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Exhibit 10.6

SECOND AMENDMENT TO
LIMITED LIABILITY COMPANY OPERATING AGREEMENT
OF MYSTIC PARTNERS, LLC

This Second Amendment to Limited Liability Company Operating Agreement (this
"Amendment") of MYSTIC PARTNERS, LLC (the "Company"), is dated as of February
__, 2006 and entered into by and among the following:

Name
 
Current Address
     
Mystic Hotel Investors, LLC
 
Post Office Box 715
(a Delaware limited liability company)
 
914 Hartford Turnpike
 
 
Waterford, CT 06385
 
 
 
Hersha Hospitality Limited Partnership
 
5 10 Walnut Street, 9th Floor
(a Virginia limited partnership)
 
Philadelphia, PA 19106

hereinafter collectively, the "Members".

W I T N E S S E T H:

WHEREAS, the Company was formed pursuant to a Certificate of Formation filed
with the Delaware Secretary of State on June 15, 2005 and by execution of a
Limited Liability Company Operating Agreement on August 9, 2005, as amended by
the First Amendment to Limited Liability Company Operating Agreement, dated
September 30, 2005 (the "LLC Agreement"); capitalized terms used herein but not
otherwise defined shall have the meanings set forth for such terms in the LLC
Agreement; and

WHEREAS, the Members desire to restructure the capital sharing ratios and
related equity and cost sharing mechanisms with respect to the Development
Assets (the "Equity Restructuring") contained in the LLC Agreement to reflect
the Equity Restructuring;

WHEREAS, pursuant to Section 3.2.2 of the LLC Agreement, the Members have agreed
to amend certain provisions of the LLC Agreement upon the occurrence of any
contribution of a Deferred Property; and

WHEREAS, the Members hereby desire to amend the LLC Agreement as set forth
herein as follows:

1.    Exhibits A, 1.1 and 1.2 of the LLC Agreement are hereby deleted in their
entirety and replaced with Exhibits A, 1.1 and 1.2 attached hereto and made a
part hereof. All references to Exhibits A, 1.1 and 1.2 in the LLC Agreement
shall be deemed to refer to the replacements of same attached hereto.

2.    The Definition of Capital Sharing Ratio is hereby amended such that
Investor Class B Member shall have a 15% interest with respect to the Hartford
Marriott and a 10% interest with respect to the Hartford Hilton and such that
Mystic Member shall have a 85% interest with respect to the Hartford Marriott
and a 90% interest with respect to the Hartford Hilton.

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3.    The definition of Contribution Agreement is hereby amended such that after
the words "August 8, 2005,", the following text shall appear:

(A) Fourth Amendment to Membership Interests Contribution Agreement dated as of
September 15, 2005, a Fifth Amendment to Membership Interests Contribution
Agreement dated as of November 1, 2005, and a Sixth Amendment to Membership
Interests Contribution Agreement dated as of February___, 2006, and as further
amended, modified or supplemented from time to time.

4.    The definition of Residual Sharing Ratios is hereby amended such that
Investor Class A Member shall have 0% with respect to Hartford Hilton and 0%
with respect to the Hartford Marriott, Investor Class B Member shall have 7%
with respect to the Hartford Hilton and 10.5% with respect to the Hartford
Marriott and Mystic Member shall have 93% with respect to the Hartford Hilton
and 89.5% with respect to the Hartford Marriott.

5.    Section 3.2.2 is hereby amended such that subclause (A) is hereby deleted
and replaced in its entirety with the following text:

(A) Mystic Member shall transfer all of its interests in the applicable Deferred
Property to the Company (which shall be the percentage of the outstanding
interests in the Deferred Property as shown on Exhibit A), free and clear of any
and all Encumbrances and with a net fair market value to be credited as a
Capital Contribution equal to (i) 90% with respect to the Hartford Hilton, (ii)
85% with respect to the Hartford Marriott and (iii) 33.3% with respect to the
remainder of the Deferred Property, in each case, of the adjusted Contribution
Value (as defined in the Contribution Agreement) attributable to the Hartford
Hilton, the Hartford Marriott and the other applicable Deferred Property,
respectively (after giving effect to payments made to Mystic Member in
accordance with the Contribution Agreement);

6.    Section 4.5.1 is hereby amended such that the words "at the rate of 50%
Investor Member participation/50% Mystic Member participation, in the case of a
Competitive Venture located within five miles of a Development Asset" is deleted
and replaced with the words "at the rate of 10% Investor Member
participation/90% Mystic Member participation, in the case of a Competitive
Venture located within five miles of the Hartford Hilton and the rate of 15%
Investor Member participation/85% Mystic Member participation, in the case of a
Competitive Venture located within five miles of the Hartford Marriott".

7.    Section 4.5.1 is hereby amended such that the last sentence thereof is
deleted and replaced with the following text:

If the proposed Competitive Venture is within five miles of both a Stabilized
Asset and a Development Asset or within five miles of both the Hartford Marriott
and the Hartford Hilton, the participation percentage shall be determined by the
nearest asset.

2

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8.    Section 4.10 is hereby amended such that the words "0.25% of Operating
Revenues, with respect to the Development Assets" are hereby deleted and
replaced with the words "0.25% of Operating Revenues, with respect to the
Hartford Marriott".

9.    The definition of Distributable Funds set forth in Section 5.2.1 is hereby
deleted in its entirety and replaced with the following text:

"Distributable Funds" shall mean (a) with respect to Investor Member, the sum of
(i) 100% of the Net Cash Flow on hand (after repayment of any outstanding Member
Loans) in respect of Stabilized Assets, plus (ii) 10% of the Net Cash Flow on
hand (after repayment of any outstanding Member Loans) in respect of the
Hartford Hilton, plus (iii) 15% of the Net Cash Flow on hand (after repayment of
any outstanding Member Loans) in respect of the Hartford Marriott, plus (iv)
Capital Proceeds actually received and (b) with respect to Mystic Member, the
sum of (i) 100% of the Net Cash Flow on hand (after repayment of any outstanding
Member Loans) in respect of Stabilized Assets, plus (ii) 90% of the Net Cash
Flow on hand (after repayment of any outstanding Member Loans) in respect of the
Hartford Hilton, plus (iii) 85% of the Net Cash Flow on hand (after repayment of
any outstanding Member Loans) in respect of the Hartford Marriott, plus (iv)
Capital Proceeds actually received. Attached hereto as Exhibit B for
illustrative purposes is a hypothetical calculation of Distributable Funds.

10.    The following text is hereby added as a new Section 15:

15.1    Investor Member Option. Mystic Member hereby grants to Investor Member
the option (the "Option") to purchase up to 50% (in the aggregate, which 50%
maximum percentage interest shall include Investor Member's percentage interest
in the Company as evidenced by its Capital Sharing Ratio as of each of the
Option Exercise Dates (as defined below)) of Mystic Member's interest in the
Development Asset Entity that own each of the Hartford Hilton ("Hartford Hilton
Owner") and the Hartford Marriott ("Hartford Marriott Owner"), respectively.
Investor Member shall have the right to close on the purchase of additional
percentage interests acquired pursuant to the Option only on either December 29,
2006 or December 31, 2007 (collectively, the "Option Purchase Dates") and on no
other date. The Option shall expire on the occurrence of the Option Purchase
Dates. Investor Member may exercise the Option in any increment of 10%. The
amount of the percentage interest desired to be purchased by Investor Member as
of the applicable Option Purchase Date in either the Hartford Marriott or the
Hartford Hilton shall herein be referred to as the "Additional Percentage
Interest".

15.2    Option Price. The price for Investor Member's acquisition of a
percentage interest in Hartford Hilton Owner (the "Hilton Option Price") shall
equal the sum of (a) the product obtained by multiplying (i) the Contribution
Value of the Hartford Hilton as set forth in the Contribution Agreement by (ii)
the Additional Percentage Interest plus (b) the product obtained by multiplying
(i) all operational funding (i.e. capital calls to fund operational shortfalls)
and capital expenditures incurred by Hartford Hilton Owner from the period since
the acquisition by the Company of the interests in Hartford Hilton Owner to the
applicable Option Purchase Date by (ii) the Additional Percentage Interest plus
(c) the product obtained by multiplying (i) 10% by (ii) the sum of (a) plus (b).
The price for Investor Member's acquisition of the Additional Percentage
Interest in Hartford Marriott Owner (the "Marriott Option Price") shall equal
the sum of (x) the product obtained by multiplying (i) the total amount of
actual costs incurred in the construction and development of the Hartford
Marriott (as of the date hereof, the Members hereby acknowledge and agree that
such costs are estimated to be approximately $94,000,000) by (ii) the Additional
Percentage Interest plus (y) the product obtained by multiplying (i) all
operational funding (i.e. capital calls to fund operational shortfalls) and
capital expenditures incurred by Hartford Marriott Owner from the period since
the acquisition by the Company of the interests in Hartford Hilton Owner to the
applicable Option Purchase Date by (ii) the Additional Percentage Interest plus
(z) the product obtained by multiplying (i) 10% by (i) the sum of (x) plus (y).

3

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15.3    Exercise of the Option. In the event that Investor Member desires to
exercise the Option, Investor Member shall provide written notice of such desire
(an "Option Notice") to Mystic Member on or prior to October 1, 2006 at 6:00
p.m., New York time (the "First Option Exercise Date") with respect to the
Option Purchase Date occurring on December 29, 2006 and October 1, 2007 at 6:00
p.m., New York time (the "Second Option Exercise Date", together with the First
Option Exercise Date, the "Option Exercise Dates") with respect to the Option
Purchase Date occurring on December 31, 2007. The Option Notice shall include
Investor Member's desired Additional Percentage Interest with respect to the
Hartford Hilton and the Hartford Marriott, as applicable. Within ten days after
Mystic Member's receipt of the Option Notice, Mystic Member shall notify
Investor Member in writing of the Hilton Option Price and the Marriott Option
Price, as applicable. In the event that Investor Member and Mystic Member do not
agree on the calculation of the Option Price, Investor Member and Mystic Member
shall negotiate the Option Price in good faith. Section 6 of the Contribution
Agreement shall govern the calculation of all prorations and post closing
adjustments necessary in connection with Investor Member's exercise of the
Option.

15.4    Closing of the Purchase of the Additional Percentage Interest. The
parties shall agree on a mutually acceptable location at which to close on
Investor Member's purchase of the Additional Percentage Interests (which may be
by mail). On each of the Option Purchase Dates, as applicable, the parties shall
do the following:

15.4.1   Execute and deliver an amendment to the LLC Agreement evidencing
revised Capital Sharing Ratios and Residual Sharing Ratios (which shall be
determined in the same manner as prior to the date hereof) of Investor Member
and Mystic Member reflecting Investor Member's acquisition of the Additional
Percentage Interests for the Hartford Hilton and/or the Hartford Marriott, as
the case may be;

15.4.2   Investor Member shall pay the Hilton Option Price and/or the Marriott
Option Price, as the case may be;

15.4.3   The parties shall calculate the prorations and deliver a Settlement
Statement in accordance with the procedures set forth in the Contribution
Agreement.

11.    All references to Waterford Class Member contained in the LLC Agreement
shall be modified to be references to Mystic Member.

4

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12.    As specifically modified hereby, the LLC Agreement shall remain in full
force and effect and is hereby ratified and confirmed. All references to the LLC
Agreement shall mean and refer to the LLC Agreement as amended and modified
hereby.

13.    This Amendment may be executed in one or more counterparts, and all such
counterparts shall together constitute the same agreement.

13.    This Amendment shall be construed and interpreted according to the laws
of the State of Delaware. Accordingly, all questions with respect to
construction of this Amendment and the rights and liabilities of the parties
shall be determined in accordance with the applicable provisions of the laws of
the State of Delaware and this Amendment is intended to be performed in
accordance with and only to the extent permitted by all applicable laws,
ordinances, rules and regulations of such State. In the event that there is a
direct conflict between the provisions of Delaware law and the provisions of any
other jurisdiction applicable to a particular transaction, the laws of Delaware
shall nevertheless apply except and to the extent that such interpretation or
application would render the action or proposed action of the Company to be
invalid or illegal, in which event, the law of the jurisdiction of the State or
country which would be applicable under general rules regarding conflict of laws
or rules of comity shall apply.

[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, the Members have caused this Amendment to be duly executed
by their respective and duly authorized representatives as of the date first
above written.

 
MEMBERS:
 
 
 
HERSHA HOSPITALITY LIMITED PARTNERSHIP
   
 
BY
 
/s/ Ashish Parikh
 
Name:
Ashish R. Parikh
 
Title:
CFO
 
 
 
MYSTIC HOTEL INVESTORS, LLC
 
 
 
By:
   
 
Name:
 
 
Title:
Authorized Representative

 

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IN WITNESS WHEREOF, the Members have caused this Amendment to be duly executed
by their respective and duly authorized representatives as of the date first
above written.
 
 
MEMBERS:
 
 
 
HERSHA HOSPITALITY LIMITED PARTNERSHIP
 
 
 
By:
   
 
Name:
 
 
Title:
 
 
 
 
MYSTIC HOTEL INVESTORS, LLC
 
 
 
By:
 
/s/ G Jette
 
Name:
Glen A. Jette
 
Title:
Authorized Representative

 

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EXHIBIT 1.1

MEMBERSHIP INTERESTS AND OWNER ENTITIES
MEMBERSHIP INTERESTS AND OWNER ENTITIES

Property
Ownership
 
1 . Residence Inn Southington
778 West St.
Southington, CT 06489
Southington Suites, LLC, composed of:
67% Mystic Hotel Investors, LLC
33% Minority Interests
2. Dunkin Donuts
790 West St.
Southington, CT 06489
790 West Street LLC, composed of:
67% Mystic Hotel Investors, LLC
33% Minority Interests
3. Residence Inn by Marriott
22 Segar St.
Danbury, CT 06810
Danbury Suites, LLC, composed of:
100% Mystic Hotel Investors, LLC
4. Mystic Marriott Hotel and Spa
625 North Road
Groton, CT 06320
Exit 88 Hotel, LLC composed of:
99.9% Mystic Hotel Investors, LLC
0.10% Mystic Hotel Investors Remote Entity Incorporated
5. Courtyard Hotel Warwick
55 Jefferson Park Road
Warwick, RI 02888
Warwick Lodgings, LLC, composed of:
100% Mystic Hotel Investors, LLC
6. Courtyard by Marriott and Rosemont Suites
181 West Town St.
Norwich, CT 06360
Norwich Hotel, LLC, composed of:
100% Mystic Hotel Investors, LLC
7. Springhill Suites by Marriott
40 1 North Frontage Road
Waterford, CT 06385
Waterford Suites, LLC, composed of:
100% Mystic Hotel Investors, LLC
8. Residence Inn by Marriott and Whitehall Mansion
40-42 Whitehall Avenue
Mystic, CT 06355
Whitehall Mansion Partners, LLC
100% Mystic Hotel Investors, LLC
9. Hartford Hilton
315 Trumbull Street
Hartford, CT 06103
3 1 5 Trumbull Street Associates, LLC, composed of:
88% Mystic Hotel Investors, LLC
12% Minority Interests
10. Hartford Marriott
Columbus Blvd.
Hartford, CT 06106
Adriaen's Landing Hotel, LLC, composed of:
95.66155% Mystic Hotel Investors, LLC
4.33845% Minority Interests

 

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EXHIBIT 1.2

DESCRIPTION OF PROPERTY

(see attached)

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Exhibit A

Members, Capital Contributions,
And Capital Sharing Ratios

Name and Address of Members
Cash Contribution
Gross Fair Market Value of Contributed Property
Less Debt Assumed or Taken Subject to by Company
Net Agreed Value of Contributed Property
Capital Sharing Ratio
Mystic Hotel Investors, LLC
$1,789,385      
$120,864,548      
$67,542,820      
$53,321,728      
33.3% with respect to Stabilized Assets
Mystic Hotel Investors, LLC
$567,557      
$31,072,620      
$18,678,125      
$12,394,495      
50% with respect to Development Assets
Hersha Hospitality Limited Partnership
$39,149,738      
$0      
$0
$0      
66.7% with respect to Stabilized Assets
Hersha Hospitality Limited Partnership
$6,764,805      
$0      
$0
$0      
50% with respect to Development Assets

 

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EXHIBIT A - CONTINUED
The Contribution Value of the contributed property is allocated among the
various Properties as follows:
 

   
Cash Contributed by Investor Member
 
Cash Contributed by Waterford Member
 
Gross FMV of Contributed Prop
 
(Less Debt)
 
Net Agreed Value of Prop
Courtyard by Marriott &
 
(working cap)
33,350
 
(working cap)
16,650
 
12,660,090
 
7,269,605
 
5,390,485
Rosemont Suites, Norwich, CT
 
(shared costs)
389,960
 
(shared costs)
194,688
 
 
 
 
 
 
(Norwich Hotel, LLC)
   
3,595,453
       
 
 
 
 
 
Springfield Suites by Marriott,
 
(working cap)
33,350
 
(working cap)
16,650
 
8,049,269
 
6,191,340
 
1,857,929
Waterford, CT (Waterford
 
(shared costs)
254,446
 
(shared costs)
127,032
 
 
 
 
 
 
Suites, LLC)
   
1,239,239
       
 
 
 
 
 
Residence Inn by Marriott,
 
(working cap)
50,025
 
(working cap)
24,975
 
9,099,530
 
7,198,757
 
1,900,773
Danbury, CT (Danbury Suites,
 
(shared costs)
887,837
 
(shared costs)
443,253
 
 
 
 
 
 
LLC)
   
1,267,815
       
 
 
 
 
 
Courtyard Hotel, Warwick, RI
 
(working cap)
33,350
 
(working cap)
16,650
 
9,094,108
 
6,247,403
 
2,846,705
(Warwick Lodgings, LLC)
 
(shared costs)
230,971
 
(shared costs)
115,312
 
 
 
 
 
 
 
   
1,898,752
       
 
 
 
 
 
Residence Inn by Marriott,
 
(shared costs)
234, 678
 
(shared costs)
117,163
 
9,259,089
1 
7,298,305
1 
1,960,784
Southington, CT (Southington
   
1,307,844
       
 
 
 
 
 
Suites, LLC)
             
 
 
 
 
 
Mystic Marriott Hotel & Spa,
 
(working cap)
590,979
 
(working cap)
295,046
 
54,658,165
 
25,330,607
 
29,327,558
Groton, CT (Exit 88 Hotel,
 
(shared costs)
401,215
 
(shared costs)
200,306
 
 
 
 
 
 
LLC)
   
19,561,481
       
 
 
 
 
 
Dunkin Donuts, 790 West St.,
 
Combined with Residence Inn by Marriott, Southington, CT
 
 
 
Southington, CT (790 West
             
 
 
 
 
 
Street LLC)
             
 
 
 
 
 
Residence Inn by Marriott and
 
(working cap)
166,750
 
(working cap)
83,250
 
18,044,297
 
8,006,803
 
10,037,494
Whitehall Mansion (Whitehall
 
(shared costs)
277,235
 
(shared costs)
138,410
 
 
 
 
 
 
Mansion Partners, LLC)
   
6,695,008
       
 
 
 
 
 
Hartford Hilton (315 Trumbull
 
(working cap)
264,000
 
(working cap)
264,000
 
31,072,620
1 
18,678,125
1
12,394,495
Street Associates, LLC)
 
(shared costs)
303,557
 
(shared costs)
303,557
 
 
 
 
 
 
 
   
6,197,248
       
 
 
 
 
 
Hartford Marriott (Adriaen's
 
(working cap)
121,968
 
(working cap)
691,155
 
83,369,041
1 
42,948,478
 
40,420,563
Landing Hotel, LLC)
 
(shared costs)
[6,063,084]
 
(shared costs)
[64,089]
 
 
 
 
 
 
TOTAL:
   
$45,914,543
   
$2,356,942
 
$151,937,168
 
 
 
$65,716,223

__________________________
1 Adjusted to take into account Minority Interests.

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Exhibit B

Mystic Partners, LLC
Second Amendment to the LLC Agreement - Distributable Funds Exhibit
December 31, 20XX

   
NET OPERATING INCOME
 
LESS: DEBT PRINCIPAL AND INTEREST
 
NET CASH FLOW
 
MYSTIC PARTNERS PERCENTAGE INTEREST
 
MYSTIC PARTNERS NET CASH FLOW
 
INVESTOR MEMBER DISTRIBUTABLE FUNDS
 
MYSTIC MEMBER DISTRIBUTABLE FUNDS
 
Norwich Hotel, LLC
 
$
1,130,000
 
$
(536,809
)
$
593,191
   
100%
 
$
593,191
 
$
593,191
 
$

 
Waterford Suites, LLC
   
675,000
   
(361,775
)
 
313,225
   
100%
 
 
313,225
   
313,225
   
-   
 
Exit 88 Hotel, LLC
   
4,125,000
   
(2,981,360
)
 
1,143,640
   
100%
 
 
1,143,640
   
1,143,640
   
-   
 
Southington Suites, LLC and 790 West Street, L
   
1,150,000
   
(625,325
)
 
524,675
   
67%
 
 
351,532
   
351,532
   
-   
 
Warwick Lodgings, LLC
   
810,000
   
(368,342
)
 
441,658
   
100%
 
 
441,658
   
441,658
   
-   
 
Danbury Suites, LLC
   
925,000
   
(459,714
)
 
465,286
   
100%
 
 
465,286
   
465,286
   
-   
 
Whitehall Mansion Partners, LLC
   
1,450,000
   
(688,581
)
 
761,419
   
100%
 
 
761,419
   
761,419
   
-   
 
 
   
10,265,000
   
(6,021,906
)
 
4,243,094
   

   
4,069,951
   
4,069,951
   
414,951
 
 
   

   

   

   

   

   

   

 
315 Trumbull Street Associates, LLC
   
635,012
   
(1,544,103
)
 
(909,091
)
 
88%
 
 
(800,000
)
 
(80,000
)
 
(720,000
)
Adriaen's Landing Hotel, LLC
   
4,712,359
   
(3,149,859
)
 
1,562,500
   
96%
 
 
1,500,000
   
225,000
   
1 ,275,000
 
 
   
5,347,371
   
(4,693,962
)
 
653,409
   

   
700,000
   
145,000
   
555,000
 
 
   

   

   

   

 
 

   

   

 
Parent company expenses
   
(400,000
)
 
-
   
(400,000
)
 
100%
 
 
(400,000
)
 
(400,000
)
 
-   
 
 
   

   

   

   

   

   

   

 
 
 
$
15,212,371
 
$
(10,715,868
)
$
4,496,503
   

 
$
4,369,951
   
3,814,951
   
969,951
 
Less: Preferential return payments
   

   

   

   

   

   
(3,400,000
)
 
(969,951
)

 

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