Exhibit 20.1
NO. 98-CI-04092
ROBERT M. HAAS, SR. et al. IN THE DISTRICT COURT OF
Plaintiffs,
MURRAY F. WEISS,
DONALD R. BURKLEW,
STEPHEN BRESLAUER,
JOSEPH LINDELL,
HERBERT YOUNG, and
ANTHONY ANDREOZZI
on behalf of themselves and all other
limited partners of Courtyard by
Marriott LP, Marriott Residence Inn LP, BEXAR COUNTY, TEXAS
Marriott Residence Inn II LP,
Fairfield Inn by Marriott LP, Desert
Springs Marriott LP
Plaintiffs Intervenors,
v.
MARRIOTT INTERNATIONAL, INC.
et al.
Defendants. 285TH JUDICIAL DISTRICT
NOTICE OF PENDENCY AND SETTLEMENT OF CLASS AND DERIVATIVE ACTION
RELATED TO MARRIOTT RESIDENCE INN LP AND FINAL APPROVAL HEARING
TO: ALL PERSONS WHO (A) WERE LIMITED PARTNERS IN MARRIOTT RESIDENCE INN LP ("
RES I LP") ON MARCH 9, 2000 OR (B ) APPEARED AS PLAINTIFFS IN THIS LITIGATION
AND HAVE SOLD THEIR UNITS IN RES I LP WITHOUT ASSIGNING THEIR LITIGATION RIGHTS
AGAINST THE DEFENDANTS.
PLEASE READ THIS NOTICE CAREFULLY. THIS NOTICE RELATES TO A PROPOSED SETTLEMENT
OF A CLASS AND DERIVATIVE ACTION AND IF YOU ARE A CLASS MEMBER, IT CONTAINS
IMPORTANT INFORMATION REGARDING YOUR RIGHTS, AS FURTHER DESCRIBED BELOW.
YOU ARE HEREBY NOTIFIED, pursuant to Rules 42(a), (b), and (c) of the
Texas Rules of Civil Procedure and Order of the 285th Judicial District Court of
Bexar County, that a proposed settlement in the total aggregate amount of
$14,981,728.00 or $228.38 for each of the 65,600 Res I LP units that participate
in the settlement or a reduced pro-rata amount for each participating fractional
unit (less Court-awarded attorneys' fees and expenses), along with the
Defendants' agreement to waive the right to receive payment in the future of
$29,781,000 in deferred management fees presently owed to the manager by Res I
LP, has been reached by the parties (the "Settlement"). The Settlement is
subject to final approval by the Court, and to certain other conditions set
forth below. The Settlement, if approved, will result in: (a) the establishment
of a settlement fund which shall be disbursed as set forth below; (b) the
approval of a plan of allocation and the appointment of a Claims Administrator
to administer the settlement fund; (c) the waiver by the Defendants of
$29,781,000 in deferred management fees owed by the Res I LP partnership; (d)
the release of claims asserted in the case and related claims and the permanent
barring and enjoining of the institution or prosecution of such claims; and (e)
the dismissal with prejudice of the above-referenced cause of action (the
"Action"), as against the Defendants, subject to the Court's retaining
jurisdiction over the administration and implementation of the Settlement.
The Settlement was made contingent upon certification of an opt-out
class under Texas Rule of Civil Procedure 42. The Court has certified the Class
as a Rule 42 (b) opt-out class. Your rights as members of a Rule 42 (b) opt-out
Class are explained below at Paragraph XI.
The Settlement is a part of a larger settlement entered into by the
Defendants involving six other limited partnerships. In addition to Res I LP,
the Settlement involves limited partners in Courtyard by Marriott Limited
Partnership ("CBM I LP"), Courtyard by Marriott II Limited Partnership ("CBM II
LP"), Fairfield Inn by Marriott Limited Partnership ("Fairfield Inn LP"),
Marriott Residence Inn II Limited Partnership ("Res II LP"), Desert Springs
Marriott Limited Partnership ("Desert Springs LP") and Atlanta Marriott Marquis
Limited Partnership ("Atlanta Marquis LP"). Class Counsel also represents the
class members in each of these classes (except Atlanta Marquis LP). The terms of
the Settlements involving these other partnerships are set forth in the
Settlement Agreement. The Notices sent to the class members in these other
classes and the Settlement Agreement are available by sending a written request
to the Claims Administrator, Gemisys, Attention: Marriott Partnership
Litigation, 7013 South Revere Parkway, Englewood, Colorado, 80112. These
documents are also available on-line at "clientline.com." To access the website,
enter the user name "limited partner" and the password "777000."
The Settlement is also contingent on: (1)not more than 10% of the Res I
LP units (other than units held by insiders) being held by holders who have
elected not to participate in the Settlement; (2)not more than 10% of the units
of limited partnership interests in each of the other six limited partnerships
involved in the Settlement (other than units held by insiders) being held by
holders who have elected not to participate in the Settlement; (3)holders of a
majority of the CBM II LP units (other than affiliates of CBM II LP) having
given valid written consents to the CBM II LP Merger and amendments to the CBM
II LP Partnership Agreement, and (4)holders of a majority of the CBM I LP units
(other than affiliates of CBM I LP) having given valid written consents to the
CBM I LP Merger and amendments to the CBM I LP Partnership Agreement. If less
than a majority of the holders of CBM I LP or CBM II LP units consent to the CBM
I LP and CBM II LP Merger and the proposed amendments to the CBM I LP and CBM II
LP Partnership Agreements, the Settlement will not be consummated. If any of the
other above conditions are not satisfied, the Settlement will not be consummated
unless Host Marriott Corporation and Marriott International, Inc. or their
assigns, in their sole and absolute discretion, waive such conditions and elect
to go forward with the Settlement.
In connection with the Settlement, Class Counsel will submit an
application for an award of attorneys' fees and expense reimbursement. Class
Counsel's application will be considered by the Court at the same time it
decides whether to approve the Settlement.
This Notice of Pendency and Settlement of Class and Derivative Action
and Final Approval Hearing (the "Notice") is to advise you of the pendency of
the Class and Derivative Action, the proposed Settlement, and of your rights in
connection with the Settlement. The Court has determined that the proposed
Settlement is within the range of fairness, adequacy and reasonableness so as to
justify sending this Notice, and the accompanying Proof of Claim form and
scheduling a hearing (the "Final Approval Hearing") at which evidence may be
received in support of or in opposition to: the proposed Settlement; the
establishment of a Settlement Fund; the proposed Plan of Allocation; Class
Counsel's Application for an Award of Attorneys' Fees and Expenses; and the
dismissal with prejudice of the Action. If you want to appear at the hearing,
you should follow the procedures set forth in paragraph XIV.
I. PARTIES
-------
A. Plaintiffs
----------
The Plaintiffs on whose behalf this suit involving Res I LP is brought
consist of the Representative Plaintiff and the Class. The attorneys
representing the Representative Plaintiff, the limited partnership and the Class
("Class Counsel") are identified in paragraph II.
1. Definition of Representative Plaintiff
--------------------------------------
Donald R. Burklew is the representative of the Res I LP Class and of Res
I LP. He brought the Action individually and on behalf of all Class members and
the limited partnership.
2. Definition of Res I LP Class
----------------------------
The Res I LP Class on whose behalf this action is being maintained
consists of:
(1) All persons who were limited partners in Marriott Residence Inn I
LP on March 9, 2000; and
(2) All persons who have appeared as plaintiffs in this Action and sold
their units in Marriott Residence Inn I LP without assigning their
litigation claims against the Defendants.
The Res I LP Class excludes the Intervenors identified below.
B. Defendants
----------
The Defendants are Host Marriott Corporation, Marriott International,
Inc., CBM One LLC (successor by merger to CBM One Corporation), Host
International, Inc., RIBM One LLC (successor by merger to RIBM One Corporation),
RIBM Two LLC (successor by merger to Marriott RIBM Two Corporation), Residence
Inn by Marriott, Inc., FIBM One LLC (successor by merger to Marriott FIBM One
Corporation), Fairfield FMC Corporation, Inc., HMC Desert LLC (successor by
merger to Marriott Desert Springs Corporation), Marriott Desert Springs
Development Corporation, Marriott Hotel Services, Inc., HMC Atlanta LLC
(successor by merger to Marriott Marquis Corporation, Marriott Hotels, Inc.,
Courtyard Management Corporation, J.W. Marriott, Jr., Stephen Rushmore and
Hospitality Valuation Services, Inc.
C. The Intervenors
---------------
Equity Resource Fund XIV, Equity Resource Fund X, Equity Resource Fund
XV, Equity Resource Fund XVI, Equity Resource Fund XVIII, Equity Resource Fund
XXI and Equity Resource Boston Fund, as an assignee of all right, title,
interest and litigation claims held by former unitholders of Res I LP, have
intervened in the litigation through their attorneys of record, Cheslock, Deely
& Rapp.
II. THE LITIGATION
--------------
On March 16, 1998, Robert M. Haas, Sr. and Irwin Randolph, joint tenants,
and other limited partners filed an action against the Defendants in the 57th
District Court of Bexar County, Texas ("the Haas case"). The Haas case involves
not only Res I LP but five other limited partnerships: CBM I LP, Res II LP,
Fairfield LP, Atlanta Marquis LP and Desert Springs LP. On June 17, 1999, Donald
R. Burklew, individually and on behalf of all other Res I LP limited partners,
filed a Second Amended Class Action Petition in Intervention in the Haas case.
On March 13, 2000, the presiding judge of Bexar County ruled that the
Haas case was a complex case and transferred it to the Honorable Michael Peden
of the 285th District Court. On June 6, 2000, Donald R. Burklew, individually
and on behalf of the Res I LP class, filed a Third Amended Class Action Petition
in Intervention. The class allegations in the Haas case now include CBM I LP,
Res II LP, Res I LP, Fairfield LP and Desert Springs LP.
On June 16, 2000, the Court, under Texas Rules of Civil Procedure 42 (a)
and (b), certified the action as a class action and created a settlement class
of Res I LP limited partners. The Court appointed David Berg and the law firm of
Berg & Androphy and Stephen Hackerman and the law firm of Hackerman Peterson
Frankel & Manela P.C. as Co-Lead Class Counsel. The Court further designated as
co-counsel for the Class, James Moriarty and the law firm of Moriarty &
Associates, P.C.; David E. Warden and the law firm of Yetter & Warden, LLP; J.
Boyd Page and the law firm of Page Gard Smiley & Bishop LLP; Charles E. Dorr and
the law firm of Charles E. Dorr, P.C.; Linda Broocks and the law firm of Ogden,
Gibson, White & Broocks, LLP; Roy Barrera, Sr. and the law firm of Nicholas &
Barrera, PC; and James L. Branton and the law firm of Branton & Hall, P.C.
(collectively, "Class Counsel").
III. PRETRIAL INVESTIGATION AND DISCOVERY IN THE ACTION
--------------------------------------------------
Prior to initiating this action, Class Counsel undertook an extensive
investigation into Res I LP, the Defendants and certain aspects of the hotel
industry. This investigation included:
(1) a detailed review of Res I LP offering materials, quarterly and annual
reports, correspondence and related materials;
(2) an analysis of annual reports, quarterly reports, news articles, books
and related materials related to the Defendants;
(3) a review and analysis of various materials relating to hotel appraisal
techniques and hotel operations, management fees, ground leases,
economic data and other hotel industry data;
(4) preparation of chronologies related to the Defendants and their
limited service hotel operations;
(5) an investigation into the background of the appraisal experts hired by
the Defendants and their historical relationships and dealings with
the Defendants; and
(6) a review and analysis of a proposed "roll-up" and REIT involving Res I
LP and other limited service hotel partnerships.
As a result of this investigation, Class Counsel concluded that the
limited partners in Res I LP had viable claims against the Defendants based on
the same general pattern of conduct that was associated with the six other
limited partnerships. Specifically, Class Counsel concluded that the Res I LP
limited partners had claims based on misrepresentations made and excessive fees
charged to the limited partnership that amounted to fraud and breach of
fiduciary duty.
While this case has been pending, Class Counsel have engaged in extensive
discovery involving the CBM II LP claims. Class Counsel believe that much of the
discovery taken and work performed in connection with the CBM II LP claims, has
been directly relevant to the Res I LP claims. The investigation and discovery
on the CBM II LP claims that lasted over eighteen months, included, inter alia:
(a) inspecting hundreds of thousands of pages of documents produced by the
Defendants and third parties; (b)deposing numerous present and former employees
of the Defendants; (c) deposing Plaintiffs; (d) deposing third party witnesses;
(e)employing and consulting with experts, including reviewing and producing
expert reports and attending and taking expert depositions; (f) reviewing public
and on-line filings; and (g)researching applicable legal issues with respect to
the claims asserted in the CBM II LP case. In the course of discovery on the CBM
II LP claims, Class Counsel reviewed and considered the following information,
among other things, which they believe had a direct bearing on the Res I LP
claims:
(1) management agreements between Res I LP and the manager of the hotels;
(2) management agreements between the manager of the hotels and third
party owners of Residence Inn by Marriott hotels;
(3) various of the Defendants' internal memoranda, minutes, notes and
other documents relating to the limited service hotels, including
those hotels owned by Res I LP;
(4) conditions which existed in the limited service hotel markets in the
mid-1980s;
(5) quarterly and annual reports of Res I LP;
(6) various hotel operations and financial information pertaining to
Residence Inn by Marriott hotels owned by Res I LP and others;
(7) various Residence Inn by Marriott Franchise Offering Circulars and
Franchise Agreements; and
(8) various memoranda, agreements and other documents pertaining to the
split of Marriott Corporation into Marriott International, Inc. and
Host Marriott Corporation.
Settlement discussions, individually and with a mediator, have been intense and
protracted.
IV. CLAIMS OF THE CLASS AND THE PARTNERSHIP
---------------------------------------
Class Counsel have asserted numerous claims in good faith on behalf of
the Class and the Partnership in the Action and believe that the evidence
developed to date in the Action supports such claims. These claims include
allegations that the Defendants: (1) breached and knowingly participated in
breaches of fiduciary duties to the limited partners in Res I LP and to Res I
LP; (2) defrauded and conspired to defraud the Res I LP limited partners and Res
I LP; (3)conspired against the Res I LP limited partners and Res I LP; (4)
violated the Texas Free Enterprise & Antitrust Act of 1983; (5) breached certain
contracts; and (6) tortiously interfered with certain contracts.
V. DEFENDANTS' STATEMENT AND DENIALS OF WRONGDOING AND
---------------------------------------------------
LIABILITY
---------
The Defendants have denied and continue to deny, in good faith, each and
all of the claims, causes of action, and charges of wrongdoing or liability
against them arising out of any of the conduct, statements, acts or omissions
alleged, or that could have been alleged, in the Action. The Defendants have
denied that they: (1) breached and knowingly participated in breaches of
fiduciary duties allegedly owed to the limited partners in Res I LP and to Res I
LP; (2) defrauded and conspired to defraud the Res I LP limited partners and Res
I LP; (3)conspired against the Res I LP limited partners and Res I LP; (4)
violated the Texas Free Enterprise & Antitrust Act of 1983; (5) breached certain
contracts; or (6) tortiously interfered with certain contracts. Defendants also
deny the allegations that the members of the Class or that Res I LP were harmed
or have suffered any damages due to any misconduct of the Defendant. The
Defendants have raised numerous affirmative defenses, including the statute of
limitations.
The Defendants have conducted an extensive investigation of the facts and
believe that they can conclusively demonstrate that: (1)the Residence Inn by
Marriott Hotels were proven industry leaders both in terms of performance and
customer satisfaction; (2) the fees charged by the hotel manager were fully
disclosed, were approximately equal to the real value of the manager's services
and affiliation with the Marriott hotel system, and were reasonable and
customary in nature and amount; (3)complete and accurate disclosures of all
material facts and risks were made to and accepted by the investors; and (4) any
damages alleged to have been suffered by Res I LP or the Res I LP limited
partners were caused by the dramatic and unforeseen changes in the economy and
the hotel industry which adversely affected the hotels' performance and impacted
the partnership and the Defendants.
In addition, many of the wrongs complained about either occurred or began
approximately a decade before the Action was filed. The Defendants believe that
there is overwhelming evidence that the limited partners either knew or should
have known of their belated claims years earlier than suit was filed but failed
to act in the time required by law. Thus many, if not all, of the limited
partners' claims are barred by the applicable statutes of limitations. The
Defendants have also raised a number of other viable defenses to the Res I LP
claims.
VI. NO COURT DETERMINATION
----------------------
The Court has not determined the merits of the claims or the defenses in
the Action, and this Notice should not be read to imply that there has been any
finding of any violation of law, any fraud, any breach of fiduciary duty or
wrongdoing by any Defendant or that any recovery could be had in any amount if
the claims are not settled. Nor has the Court made any determination regarding
the applicability of any facts regarding any other limited partnership to this
partnership.
VII. PROPOSED SETTLEMENT
-------------------
A. Availability of Documents
-------------------------
The Settlement that has been reached in the Action is embodied in the
Settlement Agreement between the Plaintiffs, the Intervenors, the Special
Litigation Committee (the "SLC") and the Defendants dated March 9, 2000. This
document and all the documents filed in this Action, may be examined at the
offices of the District Clerk of Bexar County, 100 Dolorosa Street, San Antonio,
Texas, during regular business hours. The Settlement Agreement and copies of
much of the discovery in the case are also available on-line at
"clientline.com." To access the website, enter the user name "limited partner"
and the password "777000."
The following description of the proposed settlement is only a summary,
and reference is made to the Settlement Agreement for a full statement of its
provisions.
B. Summary of Settlement Terms
---------------------------
1. Cash Payment
------------
Res I LP unitholders who have timely submitted a valid proof of claim
will receive $228.38 per Res I LP unit and a reduced pro-rata amount for any
other fractional unit. If all the holders of the 65,600 Res I LP units
participate in the Settlement, the total cash payment will be $14,981,728. The
cash payment actually received by each unitholder will be reduced by any amount
awarded to Class Counsel by the Court as attorneys' fees and reimbursement of
litigation costs and expenses. The Court has ruled that attorneys' fees will be
awarded as a percentage of the recovery not to exceed 33% of the cash recovery.
Class Counsel intends to seek an award of attorneys' fees and expense
reimbursement that total approximately $78.00 per participating Res I LP unit.
2. Waiver of Management Fees Owed
------------------------------
Defendants will waive the right to receive payment in the future of
$29,781,000 in deferred management fees presently owed by Res I LP to the
manager under the terms of the Res I LP Management Agreement.
3. Release
-------
In exchange for the cash payment referred to in paragraph VII(B)(1) and
the waiver of management fees referred to in paragraph VII(B)(2), each class
member who participates in the Settlement will release, acquit and forever
discharge the Defendants and others from all known and unknown claims related to
Res I LP as well as certain other known claims that the Class members may have
against the Defendants and related entities as set forth in the Release. The
limited partners will also be permanently barred and enjoined from instituting
or prosecuting such claims. The specific form of the release is contained in the
gold Proof of Claim described below and should be reviewed carefully.
4. Dismissal of the Litigation
---------------------------
In exchange for the cash payment referred to in paragraph VII(B)(1) and
the waiver of deferred management fees referred to in paragraph VII(B)(2), all
individual, class and derivative claims asserted in the Action will be dismissed
with prejudice.
VIII. BENEFITS OF SETTLEMENT
----------------------
Class Counsel believe that the cash portion of the Settlement is a
significant recovery considering the uncertain outcome and risks of the Action.
Class Counsel believe there is substantial evidence that certain management fees
charged to Res I LP were above market rates and were unfair, and that the hotels
were sold to Res I LP under circumstances and arrangements which provided the
maximum benefit to the Defendants and allowed them to retain most of the
economic benefits of ownership without the attendant risks. Class Counsel
recognize, however, that such evidence is subject to interpretation and a jury
could reach a different conclusion. Furthermore, while Class Counsel believe
that the evidence indicates that Res I LP was charged excessive management fees,
Res I LP did not actually pay any significant amount of excessive fees, but
rather accrued deferred obligations to pay these fees.
In response to the allegations, the Defendants would likely assert that
the evidence conclusively establishes that the management fees, chain services
fees and related fees were fully and accurately described in the Res I LP
offering memoranda and that these fees were within the range of reasonable fees
in the marketplace at the time. The Defendants would also present evidence that
the fees and chain service charges were fair and reasonable given the services
provided, the strength of the Marriott brand name and the considerable risks
undertaken by the Defendants in the Res I LP transaction. In this regard, the
Defendants could demonstrate that Residence Inns has been a very successful
brand in the marketplace and has out-performed and continues to out-perform
competitors in many critical areas.
Class Counsel believe there is also evidence indicating that, at the time
the Res I LP hotels were sold to the Res I LP limited partners, the Defendants
knew that the limited service hotel market was overbuilt, that the projections
were unfounded and that the Res I LP hotels were overvalued. The Defendants are
likely to present evidence to the contrary, for instance, that the Res I LP
offering memorandum contained only two years of projections which were based on
actual operating histories, that current hotel market conditions were fully and
accurately disclosed and well-known, and that the hotel values were fairly
derived. These facts, together with occurrence of certain intervening events in
1990-91 (e.g., the recession in the hotel industry, the Gulf War, etc.), make it
more difficult to prove that the Defendants knowingly sold the Res I LP hotels
at inflated prices based on deliberately inflated projections. Thus, Class
Counsel acknowledge that some of the compelling premises of the partnerships'
claims, in general, appear to be subject to significant dispute in the context
of Res I LP.
In addition, Class Counsel have determined that Defendants' statute of
limitations and lack of reliance defenses present significant problems to a
successful outcome at trial. Specifically, many of the wrongs complained about
either occurred or began to occur approximately twelve years ago. The Defendants
have evidence to argue that the limited partners either knew or should have
known of their claims years ago and yet failed to act within the time required
by law. If successful, the Defendants' statute of limitations defense would
eliminate most, if not all, of the damage claims. Similarly, the Defendants may
show that many of the Res I LP limited partners did not read the private
placement memorandum before investing and therefore can not sue the Defendants
for misrepresentations or omissions because they did not rely on the Defendants
in making their investment decision but, instead, relied on what their
individual brokers told them. Finally, Class Counsel believe the ultimate
outcome of the Res I LP claims at trial could be adversely impacted by the fact
that overall, the limited partners in Res I LP have not incurred any
out-of-pocket losses (the value of what they own plus the amount of the
distributions they have received is worth more than they invested).
For all these reasons, Class Counsel believe that the proposed Res I LP
Settlement represents a fair, reasonable and attractive settlement. Class
Counsel believe that the Defendants' agreement to waive their right to receive
payment in the future of deferred management fees essentially eliminates any
damages resulting from the excessive fees that are alleged to have been charged
to Res I LP. Similarly, Class Counsel believe that a cash settlement equal to
22.838% of the original purchase price of a Res I LP unit provides reasonable
compensation for claims that are twelve years old.
However, the Settlement is a negotiated compromise. As a compromise, the
Settlement is based in large part on Class Counsel's subjective evaluation of
the facts and circumstances surrounding the Res I LP claims. Moreover, while
Class Counsel have reviewed and considered documents and information which they
believe are sufficient to evaluate the relative merits of the Settlement, there
is the possibility that more extensive discovery could uncover information which
would alter the mix of information in a manner which could be more favorable or
less favorable to the Res I LP limited partners. Based on the collective
experience in handling hundreds of limited partnership claims, Class Counsel
believe that the Settlement confers substantial benefits upon the Class and each
Class member and is in the best interest of the Class.
IX. OVERLAPPING CLAIMS
------------------
The payments under the Settlement are to be made on a per unit basis. In
a few cases, more than one Class member may have a claim to the settlement
proceeds paid for a particular unit. For example, one class member may have
purchased a unit in Res I LP from another Class member without obtaining the
assignment of the former unitholder's litigation claims against the Defendants.
To the extent a dispute over payment arises, the net recovery per unit, after
any deductions for attorneys' fees and expenses, will be divided between the
current unitholder and the former unitholder on a basis agreed to by the two
unitholders, or if they cannot agree, as decided by a Special Master appointed
by the Court. The decision of the Special Master will be final. In no event will
the Defendants pay more than $228.38 per participating Res I LP unit. Moreover,
the Defendants have no responsibility or liability for the allocation or
distribution of the settlement fund to the unitholders.
X. TAX EFFECTS OF THE SETTLEMENT
-----------------------------
Accepting the benefits of the Settlement may result in certain tax
consequences for each Class member. Each Class member, therefore, is urged to
consult with his/her tax advisor regarding the tax consequences of the
Settlement before deciding whether to participate in the Settlement.
XI. THE RIGHTS OF CLASS MEMBERS
---------------------------
The Court has certified the Action as a class action under Texas Rules of
Civil Procedure 42(a) and (b). If you are a Class member as described above you
will automatically be represented by Class Counsel unless you request to be
excluded from the Class or to enter an appearance through counsel of your own
choosing at your own expense.
A. The Right To Participate in the Settlement
------------------------------------------
As a Class member, you will participate in the Settlement unless you
request exclusion from the Class in the time and manner provided for in
paragraph XI(C). As a participating Class member, you will receive the benefits
of the Settlement and you will be bound by a Judgment Order dismissing with
prejudice all of your claims.
B. The Gold Proof of Claim Form
----------------------------
Along with this Notice, you should have received a gold Proof of Claim
form. To facilitate the orderly and prompt processing and distribution of the
settlement funds, Class Counsel encourage each class member to sign and return a
properly executed gold Proof of Claim Form immediately to Gemisys, Attention:
Marriott Partnership Litigation, 7013 South Revere Parkway, Englewood, Colorado
80112. A self-addressed, enclosed stamped envelope is provided for your use in
returning your gold Proof of Claim form. In order to receive prompt payment,
your properly executed gold Proof of Claim form must be received by Gemisys no
later than September 28, 2000. If you are participating as a Class member in
more than one Marriott sponsored partnership, you must return a separate Proof
of Claim form for each partnership.
The Proof of Claim form includes the release of claims described above.
Failure to timely return a valid Proof of Claim form will delay your receipt of
the benefits of the Settlement. If you have not excluded yourself from the Class
and your Proof of Claim form has not been received within 90 days after the date
on which the judgment order approving the Settlement becomes final, Class
Counsel will execute the Proof of Claim for you and you will be bound by its
terms as if you signed it.
C. The Right To Be Excluded from the Class
---------------------------------------
Although you are a Class member, you may request to be excluded from the
Class. If you wish to request exclusion from the Class, you must do so in
writing, and submit it to Gemisys, Attention: Marriott Partnership Litigation,
7013 South Revere Parkway, Englewood, Colorado 80112, no later than August 4,
2000. The request for exclusion must set forth your name, address, and telephone
number, the number of units in Res I LP to which your request applies, the date
of purchase of the units, the name in which the units are or were held and the
name of their beneficial owner, if any, and state that you request to be
excluded from the Class.
If you request exclusion from the Class and enter an appearance through
counsel of your own choosing, you will not be a Class member, you will not
receive the benefits of the Settlement described above and you will not be bound
by the Judgment Order entered in the Action as it pertains to your individual
damage claims. You will be free to pursue your individual damage claims by
hiring, at your own expense, your own counsel other than Class Counsel.
XII. DISMISSAL OF ACTION AND COSTS
-----------------------------
In conjunction with the Settlement, the Parties have agreed to request
that the Court enter a Judgment Order dismissing the Action on the merits, with
prejudice, subject to the Court's retaining jurisdiction over the implementation
and administration of the Settlement.
XIII. CLASS COUNSEL ATTORNEYS' FEE AND EXPENSE APPLICATION
----------------------------------------------------
At the conclusion of the Final Approval Hearing described below, Class
Counsel will apply to the Court for an award of attorneys' fees of 33% of the
cash recovery obtained by the participating Class members. In exchange for the
Defendants' agreement to waive $29,781,000 in deferred management fees presently
owed by Res I LP, Class Counsel has agreed to waive their right to collect from
the Defendants $2,990,000 in attorneys' fees awarded to Class Counsel by the
Court in connection with the prosecution of the Res I LP claims. The total
request for attorneys' fees and expense reimbursement will be no more than
$78.00 per unit, ($75.37 per unit for attorneys' fees and expense reimbursement
of litigation expenses of no more than $2.63 per unit) as set forth in Class
Counsel's Application for an Award of Attorneys' Fees and Expenses, which will
be filed with the Court. This document will be available on-line at
"clientline.com." To access the website, enter the user name "limited partner"
and the password "777000." If all of the Class members participate in the Res I
LP Settlement, Class Counsel will request $4,729,028 in attorneys' fees and
approximately $151,000 in expense reimbursement from the Res I LP Settlement. If
approved, the litigation expenses and attorneys' fees awarded will be paid from
the funds paid by the Defendants following entry of the Judgment Order approving
the Settlement.
XIV. THE FINAL APPROVAL HEARING
--------------------------
At the present time, this Court has only determined that the Settlement
falls within a range of reasonableness that justifies sending Class members
notice of the proposed Settlement and holding a formal Final Approval Hearing on
the merits of the proposed Settlement.
The Court must determine whether the proposed Settlement is fair,
reasonable, and adequate and should be approved by the Court, and whether a
Judgment Order should be entered dismissing the Action with prejudice, and
retaining jurisdiction over implementation of the Settlement. These
determinations will be made upon a record developed at the Final Approval
Hearing on the fairness of the proposed Settlement. This hearing is scheduled
for August 28, 2000 at 9:00 A.M. in the courtroom of the Honorable Michael
Peden, 285th District Court, Bexar County Courthouse, 100 Dolorosa, San Antonio,
Texas. If the Final Approval Hearing is postponed for any reason, you will
receive notice of the new hearing date.
Any Class member who has not requested to be excluded from the Class, may
appear at the Final Approval Hearing to show cause, if any, why the proposed
Settlement should not be approved as fair, reasonable, and adequate, or why the
Action should not be dismissed with prejudice, or to present any opposition to
the Plan of Allocation, or to Class Counsel's Application for an Award of
Attorneys' Fees and Expenses. You need not appear at this hearing unless you
object to the proposed Settlement or the other matters referenced in this
paragraph.
No person will be heard at the Final Approval Hearing unless on or prior
to August 4, 2000, written notice of that person's intention to appear at the
Hearing, stating all grounds for objection or other statement of position, a
detailed description of the facts underlying each objection, a detailed
description of the legal authorities supporting each objection, a statement of
whether the objector intends to appear and argue at the Hearing and, if so, how
long the objector anticipates needing to present the objection; a list of
witnesses whom the objector may call by testimony or affidavit; a list of
exhibits which the objector may offer during the Hearing, along with copies of
such exhibits, showing proof of service on the attorneys of record for all
Parties as indicated below, is delivered to:
Robert M. Haas, Sr., et al. v. Marriott International, Inc., et al., No.
98-CI-04092
District Clerk
Bexar County Courthouse
100 Dolorosa Street
San Antonio, Texas 78205
FAILURE TO TIMELY FILE WRITTEN OBJECTIONS SHALL CONSTITUTE A WAIVER OF ANY
OBJECTIONS AND SHALL FORECLOSE THE RAISING OF OBJECTIONS TO THE PROPOSED
SETTLEMENT, TO THE DISMISSAL WITH PREJUDICE OF THE ACTION, TO THE PLAN OF
ALLOCATION, AND TO THE FEES AND EXPENSES REQUESTED BY CLASS COUNSEL.
XV. NOTICE TO ATTORNEYS OF RECORD
-----------------------------
Copies of all documents filed with the Clerk of the Court must also be
served upon the following Class Counsel by sending a copy to the address
indicated below:
Stephen M. Hackerman
Hackerman Peterson Frankel & Manela, P. C.
1122 Bissonnet
Houston, Texas 77005
And upon each Defendant by sending copies to their respective Defendants'
Counsel as indicated below:
Tom A. Cunningham, Esq.
Debbie Darlow, Esq.
Cunningham, Darlow, Zook &
Chapoton, L.L.P.
1700 Chase Tower
600 Travis
Houston, Texas 77002
Seagal V. Wheatley, Esq.
Charles L. Smith, Esq.
Jenkens & Gilchrist, Groce, Locke &
Hebdon, P.C.
1800 Frost Bank Tower
100 West Houston Street
San Antonio, Texas 78205-1497
The pleadings and all other records in this litigation may be examined and
copied at any time during regular business hours in the office of the District
Clerk of Bexar County, 100 Dolorosa Street, San Antonio, Texas 78205.
DO NOT CALL THE COURT OR THE CLERK OF THE COURT REGARDING THIS NOTICE; ADDRESS
ALL INQUIRIES IN WRITING.
BY ORDER OF THE HONORABLE MICHAEL P. PEDEN, JUDGE OF THE 285TH JUDICIAL
DISTRICT COURT OF BEXAR COUNTY, TEXAS
Dated: June 16, 2000