LLC MEMBERSHIP INTERESTS PURCHASE AGREEMENT

LLC Membership Agreement

You are currently viewing:

This LLC Membership Agreement involves

HERSHA HOSPITALITY TRUST | PUSHPA H. THAKKAR | BHARTI D. DESAI | MALAY H. THAKKAR | KUSH H. THAKKAR | NEEL D. DESAI | TEJAL D. DESAI | HERSHA HOSPITALITY LIMITED PARTNERSHIP

. RealDealDocs™ contains millions of easily searchable legal documents and clauses from top law firms. Search for free - click here.

Title: LLC MEMBERSHIP INTERESTS PURCHASE AGREEMENT
Governing Law: Virginia Date: 3/8/2005
Industry: REOPER Law Firm: Faggert & Frieden, P.C; Shah & Byler LLP Sector: SERVIC

Search LLC Membership Agreement by:

================================================================================

Exhibit 10.1

LLC MEMBERSHIP INTERESTS

PURCHASE AGREEMENT

dated as of February __, 2005

between

PUSHPA H. THAKKAR

BHARTI D. DESAI

MALAY H. THAKKAR

KUSH H. THAKKAR

NEEL D. DESAI

TEJAL D. DESAI

as Sellers,

and

HERSHA HOSPITALITY LIMITED PARTNERSHIP

as Purchaser

IN CONNECTION WITH THE SALE AND PURCHASE OF

MEMBERSHIP INTERESTS IN LTD ASSOCIATES ONE, LLC, OWNER OF SPRINGHILL

SUITES WILLIAMSBURG, WILLIAMSBURG, VIRGINIA

================================================================================

<PAGE>

LLC MEMBERSHIP INTERESTS PURCHASE AGREEMENT

-------------------------------------------

THIS LLC MEMBERSHIP INTERESTS PURCHASE AGREEMENT, dated as of the ______

day of February, 2005, (the "Agreement") between PUSHPA H. THAKKAR, BHARTI D.

DESAI, MALAY H. THAKKAR, KUSH H. THAKKAR, NEEL D. DESAI and TEJAL D. DESAI,

members of LTD Associates One, LLC, on the one hand (collectively, each a

"Sellers, and collectively, the "Sellers"), and HERSHA HOSPITALITY LIMITED

PARTNERSHIP, a Virginia limited partnership (the "Purchaser"), provides:

ARTICLE I

---------

DEFINITIONS; RULES OF CONSTRUCTION

----------------------------------

1.1 Definitions. The following terms shall have the indicated

-----------

meanings:

"Act of Bankruptcy" shall mean if a party hereto or any member or

-------------------

general partner thereof shall (a) apply for or consent to the appointment of, or

the taking of possession by, a receiver, custodian, trustee or liquidator of

itself or of all or a substantial part of its property, (b) admit in writing its

inability to pay its debts as they become due, (c) make a general assignment for

the benefit of its creditors, (d) file a voluntary petition or commence a

voluntary case or proceeding under the Federal Bankruptcy Code (as now or

hereafter in effect), (e) be adjudicated a bankrupt or insolvent, (f) file a

petition seeking to take advantage of any other law relating to bankruptcy,

insolvency, reorganization, winding-up or composition or adjustment of debts,

(g) fail to controvert in a timely and appropriate manner, or acquiesce in

writing to, any petition filed against it in an involuntary case or proceeding

under the Federal Bankruptcy Code (as now or hereafter in effect), or (h) take

any corporate or limited liability company action for the purpose of effecting

any of the foregoing; or if a proceeding or case shall be commenced, without the

application or consent of a party hereto or any general partner thereof, in any

court of competent jurisdiction seeking (1) the liquidation, reorganization,

dissolution or winding-up, or the composition or readjustment of debts, of such

party or general partner, (2) the appointment of a receiver, custodian, trustee

or liquidator or such party or general partner or all or any substantial part of

its assets, or (3) other similar relief under any law relating to bankruptcy,

insolvency, reorganization, winding-up or composition or adjustment of debts,

and such proceeding or case shall continue undismissed; or an order (including

an order for relief entered in an involuntary case under the Federal Bankruptcy

Code, as now or hereafter in effect) judgment or decree approving or ordering

any of the foregoing shall be entered and continue unstayed and in effect, for a

period of 60 consecutive days.

"Articles of Organization" shall mean the Articles of Organization of

-------------------------

the LLC filed with the Commonwealth of Virginia State Corporation Commission,

true and correct copies of which are attached hereto as Exhibit F.

---------

"Assignment and Assumption Agreement" shall mean any and all

--------------------------------------

Assignment and Assumption Agreements, dated as of the Closing Date by and

between Sellers and Purchaser.

<PAGE>

"Authorizations" shall mean all licenses, permits and approvals

--------------

required by any governmental or quasi-governmental agency, body or officer for

the ownership, operation and use of the Property or any part thereof.

"Closing" shall mean the closing of the sale and purchase of the

-------

Interests pursuant to this Agreement.

"Closing Date" shall mean the date on which the Closing occurs.

-------------

"Consideration" shall be determined by subtracting the outstanding

-------------

principal balance of the Existing Financing as of Closing from the LLC

Valuation, and multiplying the balance by 75%

"Continuing Liabilities" shall include liabilities arising under the

-----------------------

Existing Financing (defined in Section 3.10) and the Operating Agreements

(defined hereafter) on and subsequent to the Closing Date, or proration credits

at Closing, but shall exclude any liabilities arising from any other

arrangement, agreement, loan agreements, hotel management agreement, or pending

litigation.

"Contributed Equity" shall mean the equity contribution that each

-------------------

party shall be deemed to have made on the Closing Date and throughout the

investment period. As a matter of example, Purchaser's preferred equity

contribution shall include the Consideration and Purchaser's contribution toward

the FF&E reserve and any other additional contribution made on the Closing Date

and throughout the investment period.

"Deposit" shall mean the amount of Two Hundred Thousand and No/100

-------

($200,000.00) Dollars.

"Employment Agreements" shall mean any and all employment agreements,

----------------------

written or oral, between the LLC or its managing agent and the persons employed

with respect to the Property. A schedule indicating all pertinent information

with respect to each Employment Agreement in effect as of the date hereof, name

of employee, social security number, wage or salary, accrued vacation benefits,

other fringe benefits, etc., is attached hereto as Exhibit B.

---------

"Escrow Agent" shall mean Equity Title Company, with an address of 200

------------

Golden Oak Court, Suite 100A, Virginia Beach, VA 23452.

"Existing Financing" shall have the meaning set forth in Section 3.10.

------------------

"FIRPTA Certificate" shall mean the affidavit of the Sellers under

-------------------

Section 1445 of the Internal Revenue Code certifying that such Sellers are not a

foreign corporation, foreign partnership, foreign limited liability company,

foreign trust, foreign estate or foreign person (as those terms are defined in

the Internal Revenue Code and the Income Tax Regulations), in form and substance

satisfactory to the Purchaser for each Seller who is not a foreign corporation,

foreign partnership, foreign limited liability company, foreign trust, foreign

estate or foreign person.

<PAGE>

"Governmental Body" shall mean any federal, state, municipal or other

------------------

governmental department, commission, board, bureau, agency or instrumentality,

domestic or foreign.

"Gross Revenues" shall mean all room revenues from Hotel operations,

---------------

including, but not limited to, room revenues, revenues from food and beverage,

revenues from telecommunication service, and revenues from other operated

departments, rentals, and other business activities.

"Hotel" shall mean the 120-room SpringHill Suites Williamsburg hotel

-----

and related amenities located on the Land.

"Improvements" shall mean the Hotel and all other buildings,

------------

improvements, fixtures and other items of real estate located on the Land.

"Insurance Policies" shall mean those certain policies of insurance

-------------------

described on Exhibit C attached hereto.

---------

"Intangible Personal Property" shall mean all intangible personal

------------------------------

property owned or possessed by the Sellers and used in connection with the

ownership, operation, leasing, occupancy or maintenance of the Property,

including, without limitation, the Authorizations, general intangibles, business

records, plans and specifications, surveys and title insurance policies

pertaining to the real property and the personal property, all other licenses

which are transferable, permits and approvals with respect to the construction,

ownership, operation, leasing, occupancy or maintenance of the Property, any

unpaid award for taking by condemnation or any damage to the Land by reason of a

change of grade or location of or access to any street or highway.

"Interests" shall mean 75% of all right, title and interest in the

---------

Pushpa Interest, Bharti Interest, Malay Interest, Kush Interest, Neel Interest,

and Tejal Interest, consisting, in the aggregate, of a 75% limited liability

company interest in the LLC.

"Pushpa Interest" shall mean all right, title and interest of Pushpa

----------------

H. Thakkar in the LLC, consisting of a 10% limited liability interest in the

LLC.

"Bharti Interest" shall mean all right, title and interest of Bharti

----------------

D. Desai in the LLC, consisting of a 10% limited liability interest in the LLC.

"Malay Interest" shall mean all right, title and interest of Malay H.

---------------

Thakkar in the LLC, consisting of a 20% limited liability interest in the LLC.

"Kush Interest" shall mean all right, title and interest of Kush H.

--------------

Thakkar in the LLC, consisting of a 20% limited liability interest in the LLC.

"Neel Interest" shall mean all right, title and interest of Neel D.

--------------

Desai in the LLC, consisting of a 20% limited liability interest in the LLC.

<PAGE>

"Tejal Interest" shall mean all right, title and interest of Tejal D.

----------------

Desai in the LLC, consisting of a 20% limited liability interest in the LLC.

"Inventory" shall mean all inventory located at the Hotel, including

---------

without limitation, all mattresses, pillows, bed linens, towels, paper goods,

soaps, cleaning supplies and other such supplies.

"Knowledge" shall mean the actual knowledge of the Sellers.

---------

"Land" shall mean that certain parcel of real estate lying and being

----

in the City of Williamsburg, Virginia, with an address of 1644 Richmond Road,

Williamsburg, VA 23185, as more particularly described on Exhibit A attached

---------

hereto, together with all easements, rights, privileges, remainders, reversions

and appurtenances thereunto belonging or in any way appertaining, and all of the

estate, right, title, interest, claim or demand whatsoever of the Sellers

therein, in the streets and ways adjacent thereto and in the beds thereof,

either at law or in equity, in possession or expectancy, now or hereafter

acquired.

"LLC" shall mean LTD Associates One, LLC, a Virginia limited liability

---

company that owns, as its only assets, land and hotel improvements consisting of

a 120-room SpringHill Suites Williamsburg situated in the City of Williamsburg,

Virginia.

"LLC Operating Agreement" shall mean the current operating agreement,

------------------------

and any amendments and modifications thereto, of the LLC, a true and correct

copy of which is attached hereto as Exhibit D.

----------

"LLC Valuation" shall mean a valuation of $14,500,000.00 for all of

--------------

the LLC including the Hotel, Intangible Personal Property, Tangible Personal

Property, and Real Property, and any other assets in connection with the Hotel.

"Operating Agreements" shall mean the management agreements, service

---------------------

contracts, supply contracts, leases and other agreements, if any, in effect

with respect to the construction, ownership, operation, occupancy or maintenance

of the Property. All of the Operating Agreements in force and effect as of the

date hereof are listed on Exhibit E attached hereto.

----------

"Owner's Title Policy" shall mean an owner's policy of title insurance

--------------------

or the applicable endorsement issued to the LLC, pursuant to which the LLC's

ownership of fee simple title to the Real Property is insured (including the

marketability thereof) subject only to Permitted Title Exceptions. The Owner's

Title Policy shall be acceptable in form and substance to the Purchaser, and, in

the event such Owner's Title Policy is not acceptable to Purchaser, Purchaser,

at its sole discretion, may obtain a new owner's policy of title insurance at

its own cost and expense. The description of the Land in the Owner's Title

Policy shall be by courses and distances and shall be identical to the

description shown on a survey provided by the Sellers to

<PAGE>

the Purchaser.

"Permitted Title Exceptions" shall mean those exceptions to title to

----------------------------

the Real Property that are satisfactory to the Purchaser as determined pursuant

to Section 2.2.

------------

"Property" shall mean collectively the Land, Improvements, the

--------

Inventory, the Reservation System, the Tangible Personal Property and the

Intangible Personal Property.

"Real Property" shall mean the Land and the Improvements.

--------------

"Reservation System" shall mean the Sellers' Reservation Terminal and

-------------------

Reservation System equipment and software (other than the LTD Management

proprietary system), if any.

"Study Period" shall mean the period commencing at 9:00 a.m. on the

-------------

date hereof, and continuing through 5:00 p.m. on March 15, 2005.

"Tangible Personal Property" shall mean the items of tangible personal

--------------------------

Property, consisting of all furniture, fixtures and equipment situated on,

attached to, or used in the operation of the Hotel, and all furniture,

furnishings, equipment, machinery, and other personal property of every kind

located on or used in the operation of the Hotel and owned by the Sellers and/or

the LLC.

"Title Company" shall mean All American Abstract Company, Inc., with

-------------

an address at 1260 Valley Forge Road, Suite 111, Phoenixville, PA 19460.

"Tray Ledger" shall mean the final night's room revenue (revenue from

------------

rooms occupied as of 12:01 a.m. on the Closing Date, exclusive of food,

beverage, telephone and similar charges which shall be retained by the Sellers,

including any sales taxes, room taxes or other taxes thereon.

"Utilities" shall mean public sanitary and storm sewers, natural gas,

---------

telephone, public water facilities, electrical facilities and all other utility

facilities and services necessary for the operation and occupancy of the

Property as a hotel.

1.2 Rules of Construction. The following rules shall apply to the

------------------------

construction and interpretation of this Agreement:

(a) Singular words shall connote the plural number as well as the

singular and vice versa, and the masculine shall include the feminine and the

neuter.

(b) All references herein to particular articles, sections,

subsections, clauses or exhibits are references to articles, sections,

subsections, clauses or exhibits of this Agreement.

reference and shall not constitute a part of this Agreement nor shall they

affect its meaning, construction or effect.

<PAGE>

(d) Each party hereto and its counsel have reviewed and revised

(or requested revisions of) this Agreement, and therefore any usual rules of

construction requiring that ambiguities are to be resolved against a particular

party shall not be applicable in the construction and interpretation of this

Agreement or any exhibits hereto.

ARTICLE II

----------

PURCHASE AND SALE; STUDY PERIOD;

--------------------------------

PAYMENT OF CONSIDERATION

------------------------

2.1 Purchase and Sale. Each of the Sellers agrees to sell, assign and

------------------

transfer its respective Interests, in aggregate, to the Purchaser and the

Purchaser agrees to purchase the Sellers' Interests in exchange for the

Consideration and in accordance with the other terms and conditions set forth

herein.

(a) The Consideration shall be paid as follows:

(i) Upon the execution and delivery of this Agreement, Purchaser

shall deposit the Deposit in an interest bearing account, which is and

shall be fully refundable in accordance with the provisions with

respect to the refund thereof as set forth in this Agreement,

including, without limitation, unsatisfactory results of Study Period,

in Purchaser's sole discretion, and/or default by any Sellers

hereunder; and

(ii) The balance of the Consideration, subject to adjustment as

provided in this Agreement, shall be paid by the Purchaser by wire

transfer to the Sellers or such payee as the Sellers may direct at the

Closing. The Sellers shall provide Purchaser on or before the Closing

with Sellers wiring instructions for the payment of the Consideration.

(b) The Consideration shall be held by Equity Title Company to be released

to Sellers upon delivery of the certificates, documents, instruments,

agreements and other closing deliveries required by this Agreement.

2.2 Study Period. (a) The Purchaser shall have the right, until the

--------------

end of the Study Period, to enter upon the Real Property and to perform, at the

Purchaser's expense, such economic, surveying, engineering, environmental,

topographic and marketing tests, studies and investigations as the Purchaser may

deem appropriate provided Purchaser gives Sellers at least twenty-four (24)

hours notice prior to entering on the Real Property. The Purchaser shall

investigate the Property and the LLC, including, without limitation, a full

environmental due diligence audit and investigation of the Property and UCC,

lien, litigation, judgment and bankruptcy searches on the LLC. Promptly

following the signing of the Agreement by both parties, Sellers shall provide to

Purchaser access to all information in connection with the Property and the LLC

as required by Purchaser. Information shall include tax returns, books,

<PAGE>

accounts, records, contracts, financial reports and statements, organizational

documents of the LLC including all amendments thereto, if any, and other

relevant documents for completing the transactions contemplated in this

Agreement. If such tests, studies and investigations warrant, in the

Purchaser's sole, absolute and unbelievable discretion, the purchase of the

Interests for the purposes contemplated by the Purchaser, then the Purchaser may

elect to proceed to Closing and shall so notify the Sellers prior to the

expiration of the Study Period. If for any reason the Purchaser does not so

notify the Sellers of its determination to proceed to Closing prior to the

expiration of the Study Period, or if the Purchaser notifies the Sellers, in

writing, prior to the expiration of the Study Period that it has determined, for

any reason, and in Purchaser's sole, absolute and unbelievable discretion, not

to proceed to Closing, this Agreement automatically shall terminate, and the

Purchaser shall be released from any further liability or obligation under this

Agreement other than Purchaser's indemnification obligations given pursuant to

this paragraph which shall survive termination of this Agreement, and the

Deposit together with interest accrued thereon shall be immediately refunded to

Purchaser. Purchaser shall indemnify Sellers' and the LLC for any loss, damage

or liabilities arising our of activities relating to the Study Period and

Purchaser shall obtain an insurance policy, in amounts and with a company,

satisfactory to Sellers naming the LLC as an additional insured prior to entry

upon the Property.

(b) During the Study Period, the Sellers shall make available to the

Purchaser, its agents, auditors, engineers, attorneys and other designees, for

inspection copies of all existing architectural and engineering studies,

surveys, title insurance policies, zoning and site plan materials,

correspondence, environmental audits, environmental report, zoning compliance,

financial reports from the date of commencement of hotel operations, franchise

agreement, existing management agreement, deed and operating and services

contracts, and all of the organizational documents of the LLC including all

amendments thereto, if any, and other related materials or information if any,

relating to the Property and the LLC.

an examination of title to the Property to be made, and, prior to the expiration

of the Study Period, shall notify the Sellers of any defects in title shown by

such examination that the Purchaser is unwilling to accept. The Sellers shall

notify the Purchaser whether the Sellers are willing to cure such defects.

Sellers may cure, but shall not be obligated to cure such defects. If the

Sellers are unwilling or unable to cure any such defects by Closing, the

Purchaser shall elect (1) to waive such defects and proceed to Closing without

any abatement in the Consideration or (2) to terminate this Agreement and

receive a return of the Deposit with interest thereon. The Sellers shall not,

after the date of this Agreement and until termination of this Agreement,

subject the Property to and shall take all reasonable best efforts to prevent

the Property from being subjected to any liens, encumbrances, covenants,

conditions, restrictions, easements or other title matters or seek any zoning

changes or take any other action which may affect or modify the status of title

without the Purchaser's prior written consent, which consent shall not be

unreasonably withheld or delayed. All title matters revealed by the Purchaser's

title examination and not cured by the Sellers as provided above shall be deemed

Permitted Title Exceptions. If Purchaser shall fail to examine title and notify

the Sellers of any such title objections by the end of the Study Period, all

such title exceptions (other than those rendering title unmarketable and those

that are to be paid

<PAGE>

at Closing as provided above and other than any title exceptions first appearing

after the date of Purchaser's title examination) shall be deemed Permitted Title

Exceptions.

(d) Within ten (10) days of the signing of the this Agreement by both

parties, Sellers shall provide Purchaser with copies of existing franchise

agreement, roof warranties, existing mortgage and loan documents, audited

financial statements, and HVAC service records and warranties, an as-built ALTA

survey, the existing owner's title policy, any existing mortgage policy,

environmental report, zoning compliance, financial reports from the date of the

opening of the Hotel, existing management agreement, deed and operating and

services contracts, and all of the organizational documents of the LLC including

all amendments thereto, if any. In the event that the environmental report is

more than one year old, Purchaser may order a new environmental report and any

cost and expense in connection with such new environmental report shall be borne

by the LLC in the event the Closing occurs.

(e) During the Study Period, at Purchaser's sole costs and expense,

Purchaser may cause a property condition assessment to be performed on the

Property ("Property Condition Assessment").

(f) During the Study Period, Purchaser shall have an absolute right to

complete its investigation of the Property and the LLC to its absolute

satisfaction, and in the event, the results of the investigation are

unsatisfactory in any respect to Purchaser, then Purchaser shall have the option

to terminate the Agreement without liability, and the Deposit shall be

immediately refunded in full to Purchaser.

(g) During the Study Period, Purchaser and Sellers shall contact the

Licensor, and obtain tentative approval of the transfer of the franchise license

to the Lessee (defined hereafter in Section 3.25), and Sellers and Purchaser

shall use diligent efforts to cooperate with Licensor to obtain such approval.

(h) Purchaser and Sellers agree that, in the event any of the Sellers

intend to sell any of their respective membership interests in the LLC after the

Closing Date, Purchaser shall have the first right of refusal and, in the event

Purchaser intends to sell any of its membership interests in the LLC after the

Closing Date, Sellers shall have the first right of refusal. Such buy-sell

provisions shall be incorporated in an Amended and Restated Operating Agreement

for the LLC (the "JV Agreements") to be entered into by the Purchaser and

Sellers at Closing, and such JV Agreements shall incorporate all essential terms

of this Agreement.

(i) During the Study Period, Purchaser shall make available to Sellers

and Sellers' attorney copies of Purchaser's organizational documents, including

all amendments thereto.

(j) During the Study Period, Purchaser shall have the right, at its

expense, to audit the books, records, and financial control procedures of the

LLC with respect to the Hotel.

<PAGE>

ARTICLE III

-----------

SELLERS' REPRESENTATIONS, WARRANTIES AND COVENANTS

--------------------------------------------------

To induce the Purchaser to enter into this Agreement and to purchase

the Property, the Sellers hereby jointly and severally make the following

representations, warranties and covenants, upon each of which each of the

Sellers acknowledges and agrees that the Purchaser is entitled to rely and has

relied upon:

3.1 Identity and Power. Each of the Sellers is and has all requisite

--------------------

powers and all governmental licenses, authorizations, consents and approvals

necessary to carry on his or her respective business as now conducted, to own,

lease and operate his or her respective membership interest and Interests in the

LLC, to execute and deliver this Agreement and any document or instrument

required to be executed and delivered on behalf of the Sellers hereunder, to

perform his obligations under this Agreement and any such other documents or

instruments and to consummate the transactions contemplated hereby; and

3.2 Authorization, No Violations and Notices.

--------------------------------------------

(a) The execution, delivery and performance of this Agreement by

each of the Sellers, and the consummation of the transactions contemplated

hereby have been duly authorized, adopted and approved by the Sellers as

necessary. No other proceedings are necessary to authorize this Agreement and

the transactions contemplated hereby. This Agreement has been duly executed by

each Sellers and is a valid and binding obligation enforceable against each and

every Sellers in accordance with its terms.

(b) Neither the execution, delivery, or performance by any Sellers

of this Agreement, nor the consummation of the transactions contemplated hereby,

nor compliance by any Sellers with any of the provisions hereof, will,

(i) except for the terms of the LLC's Existing Financing

Documents (as defined in Section 3.10), the License (as defined in

Section 3.25) and the LLC's liquor license, violate, conflict with,

result in a breach of any provision of, constitute a default (or an

event that, which, with or lapse of time or both, would constitute a

default) under, result in the termination of, accelerate the

performance required by, or result in a right of termination or

acceleration, or the creation of any lien, security interest, charge,

or encumbrance upon any of the Property or assets of the LLC, under

any of the terms, conditions, or provisions of, the Articles of

Organization of such Sellers (if applicable), the LLC Operating

Agreement, license, lease, agreement, or other instrument, or