SECOND AMENDMENT TO MEMBERSHIP INTEREST PURCHASE AGREEMENT
Exhibit 10.4
SECOND AMENDMENT TO MEMBERSHIP INTEREST PURCHASE AGREEMENT
This SECOND AMENDMENT TO MEMBERSHIP INTEREST PURCHASE AGREEMENT (the “Amendment”) is made and
entered into as of the 15th day of November, 2010, by and among PLATINUM OWNERCO, LLC, a Delaware
limited liability company (“Platinum OwnerCo”), PLATINUM LEASECO, LLC, a Delaware limited liability
company (“Platinum LeaseCo”), SOUTH 17TH STREET INTERMEZZCO, LLC, a Delaware limited liability
company (“MezzCo” and together with Platinum LeaseCo and Platinum OwnerCo, individually a “Seller
Party” and collectively, the “Seller Parties”), SPARTANS OWNER LLC, a Delaware limited liability
company (“Spartans Owner”), and SPARTANS LESSEE LLC, a Delaware limited liability company
(“Spartans Lessee” and together with Spartans Owner, individually a “Purchaser Party” and
collectively, the “Purchaser Parties”). The Seller Parties and the Purchaser Parties are
collectively referred to herein as the “Parties”.
WHEREAS, the Parties entered into a certain Membership Interest Purchase Agreement dated on
October 13, 2010, as amended by the certain First Amendment to Membership Interest Purchase
Agreement dated November 12, 2010 (the “Purchase Agreement”), concerning the purchase and sale of
the membership interests in South 17th Street OwnerCo Mezzanine, LLC, a Delaware limited liability
company, and South 17th Street LeaseCo Mezzanine, LLC, a Delaware limited liability company
(defined therein as the Target Interests); and
WHEREAS, the Parties desire to amend the Purchase Agreement as set forth herein.
NOW, THEREFORE, in consideration of good and valuable consideration, the receipt of which is
hereby acknowledged, and intending to be legally bound hereby the Parties agree to amend the
Purchase Agreement as follows:
1. Definitions. All initial capitalized terms used, but not defined, in this
Amendment shall have the meanings set forth in the Purchase Agreement.
2. Amendment to Section 1. The Parties hereby agree that the following definitions
are added to Section 1 of the Purchase Agreement in alphabetical order:
“Debt” has the meaning given in the Mortgage Loan Agreement.
“Debt Assumption” has the meaning set forth in Section 2(h) hereof.
“Guarantor” has the meaning given in the Mortgage Loan Agreement.
“Guaranty” has the meaning given in the Mortgage Loan Agreement.
“Mortgage Lender” means the Lender, as defined in the Mortgage Loan Agreement.
“Mortgage Loan Documents” means the Loan Documents, as defined in the Loan Agreement.
“Mortgage Loan Transfer Fees” has the meaning set forth in Section 5(c) hereof.
Furthermore, the Parties hereby agree that clause (i) of the definition of Purchaser Parties
Liabilities is hereby deleted and replaced with the following:
“(i) with respect to the Target Interests, Target Parties, OwnerCo LLC, LeaseCo LLC, the
Property or the Hotel to the extent first arising or accruing on or after the Closing Date
including, without limitation, (A) Liabilities to the extent accruing on or after the
Closing Date under the Tenant Leases, the Management Agreement (including obligations in
respect of Employees thereunder), the Contracts, the Permitted Exceptions, the Licenses and
Permits, the third-party license agreements for the IT Systems, the Bookings, and, in the
event of the consummation of the Debt Assumption as part of the consummation of the
transactions contemplated hereby, the Mortgage Loan and Mortgage Loan Documents, and (B)
Liabilities resulting from any Third-Party Claim based on events or circumstances to the
extent first arising or accruing on or after the Closing Date;”
Furthermore, the Parties hereby agree that clause (i) of the definition of Seller Parties
Liabilities is hereby deleted and replaced with the following:
“(i) with respect to the Target Interests, Target Parties, OwnerCo LLC, LeaseCo LLC, the
Property or the Hotel to the extent first arising or accruing prior to the Closing Date,
including, without limitation, (A) Liabilities to the extent accruing prior to the Closing
Date under the Tenant Leases, the Management Agreement (including obligations in respect of
Employees thereunder), the Contracts, the Permitted Exceptions, the Licenses and Permits,
the third-party license agreements for the IT Systems, the Bookings, and, in the event that
the Purchaser Parties do not timely make an election for the Debt Assumption (as provided in
Section 2(h)) or the Debt Assumption is not otherwise consummated as part of the
consummation of the transactions contemplated hereby, the Mortgage Loan, and (B) Liabilities
resulting from any Third-Party Claim based on events or circumstances to the extent first
arising or accruing prior to the Closing Date;”
3. Amendment to Section 2(c). The Parties hereby agree that the first clause (prior
to the colon) of the first sentence of Section 2(c) of the Purchase Agreement is hereby deleted and
replaced with the following:
“Subject to adjustment as expressly provided herein, the Purchaser Parties shall pay
Eighty-Eight Million Four Hundred Eight-Six Thousand Two Hundred Forty and 00/100 Dollars
($88,486,240.00) as the purchase price for the Target Interests (the “Purchase Price”) to
the Seller Parties as follows:”
Furthermore, the Parties hereby agree that Section 2(c)(iii) of the Purchase Agreement is
hereby deleted and replaced with the following:
“At the Closing, the Deposit shall be released to the Seller Parties and the Purchaser
Parties shall deliver the balance of the Purchase Price in immediately available funds;
provided, however, in the event of the consummation of the Debt Assumption
as part of
the consummation of the transactions contemplated hereby, the Purchaser Parties shall
receive a credit to the Purchase Price for the amount of the Debt outstanding as of the
Closing Date (but excluding any Mortgage Loan Transfer Fees), and the Purchaser Parties
shall deliver the balance of the Purchase Price in immediately available funds.”
4. Addition of Section 2(h). The Parties hereby agree that Section 2(h) is added to
the Purchase Agreement as follows:
Debt Assumption and Release. The Purchaser Parties shall have the right to
elect, by providing the Seller Parties with written notice of such election no later than
three (3) Business Days prior to the date set for Closing, to retain the Debt in place and
not to require its payoff and discharge as of Closing (the “Debt Assumption”) (the failure
to make such election timely being deemed an election to not pursue such Debt Assumption),
provided that, at or prior to Closing, (i) the Purchaser Parties shall have received and
delivered to the Seller Parties all required approvals of the Mortgage Lender and/or any
other Person under and/or contemplated by the Mortgage Loan in conjunction with such Debt
Assumption, (ii) the Purchaser Parties shall cause each Guarantor under each Guaranty to be
fully released and all other Mortgage Loan Documents amended so as to release each Guarantor
of all Liabilities under the Mortgage Loan Documents, all in form and substance acceptable
to the Seller Parties and each Guarantor in their respective reasonable discretion, and
(iii) the Purchaser Parties shall (A) cause the Mortgage Lender to provide an estoppel
certificate to the Seller Parties setting forth the matters described in Section 5.1.15 of
the Mortgage Loan Agreement, and (B) use commercially reasonable efforts to cause the
Mortgage Lender to additionally state in such estoppel certificate that it has no
outstanding claims against, and that there are no outstanding defaults by, any of the Target
Parties, OwnerCo LLC or LeaseCo LLC under the Mortgage Loan Documents as of the Closing
Date, all in form and substance acceptable to the Seller Parties in their reasonable
discretion. If the Purchaser Parties timely elect to pursue the Debt Assumption, then (y)
the date set for Closing shall be December 1, 2010 (instead of November 22, 2010), and (z)
the Purchaser Parties shall have the additional option to extend the date set for Closing to
December 15, 2010, upon prior written notice thereof delivered by the Purchaser Parties to
the Seller Parties on or before December 1, 2010, and the deposit by the Purchaser Parties
with the Escrow Agent on or before December 1, 2010, of an additional amount of SIX MILLION
and 00/100 DOLLARS ($6,000,000.00), which shall be added to and become a part of the
“Deposit” hereunder. If the Purchaser Parties timely elect to pursue the Debt Assumption,
then the Purchaser Parties shall use commercially reasonable efforts to cause the
satisfaction of the foregoing conditions for Debt Assumption and the Seller Parties shall
use commercially reasonable efforts in cooperating with the Purchaser Parties in connection
therewith; provided, however, the Parties agree that in no event shall the
foregoing conditions for Debt Assumption be a Purchaser Parties Closing Condition. For
the avoidance of doubt, in the event that any condition for the Debt Assumption shall fail
to have been satisfied for any reason at or prior to the date set for Closing (as extended
and as may have been further extended pursuant hereto), then the Purchaser Parties shall
nevertheless proceed with the consummation of the transaction contemplated hereby without
such Debt Assumption, subject to the terms hereof. If the Purchaser Parties timely elect to
pursue the Debt
Assumption, and any condition for the Debt Assumption shall fail to have been satisfied for
any reason at or prior to the date set for Closing (as extended and as may have been further
extended pursuant hereto), then the Seller Parties shall have the right, from time to time
and in each instance upon written notice thereof to the Purchaser Parties, to extend the
date set for Closing (as extended and as may have been further extended pursuant hereto) by
any number of days, not in excess of three (3) Business Days as the Seller Parties deem
necessary (in their sole and absolute discretion) to prepare for the consummation of the
transactions contemplated hereby without such Debt Assumption.
5. Addition of Section 4(c)(i). The Parties hereby agree that the first two
sentences of Section 4(c)(i) are hereby deleted and replaced by the following:
Unpermitted Exceptions. If the Purchaser Parties object to any (1) liens,
encumbrances or other exceptions to title (the “Title Exceptions”) disclosed in the Title
Commitment, or (2) encroachments by improvements on adjoining properties onto or over the
Land, any encroachments of the Improvements onto or over adjoining properties, setback lines
or easements (to the extent in violation thereof) or other survey defects (the “Survey
Defects”) disclosed in the Existing Survey or Updated Survey (if any), the Purchaser Parties
shall confer with the Title Company and the Seller Parties to attempt to agree on which
shall constitute “unpermitted exceptions” to title to the Real Property (the “Unpermitted
Exceptions”) prior to the expiration of the Due Diligence Period; provided,
however, that (A) the Management Agreement, (B) all liens and encumbrances caused or
created by any Purchaser Parties Indemnitee, and (C) in the event that the Debt Assumption
is consummated as part of the consummation of the transactions contemplated hereby, the
mortgage and related lien and recorded security documents securing the Mortgage Loan, shall
in no event constitute Unpermitted Exceptions. Notwithstanding the foregoing, the Seller
Parties agree that the following shall constitute Unpermitted Exceptions: (I) if the
Purchaser Parties do not timely make an election for the Debt Assumption (as provided in
Section 2(h)) or the Debt Assumption is not otherwise consummated as part of the
consummation of the transactions contemplated hereby, the Mortgage Loan, (II) any other
mortgages, deeds of trust or other security interests for any financing (other than the
Mortgage Loan) incurred by any Target Party, OwnerCo LLC or Operating Tenant prior to
Closing (unless the Purchaser Parties are entitled to a credit therefor pursuant to this
Agreement), (III) Taxes which constitute Title Exceptions which would be delinquent if
unpaid at Closing; provided, however, that if any such Taxes are payable in
installments, such obligation shall apply only to the extent such installments would be
delinquent if unpaid at Closing, and (IV) any other Title Exceptions objected to by the
Purchaser Parties which may be removed in accordance with its terms by payment of a
liquidated amount which in the aggregate do not exceed One Hundred Thousand and 00/100
Dollars ($100,000.00) (the items set forth in (I), (II), (III) and (IV) above being referred
to herein as “Automatic Unpermitted Exceptions”).
6. Amendment to Section 5(c). The Parties hereby agree that clause (8) of the second
sentence of Section 5(c) of the Purchase Agreement is hereby deleted and replaced with the
following:
“(8) any mortgage tax, title insurance fees and expenses for any loan title insurance
policies, recording charges or other amounts payable in connection with any financing
obtained by the Purchaser Parties, and any transfer, assumption or other fees and expenses
charged by the Mortgage Lender or any other Person, including the lender’s attorney’s fees
(the “Mortgage Loan Transfer Fees”), with respect to any Debt Assumption and/or the
satisfaction of the conditions therefor; and”
7. Amendment to Section 6(b)(ii). The Parties hereby agree that Section 6(b)(ii) of
the Purchase Agreement is hereby deleted and replaced with the following:
“The Seller Parties shall have caused (or made arrangements to cause at Closing (including
the use of the Purchase Price therefor)) the prepayment of the Debt in whole;
provided, however, the Seller Parties shall not be required to cause the
prepayment of the Debt if the Debt Assumption is consummated as part of the consummation of
the transactions contemplated hereby;”
8. Addition to Section 9(a). The Parties hereby agree that Section 9(a)(xxxiv) is
added to the Purchase Agreement as follows:
“Subject to the Purchaser Parties’ timely election to pursue the Debt Assumption, (i) the
Seller Parties have delivered a true, correct and complete copy of the Mortgage Loan
Documents to the Purchaser Parties, (ii) to Seller Parties’ knowledge, there are no material
defaults, disputes, claims, rights of offset or events which, with the giving of notice or
the passage of time or both, could become material defaults under the Mortgage Loan
Documents, and (iii) neither OwnerCo LLC nor Operating Tenant has given or received any
written notice of any breach or default under the Mortgage Loan Documents which has not been
cured;”
9. Amendment to Section 12(a). The Parties hereby agree that the words “and the
Mortgage Loan Documents (subject to the Purchaser Parties’ timely election to pursue the Debt
Assumption)” are hereby inserted into clause (ii) of the first sentence of Section 12(a) of the
Purchase Agreement immediately after the words “Management Agreement” and before the words “in all
material respects.”
10. Amendment to Section 14(e). The words “, and Section 9(a)(xxxiv)” shall be added
after the word “inclusive” in Section 14(e).
11. Amendment to Section 18(c). The Parties hereby agree that the words “, and the
Purchaser Parties may assign eighty-nine percent (89%) of their right to acquire the Mezz OwnerCo
Interests to Pebblebrook Hotel, L.P., a Delaware limited partnership” are hereby inserted at the
end of the second sentence of Section 18(c) of the Purchase Agreement.
12. Seller Parties Due Diligence Satisfaction. Pursuant to Section 3(a)(i) of the
Purchase Agreement, the Purchaser Parties hereby provide notice to the Seller Parties of their
satisfaction with the result of their due diligence review of the Property and hereby waives their
right to
terminate the Purchase Agreement pursuant to the Due Diligence Contigency. The Seller Parties
hereby acknowledge receipt of the foregoing waiver.
13. No Other Amendments. Except as otherwise expressly amended by this Amendment, (i)
this Amendment shall not otherwise operate to waive, modify, release, consent to or in any manner
affect any rights or obligations of the Parties under the Purchase Agreement, and (ii) the Purchase
Agreement (as amended by this Amendment) shall remain in full force and effect.
14. Conflict. Any conflict between the terms of the Purchase Agreement and the terms
of this Amendment shall be resolved in favor of the terms of this Amendment.
15. Incorporation of Recitals and Schedules. The recitals to this Amendment are
incorporated herein by such reference and made a part of this Amendment.
16. Execution of Amendment. Any Party may deliver executed signature pages to this
Amendment by facsimile or other electronic transmission to any other Party, which facsimile or
electronic copy shall be deemed to be an original executed signature page. This Amendment may be
executed in any number of counterparts, each of which shall be deemed an original and all of which
counterparts together shall constitute one agreement with the same effect as if the Parties had
signed the same signature page.
[Remainder of page intentionally left blank;
Signatures on following pages.]
Signatures on following pages.]
In witness hereof, each party has caused this Amendment to be executed and delivered in its
name by a duly authorized officer or representative.
| SELLER PARTIES
PLATINUM OWNERCO, LLC, a Delaware limited liability company |
||||
| By: | /s/ Xxxx Xxxxxx | |||
| Name: | Xxxx Xxxxxx | |||
| PLATINUM LEASECO, LLC, a Delaware limited liability company |
||||
| By: | /s/ Xxxx Xxxxxx | |||
| Name: | Xxxx Xxxxxx | |||
| SOUTH 17TH STREET INTERMEZZCO, LLC, a Delaware limited liability company |
||||
| By: | Platinum OwnerCo, LLC, a Delaware limited liability company, its sole member | |||
| By: | /s/ Xxxx Xxxxxx | |||
| Name: | Xxxx Xxxxxx | |||
| PURCHASER PARTIES SPARTANS OWNER LLC, a Delaware limited liability company |
||||
| By: | /s/ Xxxxxx X. Xxxxxx | |||
| Name: | Xxxxxx X. Xxxxxx | |||
| SPARTANS LESSEE LLC, a Delaware limited liability company |
||||
| By: | /s/ Xxxxxx X. Xxxxxx | |||
| Name: | Xxxxxx X. Xxxxxx | |||
