Exhibit 10.8
LIMITED LIABILITY COMPANY OPERATING AGREEMENT
OF
RESIDENCE INN III LLC
This Limited Liability Company Operating Agreement of Residence Inn III
LLC (this "Agreement"), dated as of December 10, 1999, is entered into by and
between Residence Inn III LLC, a Delaware limited liability company (the
"Company"), and Marriott Residence Inn USA Limited Partnership, a Delaware
limited partnership and its sole equity member (the "Equity Member").
R E C I T A L S:
WHEREAS, the Company was formed under the Delaware Limited Liability
Company Act, as amended (the "Act"), by the filing of a certificate of formation
with the Secretary of State of the State of Delaware on December 10, 1999;
WHEREAS, the parties hereto desire to enter into this Agreement to set
forth the rights and obligations of, the relationships among, and certain other
provisions governing the conduct of the affairs of, the Members (as defined
herein), the Managers (as defined herein), and the Company; and
WHEREAS, certain capitalized terms used herein shall have the meanings
ascribed thereto in Article 14.
NOW, THEREFORE, in consideration of the foregoing, of the mutual
promises herein contained and of other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending legally to be bound, hereby agree as follows:
1. ORGANIZATIONAL AND OTHER MATTERS.
1.01. Formation; Admission.
By its execution and delivery of this Agreement, the Equity
Member hereby ratifies the formation of the Company under the provisions of the
Act pursuant to the filing of the Certificate of Formation with the Secretary of
State of the State of Delaware and confirms its admission to the Company as the
initial Member.
1.02. Name.
The name of the Company shall be Residence Inn III LLC, and the
business of the Company shall be conducted under such name.
1.03. Principal Place of Business.
The principal place of business and the principal office of
the Company shall be located at 6600 Rockledge Drive, Bethesda, Maryland 20817.
The Company may have such other or additional offices, either within or without
the State of Delaware, as the Managers or officers of the Company shall deem
advisable.
1.04. Registered Office and Agent.
The street address of the initial registered office of the
Company shall be 1013 Centre Road, Wilmington, Delaware 19805, and the Company's
registered agent at such address shall be The Prentice-Hall Corporation System,
Inc. The registered office and the registered agent of the Company may be
changed by the Board of Mangers from time to time in accordance with the then
applicable provisions of the Act and any other applicable laws.
2. PURPOSE AND POWERS
2.01. Purpose of the Company.
The sole purposes of the Company are (i) to own, manage,
operate, sell, lease and sublease the Hotels; (ii) to enter into the Loan
Transaction Documents and to perform its obligations thereunder; and (iii) to
engage in any and all activities incident to the foregoing. The Company shall
not engage in any business, and shall have no purpose, unrelated to the
foregoing.
2.02. Powers of the Company.
In order to carry out its purposes, the Company shall have and
be authorized to exercise all powers conferred by the Act and any other
applicable law as in effect from time to time, and shall be empowered and
authorized to engage in such lawful acts and activities, as may, in the judgment
of the Managers, be necessary or convenient to carry out, promote or attain the
purposes set forth in Section 2.01.
2.03 Right to Rely on Managers.
Any Person dealing with the Company shall be entitled to rely
(without further duty of inquiry) upon a certificate signed by any Manager or
officer of the Company, as to:
(a) the identity of any Manager, Member or officer;
(b) the existence or nonexistence of any fact or facts that
constitute a condition precedent to acts on behalf of the Company by any Member,
Manager or officer or that are in any other manner germane to the affairs of the
Company;
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(c) the Persons who are authorized to execute and deliver any
instrument or document of the Company; or
(d) any other matter whatsoever involving the Company or any
Member.
2.04. Qualification in Additional Jurisdictions.
The Company shall be qualified to do business and maintain its
good standing in any jurisdiction in which such qualification is necessary or in
which it is deemed desirable by the Managers in carrying out the Company's
business, and pursuant thereto the Managers are authorized to appoint a
registered agent and establish a registered office in such jurisdiction to cause
the Company to operate in such jurisdiction under another name selected by the
Managers, in compliance with the assumed name statute of such jurisdiction, if
the Company is not allowed under the laws of the jurisdiction to operate under
the name "Residence Inn III LLC."
3. MEMBERS.
3.01. Classes of Members.
There shall be two classes of Members of the Company, as
follows:
(a) Equity Member. The Equity Member shall be the only Member
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with an interest in the profits, losses, distributions and capital of the
Company. The Equity Member shall have the right to elect and remove the
Managers, subject to the provisions of Section 5.03 relating to the removal of,
and election of a replacement for, the Independent Manager. Except for the
rights specifically granted herein to the Independent Member and as may be
expressly required by law, the Equity Member shall be the only Member with any
voting rights.
(b) Independent Member. During the Covered Period, the Company
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shall have an Independent Member. The Independent Member shall be the same
Person as the Independent Manager and shall satisfy the requirements for being
an Independent Manager set forth in the definition thereof. The Independent
Member, as such, shall have no interest in the profits, losses, distributions or
capital of the Company. The Independent Member shall be entitled to vote on (i)
the granting of consent to a Member with respect to a voluntary or involuntary
bankruptcy, insolvency, or other proceeding described in Section 18-304(a) or
(b) of the Act with respect to the Company; (ii) subject to the provisions of
Section 8.01 hereof, the dissolution of the Company following the death,
retirement, resignation, expulsion, bankruptcy, or dissolution of a Member,
(iii) the amendment or recommendation of amendment of Sections of this Agreement
specified in Article 2 of the Agreement, or of the certificate of formation of
the Company, and (iv) such other matters, if any, as may be expressly set forth
in this Agreement. At such time as the Company is no longer required to have an
Independent Manager pursuant to the terms of this Agreement, then the
Independent Member shall no longer be a Member.
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The Independent Member, as such, shall have no other voting rights. During any
period when the Company does not have (and is required under this Section
3.01(b) to have) an Independent Member, the Company shall not take any action
requiring the vote or consent of the Independent Member under this Agreement.
3.02. Voting.
On any matter upon which the Independent Member shall be
entitled to vote or grant consent, approval of such matter by the Members shall
require the affirmative vote or consent of the Independent Member, and, if the
Equity Member is entitled to vote thereon, the Equity Member.
3.03. Capital Contributions.
Concurrently with or prior to the execution of this Agreement,
the Equity Member has made initial contributions to the capital of the Company.
The Equity Member shall not be required to make any additional contributions to
the capital of the Company. The Equity Member shall be entitled, upon the
request of the Company, in its sole discretion, to contribute additional capital
to the Company, on such terms as the Board of Managers may determine. No
interest shall accrue on any contribution and the Equity Member shall expressly
have no right to withdraw or be repaid or receive any return on any
contribution, except in each case as expressly provided in this Agreement. The
Independent Member shall not be required to (nor have the right to) make any
contribution to the capital of the Company.
3.04. Resignation.
The Equity Member shall not be entitled to resign or withdraw
from the Company prior to the dissolution and winding up of the Company, unless
it shall have transferred all of its interest in the Company to one or more
other Persons in accordance with this Agreement and such Person or Persons shall
have been admitted as an Equity Member in accordance with this Agreement. The
Independent Member shall be entitled to resign only if he or she concurrently is
resigning, or is removed, from his or her position as Independent Manager, and
the resignation of the Independent Member shall be effective, without any
further action by the Independent Member, upon the replacement of such Person
assuming the position of Independent Manager, whereupon such replacement shall
become the Independent Member.
3.05. Federal Income Tax Characterization.
For federal income tax purposes, the Company shall be deemed
to have a single "member" (as such term is used in the regulations under Section
7701 of the Internal Revenue Code of 1986, as amended) and is intended to be
disregarded as a separate entity for federal income tax purposes (and solely for
such purposes) pursuant to such Section 7701 and the regulations thereunder.
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3.06. Duties Among Members.
In exercising voting and other rights under this Agreement, no
Member (i) shall have any fiduciary duty to the Company or any other Member or
(ii) shall be liable for (or otherwise prevented from) exercising such rights in
a manner that solely benefits its economic and business interests, without
regard to the interests of the Company or the other Members. However, the
Members (including the Independent Member) shall be required to consider the
interests of creditors of the Company in exercising voting and other rights
under this Agreement or taking any other limited liability company action,
regardless of whether the Company is insolvent.
4. DISTRIBUTIONS
The Managers from time to time may determine the amount of
cash and other property of the Company that is reasonably necessary for the
operation of the Company and that is available for distribution to the Equity
Member and, in their discretion, may cause the Company to distribute such cash
and property to the Equity Member, subject to any limitations imposed by the Act
and by the Loan Agreement and any other contractual obligations of the Company.
5. MANAGEMENT OF THE COMPANY.
5.01. Management.
The business and affairs of the Company shall be managed by
its Board of Managers (as defined below). Subject to any nonwaivable provisions
of applicable law and compliance with any provisions of this Agreement requiring
the approval of one or more Members, the Board of Managers shall have full and
complete authority, power, and discretion to manage and control the business,
affairs, and properties of the Company, to make all decisions regarding those
matters and to perform any and all other acts or activities customary or
incident to the management of the Company's business.
5.02. Number, Tenure and Qualifications of Managers.
The Company initially shall have four Managers comprising the
"Board of Managers." The number of Managers that will comprise the entire Board
of Managers shall be fixed from time to time by the Equity Member, but in no
instance shall there by less than one Manager (in addition to any Independent
Manager) and during the Covered Period, the Board of Managers shall include an
Independent Manager. Subject to the provisions of Section 5.03 below, the Equity
member may remove any of the Managers at any time and from time to time, with or
without cause, and may designate a person to serve as a successor Manager in the
event of the death, incapacity, resignation or removal of a Manager. Each person
appointed to serve as a Manager shall serve until a successor Manager is
appointed as provided hereunder or until such person's earlier death,
resignation, incapacitation or removal.
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5.03. Independent Manager.
During the Covered Period: (i) the Board of Managers shall
include one Independent Manager; (ii) the Independent Manager may not be removed
other than by the unanimous vote of the Executive Committee (as defined below)
for cause; and (iii) if the Independent Manager should resign or be removed, the
Executive Committee shall appoint another Person as Independent Manager as
promptly as possible; provided that, during any interim period when the Company
does not have (but is required under this Section 5.03 to have) an Independent
Manager, the Company shall not take any action expressly requiring the vote or
consent of the Independent Manager under this Agreement. The Independent Manager
shall not voluntarily resign until such time as a replacement has been selected
and taken office. In connection with any vote or other act or omission to vote
or other act by the Independent Manager under this Agreement or otherwise, the
Independent Manager shall owe a fiduciary duty to the Members solely to the
extent required by the Act and other applicable law and shall also owe a
fiduciary duty to the Company as whole, and to the creditors of the Company.
5.04. Initial Managers.
The initial Executive Managers (as defined below) shall be
Steven J. Fairbanks, Tracy M.J. Colden and James L. Francis, and the initial
Independent Manager, who shall assume office upon the commencement of the term
of the Loan Agreement, shall be Crestline Res III Corporation, a Delaware
corporation.
5.05. Executive Committee.
The Managers other than the Independent Manager shall
constitute the Executive Managers of the Company (the "Executive Managers"). The
Executive Managers, acting as a committee of the Board of Managers (the
"Executive Committee"), shall exercise all of the right, power and authority
vested in the Board of Managers by this Agreement or by the Act to manage,
operate, and control the business and affairs of the Company, other than with
respect to actions by the Company for which this Agreement expressly requires
the consent or approval of the Independent Manager or one or more Members. The
terms "Managers" or "Board of Managers" as used herein shall be deemed to mean
the Executive Managers unless the provision of this Agreement containing such
term expressly requires the consent or approval of the Independent Manager.
5.06. Meetings.
Meetings of the Board of Managers or of the Executive
Committee may be called by any Manager entitled to participate in the meeting or
by the President, and shall be called by the President upon the request of the
Equity Member, in each case, upon two (2) days' Notice in writing or by
telephone to all Managers entitled to participate in the meeting in writing or
by telephone. Meetings may be held by telephone or any other
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communication by means of which all participating Managers can simultaneously
hear each other during the meeting.
5.07. Quorum.
No action may be taken at a meeting of the Board of Managers
or the Executive Committee unless a quorum consisting of a majority of Managers
entitled to vote at the meeting is present.
5.08. Required Vote; Voting Rights.
Except where a greater percentage is expressly required by
this Agreement, to be approved, any action by the Board of Managers or the
Executive Committee taken at a meeting must be approved by the affirmative vote
of Managers with a majority of the votes cast at a meeting at which a quorum
exists and, with respect to actions for which this Agreement expressly requires
the vote or consent of the Independent Manager, the vote of the Independent
Manager. Each Manager present at a meeting and entitled to participate in such
meeting shall be entitled to one vote with respect to any action.
5.09. Action by Written Consent.
Any action to be taken by the Board of Managers or the
Executive Committee may be taken without a meeting if consents in writing
setting forth the action so taken are signed by the Managers having not less
than the minimum number of votes that would be necessary to authorize or take
such action at a meeting.
5.10. Compensation of Managers.
The Managers shall be reimbursed for all reasonable expenses
incurred in connection with the performance of their duties as Managers. In
addition, the Independent Manager shall be entitled to reasonable compensation,
in an amount determined from time to time by the Executive Committee.
5.11. Members Not Agents.
The Members shall have no authority to act on the name of and
for the Company solely by virtue of being members of the Company.
5.12. Limitation on Authority.
During the Covered Period, the Company shall not, and the
Managers shall not permit the Company to, incur, create or assume any
indebtedness or guarantee or have any consensual contingent obligation for the
obligations of any other Person, except for obligations under or permitted under
the Loan Agreement or other Loan Documents, if any.
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6. OFFICERS
6.01. Number, Qualifications; Election and Term of Office.
(a) The officers of the Company shall consist, at a minimum,
of a President, a Secretary, a Treasurer, and such number of Vice Presidents as
the Board of Managers may from time to time deem advisable. Any two or more
offices may be held by the same person.
(b) The officers of the Company shall be elected by the Board
of Managers. Each officer shall hold office until hi or her successor shall have
been elected and qualified, or until his or her death, resignation or removal.
6.02. Initial Officers.
The initial officers of the Company shall be as follows:
James L. Francis President
Tracy M. J. Colden Vice President and Secretary
Larry K. Harvey Vice President and Treasurer
Elizabeth R. Lieberman Vice President and Assistant Secretary
John J. McMahon, Jr. Vice President
Steven J. Fairbanks Vice President
6.03. Resignation.
Any officer may resign at any time by giving written Notice of
such resignation to the Board of Managers, the President or the Secretary,
provided that, in the case of the President, such Notice shall be given to the
Secretary, and in the case of the Secretary, such Notice shall be given to the
President. Unless otherwise specified in such written Notice, such resignation
shall take effect upon receipt thereof by the Board of Managers or by such
officer and the acceptance of such resignation shall not be necessary to make it
effective.
6.04. Removal.
Any officer may be removed, either with or without cause, and
a successor elected, by a majority vote of the Board of Managers. The officers
and agents appointed in accordance with the provisions of Section 6.10 may be
removed, either with our without cause, by a majority vote of the Board of
Managers or by any superior officer or agent upon whom such power of removal
shall have been conferred by the Board of Managers.
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6.05. Vacancies.
A vacancy in any office specifically designated in Section
6.01 by reason of death, resignation, inability to act, removal or any other
cause shall be filled by a majority vote of the Board of Managers. In the case
of a vacancy occurring in the office of an officer or agent appointed in
accordance with the provisions of Section 6.10, such vacancy may be filled by a
majority vote of the Board of Managers or by any officer or agent upon whom such
power shall have been conferred by the Board of Managers.
6.06. President.
The President of the Company, subject to the direction of the
Board of Mangers, shall have general charge of the day-to-day operations,
business, affairs and property of the Company and general supervision over its
officers and agents. In general, he or she shall perform all duties customarily
attributed to the office of President and chief operating officer and shall see
that all orders and resolutions of the Board of Managers are carried into
effect.
6.07. Vice Presidents.
During the absence or disability of the President, the Vice
Presidents, in such order or seniority as may be determined by the President,
shall exercise all the functions of the President and, when so acting, shall
have all the powers of and be subject to all the restrictions upon the
President. Each Vice President shall have such powers and discharge such duties
as may be assigned to him or her from time to time by the Board of Mangers.
6.08. Secretary.
The Secretary shall:
(a) record all the proceedings of the Members, the Board of
Managers, and the Executive Committee in a book to be kept for that purpose;
(b) cause all Notices to be duly given in accordance with the
provisions of this Agreement and as required by statute;
(c) be custodian of the records of the Company;
(d) see the books, reports, statements, certificates and all
other documents and records of the Company required by statute or this Agreement
are properly kept and filed; and
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(e) in general, perform all duties customarily attributed to
the office of Secretary and such other duties as are given to him or her by this
Agreement or as from time to time may be assigned to him or her by the Board of
Managers or the President.
6.09. Treasurer.
The Treasurer shall:
(a) have charge of and supervision over and be responsible for
the funds, securities, receipts and disbursements of the Company;
(b) cause the moneys and other valuable effects of the Company
to be deposited in the name and to the credit of the Company in such banks or
trust companies as the Board of Managers may select or as may be required by the
Loan Agreement, other Loan Documents or as may be selected by any officer or
officers or agent or agents authorized so to do by the Board of Managers;
(c) cause the funds of the Company to be disbursed by checks
or drafts (which shall include funds disbursed by "wire transfer"), with such
signatures as may be authorized by the Board of Managers, upon the authorized
depositories of the Company, and cause to be taken and preserved proper vouchers
for all moneys disbursed;
(d) render to the President or the Board of Managers whenever
required a statement of the financial condition of the Company and of all his or
her transactions as Treasurer;
(e) keep the books of account of all the business and
transactions of the Company;
(f) be empowered to require from all officers or agents of the
Company reports or statements giving such information as he or she may desire
with respect to any and all financial transactions of the Company; and
(g) in general, perform all duties customarily attributed to
the office of Treasurer and such other duties as are given to him or her by this
Agreement or as from time to time may be assigned to him or her by the Board of
Managers or the President.
6.10. Subordinate Officers and Agents.
The Board of Managers may from time to time appoint such other officers
and agents, or authorize any officer designed in Section 6.01 to appoint such
other officers and agents, as it may deem necessary or advisable, to hold office
for such period, have such authority and perform such duties as the Board of
Managers, or such other officers, may from time to time determine.
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6.11. Execution of Instruments.
All checks, drafts, bills of exchange, acceptances, bonds,
endorsements, notes or other obligations or evidences of indebtedness of the
Company, and all deeds, mortgages, indentures, bills of sale, conveyances,
endorsements, assignments, transfers stock powers or other instruments of
transfer, contracts, agreements, dividend or other orders, powers of attorney,
proxies, waivers, consents, returns, reports, certificates, demands, Notices or
documents, and other instruments or rights of any nature may be signed,
executed, verified, acknowledged and delivered by the President, any Vice
President, the Treasurer and such other officer or officers or such other person
or persons (whether or not officers, agents or employees of the Company) as the
Board of Managers may from time to time designate.
6.12. Compensation.
The salaries or other compensation, if any, of the officers
shall be fixed from time to time by the Board of Managers, and no officer shall
be prevented from receiving such salary or any compensation by reason of the
fact that he or she is also a Manager of the Company. The Board of Managers may
delegate to any officer or agent the power to fix from time to time the salaries
or other compensation, if any, of officers or agents appointed in accordance
with the provisions of Section 6.10.
7. LIMITATION ON LIABILITY: INDEMNIFICATION
7.01. Limitation on Liability.
The debts, obligations, and liabilities of the Company,
whether arising in contract, tort, or otherwise, shall be solely the debts,
obligations, and liabilities of the Company. None of the Members, the Managers,
or any stockholders, directors, partners, officers, agents or employees of any
Member or the Company, shall be obligated personally for any debt, obligation,
or liability of the Company solely by reason of his, her, or its status as such
Member, Manager, stockholder, director, partner, officer, agent or employee. The
failure of the Company to observe any formalities or requirements relating to
the exercise of its powers or management of its business or affairs under the
Act or this Agreement shall not be grounds for imposing personal liability on
the Members, the Managers, or any stockholder, director, partner, officer, agent
or employee of any Member or the Company for liabilities of the Company.
7.02. Indemnification.
(a) No Covered Person shall be liable to the Company or any
other Covered Person for any loss, damage or claim incurred by reason of any act
or omission performed or omitted by such Covered Person in good faith on behalf
of the Company and in a manner believed by such Covered Person to be within the
scope of authority conferred on such Covered Person by this Agreement, except
that a Covered Person shall
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be liable for any such loss, damage or claim incurred by reason of such Covered
Person's gross negligence or willful misconduct.
(b) A Covered Person shall be fully protected in relying in
good faith upon the records of the Company and upon such information, opinions,
reports or statements presented to the Company by any person as to matters the
Covered Person believes are within such other Person's professional or expert
competence, including information, opinions, reports or statements as to the
value and amount of the assets, liabilities, profits, losses, or any other facts
pertinent to the existence and amount of assets from which distributions to
Members might properly be paid.
(c) To the extent that, at law or in equity, a Covered Person
has duties (which may include fiduciary duties) and liabilities relating thereto
to the Company or any other Covered Person, a Covered Person acting under this
Agreement shall not be liable to the Company or to any other Covered Person for
its good faith reliance on the provisions of this Agreement. The provisions of
this Agreement, to the extent that they restrict the duties and liabilities of
the Covered Person otherwise existing at law or in equity, are agreed by the
parties hereto to replace such other duties and liabilities of such Covered
Person.
(d) The Company shall indemnify and hold harmless each Covered
Person, to the fullest extent permitted by applicable law, for any loss, damage
or claim incurred by such Covered Person, including reasonable attorney's fees
incurred in connection therewith, by reason of any act or omission performed or
omitted by such Covered Person in good faith on behalf of the Company and in a
manner believed by such Covered Person to be within the scope of authority
conferred on such Covered Person by this Agreement, except that no Covered
Person shall be entitled to be indemnified in respect of any loss, damage, or
claim incurred by reason of such Covered Person's gross negligence or willful
misconduct with respect to such acts or omissions; provided, however, that any
indemnity under this subsection (d) shall be provided out of and to the extent
of Company assets only, and no Covered Person shall have any personal liability
on account thereof.
(e) The Company shall purchase and maintain insurance, to the
extent and in such amounts as the Managers determine to be commercially
reasonable, on behalf of Covered Persons and such other Persons as the Managers
shall determine, against any liability that may be asserted against or expense
that may be incurred by any such Covered Person in connection with the
activities of the Company. The Company may enter into indemnity contracts with
Covered Persons and adopt written procedures pursuant to which arrangements are
made for the advancement of expenses and the funding of obligations and
containing such other procedures regarding indemnification as are appropriate.
(f) The Company may (and, in the case of the Independent
Member and the Independent Manager, shall) advance expenses (including
attorneys' fees) incurred by a Covered Person in advance of the final
disposition of an action, suit or
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proceeding upon the receipt of an undertaking by or on behalf of the Covered
Person to repay such amount if it shall ultimately be determined that such
Covered Person is not entitled to indemnification under this Article 7.
(g) Notwithstanding any provision to the contrary herein, the
Company's obligation to indemnify Covered Persons pursuant to the terms of this
Agreement shall be fully subordinated to the Company's obligations under the
Loan Transaction Documents and must not constitute a claim against it in the
event that cash flow in excess of amounts necessary to satisfy its current
obligations under the Loan Transaction Documents is insufficient to satisfy such
obligations.
8. DISSOLUTION AND LIQUIDATION.
8.01. Events of Dissolution.
The Company shall dissolve, and its affairs shall be wound up,
solely upon the first to occur of the following, unless the Members eligible to
vote elect to continue the Company to the extent permitted under the Act:
(a) December 31, 2090;
(b) at the time specified in a written consent of the Equity
Member, provided that the Company shall not be dissolved during the Covered
Period;
(c) at any time that there are no remaining Members, provided
that the Company shall not be dissolved and is not required to be wound up if,
within 90 days after the occurrence of the event that terminated the continued
membership of the last remaining Member, (i) the personal representative of the
last remaining Member agrees in writing to continue the Company and to the
admission of the personal representative of such Member or its nominee or
designee to the Company as a Member, effective as of the occurrence of the event
that terminated the continued membership of the last remaining Member, or (ii)
the Managers, by a unanimous vote (including the Independent Manager during the
Covered Period), elect to continue the Company and designate a Person as a
Member (with or without an equity interest) of the Company; or
(d) at the time specified in a decree of judicial dissolution
under the Act.
The death, retirement, resignation, expulsion, bankruptcy or
dissolution of any Member or the occurrence of any other event that terminates
the continued membership of any Member shall not cause the Company to be
dissolved or its affairs to be wound up, and upon the occurrence of any such
event, the Company shall be continued without dissolution, unless, within 90
days following the occurrence of such event, all Members eligible to vote agree
in writing to dissolve the Company; provided, however, that during the Covered
Period, the Company shall not be dissolved upon the occurrence of any such
event.
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The foregoing constitute the only events upon which the
Company shall be dissolved and its affairs wound up, notwithstanding any
provisions of the Act.
The events of bankruptcy of a Member described in Sections
18-304(a) and (b) of the Act shall not cause such Member to cease to be a Member
of the Company, and upon the occurrence of such an event, the business of the
Company shall be continued without dissolution.
8.02 Winding Up of Affairs.
Upon the dissolution of the Company, unless its business is
continued as provided in the Act, the Managers shall wind up the affairs of the
Company.
8.03. Distribution of Assets; Priorities.
Upon the winding up and termination of the Company in
accordance with the Act, the assets of the Company shall be distributed in the
following order:
(i) First, to the payment of the debts and liabilities of
the Company (excluding any loans or advances made by any of the Members (or
Affiliates of the Equity Member) to the Company) and the expenses of
liquidation;
(ii) Second, to the creation of any reserves which the
Managers deem reasonably necessary for the payment of any contingent or
unforeseen liabilities or obligations of the Company or Members (to the extent
the Company is liable therefor) arising out of or in connection with the
business and operation of the Company;
(iii) Third, to the payment of any loans or advances made by
any of the Members (or Affiliates of the Equity Member) to the Company; and
(iv) Thereafter, to the Equity Member.
8.04. Certificate of Cancellation.
When all debts, liabilities, and obligations of the Company
have been paid and discharged, or adequate provisions have been made therefor
and all remaining property and assets of the Company have been distributed to
the Equity Member, a certificate of cancellation shall be prepared, executed,
and filed in accordance with the Act.
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9. TRANSFER OF MEMBERSHIP INTERESTS.
9.01. Interest of Equity Member.
The Equity Member shall not assign or transfer all of its
membership interests in the Company at any time and any Person without the
written consent of the other Members (including the Independent Member).
9.02. Interest of Independent Member.
The Independent Member shall not have any right to assign or
transfer its membership interest or rights as an Independent Member. Such
membership interest and rights shall be exercised solely through the Person who
is the Independent Member from time to time.
9.03. Transfers During the Covered Period.
Notwithstanding anything to the contrary contained herein,
during the Covered Period, no direct or indirect transfer of an equity
membership interest in the Company may be made (i) such that the transferee
owns, in the aggregate with the equity membership interests of its Affiliates
and family members, more than 49% equity interest in the Company or (ii) that
would violate any provision of the Loan Agreement, unless such transfer is
approved by the Lender, conditioned upon the delivery of an acceptable
non-consolidation opinion and upon confirmation from the applicable rating
agencies that such a transfer will not result in a qualification, withdrawal or
downgrade of any rating assigned to any outstanding mortgage-backed securities
relating to the Loan Agreement.
10. SEPARATENESS REQUIREMENTS.
10.01. Affirmative Covenants of the Company and Each Member.
Notwithstanding anything to the contrary contained herein,
during the Covered Period, the Company and each Member agree that the Company,
will:
(a) maintain its bank accounts, books, records and financial
statements separate from those of any other Person (except that, for accounting
and reporting purposes, the Company may be included in the consolidated
financial statements of an equity owner of the Company in accordance with GAAP);
(b) maintain a commercially reasonable relationship with its
Affiliates;
(c) maintain its books, records, resolutions and agreements as
official records;
(d) conduct its own business in its own name;
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(e) prepare and maintain its financial statements, accounting
records and other entity documents separate from those of any other Person
(except for inclusion in consolidated financial statements of an equity owner,
as described in clause (a) above);
(f) pay its own liabilities out of its own funds (except as
contemplated under the Management Agreement or in Section (h) below);
(g) observe all limited liability company organizational
formalities necessary to maintain its identity as an entity separate and
distinct from the Equity Member and all of its other Affiliates;
(h) participate in the fair and reasonable allocation of any
and all overhead expenses and other common expenses for facilities, goods and
services provided to multiple entities (including, without limitation,
Affiliates);
(i) use its own stationery, invoices and checks (except when
acting in a representative capacity, in which event such capacity shall be
disclosed);
(j) hold itself out as a separate entity, and not fail to
correct any known misunderstanding regarding its separate identity;
(k) hold its assets in its own name, except as contemplated
under the Management Agreement;
(l) maintain a sufficient number of employees (which may be
zero) for its contemplated business operations and pay the salaries of such
employees from its own funds; and
(m) maintain adequate capital in light of its contemplated
business operations.
10.2. Negative Covenants of the Company and Each Member.
Notwithstanding anything to the contrary contained herein,
during the Covered Period, the Company, and each Member agrees that the Company,
will not:
(a) seek or consent to any dissolution, winding up,
liquidation, consolidation, merger or sale of all or substantially all of its
assets;
(b) fail to correct any known misunderstanding regarding its
separate identity;
(c) commingle its funds or other assets with those of any
other Person, except as otherwise contemplated under the Management Agreement;
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(d) guarantee or become obligated for the debts of any other Person or
hold out its credit as being available to satisfy the obligations of any other
Person (provided that this provision shall not be deemed to prohibit customary
joint and several obligations and indemnification and contribution agreements by
the Company and its Affiliates entered into under this Agreement, the Loan
Transaction Documents, or commercially reasonable indemnification obligations
incurred in the ordinary course of business of the Company);
(e) acquire obligations or securities of its Affiliates;
(f) pledge any of its assets for the benefit of any other Person,
except as otherwise contemplated or permitted by the Loan Transaction Documents;
(g) make any loans to any other Person (except for Permitted
Investments) or buy or hold evidence of indebtedness issued by any other Person;
(h) identify its Members or any of its Affiliates as a division or
part of it (except for inclusion in consolidated financial statements of an
equity owner);
(i) engage (either as transferor or transferee) in any material
transaction with any Affiliate other than for fair value and on terms similar to
those obtainable in arms-length transactions with unaffiliated parties, or
engage in any transaction with any Affiliate involving any intent to hinder,
delay or defraud any entity;
(j) engage in any business activity or operate for any purpose other
than as stated in Section 2.01 of this Agreement; or
(k) form, acquire or hold any subsidiaries.
10.03. Covenants of Each Equity Member.
Notwithstanding anything to the contrary contained herein, during the
Covered Period, each Equity Member will:
(a) observe all customary formalities necessary to maintain its
identity as an entity separate and distinct from the Company and all of its
other Affiliates;
(b) hold itself out as a separate and distinct entity from the Company
and not identify the Company as a division or part of the Equity Member;
(c) maintain its books and records and bank accounts separate from any
other Person (except that, for accounting and reporting purposes, the Equity
Member may be included in the consolidated financial statements of an equity
owner of the Equity Member in accordance with GAAP); and
(d) hold its assets in its own name.
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11. SPECIAL VOTING MATTERS
11.01. Sale, Consolidation, Merger, Liquidation, Dissolution.
Subject to the provisions of Section 10.02(a) hereof, the Company
shall not, without the approval of the Equity Member and the affirmative vote of
all the Managers, including (during the Covered Period) the affirmative vote of
the Independent Member and the Independent Manager, dissolve, liquidate,
consolidate, merge or sell all or substantially all of its assets.
11.02. Bankruptcy.
The Company shall not, without the approval of the Equity Member and
the affirmative vote of all the Managers, including (during the Covered Period)
the affirmative vote of the Independent Member and the Independent Manager,
institute proceedings for the Company to be adjudicated as bankrupt or
insolvent, or consent to the institution of bankruptcy or insolvency proceedings
against the Company, or file a petition with respect to the Company or consent
to a petition with respect to the Company seeking reorganization or relief under
any applicable Federal or state laws relating to bankruptcy or insolvency, or
appoint or consent to the appointment of receiver, liquidator, custodian,
assignee, trustee, sequestrator (or other similar official) of the Company or a
substantial part of its properties, or make any assignment for the benefit of
creditors, or except as required by law, admit in writing the inability to pay
its debts generally as they become due, or take any action as a limited
liability company in furtherance of any such action.
12. AMENDMENT
This Agreement may be amended or modified by a written instrument
executed by the Equity Member. Notwithstanding the foregoing, during the Covered
Period, the provisions of Sections 2.01, 3.01(b), 3.02, 3.03 (last sentence),
3.04, 3.06, 5.03, 5.08, 5.12, 8.01, 9.02, 9.03, 10.01, 10.02, 10.03, 11.01,
11.02, 11.03, and this Article 12, and the definitions set forth in Article 14
of the defined terms used in the foregoing provisions, shall not be amended
without the approval of the Independent Member and the written consent of the
Lender, and only upon confirmation from the applicable rating agencies that such
amendment will not result in a qualification, withdrawal or downgrade of any
rating assigned to any mortgage-backed securities relating to the Loan
Agreement.
13. MISCELLANEOUS
13.01. Enforceability.
If any provision of this Agreement or the application thereof to any
Person or circumstances shall be invalid or unenforceable to any extent, the
remainder of this
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Agreement and the application of such provisions to other Persons or
circumstances shall not be affected thereby and shall be enforced to the
greatest extent permitted by law.
13.02. Effect of Provisions Inconsistent with the Act.
It is the intention of the parties that any provision hereof that is
inconsistent with the provisions of the Act be given effect to the maximum
extent permitted under the Act.
13.03. Binding Effect.
The terms and provisions of this Agreement shall be binding upon,
and inure to the benefit of, the successors and assigns of the Members.
13.04. Governing Law.
The terms and provisions of this Agreement shall be construed under
the laws of the State of Delaware and the Act as now adopted or as it may be
hereafter amended shall govern the interpretation of this Agreement.
13.05. Counterparts.
This Agreement may be executed in several counterparts, each of
which shall be deemed an original, but all of which shall constitute one and the
same instrument.
13.06. Entire Agreement.
This Agreement, unless subsequently amended, contains the final and
entire agreement among the parties hereto, but only with respect to the subject
matter addressed herein.
13.07. Effect of Consent of Waiver.
No consent or waiver, express or implied, by any Member to or of any
breach or default by any other Member in the performance by such other Member of
its obligations hereunder shall be deemed or construed to be a consent or waiver
to or of any other breach or default by such other Member in the performance by
such other Member of the same or any other obligations of such Member hereunder.
Failure on the part of any Member to object to or complain of any act or failure
to act of any of the other Members or to declare any of the other Members in
default, irrespective of how long such failure continues, shall not constitute a
waiver by any such Member of its rights hereunder.
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13.08. No Third Party Beneficiaries.
The provisions of this Agreement shall not be for the benefit of,
nor shall they be enforceable by, any Person who is not a party to this
Agreement.
13.09. No Partnership Intended for Non-Tax Purposes.
The Members have formed the Company under the Act, and expressly do
not intend hereby to form a partnership under either the Delaware General
Partnership Act or the Delaware Revised Uniform Limited Partnership Act. The
Members do not intend by entering into this Agreement to be partners one to
another, or partners as to any third party. To the extent any Member, by word or
action, represents to another Person that any other Member is a partner or that
the Company is a partnership, the Member making such wrongful representation
shall be liable to the Company and any other Member who incurs personal
liability by reason of such wrongful representation.
13.10. Notices.
Any notice, demand, request or communication to the Members required
to be given, served or sent pursuant to this Agreement shall be in writing and
shall be mailed by first-class, registered or certified mail, return receipt
requested, postage prepaid, or transmitted by hand delivery (including delivery
by courier or by a nationally recognized commercial delivery service), or
facsimile transmission, addressed as follows:
If to Equity Member: Marriott Residence Inn USA Limited Partnership
c/o Crestline Capital Corporation
6600 Rockledge Drive
Bethesda, Maryland 20817
Attention: General Counsel
Facsimile No.: (240) 694-2040
If to Independent Member: to the address provided by the Independent
Member to the Company.
Each party may designate by Notice in writing a new address to which
any Notice, demand, request or communication may thereafter be so given, served
or sent. Each Notice, demand, request, or communication which shall be mailed,
delivered or transmitted in the manner described above shall be deemed
sufficiently given, served, sent and received for all purposes at such time as
it is delivered to the addressee (with the return receipt, delivery receipt, the
affidavit of messenger or (with respect to a fax) a record of the electronic
confirmation of fax receipt being deemed conclusive (but not exclusive) evidence
of such delivery) or at such time as delivery is refused by the addressee upon
presentation.
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13.11. References.
References herein to the singular shall include the plural and to
the plural shall include the singular, and references to one gender shall
include the others, except where the same shall not be appropriate.
13.12. Titles and Captions.
Article and section titles or captions contained in this Agreement
are for convenience only and shall not be deemed a part of the content of this
Agreement.
14. DEFINITIONS
As used herein, the following capitalized terms have the meanings
set forth below:
"Act" has the meaning ascribed thereto in the Recitals.
"Affiliate" means, with respect to any Person, any Person directly
or indirectly controlling, controlled by or under common control with such
Person. For purposes of this definition, "control," when used with respect to
any Person, means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise, and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agreement" has the meaning ascribed thereto in the Preamble.
"Board of Managers" has the meaning ascribed thereto in Section
5.02.
"Company" has the meaning ascribed thereto in the Preamble.
"Covered Period" means that period of time commencing on the
Effective Date and ending at such time as the Debt under the Loan Agreement
shall be paid in full.
"Covered Person" means any Manager (including the Independent
Manager), any Member (including the Independent Member), any Affiliate of any
Member, or any officers, directors, shareholders, partners, employees, trustees,
representatives or agents of the Company, any Member or any Affiliates thereof,
and each of their successors, assigns, heirs and representatives.
"Debt" has the meaning ascribed to it in the Loan Agreement.
"Effective Date" means the date on which the Loan Agreement becomes
effective.
"Equity Member" has the meaning ascribed thereto in the Preamble.
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"Executive Committee" has the meaning ascribed thereto in Section
5.05.
"Executive Managers" has the meaning ascribed thereto in Section
5.05.
"GAAP" means generally accepted accounting principles.
"Hotels" means the following properties:
Montgomery, Alabama Boston (Tewksbury), Massachusetts
1200 Hilmar Court 1175 Andover Street
Montgomery, Alabama 36117 Tewksbury, Massachusetts 01876
Bakersfield, California Atlanta (Airport), Georgia
4241 Chester Lane 3401 International Boulevard
Bakersfield, California 93309 Hapeville, Georgia 30354
Dallas (Las Colinas), Texas Cincinnati (Blue Ash), Ohio
950 Walnut Hill Lane 11401 Reed Harman Highway
Irving, Texas 75038 Cincinnati, Ohio 45241
San Ramon, California Pleasant Hill, California
1071 Market Place 700 Ellinwood Way
San Ramon, California 94583 Pleasant Hill, California 94523
Meriden, Connecticut Houston (Clear Lake), Texas
390 Bee Street 525 Bay Area Boulevard
Meriden, Connecticut 06450 Houston, Texas 77058
"Hotel Manager" means, collectively, the Person or Persons named as
"Manager" in the Management Agreement, which, as of the date hereof, is
Residence Inn By Marriott, Inc.
"Independent Manager" means a corporation that (i) is wholly owned
by Crestline; (ii) has as its sole asset its interest in the Company pursuant to
the terms of this Agreement; and (iii) has at least two duly appointed members
of its board of directors, reasonably satisfactory to the Lender, each of whom
is not, and has not been within the past five (5) years and will not be while
serving: (A) a stockholder, director, officer, employee, partner, attorney or
counsel of such corporation, the Company or any Affiliate of either of them; (B)
a customer, supplier or other Person who derives any of its purchases or
revenues from its activities with such corporation, the Company or any Affiliate
of either of them; (C) a Person or other entity controlling or under common
control with any such stockholder, partner, customer, supplier or other Person;
or (D) a member of the immediate family of any such stockholder, director,
officer, employee, partner, customer, supplier or other Person. As used in this
definition, the term "control" means the possession, directly or indirectly, of
the power to direct or cause the direction
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of the management, policies or activities of a Person, whether through ownership
of voting securities, by contract or otherwise.
"Independent Member" has the meaning ascribed thereto in Section
3.01(b).
"Lender" means Bank of America, a national banking association, or
any of its successors and assigns under the Loan Agreement.
"Loan Agreement" means that certain Loan Agreement dated on or about
December 29, 1999, between Lender, as lender, and the Company, as borrower,
together with any amendment, modification, supplement, extension or replacement
thereof.
"Loan Transaction Documents" means the Loan Agreement and the
promissory notes, mortgages, security agreements, subordination and
nondisturbance agreements, assignments of leases and rents and other agreements,
instruments and documents entered into by or on behalf of the Company in
connection with the Loan Agreement.
"Management Agreement" means the Management Agreement between
Residence Inn By Marriott, Inc. and the Equity Member, dated as of March 29,
1988, as amended, and as assigned to the Company.
"Manager" means a Person named in Section 5.04 as a Manager of the
Company or hereafter appointed as a Manager pursuant to the terms of this
Agreement, including the Independent Manager.
"Member" means an Equity Member or the Independent Member.
"Notice" means a writing, containing the information required by the
Agreement to be communicated to any Person, given in accordance with Section
13.11.
"Permitted Investment" has the meaning ascribed thereto in the Loan
Agreement.
"Person" means a natural person, partnership (whether general or
limited), trust, estate, association, corporation, limited liability company,
unincorporated organization, custodian, nominee or any other individual or
entity in its own or any representative capacity.
"Qualified Affiliate" means any Person directly or indirectly wholly
owned and controlled by the Equity Member.
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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
duly executed on their behalf as of the date first written above.
MARRIOTT RESIDENCE INN USA
LIMITED PARTNERSHIP
By: CC USAGP LLC, its general partner
/s/ Tracy M.J. Colden
Name: Tracy M.J. Colden
Title: Vice President
RESIDENCE INN III LLC
/s/ Tracy M.J. Colden
Name: Tracy M.J. Colden
Title: Vice President and Secretary
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