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Exhibit 10.2

CONTRIBUTION AGREEMENT

dated as of January 17, 2007
between

Shree Associates, Kunj Associates, Devi Associates,
Shanti III Associates, Trust FBO Jay H. Shah under The Hasu
And Hersha Shah 2004 Trust dated August 18, 2004,
Trust FBO Neil H. Shah under The Hasu and Hersha Shah
2004 Trust dated August 18, 2004, and David L. Desfor

as Contributors,

and

HERSHA HOSPITALITY LIMITED PARTNERSHIP

as Acquiror

IN CONNECTION WITH THE CONTRIBUTION AND ACQUISITION
OF LLC INTERESTS IN H. METRO DELAWARE, LLC

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CONTRIBUTION AGREEMENT

THIS CONTRIBUTION AGREEMENT (the “Agreement”), dated this 17th day of January,
2007, between [Shree Associates, Kunj Associates, Devi Associates, Shanti III
Associates, Trust FBO Jay H. Shah under The Hasu And Hersha Shah 2004 Trust
dated August 18, 2004, Trust FBO Neil H. Shah under The Hasu and Hersha Shah
2004 Trust dated August 18, 2004, and David L. Desfor, (the “Contributors”), AND
HERSHA HOSPITALITY LIMITED PARTNERSHIP, a Virginia limited partnership (the
“Acquiror” or “HHLP”) 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.

“Assignment and Assumption Agreements” shall mean those certain assignment and
assumption agreements whereby the Contributors assign and HHLP assumes the
Interests.

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"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 Seven Million Seven Hundred Fifty Thousand Dollars
($7,750,000.00) payable to the Contributors at Closing in the manner described
in Article II.

“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.

"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 Acquiror.

"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.

“Interest” shall mean all right, title and interest of a Contributor in the LLC.

"Insurance Policies" shall mean those certain policies of insurance described on
Exhibit C attached hereto.

“Interests” shall mean all right, title and interest of all of the Contributors
in the LLC.

"Inventory" shall mean all "inventories of merchandise" and "inventories of
supplies", as such terms are defined in the Uniform System of Accounts for
Hotels [9th 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.

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"Lease" shall mean that certain lease of real property attached hereto as
Exhibit D.

"LLC" shall mean H. METRO DELAWARE, LLC, a Delaware limited liability company.

"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 Furniture, Fixture, and Equipment existing at the
Hotel. 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 operating agreement and
certificate of organization of the LLC, true and correct copies of which are
attached hereto as Exhibit F.

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

"Property" shall mean collectively the Inventory, the Tangible Personal
Property, and the Intangible Personal Property.

"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 LLC.

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.

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ARTICLE II
CONTRIBUTION OF INTERESTS IN EXCHANGE FOR PARTNERSHIP INTERESTS IN HHLP

2.1    Contribution. Each of the Contributors agrees to contribute, assign and
transfer its respective Interest to HHLP, and HHLP agrees to accept each
Contributor’s Interest in exchange for units of HHLP, all on the terms and
conditions set forth herein.

2.2    Value of Interests. The total value of all Interests of the Contributors
is Seven Million Seven Hundred Fifty Thousand Dollars ($7,750,000.00). If
consideration is paid in limited partnership units, the price of the limited
partnership units will be determined by utilizing the five day volume weighted
average closing price for Priority Class A Common Stock of Hersha Hospitality
Trust as of the Closing Date.

2.3    Effect of Contributions. Upon completion of the capital contributions
contemplated by this Agreement:

(a)    The Contributors will own units in HHLP with a total value of
$7,750,000.00 in the percentages as set forth in detail in Exhibit “B” attached
hereto and made a part hereof by this reference.

(b)    HHLP shall beneficially own the Interests, free and clear of any
encumbrance, pledge or any other third party interests.

(c)    HHLP shall have assumed and be responsible for the Continuing
Liabilities.

The parties agree that the transfer of the Interests to HHLP pursuant to this
Agreement shall be treated for federal income tax purposes as a contribution of
such Interests solely in exchange for partnership interests in HHLP 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 Acquiror 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 Acquiror is entitled to rely and has
relied:

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3.1    Organization and Power. The Contributors are each individuals residing in
the United States of America, 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.

(a)    The execution, delivery and performance of this Agreement by the
Contributors, and the consummation of the transactions contemplated hereby have
been duly authorized, adopted and approved by the Contributors, and the
shareholders of the Corporate Contributor, to the extent required by their
organizational documents and applicable law. No other proceedings are necessary
to authorize this Agreement and the transactions contemplated hereby. This
Agreement has been duly executed by or on behalf of each Contributor and is a
valid and binding obligation enforceable against them in accordance with its
terms.

(b)    Neither the execution, delivery, or performance by the Contributors of
this Agreement, nor the consummation of the transactions contemplated hereby,
nor compliance by the Contributors with any of the provisions hereof, will:

(i)    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 properties or assets of the LLC, under any of the terms, conditions, or
provisions of, its Operating Agreement, or any note, bond, mortgage, indenture,
deed of trust, 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 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 Contributors or compliance by the
Contributors with any of the provisions hereof.

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.

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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
Acquiror at Closing, good valid and merchantable title to the Interests, free
and clear of all liens and encumbrances, will pass to the Acquiror.

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 Acquiror 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 LLC.

(a)    The LLC is a limited liability company duly formed, validly existing and
in good standing under the laws of the State of Delaware and has all requisite
powers necessary to carry on its business as now conducted, to own, lease and
operate its properties.

(b)    Neither the execution, delivery, or performance by the Contributors of
this Agreement, nor the consummation of the transactions contemplated hereby,
nor compliance by the Contributors with any of the provisions hereof, will:

(i)    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 upon any of
the properties or assets of the LLC, under any of the terms, conditions, or
provisions of, its certificate of organization, or any note, bond, mortgage,
indenture, deed of trust, 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.

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(c)    Except for the Contributors, no party has any interest in the LLC 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 partnership or joint venture.

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

3.9    Tax Matters with respect to LLC.

(a)    The LLC has filed all income tax information returns on IRS Form 1065
(including K-1s for each partner) 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 members 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 Contributors’
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 LLC shall file all necessary
returns and petitions required to be filed through the Closing Date. The LLC
shall prepare and file all federal and state income tax returns for the tax
period ending on the Closing Date, which shall reflect the termination for tax
purposes of the LLC. If requested by the Acquiror, the Contributors shall cause
the LLC to make an election under Section 754 of the Code for the period ending
on the Closing Date.

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
LLC 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 LLC or Property or any part thereof or any planned public improvements
that may result in a special tax or assessment against the Property.

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3.12    Compliance with Existing Laws. The LLC 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 LLC 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 LLC 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 LLC
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 LLC enter into any agreements modifying
the Operating Agreements, unless (a) any such agreement or modification will not
bind the Acquiror or the Property after the date of Closing or (b) the
Contributors have obtained the Acquiror’s prior written consent to such
agreement or modification, which consent shall not be unreasonably withheld or
delayed.

3.14    Warranties and Guaranties. The LLC shall not before Closing, release or
modify any warranties or guarantees, if any, of manufacturers, suppliers and
installers relating to the Property or any part thereof, except with the prior
written consent of the Acquiror, 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 G.

3.15    Insurance. All of the LLC’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 LLC on or before the due date therefore. The LLC shall pay all premiums
on, and shall not cancel or voluntarily allow to expire, any of the LLC’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 LLC shall
name the Acquiror as an additional insured on each of the LLC’s Insurance
Policies.

3.16    Condemnation Proceedings; Roadways. The LLC has received no written
notice of any condemnation or eminent domain proceeding pending or threatened
against the Property or any part thereof.

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3.17    Litigation with respect to LLC. Except as set forth on Exhibit H there
is no action, suit or proceeding pending or known to be threatened against or
affecting the LLC 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 LLC is a party or by which it is 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 LLC, (c) could materially and adversely
affect the ability of the LLC to 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    Financial Information. To the best of the Contributors’ knowledge except
as otherwise disclosed in writing to the Acquiror prior to the closing, for each
of the LLC’s accounting years, when a given year is taken as a whole, all of the
LLC’s financial information previously delivered or to be delivered to the
Acquiror 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 Acquiror,
Contributors will forward promptly all four-week period ending financial
information they receive from the LLC. Contributors’ financial information is
prepared based on information provided by the LLC based on books and records
maintained by the LLC in accordance with the LLC’s accounting system. LLC
financial information provided to the Acquiror has been provided to the Acquiror
without any changes or alteration thereto. To the best of Contributors’
knowledge, since the date of the last financial statement included in the LLC’s
financial information, there has been no material adverse change in the
financial condition or in the operations of the Property.

3.19    Organizational Documents. The LLC’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.

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

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

3.22    Leases. True, complete copy of the Lease is attached as Exhibit D
hereto. The Lease is, and will at Closing be, in full force and effect and LLC,
is not in default and will make good faith efforts not to be in default with
respect thereto (with or without the giving of any notice and/or lapse of time).

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3.23    Securities Law Matters. Contributors further represent and warrant that
they have (i) received, reviewed, been given the opportunity to ask questions of
representatives of the Operating Partnership and the REIT regarding, and
understands the Acquiror’s Partnership Agreement, as amended, and each filing of
the REIT under the Securities Act, and (ii) Contributors are "accredited
investors" as defined under Regulation D promulgated under the Securities Act.

3.24    Tax Matters with Respect to Contributors. The Contributors represent and
warrant that they (and each of their partners) have obtained from their own
counsel advice regarding the tax consequences of (i) the transfer of the
Interests to the Acquiror and the receipt of the limited partnership units of
Hersha Hospitality Limited Partnership as consideration therefore, (ii) the
Contributors’ admission as partners of the Acquiror, and (iii) any other
transaction contemplated by this Agreement. The Contributors further represent
and warrant that they have not relied on the Acquiror or the Acquiror’s
representatives or counsel for such advice.

3.25    Noncontravention. The execution and delivery of, and the performance by
the Contributors of their obligations under this Agreement do not and will not
contravene, or constitute a default under, any provision of applicable law or
regulation, or any agreement, judgment, injunction, order, decree or other
instrument binding upon the Contributors, or result in the creation of any lien
or other encumbrance on any asset of the Contributors. There are no outstanding
agreements (written or oral) pursuant to which the Contributors (or any
predecessor to or representative of the Contributors) have agreed to contribute
or have granted an option or right of first refusal to acquire the Property or
any part thereof.

Each of the representations, warranties and covenants contained in this Article
III and its various subparagraphs are intended for the benefit of the Acquiror
and may be waived in whole or in part, by the Acquiror, but only by an
instrument in writing signed by the Acquiror. Each of said representations,
warranties and covenants shall survive the closing of the transaction
contemplated hereby for twenty-four (24) months, and no investigation, audit,
inspection, review or the like conducted by or on behalf of the Acquiror shall
be deemed to terminate the effect of any such representations, warranties and
covenants, it being understood that the Acquiror has the right to rely thereon
and that each such representation, warranty and covenant constitutes a material
inducement to the Acquiror to execute this Agreement and to close the
transaction contemplated hereby and to issue the Units of HHLP to the
Contributors. Acquiror acknowledges and agrees that, except for the
representations and warranties expressly set forth herein, Acquiror is acquiring
the Interests "AS-IS, WHERE-IS" with no representations or warranties by or from
Contributors or any of its affiliates, express or implied, or any nature
whatsoever.

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ARTICLE IV
ACQUIROR’S REPRESENTATIONS, WARRANTIES AND COVENANTS

To induce the Contributors to enter into this Agreement and to transfer the
Interests, the Acquiror hereby makes the following representations, warranties
and covenants, upon each of which the Acquiror acknowledges and agrees that the
Contributors are entitled to rely and have relied:

4.1    Organization and Power. The Acquiror is a limited partnership duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Virginia, and has all partnership powers and all governmental
licenses, authorizations, consents and approvals to carry on its businesses as
now conducted and to enter into and perform its obligations under this Agreement
and any document or instrument required to be executed and delivered on behalf
of the Acquiror hereunder.

4.2    Noncontravention. The execution and delivery of this Agreement and the
performance by the Acquiror of its obligations hereunder do not and will not
contravene, or constitute a default under, any provisions of applicable law or
regulation, the Acquiror’s partnership agreements or any agreements, judgment,
injunction, order, decree or other instrument binding upon the Acquiror or
result in the creation of any lien or other encumbrance on any asset of the
Acquiror.

4.3    Litigation. There is no action, suit or proceeding, pending or known to
be threatened, against or affecting the Acquiror in any court or before any
arbitrator or before any Governmental Body which (a) in any manner raises any
question affecting the validity or enforceability of this Agreement or any other
agreement or instrument to which the Acquiror is a party or by which it is bound
and that 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 Acquiror, (c) could materially and
adversely affect the ability of the Acquiror to perform its obligations
hereunder, or under any document to be delivered pursuant hereto, (d) could
create a lien on the Units, any part thereof or any interest therein or
(e) could adversely affect the Units, any part thereof or any interest therein
or the use, operation, condition or occupancy thereof.

4.4    Bankruptcy. No Act of Bankruptcy has occurred with respect to the
Acquiror.

4.5    No Brokers. The Acquiror has not engaged the services of, nor is it or
will it 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 transaction described herein.

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ARTICLE V
CONDITIONS AND ADDITIONAL COVENANTS

The Acquiror’s obligations hereunder are subject to the satisfaction of the
following conditions precedent and the compliance by the Contributors with the
following covenants:

5.1    Contributors’ Deliveries. The Contributors shall have delivered to the
Escrow Agent or the Acquiror, as the case may be, on or before the date of
Closing, all of the documents and other information required of Contributors
pursuant to Section 6.2.

5.2    Representations, Warranties and Covenants; Obligations of Contributors;
Certificate. All of the Contributors’ representations and warranties made in
this Agreement shall be true and correct as of the date hereof and as of the
date of Closing as if then made, there shall have occurred no material adverse
change in the financial condition of the LLC since the date hereof, the
Contributors shall have performed all of their material covenants and other
obligations under this Agreement and the Contributors shall have executed and
delivered to the Acquiror at Closing a certificate to the foregoing effect.

5.3    Condition of Property. The Property and the Tangible Personal Property
leased by the LLC shall be in the same condition at Closing as they are as of
the date hereof, reasonable wear and tear accepted. Prior to Closing, the
Contributors shall not have diminished the quality or quantity of maintenance
and upkeep services heretofore provided to the Property and the Tangible
Personal Property and the Contributors shall not have diminished the Inventory.
 
 
ARTICLE VI
CLOSING

6.1    Closing. Closing shall be held at a location that is mutually acceptable
to the parties, on or before March 31, 2007.

6.2    Contributors’ Deliveries. At Closing, the Contributors shall deliver to
Acquiror all of the following instruments, each of which shall have been duly
executed and, where applicable, acknowledged on behalf of the Contributors and
shall be dated as of the date of Closing:

(a)    The certificate required by Section 5.2.

(b)    The Assignment and Assumption Agreements.

(c)    Such agreements, affidavits or other documents as may be required by the
Title Company to issue the Owner's Title Policy with affirmative coverage over
mechanics' and materialmen's liens.

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(d)    True, correct and complete copies of all warranties, if any, of
manufacturers, suppliers and installers possessed by the Contributors and
relating to the Property, or any part thereof.

(e)    Certified copies of the LLC’s Organizational Documents.

(f)    Appropriate resolutions of the partners of the Partnership Contributors,
together with all other necessary approvals and consents of the Contributors,
authorizing (A) the execution on behalf of the Contributors of this Agreement
and the documents to be executed and delivered by the Contributors prior to, at
or otherwise in connection with Closing, and (B) the performance by the
Contributors of their obligations hereunder and under such documents.

(g)    Such proof as the Acquiror may reasonably require with respect to
Contributors’ compliance with the bulk sales laws or similar statutes.

(h)    A written instrument executed by the Contributors, conveying and
transferring to the Acquiror all of the Contributors’ right, title and interest
in any telephone numbers and facsimile numbers relating to the Property, and, if
the Contributors maintains a post office box, conveying to the Acquiror all of
its interest in and to such post office box and the number associated therewith,
so as to assure a continuity in operation and communication.

(i)    All books, records, operating reports, appraisal reports, files and other
materials in the Contributors’ possession or control which are necessary in the
Acquiror’s discretion to maintain continuity of operation of the Property.

(j)    An assignment of all warranties and guarantees from all contractors and
subcontractors, manufacturers, and suppliers in effect with respect to the
Improvements.

(k)    Such agreements, affidavits or other documents as may be required

(l)    Any other document or instrument reasonably requested by the Acquiror or
required hereby.

6.3    Acquiror’s Deliveries. At Closing, HHLP shall issue or deliver to the
Contributors the following:
 
(a)    The Units of HHLP described in ARTICLE II.

(b)    The Assignment and Assumption Agreements.

(c)    Any other document or instrument reasonably requested by the Contributors
or required hereby.

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6.4    Closing Costs. The Acquiror shall pay all legal fees and expenses. All
filing fees for the recording or other similar taxes due with respect to the
transfer of title and all charges for title insurance premiums shall be paid by
the Acquiror. The Contributors shall pay reasonable fees for the preparation of
the documents to be delivered by the Contributors hereunder. Acquiror shall pay
for the releases of any deeds of trust, mortgages and other financing
encumbering the Property and for any costs associated with any corrective
instruments. The Acquiror shall pay all other costs, including all franchise
license transfer fees, in carrying out the transactions contemplated hereunder.
 
 
ARTICLE VII
LIABILITY OF ACQUIROR; INDEMNIFICATION BY CONTRIBUTORS;
TERMINATION RIGHTS

7.1    Liability of Acquiror. Except for any obligation expressly assumed or
agreed to be assumed by the Acquiror hereunder and in the Assignment and
Assumption Agreement, the Acquiror does not assume any obligation of the
Contributors or any liability for claims arising out of any occurrence prior to
Closing.

7.2    Indemnification by Contributors. The Contributors hereby indemnify and
hold the Acquiror harmless from and against any and all claims, costs,
penalties, damages, losses, liabilities and expenses (including reasonable
attorneys' fees), subject to Section 8.11 that may at any time be incurred by
the Acquiror, whether before or after Closing, as a result of any breach by the
Contributors of any of their representations, warranties, covenants or
obligations set forth herein or in any other document delivered by the
Contributors pursuant hereto.

7.3    Termination by Acquiror. If any condition set forth herein cannot or will
not be satisfied prior to Closing, or upon the occurrence of any other event
that would entitle the Acquiror to terminate this Agreement and its obligations
hereunder, and the Contributors fail to cure any such matter within ten business
days after notice thereof from the Acquiror, the Acquiror, at its option and as
its sole remedy, shall elect either (a) to terminate this Agreement and all
other rights and obligations of the Contributors and the Acquiror hereunder
shall terminate immediately, or (b) to waive its right to terminate and,
instead, to proceed to Closing.

7.4    Termination by Contributors. If, prior to Closing, the Acquiror defaults
in performing any of its obligations under this Agreement (including its
obligation to acquire the Interests), and the Acquiror fails to cure any such
default within ten business days after notice thereof from the Contributors,
then the Contributors’ sole remedy for such default shall be to terminate this
Agreement.

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ARTICLE VIII
MISCELLANEOUS PROVISIONS

8.1    Completeness; Modification. This Agreement constitutes the entire
agreement between the parties hereto with respect to the transactions
contemplated hereby and supersedes all prior discussions, understandings,
agreements and negotiations between the parties hereto. This Agreement may be
modified only by a written instrument duly executed by the parties hereto.

8.2    Assignments. The Acquiror may assign its rights hereunder to any
affiliate of Acquiror without the consent of the Contributors. No such
assignment shall relieve the Acquiror of any of its obligations and liabilities
hereunder.

8.3    Successors and Assigns. The benefits and burdens of this Agreement shall
inure to the benefit of and bind the Acquiror and the Contributors and their
respective party hereto.

8.4    Days. If any action is required to be performed, or if any notice,
consent or other communication is given, on a day that is a Saturday or Sunday
or a legal holiday in the jurisdiction in which the action is required to be
performed or in which is located the intended recipient of such notice, consent
or other communication, such performance shall be deemed to be required, and
such notice, consent or other communication shall be deemed to be given, on the
first business day following such Saturday, Sunday or legal holiday. Unless
otherwise specified herein, all references herein to a "day" or "days" shall
refer to calendar days and not business days.

8.5    Governing Law. This Agreement and all documents referred to herein shall
be governed by and construed and interpreted in accordance with the laws of the
Commonwealth of Pennsylvania.

8.6    Counterparts. To facilitate execution, this Agreement may be executed in
as many counterparts as may be required. It shall not be necessary that the
signature on behalf of both parties hereto appear on each counterpart hereof.
All counterparts hereof shall collectively constitute a single agreement.

8.7    Severability. If any term, covenant or condition of this Agreement, or
the application thereof to any person or circumstance, shall to any extent be
invalid or unenforceable, the remainder of this Agreement, or the application of
such term, covenant or condition to other persons or circumstances, shall not be
affected thereby, and each term, covenant or condition of this Agreement shall
be valid and enforceable to the fullest extent permitted by law.

8.8    Costs. Regardless of whether Closing occurs hereunder, and except as
otherwise expressly provided herein, each party hereto shall be responsible for
its own costs in connection with this Agreement and the transactions
contemplated hereby, including without limitation fees of attorneys, engineers
and accountants.

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8.9    Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be delivered by hand, transmitted by
facsimile transmission, sent prepaid by Federal Express (or a comparable
overnight delivery service) or sent by the United States mail, certified,
postage prepaid, return receipt requested, at the addresses and with such copies
as designated below. Any notice, request, demand or other communication
delivered or sent in the manner aforesaid shall be deemed given or made (as the
case may be) when actually delivered to the intended recipient.
 
If to the Contributors:
                 
Phone:
     
Fax:
           
With a copy to:
                 
Phone:
     
Fax:
                   
If to the Acquiror:
Ashish R. Parikh   Hersha Hospitality Limited Partnership   44 Hersha Drive  
Harrisburg, PA 17102   Phone: (717) 979-4217   Fax: (717) 412-5518    
With a copy to:
Paul A. Lundberg, Esquire   Reilly, Wolfson, Sheffey, Schrum and Lundberg LLP  
1601 Cornwall Road   Lebanon, PA 17042   Phone: (717) 273-3733   Fax: (717)
273-1535

Or to such other address as the intended recipient may have specified in a
notice to the other party. Any party hereto may change its address or designate
different or other persons or entities to receive copies by notifying the other
party and the Escrow Agent in a manner described in this Section.

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8.10    Incorporation by Reference. All of the exhibits attached hereto are by
this reference incorporated herein and made a part hereof.

8.11    Survival. All of the representations, warranties, covenants and
agreements of the Contributors and the Acquiror made in, or pursuant to, this
Agreement, including the confidentiality provision of Article 8.15 of this
Agreement, shall survive for a period of twenty-four (24) months following
Closing and shall not merge into any document or instrument executed and
delivered in connection herewith.

8.12    Further Assurances. The Contributors and the Acquiror each covenant and
agree to sign, execute and deliver, or cause to be signed, executed and
delivered, and to do or make, or cause to be done or made, upon the written
request of the other party, any and all agreements, instruments, papers, deeds,
acts or things, supplemental, confirmatory or otherwise, as may be reasonably
required by either party hereto for the purpose of or in connection with
consummating the transactions described herein.

8.13    No Partnership. This Agreement does not and shall not be construed to
create a partnership, joint venture or any other relationship between the
parties hereto except the relationship of Contributors and Acquiror specifically
established hereby.

8.14    Time of Essence. Time is of the essence with respect to every provision
hereof.

8.15    Confidentiality. Except as hereinafter provided, from and after the
execution of this Agreement, the Acquiror and the Contributors shall keep the
terms, conditions and provisions of this Agreement confidential and neither
shall make any public announcements hereof unless the other first approves of
same in writing, nor shall either disclose the terms, conditions and provisions
hereof, except to persons who "need to know", such as their respective
attorneys, accountants, engineers, surveyors, financiers and bankers.
Notwithstanding the foregoing, it is acknowledged that the Acquiror has elected
to be a real estate investment trust ("REIT") and that the REIT has sold shares
and may seek to sell additional shares to the general public and that in
connection therewith, the Acquiror will have the absolute and unbridled right to
market such securities and prepare and file all necessary or reasonably required
registration statements, disclosure statements, and other papers, documents and
instruments necessary or reasonably required in the Acquiror’s judgment and that
of its attorneys and underwriters with respect to the REIT's shares with the
U.S. Securities and Exchange Commission and/or similar state authorities and to
cause same to become effective and to disclose therein and thus to its
underwriters, to the U.S. Securities and Exchange Commission and/or to similar
state authorities and to the public all of the terms, conditions and provisions
of this Agreement.

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[SIGNATURE PAGE TO FOLLOW.]

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IN WITNESS WHEREOF, the Contributors and the Acquiror have caused this Agreement
to be executed in their names by their respective duly-authorized
representatives.

CONTRIBUTORS:

        Shree Associates        
By
     
Hasu P. Shah
        Kunj Associates        
By
     
Kiran P. Patel
        Devi Associates        
By
     
Bharat Mehta
        Shanti III Associates         By
 
   
K.D. Patel
        Trust FBO Jay H. Shah under The Hasu And Hersha Shah 2004 Trust dated
August 18, 2004        
By
     
Jay H. Shah
        By      
Jatin Desai

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  Trust FBO Neil H. Shah under The Hasu and Hersha Shah 2004 Trust Dated August
18, 2004      
By
     
Neil H. Shah
       
By
     
Jatin Desai
               
David L. Desfor

ACQUIROR:

  HERSHA HOSPITALITY LIMITED PARTNERSHIP, a Virginia limited partnership      
By:
HERSHA HOSPITALITY TRUST, a Maryland business trust, its sole general partner
       
By:
             
Name:
             
Title:
   

 
 

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