1
EXHIBIT 3.26
LIMITED PARTNERSHIP AGREEMENT
OF
CAPSTAR MOCKINGBIRD PARTNERS, L.P.
Dated: As of February 24, 1997
2
LIMITED PARTNERSHIP AGREEMENT
OF
CAPSTAR MOCKINGBIRD PARTNERS, L.P.
This LIMITED PARTNERSHIP AGREEMENT (this "Agreement") is made as of
February 24, 1997, by and among EQUISTAR ACQUISITION CORPORATION, a Delaware
corporation having an office c/o CapStar Management Company, L.P., 1010
Wisconsin Avenue, N.W., Washington, D.C. 20007 ("EquiStar"), as general partner,
and CAPSTAR MANAGEMENT COMPANY II, L.P., a Delaware limited partnership having
an office at 1010 Wisconsin Avenue, N.W., Washington, D.C. 20007 ("CapStar"), as
limited partner.
WITNESSETH:
WHEREAS, the parties hereto (collectively, the "Partners" and
individually, a "Partner") desire to form a limited partnership for the purposes
hereinafter set forth.
NOW, THEREFORE, the parties hereto agree as follows:
1. Definitions. As used in this Agreement, the following terms shall have the
respective meanings set forth below:
1.1 "Act" shall mean the Delaware Revised Uniform Limited
Partnership Act, as the same may have been or may be amended.
1.2 "Adjusted Capital Account" shall mean, with respect to any
Partner, such Partner's Capital Account balance, increased by such
Partner's share of Partnership Minimum Gain and Partner Minimum Gain.
1.3 "Code" shall mean the Internal Revenue Code of 1986 as the
same has been and may hereafter be amended.
1.4 "Depreciation" shall mean, with respect to any year or
portion thereof, an amount equal to the depreciation, amortization or
other cost recovery deduction allowable with respect to an asset for
3
Federal income tax purposes, except that if the Gross Asset Value of
the asset differs from its adjusted tax basis, Depreciation shall be
determined in accordance with the methods used for Federal income tax
purposes and shall equal the amount that bears the same ratio to the
Gross Asset Value of such asset as the depreciation, amortization or
other cost recovery deduction computed for Federal income tax purposes
with respect to such asset bears to the adjusted Federal income tax
basis of such asset; provided, however, that if any such asset that is
depreciable or amortizable has an adjusted Federal income tax basis of
zero, the rate of Depreciation shall be as determined by the Partners.
1.5 "Gross Asset Value" shall mean, with respect to any
asset, the asset's adjusted basis for Federal income tax purposes,
except that (i) the Gross Asset Value of any asset contributed to the
Partnership shall be its gross fair market value at the time of
contribution, (ii) the Gross Asset Value of any asset distributed in
kind to any Partner (including upon a liquidation of the Partnership)
shall be the gross fair market value of such asset, and (iii) the Gross
Asset Value of any asset determined pursuant to clause (i) above shall
thereafter be adjusted from time to time by the Depreciation taken into
account with respect to such asset for purposes of determining Net
Profit or Net Loss.
1.6 "Net Profit" or "Net Loss" shall mean, with respect to any
fiscal year, the taxable income or loss of the Partnership as
determined for Federal income tax purposes, with the following
adjustments:
1.6.1 Such taxable income or loss shall be increased
by the amount, if any, of tax exempt income received or
accrued by the Partnership;
1.6.2 Such taxable income or loss shall be reduced by
the amount, if any, of all expenditures of the Partnership
described in Section 705(a)(2)(B) of the Code, including
expenditures treated as described therein under Section
1.704-1(b)(2)(iv)(i) of the Treasury Regulations;
2
4
1.6.3 If the Gross Asset Value of any asset is
adjusted pursuant to clause (ii) of the definition of Gross
Asset Value, the amount of such adjustment shall be taken into
account, immediately prior to the event giving rise to such
adjustment, as gain or loss from the disposition of such asset
for purposes of computing Net Profit or Net Loss;
1.6.4 Gain or loss resulting from any disposition of
any asset 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 the asset disposed of,
notwithstanding that such Gross Asset Value differs from the
adjusted tax basis of such asset; and
1.6.5 In lieu of the depreciation, amortization, or
other cost recovery deductions taken into account in computing
such taxable income or loss, there shall be taken into account
Depreciation for such fiscal year.
1.7 "Partner" shall mean each of the parties to this Agreement
and any other Person to which an interest in the Partnership is
hereafter transferred and who is admitted to the Partnership in
accordance with the terms of this Agreement.
1.8 "Partner Minimum Gain" means "partner nonrecourse debt
minimum gain," as defined in Treasury Regulations Section 1.704-2(i)(2)
and determined in accordance with Treasury Regulations Section
1.704-2(i)(3).
1.9 "Partner Nonrecourse Debt" shall have the meaning set
forth in Treasury Regulations Section 1.7042(b)(4).
1.10 "Partner Nonrecourse Deductions" shall have the meaning
set forth in Section 1.704-2(i)(1) of the Treasury Regulations and
shall be determined in accordance with Section 1.704-2(i)(2) of the
Treasury Regulations.
1.11 "Partnership" shall have the meaning set forth in Article
2.
3
5
1.12 "Partnership Minimum Gain" shall have the meaning set
forth in Treasury Regulations Section 1.704-2(b)(2) and shall be
determined in accordance with Treasury Regulations Section 1.704-2(d).
1.13 "Percentage Interests" shall have the meaning specified
in Section 6.2.
1.14 "Property" shall mean (a) that certain property presently
known as the Radisson Hotel Dallas located at 1893 West Mockingbird
Lane, Dallas, Texas 75235, and (b) all personal property situated at
such property or used or useful in connection therewith.
1.15 "Regulatory Allocations" has the meaning ascribed thereto
in subsection 7.3.8.
1.16 "Treasury Regulations" means the rules, regulations,
orders and interpretations of rules, regulations and orders validly
promulgated by the Treasury Department under the Code, whether final,
temporary or proposed, as in effect from time to time.
2. Formation and Name; General and Limited Partners.
2.1 The Partners hereby form a limited partnership (the
"Partnership") pursuant to the provisions of the Act. The business of
the Partnership shall be conducted under the name "CAPSTAR MOCKINGBIRD
PARTNERS, L.P." The General Partner shall execute and record any
limited partnership certificate required by the Act and any certificate
or application necessary to qualify the Partnership in any state in
which it transacts business.
2.2 The General Partner of the Partnership is EquiStar. The
Limited Partner of the Partnership is CapStar.
3. Principal and Registered Offices; Agent for Service of Process.
3.1 The principal place of business of the Partnership, and
the address of the office at which the records of the Partnership shall
be maintained, at 1010 Wisconsin Avenue, N.W., Suite 650, Washington,
D.C. 20007, or at such other place as may hereafter from time to time
be selected by the General Partner.
4
6
3.2 The Partnership's registered office shall be at 1010 Wisconsin
Avenue, N.W., Suite 650, Washington, D.C. 20007.
3.3 The registered agent of the Partnership for service of process
within the State of Delaware shall be United Corporate Services, 15 East North
Street, Dover, Delaware 19901. In the event that the person or entity at any
time acting as such agent shall cease to act as such for any reason, the General
Partner shall appoint a substitute agent. Such agent shall be the agent of the
Partnership on which any process, notice or demand required or permitted by law
to be served on the Partnership may be served.
4. Term. The term of the Partnership shall commence upon the execution
and delivery of this Agreement and shall continue until terminated by agreement
of the Partners or as otherwise provided in this Agreement.
5. Purpose. The purpose of the Partnership shall be (a) to acquire the
Property and other property incidental to the ownership and operation of the
Property, (b) to hold, own, operate, lease, finance, mortgage, encumber, alter,
dispose of and in all respects deal as owner of the Property, and (c) to engage
in any activities necessary or incidental to the foregoing. The Partnership
shall not engage in any business other than as set forth in the foregoing
sentence. Nothing in this Agreement shall prohibit the Partnership from entering
into any guaranties or indemnities with respect to obligations of entities which
are affiliates of CapStar Hotel Company or from entering into any mortgages,
deeds of trust, financing statements, cross-collateralization or other security
arrangements with respect thereto (all of the forgoing being collectively
referred to as "Cross-Collateralization Agreements").
6. Capital Contributions; Percentage Interest
6.1 Simultaneously with the execution and delivery of this
Agreement the Partners are making the following contributions to the capital of
the Partnership:
(a) CapStar $ 99.00
(b) EquiStar $ 1.00
5
7
6.2 The Partners' percentage interests in the Partnership
("Percentage Interests") shall be as follows:
(a) CapStar 99%
(b) EquiStar 1%
6.3 If the Partnership shall require any additional funds
after the date hereof, as determined by the General Partner, the Partners shall
contribute such funds to the Partnership in proportion to their respective
Percentage Interests.
6.4 Except as expressly provided in this Article 6, no Partner
shall be required to make any capital contributions or loans to the Partnership
and no Partner shall make any capital contributions or loans to the Partnership
without the consent of the other Partner.
7. Income and Losses; Distribution of Available Net Income.
7.1 A separate "Capital Account" shall be maintained for each
Partner. Each Partner's Capital Account shall be credited with the amount of
such Partner's capital contributions made in cash and the fair market value (net
of liabilities assumed or taken subject to) of all property contributed by such
Partner and such Partner's allocated share of Net Profit, income and gain of the
Partnership. Each Partner's Capital Account shall be debited with the amount of
any cash distributions to such Partner and the fair market value (net of
liabilities assumed or taken subject to) of all property distributed in kind to
such Partner and such Partner's allocated share of Net Loss of the Partnership.
7.2 From and after the date of this Agreement, all Net Profit
and all Net Loss of the Partnership for each year or fraction thereof
(determined after taking into account any allocation for such period under
Section 7.3) shall be credited to the Capital Accounts of the Partners in
proportion to their respective Percentage Interests.
7.3 Special Allocations.
7.3 1 Except as otherwise provided in Section 7.3.2,
all items of Partnership income, gain, deduction and loss shall be allocated
among the Partners in the same proportion as they share in the Net
6
8
Profit and Net Loss to which such items relate. Any credits against income tax
shall be allocated in accordance with the Partners' Percentage Interests.
7.3.2 Income, gain, loss or deductions of the
Partnership shall, solely for income tax purposes, be allocated among the
Partners in accordance with Section 704(c) of the Code and the Treasury
Regulations promulgated thereunder, so as to take account of any difference
between the adjusted basis of the assets of the Partnership and their respective
Gross Asset Values in accordance with the traditional method set forth in
Section 1.704-3(b) of the Treasury Regulations.
7.3.3 Notwithstanding any other provision of this
Article 7, if there is a net decrease in Partnership Minimum Gain during any
year, each Partner shall be specially allocated items of income and gain for
such year (and, if necessary, subsequent years) in an amount equal to the
portion of such Partner's share of the net decrease in Partnership Minimum Gain,
determined in accordance with Section 1.704-2(g) of the Treasury Regulations.
Allocations pursuant to the previous sentence shall be made in proportion to the
respective amounts required to be allocated to each Partner pursuant thereto.
The items to be so allocated shall be determined in accordance with Section
1.704-2(f)(6) of the Treasury Regulations. This Section 7.3.3 is intended to
comply with the minimum gain chargeback requirement in Section 1.704-2(f) of the
Treasury Regulations and shall be interpreted consistently therewith.
7.3.4 Notwithstanding any other provisions of this
Article 7, if there is a net decrease in Partner Minimum Gain attributable to a
Partner Nonrecourse Debt during any year, each Partner who has a share of the
Partner Minimum Gain attributable to such Partner Nonrecourse Debt, determined
in accordance with Section 1.704-2(i)(5) of the Treasury Regulations, shall be
specially allocated items of income and gain for such year (and, if necessary,
subsequent years) in an amount equal to the portion of such Partner's share of
the net decrease in Partner Minimum Gain attributable to such Partner
Nonrecourse Debt, determined in accordance with Section 1.704-2(i)(4) of the
Treasury Regulations. Allocations pursuant to the previous sentence shall be
made in proportion to the respective amounts required to be allocated to each
Partner pursuant thereto. The items to be so allocated
7
9
shall be determined in accordance with Section 1.704-2(i)(4) of the Treasury
Regulations. This Section 7.3.4 is intended to comply with the minimum gain
chargeback requirement in Section 1.704-2(i) of the Treasury Regulations and
shall be interpreted consistently therewith.
7.3.5 Nonrecourse Deductions for any year shall be
allocated as Net Loss pursuant to Section 7.2.
7.3.6 Any Partner Nonrecourse Deductions for any year
shall be specially allocated to the Partner who bears the economic risk of loss
with respect to the Partner Nonrecourse Debt to which such Partner Nonrecourse
Deductions are attributable in accordance with Section 1.704-2(i)(1) of the
Treasury Regulations.
7.3.7 Notwithstanding any other provision of this
Article 7, no Partner shall be allocated in any year of the Partnership any Net
Loss to the extent such allocation would cause or increase a deficit balance in
such Partner's Adjusted Capital Account, taking into account all other
allocations to be made for such year pursuant to this Article 7 and the
reasonably expected adjustments, allocations and distributions described in
Section 1.704-1(b)(2)(ii)(d) of the Treasury Regulations. Any such Net Loss that
would be allocated to a Partner (the "Deficit Partner") shall instead be
allocated to the other Partner. Moreover, if a Deficit Partner unexpectedly
receives an adjustment, allocation or distribution described in Section
1.704-1(b)(2)(ii)(d) of the Treasury Regulations which creates or increases a
deficit balance in such Partner's Adjusted Capital Account (computed after all
other allocations to be made for such year pursuant to this Article 7 have been
tentatively made as if this Section 7.3.7 were not in this Agreement), such
Deficit Partner shall be allocated items of income and gain in an amount equal
to such deficit balance. This Section 7.3.7 is intended to comply with the
qualified income offset requirement of Section 1.704-1(b)(2)(ii)(d) of the
Treasury Regulations and shall be interpreted consistently therewith.
7.3.8 The allocations set forth in Sections 7.3.3
through 7.3.7 (the "Regulatory Allocations") shall be taken into account in
allocating items of income, gain, loss and deduction among the Partners so that,
to the extent possible, the net amount of such allocations of other items and
the Regulatory
8
10
Allocations to each Partner shall be equal to the net amount that would have
been allocated to each such Partner if the Regulatory Allocations had not
occurred.
7.4 Distributions. All distributions of Partnership cash and
other property shall be made to the Partners in proportion to their respective
Percentage Interests; provided, however, that the provisions of this Section 7.4
shall not apply upon the liquidation of the Partnership or upon the sale of all
or substantially all of the Partnership's assets, it being understood that in
such circumstances the provisions of Section 13.4 shall apply.
8. Tax Matters. Federal, state and local income tax returns of the
Partnership shall be prepared and filed, or caused to be prepared and filed, by
the General Partner. The General Partner shall at all times be the "tax matters
partner" of the Partnership for purposes of Section 6231(a)(7) of the Code.
9. Management and Rights, Duties and Obligations of the Partners.
9.1 The management and control of the Partnership's business
shall be exercised, and all decisions to be made by the Partnership shall in
each case be made, by the General Partner. The General Partner shall have the
sole right to bind, or otherwise act on behalf of, the Partnership. Without
limiting the foregoing, the General Partner shall have the right, without the
consent or approval of the Limited Partner to acquire, mortgage or otherwise
encumber, and sell or otherwise dispose of the Property or any portion thereof.
9.2 Except as otherwise expressly provided in this Agreement,
no Partner shall have the right to resign from the Partnership or to demand the
return of all or any part of its contribution to the capital of the Partnership
until the Partnership has been dissolved and terminated, and then only to the
extent provided in this Agreement, nor shall any Partner have the right to
demand or receive property other than cash in return for its contribution.
10. Transfer of Partners' Interests. No Partner shall sell, assign,
transfer or otherwise dispose of, or mortgage, hypothecate, pledge or otherwise
encumber, or permit or suffer any encumbrance of, all or any part of its
interest in the Partnership, or any interest therein; provided, however, that
each Partner may pledge its
9
11
interest in the Partnership to any lender making a loan secured, in whole or in
part, by a mortgage or deed of trust on the Property.
11. Resignation, Expulsion or Bankruptcy of a Partner. In the event of
the resignation, expulsion or bankruptcy of any Partner, the Partnership shall
thereupon be dissolved and terminated and the Partners shall cause a Certificate
of Cancellation in the form required by the Act to be filed with the Secretary
of State of Delaware when the Partnership is dissolved.
12. Termination of the Partnership. Upon the voluntary termination of
the Partnership upon the consent of the Partners, the sale or other transfer of
all or substantially all of the Partnership's assets or any other termination of
the Partnership in accordance with the provisions of this Agreement, the
Partnership shall wind up its affairs and shall then be liquidated as provided
in Article 13.
13 Gain, Loss and Distribution on Liquidation. Upon any termination of
the Partnership each of the following shall be accomplished:
13.1 The Partners shall cause to be prepared a statement
setting forth the assets and liabilities of the Partnership as of the
date of such termination, and such statement shall be furnished to each
Partner.
13.2 The property and assets of the Partnership, if any, shall
be liquidated as promptly as possible, but in an orderly and
businesslike manner so as not to involve undue sacrifice.
13.3 Any Net Profit or Net Loss realized by the Partnership
upon the sale or other disposition of the property and assets of the
Partnership shall be credited or charged to the capital accounts of the
Partners pursuant to Section 7.2 or 7.3, as applicable.
10
12
13.4 The proceeds of sale and all other assets of the
Partnership shall be paid and distributed as follows and in the
following order of priority:
13.4.1 to the payment of the debts and liabilities of
the Partnership and the expenses of liquidation;
13.4.2 to the setting up of any reserves which
EquiStar, L.P. determines are reasonably necessary for any
contingent or unforeseen liabilities or obligations of the
Partnership or the Partners arising out of, or in connection
with, the Partnership; and
13.4.3 to the Partners in proportion to their
respective Capital Account balances.
14. Further Assurances; Consents and Approvals. Each party to this
Agreement agrees to execute, acknowledge, deliver, file and record such further
certificates, amendments, instruments and documents, and to do all such other
acts and things, as may be required by law, or as may, be necessary or advisable
to carry out the intent and purposes of this Agreement.
15. Single Asset Entity.
15.1 Except as may be provided to the contrary in the
Cross-Collateralization Agreements, the Partnership shall at all times conduct
its business and operations in accordance with the following provisions so as to
maintain itself as a single purpose entity:
15.1.1 The Partnership will not assume liability for
the debts of any other person, and the Partnership will not
hold itself out as being liable for the debts of any other
person;
15.1.2 None of the liabilities of the Partnership
shall be paid from the funds of the Partners or any other
person without the Partners being obligated for such
liabilities;
15.1.3 The Partnership shall not guarantee the debt
or the performance of any obligation of any of its Partners or
any other person;
15.1.4 The Partnership will not pledge any of its
assets for the benefit of any of its Partners or any other
person, and no person shall pledge its assets for the benefit
of the Partnership;
11
13
15.1.5 The Partnership shall conduct its affairs strictly in
accordance with this Agreement, and shall observe all necessary,
appropriate, and customary limited liability company formalities,
including, but not limited to, maintaining accurate and separate books,
records and accounts (including, but not limited to, transaction
accounts with any affiliate of the partnership);
15.1.6 The books, records, and accounts of the Partnership
will at all times be maintained in a manner permitting the assets and
liabilities of the Partnership to be easily separated and readily
distinguished from those of any other person;
15.1.7 The Partnership will hold itself out to creditors and
the public as a legal entity separate and distinct from any other
entity, and will not hold itself out to the public or to any of its
individual creditors as being a unified entity with assets and
liabilities in common with any other person; and
15.18 The Partnership shall not commingle its assets or funds
with those of any other person except as may be permitted or required
under the Cross-Collateralization Agreements.
16. Notices. Unless otherwise specified in this Agreement, all notices,
demands, elections, requests or other communications (collectively "notices")
which any Partner may desire or be required to give hereunder shall be in
writing and shall be given by mailing the same by registered or certified mail,
return receipt requested, or by Federal Express or comparable air courier
service, postage prepaid, or by delivering the same by hand, addressed to the
Partners at their addresses first set forth above.
17. Captions. All section and article titles or captions contained in
this Agreement and the table of contents, if any, are for convenience only and
shall not be deemed a part of this Agreement.
18. Variations of Pronouns. All pronouns and all variations thereof
shall be deemed to refer to the masculine, feminine or neuter, singular or
plural, as the identity of the person(s) or entity(ies) may require.
19. Counterparts. This Agreement may be executed in counterparts, each
of which shall constitute an original and all of which, when taken together,
shall constitute one agreement.
12
14
20. Governing Law. This Agreement is made pursuant to the provisions of
the Act and shall be construed accordingly
21. Successors and Assigns. This Agreement shall be binding upon the
parties hereto and their respective successors and permitted assigns and shall
inure to the benefit of the parties hereto and their respective successors and
permitted assigns, but shall not inure to the benefit of, or be enforceable by,
any other person or entity.
22. Invalidity. If any provision or any portion of any provision of
this Agreement, or the application of any such provision or any portion thereof
to any Partner or circumstance, shall be held invalid or unenforceable, the
remaining portion of such provision and the remaining provisions of this
Agreement, and the application of such provision or such portion to a Partner or
to circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
EQUISTAR ACQUISITION CORPORATION
By: /s/ John Plunket
----------------------------------
Name: John Plunket
Title: Vice President
CAPSTAR MANAGEMENT COMPANY II, L.P.
By: CapStar Hotel Company, general partner
By: /s/ John Plunket
----------------------------------
Name: John Plunket
Title: Executive Vice President
13