FIRST AMENDMENT TO LIMITED LIABILITY COMPANY OPERATING AGREEMENT OF MYSTIC PARTNERS LEASECO, LLC
Exhibit
10.7
FIRST
AMENDMENT TO
OF
MYSTIC
PARTNERS LEASECO, LLC
This
First Amendment to Limited Liability Company Operating Agreement (this
“Amendment”)
of
MYSTIC PARTNERS LEASECO, LLC (the “Company”),
is
dated as of February 8, 2006 and entered into by and among the following:
Name
|
Current
Address
|
Mystic
Hotel Investors, LLC
(a
Delaware limited liability company)
|
Xxxx
Xxxxxx Xxx 000
000
Xxxxxxxx Xxxxxxxx
Xxxxxxxxx,
XX 00000
|
Hersha
Hospitality Limited Partnership
(a
Virginia limited partnership)
|
000
Xxxxxx Xxxxxx, 0xx
Xxxxx
Xxxxxxxxxxxx,
XX 00000
|
hereinafter
collectively, the “Members”.
W
I T
N E S S E T H:
WHEREAS,
the Company was formed pursuant to a Certificate of Formation filed with the
Delaware Secretary of State on June 24, 2005 and by execution of a Limited
Liability Company Operating Agreement on August 9, 2005 (the “LLC
Agreement”);
capitalized terms used herein but not otherwise defined shall have the meanings
set forth for such terms in the LLC Agreement; and
WHEREAS,
the Members desire to restructure the capital sharing ratios and related equity
and cost sharing mechanisms with respect to the Development Assets (the
“Equity
Restructuring”)
contained in the LLC Agreement to reflect the Equity Restructuring;
WHEREAS,
the Members hereby desire to amend the LLC Agreement as set forth herein as
follows:
1.
The
Definition of Capital Sharing Ratio is hereby amended such that TRS Class B
Member shall have a 15% interest with respect to the Hartford Marriott and
a 10%
interest with respect to the Hartford Hilton and such that Mystic Member shall
have an 85% interest with respect to the Hartford Marriott and a 90% interest
with respect to the Hartford Hilton.
2.
The
definition of Residual Sharing Ratios is hereby amended such that TRS Class
A
Member shall have 0% with respect to Hartford Hilton and 0% with respect to
the
Hartford Marriott, TRS Class B Member shall have 7% with respect to the Hartford
Hilton and 10.5% with respect to the Hartford Marriott and Mystic Class Member
shall have 93% with respect to the Hartford Hilton and 89.5% with respect to
the
Hartford Marriott.
3.
The
reference to Article 14 in Section
4.2.1(D)
shall be
amended to refer to Article 13.
4. The
definition of Distributable Funds set forth in Section
5.2.1
is
hereby deleted in its entirety and replaced with the following
text:
“Distributable
Funds”
shall
mean (a) with respect to TRS Member, the sum of (i) 100% of the Net Cash Flow
on
hand (after repayment of any outstanding Member Loans) in respect of Stabilized
Assets, plus
(ii) 10%
of the Net Cash Flow on hand (after repayment of any outstanding Member Loans)
in respect of the Hartford Hilton, plus
(iii)
15% of the Net Cash Flow on hand (after repayment of any outstanding Member
Loans) in respect of the Hartford Marriott, plus
(iv)
Capital Proceeds actually received and (b) with respect to Mystic Member, the
sum of (i) 100% of the Net Cash Flow on hand (after repayment of any outstanding
Member Loans) in respect of Stabilized Assets, plus
(ii) 90%
of the Net Cash Flow on hand (after repayment of any outstanding Member Loans)
in respect of the Hartford Hilton, plus
(iii)
85% of the Net Cash Flow on hand (after repayment of any outstanding Member
Loans) in respect of the Hartford Marriott, plus
(iv)
Capital Proceeds actually received. Attached
hereto as Exhibit
A
for
illustrative purposes is a hypothetical calculation of Distributable
Funds.
5.
The
following text is hereby added as a new Article 14:
14.1
TRS
Member Option.
Mystic
Member hereby grants to TRS Member the option (the “Option”)
to
purchase up to 50% (in the aggregate, which 50% maximum percentage interest
shall include TRS Member’s percentage interest in the Company as evidenced by
its Capital Sharing Ratio as of each of the Option Exercise Dates (as defined
below)) of Mystic Member’s interest in the entities that own each of the
Hartford Hilton (“Hartford
Hilton Owner”)
and
the Hartford Marriott (“Hartford
Marriott Owner”),
respectively. TRS Member shall have the right to close on the purchase of
additional percentage interests acquired pursuant to the Option only on either
December 29, 2006 or December 31, 2007 (collectively, the “Option
Purchase Dates”)
and on
no other date. The Option shall expire on the occurrence of the Option Purchase
Dates. TRS Member may exercise the Option in any increment of 10%. The amount
of
the percentage interest desired to be purchased by TRS Member as of the
applicable Option Purchase Date in either the Hartford Marriott or the Hartford
Hilton shall herein be referred to as the “Additional
Percentage Interest”.
14.2
Option
Price.
The
price for TRS Member’s acquisition of a percentage interest in Hartford Hilton
Owner (the “Hilton
Option Price”)
shall
equal the sum of (a) the product obtained by multiplying (i) the Contribution
Value of the Hartford Hilton as set forth in the Contribution Agreement by
(ii)
the Additional Percentage Interest plus (b) the product obtained by multiplying
(i) all operational funding (i.e. capital calls to fund operational shortfalls)
and capital expenditures incurred by Hartford Hilton Owner from
the
period since the acquisition by the Company of the interests in Hartford Hilton
Owner to the applicable Option Purchase Date by
(ii)
the Additional Percentage Interest plus (c) the product obtained by multiplying
(i) 10% by (ii) the sum of (a) plus (b). The price for TRS Member’s acquisition
of the Additional Percentage Interest in Hartford Marriott Owner (the “Marriott
Option Price”) shall equal the sum of (x) the product obtained by multiplying
(i) the total amount of actual costs incurred in the construction and
development
of the Hartford Marriott (as of the date hereof, the Members hereby acknowledge
and agree that such costs are estimated to be approximately $94,000,000) by
(ii)
the Additional Percentage Interest plus (y) the product obtained by multiplying
(i) all operational funding (i.e. capital calls to fund operational shortfalls)
and capital expenditures incurred by Hartford Marriott Owner from
the
period since the acquisition by the Company of the interests in Hartford Hilton
Owner to the applicable Option Purchase Date by
(ii)
the Additional Percentage Interest plus
(z) the
product obtained by multiplying (i) 10% by (i) the sum of (x) plus
(y).
2
14.3 Exercise
of the Option.
In the
event that TRS Member desires to exercise the Option, TRS Member shall provide
written notice of such desire (an “Option
Notice”)
to
Mystic Member on or prior to October 1, 2006 at 6:00 p.m., New York time (the
“First
Option Exercise Date”)
with
respect to the Option Purchase Date occurring on December 29, 2006 and October
1, 2007 at 6:00 p.m., New York time (the “Second
Option Exercise Date”,
together with the First Option Exercise Date, the “Option
Exercise Dates”)
with
respect to the Option Purchase Date occurring on December 31, 2007. The Option
Notice shall include TRS Member’s desired Additional Percentage Interest with
respect to the Hartford Hilton and the Hartford Marriott, as applicable. Within
ten days after Mystic Member’s receipt of the Option Notice, Mystic Member shall
notify TRS Member in writing of the Hilton Option Price and the Marriott Option
Price, as applicable. In the event that TRS Member and Mystic Member do not
agree on the calculation of the Option Price, TRS Member and Mystic Member
shall
negotiate the Option Price in good faith. Section 6 of the Contribution
Agreement between TRS Member and Mystic Member (as amended) shall govern the
calculation of all prorations and post closing adjustments necessary in
connection with TRS Member’s exercise of the Option.
14.4
Closing
of the Purchase of the Additional Percentage Interest.
The
parties shall agree on a mutually acceptable location at which to close on
TRS
Member’s purchase of the Additional Percentage Interests (which may be by mail).
On each of the Option Purchase Dates, as applicable, the parties shall do the
following:
14.4.1
Execute
and deliver an amendment to the LLC Agreement evidencing revised Capital Sharing
Ratios and Residual Sharing Ratios (which shall be determined in the same manner
as prior to the date hereof) of TRS Member and Mystic Member reflecting TRS
Member’s acquisition of the Additional Percentage Interests for the Hartford
Hilton and/or the Hartford Marriott, as the case may be;
14.4.2
TRS
Member shall pay the Hilton Option Price and/or the Marriott Option Price,
as
the case may be;
14.4.3
The
parties shall calculate the prorations and deliver a Settlement Statement in
accordance with the procedures set forth in the Contribution Agreement.
12.
As
specifically modified hereby, the LLC Agreement shall remain in full force
and
effect and is hereby ratified and confirmed. All references to the LLC Agreement
shall mean and refer to the LLC Agreement as amended and modified hereby.
13.
This
Amendment may be executed in one or more counterparts, and all such counterparts
shall together constitute the same agreement.
3
13.
This
Amendment shall be construed and interpreted according to the laws of the State
of Delaware. Accordingly, all questions with respect to construction of this
Amendment and the rights and liabilities of the parties shall be determined
in
accordance with the applicable provisions of the laws of the State of Delaware
and this Amendment is intended to be performed in accordance with and only
to
the extent permitted by all applicable laws, ordinances, rules and regulations
of such State. In the event that there is a direct conflict between the
provisions of Delaware law and the provisions of any other jurisdiction
applicable to a particular transaction, the laws of Delaware shall nevertheless
apply except and to the extent that such interpretation or application would
render the action or proposed action of the Company to be invalid or illegal,
in
which event, the law of the jurisdiction of the State or country which would
be
applicable under general rules regarding conflict of laws or rules of comity
shall apply.
[SIGNATURE
PAGE FOLLOWS]
4
IN
WITNESS WHEREOF,
the
Members have caused this Amendment to be duly executed by their respective
and
duly authorized representatives as of the date first above written.
MEMBERS:
|
||
HERSHA
HOSPITALITY LIMITED PARTNERSHIP
|
||
By:
|
||
Name:
|
||
Title:
|
||
MYSTIC
HOTEL INVESTORS, LLC
|
||
By:
|
||
Name:
|
||
Title:
Authorized Representative
|
EXHIBIT
A
Distributable
Funds Illustration
(see
attached)