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Exhibit 3.38
LIMITED LIABILITY COMPANY AGREEMENT
OF
EQUISTAR BALLSTON COMPANY, L.L.C.
This LIMITED LIABILITY COMPANY AGREEMENT (this "Agreement") is made as
of June __, 1996, by and among EQUISTAR HOTEL INVESTORS, L.P., a Delaware
partnership having an office c/o CapStar Hotels, Inc., 1010 Wisconsin Avenue,
N.W., Washington, D C. 20007 ("EquiStar, L.P."), and EQUISTAR ACQUISITION
CORPORATION, a Delaware corporation having an office c/o CapStar Hotels, Inc.,
1010 Wisconsin Avenue, N.W., Washington, D.C.20007 ("EquiStar Corp ").
WITNESSETH:
WHEREAS, the parties hereto (collectively, the "Members" and
individually, a "Member") desire to form a limited liability company 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 Limited Liability Act of the State of
Delaware, as the same may have been or may be amended.
1.2 "Adjusted Capital Account" shall mean, with respect to any
Member, such Member's Capital Account balance, increased by such
Member's share of Company Minimum Gain and Member 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 "Company" shall have the meaning set forth in Article 2.
1.5 "Company Minimum Gain" means "partnership minimum gain,"
as defined in Treasury Regulations Section 1.704-2(b)(2) and shall be
determined in accordance with Treasury Regulations Section 1.704-2(d).
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1.6 "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
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 Members.
1.7 "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 Company 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 Member
(including upon a liquidation of the Company) 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.
1.8 "Member" shall mean each of the parties to this Agreement
and any other Person to which an interest in the Company is hereafter
transferred and who is admitted to the Company in accordance with the
terms of this Agreement.
1.9 "Member 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).
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1.10 "Member Nonrecourse Debt" means "partner nonrecourse
debt," as defined in Treasury Regulations Section 1.704-2(b)(4).
1.11 "Member Nonrecourse Deductions" means "partner
nonrecourse deductions," as defined 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.
1.12 "Net Profit" or "Net Loss" shall mean, with respect to
any fiscal year, the taxable income or loss of the Company as
determined for Federal income tax purposes, with the following
adjustments:
1.12.1 Such taxable income or loss shall be increased
by the amount, if any, of tax-exempt income received or
accrued by the Company;
1.12.2 Such taxable income or loss shall be reduced
by the amount, if any, of all expenditures of the Company
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;
1.12.3 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;
1.12.4 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
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1.12.5 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.
1.13 "Partnership" shall mean ESBH Limited Partnership, a
Delaware limited partnership.
1.14 "Percentage Interests" shall have the meaning specified
in Section 6.2.
1.15 "Property Debt" shall mean that certain
1.16 "Property" shall mean (i) that certain property presently
known as the Arlington Renaissance located at the Ballston Metro
Center, Arlington, Virginia, and all personal property situated at such
property or used or useful in connection therewith.
1.17 "Regulatory Allocations" has the meaning ascribed thereto
in subsection 7.3.8.
1.18 "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. Members hereby form a limited liability company
(the "Company") pursuant to the provisions of the Act. The business of the
Company shall be conducted under the name "EQUISTAR BALLSTON COMPANY, L.L.C."
Paul W. Whetsell and William H. Diamond are hereby authorized to execute and
record any certificate of formation required by the Act and any certificate or
application necessary to qualify the company in any jurisdiction in which it
conducts business.
3. Principal and Registered Offices; Agent for Service of Process.
3.1 The principal place of business of the Company, and the address
of the office at which the records of the Company shall be maintained, shall be
in care of CapStar Hotels, Inc., 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 Managing Member.
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3.2 The Company's registered office shall be c/o CapStar Hotels,
Inc., 1010 Wisconsin Avenue, N.W., Suite 650, Washington, D.C. 20007.
3.3 The registered agent of the Company 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, EquiStar,
L.P. shall appoint a substitute agent. Such agent shall be the agent of the
Company on which any process, notice or demand required or permitted by law to
be served on the Company may be served.
4. Term. The term of the Company shall commence upon the execution and
delivery of this Agreement and shall continue until terminated by agreement of
the Members or as otherwise provided in this Agreement.
5 Purpose. The purpose of the Company shall be (a) to acquire, hold,
manage, finance, pledge, assign and/or dispose of a general partnership interest
in the Partnership, (b) to acquire, hold, manage, finance, pledge, assign and/or
dispose of a limited partnership interest in the Partnership, (c) to acquire,
hold, alter, extend, participate, sell, assign, pledge, foreclose and/or
restructure the Property Debt and to act in all respects as the holder of the
Property Debt, subject to the terms and conditions of this Agreement, and (d) to
engage in any and all activities necessary or incidental to the foregoing
including, but not limited to, performing such duties and obligations as the
Company may have from time to time pursuant to that certain Limited Partnership
Agreement of the Partnership, dated as of June __, 1996 (as amended from time to
time, the "Partnership Agreement"). The purposes of the Company shall not
include the acquisition, improvement, operation, resale, foreclosure or
restructuring of (i) any real property other than the Real Property or (ii) any
legal or beneficial interest in any entity other than the Partnership, and the
Company shall not engage in any business other than as set forth in the
foregoing sentence.
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6. Capital Contributions; Percentage Interests.
6.1 Simultaneously with the execution and delivery of this Agreement
the Members are making the following contributions to the capital of the
Company:
(a) EquiStar, L.P - $99.00
(b) EquiStar Corp. - $ 1.00
6.2 The Members' percentage interests in the Company
("Percentage Interests") shall be as follows:
(a) EquiStar, L.P - 99%
(b) EquiStar, Corp. - 1%
6.3 If the Company shall require any additional funds after
the date hereof, as determined by EquiStar, L.P., the Members shall
contribute such funds to the Company in proportion to their respective
Percentage Interests.
6.4 Except as expressly provided in this Article 6, no Member
shall be required to make any capital contributions or loans to the Company
and no Member shall make any capital contributions or loans to the Company
without the consent of the other Member.
7. Income and Losses; Distribution of Available Net Income.
7.1 A separate "Capital Account" shall be maintained for each
Member. Each Member's Capital Account shall be credited with the amount of
such Member'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 Member and such Member's allocated share of Net Profit, income and
gain of the Company. Each Member's Capital Account shall be debited with the
amount of any cash distributions to such Member and the fair market value
(net of liabilities assumed or taken subject to) of all property distributed
in kind to such Member and such Member's allocated share of Net Loss of the
Company.
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7.2 From and after the date of this Agreement, all Net Profit
and all Net Loss of the Company 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 Members 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 Company income, gain, deduction and loss shall be allocated
among the Members in the same proportion as they share in the Net Profit and
Net Loss to which such items relate. Any credits against income tax shall be
allocated in accordance with the Members' Percentage Interests.
7.3.2 Income, gain, loss or deductions of the Company
shall, solely for income tax purposes, be allocated among the Members 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 Company 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 Company Minimum Gain during any
year, each Member 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 Member's share of the net decrease in Company 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 Member
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
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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 Member Minimum Gain attributable to
a Member Nonrecourse Debt during any year, each Member who has a share of
the Member Minimum Gain attributable to such Member 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 Member's share of the net decrease in Member Minimum Gain
attributable to such Member 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 Member pursuant thereto. The items to be so
allocated 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 Member Nonrecourse Deductions for any year
shall be specially allocated to the Member who bears the economic risk of
loss with respect to the Member Nonrecourse Debt to which such Member
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 Member shall be allocated in any year of the Company any Net
Loss to the extent such allocation would cause or increase a deficit balance
in such Member's Adjusted Capital Account, taking into
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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 Member (the
"Deficit Member") shall instead be allocated to the other Member. Moreover,
if a Deficit Member 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 Member'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 Member 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 Members so
that, to the extent possible, the net amount of such allocations of other
items and the Regulatory Allocations to each Member shall be equal to the
net amount that would have been allocated to each such Member if the
Regulatory Allocations had not occurred.
7.4 Distributions. All distributions of Company cash and other
property shall be made to the Members 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 Company or upon the sale of
all or substantially all of the Company's assets, it being understood that
in such circumstances the provisions of Section 13.4 shall apply.
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8. Tax Matters. Federal, state and local income tax returns of the
Company shall be prepared and filed, or caused to be prepared and filed, by
EquiStar L.P. EquiStar, L.P. shall at all times be the "tax matters partner"
of the Company for purposes of Section 6231(a)(7) of the Code.
9. Management and Rights, Duties and Obligations of the Members.
9.1 The management and control of the Company's business shall
be exercised, and all decisions to be made by the Company shall in each case
be made, by EquiStar, L.P. EquiStar, L.P. shall have the sole right to bind,
or otherwise act on behalf of, the Company. Without limiting the foregoing,
EquiStar, L.P. shall have the right, without the consent or approval of
EquiStar Corp., 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 Member shall have the right to resign from the Company or to demand the
return of all or any part of its contribution to the capital of the Company
until the Company has been dissolved and terminated, and then only to the
extent provided in this Agreement, nor shall any Member have the right to
demand or receive property other than cash in return for its contribution.
10. Transfer of Members' Interests. No Member 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 Company, or any interest therein.
11. Resignation, Expulsion or Bankruptcy of a Member. In the event
of the resignation, expulsion or bankruptcy of any Member, the Company shall
thereupon be dissolved and terminated and the Members 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 Company is dissolved.
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12. Termination of the Company. Upon the voluntary termination of
the Company upon the consent of the Members, the sale or other transfer of
all or substantially all of the Company's assets or any other termination of
the Company in accordance with the provisions of this Agreement, the Company
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 Company each of the following shall be accomplished:
13.1 The Members shall cause to be prepared a statement
setting forth the assets and liabilities of the Company as of the
date of such termination, and such statement shall be furnished to
each Member.
13.2 The property and assets of the Company, 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 Company upon
the sale or other disposition of the property and assets of the
Company shall be credited or charged to the capital accounts of the
Members pursuant to Section 7.2 or 7.3, as applicable.
13.4 The proceeds of sale and all other assets of the Company
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 Company 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
Company or the Members arising out of, or in connection with,
the Company; and
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13.4.3 to the Members 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 Lehman
Documents (as hereinafter defined), the Company 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 Company will not assume liability for the
debts of any other person, and the Company will not hold itself out
as being liable for the debts of any other person;
15.1.2 None of the liabilities of the Company shall
be paid from the funds of the Members or any other person without
the Members being obligated for such liabilities;
15.1.3 The Company shall not guarantee the debt or
the performance of any obligation of any of its Members or any other
person;
15.1.4 The Company will not pledge any of its assets
for the benefit of any of its Members or any other person, and no
person shall pledge its assets for the benefit of the Company;
15.1.5 The Company 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
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separate books, records and accounts (including, but not limited to,
transaction accounts with any affiliate of the Company);
15.1.6 The books, records, and accounts of the
Company will at all times be maintained in a manner permitting the
assets and liabilities of the Company to be easily separated and
readily distinguished from those of any other person;
15.1.7 The Company 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 Company shall not commingle its assets or
funds with those of any other person (except as may be permitted
under that certain Cash Collateral Agreement, dated as of December
21, 1995, among EquiStar, L.P., Lehman Brothers Holdings Inc. (the
"Lender") and Wells Fargo Bank, National Association), and to be
entered into by the Company.
15.2 The Company shall have the authority to enter into (i)
that certain Master Loan Facility Agreement, dated December 21, 1995, among
EquiStar, L.P., the "Affiliate Borrowers" (as such term is defined therein)
and Lender, (ii) that certain Loan Agreement (the "Loan Agreement"), dated
December 21, 1995, between the Lender and the Company, and (iii) all Loan
Documents (as such term is defined in the Loan Agreement), and to undertake
all obligations set forth in the foregoing documents (such documents being,
collectively, the "Lehman Documents").
15.3 For so long as any amounts remain outstanding under the
Loan Agreement, the Company shall not terminate or amend (i) the provisions
of Sections 5 and 15
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hereof or (ii) any other provision of this Agreement in any way which would
endanger the single asset character of the Company.
16. Notices. Unless otherwise specified in this Agreement, all
notices, demands, elections, requests or other communications (collectively
"notices") which any Member 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 Members 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.
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 Member or circumstance,
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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 Member 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 HOTEL INVESTORS, L.P.,
a Delaware limited partnership
By: Cherwell Investors, Inc.,
a Delaware corporation, general partner
By: /s/ Bradford Bernstein
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Name: Bradford Bernstein
Title: Vice President
By: CapStar Executive Investors I, L.L.C.,
a Delaware limited liability company, general partner
By: /s/ ?
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Member
EQUISTAR ACQUISITION CORPORATION,
a Delaware corporation
By: /s/ Paul W. Whetsell
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Name: Paul W. Whetsell
Title: President
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