurisdiction; that the Partnership shall not have any obligation to register the same in connection with the offering, sale or issuance thereof to it pursuant hereto or at any time thereafter; that such Partnership Interest is subject to restrictions on transfer contained in the Partnership Agreement and, in any event, cannot be sold unless such Partnership Interest is subsequently registered under the Securities Act or an exemption from such registration is available; and that the Partnership, in issuing such Partnership Interest in accordance with the provisions hereof, is relying upon the representations and warranties of FSC or Sonesta II, as the case may be, contained herein. (ii) It has been advised to consult, and has consulted, with independent tax counsel regarding the tax consequences of the Transactions, including without limitation the acquisition of the Partnership Interest to be acquired by it pursuant hereto and the Partnership Agreement, and it is not relying on tax advice provided by or through KBLP or any other party. (iii) It has been provided with such other information regarding KBLP as it has requested and has had an opportunity to meet with and ask questions of representatives of KBLP. (iv) The Partnership Interest to be acquired by it pursuant to this Agreement is being acquired by it for its own account for investment purposes only and not with a view to, and with no present intention of, distributing the same. (v) It acknowledges that an investment in the Partnership involves a substantial amount of risk, that it does not expect to receive any distributions from the Partnership and that it is able to bear the economic risk of such ownership, including the risk of losing its entire investment in the Partnership. 4.2 KBLP Representations and Warranties. KBLP represents and warrants to the Sonesta Partners as follows: (a) KBLP is a limited partnership duly formed, validly existing and in good standing under the laws of the State of Florida with full power and authority to execute, deliver and perform this Agreement. (b) The execution, delivery and performance of this Agreement by KBLP has been duly and validly authorized by all necessary action on the part of KBLP. This Agreement has been, and the KBLP Closing Documents will be, duly executed and delivered by KBLP. This Agreement constitutes, and when so executed and delivered the KBLP Closing Documents will constitute, the legal, valid and binding obligations of KBLP, enforceable against KBLP in accordance with their terms. (c) Subject to obtaining the Aetna Consent/Estoppel and the Contract Party Consents, none of the execution, delivery or performance of this Agreement by KBLP does or will, with or without the giving of notice, lapse of time or both, violate, conflict with or constitute a default or result in a loss of rights or acceleration of payments due or 15 require the consent of or filing with any person (including without limitation any governmental authority) under (A) the organizational documents of KBLP, the Existing Indebtedness Documents or, to KBLP's knowledge, any other agreement to which KBLP is a party or by which it is bound, including without limitation the Contracts, or (B) any judgment, decree, order, statute, injunction, rule or regulation of a governmental unit applicable to KBLP. (d) To KBLP's knowledge, KBLP has, and upon conveyance to the Partnership at Closing in accordance with the terms hereof, the Partnership will have, good, valid and marketable title to the Property (other than the Real Property), free and clear of all Liens other than the Permitted Exceptions and Liens created by, through or under the Partnership. To KBLP's knowledge, there are no leases or other rights of occupancy or use of or rights to purchase (including without limitation rights of first refusal or first offer in respect of the purchase or disposition of) any portion of the Property other than rights of persons who are hotel guests or the rights of persons arising under the Contracts or instruments or agreements which comprise Permitted Exceptions. (e) To KBLP's knowledge, neither KBLP nor any other Person has caused or permitted any Hazardous Material to be maintained, disposed of, stored, released or generated on, under or at the Property or any part thereof or any real property adjacent thereto except for the storage and use of substances commonly present at or used in the operation and maintenance of hotels in quantities commonly present at hotels and in compliance with applicable laws, including, without limitation, Environmental Laws. To KBLP's knowledge, KBLP is in compliance with all Environmental Laws with respect to the Property and all other occupants of the Property are in compliance with the Environmental Laws. To KBLP's knowledge, KBLP has received no notice from any governmental unit or other person that KBLP or the Property is not in compliance with any Environmental Law. KBLP has not installed any underground or above ground storage tanks on, under or about the Property and, to KBLP's knowledge, there are no such tanks located upon the Property. (f) Schedule 4.2(f) sets forth a list of all Existing Indebtedness Documents, including without limitation all amendments, exhibits, attachments, waivers and other changes thereto (including without limitation side letters) and the Sonesta Partners have been supplied with true and correct copies of the same. Such documents constitute the entire agreement between KBLP and each other party thereto and there are no oral promises or agreements amending, supplementing or modifying the same. The Existing Indebtedness Documents (other than those relating to the FSC Indebtedness) are in full force and effect and no material breach or default by KBLP or any other party has occurred with respect to any of them and KBLP has received no notice of any such default. The outstanding principal amount of the Existing Indebtedness (other than the FSC Indebtedness) and all accrued but unpaid interest thereon is set forth in Schedule 4.2(f) and, except as set forth on Schedule 4.2(f), there are no deposits or other amounts held in escrow or otherwise under the Existing Indebtedness Documents (other than those relating to the FSC Indebtedness). 16 (g) To KBLP's knowledge, Schedule 4.2(g) sets forth a list of all other Contracts, including without limitation all amendments, exhibits, attachments, waivers and other changes thereto (including without limitation side letters), the Sonesta Partners have been supplied with true and correct copies of the same and such documents constitute the entire agreement between KBLP and each other party thereto and there are no oral promises or agreements amending, supplementing or modifying the same. To KBLP's knowledge, all Contracts (other than the Existing Indebtedness Documents) are in full force and effect, no material breach or default by KBLP or any other party has occurred with respect to any of them, and KBLP has received no notice of any such default. To KBLP's knowledge, no rents or other payments or deposits are held by KBLP or its agent except the security and other deposits described on Schedule 4.2(g) and rents prepaid for the current month. (h) No Affiliate (past or present) of KBLP or KBHA owns any assets relating to the Hotel and, to KBLP's knowledge, the Property comprises all of the assets and property necessary for the Partnership to conduct KBLP's business as it currently is being conducted. (i) To KBLP's knowledge, Schedule 4.2(i) sets forth a true and complete list of all liability, property, workers' compensation and other insurance policies currently in effect that insure KBLP, KBLP's business or the Property, listing for each policy the identity of the insurance carrier, the policy period, the limits and retentions and any special exclusions, and a description of any self-insurance arrangement, including any reserves established thereunder. To KBLP's knowledge, each such policy is valid and binding and in full force and effect, all premiums thereunder have been paid and KBLP has received no notice of cancellation or termination thereof and is not in default thereunder. To KBLP's knowledge, KBLP has not received notice that any insurer of KBLP is denying liability with respect to a claim made by or against KBLP or defending under a reservation of rights clause. (j) KBLP is not a party to any collective bargaining or union agreements and has not encountered any labor union organizing activity or any actual or threatened employee strikes, work stoppages, slowdowns or lock-outs. To KBLP's knowledge, KBLP has no employees and, except as set forth on Schedule 4.2(j), does not maintain or sponsor any employee benefit plans, including, without limitation, any plans subject to the Employer Retirement Income Security Act of 1974, as amended. (k) KBLP has received no notices from governmental authorities or other persons that it is not in compliance with all laws, ordinances, rules, regulations, decrees, orders, permits, licenses or other authorizations applicable to it and, to KBLP's knowledge, KBLP is in compliance with all such laws, ordinances, rules, regulations, decrees, orders, permits, licenses or other authorizations. To KBLP's knowledge, Schedule 4.2(k) sets forth a true and complete list of all licenses, permits and other authorizations held by KBLP with respect to the construction, operation or maintenance of the Property (other than those held by FSC in its own name). 17 (l) There is no litigation, including any arbitration, investigation or other proceeding by or before any court, arbitrator or governmental or regulatory official, body or authority which is pending and with respect to which notice has been served on KBLP or which, to KBLP's knowledge, is otherwise pending or threatened against KBLP relating to the Property or the Transactions, and there are no unsatisfied arbitration awards or judicial orders against KBLP. (m) No condemnation proceeding or other proceeding or action in the nature of eminent domain is pending with respect to all or any part of the Property as to which notice has been served on KBLP, and, to KBLP's knowledge, no condemnation proceeding or other proceeding or action in the nature of eminent domain is otherwise pending or threatened with respect to all or any part of the Property. (n) To KBLP's knowledge, Schedule 4.2(n) lists the patents, trademarks (including registrations thereof), and trade names which are used by KBLP in connection with its business other than those that belong to FSC or its Affiliates. To KBLP's knowledge, the use of such intellectual property does not infringe upon the patents, trademarks, copyrights or other intellectual property rights of any third party, KBLP has received no notice asserting any such infringements and no third parties are currently infringing upon the patents, copyrights, trademarks or other intellectual property rights of KBLP. (o) KBLP is aware that the Partnership Interest to be acquired by it pursuant hereto will not be registered under the Securities Act or under the securities laws of any state or other jurisdiction; that the Partnership shall not have any obligation to register the same in connection with the offering, sale or issuance thereof to it pursuant hereto or at any time thereafter; that such Partnership Interest is subject to restrictions on transfer contained in the Partnership Agreement and, in any event, cannot be sold unless such Partnership Interest is subsequently registered under the Securities Act or an exemption from such registration is available; and that the Partnership, in issuing such Partnership Interest in accordance with the provisions hereof, is relying upon the representations and warranties of KBLP contained herein. (p) KBLP has been advised to consult, and has consulted, with independent tax counsel regarding the tax consequences of the Transactions, including without limitation the acquisition of the Partnership Interest to be acquired by it pursuant hereto and the Partnership Agreement, KBLP is not relying (and will not in the future rely) on tax advice provided by or through the Sonesta Partners or the Partnership and KBLP acknowledges that, except as specifically provided herein or in the Partnership Agreement, neither of the Sonesta Partners nor the Partnership is guarantying any particular tax result or results for KBLP on account of the Transactions or the operation of the Partnership. 18 (q) KBLP has been provided with such other information regarding the Partnership as KBLP has requested and has had an opportunity to meet with and ask questions of representatives of Sonesta Partners. (r) The Partnership Interest to be acquired by KBLP pursuant to this Agreement is being acquired by KBLP for its own account for investment purposes only and not with a view to, and with no present intention of, distributing the same. (s) KBLP acknowledges that an investment in the Partnership involves a substantial amount of risk, that KBLP does not expect to receive any distributions from the Partnership and that KBLP is able to bear the economic risk of such ownership, including the risk of losing its entire investment in the Partnership. (t) No broker, finder, investment banker or other person is entitled to any brokerage, finder's or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of KBLP or its affiliates. For purposes of this Agreement, the knowledge of FSC or the Sonesta Partners shall not be imputed to KBLP. Each reference to "KBLP's knowledge" shall be deemed to refer to the personal knowledge of Joel Stone and/or Richard A. Berman without any obligation on their part to conduct any further or additional investigation. Neither Joel Stone nor Richard A. Berman shall have any personal liability by reason of any breach of a representation or warranty of KBLP hereunder, regardless of whether the applicable representation and warranty was to KBLP's knowledge or otherwise. In any event, if as of the execution of this Agreement either Sonesta Partner or FSC is aware of facts or circumstances which are inconsistent with any representations or warranties of KBLP under this Agreement, then under no circumstances shall KBLP be deemed to have breached the representation or warranty (and such representation or warranty shall be deemed to be true and complete despite any such inconsistency) to the extent such inconsistent facts or circumstances were known to such Sonesta Partner or FSC. ARTICLE V Conditions to Closing 5.1 Conditions to KBLP's Obligations. KBLP's obligation to close is subject to satisfaction of each of the following conditions (any of which may be waived by KBLP in its sole discretion): (a) Compliance with Agreement. On the Closing Date, all of the covenants and agreements to be complied with or performed by the Partnership and the Sonesta Partners under this Agreement on or before the Closing shall have been complied with or performed in all material respects. (b) Accuracy of Representations and Warranties. The representations and warranties made by the Sonesta Partners in this Agreement shall be true and complete in all material respects on and as of the Closing Date. 19 (c) Aetna Consent/Estoppel. The Aetna Consent/Estoppel shall have been obtained. (d) Plan. The Plan shall have been confirmed. (e) [Intentionally Deleted] 5.2 Conditions to Sonesta Partners' Obligations. The Sonesta Partners' obligation to close is subject to satisfaction of each of the following conditions (any of which may be waived by the Sonesta Partners in their sole discretion): (a) Compliance with Agreement. On the Closing Date, all of the covenants and agreements to be complied with or performed by KBLP under this Agreement on or before the Closing shall have been complied with or performed in all material respects. (b) Accuracy of Representation and Warranties. The representations and warranties made by KBLP in this Agreement shall be true and complete in all material respects on and as of the Closing Date. (c) Aetna Consent/Estoppel. The Aetna Consent/Estoppel shall have been obtained. (d) Issuance of Title Policy. The Title Company shall issue, or be irrevocably committed to issue, the Title Policy. (e) Bulk Sales Releases/Directions. The Bulk Sales Releases/Directions shall have been obtained. (f) Licenses and Permits. The Partnership shall have obtained all licenses or permits (including without limitation liquor licenses) set forth on Schedule 4.2(f), where comparable permits and licenses held by KBLP are not transferable to the Partnership, and such licenses and permits shall be in full force and effect. (g) Plan. The Plan shall have been confirmed. (h) [Intentionally Deleted] (i) [Intentionally Deleted] ARTICLE VI Additional Covenants 6.1 Indemnification. (a) Indemnification by KBLP. From and after the Closing, KBLP shall indemnify, defend and hold harmless the Sonesta Partners, the Partnership, their respective successors and assigns and their respective officers, directors, shareholders, partners, employees and agents (the 20 "Indemnified Sonesta Persons") from and against any claim, action, demand, loss, cost, expense, liability, penalty or damages, including, without limitation, reasonable attorneys' fees and expenses (a "Loss"), incurred or suffered by any Indemnified Sonesta Person that results from, relates to or arises out of (i) the breach or inaccuracy of any representation or warranty made by KBLP in this Agreement or the KBLP Closing Documents, (ii) the breach or non-fulfillment by KBLP of any of the covenants or agreements of KBLP under this Agreement or the KBLP Closing Documents, (iii) KBLP's failure to pay the KBLP Liabilities as and when due (subject to the right, in good faith, to contest amounts due), or (iv) the breach or nonfulfillment by KBLP or any of its Affiliates of any fiduciary or other duty or obligation to any limited partner or other equity investor of KBLP or any partner of KBLP. The liability of KBLP under this indemnity and any other of its indemnification obligations set forth in this Agreement shall be limited to the assets of KBLP, and none of KBLP's constituent partners, shareholders, subsidiaries or affiliates shall have any liability with respect thereto. (b) Indemnification by the Sonesta Partners. From and after the Closing, the Sonesta Partners shall jointly and severally indemnify, defend and hold harmless KBLP, its successors and assigns and their respective partners, employees and agents (the "Indemnified KBLP Persons") from and against any Loss incurred or suffered by any Indemnified KBLP Person that results from, relates to or arises out of (i) the breach or inaccuracy of any representation or warranty made by either Sonesta Partner in this Agreement or the Sonesta Closing Documents, (ii) the breach or non-fulfillment by either Sonesta Partner or the Partnership of any of the covenants or agreements of either Sonesta Partner or the Partnership under this Agreement, the Partnership Closing Documents or the Sonesta Closing Documents, or (iii) the Partnership's failure to pay the Assumed Liabilities as and when due (subject to the right, in good faith, to contest amounts due). The liability of the Sonesta Partners under this indemnity and any other of their respective indemnification obligations set forth in this Agreement shall be limited to their respective assets, and none of their respective constituent partners, shareholders, subsidiaries or affiliates (except the Partnership) shall have any liability with respect thereto. (c) Joint Cooperation. Upon obtaining knowledge of the institution of any action or proceeding or other event which could give rise to a claim for indemnity hereunder, the party seeking indemnification shall promptly give written notice thereof to the party from whom indemnification may be sought. If such claim or demand relates to a claim or demand asserted by a third party, the indemnifying party shall have the right, at its expense, to employ counsel to defend such claim or demand and the indemnified party shall have the right, but not the obligation, to participate in the defense of any such claim or demand. So long as the indemnifying party is defending such claim or demand in good faith, the indemnified party will not settle such claim or demand without the indemnifying party's consent. The indemnified party shall make available to the indemnifying party all records and other materials reasonably required by it in contesting a claim or demand asserted by a third party against the indemnified party and shall cooperate in the defense thereof. 21 6.2 Matters Relating to the Plan (a) Reasonable Best Efforts. The parties hereto shall use their reasonable best efforts in good faith to file a petition for relief, disclosure statement and all required schedules and to obtain entry of an order by a court of competent jurisdiction confirming the Plan before the respective Deadlines set forth in subparagraph (b) below. (b) Deadlines. This Agreement shall be null and void unless (i) on or before March 1, 1998, KBLP has filed a petition for relief under the Bankruptcy Code, together with the Plan and its disclosure statement and all required schedules in connection therewith, in form and substance reasonably acceptable to the Sonesta Partners and KBLP; and (ii) on or before July 1, 1998, a court of competent jurisdiction has entered an order confirming the Plan (the foregoing dates are referred to as the "Deadlines"). (c) No Solicitation. So long as this Agreement has not become null and void pursuant to subparagraph (b) above or otherwise terminated, neither KBLP nor its successors, assigns, employees, affiliates, agents or others purporting to act on its behalf (the "KBLP Parties") shall solicit or initiate contact with any other person with respect to the sale, transfer or refinancing of KBLP or the Property (a "Financial Transaction"). (d) Confidentiality. So long as the obligations of KBLP remain in effect pursuant to subparagraph (c) above, the response of any KBLP Party to any third-party inquiry regarding a Financial Transaction shall be limited to acknowledgment of the existence of this Agreement and notification that copies of any documents filed with the Bankruptcy Court may be obtained from the Bankruptcy Court. So long as the obligations of KBLP remain in effect pursuant to subparagraph (c) above, no persons other than the parties hereto shall be allowed to inspect the Property or its financial records other than as filed with the Bankruptcy Court. (e) No Other Agreements. So long as the obligations of KBLP remain in effect pursuant to subparagraph (c) above, no KBLP Party shall enter into any Financial Transaction with any person other than as set forth herein. 6.3 Books and Records. Upon execution hereof, KBLP shall (a) make available to FSC, its Affiliates and their respective agents, counselors, accountants and representatives the Books and Records for inspection, audit and copying, and (b) use its reasonable best efforts (without incurring liability in excess of that contemplated by the Transactions) to assist FSC in the preparation of an audit letter. From and after Closing, and for so long as KBLP is filing tax returns with respect to the Property, KBLP shall have the right, upon reasonable prior notice to FSC (or the general partner of the Partnership, as the case may be) and during normal business hours, to examine and make copies of the books and records of the Property at the location at which such books and records are ordinarily kept, such examination and copying to be made at the expense of KBLP. KBLP shall keep all such information confidential. 6.4 Transaction Costs and Expenses. The Sonesta Partners shall pay (a) all reasonable legal and accounting fees reasonably incurred by FSC or its Affiliates, KBLP and/or the general partner of KBLP in connection with the negotiation and preparation of this 22 Agreement and the Partnership Agreement and the consummation of the Transactions, including the preparation, confirmation and implementation of the Plan and any third-party costs related thereto, and (b) title insurance and recording charges, survey costs and transfer taxes, if any, incurred in connection with the Transaction (such costs paid by the Sonesta Partners, are hereinafter referred to the "Transaction Costs"). Otherwise, each of the Sonesta Partners, on the one hand, and KBLP, on the other hand, shall bear its or their own legal, accounting and other fees incurred in connection with the negotiation and preparation of this Agreement and the consummation of the Transactions. 6.5 Bulk Sales. If, under applicable law, any notification is required to be given to, or a clearance is required to be obtained from, any state or local taxing authorities in order to permit the transfer of the Property as herein contemplated without a Lien attaching to the assets transferred or liability being incurred by the Partnership for any state or local taxes required to be paid or collected by KBLP relating to periods prior to the Closing Date, the Sonesta Partners shall obtain appropriate clearances or releases (and/or statements that no clearances or releases are required) from the applicable taxing authorities (the "Bulk Sales Releases/Directions). 6.6 [Intentionally Deleted]. 6.7 Contract Party Consents. KBLP shall use reasonable efforts to obtain (and the Sonesta Parties shall cause FSC to cooperate with KBLP in obtaining) the consent of the other parties to the Contracts marked with a "C" on Schedule 4.2(g) (the "Contract Party Consents"), and KBLP shall cooperate with the Sonesta Partners in connection with obtaining the licenses and permits described in Section 5.2(f), including, if required, surrendering any comparable licenses or permits currently held by KBLP to the Partnership at the Closing, granting to governmental agents or representatives access to the Property for the purpose of inspecting the same, and authorizing its management personnel to disclose to such governmental agents or representatives such information with respect to the Property, and the conduct of the business therefrom, as such agents or representatives shall require. 6.8 Forbearance. In consideration of KBLP's execution of this Agreement, and the performance of its obligations hereunder, FSC agrees to forbear from foreclosing the mortgages and realizing upon the other collateral securing the FSC Indebtedness until March 1, 1998. 6.9 Further Assurances. The Sonesta Partners, on the one hand, and KBLP, on the other hand, agree, at any time and from time to time after the Closing, to execute, acknowledge where appropriate and deliver such further instruments and documents (and to bear their own costs and expenses incidental thereto) and to take such other actions (without incurring liability in excess of that contemplated by the Transactions) as the other of them may reasonably request in order to carry out the intents and purposes of this Agreement. 6.10 Prorations and Apportionments. There shall be no prorations or apportionments of rents, real estate taxes or other amounts between the Sonesta Partners and/or the Partnership, on the one hand, and KBLP, on the other hand. 23 6.11 Tax Reporting. The Sonesta Partners shall cause the Partnership to report the transfer of the Property to the Partnership in accordance with this Agreement as a contribution of the Property to the capital of the Partnership pursuant to Section 721(a) of the Internal Revenue Code of 1986, as amended (the "Code"). ARTICLE VII Default 7.1 Events of Default. A party shall be deemed to be in "Default" hereunder in the event (a) it fails to perform any of its obligations hereunder within five (5) business days after its receipt of notice thereof from a party hereto; (b) any of its representations or warranties is false or misleading in any material respect at the time it was made or at the Closing, and, in the event the facts upon which such representation or warranty was based is subject to cure, the failure to cure the same within five (5) business days after its receipt of notice thereof from a party hereto; or (c) it breaches any of its covenants hereunder and fails to cure the same within five (5) business days after its receipt of notice thereof from a party hereto. Notwithstanding the foregoing, no party shall be deemed to be in Default solely by reason of failure to meet Deadlines. 7.2 Remedies. Upon the occurrence of a Default by a party, any other party not in Default shall have all rights and remedies provided hereunder and under applicable law with respect thereto. ARTICLE VIII Miscellaneous 8.1 Survival. The covenants, representations and warranties contained herein shall survive Closing indefinitely and the representations and warranties shall not be deemed to have been waived at the Closing or merged into any of the documents of conveyance or transfer to be delivered at the Closing. 8.2 Notices. Notices must be in writing and sent to the party to whom or to which such notice is being sent, by certified or registered mail, return receipt requested, commercial overnight delivery service or facsimile or delivered by hand with receipt acknowledged in writing, as follows: (a) To either Sonesta Partner: c/o Sonesta International Hotels Corporation 200 Clarendon Street, Floor 41 Boston, Massachusetts 02116 Attention: Peter J. Sonnabend 24 with a copy thereof to: Bell, Boyd & Lloyd Three First National Plaza Suite 3300 Chicago, Illinois 60602 Attention: David F. Heroy (b) To KBLP: c/o Strategic Realty Advisors, Inc. 630 Dundee Road, Suite 220 Northbrook, Illinois 60062 Attention: Joel Stone with a copy thereof to: Sonnenschein Nath & Rosenthal 8000 Sears Tower 233 S. Wacker Drive Chicago, Illinois 6060 Attention: Mark Mehlman All notices (i) shall be deemed given when received and (ii) may be given either by a party or by such party's attorneys. The cost of delivery shall be borne by the party delivering the notice. 8.3 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, and all of which together shall constitute a single document. 8.4 Amendments. This Agreement may only be changed, modified, supplemented or terminated by a document executed by the parties hereto. 8.5 Waiver. No waiver by any party hereto of any failure or refusal by another party hereto to comply with its obligations hereunder shall be deemed a waiver of any other or subsequent failure or refusal to so comply. All waivers hereunder must be in writing. 8.6 Successors and Assigns. The terms, covenants, agreements, conditions, representations and warranties contained in this Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and assigns. 25 8.7 Third Party Beneficiaries. The provisions of this Agreement are made for the benefit of the parties hereto and the Partnership, and their respective successors in interest and assigns and are not intended for, and may not be enforced by, any other person or entity. 8.8 Partial Invalidity. If any term or provision of this Agreement or the application thereof to any person or circumstance shall, to any extent, be invalid or unenforceable, the remainder of this Agreement, or the application of such term or provision to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby and each term and provision of this Agreement shall be valid and enforced to the fullest extent permitted by law. 8.9 Governing Law. This Agreement has been made pursuant to and shall be governed by the laws of the State of Illinois (without regard to conflicts of law rules). 8.10 Assignment. This Agreement may not be assigned by any party without the prior written consent of the other. 8.11 Headings. The headings of the various Article and Sections of this Agreement have been inserted solely for purposes of convenience, are not part of this Agreement and shall not be deemed in any manner to modify, explain, expand or restrict any of the provisions of this Agreement. 8.12 Gender and Number. Words of any gender shall include the other gender and the neuter. Whenever the singular is used, the same shall include the plural wherever appropriate, and whenever the plural is used, the same also shall include the singular where appropriate. 8.13 Time of Essence. Time shall be of the essence with respect to all of the time periods contained herein. 8.14 Schedules. The parties shall negotiate in good faith to agree upon, complete and attach to this Agreement any Schedule provided for in this Agreement that is not included as of the date hereof. 26 IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto, and joined in by KBHA, PLT, SRAI and Sonesta International, on the day and year first above written. KEY BISCAYNE LIMITED PARTNERSHIP, a Florida limited partnership By: _____________________________ Its ________________________ FLORIDA SONESTA CORPORATION, a Florida corporation By: _____________________________ Its ________________________ KEY BISCAYNE LAND CORPORATION, a Florida corporation By: _____________________________ Its ________________________ Each of the undersigned joins in the execution of this Agreement for purposes of agreeing with the provisions of Sections 2.3(c), 2.4, 3.2(e) and 3.2(i) hereof and other provisions of this Agreement that relate to it. KEY BISCAYNE HOTEL ASSOCIATES, LTD., a Florida limited partnership, By: ________________________________ Its __________________________ PARTNERS LIQUIDATING TRUST, a Delaware trust By: ________________________________ Its __________________________ 27 The undersigned joins in the execution of this Agreement for purposes of agreeing with the provisions of Sections 2.4 and 3.2(b) hereof and other provisions of this Agreement that relate to it. STRATEGIC REALTY ADVISORS, INC., an Illinois corporation By: ________________________________ Its __________________________ The undersigned joins in the execution of this Agreement for purposes of agreeing to deliver the Sonesta Guaranty. SONESTA INTERNATIONAL HOTELS CORPORATION, a New York corporation By: ________________________________ Its __________________________ 28 Exhibit A - Legal Description of the Land Exhibit B - Partnership Agreement Exhibit C - Permitted Exceptions Schedule 2.1 - Capital Contributions
Partner Capital Contribution ------- -------------------- FLORIDA SONESTA CORPORATION $1.00 KEY BISCAYNE LAND CORPORATION $98.00 KEY BISCAYNE LIMITED PARTNERSHIP $1.00
Schedule 2.2(a) - Payables Schedule 2.3(d) - Mortgage Amendments Schedule 4.2(f) - Existing Indebtedness Schedule 4.2(g) - Contracts Schedule 4.2(i) - Insurance Schedule 4.2(j) - Employee Benefit Plan Schedule 4.2(k) - Licenses and Permits Schedule 4.2(n) - Intellectual Property NONE EX-2.2 3 AMENDMENT TO CONTRIBUTION FIRST AMENDMENT TO CONTRIBUTION AND FORMATION AGREEMENT THIS FIRST AMENDMENT TO CONTRIBUTION AND FORMATION AGREEMENT (the "Amendment") is made as of April 3, 1998 among KEY BISCAYNE LIMITED PARTNERSHIP, a Florida limited partnership ("KBLP"), FLORIDA SONESTA CORPORATION, a Florida corporation, ("FSC"), KEY BISCAYNE LAND CORPORATION, a Florida corporation ("Sonesta II"), KEY BISCAYNE HOTEL ASSOCIATES, LTD., a Florida limited partnership ("KBHA"), PARTNERS LIQUIDATING TRUST, a Delaware trust ("PLT"), STRATEGIC REALTY ADVISORS, INC., an Illinois corporation ("SRAI") and SONESTA INTERNATIONAL HOTELS CORPORATION, a New York corporation. Recitals A. The parties hereto have executed and delivered (or joined in) that certain CONTRIBUTION AND FORMATION AGREEMENT dated as of January 30, 1998 (the "Agreement"), pursuant to which, inter alia, KBLP agreed to contribute certain of its real property and improvements to a partnership to be formed by FSC. B. The parties desire to revise the Agreement with respect to rights of KBLP to certain distributions under the partnership agreement and other matters, all as further set forth herein. Agreements NOW THEREFORE, for and in consideration of the foregoing recitals, the mutual covenants and agreements hereinafter set forth, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows: ARTICLE I Section 1.1. Definitions. Initially capitalized terms used but not otherwise defined herein have the same meanings given them in the Agreement. Section 1.2. Amended Definitions. The following definitions are amended and restated as follows: "Fair Market Value" shall have the meaning set forth in the Partnership Agreement; provided that the Fair Market Value of the Property cannot exceed an amount equal to ten times the average cash flow from the Property for the two calendar years prior to the date of determination. Cash flow will equal revenues less expenses and fixed expenses, including without limitation, all management fees (including the Asset Management Fee), capital expenditures (up to four percent of revenues per annum), insurance and real estate taxes; interest payments on debt service shall not be an item of expense or fixed expense for purposes of calculating the cash flow used to determine fair market value. Section 1.3. Amended Deadlines. The deadlines set forth in sections 6.2(b)(i) and (ii) are amended to be April 15, 1998 and August 15, 1998, respectively. Section 1.4. New Definitions. The following defined terms are hereby added to the Agreement: "KBLP Excess" means (i) in the event of a Realization Event, an amount equal to the Net Realization Proceeds from such Realization Event, less the Transfer Basis, and (ii) in the event of a Special Final KBLP Distribution, an amount equal to the Fair Market Value of the Property on the date the Notice (as defined in the Partnership Agreement) is given, less the Transfer Basis. "Special KBLP Distribution" means an amount distributable to KBLP in the event of a Realization Event or a Special Final KBLP Distribution equal to a portion of the KBLP Excess determined, on the date of calculation, as follows:
Percentage of Cumulative Dollar Excess Allocable Amount of KBLP Amount of Excess to KBLP Special Distribution ---------------- ------- -------------------- Less than $10.0 million 0% $ 0 Between $10.0 million and $10.1 million 100 up to 100,000 Between $10.1 million and $12.5 million 0 100,000 Between $12.5 million and $12.65 million 100 up to 250,000 Between $12.650 million and $15.0 million 0 250,000 Between $15.0 million and $15.25 million 100 up to 500,000 Between $15.250 million and $17.5 million 0 500,000 Between $17.5 million and $17.75 million 100 up to 750,000 Between $17.750 million and $20.0 million 0 750,000 Between $20.0 million and $20.25 million 100 up to 1,000,000 In excess of $20.25 million 0 1,000,000
In no event shall the total amount paid or payable to KBLP with respect to the Special KBLP Distribution exceed $1,000,000. ARTICLE II 2.1 Special KBLP Distribution. Notwithstanding anything contained in the Agreement to the contrary, and in addition to the other distributions to which KBLP is entitled, in the event of a Realization Event or a Special Final KBLP Distribution, the Partnership shall make the Special KBLP Distribution to KBLP. The Partnership shall pay to KBLP the Special KBLP Distribution in the form of an unsecured non-interest bearing promissory note payable in five equal annual installments beginning one year after the Realization Event or the Special Final KBLP Distribution, as applicable (provided that the Partnership may, in its sole discretion, prepay all or any portion of the note). 2 2.2 Bankruptcy Plan. KBLP and FSC shall be co-proponents of a chapter 11 plan in substantially the form attached as Exhibit A (the "Plan"), and either KBLP or FSC may seek confirmation of the Plan in accordance with its terms except as specifically set forth herein. FSC acknowledges that its acting as a proponent of the Plan, including the right to solicit acceptances and seek confirmation of the Plan, will not otherwise impair KBLP's exclusive periods to propose and solicit acceptance of a plan as provided in title 11 of the United States Code, 11 U.S.C. ss.ss. 101 et seq., as the same may be amended or modified by court order ("KBLP's Exclusivity Rights"). In the event that circumstances arise or additional factors become known which KBLP believes in its good faith judgment require withdrawal, material delay or modification of the Plan (a "Change"), then FSC may not seek confirmation of the Plan or any other plan except as may be permitted by KBLP's Exclusivity Rights, and KBLP may withdraw, delay or modify the Plan or any other plan it seeks to propose, without FSC's consent; provided, however, that KBLP will consult in good faith with FSC for a five business day period regarding any such Change before materially delaying, modifying or withdrawing the Plan or seeking confirmation of an alternative plan; provided further, however, that in the event of a Change, any ballot cast by Sonesta, KBHA, PLT or Aetna accepting the Plan may, at such party's sole option, be considered null and void, and nothing herein shall prejudice such party's rights to object to any modified plan, other plan or action in KBLP's chapter 11 case. An offer or expression of interest by a potential buyer of KBLP's property or unrelated third party funder of an alternative plan shall not be sufficient grounds for a Change. 2.3 FSC Indebtedness. At Closing, the FSC Indebtedness shall be deemed to be amended to provide that no portion of the FSC Indebtedness shall mature prior to the date that is one day after the Measurement Date. 2.4 KBHA/PLT Debt. Prior to the Measurement Date, FSC shall not release the security interests, if any, securing the KBHA/PLT Indebtedness (other than in connection with a refinancing of the Aetna Indebtedness or its replacement), without KBLP's consent. 2.5 Transaction Costs. Notwithstanding Section 6.4 of the Agreement, the Sonesta Partners shall not be obligated to pay any Transaction Costs incurred by KBLP and/or the general partner of KBLP or any of their Affiliates (including KBHA and PLT) except in the event (a) the Closing occurs based upon the Plan (i) in substantially the form attached or (ii) with a Change acceptable to the Sonesta Partners in their sole discretion, or (b) the Closing fails to occur due solely to an uncured Default by the Sonesta Partners under the Agreement. Notwithstanding the foregoing, except in the event of a Default by KBLP and/or the general partner of KBLP or any of their Affiliates (including KBHA), the Sonesta Partners shall pay the fees of the debtor's counsel (Greenberg, Traurig, et al, Miami Florida). 2.6 Partnership Agreement. The Partnership Agreement attached as Exhibit B to the Agreement shall be amended as indicated on the attached Exhibit B. 3 2.7 Defaults. Each of the covenants, representatives and warranties contained herein shall, with those covenants, representations and warranties contained in the Agreement, constitute covenants, representations and warranties for all purposes set forth therein, including without limitation Article VII "Defaults." ARTICLE III 3.1 Notice. All notices, waivers, demands, requests or other communications required or permitted hereunder shall be given in accordance with the Agreement. 3.2 Entire Agreement. This Amendment and the Agreement embody the entire agreement of the parties in relation to the subject matter hereof, and supersedes prior agreements of the parties with respect to the subject matter hereof. No change or modification of this Amendment or the Agreement shall be valid unless the same is in writing and signed by both of the parties hereto. 3.3 Headings. The subject headings of the Sections of this Amendment are included for purposes of convenience only, and shall not affect the construction or interpretation of any of its provisions. 3.4 Governing Law. The validity and interpretation of this Amendment and of each and every clause, term and part hereof shall be governed by and construed in accordance with the laws of the State of Illinois applicable to contracts made and to be performed therein. 3.5 Severability. If any provision hereof is held or finally determined to be invalid or unenforceable to any extent for any reason, to the extent that such provision is valid and enforceable, the arbiters or court of competent jurisdiction, as the case may be, shall construe and interpret said provision to provide for maximum validity and enforceability. 3.6 Binding Agreement. This Amendment and the Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors, assigns, heirs and legal representatives as one agreement, notwithstanding the terms of the Agreement, including the deadlines originally set forth in section 6.2 (b) thereof. 3.7 Counterparts. This Amendment may be executed in any number of counterparts, each of which shall be deemed an original. 4 IN WITNESS WHEREOF, the parties have caused this Amendment to be duly executed as of the day and year first above written. KEY BISCAYNE LIMITED PARTNERSHIP, a Florida limited partnership By: ------------------------------- Its ---------------------------- FLORIDA SONESTA CORPORATION, a Florida corporation By: ------------------------------- Its ---------------------------- KEY BISCAYNE LAND CORPORATION, a Florida corporation By: ------------------------------- Its ---------------------------- KEY BISCAYNE HOTEL ASSOCIATES, LTD., a Florida limited partnership, By: ------------------------------- Its ---------------------------- PARTNERS LIQUIDATING TRUST, a Delaware trust By: ------------------------------- Its ---------------------------- 5 STRATEGIC REALTY ADVISORS, INC., an Illinois corporation By: ------------------------------- Its ---------------------------- SONESTA INTERNATIONAL HOTELS CORPORATION, a New York corporation By: ------------------------------- Its ---------------------------- 6 EXHIBIT A THE PLAN EXHIBIT B THE PARTNERSHIP AGREEMENT AMENDMENTS EX-2.3 4 AGREEMENT OF LIMITED PARTNERSHIP AGREEMENT OF LIMITED PARTNERSHIP OF SONESTA BEACH RESORT LIMITED PARTNERSHIP AGREEMENT OF LIMITED PARTNERSHIP OF SONESTA BEACH RESORT LIMITED PARTNERSHIP Agreement of Limited Partnership, dated _____________, 1998, among FLORIDA SONESTA CORPORATION, a Florida corporation ("FSC"), as general partner, and KEY BISCAYNE LAND CORPORATION, a Florida corporation ("Sonesta II") and KEY BISCAYNE LIMITED PARTNERSHIP, a Florida limited partnership ("KBLP"), as limited partners. PRELIMINARY STATEMENT The parties desire to form a limited partnership under the Delaware Revised Uniform Limited Partnership Act, as amended, and upon the terms and subject to the conditions contained herein. NOW, THEREFORE, in consideration of the foregoing, the mutual covenants and conditions hereinafter set forth, and other good and valuable consideration, the parties do hereby agree as follows: ARTICLE I Definitions For purposes of this Agreement, unless otherwise specifically herein provided, the following terms shall have the respective meanings indicated below. Any references in this Agreement to particular sections, articles, schedules or exhibits shall, unless expressly otherwise provided or unless the context otherwise requires, be deemed to refer to the specific sections, articles, schedules or exhibits in this Agreement. In addition, the words "hereof", "herein", "hereunder" and words of similar import refer to this Agreement as a whole, and not to any particular article. "Act" shall mean the Revised Uniform Limited Partnership Act of the State of Delaware, as such Act has been amended or is amended from time to time hereafter. "Additional Units" shall have the meaning set forth in Section 3.6. "Adjusted Capital Account Deficit" shall mean, with respect to any Limited Partner, the deficit balance, if any, in such Limited Partner's Capital Account as of the end of any relevant Fiscal Year, after giving effect to the following adjustments: (a) credit to such Capital Account any amounts which such Limited Partners are obligated or treated as obligated to restore with respect to any deficit balance in such Capital Account pursuant to Section 1.704-l(b)(2)(ii)(c) of the Regulations, or is deemed to be obligated to restore with respect to any deficit balance pursuant to the penultimate sentences of Sections 1.704-2(g)(1) and 1.704-2(i)(5) of the Regulations; and 2 (b) debit to such Capital Account the items described in Sections 1.704-l(b)(2)(ii)(d)(4), (5) and (6) of the Regulations. The foregoing definition of Adjusted Capital Account Deficit is intended to comply with the requirements of the alternate test for economic effect contained in Section 1.704-l(b)(2)(ii)(d) of the Regulations and shall be interpreted consistently therewith. "Aetna Indebtedness" shall have the meaning set forth in the Contribution Agreement. "Affected Gain" shall have the meaning set forth in Section 4.5(b). "Affiliate" shall mean, as to any Partner (or as to any other person the affiliates of whom are relevant for purposes of any of the provisions of this Agreement), the affiliate of such person as determined under the Securities Act of 1933, as amended. "Agreement" shall mean this Agreement of Limited Partnership, as it may hereafter be amended from time to time. "Appraiser" shall mean such qualified real estate appraiser as the General Partner and KBLP may agree upon in writing or shall otherwise be deemed to agree upon as provided herein. In the event the General Partner and KBLP cannot agree upon a single appraiser within ten (10) business days following receipt by KBLP of notice proposing an appraiser, each of the General Partner and KBLP shall select its own appraiser within an additional ten (10) business days, and those two appraisers shall select a third appraiser within an additional ten (10) business days. If the two appraisers fail to select a third appraiser within such 10 business-day period, either party may request the American Arbitration Association, or any equivalent successor organization, to select a third appraiser within ten (10) business days after receiving such request, and the parties shall be bound by any such selection made within such 10 business-day period. If the American Arbitration Association, or any such successor organization, fails to select the third appraiser within such 10-day period, either party may apply to any court having jurisdiction to make such selection. Any appraiser selected by the first two appraisers, by the American Arbitration Association or such successor organization or by such court shall be deemed the Appraiser for purposes of this Agreement. "Bankruptcy" or "Bankrupt" shall mean, as to any person (including, without limitation, any Partner, the Partnership or other relevant person), (i) any proceeding brought by or against such person under the United States Bankruptcy Code, or any successor thereto, as amended, or any state laws providing for the relief of debtors, except that, in the case of an involuntary proceeding brought against any such person, only if such proceeding shall not have been withdrawn, stayed or discharged within sixty (60) days after the institution thereof, unless, within such sixty (60) day period, such person shall have consented to the institution thereof; (ii) admission in writing of the inability of such person to pay its debts as they come due; (iii) the making of an assignment for the benefit of the creditors of such person; (iv) if such person shall become insolvent (except that, for purposes hereof, no Partner shall be deemed insolvent merely by reason of the fact that it has a negative balance in its Capital Account or by reason of the fact that the amount of its liabilities exceeds the amount of its assets by an amount equal to or less 3 than the negative balance of such Partner's Capital Account); or (v) the entry of an order, judgment or decree against such person in an amount in excess of $100,000 which continues unpaid, unstayed or undischarged for more than sixty (60) days after the entry thereof. "Capital Account" shall mean, with respect to any Partner, the separate "book" account established and maintained for such Partner in accordance with Section 704(b) of the Code and Section 1.704-l(b)(2)(iv) of the Regulations and in accordance with such other provisions of Section 1.704-l(b) of the Regulations that must be complied with in order for the Capital Accounts to be determined in accordance with the provisions of said Regulations. In furtherance of the foregoing, the Capital Accounts shall be maintained in compliance with Section 1.704-l(b)(2)(iv) of the Regulations, and the provisions hereof shall be interpreted and applied in a manner consistent therewith. "Closing Date" shall have the meaning set forth in the Contribution Agreement. "Code" shall mean the Internal Revenue Code of 1986, as amended, or any replacement or successor Code thereto. "Contribution Agreement" shall mean that certain Contribution and Formation Agreement dated the date hereof, among FSC, Sonesta II and KBLP, and joined in by certain other parties. "Depreciation" shall mean, if there is no difference between the fair market value and the adjusted tax basis of property upon the contribution of such property to the Partnership or upon the revaluation of such property pursuant to Treas. Reg. Section 1.704-l(b)(2)(iv)(f), depreciation, depletion or amortization, as the case may be, allowed or allowable for federal income tax purposes ("Tax Depreciation"); otherwise, Depreciation shall mean book depreciation, depletion or amortization as determined under Treas. Reg. Section 1.704-l(b)(2)(iv)(g) ("Book Depreciation") and the Partners' Capital Accounts shall be adjusted in accordance with said Treasury Regulation. "Excess Expenditures" shall mean, for each calendar year (commencing with 1998) or portion thereof, the excess of (a) the capital expenditures (including without limitation interest) made by the Partnership as reasonably determined by the General Partner to be reasonably required in respect of the Property for such calendar year or portion thereof over (b) four (4) percent of the Gross Revenues (as defined in the Management Agreement) from the Property for such calendar year or portion thereof (annualized for partial years). "Existing Indebtedness" shall have the meaning set forth in the Contribution Agreement. "Existing Indebtedness Documents" shall have the meaning set forth in the Contribution Agreement. 4 "Fair Market Value" shall mean the price at which parties dealing at arm's length and without any compulsion or duress to either purchase or sell the Property would agree to purchase or sell the Property subject to the Management Agreement (without regard to the provisions of the Third Amendment). The Fair Market Value shall be determined by the Partnership and KBLP within twenty (20) days after delivery of the Notice provided for in Section 2.1(b) of the Contribution Agreement. In the event that the Partnership and KBLP cannot agree as to the Fair Market Value, each shall designate its belief as to Fair Market Value within ten (10) days after written notice calling for such designation is given by either to the other, and the Appraiser shall, no later than twenty (20) days following the expiration of such ten (10) day period, determine which of the designated fair market values is closer to the Fair Market Value, in which case such closer designated Fair Market Value shall be the Fair Market Value. In the event that either the Sonesta Partners or KBLP does not designate a Fair Market Value within such ten (10) day period, the Fair Market Value designated by the other shall be deemed the Fair Market Value. In making such determination of Fair Market Value, the Appraiser shall be instructed to include the Asset Management Fee (as defined in the Contribution Agreement), and exclude from the Partnership's expenses that portion of expenses paid or incurred by the Partnership representing amounts paid to FSC or its Affiliates that are in excess of the greater of (i) amounts as are contemplated under the Management Agreement, as amended as contemplated by the Contribution Agreement, (ii) amounts that would customarily be payable for similar services in connection with a first-class hotel, or (iii) amounts properly paid to FSC or its Affiliates during the time KBLP owned the Property. The costs of the Appraiser shall be borne equally by the Sonesta Partners and KBLP. Notwithstanding the foregoing, the Fair Market Value of the Property shall not exceed an amount equal to ten times the average cash flow from the Property for the two calendar years prior to the date of determination (cash flow equals revenues less expenses and fixed expenses, including without limitation, all management fees (including the Asset Management Fee), capital expenditures (up to four percent of revenues per annum), insurance and real estate taxes; interest payments on debt service shall not be an item of expense or fixed expense for purposes of calculating the cash flow used to determine fair market value). "FF&E" shall mean all fixtures, furniture, furnishings, fittings, equipment, machinery, apparatus, appliances and other articles of tangible personal property used or usable, or intended for use, in connection with any present or future occupation or operation of all or any part of the Property, whether located on or in the Property or stored off site, subject to such depletions, re-supplies, substitutions and replacements as shall occur and be made in the normal course of business. "General Partner" shall mean FSC, its duly admitted successors or assigns or any person who is a general partner of the Partnership at the time of reference thereto. "Gross Asset Value" shall mean, with respect to any asset of the Partnership, the asset's adjusted basis for federal income tax purposes, except as follows: (a) the initial Gross Asset Value of any asset contributed by a Partner to the Partnership shall be the gross fair market value of such asset, as reasonably determined by the General Partner and the contributing Partner; 5 (b) if the General Partner reasonably determines that such adjustment is necessary or appropriate to reflect the relative economic interests of the Partners in the Partnership, the Gross Asset Values of all Partnership assets shall be adjusted to equal their respective gross fair market values, as reasonably determined by the Partners, as of the following times: (i) the acquisition of an additional Partnership Interest in the Partnership by any new or existing Partner in exchange for more than a de minimis Capital Contribution; (ii) the distribution by the Partnership to a Partner of more than a de minimis amount of Partnership property as consideration for a Partnership Interest in the Partnership; and (iii) the liquidation of the Partnership within the meaning of Regulation Section 1.704-l(b)(2)(ii)(g); (c) the Gross Asset Values of Partnership assets distributed to any Partner shall be the gross fair market values of such assets (taking Code Section 7701(g) into account) as reasonably determined by the Partners as of the date of distribution; and (d) the Gross Asset Values of Partnership assets shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such assets pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Regulation Section 1.704-l(b)(2)(iv)(m) and Section 4.3(f); provided, however, that Gross Asset Values shall not be adjusted pursuant to this paragraph to the extent the Partners reasonably determine that an adjustment pursuant to Paragraph (b) above is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment pursuant to this Paragraph. At all times, Gross Asset Values shall be adjusted by Depreciation, which Depreciation is taken into account with respect to the Partnership's assets for purposes of computing Net Profits or Net Losses. Any adjustment to the Gross Asset Values of Partnership property shall require an adjustment to the Partners' Capital Accounts; as for the manner in which such adjustments are allocated to the Capital Accounts, see Paragraph (d) of the definition of Net Profits and Net Losses in the case of adjustments by Depreciation, and see Paragraph (c) of said definition in all other cases. "KBLP Distribution" shall mean an amount equal to the greater of (i) $10.00 and (ii) the product of the Partnership Percentage of KBLP multiplied by the excess of (A) the Net Realization Proceeds from a Realization Event over (B) the Transfer Basis. "KBLP Excess" shall mean (i) in the event of a Realization Event, an amount equal to the Net Realization Proceeds from such Realization Event, less the Transfer Basis, and (ii) in the event of a Special Final KBLP Distribution, an amount equal to the Fair Market Value of the Property on the date the Notice (as defined herein) is given, less the Transfer Basis. "Liens" shall have the meaning set forth in Section 9.5(c). 6 "Limited Partners" shall mean Sonesta II, KBLP, their duly admitted successors and assigns or any person who is a limited partner of the Partnership at the time of reference thereto. "Liquidated Damages" shall have the meaning set forth in the Contribution Agreement. "Liquidation Committee" shall have the meaning set forth in Section 10.1. "Management Agreement" shall have the meaning set forth in the Contribution Agreement. "Net Cash Flow" shall mean, with respect to any fiscal period of the Partnership, the excess, if any, of "Receipts" over "Expenditures." For purposes hereof, the term "Receipts" shall mean the sum of all cash receipts of the Partnership from all sources for such period, including capital contributions and loan and sale proceeds, and any amount of previously established Reserves which the General Partner, in its sole and absolute discretion, determines is no longer to be held as Reserves. The term "Expenditures" means the sum of (a) all cash expenses (including without limitation capital expenditures) of the Partnership for such period, (b) the amount of all payments of principal and interest on account of any indebtedness of the Partnership, including the Existing Indebtedness (including without limitation any prepayments thereof), and (c) such additional cash Reserves as of the last day of such period as the General Partner, in its sole and absolute discretion, deems necessary for any capital or operating expenditure permitted hereunder. The Partners acknowledge that the amount of Existing Indebtedness that must be repaid prior to any distribution of Net Cash Flow is at least $50,000,000. "Net Profits" or "Net Losses" shall mean the taxable income or loss of the Partnership for Federal income tax purposes determined in accordance with Section 703(a) of the Code as of the close of the Partnership's fiscal year (or such other time as may be required by this Agreement), inclusive of all items of income, gain, loss or deduction required to be separately taxed pursuant to said Section 703(a) of the Code, with the following adjustments: (a) any income of the Partnership that is exempt from federal income tax and not otherwise taken into account in computing Net Profits or Net Losses shall be added to such taxable income or loss; (b) any expenditures of the Partnership described in Section 705(a)(2)(B) of the Code or treated as Section 705(a)(2)(B) expenditures under Section 704(b) of the Code and not otherwise taken into account in computing Net Profits or Net Losses shall be subtracted from such taxable income or loss; (c) gain or loss resulting from any disposition of Partnership property with respect to which gain or loss is recognized for federal income tax purposes shall be computed by reference to the Gross Asset Value of such property rather than its adjusted tax basis; 7 (d) in lieu of the depreciation, depletion, amortization and other cost recovery deductions taken into account in computing taxable income or loss, there shall be taken into account Depreciation; and (e) in the event of an adjustment of the Gross Asset Value of any Partnership asset which requires that the Capital Accounts of the Partnership be adjusted pursuant to Treas. Reg. Sections 1.704-l(b)(2)(iv)(e), (f) and (m), the amount of such adjustments are, in the case of Treas. Reg. Section 1.704-l(b)(2)(iv) (e) and (f), to be taken into account as gain or loss from a taxable disposition of Partnership property pursuant to Paragraph (c) above, and, in the case of Treas. Reg. Section 1.704-l(b)(2)(iv)(m), to be taken into account as additional Net Profits or Net Losses. "Net Realization Proceeds" shall mean (i) in the event of a Realization Event (other than one described in clause (ii) below), all cash received by the Partnership from such Realization Event, less all expenses paid or incurred in connection with such Realization Event, or (ii) in the event of a Realization Event giving rise to a liquidation distribution under Section 10.2, the net proceeds resulting from the liquidation of the Property following a dissolution of the Partnership, less all expenses paid or incurred in connection with such liquidation. "Nonrecourse Deductions" shall mean, for a Partnership fiscal year, the net increase in the amount of Partnership Minimum Gain during such Partnership fiscal year, less the aggregate amount of any distributions (whether actual or deemed) during such fiscal year of proceeds of Nonrecourse Liabilities (other than Partner Nonrecourse Deductions) that are allocable to an increase in Partnership Minimum Gain, determined in accordance with Section 1.704-2(b)(1) and (c) of the Regulations. "Nonrecourse Liabilities" shall have the meaning ascribed to it in Section 1.704-2(b)(3) of the Regulations. "Partner Nonrecourse Deductions" shall have the meaning set forth in Section 1.704-2(i)(2) of the Regulations. "Partners" shall mean the General Partner, the Limited Partners, and their respective duly admitted successors or assigns, or any person who is a Partner of the Partnership at the time of reference thereto. "Partnership" shall mean the Delaware limited partnership formed pursuant hereto. "Partnership Interest" shall mean the ownership interest of a Partner in the Partnership from time to time including the right of such Partner to any and all benefits to which such Partner may be entitled under this Agreement, together with the obligations of such Partner to comply with all of the terms and provisions of this Agreement and of applicable law, and shall include, without limitation, each Partner's Partnership Percentage and Capital Account. Whenever in this Agreement reference is made to a particular percentage of a Partner's Partnership Interest it shall be deemed to refer to such Partner's Partnership Percentage. 8 "Partnership Minimum Gain" shall have the meaning set forth in Section 1.704-2(b)(2) of the Regulations. "Partnership Percentages" shall mean the percentage interests of each of the Partners as set forth in Section 3.7, as the same may be adjusted from time to time in accordance with the provisions of this Agreement. "Person" or "person" shall mean any individual, trust, corporation, partnership, limited liability company, business trust or other entity. "Prohibited Sale" shall have the meaning set forth in Section 5.8(a). "Property" shall mean the real property commonly known as the Sonesta Beach Hotel, Key Biscayne, Florida and legally described on Exhibit A, together with all improvements thereon and all personal property relating thereto and owned by the Partnership. "Qualified Person" shall mean a Person that is experienced in the ownership and operation of hotels similar to the Property and that, together with the Affiliates of such Person, has a net worth of at least $10,000,000. Any Affiliate of Sonesta International Hotels Corporation shall be a Qualified Person. "Rate" shall mean the prime rate as announced from time to time by United States Trust Company, Boston, plus one percent (1.0%). "Realization Event" shall mean (i) a sale, exchange, or other disposition of the Property by the Partnership for value, including an involuntary conversion by condemnation, casualty or otherwise, on which gain or loss is recognized by the Partners for federal income tax purposes, and (ii) an event giving rise to a liquidation distribution under Section 10.2. "Regulations" or "Treas. Regs." shall mean the proposed, temporary and final regulations promulgated by the Treasury Department pursuant to the Code. "Reserves" shall mean payments made or amounts allocated during any period to reserves which shall be maintained in amounts deemed sufficient by the General Partner, in its sole and absolute discretion, for working capital, to pay taxes, insurance, debt service or to pay for repairs, replacements, capital improvements or renewals or other costs and expenses incident to the business of the Partnership. "Section 704(c) Tax Items" shall have the meaning set forth in Section 4.5(c). "Substitute Limited Partner" shall mean any assignee of a Partner's Partnership Interest admitted as a substitute limited partner pursuant to Article IX hereof. "Sonesta Partners" shall mean FSC or Sonesta II and "Sonesta Partners" shall mean both of them. 9 "Special KBLP Distribution" means an amount distributable to KBLP in the event of a Realization Event or a Special Final KBLP Distribution equal to a portion of the KBLP Excess determined, on the date of calculation, as follows:
Percentage of Cumulative Dollar Excess Allocable Amount of KBLP Amount of Excess to KBLP Special Distribution ---------------- ------- -------------------- Less than $10.0 million 0% $ 0 Between $10.0 million and $10.1 million 100 up to 100,000 Between $10.1 million and $12.5 million 0 100,000 Between $12.5 million and $12.65 million 100 up to 250,000 Between $12.650 million and $15.0 million 0 250,000 Between $15.0 million and $15.25 million 100 up to 500,000 Between $15.250 million and $17.5 million 0 500,000 Between $17.5 million and $17.75 million 100 up to 750,000 Between $17.750 million and $20.0 million 0 750,000 Between $20.0 million and $20.25 million 100 up to 1,000,000 In excess of $20.25 million 0 1,000,000
In no event shall the total amount paid or payable to KBLP with respect to the Special KBLP Distribution exceed $1,000,000. "Special Final Distribution" shall have the meaning set forth in Section 4.9. "Tax Items" shall have the meaning set forth in Section 4.5(a). "Timing Requirement" shall have the meaning set forth in Section 10.2. "Transaction Costs" shall have the meaning set forth in the Contribution Agreement. "Transfer Basis" shall mean, as of any date, the sum of (a) the outstanding principal amount of all secured and unsecured indebtedness of the Partnership on the Closing Date, including the Assumed Liabilities (as defined in the Contribution Agreement), plus all unpaid interest accrued or deemed to have accrued thereon through the Measurement Date (or the date of the Special Final Distribution or applicable Realization Event, as applicable), less amounts applied in repayment thereof in accordance with the terms of such debt (as modified by the Second Amendment to Management Agreement in the case of the FSC Indebtedness, as defined in the Contribution Agreement), and (b) the sum of the Excess Expenditures for the calendar years or portion thereof through the Measurement Date (or the date of the Special Final Distribution or applicable Realization Event, as applicable), and the Transaction Costs, plus interest thereon through the Measurement Date (or the date of the Special Final Distribution or applicable Realization Event, as applicable), at the per annum rate equal to the Rate. 10 ARTICLE II Formation of Partnership 2.1 Formation. Effective as of, but not before, the Closing Date, the parties hereto hereby agree to and hereby form the Partnership as a limited partnership under the Act and the terms hereof. 2.2 Name. The name of the Partnership shall be "SONESTA BEACH RESORT LIMITED PARTNERSHIP," or such other name as the General Partner may from time to time determine in its sole and absolute discretion. 2.3 Place of Business. The principal place of business of the Partnership shall be located at 200 Clarendon Street, Boston, Massachusetts 02116, or at such other place or places as the General Partner may hereafter determine in its sole and absolute discretion. 2.4 Purpose and Business. The purpose and business of the Partnership shall be to own, hold, sell, exchange, transfer or otherwise dispose of (in whole or in part), finance, manage, operate, renovate, expand, redevelop and otherwise deal with the Property and to conduct any other business or businesses permissible under the Act. The Partnership shall have all powers necessary or desirable to accomplish these purposes. 2.5 Filing of Partnership Documents. Promptly upon the Closing Date, the General Partner shall cause an executed Certificate of Limited Partnership (the "Certificate") which is consistent with the provisions of this Agreement and in the form required by the Act to be filed for record in the Office of the Secretary of State of Delaware and in such additional offices as may be designated by the Act or other applicable law. The Partners shall sign, acknowledge and verify such applications, affidavits and other documents as may be required by the Act or other applicable law to be signed, acknowledged or verified in connection with the conduct of the Partnership business and shall cause them to be filed or recorded, as required, in the appropriate governmental offices. 2.6 Term. The Partnership shall continue in existence until the first to occur of the following: (a) the disposition by the Partnership of all, or substantially all, of its assets; (b) subject to the provisions of Section 5.8, the decision of the General Partner, KBLP and sufficient numbers of other Limited Partners, such that, together with KBLP, they represent a majority in interest of the Partnership Percentages then held by the Limited Partners to dissolve the Partnership; (c) a dissolution required by law; or (d) December 31, 2050. 11 ARTICLE III Capital Contributions 3.1 Initial Capital Contributions. On the Closing Date, the General Partner and the Limited Partners shall contribute capital to the Partnership as more particularly described in the Contribution Agreement. 3.2 Additional Capital Contributions. In the event that the General Partner from time to time shall determine that additional funds are necessary or desirable for any partnership purpose, in excess of other funds anticipated to be available to the Partnership, then the General Partner may, but shall not be obligated to, make an additional capital contribution to the Partnership either in cash or property. Upon any such additional contribution, the Partnership Percentages of the Partners shall be adjusted in the manner provided in Section 3.6. No Partner shall be required or permitted to make any additional capital contribution to, or other financial accommodation for the benefit of, the Partnership except as expressly provided herein. 3.3 Limitation of Liability. The Limited Partners shall not be bound by, or be personally liable for, the expenses, liabilities or obligations of the Partnership or the General Partner and the liability of the Limited Partners shall be limited solely to the amount of their respective contributions to the capital of the Partnership as provided in this Agreement and, to the extent provided by applicable law, any distributions made to any Limited Partner that are deemed to be a return or withdrawal of capital. 3.4 No Withdrawal. Except as provided herein, The Partnership shall not be obligated to redeem or repurchase any Partnership Interest; no capital contribution or portion thereof may be withdrawn by any Partner and no Partner may withdraw from the Partnership except as provided herein; and no distribution is required to be made to any Partner except in accordance with the provisions of this Agreement. No Partner shall be entitled to demand any property from the Partnership other than cash. 3.5 Capital Accounts. An individual Capital Account shall be maintained for each Partner. No interest shall be paid or accrued on the Capital Account of any Partner. 3.6 Additional Partners. Whenever the General Partner shall, in its sole and absolute discretion, determine that additional funds are required for the purposes contemplated herein which the General Partner is unwilling to provide pursuant to Section 3.2, the General Partner shall have the right to issue additional units of general or limited partnership interests (the "Additional Units") to any person, including without limitation an Affiliate of the General Partner. The Additional Units shall have such rights with respect to Partnership Percentages, distributions of cash or property and allocations of Net Profits and Net Losses, and otherwise shall have such rights, benefits and obligations as the General Partner shall, in its sole and absolute discretion, determine. Upon issuance of Additional Units, an appropriate amendment to this Agreement shall be entered into among all Partners, including, without limitation, those Partners admitted to the 12 Partnership in connection with the issuance of Additional Units. Anything in Article VII to the contrary notwithstanding, the Power of Attorney granted pursuant to Article VII shall include the power and authority to execute, acknowledge and deliver in the name and on behalf of the Limited Partners any such amendment which the General Partner deems necessary or advisable in connection with the issuance of Additional Units. Any amendments entered into in connection with the issuance of Additional Units shall provide for a proportionate dilution of Partnership Interests between the General Partner and the Limited Partners based on their respective relative Partnership Percentages immediately prior to the issuance of the Additional Units to the extent of the Partnership Percentages applicable to the Additional Units (but the rights of KBLP to allocations of Net Profits and Net Losses and distributions of Net Cash Flow may not be diluted on the account of the issuance of the Additional Units). 3.7 Partnership Percentages. Subject to adjustment as herein provided, the initial Partnership Percentages of the Partners shall be 1.00% for FSC, 98.00% for Sonesta II, and 1.00% for KBLP. 3.8 No Third Party Beneficiaries. The right of any Partner to make a capital contribution or otherwise to do, perform, satisfy or discharge any liability or obligation of such Partner hereunder, or to pursue any other right or remedy hereunder or at law or in equity, shall not confer any right or claim upon or otherwise inure to the benefit of any creditor or other third party having dealings with the Partnership, it being understood and agreed that the provisions of this Agreement shall be solely for the benefit of, and may be enforced solely by, the parties hereto and their respective successors and assigns. The rights or obligations of the Partners herein set forth, including, without limitation, the right to make additional capital contributions, shall not be deemed an asset of the Partnership, may not be sold, transferred or assigned by the Partnership and may not be pledged or encumbered to secure any debt or other obligation of the Partnership or of the Partners. ARTICLE IV Allocation of Partnership Items; Distributions 4.1 Net Profits Allocations. After giving effect to the allocations set forth in Sections 4.3 and 4.4, Net Profits for any fiscal year shall then be allocated as follows: (a) first, among the Partners to the extent necessary to reverse any prior allocations of Losses under Section 4.2, taking into account the Partners' respective rights to receive distributions under Section 4.7 and 4.9; and (b) the balance, in accordance with the Partners' respective rights to receive distributions under Sections 4.7, 4.9 or 4.10. 4.2 Net Losses Allocations. After giving effect to the allocations set forth in Sections 4.3 and 4.4, Net Losses for any fiscal year shall be allocated as follows: 13 (a) first, among the Partners to the extent necessary to reverse any prior allocations or Profits under Section 4.1(a), taking into account the Partners' respective rights to receive distributions under Section 4.7 and 4.9; and (b) the balance, in accordance with the Partners' Percentage Interests. 4.3 Special Allocations. Notwithstanding any other provision of this Article IV, the following special allocations shall be made in the following order: (a) Minimum Gain Chargeback (Nonrecourse Liabilities). If there is a net decrease in Partnership Minimum Gain for any Partnership fiscal year (except as a result of the conversion or refinancing of any Nonrecourse Liabilities, certain capital contributions, or a revaluation of the Partnership property as further outlined in Regulation Section 1.704-2(d)(4), (f)(2), or (f)(3)), each Partner shall be specially allocated items of Partnership income and gain for such year (and, if necessary, subsequent years) in an amount equal to that Partner's share of the net decrease in Partnership Minimum Gain. The items to be so allocated shall be determined in accordance with Regulation Section 1.704-2(f). This Section 4.3(a) is intended to comply with the minimum gain chargeback requirement in said section of the Regulations and shall be interpreted consistently therewith. Allocations pursuant to this paragraph shall be made in proportion to the respective amounts required to be allocated to each Partner pursuant hereto. (b) Minimum Gain Attributable to Partner Nonrecourse Debt. If there is a net decrease in Minimum Gain Attributable to Partner Nonrecourse Debt during any fiscal year (other than due to the conversion, refinancing or other change in the debt instrument causing it to become partially or wholly non-recourse, certain capital contributions, or certain revaluations of Partnership property as further outlined in Regulation Section 1.704-2(i)(4)), each Partner shall be specially allocated items of Partnership income and gain for such year (and, if necessary, subsequent years) in an amount equal to that Partner's share of the net decrease in the Minimum Gain Attributable to Partner Nonrecourse Debt. The items to be so allocated shall be determined in accordance with Regulation Section 1.704-2(i)(4) and (j)(2). This Section 4.3(b) is intended to comply with the minimum gain chargeback requirement with respect to Partner Nonrecourse Debt contained in said section of the Regulations and shall be interpreted consistently therewith. Allocations pursuant to this paragraph shall be made in proportion to the respective amounts required to be allocated to each Partner pursuant hereto. (c) Qualified Income Offset. In the event that any Limited Partner unexpectedly receives any adjustments, allocations or distributions described in Regulation Section 1.704-l(b)(2)(ii)(d)(4), (5), or (6), and such Limited Partner has an Adjusted Capital Account Deficit, items of Partnership income and gain shall be specially allocated to such Partner in an amount and manner sufficient to 14 eliminate the Adjusted Capital Account Deficit as quickly as possible. This Section 4.3(c) is intended to constitute a "qualified income offset" under Regulation Section 1.704-l(b)(2)(ii)(d) and shall be interpreted consistently therewith. (d) Nonrecourse Deductions. Nonrecourse Deductions for any fiscal year or other applicable period shall be specially allocated to the Partners in accordance with their Partnership Percentages. (e) Partner Nonrecourse Deductions. Partner Nonrecourse Deductions for any fiscal year or other applicable period shall be specially allocated to the Partner that bears the economic risk of loss for the debt (i.e., the partner nonrecourse debt) in respect of which such Partner Nonrecourse Deductions are attributable (as determined under Regulation Section 1.704-2(b)(4) and (i)(1). (f) Section 754 Basis Adjustments. To the extent an adjustment to the adjusted tax basis of any Partnership asset pursuant to Sections 732, 734 or 743 of the Code is required, pursuant to Regulation Section 1.704-l(b)(2)(iv)(m), to be taken into account in determining Capital Accounts, the amount of such adjustment to the Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis) and such gain or loss shall be specially allocated to the Partners in a manner consistent with the manner in which their Capital Accounts are required to be adjusted pursuant to said section of the Regulations. (g) Allocation of Excess Nonrecourse Liabilities. Any "excess nonrecourse liabilities" (as defined within Regulations Section 1.752-3(a)) shall be allocated in the same manner as Nonrecourse Deductions are allocated to the Partners in accordance with their Partnership Percentages. 4.4 Curative Allocations. Notwithstanding any other provision of this Article IV to the contrary, the allocations set forth in Sections 4.3(a), 4.3(b), 4.3(c), 4.3(d), 4.3(e) and 4.3(f) hereof (the "Regulatory Allocations") shall, to the extent necessary and possible, be offset with other Regulatory Allocations or with special allocations of other items of Partnership income, gain, loss, and deduction so that the cumulative net amount of allocations of Partnership items under this Article IV shall be equal to the net amount that would have been allocated to each Partner if the Regulatory Allocations had not occurred. This Section 4.4 is intended to minimize to the extent possible and to the extent necessary any economic distortions which may result from application of Section 1.704-l(b) of the Regulations and shall be interpreted in a manner consistent therewith. 4.5 Tax Allocations. (a) Generally. Subject to paragraphs (b) and (c) of this Section 4.5, items of income, gain, loss, deduction and credit to be allocated for income tax 15 purposes (collectively, "Tax Items") shall be allocated among the Partners on the same basis as the respective book items. (b) Sections 1245/1250 Recapture. If any portion of gain from the sale of property is treated as gain which is ordinary income by virtue of the application of Code Sections 1245 or 1250 ("Affected Gain"), then (A) such Affected Gain shall be allocated among the Partners in the same proportion that the depreciation and amortization deductions giving rise to the Affected Gain were allocated and (B) other Tax Items of gain of the same character that would have been recognized, but for the application of Code Sections 1245 and/or 1250, shall be allocated away from those Partners who are allocated Affected Gain pursuant to Clause (A) so that, to the extent possible, the other Partners are allocated the same amount, and type, of capital gain that would have been allocated to them had Code Sections 1245 and/or 1250 not applied. For purposes hereof, in order to determine the proportionate allocations of depreciation and amortization deductions for each fiscal year or other applicable period, such deductions shall be deemed allocated on the same basis as Net Profits and Net Losses for such respective period. (c) Allocations Respecting Section 704(c) and Revaluations. Notwithstanding paragraph (b) hereof, Tax Items with respect to Partnership property that is subject to Code Section 704(c) and/or Regulation Section 1.704-3 (collectively "Section 704(c) Tax Items") shall, to the extent so required, be allocated in accordance with said Code section and Regulation Section 1.704-3(b)(1). 4.6 Allocations Subsequent to Assignment or Admission of Additional Partners. To the extent permitted by the Code, Net Profits or Net Losses and other items attributable to a Partnership Interest acquired by reason of an assignment from a Partner shall be allocated or adjusted between the assignor and the assignee based upon either (a) the length of time in any fiscal period of the Partnership during which the assigned Partnership Interest was owned by each of them, determined with reference to the effective date of the assignment, or (b) an interim closing of the Partnership's books (at assignor's sole expense), such manner of allocation or adjustment to be determined by the General Partner in its sole and absolute discretion. 4.7 Distributions. (a) The Partnership shall make distributions of Net Cash Flow: (i) resulting from any source (other than in connection with a Realization Event) to the Partners (other than KBLP if the Partnership has previously made the Special Final Distribution to KBLP) at such time and in such amounts as are determined in the sole and absolute discretion of the General Partner; any such distributions shall be made to the Partners (other than KBLP if the Partnership has previously made the Special Final Distribution to KBLP) in accordance with their respective Partnership Percentages; and (ii) resulting from a Realization Event to the Partners (other than KBLP if the Partnership has previously made the Special Final Distribution to KBLP), except 16 that to the extent KBLP is entitled to a distribution resulting from a Realization Event, the amount of such distribution shall be determined as set forth in subparagraph (b) below, at such time and in such amounts as are determined in the sole and absolute discretion of the General Partner; any such distributions shall be made to the Partners (other than KBLP if the Partnership has previously made the Special Final Distribution to KBLP) in accordance with their respective Partnership Percentages. (b) Unless the Partnership has made the Special Final Distribution to KBLP, within thirty (30) days after a Realization Event, the Partnership shall make the KBLP Distribution to KBLP. Upon payment of the KBLP Distribution, KBLP shall be deemed to have (i) relinquished its interest in the Partnership, and all rights and privileges pertaining thereto or hereunder, including any right to vote on Partnership matters or to receive any further distributions from the Partnership whatsoever (except as provided in Section 10.2(e)), including the Special Final Distribution, and (ii) assigned to FSC all of its right, title and interest in, to and under this Agreement. 4.8 Allocation of Nonrecourse Liabilities. Subject to the provisions of Section 5.8, Nonrecourse Liabilities shall be allocated to the Partners in accordance with their respective Partnership Percentages; provided that notwithstanding the foregoing or Section 5.8 to the contrary, prior to the KBLP Distribution or the Special Final Distribution, the Aetna Indebtedness (and any nonrecourse indebtedness that replaces or refinances the Aetna Indebtedness) shall be allocated 100 percent to KBLP, and after the KBLP Distribution or the Special Final Distribution, such indebtedness shall be allocated to the Partners in accordance with their respective Partnership Percentages. 4.9 Special Final Distribution to KBLP. The Partnership may elect (in its sole discretion) at any time on or after January 1, 2002 by written notice (the "Notice") delivered to KBLP or its successors or legal representatives, to make a special final distribution (the "Special Final Distribution") to KBLP equal to the greater of (i) $10.00 and (ii) the product of the Partnership Percentage of KBLP multiplied by the excess of (A) the Fair Market Value of the Property on the date the Notice is delivered over (B) the Transfer Basis. The Special Final Distribution shall be made on the twentieth (20th) day following the date of the Notice and shall be paid in cash (and, in the event that the Fair Market Value has not been determined, the Partnership shall pay to KBLP the amount to be paid pursuant to this Section based on the amount designated by the Sonesta Partners as the Fair Market Value pursuant to the definition of "Fair Market Value," and a subsequent adjustment shall be made between the Partnership and KBLP upon the determination of Fair Market Value if the amount owing based on the final determination of Fair Market Value differs from the sum originally paid ). Upon payment of the Special Final Distribution, KBLP shall be deemed to have (i) relinquished its interest in the Partnership, and all rights and privileges pertaining thereto or hereunder, including any right to vote on Partnership matters or to receive any further distributions from the Partnership whatsoever (except as provided in Section 10.2(e)), and (ii) assigned to FSC all of its right, title and interest in, to and under this Agreement. 17 On the Closing Date, KBLP shall execute and deposit in an escrow (the terms of which are reasonably acceptable to FSC and KBLP) established with the law firm Broad & Cassel in Boca Raton, Florida, or such other escrow agent reasonably acceptable to FSC and KBLP, an assignment of its interest in the Partnership to FSC. The terms of the escrow shall provide for the release of the assignment to FSC upon the escrowee's receipt of evidence that the Special Final Distribution or the KBLP Distribution has been paid to KBLP. Notwithstanding the foregoing, the failure of such assignment to be so deposited into, or released from, the escrow shall not vitiate the effectiveness of KBLP's relinquishment of its interest in the Partnership, and all rights and privileges pertaining thereto or hereunder, as further described above in this Section or Section 4.7(b), upon the payment of the Special Final Distribution or the KBLP Distribution to KBLP. 4.10 Special KBLP Distribution. Notwithstanding anything contained in this Agreement to the contrary, and in addition to the other distributions to which KBLP is entitled, in the event of a Realization Event or a Special Final KBLP Distribution, the Partnership shall make the Special KBLP Distribution to KBLP. The Partnership shall pay to KBLP the Special KBLP Distribution in the form of an unsecured non-interest bearing promissory note payable in five equal annual installments beginning one year after the Realization Event or the Special Final KBLP Distribution, as applicable (provided that the Partnership may, in its sole discretion, prepay all or any portion of the note). 4.11 Liquidated Damages. If prior to January 1, 2002, the Partnership sells, exchanges or otherwise disposes of the Property, or the Partnership is otherwise liquidated or dissolved in a manner that results in income or gain for federal income tax purposes by KBLP or is treated as a sale or exchange of all or substantially all of the Property for federal income tax purposes, or there is any other occurrence (other than a refinancing of the Aetna Indebtedness or its replacement or the consummation of the Transactions, as defined in the Contribution Agreement) that results in income or gain for federal income tax purposes by KBLP or is treated as a sale or exchange of all or substantially all of the Property for federal income tax purposes, then the Partnership shall, concurrent with the occurrence of any such event, pay to KBLP an amount equal to the Liquidated Damages. ARTICLE V Management of the Partnership 5.1 Management. Subject to the provisions of Section 5.8, the General Partner shall have exclusive authority to manage and control the Partnership business. Except as otherwise expressly provided herein, the General Partner shall have the right, authority and power to do any and all acts and things necessary, proper, convenient or advisable in its sole and absolute discretion to accomplish the purposes of the Partnership and manage the business and assets of the Partnership, without the consent or approval of any Limited Partner, including without limitation the following: (a) To expend Partnership funds (whether derived from capital or income or loans) in the exercise of any rights or powers possessed by the General Partner under this Agreement; 18 (b) To own, acquire, hold, develop, lease, manage, operate, encumber, exchange, convert, sell or otherwise dispose of the Partnership property in whole or in part (including the creation of joint venture or tenancy-in-common interests), or to authorize the sale, exchange or other disposition of the Partnership property in whole or in part (including the creation of joint venture or tenancy-in-common interests), or any interest therein, whether or not such sale results in the dissolution of the Partnership or makes it impossible to carry on its ordinary business, at such prices or amounts for cash or securities (including without limitation promissory notes, whether secured or unsecured) and upon such other terms, as the General Partner deems in its sole and absolute discretion to be in the best interests of the Partnership; (c) To invest and reinvest Partnership funds or pool Partnership funds for the purpose of investing; (d) To borrow money which the General Partner deems necessary or advisable, in its sole and absolute discretion, in connection with the business and affairs of the Partnership, including borrowings from the General Partner, its Affiliates or others, to be evidenced by notes or debentures and to secure the repayment of such borrowing by executing mortgages or deeds of trust, assignments, or security agreements pledging or otherwise encumbering or subjecting to security interests all or any part of the property of the Partnership, and to refund, refinance, increase, modify, consolidate or extend the maturity and/or other terms of any indebtedness created by such borrowing, or any such mortgage, deed of trust, assignment, security agreement, pledge, encumbrance or other security device; (e) To enter into such agreements, contracts, documents and instruments with such parties and to give such receipts, releases and discharges with respect to all of the foregoing and any matters incident thereto as the General Partner, in its sole and absolute discretion, may deem advisable, appropriate or convenient in connection with the business of the Partnership; (f) To place record title to, or the right to use, Partnership assets in the name or names of a nominee or nominees for any purpose convenient or beneficial to the Partnership; (g) To employ from time to time persons or companies (which may be Affiliates) in connection with the operation and management of the Partnership business or assets including, but not limited to, developers, supervisory and managing agents, consultants, building management agents, insurance brokers, sales agents, real estate brokers, loan brokers, independent contractors, attorneys and accountants, on such terms and for such compensation as the General Partner shall determine in its sole and absolute discretion; (h) To manage the Partnership property or to contract, either totally or partially, for management services by another person or company (which may be an Affiliate). (i) To pay, collect, compromise, litigate, arbitrate or otherwise adjust any and all claims or demands of or against the Partnership; 19 (j) To establish, maintain and draw upon checking, savings and other accounts in the name of the Partnership in such bank or banks as the General Partner may from time to time select in its sole and absolute discretion and to designate others to draw upon such accounts; (k) To execute, acknowledge or verify and file any notification, application, statement and other filing in the name of or on behalf of the Partnership that the General Partner, in its sole and absolute discretion, consider to be required or desirable to be filed with any local, state or federal agency, department or authority; (l) To admit additional Partners from time to time and determine the rights and interests of such Partners (subject, however, to the provisions of Section 3.6); (m) To permit the withdrawal and/or substitution or succession of Partners (which may be Affiliates); (n) To develop, redevelop or improve the Partnership property and to determine the nature and scope, design and/or expenditures therefor and to determine if and when to proceed with any phase of development or redevelopment and to enter into agreements or contracts with respect thereto with Affiliates or others; (o) To select or vary depreciation or accounting methods, change the Partnership fiscal year or make other material decisions regarding the treatment of transactions for bookkeeping or tax purposes; (p) With the written approval of all Partners, to file a petition for Bankruptcy or other similar reorganization under applicable statutes; (q) With the written approval of all Partners, to assign Partnership property in trust for creditors or on the assignee's promise to pay the debts of the Partnership; (r) To confess a judgment or submit a Partnership claim or liability to arbitration; (s) To acquire assets and property for and on behalf of the Partnership, including the acquisition of property for the purpose of reinvesting condemnation proceeds in accordance with Section 1033 of the Code; (t) To delegate any authority granted hereunder; (u) To exercise and enforce the rights of the Partnership under any agreement, including without limitation the rights of the Partnership to terminate any agreement; (v) To take all actions and execute all documents and instruments necessary or advisable in the sole and absolute discretion of the General Partner to implement and further the purposes and operate the business of the Partnership in accordance with the terms hereof; and (w) To do any and all of the foregoing for such consideration and upon such other terms and conditions as the General Partner in its sole and absolute discretion determines to be 20 appropriate, and in no event shall any purchaser, lender, title company or other third party be required to ascertain whether any action of the General Partner has in fact been duly authorized, and the failure of the General Partner to obtain such authorization shall in no way affect the validity of any sale, conveyance, mortgage, deed of trust, lease, loan extension or renewal made by the General Partner. 5.2 Independent Activities; Other Businesses. Each party recognizes that the Partners (including without limitation the General Partner), and their Affiliates, have or may have other business interests, activities and investments, some of which may now or hereafter be in conflict or competition with the business of the Partnership, and that each Partner (including without limitation the General Partner) and its respective Affiliates are entitled to carry on such other business activities, interests and investments without any accountability therefor to the Partnership or any other Partner. Each Partner (including without limitation the General Partner), and each Affiliate of each Partner (including without limitation the General Partner), may engage in or possess an interest in any other business or venture of any kind, independently or with others, including, without being limited to, owning, financing, acquiring, leasing, promoting, developing, improving, constructing, operating or managing other real or personal properties on its own behalf or on behalf of other entities with which it is affiliated or associated, and any Partner (including without limitation the General Partner) and each Affiliate of any Partner (including without limitation the General Partner) may engage in any activities, whether or not competitive to the Partnership, including without limitation the management of the Property by an Affiliate of the General Partner, without any obligation to offer any interest in such activities to the Partnership or to any Partner or to any Affiliate of any Partner. Neither the Partnership nor any Partner nor any Affiliate of any Partner shall have any right by virtue of this Agreement or by virtue of the relationship between the Partners as partners, in or to such other activities, or to the income or profits derived therefrom, and the pursuit of such activities, even if competitive with the business of the Partnership, shall not be deemed wrongful or improper or a breach of any joint venture or fiduciary duties owed by one party to the other, or entitle either party to any interest in or sharing in the profits or losses from any such other activities. 5.3 Duties; Reimbursement. The General Partner shall provide services to the Partnership as it shall deem to be appropriate in its sole and absolute discretion in connection with the day-to-day operations of the Partnership and shall be entitled to such compensation (in addition to the compensation payable under the Management Agreement) as the General Partner determines in good faith is reasonable based on the nature and scope of services provided by it to the Partnership from time to time and consistent with compensation paid in the marketplace to independent third parties for similar services rendered with respect to comparable properties; provided that any compensation payable to the General Partner (or its Affiliates) in addition to that payable under the Management Agreement shall be subordinate to amounts due with respect to the KBHA/PLT Indebtedness (as defined in the Contribution Agreement). In addition, the Partnership shall pay or reimburse the General Partner for all reasonable out-of-pocket expenses incurred by it in connection with the Partnership's business, which reimbursement may include a reasonable allocation of overhead or general administrative expenses. The General Partner shall devote itself to the business of the Partnership to the extent it, in its sole and absolute judgment, deems necessary for the efficient carrying on thereof. The General Partner shall have no 21 obligation to conduct the business of the Partnership so as to accommodate the personal or business circumstances of the Limited Partners. 5.4 Additional Compensation to the General Partner; Transactions with Affiliates. (a) The General Partner and/or its Affiliates shall be entitled to receive, in addition to the amounts described in Section 5.3 and elsewhere herein and the amounts provided in the Management Agreement, fees and other compensation for services rendered or goods provided from time to time to or on behalf of the Partnership as would be payable to third parties providing comparable goods or services to the Partnership. (b) No contract or agreement entered into between the Partnership and the General Partner or any Affiliate of the General Partner shall be void, violable or in violation of any rights, duties, liabilities or responsibilities of the General Partner, whether or not approved by the Limited Partners, so long as any such transaction shall be in compliance with the provisions of this Agreement. (c) The General Partner shall be permitted to engage attorneys, accountants and other advisors and professionals which may have current or prior relationships with the General Partner or its Affiliates. No such relationship, even if continuing and ongoing, shall be deemed a conflict of interest by any such professionals. 5.5 Limitation of liability. Neither the General Partner nor any officer, shareholder, director, employee, agent or Affiliate of the General Partner shall be liable, responsible or accountable in damages or otherwise to the Partnership or any Limited Partner for any action taken or failure to act on behalf of the Partnership within the scope of the authority conferred on the General Partner by this Agreement or by law unless such action or omission constituted gross negligence or willful misconduct. 5.6 Indemnification. The Partnership shall indemnify and hold harmless the General Partner and each of its officers, directors, shareholders, employees, agents and Affiliates, and their respective successors and assigns (collectively the "Indemnified Parties") from and against any loss, expense, damage or injury suffered or sustained by any such person by reason of any acts, omissions or alleged acts or omissions arising out of their activities on behalf of the Partnership or in furtherance of the interests of the Partnership including, but not limited to, any judgment, award, settlement, reasonable attorney's fees and other costs or expenses incurred in connection with the defense of any actual or threatened action, proceeding or claim (which attorney's fees and defense costs shall be paid as incurred upon receipt of an undertaking by the Indemnified Party to repay the same if the Indemnified Party is found not to be entitled thereto), provided that the acts, omissions or alleged acts or omissions upon which such actual or threatened action, proceeding or claim is based are not found in a non-appealable order by a court of competent jurisdiction to have been performed or omitted in bad faith or as a result of gross negligence by or the willful misconduct of such Indemnified Party. 22 5.7 Authority to Bind Partnership. Except as otherwise provided herein or in the Act, the General Partner shall have authority to act on behalf of the Partnership and to bind it under this Agreement and in no event shall any third party be required to ascertain whether any action of the General Partner has in fact been duly authorized by the Limited Partners. The Limited Partners shall take no part in the management and operation of the business of the Partnership and shall have no authority to act on behalf of or bind the Partnership. 5.8 Restrictions on General Partner Authority; Etc. Notwithstanding anything to the contrary contained herein but subject to Section 4.9 hereof, the following restrictions shall apply as long as any Partnership Interest in the Partnership is owned by KBLP: (a) Without the prior written consent of KBLP, the Partnership shall not voluntarily dispose of all or substantially all of the Property prior to January 1, 2002. The provisions of Section 5.8(a) shall not apply to (i) transactions, such as like-kind exchanges, which would not result in the recognition of income or gain to KBLP for federal income tax purposes by reason of the application of Section 704(c) or Section 737 of the Code (but, in the event of any disposition permitted by the preceding clause, the disposition of any carryover basis real property or other successor real property shall be subject to the provisions of this Section 5.8), (ii) the mortgage of or the granting of security interests in any and all property of the Partnership provided the same is not a sale or exchange for federal income tax purposes of all or substantially all of the Property (and the conveyance of such property in connection with foreclosure of any such mortgage or security interest or by deed in lieu thereof), (iii) the lease of the Property or portions thereof provided the same is not a sale or exchange for federal income tax purposes of all or substantially all of the Property, (iv) the exercise of all other rights of an owner with respect to the Property provided the same is not a sale or exchange for federal income tax purposes of all or substantially all of the Property, and (v) the sale, exchange or other disposition of the Property so long as the Partnership shall, concurrent with the occurrence of such an event, pay to KBLP an amount equal to the Liquidated Damages. If the Partnership shall have obtained an opinion of counsel (reasonably acceptable to KBLP) with respect to the determination as to whether a particular transaction will result in income or gain for federal income tax purposes by KBLP or is treated as a sale or exchange of all or substantially all of the Property for federal income tax purposes(although the Partnership shall not be required to do so), the determination set forth in such opinion shall be deemed conclusive for purposes of this Agreement. Any transaction prohibited pursuant to the provisions of this Section 5.8(a) is hereinafter referred to as a "Prohibited Sale". (b) In no event shall the Property be used other than as a resort or hotel prior to January 1, 2002 without the written consent of KBLP. Subject to the provisions of Section 5.8(a), no sale, exchange, lease or other disposition relating to the Property or any portion of it shall be entered into between the General Partner and any Affiliate of the General Partner if the same would adversely affect the value of KBLP's Partnership Interest. (c) Nonrecourse Liabilities shall be allocated to KBLP to the maximum extent permissible under Treasury Regulation ss. 1.752-3 and Revenue Ruling 95-41, 1995-23 I.R.B.5., and the Partnership shall at all times have nonrecourse indebtedness (as described in Treasury 23 Regulation ss. 1.752-l(a)(2)) so that KBLP is allocated indebtedness equal at least to the aggregate negative Capital Account of KBLP from time to time, but in no event less than the negative Capital Account of KBLP at the time of the contribution of the Property to the Partnership. (d) Prior to the Special Final Distribution to KBLP and the payment of the KBHA/PLT Note (as defined in the Contribution Agreement), the Partnership shall not incur secured debt that, in the aggregate, exceeds eighty percent (80%) of the fair market value of the Property from time to time, excluding debt to the Sonesta Partners or any of their Affiliates. ARTICLE VI Financial Matters 6.1 Books and Accounts. The General Partner shall, at the expense of the Partnership, keep or cause to be kept adequate books of account of the Partnership, which shall record and reflect all of the contributions to the capital of the Partnership and all of the income, expenses and transactions of the Partnership or at the Property. Such books of account shall be kept at the principal place of business of the Partnership. The General Partner shall determine the method of accounting utilized by the Partnership. The Limited Partners shall have the right, upon reasonable notice to the General Partner and during normal business hours, to examine and make copies of the books and records of the Partnership to the extent provided by the Act at the location at which such books and records are ordinarily kept, such examination and copying to be made at the expense of the Limited Partners. 6.2 Accounting and Reports. At least once a year, the General Partner shall, at the expense of the Partnership, cause to be prepared and transmitted to each Partner a balance sheet and profit and loss statement of the Partnership relating to the prior fiscal year, which statements may be audited or unaudited in the sole and absolute discretion of the General Partner. 6.3 Fiscal Year. The Partnership's fiscal year shall be the year, or portion thereof in the event of a partial year, ending December 31. 6.4 Banking. All funds of the Partnership shall be deposited in a separate bank account or accounts as shall be determined by the General Partner. All withdrawals therefrom shall be made upon checks signed by the General Partner or by any person authorized to do so by the General Partner, or by wire transfer or cashier's checks effected by the General Partner or persons authorized to do so by the General Partner. 6.5 Tax Returns. The General Partner shall cause to be prepared at the Partnership's expense the required Federal, state and local tax returns. As soon as practicable after the close of each fiscal year of the Partnership, the General Partner shall furnish a copy of Internal Revenue Service Form K-1 for such fiscal year to each Partner. 24 6.6 Tax Elections. The General Partner shall be authorized to make on behalf of the Partnership any and all elections under the Code which are permitted to be made by the Partnership, including without limitation an election pursuant to Section 754 of the Code, but nothing herein shall be deemed to obligate the General Partner to make any such election. 6.7 Tax Audits. The Partnership, through the General Partner, is authorized to cooperate with and to monitor the Internal Revenue Service in any audit that the Internal Revenue Service may conduct of the Partnership books and records and information or other returns filed by the Partnership for Federal income tax purposes. The Partnership, through the General Partner, may similarly cooperate with and monitor any audit by any state tax or other state or local governmental authority. The Partnership may prepare and file protests or other appropriate responses to such audits. All costs incurred in connection with the foregoing activities, including legal and accounting costs, shall be Partnership expenses. Neither the Partnership nor the General Partner shall be obligated to defend any Partner against any claim asserted by the Internal Revenue Service or state or local tax authority of additional tax liability arising out of the ownership of its Partnership Interest. 6.8 Designation of Tax Matters Partner. The General Partner is hereby authorized to designate the Tax Matters Partner of the Partnership (which could be the General Partner) as provided in regulations pursuant to Section 6231 of the Code. Each Partner by the execution of this Agreement consents to such designation of the Tax Matters Partner and agrees to execute, certify, acknowledge, deliver, swear to, file and record at the appropriate public offices such documents as may be necessary or appropriate to evidence such consent. 6.9 Duties of Tax Matters Partner. (a) To the extent and in the manner provided by applicable law and regulations, the Tax Matters Partner shall furnish the name, address, profits, interest and taxpayer identification number of each Partner, including any Substitute Limited Partner, to the Secretary of the Treasury or his delegate (the "Secretary"). (b) To the extent and in the manner provided by applicable law and regulations, the Tax Matters Partner shall keep each Partner informed of the administrative and judicial proceedings for the adjustment at the Partnership level of any item required to be taken into account by a Partner for income tax purposes (such administrative proceedings referred to hereinafter as a "tax audit" and such judicial proceeding referred to hereinafter as "judicial review"). (c) If the Tax Matters Partner, on behalf of the Partnership, receives a notice with respect to a Partnership tax audit, the Tax Matters Partner shall forward a copy of such notice to the Partners who hold or held an interest in the profits or losses of the Partnership for the taxable year to which the notice relates. 6.10 Authority of Tax Matters Partner. The Tax Matters Partner is hereby authorized, but not required: 25 (a) To enter into any settlement with the Internal Revenue Service or the Secretary with respect to any tax audit or judicial review in which agreement the Tax Matters Partner may expressly state that such agreement shall bind the other Partners except that such settlement agreement shall not bind any Partner who (within the time prescribed pursuant to the Code) files a statement with the Secretary that the Tax Matters Partner shall not have the authority to enter into a settlement agreement on the behalf of such Partner; (b) In the event that a notice of a final administrative adjustment of any item required to be taken into account by a Partner for tax purposes (a "final adjustment") is mailed to the Tax Matters Partner, to seek judicial review of such final adjustment including, but not limited to, the filing of a petition for readjustment with the Tax Court, the District Court of the United States for the district in which the Partnership's principal place of business is located or the United States Court of Claims; (c) To intervene in any action brought by another Partner for judicial review of a final adjustment; (d) To file a request for an administrative adjustment with the Secretary at any time and, if any part of such request is not allowed by the Secretary, to file a petition for judicial review with respect to such request; (e) To enter into an agreement with the Internal Revenue Service to extend the period for assessing any tax which is attributable to any item required to be taken into account by a Partner for tax purposes or an item affected by such item; and (f) To take any other action on behalf of the Partners or the Partnership in connection with any tax audit or judicial review to the extent permitted by applicable law or regulations. 6.11 Expenses of Tax Matters Partner; Conflicts of Interest. The Partnership shall indemnify and reimburse the Tax Matters Partner for all claims, liabilities, losses, expenses and damages (including but not limited to legal and accounting fees) incurred in connection with any administrative or judicial proceeding with respect to the Partnership or the tax liability of the Partners relating thereto. Neither the General Partner, nor any Affiliate, nor any other person, shall have any obligation to provide funds for such purpose. The taking of any action and the incurring of any expense by the Tax Matters Partner in connection with any such proceeding, except to the extent required by law, is a matter in the sole discretion of the Tax Matters Partner and the provisions on limitation of liability and indemnification set forth in Sections 5.5 and 5.6 shall be fully applicable to the Tax Matters Partner with respect to any actions taken or required to be taken by it in its capacity as such. It is further acknowledged that the interests of the Limited Partners may from time to time be inconsistent with the interests of other Partners, including the Tax Matters Partner, and nothing herein shall be deemed to create any obligation on the part of the Tax Matters Partner to take into account any such inconsistent or conflicting interests except as expressly provided herein. 26 ARTICLE VII Power of Attorney 7.1 Grant of Power. Each Limited Partner (including any Substitute Limited Partner) hereby designates and appoints the General Partner and, with respect to any corporate General Partner (or the corporate general partner or manager of any General Partner), the President (or the chief executive officer, however designated), Vice President and the Secretary thereof, and each of them, as his or its attorney-in-fact with power of substitution to act in his or its name and on his or its behalf in the execution, acknowledgment and filing of documents as follows: (a) Certificates of Limited Partnership, as well as amendments thereto, under the laws of the State of Delaware and the laws of any other states in which such a certificate is required to be filed; (b) Any other instrument that may be required to be filed, or that the General Partner deems advisable to file, by the Partnership under applicable law; (c) Any documents that may be required to effect the reorganization and continuation of the Partnership, the amendment of this Agreement, the admission of any additional or Substitute Limited Partner or the dissolution and termination of the Partnership, provided such reorganization, continuation, amendment, admission or dissolution and termination is in accordance with the terms of this Agreement; and (d) Any and all such other documents and instruments as may be deemed necessary or desirable by the General Partner to carry out fully the provisions of this Agreement in accordance with its terms and any amendments or modifications thereof and any certificates, instruments or other documents relating thereto. 7.2 Nature of Power. The power of attorney granted by each Limited Partner in Section 7.1: (a) Is a special power of attorney coupled with an interest and is irrevocable and shall survive the disability, dissolution, liquidation or cessation of the existence as a legal entity of a Limited Partner; (b) May be exercised by the General Partner, or appropriate officer thereof or of the general partner or manager thereof, for each Limited Partner by a facsimile signature of such person or by listing each Limited Partner executing any instrument with a facsimile signature of such person acting as attorney-in-fact for all of them; and (c) Shall survive the delivery of any assignment by a Limited Partner of the whole or any portion of his or its Partnership Interest in the Partnership except that where the assignee thereof has been approved by the General Partner for admission to the Partnership as a Substitute Limited Partner the power of attorney shall survive the delivery of such assignment for the sole 27 purpose of enabling the General Partner to execute, acknowledge and file any instrument necessary to effect such substitution. 7.3 Effect of this Article. This Article VII does not supersede any other section of this Agreement, nor is it to be used to deprive any Limited Partner of its rights under this Agreement, but is intended only to provide a simplified system for the execution of documents. ARTICLE VIII Transfer of General Partnership Interest 8.1 Withdrawal of General Partner. (a) Subject to the provisions of Sections 4.11, 5.8 and 8.3, a General Partner shall be entitled to sell, transfer or assign its Partnership Interest as General Partner to a Qualified Person at any time with the consent of the other General Partner(s), if any (without Limited Partner approval). (b) Subject to the provisions of Section 4.11 and 5.8, substitutions of one person for another person as a General Partner may be made by the General Partner at any time with the consent of the other General Partner(s), if any (without Limited Partner approval) provided the substituted person is a Qualified Person. (c) In the event that a General Partner withdraws from the Partnership or sells, transfers or assigns its entire Partnership Interest, the withdrawing, selling, transferring or assigning General Partner shall be, and shall remain, liable for all obligations and liabilities incurred by the Partnership for which the General Partners were liable before such withdrawal, sale, transfer or assignment shall have become effective but shall be free of any obligation or liability incurred on account of the activities of the Partnership from and after the time such withdrawal, sale, transfer or assignment shall have become effective. (d) Subject to the provisions of Section 3.6, the General Partner may at any time designate additional persons to be General Partners, whose Partnership Interest shall be such as are agreed upon by the General Partner and such additional persons. Such additional persons shall become successor or additional General Partners only upon meeting the conditions provided in Sections 8.2(a) and (b). 8.2 Admission of a Successor or Additional General Partner. A person shall be admitted as a General Partner of the Partnership only if the following terms and conditions are satisfied: (a) The successor person shall have accepted and agreed to be bound by the terms and provisions of this Agreement by executing a counterpart hereof and such other documents or instruments as the General Partner deems required or appropriate in order to effect the admission of such person as a General Partner; and 28 (b) If the successor person is a corporation, partnership or other entity, it shall have provided the Partnership with evidence satisfactory to counsel for the Partnership of its authority to become a General Partner and to be bound by the terms and provisions of this Agreement. 8.3 Effect of Bankruptcy, Death, Withdrawal, Dissolution or Incompetency of a General Partner. (a) In the event of the Bankruptcy, death, withdrawal, dissolution or incompetency of the General Partner, the Partnership shall be dissolved unless those Partners holding a majority in interest of the remaining Partnership Percentages elect to continue the business of the Partnership within ninety (90) days after such event. (b) Upon the Bankruptcy, death, withdrawal, dissolution or incompetency of the General Partner where the business of the Partnership is continued in accordance with Section 8.3(a), such General Partner shall immediately cease to be a General Partner and its Partnership Interest shall be converted to that of a Limited Partner with the same rights under Article IV to share in the Net Profits and Losses, Net Cash Flow and proceeds from liquidation of the Partnership. Nothing in this Section 8.3(b) shall affect any rights or liabilities of the Bankrupt, deceased, withdrawn, dissolved or incompetent General Partner which matured prior to the Bankruptcy, death, withdrawal, dissolution or incompetency of such General Partner. (c) If, at the time of the Bankruptcy, death, withdrawal, dissolution or incompetency of a General Partner, such General Partner was not the sole General Partner of the Partnership, the remaining General Partner or Partners shall (i) give Notice to the Limited Partners of such Bankruptcy, death, withdrawal, dissolution or incompetency and (ii) make such amendments of this Agreement and execute and file for recordation such other documents or instruments as are necessary to reflect the conversion of the Partnership Interest of the Bankrupt, deceased, withdrawing, dissolved or incompetent General Partner in accordance with Section 8.3(b). ARTICLE IX Transfer of Limited Partnership Interest 9.1 Restrictions on Transfer of Limited Partners' Interests. (a) Except as provided in Section 9.4, no Limited Partner shall offer, sell, assign, hypothecate, pledge or otherwise transfer in whole or in part its Partnership Interest without the prior written consent of the General Partner, which may be given or withheld in the sole discretion of the General Partner. (b) As a condition to the granting of its consent to a sale, transfer, assignment, hypothecation or pledge of any Partnership Interest, the General Partner may, but shall not be obligated to, require that it receive an opinion of counsel satisfactory to it that such proposed disposition or hypothecation (i) may be effected without registration of the Partnership Interest under the Securities Act of 1933, as amended, (ii) would not be in violation of any applicable State securities or "Blue Sky" law (including investment suitability standards), and (iii) would 29 not cause a termination of the Partnership for Federal income tax purposes or result in the imposition of any transfer tax pursuant to applicable law. (c) In no event shall a Limited Partner's Partnership Interest or any portion thereof be sold, assigned or transferred to a minor or incompetent unless by will or intestate succession. 9.2 Admission of Substitute Limited Partner. (a) Notwithstanding the other provisions of this Article IX, an assignee of the Partnership Interest of a Limited Partner (which shall be understood to include any purchaser, transferee, donee or other recipient of any disposition of such Partnership Interest) shall be deemed admitted as a Limited Partner of the Partnership (sometimes referred to as a "Substitute Limited Partner") only upon the satisfactory completion of the following: (i) Consent of the General Partner shall have been given, which consent may be evidenced by the execution by the General Partner of a Certificate evidencing the admission of such person as a Limited Partner and which consent may be given or withheld in the General Partner's sole discretion; (ii) The assignee shall have accepted and agreed to be bound by the terms and provisions of this Agreement by executing a counterpart hereof and such other documents or instruments as the General Partner may require in order to effect the admission of such person as a Limited Partner; (iii) The assignee shall have delivered a letter containing a representation that acquisition of its Partnership Interest is made as a principal for its own account for investment purposes only and not with a view to the resale or distribution of such Partnership Interest. (iv) If the assignee is a corporation, partnership or other entity, the assignee shall have provided the General Partner with evidence satisfactory to counsel for the Partnership of its authority to become a Limited Partner under the terms and provisions of this Agreement; (v) The assignee shall have executed a power of attorney acceptable to the General Partner containing the terms and provisions set forth in Article VII; and (vi) The assignee shall have paid all reasonable legal fees and administrative costs of the Partnership and the General Partner and filing and publication costs in connection with his or its substitution as a Limited Partner. (b) A Substitute Limited Partner shall be treated as having become, and appearing in the records of the Partnership as, a Partner as of the day the conditions set forth in Section 9.2(a) are satisfied. 30 (c) Any Limited Partner who shall assign all of his or its Partnership Interest shall cease to be a Limited Partner of the Partnership except that unless and until a Substitute Limited Partner is admitted in his or its stead and place such assigning Limited Partner shall retain the statutory rights of an assignor of a limited Partnership Interest under the Act (as modified by this Agreement) and retain the obligations of a Limited Partner under the Act and this Agreement. 9.3 Rights of Assignee of Partnership Interest. (a) The rights of an assignee of his or its Partnership Interest who does not become a Substitute Limited Partner shall be limited to receipt of his or its share of Net Profits and Net Losses and Net Cash Flow pursuant to Article IV and distributions upon liquidation and dissolution as determined under Article X. (b) The Partnership shall not be obligated for any purposes whatsoever to recognize the assignment by any Limited Partner of his or its Partnership Interest as permitted hereunder unless and until the Partnership has received notice thereof, which notice must include such information and documentation with respect to the assignment as the General Partner may reasonably require. (c) Any person who is the assignee of all or any portion of a Limited Partner's Partnership Interest but does not become a Substitute Limited Partner and desires to make a further assignment of such Partnership Interest shall be subject to all the provisions of this Article IX to the same extent and in the same manner as any Limited Partner desiring to make an assignment of his or its Partnership Interest. 9.4 Effect of Bankruptcy, Death or Incompetence of a Limited Partner. The Bankruptcy of a Limited Partner or the death of a Limited Partner or an adjudication that a Limited Partner is incompetent (which term shall include, but not be limited to, insanity) shall not cause the termination or dissolution of the Partnership and, in such case, the business of the Partnership shall continue. If a Limited Partner becomes Bankrupt, the trustee or receiver of his or its estate or, if he dies, his executor, administrator or trustee or if he is adjudicated incompetent, his committee, guardian or conservator, shall have the rights of an assignee hereunder but shall not become a Substitute Limited Partner except in accordance with the terms of Section 9.2. ARTICLE X Dissolution and Liquidation 10.1 Liquidation. In the event of the termination of the Partnership pursuant to Section 2.6, the General Partner (or if there be none, then a liquidation committee ("Liquidation Committee") appointed by the Limited Partners owning, in the aggregate, a majority in interest of the Partnership Percentages then held by the Limited Partners), shall commence to wind up the affairs of the Partnership and to liquidate its assets. Subject to the provisions of Section 5.8, the General Partner (or the Liquidation Committee) shall have full right and unlimited discretion to determine the time, manner and terms of any sale or sales of Partnership property pursuant to 31 such liquidation, having due regard to the activity and condition of the relevant market and general financial and economic conditions. In the event that the General Partner (or the Liquidation Committee) determines, in its sole and absolute discretion, that it is necessary or (subject to the provisions of Section 5.8) desirable to make a distribution of Partnership property in kind, such property shall be transferred and conveyed to the Partners so as to vest in each as a tenant in common an undivided interest in the whole of said property equal to his or its interest in the distribution of proceeds pursuant to Section 10.2. Subject to the provisions of Section 10.2, in the event of the sale of Partnership assets for a consideration including, in whole or in part, deferred obligations, the liquidation of the Partnership shall not be deemed finally terminated until the Partnership shall have sold all or substantially all of its assets for cash or received cash payments in full with respect to all deferred obligations received by the Partnership in connection with the sale of Partnership assets. 10.2 Distribution of Proceeds. The net proceeds resulting from the liquidation of the Partnership's properties following a dissolution of the Partnership shall be distributed to the Partners and applied in the following order of priority (except as provided in Section 4.9): (a) first, to the payment of the debts and liabilities of the Partnership (other than debts and liabilities owed to the General Partner or any of its Affiliates); (b) second, to the payment of Liquidated Damages, if any; (c) third, to the payment of the debts and liabilities of the Partnership to the General Partner or any of its Affiliates; (d) fourth, to the setting up of any Reserves that the General Partner or the Liquidation Committee deems reasonably necessary, in its sole and absolute discretion, to provide for any contingent or unforeseen liabilities or obligations of the Partnership (it being understood however, that any funds so reserved shall be distributed in accordance with the provisions of this Section 10.2 after the obligation for which the Reserve was established has been satisfied); and (e) the balance, if any, to the Partners in accordance with their positive Capital Account balances determined after (i) taking into account all Capital Account adjustments for the taxable year during which the dissolution occurs (other than those made pursuant to this Section 10.2(c)) and (ii) revaluing all Partnership property to be distributed to the Partners at its Gross Asset Values in accordance with the rules of Treas. Reg. Section 1.704-l(b)(2)(iv)(f) (except that for purposes hereof, KBLP shall be entitled to no more than an amount equal to the KBLP Distribution plus KBLP's share of undistributed Net Profits previously allocated to KBLP). In the event the Partnership is "liquidated" within the meaning of Section 1.704-l(b)(2)(ii)(g) of the Regulations, such amounts shall be distributed by the end of the taxable year in which the liquidation occurs or, if later, within 90 days of such liquidation (the "Timing Requirement") and no Partner shall have any obligation to restore a deficit in its Capital Account (after giving effect to all contributions, distributions and allocations for all taxable years, 32 including the year during which such liquidation occurs), no such deficit being considered a debt owed to the Partnership or any other person for any purpose whatsoever. If the General Partner (or the Liquidating Committee, as the case may be) in its sole and absolute discretion determines that the Timing Requirement shall not be met, all or any portion of the distributions that would otherwise be made to the Partners pursuant to Section 10.2 may be distributed to the General Partner (or the Liquidating Committee, as the case may be) in trust for the benefit of the Partners for the purposes of liquidating Partnership assets, collecting amounts owed to the Partnership, and paying any contingent or unforeseen liabilities or obligations of the Partnership. The assets of any such trust shall be distributed to the Partners from time to time, in the sole and absolute discretion of the General Partner (or the Liquidating Committee, as the case may be), in the same proportions as the amount distributed to such trust by the Partnership would otherwise have been distributed to the Partners pursuant to this Agreement. 10.3 Accounting. Within a reasonable time following the completion of the liquidation of the Partnership's properties, the General Partner (or the Liquidation Committee) shall supply to each of the Partners a statement setting forth the assets and the liabilities of the Partnership as of the date of completion of liquidation and each Partner's pro rata portion of distribution pursuant to Section 10.2. 10.4 Certificate of Cancellation. Upon the completion of the liquidation of the Partnership and the distribution of all Partnership funds, the Partnership shall terminate and the General Partner (or the Liquidation Committee) shall have the authority to execute and file a Certificate of Cancellation of the Partnership as well as any and all other documents required to effectuate the dissolution and termination of the Partnership. 10.5 Right Limited To Partnership Assets. Each Partner shall look solely to the assets of the Partnership for all distributions with respect to the Partnership, the return of his or its capital contribution thereto and his or its share of Net Cash Flow and shall have no recourse therefor, upon dissolution or otherwise, against any other Partner except as provided in the last paragraph of Section 10.2. No Partner shall have any right to demand or receive property other than cash upon dissolution and termination of the Partnership. ARTICLE XI Amendments 11.1 Right of General Partner to Amend. Subject to Sections 3.6, 5.8 and 11.2, the General Partner may from time to time amend this Agreement as the General Partner deems advisable, in its sole and absolute discretion, without seeking or obtaining the approval or consent of any Limited Partner and may execute counterparts to this Agreement, and such other documents as it deems appropriate to reflect such amendment on behalf of each Limited Partner pursuant to the Power of Attorney granted by Article VII hereof. 11.2 Limitations on Amendments. Notwithstanding the provisions of Section 11.1, no amendment to this Agreement may: 33 (i) enlarge the obligations of any Partner under this Agreement or convert the Partnership Interest of any Limited Partner into the Partnership Interest of a General Partner or modify the limited liability of any Limited Partner without the consent of such Partner; (ii) subject to the provisions of Section 3.6, alter the rights of any Partner in Net Profits and Net Losses, Net Cash Flow or liquidation proceeds, without the consent of such Partner; (iii) cause the Partnership to be taxable as a corporation without the consent of all Partners; (iv) amend Sections 4.11, 5.8, 11.1 or 11.2 without the consent of KBLP; (v) amend this Article XI without the consent of all Partners; or (vi) amend this Agreement in any other respect if the effect of such amendment would materially adversely effect KBLP's rights and benefits hereunder. 11.3 Amendments on Admission or Withdrawal of Partners. (a) If this Agreement shall be amended as a result of adding or substituting a Limited Partner, the amendment to this Agreement shall be signed by the General Partner and by the person to be substituted or added. (b) If this Agreement shall be amended to reflect the designation of an additional or successor General Partner, such amendment shall be signed by the other General Partner(s), if any, and by such additional or successor General Partner. (c) If this Agreement shall be amended to reflect the withdrawal of a General Partner and the business of the Partnership is continued, such amendment shall be signed by the remaining or successor General Partner(s). (d) Notwithstanding the foregoing, no amendment to this Agreement shall, without KBLP's consent, adversely affect KBLP's rights to Liquidated Damages in the circumstances described in Sections 4.11 and 5.8, or to receive the Special Final Distribution in the event of an election by the Partnership to make such a distribution as set forth in Section 4.9. 11.4 Management of the Partnership. No Limited Partner shall take part in the management or control of the business of the Partnership or transact any business in the name of the Partnership. No Limited Partner shall have the power or authority to bind the Partnership or to sign any Agreement or document in the name of the Partnership. No Limited Partner shall have any power or authority with respect to the Partnership except insofar as the consent of the Limited Partner shall be expressly required herein. 34 ARTICLE XII General Provisions 12.1 Notices. All notices required or permitted to be given hereunder shall be in writing and addressed to the addressee at the addresses set forth on the signature pages hereto or to such other address as the addressee shall have previously notified the sender of in writing. Personal or overnight mail delivery, facsimile communication or the mailing of a notice by registered or certified mail, return receipt requested, shall be sufficient service and shall be effective as of the date upon which it is delivered (or delivery is refused or postal authorities designate the notice as non-deliverable, as the case may be) in the case of personal or overnight mail delivery or certified or registered mail or upon receipt of confirmed answerback in the case of facsimile transmission. 12.2 Governing Law. This Agreement shall be governed by the laws of the State of Delaware, without regard to its conflicts of law principles. 12.3 Headings. The headings of the articles and sections of this Agreement are inserted for convenience only and are not to be deemed to constitute a part of this Agreement. 12.4 Additional Documents. Each of the parties hereto agrees to execute, acknowledge and verify, if required to do so, any and all further or additional documents as may be reasonably necessary to fully effectuate the terms of this Agreement. 12.5 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same document. 12.6 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the executors, administrators, heirs or other successors and the permitted assigns of the respective Partners. 12.7 Waiver. The waiver of any breach of any term, covenant or condition of this Agreement by any of the parties hereto shall not constitute a continuing waiver or a waiver of any subsequent breach, either of the same or any other additional or different term, covenant or condition of this Agreement. 12.8 Severability. The parties hereby agree that in the event any court of competent jurisdiction determines that any provision of this Agreement is unlawful or unenforceable then, in that event, each and all remaining provisions shall remain in full force and effect. 12.9 Merger. This Agreement, together with the Contribution Agreement, sets forth (and is intended by all parties to be an integration of) all of the promises, agreements and understandings among the parties hereto with respect to the Partnership, the Partnership business and the property and assets of the Partnership, and there are no promises, agreements or understandings, oral or written, express or implied, among them other than as set forth or therein. 35 12.10 Pronouns. All the pronouns and variations thereof shall be deemed to refer to the masculine, feminine, neuter, singular or plural as the identity of the person or persons may require. 12.11 Certificate of Limited Partnership and Amendments. Upon written request of any Limited Partner, the General Partner shall deliver to such Limited Partner copies of any Certificate of Limited Partnership, Certificate of Amendment, Restated Certificate of Limited Partnership or Certificate of Cancellation filed pursuant to the Act in respect of the Partnership. 12.12 [Intentionally Deleted] 12.13 Signatures. Each Limited Partner, Substitute Limited Partner, additional General Partner and successor General Partner shall become a signatory hereto by signing such number of counterpart signature pages to this Agreement and such other instrument or instruments in such manner and at such time as the General Partner shall determine. By so signing, each Limited Partner, Substitute Limited Partner, successor General Partner or additional General Partner, as the case may be, shall be deemed to have adopted and be bound by all provisions of this Agreement, as amended from time to time; provided, however, no such counterpart shall be binding unless and until it shall have been accepted by the General Partner. 36 IN WITNESS WHEREOF the undersigned have executed this Agreement on the day and year first above written. GENERAL PARTNER: FLORIDA SONESTA CORPORATION, 200 Clarendon Street a Florida corporation Boston, Massachusetts 02116 Attn: Peter J. Sonnabend Facsimile No.: (617) 421-5402 By: ----------------------------- Its ---------------------- With a copy to: Bell, Boyd & Lloyd Three First National Plaza Suite 3300 Chicago, Illinois 60602 Attn: David F. Heroy Facsimile No.: (312) 372-2098 LIMITED PARTNERS: KEY BISCAYNE LAND CORPORATION, 200 Clarendon Street a Florida corporation Boston, Massachusetts 02116 Attn: Peter J. Sonnabend Facsimile No.: (617) 421-5402 By: ----------------------------- Its ---------------------- With a copy to: Bell, Boyd & Lloyd Three First National Plaza Suite 3300 Chicago, Illinois 60602 Attn: David F. Heroy Facsimile No. (312) 372-2098 37 KEY BISCAYNE LIMITED c/o Strategic Realty Advisors, Inc. PARTNERSHIP, 630 Dundee Road a Florida limited partnership Suite 220 Northbrook, Illinois 60062 By: Key Biscayne Beach Hotel Attn: Joel A. Stone, Associates, Ltd., a President and Chief Florida limited Executive Officer partnership Facsimile No. (847) 714-9696 By: VMS Realty Investment, With a copy to: Ltd., an Illinois limited partnership, a general Mr. Mark Mehlman partner Sonnenschein, Nath & Rosenthal 8000 Sears Tower By: 233 South Wacker Drive ----------------------- Chicago, Illinois 60606 Facsimile No. (312) 876-7934 38 EX-4.1 5 ASSUMPTION AGREEMENT RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: Dechert, Price and Rhoads 90 State House Square Hartford, Connecticut 06103 Attention: Katherine A. Burroughs, Esq. Space Above This Line For Recorder's Use - -------------------------------------------------------------------------------- Loan # 1-001-571 ASSUMPTION AGREEMENT This ASSUMPTION AGREEMENT (this "Agreement") is dated as of July 1, 1998, by and between SONESTA BEACH RESORT LIMITED PARTNERSHIP, a Delaware limited partnership having a mailing address of c/o Sonesta International Hotels Corporation, T-41, 200 Clarendon Street, Boston, MA 02116, Office of the Treasurer ("Borrower"), and STATE STREET BANK AND TRUST COMPANY, TRUSTEE ("Lender"), having a mailing address of 2 International Plaza, 5th Floor, Boston, MA 02117. RECITALS A. Lender is the owner and holder of certain indebtedness (the "Loan") evidenced, inter alia, by that Second Renewal Promissory Note (the "Note") dated December 1, 1993 from Key Biscayne Limited Partnership (the "Debtor"), as maker, which Note is payable to the order of Aetna Life Insurance Company ("Aetna") in the original principal amount of $24,142,088.26 and which Note was endorsed to the order of Lender by way of a separate Allonge executed by Aetna and attached to the Note, as well as the following documents and instruments evidencing and securing the Loan (collectively with the Note, the "Loan Documents"): (i) That certain Promissory Note dated December 28, 1984, evidencing a loan to Debtor from Southeast Bank, N.A. in the original principal amount of $22,000,000 (the "Original Note") and a Mortgage and Security Agreement dated December 28, 1984, from Debtor to Southeast Bank, N.A., which secures the Original Note and which is recorded in the Public Records of Dade County, Florida in Official Records Book 12369, Page 6689 (the "Original Mortgage"), which (i) Original Note, (iii) Original Mortgage, and (iii) Assignment of Lessor's Interest in Leases appurtenant thereto and recorded in the Public Records of Dade County, Florida in Official Records Book 12369, Page 6716 (the "Original Assignment"), were assigned to Aetna pursuant to that certain Assignment recorded in the Public Records of Dade County, Florida in Official Records Book 12514, Page 2826, and which Original Note was endorsed to the order of Aetna pursuant to that certain endorsement affixed to the Original Note and executed by Southeast Bank, N.A. The Original Note was amended and restated by that certain Note Modification - ------------------------------- NO DOCUMENTARY STAMP TAX IS DUE UPON THE RECORDATION OF THIS AGREEMENT PURSUANT TO SECTION 1146(C) OF THE UNITED STATES BANKRUPTCY CODE AND PARAGRAPH 7 OF THE CONFIRMATION ORDER DATED JUNE 25, 1998, ENTERED IN CASE #98-13500 IN THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF FLORIDA. Agreement by and between Aetna and Debtor dated May 17, 1985, and the Original Mortgage was amended and restated by that certain Mortgage Modification and Extension Agreement dated May 17, 1985 and recorded in the Public Records of Dade County, Florida in Official Records Book 12514, Page 2827. As additional security for the Original Note, as amended and restated, as aforesaid, Debtor executed in favor of Aetna that certain Assignment of Rents and Leases dated May 17, 1985 and recorded in the Public Records of Dade County, Florida in Official Records Book 12514, Page 2847 (the "Second Assignment"). Debtor and Aetna also entered into (i) that certain Note and Mortgage Modification Agreement dated July 29, 1988 and recorded in the Public Records of Dade County, Florida in Official Records Book 13804, Page 1027, (ii) that certain Second Note and Mortgage Modification Agreement dated October 9, 1989 and recorded in the Public Records of Dade County, Florida in Official Records Book 14290, Page 861, and (iii) that certain Third Note and Mortgage Modification Agreement dated February 22, 1990 and recorded in the Public Records of Dade County, Florida in Official Records Book 14461, Page 697. In addition, Debtor executed and delivered to Aetna its Accrual Promissory Note dated as of October 1, 1991, in the original principal amount of $953,333.33, which was consolidated with Debtor's indebtedness evidenced by the aforesaid Third Note and Mortgage Modification Agreement pursuant to a Consolidating Note Agreement dated as of October 1, 1991 between Debtor and Aetna, and renewed pursuant to Debtor's Renewal Promissory Note dated as of October 1, 1991, and further modified by Mortgage Modification Agreement dated as of October 1, 1991 and recorded in the Public Records of Dade County, Florida in Official Records Book 16242, Page 1563, and which Accrual Promissory Note and Renewal Promissory Note were each endorsed to the order of the Lender for the registered holders of Aetna Commercial Mortgage Trust Multiclass Pass-Through Certificates, Series 1997-ALIC by way of separate Allonges executed by Aetna and attached to each of the aforesaid Accrual Promissory Note and Renewal Promissory Note. The Original Mortgage, as restated and subsequently assigned, amended, modified and renewed, as aforesaid, is hereinafter referred to as the "Mortgage." (ii) The Lender is also the holder of (i) that certain Accrual Promissory Note dated as of December 1, 1993 (the "Accrual Note") from Debtor, in the principal amount of $2,192,906.23, and (ii) that certain Promissory Note dated December 1, 1993 (the "Capitalized Interest Note") from Debtor, in the principal amount of $2,142,088.26. The Note, the Accrual Note and the Capitalized Interest Note have been consolidated pursuant to the terms of a Consolidating Note Agreement dated effective as of December 1, 1993, between Debtor and Aetna, and said notes, as consolidated, have been renewed pursuant to the provisions of the Note effective as of December 1, 1993, in favor of Aetna. The Accrual Promissory Note, the Capitalized Interest Note and the Note were each endorsed to the order of the Lender by way of separate Allonges executed by Aetna and attached to each of the aforesaid Accrual Promissory Note, Capitalized Interest Note and Note. The Accrual Promissory Note and the Capitalized Interest Note are secured by a Mortgage Deed (the "Mortgage Deed") dated as of December 1, 1993, from Debtor to Aetna and recorded in the Public Records of Dade County, Florida in Official Records Book 16242, Page 1581. The Mortgage and the Mortgage Deed have been further -2- consolidated and modified, and the Original Assignment and the Second Assignment have been ratified and confirmed, pursuant to that certain Mortgage Modification Agreement dated as of December 1, 1993, and recorded in the Public Records of Dade County, Florida in Official Records Book 16242, Page 1589. The aforesaid Mortgage, the Mortgage Deed, the Original Assignment and the Second Assignment, each as restated, assigned, amended, modified and renewed, as aforesaid, together with the note or notes described in said documents, and all other documents or instruments which may have been executed in favor of Aetna in connection with the aforesaid documents were assigned by Aetna to the Lender pursuant to that certain Assignment of Mortgage Loan dated as of December 22, 1997 and recorded in the Public Records of Dade County, Florida in Official Records Book 17976, Page 980. B. The Loan is secured by, inter alia, a first priority lien on and in that certain real property with improvements thereon and certain personalty related thereto, commonly known as Sonesta Beach Resort located in Key Biscayne, Florida and more fully described on the attached Exhibit A (the "Mortgaged Property"). C. On or about April 23, 1998 (the "Petition Date"), Debtor filed a petition for relief under Chapter 11 of the United States Bankruptcy Code, Case #98-13500, (the "Bankruptcy Proceeding") in the United States Bankruptcy Court for the Southern District of Florida (the "Bankruptcy Court"). D. On or about the Petition Date, Debtor filed that certain Joint Plan of Reorganization dated April 23, 1998 (the "Plan") in the Bankruptcy Proceeding. E. On or about June 25, 1998, the Bankruptcy Court entered an order confirming the Plan (the "Confirmation Order"). F. The Plan provides, inter alia, for: (i) the transfer of the Mortgaged Property to Borrower; and (ii) the assumption of the Loan by the Borrower. G. Lender has consented to the terms of the Plan. NOW THEREFORE, in consideration of the mutual covenants and agreements hereinafter contained, it is agreed as follows: 1. Borrower hereby assumes and agrees to pay, perform and be bound by all obligations of Debtor under, arising from or related to, and all terms and conditions of, the Loan and the Loan Documents and the indebtedness evidenced and secured thereby. 2. All references in the Loan Documents to "Maker", "Mortgagor", "Assignor", "Borrower" or other similar references shall hereafter be deemed to refer to and describe Borrower. All representations, covenants and warranties of Debtor set forth in any of the Loan Documents are affirmed and remade by Borrower herein. Borrower (as debtor) hereby grants to Lender (as creditor) a security interest in all personal property and fixtures related to the -3- Mortgaged Property, and in any other personal property or fixtures constituting part of the Mortgaged Property. 3. The parties hereto hereby acknowledge and agree that none of the Loan Documents has been modified, amended, cancelled, terminated, released, superseded or otherwise rendered of no force and effect. 4. Each of the Loan Documents are hereby ratified and confirmed by the parties hereto, and every provision, covenant, condition, obligation, right and power contained in and under each of the Loan Documents shall continue in full force and effect, affected by this Agreement only to the extent of the assumption set forth herein. 5. Lender hereby consents to the assumption of the Loan Documents by Borrower. 6. Representations and Warranties of Borrower: (A) Organization. Borrower (i) is a duly organized and validly existing limited partnership in good standing under the laws of the State of its formation, (ii) is duly qualified as a foreign entity in each jurisdiction in which the nature of its business, or the location of the Mortgaged Property makes such qualification necessary or desirable, (iii) has the requisite power and authority to carry on its business as now being conducted, and (iv) has the requisite power to execute and deliver, and perform its obligations under, this Agreement and the Loan Documents. (B) Authorization. The execution and delivery by Borrower of this Agreement, Borrower's performance of its obligations thereunder and under the Loan Documents and the security interests and liens provided for in the Loan Documents (i) have been duly authorized by all requisite entity action on the part of Borrower, (ii) will not violate any provision of the Plan, any applicable legal requirements, any order, writ, decree, injunction or demand of any court or other governmental authority, any organizational document of Borrower or any indenture or agreement or other instrument to which Borrower is a party or by which Borrower is bound, and (iii) will not be in conflict with, result in a breach of, or constitute (with due notice or lapse of time or both) a default under, or result in the creation or imposition of any lien of any nature whatsoever upon any of the property or assets of Borrower pursuant to any indenture or agreement or instrument. Except for those obtained or filed on or prior to the date hereof, Borrower is not required to obtain any consent, approval or authorization from, or to file any declaration or statement with, any governmental authority or other agency in connection with or as a condition to the execution, delivery or performance of this Agreement. (C) Litigation. There are no actions, suits or proceedings at law or in equity by or before any governmental authority or other agency now pending and served -4- or, to the knowledge of Borrower, threatened against Borrower, or the Mortgaged Property except the Bankruptcy Proceeding. (D) Agreements. Borrower is not a party to any agreement or instrument or subject to any restriction which is likely to have a material adverse effect on ability to perform obligations hereunder or under the Loan Documents. Borrower is not in default in any respect in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any indenture, agreement or instrument to which it is a party or by which Borrower or the Mortgaged Property is bound. (E) No Bankruptcy Filing. Borrower is not contemplating either the filing of a petition by Borrower under any state or federal bankruptcy or insolvency laws or the liquidation of all or a major portion of Borrower's assets or property, and Borrower has no knowledge of any person contemplating the filing of any such petition against Borrower. (F) Location of Chief Executive Offices. The location of Borrower's principal place of business is 350 Ocean Drive, Key Biscayne, Florida 33149, and the location of Borrower's chief executive office is c/o Sonesta International Hotels Corporation, T-41, 200 Clarendon Street, Boston, Massachusetts 02116, and Borrower has no other places of business. (G) Compliance. Borrower, the Mortgaged Property and Borrower's use thereof and operations thereat comply in all material respects with all applicable legal requirements. Borrower is not in default or violation of any order, writ, injunction, decree or demand of any governmental authority, the violation of which is reasonably likely to have a material adverse effect on Borrower or the Mortgaged Property. (H) Solvency. Borrower (i) has not entered into this Agreement with the actual intent to hinder, delay, or defraud any creditor, and (ii) has received reasonably equivalent value in exchange for its obligations under this Agreement and under the Plan. Borrower's assets do not and, immediately following the execution and delivery of this Agreement and the consummation of the Plan, will not, constitute unreasonably small capital to carry out its business as conducted or as proposed to be conducted. Borrower does not intend to, and does not believe that it will, incur debts and liabilities (including, without limitation, contingent obligations and other commitments) beyond its ability to pay such debts as they mature (taking into account the timing and amounts to be payable on or in respect of obligations of Borrower). (I) Title to the Mortgaged Property. Borrower owns good, indefeasible, marketable and insurable fee simple title to the Mortgaged Property, free and clear of all liens, other than the liens created by the Loan Documents and those set forth on Exhibit B (the "Permitted Encumbrances"). There are no outstanding options to purchase or rights of first refusal affecting the Facility. The Permitted Encumbrances do not and will not materially and adversely affect (i) the ability of Borrower to pay in -5- full all sums due under the Note and other Loan Documents, or any of its other obligations in a timely manner or (ii) the use of the Mortgaged Property for the use currently being made thereof or the operation of the Mortgaged Property as currently being operated. (J) Enforceability. This Agreement and the Loan Documents are the legal, valid and binding obligations of Borrower, enforceable against Borrower in accordance with their terms. The Mortgage and other Loan Documents create a valid and enforceable first mortgage lien and security interest in the Mortgaged Property as security for the repayment of the Loan. The Loan Documents are, as of the date hereof, not subject to any right of rescission, set-off, counterclaim or defense by Borrower, including the defense of usury, nor will the operation of any of the terms of the Note, the Mortgage, or such other Loan Documents, or the exercise of any right thereunder, render the Loan Documents unenforceable against Borrower, in whole or in part, or subject to any right of rescission, set-off, counterclaim or defense by Borrower, including the defense of usury, and Borrower has not asserted any right of rescission, set-off, counterclaim or defense with respect thereto. (K) Conduct of Business. Borrower does not conduct its business "also known as", "doing business as" or under any name other than Sonesta Beach Resort-Key Biscayne. (L) Survival of Representations and Warranties. Borrower agrees that (i) all of the representations and warranties of Borrower set forth in this Agreement and in the other Loan Documents are made as of the date hereof (except as expressly otherwise provided) and (ii) all representations and warranties made by Borrower shall survive the delivery of this Agreement and continue for so long as any amount remains owing to Lender under this Agreement, the Note or any other Loan Document. 7. All provisions of this Agreement shall be effective as of the date hereof, and shall be binding upon and inure to the benefit of the respective heirs, legal representatives, successors and assigns of the parties hereto. 8. Matters of construction, validity and performance of this Agreement and the obligations arising hereunder shall be governed by the internal laws of the State of Florida. 9. No modification, amendment, extension, discharge, termination or waiver of any provision of this Agreement, the Note or any other Loan Document, or consent to any departure by Borrower therefrom, shall in any event be effective unless the same shall be in a writing signed by the party against whom enforcement is sought, and then such waiver or consent shall be effective only in the specific instance, and for the purpose, for which given. 10. All notices, consents, approvals and requests required or permitted hereunder or under any other Loan Document shall be given in accordance with the terms of the Loan Documents and addressed, if to Lender, at its address set forth on the first page hereof, and, if to Borrower, at its designated address set forth on the first page hereof, or to such other address -6- as either party shall provide written notice to the other. A copy of all notices, consents, approvals and requests, if directed to Lender, shall be delivered concurrently to Dechert Price & Rhoads, 90 State House Square, 12th Floor, Hartford, Connecticut 06103-3702, Attention: Katherine A. Burroughs, Esq., Telefax Number 860/524-3930, and if directed to Borrower, shall be delivered concurrently to: Sonesta International Hotels Corporation, T-41, 200 Clarendon Street, Boston, MA 02116, Office of the Treasurer. 11. BORROWER AND LENDER, TO THE FULLEST EXTENT THAT THEY MAY LAWFULLY DO SO, HEREBY WAIVE TRIAL BY JURY IN ANY ACTION OR PROCEEDING, INCLUDING, WITHOUT LIMITATION, ANY TORT ACTION, BROUGHT BY ANY PARTY HERETO WITH RESPECT TO THIS AGREEMENT, THE NOTE OR THE OTHER LOAN DOCUMENTS. 12. Borrower shall pay all transaction costs, which shall include, without limitation, reasonable fees, costs, expenses, and disbursements of Lender and its attorneys, including local counsel, in connection with (i) the negotiation, preparation, execution and delivery of this Agreement, including opinions of counsel required in connection therewith, (ii) the creation, perfection or protection of Lender's liens in the Mortgaged Property (including, without limitation, fees and expenses for title and lien searches and filing and recording fees, intangibles taxes, personal property taxes), mortgage recording taxes, and (iv) the costs and expenses of obtaining an endorsement and down dating of the title policy issued in connection with the Loan. 13. This Agreement, together with the Exhibits hereto and the other Loan Documents, constitutes the entire agreement among the parties hereto with respect to the subject matter contained in this Agreement, the Exhibits hereto and the other Loan Documents and supersedes all prior agreements, understandings and negotiations between the parties. 14. Borrower and the general partner(s) of Borrower, upon request from Lender, agree to execute such other and further documents as may be reasonably necessary or appropriate to consummate the transactions contemplated by the Loan Documents or this Agreement or to perfect the liens and security interests intended to secure the payment of the Loan. 15. This Agreement may be executed in any number of identical counterparts, each of which shall be deemed to be an original, and all of which shall collectively constitute a single agreement, fully binding upon and enforceable against the parties hereto. Remainder of Page Intentionally Left Blank; Signature Page Follows -7- IN WITNESS WHEREOF, the parties have hereunto executed this Agreement as of the date first written above. Borrower: Witnessed By: SONESTA BEACH RESORT LIMITED PARTNERSHIP By: Florida Sonesta Corporation General Partner By: - ------------------------------------ ---------------------------- Name: Name: Title: - ------------------------------------ Name: Lender: Witnessed By: STATE STREET BANK AND TRUST COMPANY, TRUSTEE By: - ------------------------------------ ---------------------------- Name: Name: Title: - ------------------------------------ Name: -8- STATE OF ) ------------------------------------ ) ss. ___________ ____, 1998 COUNTY OF ) ----------------------------------- Personally appeared , _______,_________________ of Florida Sonesta Corporation, a Florida corporation and general partner of SONESTA BEACH RESORT LIMITED PARTNERSHIP, a Delaware limited partnership, and acknowledged the execution of this instrument to be his/her free act and deed and the free act and deed of the corporation and limited partnership, before me this day. ---------------------------------- Name: Commissioner of the Superior Court Notary Public My Commission Expires: [NOTARY SEAL] STATE OF ) ------------------------------------ ) ss. ___________ ____, 1998 COUNTY OF ) ----------------------------------- Personally appeared , _______,______________________ of STATE STREET BANK AND TRUST COMPANY, TRUSTEE and acknowledged the execution of this instrument to be his/her free act and deed and the free act and deed of the corporation, before me this day. ---------------------------------- Name: Commissioner of the Superior Court Notary Public My Commission Expires: [NOTARY SEAL] -9- EXHIBIT A [Legal Description] - ------------------------------- NO DOCUMENTARY STAMP TAX IS DUE UPON THE RECORDATION OF THIS AGREEMENT PURSUANT TO SECTION 1146(C) OF THE UNITED STATES BANKRUPTCY CODE AND PARAGRAPH 7 OF THE CONFIRMATION ORDER DATED JUNE 25, 1998, ENTERED IN CASE #98-13500 IN THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF FLORIDA. EXHIBIT B [Permitted Encumbrances] - ------------------------------- NO DOCUMENTARY STAMP TAX IS DUE UPON THE RECORDATION OF THIS AGREEMENT PURSUANT TO SECTION 1146(C) OF THE UNITED STATES BANKRUPTCY CODE AND PARAGRAPH 7 OF THE CONFIRMATION ORDER DATED JUNE 25, 1998, ENTERED IN CASE #98-13500 IN THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF FLORIDA. EX-4.2 6 AMENDMENT This document prepared by: Lawrence C. Eppley Bell, Boyd & Lloyd Three First National Plaza 70 West Madison Street Suite 3300 Chicago, Illinois 60602 After recording return to: Arvin Jaffe Broad and Cassel Corporate Centre at Boca Raton 7777 Glades Road Suite 300 Boca Raton, Florida 33434 AMENDMENT TO AND ASSIGNMENT OF KBHA/PLT INDEBTEDNESS THIS AMENDMENT TO AND ASSIGNMENT OF KBHA/PLT INDEBTEDNESS (the "Amendment") is made as of July 1, 1998 among KEY BISCAYNE LIMITED PARTNERSHIP, a Florida limited partnership ("KBLP"), KEY BISCAYNE BEACH HOTEL ASSOCIATES, LTD., a Florida limited partnership ("KBHA"), PARTNERS LIQUIDATING TRUST, a Delaware trust ("PLT") and SONESTA BEACH RESORT LIMITED PARTNERSHIP, a Delaware limited partnership (the "Partnership"). Recitals A. KBLP, KBHA (referred to as "Key Biscayne Hotel Associates, Ltd."), PLT, FLORIDA SONESTA CORPORATION, a Florida corporation ("FSC"), KEY BISCAYNE LAND CORPORATION, a Florida corporation ("Sonesta II"), STRATEGIC REALTY ADVISORS, INC., an Illinois corporation ("SRAI") and SONESTA INTERNATIONAL HOTELS CORPORATION, a New York corporation ("Sonesta International") have executed and delivered (or joined in) that certain CONTRIBUTION AND FORMATION AGREEMENT dated as of January 30, 1998 and First Amendment to Contribution and Formation Agreement dated as of April 3, 1998 (collectively, the "Agreement"), pursuant to which, inter alia, KBLP agreed to contribute certain of its real property and improvements, commonly known as the Sonesta Beach Resort and legally described on Exhibit A hereto (the "Property") to the Partnership. B. KBLP is the borrower under certain loans from (i) KBHA (such indebtedness, which is indicated on Exhibit B attached hereto and incorporated herein, is referred to as the "KBHA Indebtedness"), and (ii) PLT (such indebtedness, which is indicated on Exhibit B attached hereto and incorporated herein, is referred to as the "PLT Indebtedness"). The combined obligations of KBLP under the KBHA Indebtedness and the PLT Indebtedness is referred to herein and the Agreement as the "KBHA/PLT Indebtedness"). C. The Agreement requires certain amendments to the KBHA/PLT Indebtedness. Agreements NOW THEREFORE, for and in consideration of the foregoing recitals, the mutual covenants and agreements hereinafter set forth, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows: 1. Definitions. Initially capitalized terms used but not otherwise defined herein have the same meanings given them in the Agreement or in the documents evidencing or securing the KBHA/PLT Indebtedness, as the context requires. 2. KBHA/PLT Indebtedness Amendments and Assignment. (a) In exchange for a note from the Partnership in the principal amount of $500,000 in the form attached hereto as Exhibit C (the "KBHA/PLT Note"), a guaranty from FSC in the form attached hereto as Exhibit D (the "FSC Guaranty"), pursuant to which FSC shall guaranty the obligations of the Partnership under the KBHA/PLT Note, and a back-up guaranty of collection from Sonesta International in the form attached hereto as Exhibit E (the "Sonesta Guaranty"), pursuant to which Sonesta International shall guaranty the obligations of FSC under the FSC Guaranty to guaranty the KBHA/PLT Note (the "Sonesta Guaranty"), KBHA and PLT hereby assign all of their respective right, title and interest in, to and under the KBHA/PLT Indebtedness (including all security interests of KBHA and PLT with respect to the KBHA Indebtedness and the PLT Indebtedness) to the Partnership, free and clear of all claims, liens and encumbrances. Certain of the security interests being assigned are set forth on Exhibit F attached hereto. (b) Payments made in respect of the KBHA/PLT Note shall be paid to KBHA. (c) Prior to the Measurement Date, the Partnership shall not release the security interests, if any, securing the KBHA/PLT Indebtedness (other than in connection with a refinancing of the Aetna Indebtedness or its replacement), without KBLP's consent. (d) This Amendment, the KBHA/PLT Note, the FSC Guaranty and the Sonesta Guaranty constitute the "KBHA/PLT Indebtedness Amendments" defined in Section 2.3(c) of the Agreement. 3. Headings. The subject headings of the Sections of this Amendment are included for purposes of convenience only and shall not affect the construction or interpretation of any of its provisions. 4. Governing Law. The validity and interpretation of this Amendment and of each and every clause, term and part hereof shall be governed by and construed in accordance with the laws of the State of Florida applicable to contracts made and to be performed therein. 5. Severability. If any provision hereof is held or finally determined to be invalid or unenforceable to any extent for any reason, to the extent that such provision is valid and enforceable, the arbiters or court of competent jurisdiction, as the case may be, shall construe and interpret said provision to provide for maximum validity and enforceability. 6. Binding Agreement. This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors, assigns, heirs and legal representatives. 7. Counterparts. This Amendment may be executed in any number of counterparts, each of which shall be deemed an original. IN WITNESS WHEREOF, the parties have caused this Amendment to be duly executed as of the day and year first above written. Signed, sealed and delivered KEY BISCAYNE LIMITED PARTNERSHIP, a in the presence of: Florida limited partnership, its general partners _____________________________________________ By: KEY BISCAYNE BEACH HOTEL ASSOCIATES, LTD., a Florida limited Print Name: _________________________________ partnership _____________________________________________ By: _____________________________________________ Richard A. Berman, Authorized Signatory Print Name: _________________________________ and _____________________________________________ By: VMS REALTY INVESTMENT, LTD., an Illinois limited partnership Print Name: _________________________________ _____________________________________________ By: _____________________________________________ Richard A. Berman, Authorized Signatory Print Name: _________________________________ _____________________________________________ KEY BISCAYNE BEACH HOTEL ASSOCIATES, LTD., a Florida limited Print Name: _________________________________ partnership, its general partner _____________________________________________ By: _____________________________________________ Richard A. Berman, Authorized Signatory Print Name: _________________________________ PARTNERS LIQUIDATING TRUST, Print Name: _________________________________ a Delaware trust _____________________________________________ By: _____________________________________________ Print Name: _________________________________ Its ________________________________________ SONESTA BEACH RESORT LIMITED PARTNERSHIP, a Delaware limited partnership _____________________________________________ By: FLORIDA SONESTA CORPORATION, a Florida corporation, its general partner _____________________________________________ By: _____________________________________________ Peter J. Sonnabend, its Vice President Print Name: _________________________________
STATE OF ______________) ) SS. COUNTY OF ______________) I, the undersigned, a Notary Public, in and for the County and State aforesaid, DO HEREBY CERTIFY, that Richard A. Berman, the authorized signatory of VMS REALTY INVESTMENTS, LTD., an Illinois limited partnership and of KEY BISCAYNE BEACH HOTEL ASSOCIATES, LTD., a Florida limited partnership, a general partner of KEY BISCAYNE LIMITED PARTNERSHIP, a Florida limited partnership, personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person and acknowledged that as such authorized signatory, he/she signed and delivered the said instrument as his/her free and voluntary act, and as the free and voluntary act and deed of said entity, for the uses and purposes therein set forth. Given under my hand and official seal, this ____ day of _________. My commission expires _________ _____________________________________________ Notary Public STATE OF ______________) ) SS. COUNTY OF ______________) I, the undersigned, a Notary Public, in and for the County and State aforesaid, DO HEREBY CERTIFY, that Richard A. Berman, the authorized signatory of KEY BISCAYNE BEACH HOTEL ASSOCIATES, LTD., personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person and acknowledged that as such authorized signatory, he/she signed and delivered the said instrument as his/her free and voluntary act, and as the free and voluntary act and deed of said entity, for the uses and purposes therein set forth. Given under my hand and official seal, this ____ day of _________. My commission expires _________ _____________________________________________ Notary Public STATE OF ______________) ) SS. COUNTY OF ______________) I, the undersigned, a Notary Public, in and for the County and State aforesaid, DO HEREBY CERTIFY, that _________________________, the authorized signatory of PARTNERS LIQUIDATING TRUST, personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person and acknowledged that as such authorized signatory, he/she signed and delivered the said instrument as his/her free and voluntary act, and as the free and voluntary act and deed of said entity, for the uses and purposes therein set forth. Given under my hand and official seal, this ____ day of _________. My commission expires _________ _____________________________________________ Notary Public STATE OF ______________) ) SS. COUNTY OF ______________) I, the undersigned, a Notary Public, in and for the County and State aforesaid, DO HEREBY CERTIFY, that Peter J. Sonnabend, the authorized signatory of FLORIDA SONESTA CORPORATION, the general partner of SONESTA BEACH RESORT LIMITED PARTNERSHIP, personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person and acknowledged that as such authorized signatory, he/she signed and delivered the said instrument as his/her free and voluntary act, and as the free and voluntary act and deed of said entities, for the uses and purposes therein set forth. Given under my hand and official seal, this ____ day of ________. My commission expires _________ _____________________________________________ Notary Public EXHIBIT A LEGAL DESCRIPTION EXHIBIT B KBHA/PLT INDEBTEDNESS EXHIBIT C KBHA/PLT NOTE $500,000 July 1, 1998 For Value Received, SONESTA BEACH RESORT LIMITED PARTNERSHIP, a Delaware limited partnership hereby promises to pay to the order of KEY BISCAYNE BEACH HOTEL ASSOCIATES, LTD., a Florida limited partnership ("KBHA") and PARTNERS LIQUIDATING TRUST, a Delaware trust ("PLT"), the principal sum of FIVE HUNDRED THOUSAND DOLLARS ($500,000). This Note shall be due and payable on the Measurement Date. No interest shall accrue on amounts due hereunder unless this Note is paid after the Measurement Date, in which event the amount unpaid shall bear simple interest from the Measurement Date at twelve percent (12%) per annum until this Note is paid in full. This Note may be prepaid in whole or in part at any time without penalty. Payment shall be made by check to KBHA sent to KBHA c/o KBHA, c/o Strategic Realty Advisors, Inc., 630 Dundee Road, Suite 220, Northbrook, Illinois 60662, or to such other address as KBHA shall provide to the Partnership. If this Note is placed in the hands of an attorney for collection, the Partnership agrees to pay KBHA's reasonable attorney fees and costs reasonably incurred in connection therewith whether or not an action is filed. If an action is filed, the amount of such fees and costs shall be fixed by the court and shall include fees and costs on any appeal. This Note and the rights of the parties shall be governed solely by the laws of the State of Florida. The undersigned waives presentment, protest and demand, and notice of protest, demand and dishonor. This Note is being delivered pursuant to, subject to and in accordance with (i) that certain CONTRIBUTION AND FORMATION AGREEMENT dated as of January 30, 1998 and FIRST AMENDMENT TO CONTRIBUTION AND FORMATION AGREEMENT dated as of April 3, 1998 (collectively, the "Agreement") among KEY BISCAYNE LIMITED PARTNERSHIP, a Florida limited partnership ("KBLP"), KEY BISCAYNE BEACH HOTEL ASSOCIATES, LTD., a Florida limited partnership ("KBHA"), PARTNERS LIQUIDATING TRUST, a Delaware trust ("PLT"), FLORIDA SONESTA CORPORATION, a Florida corporation, KEY BISCAYNE LAND CORPORATION, a Florida corporation, STRATEGIC REALTY ADVISORS, INC., an Illinois corporation and SONESTA INTERNATIONAL HOTELS CORPORATION, a New York corporation, and (ii) that certain AMENDMENT TO AND ASSIGNMENT OF KBHA/PLT INDEBTEDNESS of even date herewith among KBLP, KBHA, PLT and the Partnership. Initially capitalized terms used but not otherwise defined herein have the same meanings given them in the Agreement. SONESTA BEACH RESORT LIMITED PARTNERSHIP, a Delaware limited partnership By: FLORIDA SONESTA CORPORATION, a Florida corporation, its general partner By: ____________________________________ Peter J. Sonnabend, its Vice President EXHIBIT D FSC GUARANTY EXHIBIT E SONESTA GUARANTY EXHIBIT F CERTAIN ASSIGNED SECURITY INTERESTS 1) Mortgage and Security Agreement from Biscayne Beach Hotel Associates, Ltd., a Florida Limited Partnership, to VMS Mortgage Company II, an Illinois Partnership, filed December 31, 1984, in Official Records Book 12369, Page 6889, in the amount of $2,000,000.00, as modified by Non-Disturbance and Attornment Agreement filed December 31, 1984, in Official Records Book 12369, page 6942; Modification Agreement filed May 10, 1985, in Official Records Book 12506, page 769; Amendment of Note and Fourth Mortgage filed June 7, 1993, in Official Records Book 15941, page 83. Said mortgage, through mesne assignments, was assigned to Partners Liquidating Trust, by instrument filed January 21, 1994, in Official Records Book 16220, page 4140, together with that UCC-1 Financing Statement in favor of VMS Mortgage Company II, filed December 31, 1984 in Official Records Book 12369, page 6938; and 2) Mortgage from Key Biscayne Limited Partnership to Key Biscayne Beach Hotel Associates, Ltd., dated February 4, 1994, filed February 8, 1994, in Official Records Book 16242, page 1680, securing the original principal sum of $1,317,426.00, as modified by Non-Disturbance and Attornment Agreement filed February 8, 1994, in Official Records Book 16242, page 1709, together with that UCC-1 Financing Statement in favor of Key Biscayne Beach Hotel Associates, Ltd., filed February 8, 1994, in Official Records Book 16242, page 1717, as modified by UCC-3, Statement of Change, filed July 8, 1994, in Official Records Book 16431, page 3367; and UCC-3, Statement of Change, filed July 8, 1994, in Official Records Book 16431, page 3368. IN WITNESS WHEREOF, the parties have caused this Amendment to be duly executed as of the day and year first above written. Signed, sealed and delivered KEY BISCAYNE LIMITED PARTNERSHIP, a in the presence of: Florida limited partnership, its general partners _____________________________________________ By: KEY BISCAYNE BEACH HOTEL ASSOCIATES, LTD., a Florida limited Print Name: _________________________________ partnership _____________________________________________ By: _____________________________________________ Richard A. Berman, Authorized Signatory Print Name: _________________________________ and _____________________________________________ By: VMS REALTY INVESTMENT, LTD., an Illinois limited partnership Print Name: _________________________________ _____________________________________________ By: _____________________________________________ Richard A. Berman, Authorized Signatory Print Name: _________________________________ _____________________________________________ KEY BISCAYNE BEACH HOTEL ASSOCIATES, LTD., a Florida limited Print Name: _________________________________ partnership, its general partner _____________________________________________ By: _____________________________________________ Richard A. Berman, Authorized Signatory Print Name: _________________________________ PARTNERS LIQUIDATING TRUST, a Delaware trust _____________________________________________ By: Key Biscayne Beach Hotel Associates, Ltd., a Florida limited Partnership, its attorney-in-fact Print Name: _________________________________ _____________________________________________ By: _____________________________________________ Richard A. Berman, Authorized Signatory Print Name: _________________________________ SONESTA BEACH RESORT LIMITED PARTNERSHIP, a Delaware limited partnership _____________________________________________ By: FLORIDA SONESTA CORPORATION, a Florida corporation, its general partner Print Name: _________________________________ _____________________________________________ By: _____________________________________________ Peter J. Sonnabend, its Vice President Print Name: _________________________________
-----END PRIVACY-ENHANCED MESSAGE-----