Exhibit 3.17
OPERATING AGREEMENT
OF
HMC REAL ESTATE LLC
TABLE OF CONTENTS
Page
----
1. CERTAIN DEFINITIONS ................................................... 1
2. FORMATION; NAME; PLACE OF BUSINESS .................................... 1
2.1. Formation of the Company; Certificate of Formation ............ 1
2.2. Name of Company ............................................... 2
2.3. Place of Business ............................................. 2
2.4. Registered Office and Registered Agent ........................ 3
3. PURPOSES AND POWERS OF COMPANY ........................................ 3
3.1. Purposes ...................................................... 3
3.2. Powers ........................................................ 3
4. TERM OF COMPANY ....................................................... 3
5. CAPITAL ............................................................... 3
5.1. Capital Contributions ......................................... 3
5.2. Liability of Member and Board of Managers ..................... 4
6. DISTRIBUTIONS ......................................................... 4
6.1. Distributions ................................................. 4
7. MEMBERS AND MANAGEMENT ................................................ 4
7.1. Member ........................................................ 4
7.2. Management of the Company by Board of Managers ................ 5
7.3. Officers ...................................................... 8
7.4. Fiduciary Relationship ........................................ 10
7.5. Other Activities of the Member or Affiliates .................. 10
7.6. Certain Transactions .......................................... 11
7.7. Indemnification of the Member, Managers, Officers and
Affiliates .................................................. 11
8. BANK ACCOUNTS; BOOKS AND RECORDS; STATEMENTS; TAXES; FISCAL YEAR ...... 12
8.1. Bank Accounts ................................................. 12
8.2. Books and Records ............................................. 12
8.3. Financial Statements and Information .......................... 13
8.4. Accounting Decisions .......................................... 13
8.5. Where Maintained .............................................. 13
8.6. Fiscal Year ................................................... 13
8.7. Tax Treatment of the Company .................................. 13
9. TRANSFER AND CONVERSION OF INTERESTS AND THE ADDITION, SUBSTITUTION
AND WITHDRAWAL OF MEMBERS .......................................... 14
9.1. Transfer of Interests ......................................... 14
10. DISSOLUTION AND LIQUIDATION .......................................... 14
10.1. Events Causing Dissolution ................................... 14
-1-
10.2. Right to Continue Business of the Company .................... 15
10.3. Cancellation of Certificate .................................. 15
10.4. Distributions Upon Dissolution ............................... 15
10.5. Reasonable Time for Winding Up ............................... 15
11. MISCELLANEOUS PROVISIONS ............................................. 16
11.1. Compliance with Delaware LLC Act ............................. 16
11.2. Additional Actions and Documents ............................. 16
11.3. Severability ................................................. 16
11.4. Amendment Procedure .......................................... 16
11.5. Pronouns ..................................................... 16
11.6. Headings ..................................................... 17
11.7. Governing Law ................................................ 17
-2-
OPERATING AGREEMENT
OF
HMC REAL ESTATE LLC
THIS OPERATING AGREEMENT (the "Agreement") is entered into as of
July 28, 1998.
WHEREAS, Host Marriott Corporation, a Delaware corporation (the
"Member"), has decided to form a limited liability company under the name "HMC
Real Estate LLC" (the "Company") pursuant to the provisions of the Delaware
Limited Liability Company Act (the "Delaware LLC Act") pursuant to a Certificate
of Formation, dated July 28, 1998 (the "Certificate").
WHEREAS, the Member is executing this Agreement to (i) ratify the
formation of the Company and the filing of the Certificate, (ii) continue the
existence of the Company, and (iii) set forth the terms governing the affairs of
the Company and the conduct of its business.
1. CERTAIN DEFINITIONS
Unless the context otherwise specifies or requires, capitalized terms
used herein shall have the respective meanings assigned thereto in Addendum I,
attached hereto, and incorporated herein by reference, for all purposes of this
Agreement (such definitions to be equally applicable to both the singular and
the plural forms of the terms defined). Unless otherwise specified, all
references herein to Articles or Sections are to Articles or Sections of this
Agreement.
2. FORMATION; NAME; PLACE OF BUSINESS
2.1. Formation of the Company; Certificate of Formation
The Member hereby:
2.1.1. approves and ratifies the filing of the Certificate with the
Recording Office on July 28, 1998;
2.1.2. confirms and agrees to its status as the sole member of the
Company;
2.1.3. executes this Agreement for the purpose of setting forth the
terms governing the affairs of the Company and the conduct of its business and
establishing the rights and duties of its Members;
2.1.4. (i) agrees that if the laws of any jurisdiction in which the
Company transacts business so require, the Board of Managers or the appropriate
officers or other authorized representatives of the Company shall file, or shall
cause to be filed, with the appropriate office in that jurisdiction, any
documents necessary for the Company to qualify to transact business under such
laws; and (ii) agrees and obligates itself to execute, acknowledge, and cause to
be filed for record, in the place or places and manner prescribed by law, any
amendments to the Certificate as may be required, either by the Delaware LLC
Act, by the laws of any jurisdiction in which the Company transacts business, or
by this Agreement, to reflect changes in the information contained therein or
otherwise to comply with the requirements of law for the continuation,
preservation, and operation of the Company as a limited liability company under
the Delaware LLC Act; and
2.1.5. represents and warrants that such Member is duly authorized to
execute, deliver, and perform its obligations under this Agreement and that the
Person, if any, executing this Agreement on behalf of such Member is duly
authorized to do so and that this Agreement is binding on and enforceable
against such Member in accordance with its terms.
2.2. Name of Company
The name under which the Company shall conduct its business is "HMC
Real Estate LLC." The business of the Company may be conducted under any other
name permitted by the Delaware LLC Act that is deemed necessary or desirable by
the Board of Managers, in its sole and absolute discretion. The Board of
Managers or the appropriate officers or other authorized representatives of the
Company promptly shall execute, file, and record, or cause to be executed, filed
and recorded, any assumed or fictitious name certificates required by the laws
of the State of Delaware or any state in which the Company conducts business.
2.3. Place of Business
The location of the principal place of business of the Company shall
be c/o Host Marriott Corporation, 00000 Xxxxxxxx Xxxx, Xxxxxxxx, Xxxxxxxx 00000-
1109. The Board of Managers may hereafter change the principal place of
business of the Company to such other place or places within the United States
as the Board of Managers may from time to time determine, provided that the
Board of Managers shall give written notice thereof to the Member within thirty
(30) days after the effective date of any such change and, if necessary, the
Board of Managers shall amend, or shall cause to be amended, the Certificate in
accordance with the applicable requirements of the Delaware LLC Act. The Board
of Managers may establish and maintain such other offices and additional places
of business of the Company, either within or without the State of Delaware, as
it deems appropriate.
-2-
2.4. Registered Office and Registered Agent
The street address of the initial registered office of the Company
shall be 0000 Xxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxx 00000, and the Company's
registered agent at such address shall be The Xxxxxxxx-Xxxx Corporation System,
Inc. The registered office and the registered agent of the Company may be
changed by the Board of Managers from time to time in accordance with the then
applicable provisions of the Delaware LLC Act and any other applicable laws.
3. PURPOSES AND POWERS OF COMPANY
3.1. Purposes
The purposes of the Company shall be to engage in any lawful business
permitted by the Delaware LLC Act or laws of any jurisdiction in which the
Company may do business and to enter into any lawful transaction and engage in
any lawful activities in furtherance of the foregoing purposes and as may be
necessary, incidental or convenient to carry out the business of the Company as
contemplated by this Agreement.
3.2. Powers
Subject to all of the provisions of this Agreement, the Company shall
have the power to do any and all acts and things necessary, appropriate,
advisable, or convenient for the furtherance and accomplishment of the purposes
of the Company, including, without limitation, to engage in any kind of activity
and to enter into and perform obligations of any kind necessary to or in
connection with, or incidental to, the accomplishment of the purposes of the
Company, so long as said activities and obligations may be lawfully engaged in
or performed by a limited liability company under the Delaware LLC Act.
4. TERM OF COMPANY
The Company shall have perpetual existence, unless dissolved and
liquidated in accordance with the provisions of Article 10.
5. CAPITAL
5.1. Capital Contributions
Concurrently with the execution of this Agreement, the Member has made
an initial capital contribution to the Company. The Member shall not be
-3-
required to make any additional contributions to the capital of the Company.
The Member shall be entitled upon the request of the Company, at its sole
discretion, to contribute additional capital to the Company. No interest shall
accrue on any contribution and the Member shall not have the right to withdraw
or be repaid any contribution except as provided in this Agreement.
5.2. Liability of Member and Board of Managers
Except as otherwise provided in the Delaware LLC Act, 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, and neither the Member nor the Board of Managers shall be obligated
personally for any such debt, obligation or liability of the Company solely by
reason of being the Member or a Manager. 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 Delaware LLC Act or this
Agreement shall not be grounds for imposing personal liability on any Member or
Manager for liabilities of the Company.
6. DISTRIBUTIONS
6.1. Distributions
Cash available or property available to be distributed in-kind by the
Company to the Member shall be determined by the Board of Managers from time to
time and may be distributed to the Member.
7. MEMBERS AND MANAGEMENT
7.1. Member
7.1.1. Meetings.
The Member may meet at such place, on such date and at such time
as may be fixed by the Board of Managers for the transaction of such lawful
business as may come before the meeting. Meetings of the Member may be called by
the President and shall be called by the President or Secretary upon the request
of the Board of Managers or the Member upon prior notice to the Member in
writing or by telephone or facsimile. No business shall be acted upon at a
special meeting that is not stated in the notice of the meeting.
-4-
7.1.2. Action by Written Consent.
Any action which may be taken by the Member under this
Agreement may be taken without a meeting if consents in writing setting forth
the action so taken are signed by the Member.
7.1.3. Waivers of Notice.
Whenever the giving of any notice to the Member is required by
statute or this Agreement, a waiver thereof, in writing and delivered to the
Company signed by the Person or Persons entitled to said notice, whether before
or after the event as to which such notice is required, shall be deemed
equivalent to notice. Attendance of a Member at a meeting or execution of a
written consent to any action shall constitute a waiver of notice of such
meeting or action.
7.2. Management of the Company by Board of Managers
7.2.1. Management by Board of Managers.
The Member hereby agrees that full responsibility for
management of the business and affairs of the Company shall be delegated to a
board of managers (the "Board of Managers") pursuant to Section 18-402 of the
Delaware LLC Act.
7.2.2. Power and Authority of Board of Managers.
The Board of Managers (acting on behalf of the Company) shall
have the right, power, and authority to manage, operate and control the business
and affairs of the Company and to do or cause to be done any and all acts, at
the expense of the Company, deemed by the Board of Managers to be necessary or
appropriate to effectuate the purposes of the Company. Except as otherwise
expressly provided in this Agreement or as may be approved by the Board of
Managers, the Member shall not have any authority, right or power, by virtue of
being a Member, to bind the Company, or to manage or control, or to participate
in the management or control of, the business and affairs of the Company in any
manner whatsoever. Without limiting the generality of the foregoing, the Board
of Managers shall have the right, power and authority on behalf of the Company:
(i) to develop, review and approve annual budgets, policies,
operating guidelines, and other operational items for the Company;
(ii) to elect officers of the Company in accordance with
Section 7.3;
-5-
(iii) to arrange for such personnel as may be necessary or
convenient to carry out the business and affairs of the Company;
(iv) to establish such reasonable cash reserves to provide for
anticipated expenses of the Company as the Board of Managers determines to be
necessary for timely payment of such expenses; and
(v) to direct the President or any other duly appointed
officer of the Company to make, execute, assign, acknowledge, and file on behalf
of the Company any and all documents or instruments of any kind which the Board
of Managers may deem necessary or appropriate in carrying out the business and
affairs of the Company, including, without limitation, powers of attorney,
agreements of indemnification, documents, or instruments of any kind or
character, and amendments thereto (and no person, firm or corporation dealing
with the Board of Managers shall be required to determine or inquire into the
authority or power of the Board of Managers to bind the Company).
7.2.3. Composition; Election; Removal.
(i) Number; Qualifications. The Board of Managers shall at
----------------------
all times be composed of not less than two nor more than five managers (each, a
"Manager"). Within such limits, the number of Managers and the qualifications
for Managers shall be as fixed from time to time by the Board of Managers, at
any meeting, subject to the provisions of this Agreement. The number of Managers
which shall constitute the initial Board of Managers is hereby fixed at two.
Managers need not be members of the Company.
(ii) Election. Managers shall be elected by the Member to
--------
hold office until their respective successors are duly elected and qualified.
(iii) Initial Managers. The Member does hereby elect as the
----------------
initial Managers Xxxxxxxxxxx X. Xxxxxxxx and Xxxxxx X. Xxxxxxx, Xx.
(iv) Vacancies. In the event of any vacancy in the office of
---------
a Manager as a result of the death, incapacity, resignation or removal of a
Manager, such vacancy shall be filled by the Member. The Manager elected to fill
any vacancy shall hold office until a successor Manager is appointed as provided
hereunder or until such person's earlier death, resignation or removal.
(v) Removal of Managers. Any Manager may be removed, with or
-------------------
without cause, by the Member. Any vacancy caused by any such removal shall be
filled as provided in Section 7.2.3(iv) above.
-6-
7.2.4. Meetings.
Meetings of the Board of Managers may be called by any Manager
entitled to participate in the meeting or the President and shall be called by
the President upon the request of the Member, upon notice to all Managers in
writing or by telephone or facsimile transmission. Meetings of the Board of
Managers may be held by conference telephone or other communications equipment
by means of which all participating Managers can simultaneously hear each other
during the meeting.
7.2.5. Quorum.
No action may be taken at a meeting of the Board of Managers
unless a quorum consisting of at least a majority of the Managers then in office
are present.
7.2.6. Action by Written Consent.
Any action which may be taken by the Board of Managers under
this Agreement may be taken without a meeting if consents in writing setting
forth the action so taken are signed by a majority of the Managers then in
office.
7.2.7. Voting Rights; Required Votes.
Each Manager shall be entitled to cast one vote with respect
to any matter coming before the Board of Managers, except with respect to a
determination to seek indemnification pursuant to Section 7.7 hereof, in which
event a Manager seeking indemnification hereunder shall have no vote with
respect to his or her indemnification. Any action required or permitted to be
taken by the Board of Managers must be approved by the affirmative vote of a
majority of the Managers then in office, except that any determination to grant
indemnification to a Manager pursuant to Section 7.7 hereof shall require the
affirmative vote of only one (1) Manager.
7.2.8. Compensation of Managers.
The Managers shall be reimbursed for all reasonable expenses
incurred in connection with the performance of their duties as Managers.
7.2.9. Resignations.
Any Manager may resign at any time by giving written notice to
the Board of Managers. Any such resignation shall take effect at the time
specified therein, or, if no time is specified, upon receipt thereof; and unless
otherwise
-7-
specified therein, acceptance of such resignation shall not be necessary to make
it effective.
7.3. Officers
7.3.1. Number, Election and Term of Office.
The officers of the Company shall be a President, a Treasurer
and a Secretary, and may at the discretion of the Board of Managers include one
or more Vice Presidents, Assistant Secretaries and other officers. The officers
of the Company shall be elected by the Board of Managers and shall hold their
respective offices until their successors are duly elected and have qualified or
until their earlier death, resignation or removal. Except as otherwise provided
by law, any number of offices may be held by the same person.
7.3.2. President.
Subject to the direction of the Board of Managers, the
President (i) shall be the chief operating officer of the Company, (ii) shall
have full responsibility and authority for management of the day-to-day
operations of the Company, and (iii) may execute agreements and contracts on
behalf of the Company.
7.3.3. Treasurer.
The Treasurer shall have charge of the funds of the Company.
He or she shall keep full and accurate accounts of all receipts and
disbursements of the Company in books belonging to the Company and shall deposit
all moneys and other valuable effects in the name and to the credit of the
Company in such depositories as may be designated by the Board of Managers. He
or she shall disburse the funds of the Company as may be ordered by the Board of
Managers, and shall render to the Board of Managers, whenever they may require
it, an account of all his transactions as Treasurer and an account of the
business and financial position of the Company.
7.3.4. Secretary.
The Secretary, at the direction of the Board of Managers,
shall prepare and distribute to the Managers an agenda in advance of each
meeting and shall prepare and distribute promptly to each Manager written
minutes of all meetings of the Board of Managers. The Secretary shall also be
responsible for preparing and distributing to the Managers any notices received
by the Company or otherwise called for by this Agreement to be given by the
Company.
-8-
7.3.5. Vice President.
The Board of Managers may appoint one or more Vice Presidents
of the Company. Each Vice President shall perform such duties as the Board of
Managers shall require of such Vice President.
7.3.6. Assistant Secretary.
The Board of Managers may appoint one or more Assistant
Secretaries of the Company. Each Assistant Secretary shall perform such duties
as the Board of Managers shall require of such Assistant Secretary. The
Assistant Secretaries (in the order of their election) shall, during the absence
or incapacity of the Secretary, assume and perform all functions and duties
which the Secretary might lawfully do if present and not under any incapacity.
7.3.7. Other Officers.
The Board of Managers may appoint such other officers and
agents of the Company as the Board of Managers shall deem necessary or
appropriate to carry out the business of the Company upon such terms and
conditions the Board of Managers may determine. Any such officer shall hold his
or her respective office for the term specified by the Board of Managers unless
earlier removed by the Board of Managers.
7.3.8. Resignation.
Any officer or agent of the Company may resign at any time by
giving written notice to the Board of Managers or to the President or the
Secretary of the Company. Any such resignation shall take effect at the time
specified therein or, if no time is specified, upon receipt thereof; and unless
otherwise specified therein, acceptance of such resignation shall not be
necessary to make it effective.
7.3.9. Removal; Vacancies; Transfer of Duties.
Any officer or agent of the Company may be removed from
office, with or without cause, by the Board of Managers at a meeting called for
that purpose. Any vacancy in the office of President, Vice President, Treasurer,
or Secretary for any reason shall be filled by a person designated by the Board
of Managers for the unexpired term of the vacant office. The Board of Managers
in its sole and absolute discretion may transfer the power and duties, in whole
or in part, of any officer to any other officer, or persons, notwithstanding the
provisions of this Agreement, except as otherwise provided by the laws of the
State of Delaware.
-9-
7.3.10. Compensation.
The officers of the Company shall be entitled to such salary or
other compensation as the Board of Managers shall determine.
7.3.11. Third Party Reliance.
Third parties dealing with the Company shall be entitled to rely
conclusively upon the power and authority of the officers of the Company as set
forth herein.
7.3.12. 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 such 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.
7.4. Fiduciary Relationship
No Manager shall be liable to the Company or the Member for monetary
damages for breach of fiduciary duty as a Manager or otherwise liable,
responsible or accountable to the Company or the Member for monetary damages or
otherwise for any acts performed, or for any failure to act; provided, however,
that this provision shall not eliminate or limit the liability of a Manager (i)
for any breach of the Manager's duty of loyalty to the Company or the Member,
(ii) for acts or omissions which involve intentional misconduct or a knowing
violation of law, or (iii) for any transaction from which the Manager received
any improper personal benefit.
7.5. Other Activities of the Member or Affiliates
Subject to any intellectual property or other property rights of the
Company and to protection of the confidentiality of any information treated as
confidential by the Company, a member of the Company or any Affiliate thereof
may have other business interests and may engage in other business ventures of
any nature or description, whatsoever, whether currently existing or hereafter
created, and may compete, directly or indirectly, with the business of the
Company.
-10-
Neither the Member nor any Affiliate thereof shall incur any liability to the
Company as a result of the Member's or Affiliate's pursuit of such other
business interests, ventures and competitive activity, and neither the Company
nor any other members of the Company shall have any right to participate in such
other business ventures or to receive or share in any income or profits derived
therefrom.
7.6. Certain Transactions
The Company is expressly permitted in the normal course of its
business to enter into transactions with the Member or with any Affiliate of the
Member provided that the price and other terms of such transactions are fair to
the Company and that the price and other terms of such transactions are not less
favorable to the Company than those generally prevailing with respect to
comparable transactions between unrelated parties.
7.7. Indemnification of the Member, Managers, Officers and Affiliates
7.7.1 In accordance with Section 18-108 of the Delaware LLC Act, the
Company shall indemnify and hold harmless the Member, any Manager, any officer,
or an Affiliate thereof (individually, in each case, an "Indemnitee") to the
fullest extent permitted by law from and against any and all losses, claims,
demands, costs, damages, liabilities (joint or several), expenses of any nature
(including attorneys' fees and disbursements), judgments, fines, settlements,
and other amounts arising from any and all claims, demands, actions, suits, or
proceedings, whether civil, criminal, administrative or investigative, in which
the Indemnitee may be involved, or threatened to be involved, as a party or
otherwise, arising out of or incidental to the business or activities of or
relating to the Company, regardless of whether the Indemnitee continues to be
the Member, a Manager, an officer, or an Affiliate thereof at the time any such
liability or expense is paid or incurred; provided, however, that this provision
shall not eliminate or limit the liability of an Indemnitee (i) for any breach
of the Indemnitee's duty of loyalty to the Company or the Member, (ii) for acts
or omissions which involve intentional misconduct or a knowing violation of law,
or (iii) for any transaction from which the Indemnitee received any improper
personal benefit.
7.7.2. Expenses incurred by an Indemnitee in defending any claim,
demand, action, suit, or proceeding subject to this Section 7.7 shall, from time
to time, upon request by the Indemnitee, be advanced by the Company prior to the
final disposition of such claim, demand, action, suit, or proceeding upon
receipt by the Company of an undertaking by or on behalf of the Indemnitee to
repay such amount, if it shall be determined in a judicial proceeding or a
binding arbitration
-11-
that such Indemnitee is not entitled to be indemnified as authorized in this
Section 7.7.
7.7.3. The indemnification provided by this Section 7.7 shall be in
addition to any other rights to which an Indemnitee may be entitled under any
agreement, vote of the Member, as a matter of law or equity, or otherwise, both
as to an action in the Indemnitee's capacity as the Member, a Manager, an
officer, or any Affiliate thereof, and as to an action in another capacity, and
shall continue as to an Indemnitee who has ceased to serve in such capacity and
shall inure to the benefit of the heirs, successors, assigns, and administrators
of the Indemnitee.
7.7.4. The Company may purchase and maintain insurance on behalf of
the Board of Managers and such other Persons as the Board of Managers shall
determine against any liability that may be asserted against or expense that may
be incurred by such Persons in connection with the offering of interests in the
Company or the business or activities of the Company, regardless of whether the
Company would have the power to indemnify such Persons against such liability
under the provisions of this Agreement.
7.7.5. An Indemnitee shall not be denied indemnification in whole or
in part under this Section 7.7 or otherwise by reason of the fact that the
Indemnitee had an interest in the transaction with respect to which the
indemnification applies if the transaction was otherwise permitted or not
expressly prohibited by the terms of this Agreement.
7.7.6. The provisions of this Section 7.7 are for the benefit of the
Indemnitees, their heirs, successors, assigns and administrators and shall not
be deemed to create any rights for the benefit of any other Persons.
8. BANK ACCOUNTS; BOOKS AND RECORDS; STATEMENTS; TAXES; FISCAL YEAR
8.1. Bank Accounts
All funds of the Company shall be deposited in its name in such
checking and savings accounts, time deposits or certificates of deposit, or
other accounts at such banks as shall be designated by the Board of Managers
from time to time, and the Board of Managers shall arrange for the appropriate
conduct of such account or accounts.
-12-
8.2. Books and Records
The Company shall keep, or cause to be kept, accurate, full and
complete books and accounts showing assets, liabilities, income, operations,
transactions and the financial condition of the Company. Such books and
accounts shall be prepared on the cash or accrual basis of accounting, as
determined by the Board of Managers. The Member, or its respective designee,
shall have access thereto at any reasonable time during regular business hours
and shall have the right to copy said records at its expense.
8.3. Financial Statements and Information
8.3.1. All financial statements prepared pursuant to this Section 8.3
shall present fairly the financial position and operating results of the Company
and shall be prepared in accordance with generally accepted accounting
principles for each fiscal year of the Company during the term of this
Agreement.
8.3.2. The Company shall provide to the Member in a timely fashion
such reports and information concerning the business and affairs of the Company
as may be required by the Delaware LLC Act or by any other law or regulation of
any regulatory body applicable to the Company.
8.4. Accounting Decisions
All decisions as to accounting matters, except as specifically
provided to the contrary herein, shall be made by the Board of Managers.
8.5. Where Maintained
The books, accounts and records of the Company at all times shall be
maintained at the Company's principal office or such other office or offices as
the Board of Managers shall determine.
8.6. Fiscal Year
The fiscal year of the Company for financial, accounting, federal,
state and local income tax purposes shall consist of a 52-week calendar period
in each year to commence on the expiration of the then current 52-week period,
which shall end the Friday closest to December 31.
8.7. Tax Treatment of the Company
It is intended that the Company be disregarded as an entity separate
from its owner for federal tax purposes. For this reason, the Company shall not
elect to be classified as a corporation on Form 8832, "Entity Classification
Election",
-13-
but, instead, will be treated by default as an entity disregarded as separate
from its owner pursuant to Treasury Regulations Section 301.7701-3(b)(1)(ii).
Furthermore, it is intended that the Company be disregarded as an entity
separate from its owner for state tax purposes, and the Company shall take such
actions as are necessary to cause this result.
9. TRANSFER AND CONVERSION OF INTERESTS AND THE ADDITION, SUBSTITUTION AND
WITHDRAWAL OF MEMBERS
9.1. Transfer of Interests
Subject to applicable law, the Member may assign or transfer all or
part of its membership interest in the Company (including granting security
interests in such interest or transfers by reason of a merger or consolidation
involving the Member) at any time to any Person. Without any further action by
the Member or assignee of the membership interest, such assignee of the Member's
interest shall be admitted as a member of the Company, the assignor shall be
withdrawn as a member of the Company and such assignee shall thereafter be
deemed the Member for all purposes under this Agreement. In the event that the
Member's membership interest is assigned to more than one Person, the assignees
(new members) shall make appropriate amendments to this Agreement.
10. DISSOLUTION AND LIQUIDATION
10.1. Events Causing Dissolution
Subject to the provisions of Section 10.2 below, the Company shall be
dissolved and its affairs wound up upon the occurrence of any of the following
events:
10.1.1. The consent in writing to dissolve and wind up the affairs of
the Company by the Member;
10.1.2. The sale or other disposition by the Company of all or
substantially all of the Company Assets and the collection of all amounts
derived from any such sale or other disposition, including all amounts payable
to the Company under any promissory notes or other evidences of indebtedness
taken by the Company (unless the Member shall elect to distribute such
indebtedness to the Member in liquidation), and the satisfaction of contingent
liabilities of the Company in connection with such sale or other disposition;
-14-
10.1.3. The occurrence of any other event that, under the Delaware
LLC Act, would cause the dissolution of the Company or that would make it
unlawful for the business of the Company to be continued.
10.2. Right to Continue Business of the Company
Upon an event described in Section 10.1.3. (but not an event described
in Section 10.1.3. that makes it unlawful for the business of the Company to be
continued), the Company thereafter shall be dissolved and liquidated unless,
within 90 days after the event described in such Section, an election to
continue the business of the Company shall be made in writing by the Member. If
such an election to continue the Company is made, then the Company shall
continue until another event causing dissolution in accordance with this Article
10 shall occur.
10.3. Cancellation of Certificate
Upon the dissolution and completion of winding up of the Company, the
Certificate shall be canceled in accordance with the provisions of Section 18-
203 of the Delaware LLC Act, and the Board of Managers (or any other person or
entity responsible for winding up the affairs of the Company) shall promptly
notify the Member of such dissolution.
10.4. Distributions Upon Dissolution
10.4.1. Upon the dissolution of the Company, the Board of Managers
(or any other person or entity responsible for winding up the affairs of the
Company) shall proceed without any unnecessary delay to sell or otherwise
liquidate the Company Assets and pay or make due provision for the payment of
all debts, liabilities and obligations of the Company.
10.4.2. The Board of Managers (or any other person or entity
responsible for winding up the affairs of the Company) shall distribute the net
liquidation proceeds and any other liquid assets of the Company after the
payment of all debts, liabilities and obligations of the Company (including,
without limitation, all amounts owing to the Member under this Agreement or
under any agreement between the Company and the Member entered into by the
Member other than in its capacity as a member in the Company or the
establishment of reasonable revenues therefor), the payment of expenses of
liquidation of the Company, and any remaining assets to the Member.
-15-
10.5. Reasonable Time for Winding Up
A reasonable time shall be allowed for the orderly winding up of the
business and affairs of the Company and the liquidation of its assets pursuant
to Section 10.4 in order to minimize any losses otherwise attendant upon such a
winding up.
11. MISCELLANEOUS PROVISIONS
11.1. Compliance with Delaware LLC Act
The Member agrees not to take any action or fail to take any action
which, considered alone or in the aggregate with other actions or events, would
result in the termination of the Company under the Delaware LLC Act.
11.2. Additional Actions and Documents
The Member hereby agrees to take or cause to be taken such further
actions, to execute, acknowledge, deliver and file or cause to be executed,
acknowledged, delivered and filed such further documents and instruments, and to
use best efforts to obtain such consents, as may be necessary or as may be
reasonably requested in order to fully effectuate the purposes, terms and
conditions of this Agreement, whether before, at or after the closing of the
transactions contemplated by this Agreement.
11.3. Severability
The invalidity of any one or more provisions hereof or of any other
agreement or instrument given pursuant to or in connection with this Agreement
shall not affect the remaining portions of this Agreement or any such other
agreement or instrument or any part thereof, all of which are inserted
conditionally on their being held valid in law; and in the event that one or
more of the provisions contained herein or therein should be invalid, or should
operate to render this Agreement or any such other agreement or instrument
invalid, this Agreement and such other agreements and instruments shall be
construed as if such invalid provisions had not been inserted.
11.4. Amendment Procedure
Any amendment or modification to this Agreement may be made only upon
the written consent of the Member.
-16-
11.5. Pronouns
All pronouns and any variations thereof shall be deemed to refer to
the masculine, feminine, neuter, singular or plural, as the identity of the
person or entity may require.
11.6. Headings
Article, section and subsection headings contained in this Agreement
are inserted for convenience of reference only, shall not be deemed to be a part
of this Agreement for any purpose, and shall not in any way define or affect the
meaning, construction or scope of any of the provisions hereof.
11.7. Governing Law
This Agreement, the rights and obligations of the parties hereto, and
any claims or disputes relating thereto, shall be governed by and construed in
accordance with the laws of the State of Delaware and the Delaware LLC Act (but
not including the choice of law rules thereof).
IN WITNESS WHEREOF, the undersigned has duly executed this Operating
Agreement as of the day and year first herein above set forth.
HOST MARRIOTT CORPORATION
By: /s/ Xxxxxxxxxxx X. Xxxxxxxx
---------------------------------
Name: Xxxxxxxxxxx X. Xxxxxxxx
Title: Senior Vice President
-17-
ADDENDUM I
DEFINITIONS
"Affiliate" - When used with reference to a specified Person, means
any other Person directly or indirectly controlling or controlled by or under
direct or indirect common control with, or any general partner or managing
member in, such specified Person. As used in this definition of "Affiliate,"
the term "control," when used with respect to any specified Person means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract, or otherwise, and the terms
"controlling" and "controlled" have the meanings correlative to the foregoing.
Notwithstanding the foregoing, Marriott International, Inc. and its Affiliates
shall not be deemed Affiliates of the Company or its Member.
"Agreement" - As defined in the introductory paragraph.
"Board of Managers" - As defined in Section 7.2.1.
"Certificate" - As defined in the Recitals.
"Code" - The Internal Revenue Code of 1986, as in effect and hereafter
amended, and, unless the context otherwise requires, applicable regulations
thereunder. Any reference herein to a specific section or sections of the Code
shall be deemed to include a reference to any corresponding provision of future
law.
"Company" - As defined in the Recitals.
"Company Assets" - All assets and property, whether tangible or
intangible and whether real, personal, or mixed, at any time owned by or held
for the benefit of the Company.
"Delaware LLC Act" - As defined in the Recitals.
"Indemnitee" - As defined in Section 7.7.1.
"Manager" - As defined in Section 7.2.3.
"Member" - As defined in the introductory paragraph.
"Person" - Any individual, corporation, association, partnership,
limited liability company, joint venture, trust, estate, or other entity or
organization.
"Recording Office" - The office of the Secretary of State of the State
of Delaware.
