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Exhibit 10.2
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 TWO, LLC, OWNER OF RESIDENCE INN
WILLIAMSBURG, WILLIAMSBURG, VIRGINIA
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<PAGE>
LLC MEMBERSHIP INTERESTS PURCHASE AGREEMENT
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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 Two, 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
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DEFINITIONS; RULES OF CONSTRUCTION
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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.
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"Assignment
and Assumption Agreement" shall mean any and all
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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
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Interests pursuant to this Agreement.
"Closing Date"
shall mean the date on which the Closing occurs.
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"Consideration" shall
be determined by subtracting the outstanding
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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
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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
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($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.
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"Escrow Agent" shall mean Equity Title Company, with an address of
200
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Golden Oak Court, Suite 100A, Virginia
Beach, VA 23452.
"Existing Financing" shall have the meaning set forth in Section
3.10.
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"FIRPTA Certificate"
shall mean the affidavit of the Sellers
under
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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.
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<PAGE>
"Governmental Body"
shall mean any federal, state, municipal or other
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governmental department, commission, board, bureau, agency
or instrumentality,
domestic or foreign.
"Gross Revenues"
shall mean all room
revenues from Hotel operations,
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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 108-room
Residence Inn Williamsburg hotel and
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related amenities located on the Land.
"Improvements" shall
mean the Hotel and all other buildings,
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improvements, fixtures and other items of
real estate located on the Land.
"Insurance Policies"
shall mean those certain policies of
insurance
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described on Exhibit C attached hereto.
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"Intangible Personal
Property" shall mean all intangible personal
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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
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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
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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
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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.
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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.
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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.
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Desai in the LLC, consisting of a 20% limited
liability interest in the LLC.
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"Tejal Interest" shall
mean all right, title and interest of Tejal D.
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Desai in the LLC, consisting of a 20% limited
liability interest in the LLC.
"Inventory" shall
mean all inventory
located at the Hotel, including
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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.
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"Land" shall
mean that certain
parcel of real estate lying and being
----
in the City of Williamsburg, Virginia, with an
address of 1648 Richmond Road,
Williamsburg, VA 23185, as more particularly described on
Exhibit A attached
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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 Two, LLC, a Virginia limited
liability
---
company that owns, as its only assets, land
and hotel improvements consisting of
a 108-room Residence Inn Williamsburg situated in the City of
Williamsburg,
Virginia.
"LLC Operating
Agreement" shall mean the current operating agreement,
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and any amendments and modifications thereto, of the LLC,
a true and correct
copy of which is attached hereto as Exhibit
D.
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"LLC Valuation"
shall mean a valuation of $16,000,000.00
for all of
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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
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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.
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"Owner's Title Policy" shall mean an owner's policy of title
insurance
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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 the Purchaser.
"Permitted Title
Exceptions" shall mean
those exceptions to title to
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the Real Property that are
satisfactory to the Purchaser as determined pursuant
to Section 2.2.
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<PAGE>
"Property" shall
mean collectively the Land, Improvements, the
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Inventory, the Reservation System, the Tangible Personal Property and the
Intangible Personal Property.
"Real Property"
shall mean the Land and the Improvements.
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"Reservation System"
shall mean the Sellers' Reservation Terminal and
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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
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date hereof, and continuing through 5:00
p.m. on March 15, 2005.
"Tangible Personal Property" shall mean the items of tangible
personal
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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
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an address at 1260 Valley Forge Road, Suite
111, Phoenixville, PA 19460.
"Tray Ledger" shall
mean the final night's room revenue (revenue from
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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,
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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
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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.
(c)
Headings contained
herein are solely for convenience of
reference and shall not constitute a part of this Agreement nor shall
they
affect its meaning, construction or effect.
(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.
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<PAGE>
ARTICLE II
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PURCHASE AND SALE; STUDY PERIOD;
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PAYMENT OF CONSIDERATION
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2.1 Purchase
and Sale. Each of the Sellers agrees to
sell, assign and
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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
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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,
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
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<PAGE>
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.
(c) During
the Study Period, the Purchaser, at
its expense, may cause
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 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
7
<PAGE>
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.
ARTICLE III
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SELLERS' REPRESENTATIONS, WARRANTIES AND COVENANTS
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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
8
<PAGE>
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
obligation to
which the LLC is a party, or by which the
LLC may be
bound, or to which the LLC or the Property
or assets may be subject;
or
(ii)
violate any
judgment, ruling,
order, writ, injunction,
decree, statute,
rule, or regulation applicable to the LLC or its
Property or
assets that would not be violated by the execution,
delivery or
performance
of this Agreement or the transactions
contemplated hereby
by the Sellers or
compliance by the Sellers with
any of the provisions hereof.
3.3 Litigation
with respect to Sellers. There is no action, suit,
--------------------------------------
claim or proceeding pending or to Sellers' knowledge, threatened
against or
affecting any of the Sellers or any of the
Sellers' assets in any court, before
any arbitrator or before or by any governmental body or other regulatory
authority (i) that would adversely affect such Sellers or their
respective
Interests, (ii)
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<PAGE>
that seeks restraint, prohibition, damages or other
relief in connection with
this Agreement or the transactions
contemplated hereby, or (iii) would delay the
consummation of any of the transactions contemplated hereby. None of the
Sellers is subject to any judgment, decree, injunction,
rule or order of any
court relating to such Seller's participation in
the transactions contemplated
by this Agreement.
3.4 Interests
and Property.
------------------------
(a)
The Interests
will be on the Closing
Date, free and clear of
all liens and encumbrances and each of the
Sellers has good, marketable title
thereto and the right to convey same in accordance with the terms of
this
Agreement. Upon delivery of the Sellers'
Assignment and Assumption Agreement to
the Purchaser at Closing, good valid and marketable title to each
and every
Sellers' respective Interests, free and clear of all liens and
encumbrances,
will pass to the Purchaser. The Interests
and Sellers' remaining 25% interests
in the LLC constitute the only outstanding
securities of the LLC. On the Closing
Date, there shall be no pledge, lien or encumbrance on
any of the membership
interests in the LLC.
(b)
The Property
will be on the Closing Date, free and
clear of
all liens and encumbrances, except for the
Permitted Title Exceptions and the
lien of the existing deed of trust, and the LLC has good,
marketable title
thereto and the right to convey same. The LLC is the fee simple owner of
the
Real Property and the sole owner of the
Property.
3.5 Bankruptcy
with Respect to Sellers. No Act of Bankruptcy has
--------------------------------------
occurred with respect to the Sellers.
3.6 Brokerage
Commission.
The Sellers have engaged the services of
---------------------
Doug Henkel of CB Richard Ellis as its
broker and will be solely responsible for
any brokerage or finder's fee, commission or
other amount due to
said broker.
3.7 The LLC.
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(a)
The LLC is a limited liability company duly
formed, validly
existing and in good standing under the
laws of the Commonwealth of Virginia and
has all requisite powers necessary to carry
on its business as now conducted, to
own, lease and operate its properties and is in Good Standing in the
Commonwealth of Virginia.
(b)
Neither the execution, delivery, or performance by the Sellers
of this Agreement, nor the consummation of
the transactions contemplated hereby,
nor compliance by the Sellers or the LLC with any of the
provisions hereof,
will:
(i)
except for
the terms of the LLC's Existing Financing
Documents, the License and the LLC's liquor license, violate,
conflict
with, result in a breach of any provision of, constitute a default
(or
an event that, with
notice 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
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upon any of the
Property or other assets of the LLC, under any of the
terms, conditions,
or provisions of, the
Articles of Organization of
the LLC or LLC Operating Agreement, or any note,
, license, lease,
agreement, or
other instrument or obligation to which the LLC is
a
party, or by which the LLC may be bound, or to
which the LLC or its
properties or
assets may be subject; or
(ii)
violate any
judgment, ruling,
order, writ, injunction,
decree, statute,
rule, or regulation
applicable to the LLC or any of
the LLC's properties or assets.
(c)
Except for
the Sellers, no party
has any interest in the LLC
or the Property or any portion thereof, or the
right or option to acquire any
interest in the LLC or the Property or any portion
thereof. The LLC has
no
subsidiaries and does not directly or indirectly own any securities of or
interest in any other entity, including, without
limitation, any LLC or joint
venture.
(d)
The LLC has conducted no business other than the ownership and
operation of the Property.
3.8 Liabilities,
Debts and Obligations. Except for the Continuing
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Liabilities on the Closing Date, the LLC will have no liabilities,
debts or
obligations which have not been assumed by Sellers.
3.9 Tax Matters with respect to LLC.
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(a) The Sellers have caused the LLC to file, and
shall cause the
LLC to file all income tax information
returns on IRS Form 1065 (including K-1s
for each member) and applicable state
and local income tax forms required to be
filed with the United States Government and with all states and political
subdivisions thereof where any such returns are
required to be filed and where
the failure to file such return or report would subject the
LLC or its sole
member the Sellers, to any material
liability or penalty.
All taxes (other than
sale taxes, rental taxes or the equivalent and
real property taxes) imposed by
the United States, or by any foreign country, or by any
state, municipality,
subdivision, or instrumentality of the United
States or of any foreign country
or by any other taxing authority, which are
due and payable by the LLC have been
paid in full or adequately provided for by
reserves shown in their records and
books of account and in the LLC's financial information.
The LLC has not
obtained or received any extension of time (beyond the
Closing Date) for the
assessment of deficiencies for any years or waived or
extended the statute of
limitations for the determination or collection of
any tax. To the Sellers'
Knowledge, no unassessed tax deficiency is proposed or
threatened against the
LLC.
(b)
All taxes,
rental taxes or the equivalent, and all
interest
and penalties due thereon, required to be paid or collected by the LLC
in
connection with the operation of the Property as
of the Closing Date will have
been collected and/or paid to the appropriate governmental
authorities, as
required or such amounts shall be pro-rated
as of the Closing Date. The Sellers
shall cause the LLC to file, all
necessary returns and petitions required to be
filed through the Closing Date.
The Sellers shall
cause the LLC to prepare and
file all federal and
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state income tax returns for the tax period
ending on the Closing
Date, which
shall reflect the termination for tax
purposes of the LLC.
3.10
Contracts and
Agreements. There is
no loan agreement, guarantee,
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note, bond, indenture and other debt instrument, lease and
other contract to
which the LLC is a party or by which its
assets are bound other than Permitted
Title Exceptions, the Operating Agreements, and the loan
documents respecting
that certain financing by and among the LLC and the lender
with the existing
mortgage on the Property (the "Lender") with an outstanding balance of
approximately $8,700,000.00 (the "Existing Financing Documents" and the
"Existing Financing", respectively), and
such Existing Financing shall continue
to be the debt of the LLC after the Closing with the
consent of the Lender.
3.11
No
Special Taxes. The
Sellers have no Knowledge of, nor have they
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received any written notice of, any special
taxes or assessments relating to the
LLC or Property or any part thereof or
any planned public improvements that may
result in a special tax or assessment against the Property.
3.12
Compliance with
Existing Laws. The LLC possesses all
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Authorizations, each of which is valid and in full force and
effect, and, to
Sellers' Knowledge, no provision, condition or limitation of any of the
Authorizations has been breached or violated.
The LLC has not
misrepresented
or failed to disclose any relevant fact in
obtaining all Authorizations, and the
Sellers have no Knowledge of any change in the
circumstances under which those
Authorizations were obtained that result in their termination, suspension,
modification or limitation other than the
LLC's liquor license. The Sellers have
no Knowledge, nor have they received
written notice within the past three years,
of any existing violation of any
provision of any applicable building, zoning,
subdivision, environmental or other
governmental ordinance, resolution, statute,
rule, order or regulation, including but not
limited to those of environmental
agencies or insurance boards of underwriters, with respect to
the ownership,
operation, use, maintenance or condition of
the Property or any part thereof, or
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