Exhibit 3.2
SIXTH AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
SUNSTONE HOTEL PARTNERSHIP, LLC
THIS SIXTH AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT, dated as of April 22, 2021 of Sunstone Hotel Partnership, LLC (the “Company”), is entered into by Sunstone Hotel Investors, Inc., as Managing Member (the “Managing Member”);
WHEREAS, the Company was formed by the filing of a certificate of formation with the Secretary of State of the State of Delaware on June 29, 2004 by an authorized person of the Company;
WHEREAS, the Limited Liability Company Agreement, dated as of October 26, 2004, was amended and restated in its entirety by that certain First Amended and Restated Limited Liability Company Agreement, dated as of March 17, 2005 (the “First Amended and Restated Agreement”);
WHEREAS, the First Amended and Restated Liability Company Agreement, dated as of March 17, 2005, was amended and restated in its entirety by that certain Second Amended and Restated Limited Liability Company Agreement, dated as of July 8, 2005, as amended (the “Second Amended and Restated Agreement”);
WHEREAS, the Second Amended and Restated Agreement was amended and restated in its entirety by that certain Third Amended and Restated Limited Liability Company Agreement, dated as of April 6, 2011, as amended (the “Third Amended and Restated Agreement”);
WHEREAS, the Third Amended and Restated Agreement was amended and restated in its entirety by that certain Fourth Amended and Restated Limited Liability Company Agreement, dated as of March 11, 2016, as amended (the “Fourth Amended and Restated Agreement”);
WHEREAS, the Fourth Amended and Restated Agreement was amended and restated in its entirety by that certain Fifth Amended and Restated Limited Liability Company Agreement, dated as of May 17, 2016, as amended;
WHEREAS, the Board of Directors and a duly authorized committee of the Board of Directors of the Managing Member each approved certain resolutions classifying and designating 2,650,000 shares of Preferred Stock (as defined in the charter of the Managing Member (the “Charter”)) as Series G Cumulative Redeemable Preferred Stock (the “Series G Preferred Stock”);
WHEREAS, the Managing Member filed Articles Supplementary to the Charter (the “Series G Articles Supplementary”) with the State Department of Assessments and Taxation of Maryland on April 22, 2021, establishing a series of Preferred Stock, designated the Series G Preferred Stock;
WHEREAS, on April 22, 2021, the Managing Member issued 2,650,000 shares of Series G Preferred Stock;
WHEREAS, the Managing Member is the sole Managing Member of the Company and Sun SHP II, LLC is the sole Non-Managing Member of the Company, in each case, as set forth on Exhibit A hereto;
WHEREAS, the Members desire to continue the Company under the Act (as defined below) and to set forth their respective rights and duties relating to the Company on the terms as provided herein;
WHEREAS, the Managing Member, the sole Non-Managing Member and the Company believe it is desirable and in the best interest of the Company to amend and restate this Agreement as set forth herein; and
NOW, THEREFORE, for good and valuable consideration the receipt and adequacy of which is hereby acknowledged, the Managing Member and the sole Non-Managing Member, hereby amend and restate this Agreement in its entirety as follows:
TABLE OF CONTENTS
Page
Article I DEFINED TERMS1
Article II ORGANIZATIONAL MATTERS14
Section 2.1Organization and Continuation; Application of Act14
Section 2.2Name14
Section 2.3Registered Office and Agent; Principal Office15
Section 2.4Term15
Article III PURPOSE15
Section 3.1Purpose and Business15
Section 3.2Powers15
Section 3.3Certain ERISA Matters15
Article IV CAPITAL CONTRIBUTIONS; ISSUANCE OF UNITS; CAPITAL ACCOUNTS16
Section 4.1Capital Contributions of the Members16
Section 4.2Issuances of Additional Membership Interests17
Section 4.3No Preemptive Rights22
Section 4.4Capital Accounts of the Members22
Article V DISTRIBUTIONS25
Section 5.1Requirement and Characterization of Distributions25
Section 5.2Amounts Withheld25
Section 5.3Distributions Upon Liquidation25
Article VI ALLOCATIONS26
Section 6.1Allocations for Capital Account Purposes Other than the Taxable Year of Liquidation26
Section 6.2Allocations for Capital Account Purposes in the Taxable Year of Liquidation27
Section 6.3Regulatory Allocation Rules27
Section 6.4Allocations for Tax Purposes28
Article VII MANAGEMENT AND OPERATION OF BUSINESS29
Section 7.1Management29
Section 7.2Certificate of Formation33
Section 7.3Restrictions on Managing Member’s Authority33
Section 7.4Responsibility for Expenses34
Section 7.5Outside Activities of the Managing Member35
Section 7.6Contracts with Affiliates35
Section 7.7Indemnification36
Section 7.8Liability of the Managing Member39
Section 7.9Other Matters Concerning the Managing Member40
Section 7.10Title to Company Assets40
Section 7.11Reliance by Third Parties41
Article VIII RIGHTS AND OBLIGATIONS OF NONMANAGING MEMBERS41
Section 8.1Limitation of Liability41
Section 8.2Management of Business41
Section 8.3Outside Activities of NonManaging Members42
Section 8.4Return of Capital and Priority Among Members42
Section 8.5Rights of NonManaging Members Relating to the Company42
Article IX BOOKS, RECORDS, ACCOUNTING AND REPORTS44
Section 9.1Records and Accounting44
Section 9.2Fiscal Year44
Section 9.3Reports44
Article X TAX MATTERS44
Section 10.1Preparation of Tax Returns44
Section 10.2Tax Elections45
Section 10.3Tax Matters Member45
Section 10.4Organizational Expenses47
Section 10.5Withholding47
Article XI TRANSFERS AND WITHDRAWALS48
Section 11.1Transfer48
Section 11.2Transfer of Managing Member’s Membership Interest.48
Section 11.3NonManaging Members’ Rights to Transfer49
Section 11.4Substituted NonManaging Members51
Section 11.5Assignees51
Section 11.6General Provisions52
Article XII ADMISSION OF MEMBERS53
Section 12.1Admission of Successor Managing Member53
Section 12.2Admission of Additional NonManaging Members53
Section 12.3Amendment of Agreement and Certificate53
Article XIII DISSOLUTION AND LIQUIDATION53
Section 13.1Dissolution53
Section 13.2Winding Up54
Section 13.3Capital Contribution Obligation55
Section 13.4Compliance with Timing Requirements of Regulations; Allowance for Contingent or Unforeseen Liabilities or Obligations56
Section 13.5Other Events56
Section 13.6Rights of NonManaging Members56
Section 13.7Notice of Dissolution57
Section 13.8Cancellation of Certificate57
Section 13.9Reasonable Time for WindingUp57
Article XIV AMENDMENT OF AGREEMENT; MEETINGS57
Section 14.1Amendments57
Section 14.2Meetings of the Members59
Article XV GENERAL PROVISIONS59
Section 15.1Addresses and Notice59
Section 15.2Titles and Captions60
Section 15.3Pronouns and Plurals60
Section 15.4Further Action60
Section 15.5Binding Effect60
Section 15.6Waiver of Partition60
Section 15.7Entire Agreement60
Section 15.8Securities Law Provisions60
Section 15.9Remedies Not Exclusive60
Section 15.10Time60
Section 15.11Creditors60
Section 15.12Waiver61
Section 15.13Execution Counterparts61
Section 15.14Applicable Law61
Section 15.15Invalidity of Provisions61
Section 15.16No Rights as Stockholders61
Article XVI POWER OF ATTORNEY61
Section 16.1Power of Attorney61
Article XVII SERIES E PREFERRED UNITS62
Section 17.1Designation and Number62
Section 17.2Distributions62
Section 17.3Liquidation Proceeds.64
Section 17.4Redemption64
Section 17.5Conversion65
Section 17.6Ranking66
Section 17.7Voting Rights66
Section 17.8Transfer Restriction66
Section 17.9No Sinking Fund66
Article XVIII SERIES F PREFERRED UNITS66
Section 18.1Designation and Number66
Section 18.2Distributions66
Section 18.3Liquidation Proceeds67
Section 18.4Redemption68
Section 18.5Conversion69
Section 18.6Ranking69
Section 18.7Voting Rights70
Section 18.8Transfer Restriction70
Section 18.9No Sinking Fund70
Article XIX series G preferred units70
Section 19.1Designation and Number70
Section 19.2Distributions70
Section 19.3Liquidation Proceeds71
Section 19.4Redemption72
Section 19.5Ranking73
Section 19.6Voting Rights73
Section 19.7Transfer Restriction73
Section 19.8No Sinking Fund73
EXHIBIT AMEMBERS, CONTRIBUTIONS AND MEMBERSHIP INTERESTS
The following definitions shall be for all purposes, unless otherwise clearly indicated to the contrary, applied to the terms used in this Agreement.
of the Company at any time and from time to time and shall notify the Non-Managing Members of such change in the next regular communication to the Non-Managing Members.
assets of the Company so that each of the Managing Member and the Company will qualify as a “real estate operating company” (as such term is defined in the Plan Asset Regulation).
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON BENEFICIAL AND CONSTRUCTIVE OWNERSHIP AND TRANSFER FOR THE PURPOSE, AMONG OTHERS, OF THE CORPORATION’S MAINTENANCE OF ITS STATUS AS A REAL ESTATE INVESTMENT TRUST UNDER THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”). SUBJECT TO CERTAIN FURTHER RESTRICTIONS AND EXCEPT AS EXPRESSLY PROVIDED IN THE CORPORATION’S CHARTER, (I) NO INDIVIDUAL MAY BENEFICIALLY OR CONSTRUCTIVELY OWN SHARES OF THE CORPORATION’S COMMON STOCK IN
EXCESS OF 9.8 PERCENT (IN VALUE OR NUMBER OF SHARES) OF THE OUTSTANDING SHARES OF COMMON STOCK OF THE CORPORATION UNLESS SUCH INDIVIDUAL IS AN EXCEPTED HOLDER (IN WHICH CASE THE EXCEPTED HOLDER LIMIT SHALL BE APPLICABLE); (II) NO INDIVIDUAL MAY BENEFICIALLY OR CONSTRUCTIVELY OWN SHARES OF CAPITAL STOCK OF THE CORPORATION IN EXCESS OF 9.8 PERCENT OF THE VALUE OF THE TOTAL OUTSTANDING SHARES OF CAPITAL STOCK OF THE CORPORATION, UNLESS SUCH INDIVIDUAL IS AN EXCEPTED HOLDER (IN WHICH CASE THE EXCEPTED HOLDER LIMIT SHALL BE APPLICABLE); (III) NO PERSON MAY BENEFICIALLY OR CONSTRUCTIVELY OWN CAPITAL STOCK THAT WOULD RESULT IN THE CORPORATION BEING “CLOSELY HELD” UNDER SECTION 856(h) OF THE CODE OR OTHERWISE CAUSE THE CORPORATION TO FAIL TO QUALIFY AS A REIT; AND (IV) NO PERSON MAY TRANSFER SHARES OF CAPITAL STOCK IF SUCH TRANSFER WOULD RESULT IN THE CAPITAL STOCK OF THE CORPORATION BEING OWNED BY FEWER THAN 100 PERSONS. ANY PERSON WHO BENEFICIALLY OR CONSTRUCTIVELY OWNS OR ATTEMPTS TO BENEFICIALLY OR CONSTRUCTIVELY OWN SHARES OF CAPITAL STOCK WHICH CAUSES OR WILL CAUSE A PERSON TO BENEFICIALLY OR CONSTRUCTIVELY OWN SHARES OF CAPITAL STOCK IN EXCESS OR IN VIOLATION OF THE ABOVE LIMITATIONS MUST IMMEDIATELY NOTIFY THE CORPORATION. IF ANY OF THE RESTRICTIONS ON TRANSFER OR OWNERSHIP ARE VIOLATED, THE SHARES OF CAPITAL STOCK REPRESENTED HEREBY WILL BE AUTOMATICALLY TRANSFERRED TO A TRUSTEE OF A TRUST FOR THE BENEFIT OF ONE OR MORE CHARITABLE BENEFICIARIES. IN ADDITION, THE CORPORATION MAY REDEEM SHARES UPON THE TERMS AND CONDITIONS SPECIFIED BY THE BOARD OF DIRECTORS IN ITS SOLE DISCRETION IF THE BOARD OF DIRECTORS DETERMINES THAT OWNERSHIP OR A TRANSFER OR OTHER EVENT MAY VIOLATE THE RESTRICTIONS DESCRIBED ABOVE. FURTHERMORE, UPON THE OCCURRENCE OF CERTAIN EVENTS, ATTEMPTED TRANSFERS IN VIOLATION OF THE RESTRICTIONS DESCRIBED ABOVE MAY BE VOID AB INITIO. ALL CAPITALIZED TERMS IN THIS LEGEND HAVE THE MEANINGS DEFINED IN THE CHARTER OF THE CORPORATION, AS THE SAME MAY BE AMENDED FROM TIME TO TIME, A COPY OF WHICH, INCLUDING THE RESTRICTIONS ON TRANSFER AND OWNERSHIP, WILL BE FURNISHED TO EACH HOLDER OF CAPITAL STOCK OF THE CORPORATION ON REQUEST AND WITHOUT CHARGE. REQUESTS FOR SUCH A COPY MAY BE DIRECTED TO THE SECRETARY OF THE CORPORATION AT ITS PRINCIPAL OFFICE.
FIRST, pro rata to the Members holding Series E Preferred Units, Members holding Series F Preferred Units and Members holding Series G Preferred Units to the extent of, and in proportion to, losses allocated to such Members under Section 6.1(b);
SECOND, pro rata to the Members holding Series E Preferred Units, Members holding Series F Preferred Units, Members holdings Series G Preferred Units and holders of Common Units who received such Common Units upon a conversion of Series E Preferred Units or Series F Preferred Units up to and in proportion to the accumulated amount of the accrued Series E Priority Return, Series F Priority Return and Series G Priority Return (irrespective of whether such accrued amounts are actually paid) with respect to such Member;
THIRD, to the Members holding Common Units in accordance with their Membership Interests.
FIRST, to the Members holding Common Units pro rata among such Common Units until such Members’ Capital Accounts shall equal zero;
SECOND, to the Members holding Series E Preferred Units, Series F Preferred Units and Series G Preferred Units pro rata among such Series E Preferred Units, Series F Preferred Units and Series G Preferred Units until such Members’ Capital Accounts shall equal zero; and
THIRD, to the Members holding Common Units in accordance with their Percentage Interests.
or any portion thereof. Title to any or all of the Company assets may be held in the name of the Company, the Managing Member or one or more nominees, as the Managing Member may determine, including Affiliates of the Managing Member. The Managing Member hereby covenants, declares and warrants that any Company assets as to which legal title is held in the name of the Managing Member or any nominee or Affiliate of the Managing Member shall be held by the Managing Member or such nominee or Affiliate for the exclusive use and benefit of the Company in accordance with the provisions of this Agreement; provided, however, that the Managing Member shall use its best efforts to cause beneficial and record title to such assets to be vested in the Company as soon as reasonably practicable. All Company assets shall be recorded as the property of the Company in its books and records, irrespective of the name in which legal title to such Company assets is held.
shall not affect, impair or eliminate the limitations on the liability of the Non-Managing Members or Assignees under this Agreement.
reasonable efforts to furnish the tax information reasonably required by the Managing Member and the Non-Managing Members for Federal and state income tax reporting purposes within 60 days after the close of such taxable year. Each Non-Managing Member shall promptly provide the Managing Member with any information reasonably requested by the Managing Member relating to any Contributed Property contributed (directly or indirectly) by such Non-Managing Member to the Company.
The taking of any action and the incurring of any expense by the tax matters Member in connection with any such proceeding, except to the extent required by law, is a matter in the sole and absolute discretion of the tax matters Member, and the provisions relating to indemnification of the Managing Member set forth in Section 7.7 of this Agreement shall be fully applicable to the tax matters Member in its capacity as such.
shall bear interest at the base rate on corporate loans at large United States money center commercial banks, as published from time to time in the Wall Street Journal, plus four percentage points (but not higher than the maximum lawful rate) from the date such amount is due (i.e., 15 days after demand) until such amount is paid in full. Each Non-Managing Member shall take such actions as the Company or the Managing Member shall request in order to perfect or enforce the security interest created hereunder.
Any transfer or purported transfer of a Membership Interest not made in accordance with this Article XI shall be null and void.
Any Member seeking to transfer or assign Membership Units pursuant to any of the foregoing disregarded transfers shall, prior to such transfer or assignment, deliver to the Company a
certificate of a duly authorized officer of such Member setting forth the facts relating to such transfer or assignment and the basis for disregarding such transfer for these purposes. The Company shall, in the sole and absolute discretion of the Managing Member, determine whether to permit such transfer or assignment; provided, that any transfer that complies with any exception in Section 11.3(d)(1) through (d)(8) shall be permitted. Any attempted transfer or assignment in contravention of the provisions of this Section 11.3(d) or that is not permitted by the Managing Member pursuant to the preceding sentence shall be null and void ab initio, the purported transferor shall continue to be the Member for all purposes and the purported transferee shall not become a Member as a result of such purported transfer, and the Company shall in no event admit such purported transferee as a Member or otherwise recognize any rights of such purported transferee (including, without limitation, any right to receive distributions (directly or indirectly) or to acquire any interest in the capital or profits of the Company). Any Member seeking to transfer or assign Membership Units may request confirmation from the Company that such transfer or assignment is permissible under Section 11.3(a) or the first sentence of this Section 11.3(d).
Members for a vote (such Membership Units being deemed to have been voted on such matter in the same proportion as all Membership Units held by Non-Managing Members are voted). In the event any such transferee desires to make a further assignment of any such Membership Units, such transferee shall be subject to all the provisions of this Article XI to the same extent and in the same manner as any Non-Managing Member desiring to make an assignment of Membership Units.
The Managing Member shall not receive any additional compensation for any services performed pursuant to this Article XIII other than reimbursement of its expenses as provided for in Section 7.4.
taxable years, including the year during which such liquidation occurs), such Member shall have no obligation to make any contribution to the capital of the Company with respect to such deficit, and such deficit at any time shall not be considered a debt owed to the Company or to any other Person for any purpose whatsoever, except to the extent otherwise expressly agreed to by such Member and the Company.
The Managing Member will provide notice to the Non-Managing Members when any action under this Section 14.1(b) is taken.
principal place of business set forth above. Unless delivered personally or by telefax, telex or other wire transmission as above (which shall be effective on the date of such delivery or transmission), any notice shall be deemed to have been made three (3) days following the date so mailed. Any party hereto may designate a different address to which notices and demands shall thereafter be directed by written notice given in the same manner and directed to the Company at its office hereinabove set forth.
Nothing contained herein shall be construed as authorizing the Managing Member to amend this Agreement except in accordance with Article XIV hereof or as may be otherwise expressly provided for in this Agreement.
[Signature Page Follows]
IN WITNESS WHEREOF, the parties hereto have executed this Sixth Amended and Restated Limited Liability Company Agreement of Sunstone Hotel Partnership, LLC as of the date first written above.
Managing Member:
Sunstone Hotel Investors, Inc.
By:/s/ Bryan A. Giglia
Name:Bryan A. Giglia
Title:CFO
Non-Managing Member:
Sun SHP II, LLC
By:/s/ Bryan A. Giglia
Name: Bryan A. Giglia
Title: CFO
EXHIBIT A
MEMBERS, CONTRIBUTIONS AND
MEMBERSHIP INTERESTS
Name and Address of Member | Cash Contribution(1) | Agreed Value of Contributed Property | Membership Units(1) | Percentage Interest |
Managing Member:Sunstone Hotel Investors, Inc. 200 Spectrum Drive, 21st Floor Irvine, California 92618 | $1,978,826,682(2) | $494,759,294 | 212,278,669 | 98.90% |
Non-Managing Members: Sun SHP II, LLC 200 Spectrum Drive, 21st Floor Irvine, California 92618 | 18,061,841 | N/A | 2,358,649(3) | 1.10% |
Total | $1,996,888,523 | $494,759,294 | 214,637,318 | 100% |
(1) | The Managing Member holds 4,600,000 Series E Preferred Units and has made a cash contribution of the net proceeds from the issue and sale of the corresponding Series E Preferred Shares. The net proceeds from the issuance and sale of the Series E Preferred Shares were approximately $110,984,000. The Managing Member also holds 3,000,000 Series F Preferred Units and has made a cash contribution of the net proceeds from the issue and sale of the corresponding Series F Preferred Shares. The net proceeds from the issuance and sale of the Series F Preferred Shares were approximately $72,387,500. The Managing Member also holds 2,650,000 Series G Preferred Units and has made a cash contribution of the net proceeds from the issue and sale of the corresponding Series G Preferred Shares. The net proceeds from the issuance and sale of the Series G Preferred Shares were approximately $66,250,000. |
(2) | Reflects gross proceeds of Common Shares issued and sold by the Managing Member and is net of amounts used to redeem Membership Units from Non-Managing Members |
(3) | Includes Membership Units of 51,570 issued for $1,204,160 and 515,704 Membership Units contributed by the Managing Member |
EXHIBITS B AND C
Exhibits B and C have not been amended in connection with this Sixth Amended and Restated Limited Liability Company Agreement and are hereby incorporated by reference from the Third Amended and Restated Agreement.