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By-Laws – Article IV
Directors
Section 1. Powers and Responsibilities. The property and affairs of the Association shall be managed and directed by the Board, which may exercise all powers of the Association and do all acts and things not prohibited by law, the Articles of Incorporation or these By-laws.
Section 2. Number and Term. The Board shall consist of 15 voting directors (the “Directors”). Each Director shall serve a term of two years. Membership on the Board shall be staggered so that 7 of the Directors shall be elected at a Board meeting following each annual Regular Member meeting held in an odd-numbered year and 8 of the Directors shall be elected at a Board meeting following each annual Regular Member meeting held in an even-numbered year. Those members of the Board elected as officers shall automatically have their terms extended to accommodate the term of the office to which they were elected.
Section 3. Eligibility of Directors. The following individuals are eligible to serve as Directors: (i) an Owner or Franchisee of a Regular Member (or, if they are entities, a partner or principal officer of an Owner or Franchisee) or (ii) a principal officer of a company that manages a Regular Member. However, Directors may not be directly or indirectly employed by or under the control of Starwood or its affiliates. If a Director ceases to be affiliated with a Regular Member (e.g., due to a job change or change of management company) or if the Regular Member with whom they are affiliated fails to maintain their membership, the Director may remain on the Board for a period of up to three months. If the Director does not meet the initial eligibility requirements (e.g., obtain a new position with another Regular Member) by the end of the three months, the Director’s position will be considered vacant. Memberships on the Board shall be individual to the persons elected thereto and no Director shall have any power of substitution for himself/herself, or of delegation of his/her authority, with respect to membership on the Board. Directors shall serve until the expiration of term and the due election of their successors, unless they resign, die, become incapacitated, or are otherwise removed from office.
Section 4. Nominations and Elections.
(a) Nominations. The Executive Committee (as defined in Article V) is responsible for submitting to the Board a list of nominees for vacant Board positions. The Executive Committee will investigate and seek out eligible candidates. Each Board member and each Regular Member may submit qualified candidates to the Executive Committee for consideration at any time during the fiscal year. The Executive Committee will determine who, in the Executive Committee’s best judgment, will best serve the Association and will select a single nominee for each vacant position. Nominees may include current Board members seeking reelection. The Executive Committee may, in its sole discretion, reject any candidate who represents a Regular Member that is not at that time in good standing with Starwood for any reason whatsoever. The Executive Committee will secure each nominee’s consent to serve for the various offices if nominated. The Executive Committee will submit to the Board one qualified candidate for each vacant position with the recommendation that the candidates be elected to the Board in accordance with the terms and conditions set forth in these By-laws.
(b) Elections. The Board shall conduct a separate vote for each candidate nominated by the Executive Committee. If a majority of the Board votes in favor of a candidate, the candidate shall become a Director. If a majority of the Board fails to elect a certain candidate, the Executive Committee shall solicit by mail or email additional nominations from the Regular Members for the vacant position. Any Regular Member in good standing may submit nominations to the Executive Committee within 10 days of receiving the solicitation. The Executive Committee will review the proposed nominees and present to the Board a single candidate for each vacant position. If the Board fails to elect the new candidate, the Executive Committee may present alternative nominees to the Board until the majority of the Board votes in favor of a particular candidate.
Section 5. Removal. Any Director may be removed for any reason, with or without cause, by a three-fourths (3/4) vote of the Regular Members at any special meeting, or by a three-fourths (3/4) vote of all the Directors at any meeting of the Board.
Section 6. Attendance Requirement. Notwithstanding the foregoing, if a Director is absent from either (i) two regular Board meetings (other than special meetings) during a single fiscal year or (ii) the majority of special Board meetings or conference calls during a single fiscal year, their office may thereupon be declared vacant by a vote of a majority of the Board.
Section 7. Resignation of Director. Any Director may at any time resign as a Director by giving written notice of resignation to the Secretary of the Association. Such resignation shall take effect at the time specified therein or, if no time is specified, at the time of receipt thereof. No action by the Board shall be necessary to cause a resignation to be effective.
Section 8. Selection of Replacement Director. Any vacancy on the Board for an unexpired term shall be filled by an appointment selected by a majority vote of the Executive Committee that is subsequently approved by a majority of the Board.
Section 9. Board Meetings. Regular meetings of the Board shall be held in person at least four times each year at the time and place agreed to by the majority of the Executive Committee and guided by budget and time constraints. Regular meetings of the Board may not be held by web cast or teleconference. Special meetings of the Board may be called by the President, either on his or her own request or upon petition or vote by a majority of the Executive Committee or a majority of the Directors then in office. Special meetings may be held via web cast, via dial-in teleconference, or in person at a time and place agreed to by the majority of the Executive Committee. Only business related to the purposes set forth in the notice of the meeting may be transacted at a special meeting. The President or his/her designee must be present at all Board meetings.
Section 10. Notice of Board Meetings. Written notice of the time and place of both regular and special meetings shall be given to each Director either by personal delivery, by mail, by e-mail or by facsimile transmission at least three days before the meeting. Such notice shall be deemed to have been duly served or given three days after being deposited, first class postage prepaid, in the United States mail, or upon receipt if delivered personally or sent via facsimile transmission or by e-mail. Such notice shall state a reasonable time, date and place of meeting, but the purpose need not be stated therein unless the notice is for a special Board meeting. Notice need not be given to any Director who signs a waiver of notice either before or after the meeting. Attendance of a Director at a meeting shall constitute a waiver of notice of such meeting and waiver of all objections to the place and time of the meeting, or the manner in which it has been called or convened, except when the Director states, at the beginning of the meeting, any such objection or objections to the transaction of business. Notwithstanding the foregoing, notice shall be given to any Director from Canada solely by facsimile transmission or by e-mail, in either case if he/she so requests in writing.
Section 11. Quorum. At all meetings of the Board, a majority of the Directors in office at that time shall constitute a quorum for the transaction of business at any meeting of the Board. The vote of a majority of the Directors present and voting shall constitute the action of the Board if there is a quorum present. In the absence of a quorum, a majority of the Directors present may (i) adjourn any meeting from time to time until a quorum is present or (ii) accept a Director phoning in to the meeting to cast a vote, provided that the number of Directors phoning in to the meeting are sufficient to achieve a quorum.
Section 12. Attendance by Teleconference. Unless the Articles of Incorporation or these By-laws otherwise provide, individual Directors or any committee designated by the Board may participate in a meeting of the Board or committee by means of conference telephone or similar communications equipment whereby all persons participating in the meeting can simultaneously hear each other. Participation in the meeting shall constitute presence in person.
Section 13. Consent of Directors. Any action required or permitted to be taken at any meeting of the Board or any committee, as the case may be, may be taken without a meeting if all members thereof consent to such action in writing, setting forth the action so taken, and the writing or writings are filed with the minutes of the proceedings of the Board or the committee, as the case may be. Such consent shall have the same force and effect as a unanimous vote of the Board or of the committee, as the case may be.
Section 14. Compensation of Directors. Except as otherwise expressly authorized by the Board, all Directors shall serve without compensation for their services as Directors, but may be reimbursed for their out-of-pocket expenses incurred in carrying out the business and affairs of the Association. The Board is authorized to pay, as determined by the Board in its sole discretion, a reasonable salary and other amounts to any person who serves as President and Chief Executive Officer or Executive Director or as an administrator for the Association, even if a Director, for services rendered to the Association.
Section 15. Honorary Executive Directors. The Board may elect two former Board members to serve as “Honorary Executive Directors.” Honorary Executive Directors may attend and participate in all Board meetings. However, Honorary Executive Directors shall not have the right to vote in any Board matter or be included in the determination of whether a quorum of the Board is present. Honorary Executive Directors shall serve one-year terms, but may be reelected for an unlimited number of terms. The other rights and privileges of any Honorary Executive Director shall be determined by the Board in its sole discretion, and may be revoked or modified at any time by the Board.
Section 16. Honorary Directors. The Board may invite Honorary Directors to attend certain portions of the Board’s four regular meetings held throughout the year. Honorary Directors will join the meetings at a time that the subject matter as determined by the Board and the meeting agenda relates to business matters associated with their membership or to which their expert contribution is considered pertinent to the Board. Honorary Directors shall not have the right to vote in any Board matter or be included in the determination of whether a quorum of the Board is present. The other rights and privileges of any Honorary Director shall be determined by the Board in its sole discretion, and may be revoked or modified at any time by the Board.
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