CONTRIBUTION AGREEMENT

Exhibit 10.1

 

CONTRIBUTION AGREEMENT

 

dated as of January 10, 2007

between

 

SHREE ASSOCIATES, KUNJ ASSOCIATES, SHANTI III ASSOCIATES, TRUST FBO NEIL H. SHAH UNDER THE HASU AND HERSHA SHAH 2004 TRUST, TRUST FBO JAY H. SHAH UNDER THE HASU AND HERSHA SHAH 2004 TRUST, DEVI ASSOCIATES, DAVID L. DESFOR, AND SHREENATHJI ENTERPRISES, LTD.

 

 

as Contributors,

 

and

 

HERSHA HOSPITALITY LIMITED PARTNERSHIP AND HERSHA HOSPITALITY, LLC

 

as Acquirors

 

IN CONNECTION WITH THE CONTRIBUTION AND ACQUISITION

OF PARTNERSHIP INTERESTS IN 44 CARLISLE ASSOCIATES, LP,

OWNER OF RESIDENCE INN, CARLISLE, PENNSYLVANIA

 

 

CONTRIBUTION AGREEMENT

 

THIS CONTRIBUTION AGREEMENT (the “Agreement”), dated this 10th day of January, 2007, between SHREE ASSOCIATES ("Shree"), KUNJ ASSOCIATES ("Kunj"), SHANTI III ASSOCIATES ("Shanti III"), DEVI ASSOCIATES (“Devi”), all Pennsylvania limited partnerships (the “Partnership Contributors”), TRUST FBO NEIL H. SHAH UNDER THE HASU AND HERSHA SHAH 2004 TRUST (“NHS Trust”), TRUST FBO JAY H. SHAH UNDER THE HASU AND HERSHA SHAH 2004 TRUST (“JHS Trust”) (the “Trust Contributors”), and Shreenathji Enterprises, Ltd. (“SEL”), a Pennsylvania corporation, (the “Corporate Contributor”), (collectively, the “Contributors”), DAVID L. DESFOR (“Desfor”) (the “Individual Contributor”), AND HERSHA HOSPITALITY LIMITED PARTNERSHIP, a Virginia limited partnership (the “Partnership Acquiror” or “HHLP”) and HERSHA HOSPITALITY, LLC, a Virginia limited liability company (the “LLC Acquiror” or “HHLLC”) (collectively, the “Acquirors”) and 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 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 partnership 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.

 

 

"HHLP- JHS Trust Assignment and Assumption Agreement" shall mean that certain assignment and assumption agreement whereby JHS Trust assigns and HHLP assumes the HHLP- JHS Trust Interest.

“HHLP-NHS Trust Assignment and Assumption Agreement” shall mean that certain assignment and assumption agreement whereby NHS Trust assigns and HHLP assumes the HHLP - NHS Trust Interest.

 

“HHLP-Shree Assignment and Assumption Agreement” shall mean that certain assignment and assumption agreement whereby Shree assigns and HHLP assumes the HHLP-Shree Interest.  

“HHLP-Kunj Assignment and Assumption Agreement” shall mean that certain assignment and assumption agreement whereby Kunj assigns and HHLP assumes the HHLP-Kunj Interest.

 

“HHLP-Shanti III Assignment and Assumption Agreement” shall mean that certain assignment and assumption agreement whereby Shanti III assigns and HHLP assumes the HHLP-Shanti III Interest.  

 

“HHLP-Devi Assignment and Assumption Agreement” shall mean that certain assignment and assumption agreement whereby Devi assigns and HHLP assumes the HHLP-Devi Interest.

 

“HHLP-Desfor Assignment and Assumption Agreement” shall mean that certain assignment and assumption agreement whereby Desfor assigns and HHLP assumes the HHLP-Desfor Interest.

 

“HHLLC-SEL Assignment and Assumption Agreement” shall mean that certain assignment and assumption agreement whereby SEL assigns and HHLLC assumes the HHLLC-SEL Interest.

 

“Assignment and Assumption Agreements” shall mean the HHLP-Shree Assignment and Assumption Agreement, the HHLP-Kunj Assignment and Assumption Agreement, the HHLP-Shanti III Assignment and Assumption Agreement, the HHLP-JHS Trust Assignment and Assumption Agreement, the HHLP- NHS Trust Assignment and Assumption Agreement, the HHLP-Devi Assignment and Assumption Agreement, the HHLP-Desfor Assignment and Assumption Agreement, and the HHLLC-SEL Assignment and Assumption Agreement.

 

"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 contribution and acquisition of the Interests pursuant to this Agreement.

 

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

 

“Consideration” shall mean $8,615,000 payable to the Contributors at Closing in the manner described in Section 2.3.

 

“Continuing Liabilities” shall include liabilities arising under operating agreements, equipment leases, loan agreements, or proration credits at Closing, but shall exclude any liabilities arising from any other arrangement, agreement or pending litigation.

 

"Escrow Agent" shall mean All American Abstract Co., Inc., 2854 Egypt Road, Audubon, PA 19403.

 

"FIRPTA Certificates" shall mean the affidavit of each of the Contributors under Section 1445 of the Internal Revenue Code certifying that such Contributor is not a foreign corporation, foreign partnership, 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 Acquirors.

 

"Governmental Body" means any federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign.

 

"Hotel" shall mean the 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.

 

“HHLP-JHS Trust Interest” shall mean all right, title and interest of JHS Trust in the Partnership, consisting of a 20% limited partnership interest in the Partnership.

“HHLP-NHS Trust Interest” shall mean all right, title and interest of NHS Trust in the Partnership, consisting of a 20% limited partnership interest in the Partnership.

 

“HHLP-Shree Interest” shall mean all right, title and interest of Shree in the Partnership, consisting of a 14% limited partnership interest in the Partnership.

“HHLP-Kunj Interest” shall mean all right, title and interest of Kunj in the Partnership, consisting of a 15% limited partnership interest in the Partnership.

 

 

“HHLP-Shanti III Interest” shall mean all right, title and interest of Shanti III in the Partnership, consisting of a 14% limited partnership interest in the Partnership.

 

“HHLP-Devi Interest” shall mean all right, title and interest of Devi in the Partnership, consisting of a 14% limited partnership interest in the Partnership.

 

“HHLP-Desfor Interest” shall mean all right, title and interest of Desfor in the Partnership, consisting of a 2% limited partnership interest in the Partnership.  

 

“HHLLC-SEL Interest” shall mean all right, title and interest of SEL in the Partnership, consisting of a 1% general partnership interest in the Partnership.

   

"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 Contributors and used in connection with the ownership, operation, leasing, occupancy or maintenance of the Property, including, without limitation, the right to use the trade name "Residence Inn" and all variations thereof, the Authorizations, escrow accounts, insurance policies, general intangibles, business records, plans and specifications, surveys and title insurance policies pertaining to the Real Property and the Personal Property, all licenses, 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, and the share of the Tray Ledger as hereinafter defined, excluding (a) any of the aforesaid rights the Acquirors elect not to acquire, (b) the Contributors’ cash on hand, in bank accounts and invested with financial institutions and (c) accounts receivable except for the above described share of the Tray Ledger.

 

“Interests” shall mean the HHLP-Shree Interest, the HHLP-Kunj Interest, the HHLP-Shanti III Interest, the HHLP- JHS Trust Interest, the HHLP-NHS Trust Interest, the HHLP-Devi Interest, the HHLP-Desfor Interest, and the HHLLC-SEL Interest.

 

"Inventory" shall mean all "inventories of merchandise" and "inventories of supplies", as such terms are defined in the Uniform System of Accounts for Hotels [9^th Revised Edition] as published by the Hotel Association of New York City, Inc., as revised, and similar consumable supplies.

 

"Land" shall mean that certain parcel of real estate lying and being at, more commonly known as the, 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 Contributors 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.

 

 

"Leases" shall mean those leases of real property attached hereto as Exhibit D.

 

“Lessee” shall mean 44 New England Management Company.

 

"Manager" shall mean Hersha Hospitality Management, L.P.

 

"Operating Agreements" shall mean the management agreements, service contracts, supply contracts, leases (other than the 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.

 

“Organizational Documents” shall mean the current partnership agreements and certificates of limited partnership of the Partnership Contributors, true and correct copies of which are attached hereto as Exhibit F and Exhibit G, respectively.

 

"Owner's Title Policy" shall mean an owner's policy of title insurance issued to the Acquirors by the Title Company, pursuant to which the Title Company insures the Acquirors' ownership of fee simple title to the Real Property (including the marketability thereof) subject only to Permitted Title Exceptions. The Owner's Title Policy shall insure the Acquirors in the amount of the Consideration and shall be acceptable in form and substance to the Acquirors. 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 the Survey.

 

“Partnership” shall mean 44 Carlisle Associates, LP, a Pennsylvania limited partnership that owns as its sole assets hotel improvements situated at 1 Hampton Court, Carlisle, PA 17013.  

 

"Permitted Title Exceptions" shall mean those exceptions to title to the Real Property that are satisfactory to the Acquirors.

 

"Property" shall mean collectively the Real Property, 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 Contributors’ Reservation Terminal and Reservation System equipment and software, if any.

 

 

"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 Contributors; provided, however, that the Acquirors agree that, all Inventory shall be conveyed to the Acquirors' property manager.

 

"Title Commitment" shall mean the commitment by the Title Company to issue the Owner's Title Policy.

 

"Title Company" shall mean All American Abstract Co., Inc., 2854 Egypt Road, Audubon, PA 19403.

 

"Tray Ledger" shall mean the final night's room revenue (revenue from rooms occupied as of 12:01 a.m. on the Effective Date, exclusive of food, beverage, telephone and similar charges which shall be retained by the Contributors), 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.

 

(c)   The 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.

 

 

ARTICLE II

CONTRIBUTION AND ACQUISITION; PAYMENT OF CONSIDERATION AND CONTINGENT CONSIDERATION

 

2.1   Contribution and Acquisition. Each of the Contributors agrees to contribute, assign and transfer its respective Interest to the Acquirors and the Acquirors agree to accept each Contributor’s Interest in exchange for the Consideration and in accordance with the other terms and conditions set forth herein.

 

2.2   Intentionally Omitted.

2.3   Payment of the Consideration. The consideration shall be paid to the Contributor in the following manner:

 

(a) The Acquirors shall receive a credit against the Consideration in an amount equal to the Contributors’ closing costs assumed and paid for by the Acquirors pursuant to Section 6.4 hereof.

 

(b) The Acquirors shall receive a credit against the Consideration in an amount equal to the outstanding balance (principal, interest, fees and the like), as of the date of Closing (approximately $7million), of the existing mortgage loan encumbering the property as such balance is evidenced by a letter from the lender, which loan the Acquirors shall take subject to or, if requested, assume.

 

(c) The Acquirors shall issue units of Hersha Hospitality Limited Partnership for the amount of $1,330,000.00.

 

(d) The Acquirors shall pay in the lawful money of the United States for the balance of the Consideration.

 

The parties agree that the transfer of the assets to the Acquirors pursuant to this Agreement shall be treated for federal income tax purposes as a contribution of such assets solely in exchange for partnership interests in the Partnership Contributor that qualifies as a tax-free contribution under Section 721 of the Internal revenue Code of 1986, as amended.

 

 

ARTICLE III

CONTRIBUTORS’ REPRESENTATIONS, WARRANTIES AND COVENANTS

 

To induce the Acquirors to enter into this Agreement and to acquire the Interests, the Contributors hereby make the following representations, warranties and covenants on a joint and several basis, upon each of which the Contributors acknowledge and agree that the Acquirors is entitled to rely and has relied:

 

 

3.1   Organization and Power. The Partnership Contributors are each limited partnerships duly formed, validly existing and in good standing under the laws of the Commonwealth of Pennsylvania, and the Corporate Contributor is a corporation duly formed, validly existing and in good standing under the laws of the Commonwealth of Pennsylvania and have all requisite powers and all governmental licenses, authorizations, consents and approvals necessary to carry on its business as now conducted, to own, lease and operate its properties, to execute and deliver this Agreement and any document or instrument required to be executed and delivered on behalf of the Contributors hereunder, to perform their obligations under this Agreement and any such other documents or instruments and to consummate the transactions contemplated hereby.

 

3.2   Authorization, No Violations and Notices.

 

 

 

 

 

 

3.3   Litigation with respect to Contributors. There is no action, suit, claim or proceeding pending or, to the Contributors’ knowledge, threatened against or affecting the Contributors or their assets in any court, before any arbitrator or before or by any governmental body or other regulatory authority (i) that would adversely affect the Interests, (ii) 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. The Contributors are not subject to any judgment, decree, injunction, rule or order of any court relating to the Contributors’ participation in the transactions contemplated by this Agreement.

 

3.4   Interests. The Interests will be free and clear of all liens and encumbrances on the Closing Date and the Contributors have good, merchantable title thereto and the right to convey same in accordance with the terms of this Agreement. Upon delivery of the Assignment and Assumption Agreements to the Acquirors at Closing, good valid and merchantable title to the Interests, free and clear of all liens and encumbrances, will pass to the Acquirors.

 

3.5   Bankruptcy with Respect to Contributors. No Act of Bankruptcy has occurred with respect to the Contributors.

 

3.6   Brokerage Commission. The Contributors have not engaged the services of, nor are they or will they or Acquirors become liable to, any real estate agent, broker, finder or any other person or entity for any brokerage or finder’s fee, commission or other amount with respect to the transactions described herein on account of any action by the Contributors.

3.7   The Partnership.

 

 

 

 

 

 

 

3.8   Liabilities, Debts and Obligations. Except for the Continuing Liabilities, the Partnership has no liability, debt or obligation.

 

3.9   Tax Matters with respect to Partnership.

 

 

 

 

3.10   Contracts and Agreements. There is no loan agreement, guarantee, note, bond, indenture and other debt instrument, lease and other contract to which the Partnership is a party or by which its assets are bound other than Permitted Title Encumbrances, the Leases, and the Operating Agreements.

 

3.11   No Special Taxes. The Contributors have no actual knowledge of, nor have they received any written notice of, any special taxes or assessments relating to the Partnership 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 Partnership possesses all Authorizations, each of which is valid and in full force and effect, and, to Contributors’ actual knowledge, no provision, condition or limitation of any of the Authorizations has been breached or violated. The Partnership has not misrepresented or failed to disclose any relevant fact in obtaining all Authorizations, and the Contributors have no actual knowledge of any change in the circumstances under which those Authorizations were obtained that result in their termination, suspension, modification or limitation. The Contributors have no actual 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 requiring any repairs or alterations other than those that have been made prior to the date hereof.

 

3.13   Operating Agreements. The Partnership has performed all of its obligations under each of the Operating Agreements and no fact or circumstance has occurred which, by itself or with the passage of time or the giving of notice or both, would constitute a material default under any of the Operating Agreements. The Partnership shall not enter into any new management agreement, maintenance or repair contract, supply contract, lease in which it is lessee or other agreements with respect to the Property, nor shall the Partnership enter into any agreements modifying the Operating Agreements, unless (a) any such agreement or modification will not bind the Acquirors or the Property after the date of Closing or (b) the Contributors have obtained the Acquirors' prior written consent to such agreement or modification, which consent shall not be unreasonably withheld or delayed.

 

 

3.14   Warranties and Guaranties. The Partnership shall not before Closing, release or modify any warranties or guarantees, if any, of manufacturers, suppliers and installers relating to the Improvements and the Personal Property or any part thereof, except with the prior written consent of the Acquirors, which consent shall not be unreasonably withheld or delayed. A complete list of all such warranties and guaranties in effect as of this date is attached hereto as Exhibit H.

 

3.15   Insurance. All of the Partnership’s Insurance Policies are valid and in full force and effect, all premiums for such policies were paid when due and all future premiums for such policies (and any replacements thereof) shall be paid by the Partnership on or before the due date therefor. The Partnership shall pay all premiums on, and shall not cancel or voluntarily allow to expire, any of the Partnership’s Insurance Policies prior to the Closing Date unless such policy is replaced, without any lapse of coverage, by another policy or policies providing coverage at least as extensive as the policy or policies being replaced. The Partnership shall name the Acquirors as an additional insured on each of the Partnership’s Insurance Policies.

 

3.16   Condemnation Proceedings; Roadways. The Partnership has received no written notice of any condemnation or eminent domain proceeding pending or threatened against the Property or any part thereof. The Contributors have no actual knowledge of any change or proposed change in the route, grade or width of, or otherwise affecting, any street or road adjacent to or serving the Real Property.

 

3.17   Litigation with respect to Partnership. Except as set forth on Exhibit I there is no action, suit or proceeding pending or known to be threatened against or affecting the Partnership or its property in any court, before any arbitrator or before or by any governmental agency which (a) in any manner raises any question affecting the validity or enforceability of this Agreement or any other material agreement or instrument to which the Partnership are a party or by which they are bound and that is or is to be used in connection with, or is contemplated by, this Agreement, (b) could materially and adversely affect the business, financial position or results of operations of the Partnership, (c) could materially and adversely affect the ability of the Partnership perform its obligations hereunder, or under any document to be delivered pursuant hereto, (d) could create a lien on the Property, any part thereof or any interest therein, or (e) could otherwise materially adversely affect the Property, any part thereof or any interest therein or the use, operation, condition or occupancy thereof.

 

3.18   Labor Disputes and Agreements. The Partnership currently has no labor disputes pending or, threatened as to the operation or maintenance of the Property or any part thereof. The Partnership is not a party to any union or other collective bargaining agreement with employees employed in connection with the ownership, operation or maintenance of the Property. The Acquirors will not be obligated to give or pay any amount to any employee of the Partnership, and the Acquirors shall not have any liability under any pension or profit sharing plan that the Partnership may have established with respect to the Property or their or its employees.

 

 

3.19   Financial Information. To the best of the Contributors’ knowledge except as otherwise disclosed in writing to the Acquirors prior to the closing, for each of the Partnership’s accounting years, when a given year is taken as a whole, all of the Partnership’s financial information previously delivered or to be delivered to the Acquirors is and shall be correct and complete in all material respects and presents accurately the results of the operations of the Property for the periods indicated, except such statements do not have footnotes or schedules that may otherwise be required by GAAP. If requested by the Acquirors, Contributors will forward promptly all four-week period ending financial information they receive from the Partnership. Contributors’ financial information is prepared based on information provided by the Partnership based on books and records maintained by the Partnership in accordance with the Partnership’s accounting system. Partnership financial information provided by the Acquirors has been provided to the Acquirors without any changes or alteration thereto. To the best of Contributors’ knowledge, since the date of the last financial statement included in the Partnership’s financial information, there has been no material adverse change in the financial condition or in the operations of the Property.

 

3.20   Organizational Documents. The Partnership’s Organizational Documents are in full force and effect and have not been modified or supplemented, and no fact or circumstance has occurred that, by itself or with the giving of notice or the passage of time or both, would constitute a default thereunder.

 

3.21   Operation of Property. The Contributors covenant that between the date hereof and the date of Closing they will make good faith efforts to cause the Partnership to (a) operate the Property only in the usual, regular and ordinary manner consistent with the Partnership’s prior practice, (b) maintain their books of account and records in the usual, regular and ordinary manner, in accordance with sound accounting principles applied on a basis consistent with the basis used in keeping its books in prior years, and (c) use all reasonable efforts to preserve intact their present business organization, keep available the services of their present officers and employees and preserve their relationships with suppliers and others having business dealings with them. The Contributors shall make good faith efforts to encourage the Partnership to continue to make good efforts to take guest room reservations and to book functions and meetings and otherwise to promote the business of the Property in generally the same manner as the Partnership did prior to the execution of this Agreement. Except as otherwise permitted hereby, from the date hereof until Closing, the Contributors shall use its good faith efforts to ensure that the Partnership shall not take any action or fail to take action the result of which (i) would have a material adverse effect on the Property or the Acquirors’ ability to continue the operation thereof after the date of Closing in substantially the same manner as presently conducted, (ii) reduce or cause to be reduced any room rents or any other charges over which Contributors have operational control, or (iii) would cause any of the representations and warranties contained in this Article III to be untrue as of Closing. 

 

 

3.22   Bankruptcy with respect to Partnership. No Act of Bankruptcy has occurred with respect to the Partnership.

 

3.23   Hazardous Substances. Except for matters in Partnership’s or Acquirors' audits, Contributors have no knowledge: (a) of the presence of any "Hazardous Substances" (as defined below) on the Property, or any portion thereof, or, (b) of any spills, releases, discharges, or disposal of Hazardous Substances that have occurred or are presently occurring on or onto the Property, or any portion thereof, or (c) of the presence of any PCB transformers serving, or stored on, the Property, or any portion thereof, and Contributors have no actual knowledge of any failure to comply with any applicable local, state and federal environmental laws, regulations, ordinances and administrative and judicial orders relating to the generation, recycling, reuse, sale, storage, handling, transport and disposal of any Hazardous Substances (as used herein, "Hazardous Substances" shall mean any substance or material whose presence, nature, quantity or intensity of existence, use, manufacture, disposal, transportation, spill, release or effect, either by itself or in combination with other materials is either: (1) potentially injurious to the public health, safety or welfare, the environment or the Property, (2) regulated, monitored or defined as a hazardous or toxic substance or waste by any Environmental Authority, or (3) a basis for liability of the owner of the Property to any Environmental Authority or third party, and Hazardous Substances shall include, but not be limited to, hydrocarbons, petroleum, gasoline, crude oil, or any products, by-products or components thereof, and asbestos). Notwithstanding anything to the contrary contained herein Contributors shall have no liability to Acquirors for any Hazardous Substances of which Contributors have no actual knowledge.

 

3.24   Room Furnishings. All public spaces, lobbies, meeting rooms, and each room in the Hotel available for guest rental are furnished in accordance with Licensor's standards for the Hotel and room type.

 

3.25   License. The license from Residence Inn Carlisle (Marriott International) (the "Licensor") with respect to the Hotel (the "License") is, and at Closing will be, valid and in full force and effect, and Contributors will make good faith efforts not to be in default with respect thereto (with or without the giving of any required notice and/or lapse of time).

 

3.26   Independent Audit. Contributors shall provide access by Acquirors' representatives, to all financial and other information relating to the Property which would be sufficient to enable them to prepare audited financial statements in conformity with Regulation S-X of the Securities and Exchange Commission (the "Commission") and to enable them to prepare report or disclosure statement for filing with the Commission. Contributors shall also provide to Acquirors' representatives a signed representative letter and a hold harmless letter, which would be sufficient to enable an independent public accountant to render an opinion on the financial statements related to the Property.

 

 

3.27   Bulk Sale Compliance. Contributors shall indemnify Acquirors against any claim, loss or liability arising under the bulk sales law in connection with the transaction contemplated herein.

 

3.28   Intentionally Omitted.

 

3.29   Sufficiency of Certain Items. The Property contains not