SIXTH AMENDMENT TO MEMBERSHIP INTERESTS CONTRIBUTION AGREEMENT
Exhibit
10.5
SIXTH
AMENDMENT TO
This
Sixth Amendment to Membership Interests Contribution Agreement dated as of
February 8, 2006 (this “Sixth
Amendment”),
by
and among Mystic Hotel Investors, LLC, a Delaware limited liability company
(“Mystic”),
Waterford Hospitality Group, LLC, a Delaware limited liability company
(“Waterford”
and
together with Mystic, the “Contributor”),
Hersha Hospitality Limited Partnership, a Virginia limited partnership
(“Investor”),
and
First American Title Insurance Company, as Escrow Agent.
WITNESSETH:
WHEREAS,
Contributor and Investor have entered into a Membership Interests Contribution
Agreement dated as of June 15, 2005 (“Original
Contribution Agreement”),
pursuant to which, and subject to the terms and conditions thereof, Contributor
shall contribute to the Company the Membership Interests and Investor shall
make
the Cash Payment;
WHEREAS,
the parties to the Original Contribution Agreement have entered into a First
Amendment to Membership Interests Contribution Agreement dated as of July 8,
2005 (the “First
Amendment”),
a
Second Amendment to Membership Interests Contribution Agreement dated as of
July
25, 2005 (the “Second
Amendment”),
a
Third Amendment to Membership Interests Contribution Agreement dated as of
August 8, 2005 (the “Third
Amendment”),
a
Fourth Amendment to Membership Interests Contribution Agreement dated as of
September 15, 2005 (the “Fourth
Amendment”),
and a
Fifth Amendment to Membership Interests Contribution Agreement dated as of
November 1, 2005 (the “Fifth
Amendment”,
together with the Original Contribution Agreement, as amended by the First
Amendment, the Second Amendment, the Third Amendment, the Fourth Amendment
and
the Fifth Amendment, the “Contribution
Agreement”);
WHEREAS,
the parties to the Contribution Agreement desire to restructure the capital
sharing ratios and other related equity and cost sharing mechanisms with respect
to the Development Assets (the “Equity
Restructuring”)
contained in the Contribution Agreement, the LLC Agreement and the Lessee LLC
Agreement and as a result thereof to (1) effect appropriate prorations and
adjustments at the Closing with respect to the Development Asset commonly known
as the Hartford Marriott to reflect the Equity Restructuring and (2) modify,
supplement and terminate certain documents related to the operation of the
Development Assets, including, without limitation, termination of the Asset
Management Agreement for the Development Asset commonly known as the Hartford
Hilton;
WHEREAS,
the parties to the Contribution Agreement desire to effectuate a transfer of
the
obligation to employ all Employees from the Lessee Company Affiliates to the
Manager with respect to each Property (the “Employee
Transfer”)
and to
amend certain provisions of the Management Agreements and Lease Agreements
as a
result thereof; and
WHEREAS,
the parties to the Contribution Agreement wish to amend the Contribution
Agreement as set forth herein.
NOW,
THEREFORE, in consideration of the mutual covenants and agreements herein
contained, the parties hereto agree as follows:
Capitalized
terms used but not defined herein shall have the respective meanings set forth
in the Contribution Agreement.
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Amendments
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1.1
Outside
Closing Date with Respect to Deferred Properties.
Notwithstanding anything to the contrary contained in Section 14.2, the
“Deferred Property Outside Closing Date” with respect to the Hartford Marriott
shall mean February 15, 2006. For the purposes of Section 17.1 of the
Contribution Agreement, the “Outside Closing Date” with respect to the Hartford
Marriott shall mean the Deferred Property Outside Closing Date.
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1.2
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Amendments
Related to Equity Restructuring.
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1.2.1
All
references to fifty percent (50%) contained in Sections
3.1,
3.3,
3.4,
3.5,
12.3
and
17.1
of the
Contribution Agreement are hereby modified to refer to (A) with respect to
the
Development Asset commonly known as the Hartford Hilton, ten percent (10%)
for
Investor and ninety percent (90%) for Contributor and (B) with respect to the
Development Asset commonly known as the Hartford Marriott, fifteen percent
(15%)
for Investor and eighty-five percent (85%) for Contributor.
1.2.2
All
references to 57.96% and 42.04% contained in Sections
3.3
and
17.1
are
hereby modified to refer to 39.2% and 60.8%, respectively.
1.2.3
A
new
Section
6.6.4
is
hereby added after Section
6.6.3
of the
Contribution Agreement as follows:
Adjustments
and prorations with respect to the Hartford Marriott
shall
be
made in accordance with this Article in order to retroactively effect the Equity
Restructuring such that the credits and debits set forth on the Closing
Statement for the Development Asset commonly known as the Hartford Marriott
sets
forth payments of costs and Cash Payments (including those previously made
with
respect to the Development Asset commonly known as the Hartford Hilton) in
accordance with the revised percentage of the Contribution Value attributable
to
the Development Assets to be reflected in Investor’s initial Capital Account in
the Company and the revised percentage of costs for which Investor is
responsible as set forth in this Sixth Amendment.
1.2.4
The
following new sections are hereby added after Section
8.30
of the
Contribution Agreement as follows:
“Section
8.31. Tax
Fixing Agreement.
2
(a) The
Tax
Assessment Fixing Agreement, dated August 25, 2000, between the City of
Hartford and Waterford Development, LLC and recorded in Volume 4847 at Page
105
of the Hartford Land Records, as subsequently assigned pursuant to that certain
Assignment and Assumption Agreement, dated September 11, 2003, by and
between Waterford Development, LLC, as assignor, and Adriaen’s Landing Hotel,
LLC (“ALH”), as assignee, and recorded in Volume 4858 at Page 197 of the
Hartford Land Records (the “Tax Fixing Agreement”) is in full force and effect,
and no default or breach has occurred thereunder.
(b) Contributor
has provided to Investor a true, complete and correct copy of the Tax Fixing
Agreement as in effect as of the date hereof.
8.32.
Material
Contracts.
Schedule
8.32
sets
forth a complete list of all material contracts, obligations, undertakings,
agreements, guaranties, leases, mortgages, licenses or other agreements or
commitments to which ALH is a party or is bound or is otherwise related to
the
Hartford Marriott (each, a “Material
Contract”).
Contributor
has provided Investor with true and complete copies of all Material Contracts,
and (i) there are no disputes pursuant to any Material Contracts that have
not
been previously disclosed to Investor, (ii) all such Material Contracts are
in
full force and effect and (iii) ALH is in compliance with its material
obligations under all such Material Contracts. Investor
acknowledges receipt of copies of all Material Contracts from Contributor.
8.33
Disclosure.
(a) Neither
this
Agreement nor any Schedule or Exhibit nor any certificate or other document,
report or other materials and information furnished to Investor by Contributor
or its Affiliates or representatives in connection with the Equity Restructuring
and the Closing with respect to the Hartford Marriott contains any untrue
statement of a material fact or fails to state a material fact necessary in
order to make the statements contained therein or herein, in light of the
circumstances under which they were made, not misleading.
(b) Contributor
has
provided Investor with all material documents, reports or other materials and
information relating to the Hartford Marriott or to which ALH is party or is
otherwise bound.
1.2.5
A
new
Section 14.1.8
is
hereby added after Section 14.1.7
as
follows:
With
respect to the Hartford Marriott and ALH, the Existing Debt in the amount of
eight million dollars ($8,000,000) pursuant to a loan to ALH from the City
of
Hartford shall have been fully and finally defeased at the expense of the
Contributor.
1.2.6 A
new
Section 14.1.9
is
hereby added after Section 14.1.8
as
follows:
3
There
shall not have occurred any condition,
circumstance, change, event or effect that is known to or reasonably should
have
been known to Contributor, which is or is reasonably likely to be materially
adverse to (a) the assets, properties, financial condition or results of
operations of ALH or the Hartford Marriott or (b) the ability of Contributor
to
consummate this Agreement or any of the transactions contemplated hereby,
except
for any such condition,
circumstance, change,
event or effect to the extent resulting from or arising out of (y) changes
or developments in financial,
or
securities markets or the economy in general or as a result of the outbreak
of
war or hostilities against the United States
or (z)
the announcement, negotiation,
execution, delivery, or consummation of the transactions contemplated by, or
compliance with, this Agreement.
1.2.7
A
new
Section 14.2.5
is
hereby added after Section 14.2.4
as
follows:
As
a
condition to Contributor’s obligations with regard to the Equity Structuring in
respect of the Hartford Hilton, the Closing with respect to the Hartford
Marriott shall have occurred on or prior to the date on which the Closing of
the
Equity Restructuring in respect of the Hartford Hilton occurs.
1.2.8
A
new
Section
15.8
is
hereby added after Section
15.7
of the
Contribution Agreement as follows:
During
the term of this Agreement and subsequent to the Closing with respect to the
Development Asset commonly known as the Hartford Marriott, Contributor and
Investor hereby agree to cooperate in good faith to (i) negotiate, execute
and
deliver amendments, modifications, supplements, terminations and other changes
to any and all documents executed and delivered at previous portions of the
Closing under this Agreement that may be implicated by the Equity Restructuring
and the Employee Transfer, including, without limitation, amendments to the
Management Agreements, the Leases, the LLC Agreement and the Lessee LLC
Agreement and a termination of the Asset Management Agreement with respect
to
the Development Asset commonly known as the Hartford Hilton and (ii) obtain
any
consents and authorizations to the foregoing as determined to be necessary
by
Contributor and Investor in their reasonable discretion.
1.3 Amendments
Related to Employee Transfer.
1.3.1
Section
6.1.11
of the
Contribution Agreement is hereby deleted in its entirety and replaced with
the
following as a new Section
6.1.11:
All
salaries and benefits of employees whose employment is assumed by the Company
or
the Manager pursuant to Section
8.15
hereof
shall be prorated.
1.3.2
The
first
sentence of Section
8.15
of the
Contribution Agreement is hereby deleted in its entirety and replaced with
the
following:
4
At
the
Closing, the Manager shall hire all persons then employed by the Contributor
or
any Owner Entity in connection with the management, operation or maintenance
of
the Properties (collectively, the “Employees”).
2
Reference
to and Effect on the Contribution Agreement.
2.1 Upon
the
due execution and delivery of this Sixth Amendment by the parties hereto, on
and
after the date hereof each reference in the Contribution Agreement to “this
Agreement”, “hereunder”, “hereof” and “herein” and the like shall mean and be a
reference to the Contribution Agreement, as amended hereby.
2.2 Except
as
specifically amended above, the Contribution Agreement shall remain in full
force and effect and is hereby ratified and confirmed.
2.3 The
execution, delivery, and effectiveness of this Sixth Amendment shall be limited
precisely as written and, except as expressly provided herein, shall not be
deemed to (i) be a consent to any waiver or modification of any other term
or condition of the Contribution Agreement or any of the instruments or
documents referred to therein or (ii) create, or be evidence of, alone or
taken with any consent to, waiver or modification of, or other amendment of
the
provisions of the Contribution Agreement or any of the instruments or documents
referred to therein, a course of conduct.
2.4 The
representations and warranties made in the Contribution Agreement with respect
to the Hartford Marriott as amended hereby are true and correct as of the date
hereof.
3 Governing
Law.
THIS
SIXTH AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, UNITED STATES OF AMERICA, WITHOUT
REFERENCE TO PRINCIPLES OF CONFLICTS OF LAW.
4
Counterparts.
This
Sixth Amendment may be executed in counterparts, each of which when so executed
and delivered shall be deemed an original and all of which together shall
constitute one and the same instrument.
[SIGNATURE
PAGE FOLLOWS]
5
IN
WITNESS WHEREOF,
a duly
authorized officer of each of Contributor, Investor and Escrow Agent have
executed this Sixth Amendment as of the day and year first above
written.
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CONTRIBUTOR:
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WATERFORD
HOSPITALITY GROUP, LLC
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By:
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Xxxxxx
Suites, Inc., its member
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By:
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Name:
Del Xxxxxx
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Title:
Vice President
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By:
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LMW
Investments, Inc., its member
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By:
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Name:
Xxx Xxxxxx
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Title:
President
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By:
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MYSTIC
HOTEL INVESTORS, LLC
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By:
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Name:
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Title:
Authorized Representative
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INVESTOR:
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HERSHA
HOSPITALITY LIMITED PARTNERSHIP
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By:
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Hersha
Hospitability Trust, its general partner
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By:
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Name:
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Title:
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6
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ESCROW
AGENT:
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FIRST
AMERICAN TITLE INSURANCE COMPANY
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By:
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| Name: |
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| Title: |
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7
SCHEDULE
8.32
Material
Contracts
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DESCRIPTION
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VENDOR/
PARTY
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Xxxxx
Xxxxxxx
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Xxxxx
Xxxxxxx
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Music
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Muzak
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Laundry
Service
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Atlantic
City Linen
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MZ
Cleaners & Tailors
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Extermination/Pest
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Terminix
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Kitchen
Equipment
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Suiza
Foods
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Tri-State
Malted Waffles
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Coca
Cola - 265060
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Coca
Cola - 265061
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Internet
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IBahn
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Telephone
System Services
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SBC
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IMR
Capital
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NTP
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Paetex
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Xeta
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Shared
Technologies
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Refuse
Removal
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Waste
Management
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Pool
Maintenance
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ECOLAB
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ATM
Service
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ATM
Systems
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Gift
Cards
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Givex
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Audio/Visual
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PSAV
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Advertising
Agreement
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Xxxxxxx
Media
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Television/
Videos
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OnCommand
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Point
of Sale Systems
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Micros
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LEASES
/
LICENSES
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UPS
Store
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Shipping
Services II, LLC
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Starbucks
License
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Starbucks
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Parking
Agreement
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LAZ
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Car
Rental
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Hertz
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Parking
(for hotel employees)
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CL&P
Charter
Oak Square
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Energy
Services Agreement
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CUP
Agreement with CCEDA
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8
Marriott
Hotel License (Franchise Agreement) Marriott
International, Inc.
DEVELOPMENT
/ PROJECT RELATED AGREEMENTS
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Hotel
Site Lease
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CCEDA
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AirSpace
Lease
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CCEDA
/ OPM
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Development
Agreement
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CCEDA
/ OPM
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Declaration
of Covenants
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CCEDA
/ OPM
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Perini
Contract
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Perini
Building Corp
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Tax
Assessment Fixing Agreement and Assignment and Assumption of Tax
Assessment Fixing Agreement
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City
of Hartford/Waterford Development, LLC
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**City
of Hartford/HUD Loan Documents
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HUD/City
of Hartford
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Hotel
Management Agreement
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Waterford
Hotel Group, Inc.
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Sales
& Use Tax Relief Program Implementing Agreement Connecticut
Development Authority
Name
License Agreement OPM
**
List
of City of Hartford Loan Documents is attached as Exhibit A. Please note that
the City of Hartford/HUD funded loan will be defeased on or before the Hartford
Marriott closing.
9
Exhibit
A
List
of
City of Hartford Loan Documents
1. Substitute
Promissory Note dated September 26, 2003 in the principal amount of $8,000,000
from ALH in favor of the City;
2. Loan
Agreement dated September 26, 2003 between ALH and the City;
3. Environmental
Indemnity Agreement dated September 26, 2003 by ALH and Mystic in favor of
the
City;
4. Collateral
Assignment and Security Agreement in Respect of Contracts, Licenses and Permits
dated September 26, 2003 from ALH to the City;
5. UCC-1
Financing Statement filed against ALH in favor of the City;
6. Guaranty
dated September 26, 2003 from Mystic to the City;
7. Collateral
Assignment and Subordination of Management Agreement dated September 26, 2003
between ALH and the City;
8. Open-End
Construction Leasehold Mortgage Deed dated September 26, 2003 from ALH to the
City.
9. Standstill
and Subordination Agreement dated September 26, 2003 by and among the City,
ALH,
People’s Bank and BankNorth, N.A..
10.
Collateral
Assignment of Leases and Rents dated September 26, 2003 by ALH in favor of
the
City.
10
