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Exhibit 10.1
 
PURCHASE AND SALE AGREEMENT

THIS PURCHASE AND SALE AGREEMENT (this “Agreement”) is made and entered into as
of July 11, 2006 by and between CNL HOSPITALITY PARTNERS, LP, a Delaware limited
partnership (the “Seller”) and HERSHA HOSPITALITY LIMITED PARTNERSHIP, a limited
partnership organized under the laws of the Commonwealth of Virginia, and its
assignee or designee (the “Purchaser”), which together constitute the “Parties”
(and referred to individually as a “Party”).

RECITALS:

WHEREAS, the Seller and Purchaser are parties to that certain Limited
Partnership Agreement, dated as of April 21, 2003 (as amended pursuant to
Amendment to Limited Partnership Agreement dated as of August, 2003,
collectively, the “Partnership Agreement”), for HT/CNL Metro Hotels, L.P., a
Delaware limited partnership (the “Partnership”); and

WHEREAS, the Seller owns a sixty-six and 66.7/100 percent (66.667%) limited
partnership interest in the Partnership and has agreed to sell to Purchaser its
entire limited partnership interest in the Partnership, including, without
limitation, all of its rights to distributions, capital accounts and equity
interests (in the aggregate herein called the “Interest”), pursuant to the terms
of this Agreement; and

WHEREAS, the Partnership owns all of the equity of Chelsea Grand East, LLC, a
New York limited liability company (“Hotel Owner”), which owns the fee interest
in the Hampton Inn Chelsea Hotel (the “Hotel”), and 100% of the equity interests
of Tenant; and

WHEREAS, the Purchaser is making this Agreement without any contingency for
outside financing of the Closing Payment (defined below); and

WHEREAS, this Agreement contains the entire understanding of the Parties
regarding the purchase of the Interest by the Purchaser and the sale of the
Interest by the Seller.

AGREEMENT

NOW, THEREFORE, for and in consideration of the foregoing premises, the mutual
covenants and agreements set forth below, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
each of the Parties, the Parties agree as follows:

ARTICLE 1

RECITALS

1.1    Incorporation of Recitals. The Parties hereby acknowledge and agree that
the foregoing recitals are true and correct and incorporated into this Agreement
by this reference.

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ARTICLE 2

DEFINITIONS

2.1    As used in this Agreement, the following terms shall have the respective
meanings set forth below and other defined terms shall have the meaning as set
forth elsewhere in this Agreement:

“Affiliates” of any Person means (a) any other Person which (i) directly or
indirectly, owns more than forty-nine percent (49%) of the beneficial or equity
interests in such Person or (ii) directly or indirectly, is in control of, is
controlled by or is under common control with, such Person; or (b) any other
Person who is a director or officer of (i) such Person, (ii) any subsidiary of
such Person, or (iii) any Person described in clause (a) above.

“Applicable Laws” means the laws of Delaware and the laws of New York that may
be applicable in connection with the Hotel.

“Assumed Value” shall have the meaning specified in Section 3.3.

“Closing” shall mean the closing of the purchase of the Interest as contemplated
in Section 4.1.

“Closing Documents” means (i) an assignment (the “Assignment”) of the Interest
to be executed by Seller in favor of Purchaser, or its designee, in the form
attached hereto as Exhibit A, (ii) a FIRPTA Certificate to be executed by
Seller, (iii) a Certificate of Representations and Warranties from each Party in
the form of Exhibit B-1 and Exhibit B-2, respectively, (the “Officer’s
Certificate”) and (iv) a Closing Statement to be executed by both Parties and
such other documents and certificates as are customary for transactions of this
nature and approved by Seller and Purchaser in good faith in their sole
discretion.

“Closing Payment” shall have the meaning specified in Section 3.3.

“Deductible” shall have the meaning specified in Section 11.4.

“Deposit” shall have the meaning specified in Section 3.4.

“Distributions” shall have the meaning specified in the Partnership Agreement.

“Effective Date” shall have the meaning specified in Section 3.2.

“Escrow Agent” means Lowndes, Drosdick, Doster, Kantor & Reed, P.A.

“Franchise Agreement” means that certain Amended and Restated Franchise
Agreement between Franchisor and Tenant, dated as of August 27, 2003.

“Franchisor” means Promus Hotels, Inc., a Delaware corporation.

“Hotel” shall have the meaning specified in the Recitals.

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“Hotel Owner” shall have the meaning specified in the Recitals.

“Interest” shall have the meaning specified in the Recitals.

“Knowledge of Seller” or similar phrases means the actual knowledge of Marcel
Verbaas.

“Management Agreement” means that certain Hotel Management Agreement between
Manager and Tenant, dated as of August 29, 2003, as the same may be amended.

“Manager” means Hersha Hospitality Management, L.P., a Pennsylvania limited
partnership.

“Mortgage Debt” means the principal amount outstanding under that certain Loan
Agreement between Hotel Owner and Tenant, as co-borrower, and Mortgage Lender,
as lender dated as of February 4, 2004, as amended by First Amendment to Loan
Agreement and other Loan documents dated as of July 30, 2004, as the same may be
further amended. The outstanding principal balance of the Mortgage Debt on the
date of this Agreement is $15,860,345.00

“Mortgage Lender” means General Electric Capital Corporation or any subsequent
holder of the Mortgage Debt.

“Net Cash Flow” shall have the meaning specified in the Partnership Agreement.

“Parties” shall have the meaning specified in the Recitals.

“Partnership” shall have the meaning specified in the Recitals.

“Partnership Agreement” shall have the meaning specified in the Recitals.

“Person” means an individual, corporation, trust, association, unincorporated
association, estate, partnership, joint venture, limited liability company or
other legal entity, including a governmental entity.

“Purchase Price” shall have the meaning specified in Section 3.3.

“Purchaser” shall have the meaning specified in the Recitals.

“Purchaser Default” shall have the meaning specified in Section 11.2.

“Required Consents” shall have the meaning specified in Section 5.2.

“Seller” shall have the meaning specified in the Recitals.

“Seller Default” shall have the meaning specified in Section 11.1.

“Seller’s Partnership Interest” means 66.667%.

“Tenant” means Hersha CNL TRS, Inc., a Delaware corporation.

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ARTICLE 3

SALE OF INTEREST

3.1    Sale of Interest. The Seller hereby agrees to sell to the Purchaser, and
the Purchaser hereby agrees to purchase from the Seller, the Interest pursuant
to the terms and conditions set forth herein.

3.2    Effective Date. The effective date (“Effective Date”) of the purchase and
sale of the Interest hereunder will be the date this Agreement is last executed
by Seller and Purchaser.

3.3    Purchase Price. In determining the aggregate purchase price (“Purchase
Price”) for the Interest to be purchased hereunder, the Parties have assumed
that the value of all of the assets of the Partnership, including the Hotel, is
$54,000,000.00 (the “Assumed Value”). The Purchase Price to be paid shall be
equal to the Assumed Value less the Mortgage Debt times the Seller’s Partnership
Interest. In addition to the Purchase Price, Seller shall receive at Closing
Seller’s Partnership Interest in Net Cash Flow, the FF & E Reserve and working
capital, all determined as of Closing (the Purchase Price and Seller’s share of
the Net Cash Flow, the FF&E Reserve and working capital is herein referred to as
the “Closing Payment”).

3.4    Deposit. Upon execution of this Agreement by Purchaser and Seller,
Purchaser shall deposit an amount equal to One Million Five Hundred Thousand and
No/100 Dollars ($1,500,000.00) (plus any interest or earnings accrued thereon,
the “Deposit”), by wire transfer, official bank check, or other immediately
available funds, or by a letter of credit with the Escrow Agent. In the event
the Purchaser elects to provide the Deposit by a letter of credit, the letter of
credit shall be payable to Seller and shall by its express terms provide that
upon the occurrence of a default by Purchaser hereunder, as contemplated in
Section 11.2 hereof, resulting in the termination of this Agreement by Seller,
the letter of credit shall immediately be delivered to Seller by Escrow Agent
and Purchaser shall have no right or claim with respect thereto. In the event
that the Deposit has not been deposited with Escrow Agent within two (2)
business days following the execution of this Agreement, this Agreement shall
immediately terminate. The Deposit shall be deposited by the Escrow Agent into
an interest-bearing, fully insured account, as directed by the Purchaser. The
Deposit shall be applied to payment of the Closing Payment at Closing or shall
otherwise be paid as herein provided. The Purchaser acknowledges and agrees that
the Deposit, when made, is “At Risk” with respect to a default by the Purchaser
of its obligations to close the purchase and sale of the Interest as set forth
in this Agreement (as specifically set forth in Section 11.2). All interest
earned in said account of the Escrow Agent shall be for the account of the
Purchaser and reported by the Escrow Agent to the Internal Revenue Service as
income to the Purchaser (and the Purchaser agrees to execute a Form W-9 and any
other tax documents necessary in connection therewith).

3.5    Payment of the Closing Payment. At the Closing, the Purchaser shall pay
the Closing Payment (less the Deposit) to the Seller and the Escrow Agent shall
pay the Deposit to Seller, in each case by wire transfer, official bank check,
or other immediately available funds.

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3.6    Escrow Agent. The Escrow Agent, in its capacity as holder of the Deposit
in escrow, joins in the execution of this Agreement for the limited purpose of
acknowledging and agreeing to the provisions of this Section 3.6.

A.    The duties of the Escrow Agent shall be as follows:

(i)    The Escrow Agent shall deposit, hold and disburse the Deposit in
accordance with the terms and provisions of this Agreement.

(ii)   If this Agreement shall be terminated by the mutual written agreement of
the Purchaser and the Seller, or if the Escrow Agent shall be unable to
determine at any time to whom the Deposit should be paid, or if a dispute shall
develop between the Seller and the Purchaser concerning to whom the Deposit
should be paid and delivered, then and in any event, the Escrow Agent may
request the joint written instructions of the Seller and the Purchaser and pay
and deliver the Deposit in accordance therewith. In the event that such written
instruction shall not be received by the Escrow Agent within ten (10) days after
the Escrow Agent has served a written request for instructions upon the Seller
and the Purchaser, then the Escrow Agent shall have the right to pay and deliver
the Deposit into an appropriate court of proper jurisdiction in the State of
Florida, and interplead the Seller and the Purchaser in respect thereof, and
thereupon the Escrow Agent shall be discharged of any obligations in connection
with this Agreement.

B.    If costs or expenses are incurred by the Escrow Agent in its capacity as
holder of the Deposit in escrow because of litigation or a dispute between the
Seller and the Purchaser arising out of the holding of the Deposit in escrow,
the Seller and the Purchaser shall each pay the Escrow Agent one-half of such
reasonable costs and expenses.

C.    By joining herein, the Escrow Agent undertakes only to perform the duties
and obligations imposed upon the Escrow Agent under the terms of this Agreement
and expressly does not undertake to perform any of the other covenants, terms
and provisions incumbent upon the Seller and the Purchaser hereunder.

D.    The Purchaser and the Seller hereby agree and acknowledge that the Escrow
Agent assumes no liability in connection herewith except for its willful
misconduct or gross negligence; that the Escrow Agent shall never be responsible
for the validity, correctness or genuineness of any document or notice referred
to under this Agreement; and that in the event of any dispute under this
Agreement, the Escrow Agent may seek advice from its own legal counsel and shall
be fully protected in any action taken by it in good faith in accordance with
the good faith opinion of its legal counsel.

E.    Purchaser and Seller agree that Escrow Agent shall be free to represent
Seller in any dispute relating to this Agreement in addition to acting as Escrow
Agent, including without limitation, a dispute relating to the Deposit.

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ARTICLE 4

CLOSING

4.1    Closing. Unless otherwise expedited by agreement of the Parties, the
Closing will take place on a date (the “Closing Date”) which is no later ninety
(90) days after the date of this Agreement or such earlier date agreed upon by
the Parties. The Closing shall take place through the mail. Summit Associates,
whose address is 100 Lafayette Street, 3rd Floor, New York, New York 10013,
shall serve as closing and disbursing agent. At and in connection with the
Closing, the Parties shall execute and deliver the Closing Documents and the
Escrow Agent shall return the Deposit to the Purchaser and the Purchaser shall
pay the Closing Payment to Seller by wire transfer, official bank check or other
immediately available funds.

ARTICLE 5

REPRESENTATIONS AND WARRANTIES OF SELLER

To induce the Purchaser to enter into this Agreement, and to consummate the
transactions contemplated hereby, the Seller represents and warrants to the
Purchaser as of the date hereof and on the Effective Date, as follows:

5.1    General Representations and Warranty of the Seller. (i) The Seller is a
limited partnership, duly formed and organized, validly existing, and in good
standing under the laws of Delaware; and (ii) the Seller’s general partner has
the full legal right, capacity and power to enter into this Agreement and to
perform Seller’s respective obligations hereunder.

5.2    Authorization and Execution. (i) The execution and delivery of this
Agreement by the Seller and the performance of its obligations hereunder,
including the sale and transfer of the Interest hereunder, have been duly
authorized and approved pursuant to the applicable provisions of the Partnership
Agreement and by all other necessary partnership authorizing action on the part
of the Seller and, except for any consent to the subject sale of the Interest or
release of Seller from any and all liability which Seller requests or which
Purchaser is required to obtain from the Mortgage Lender (“Lender Consent”),
Manager (“Manager Consent”) and Franchisor (“Franchisor Consent”) in connection
with the transactions contemplated herein (together the “Required Consents”), no
other approvals or consents of any third party or governmental authority are
required in connection with the transactions contemplated hereunder; (ii) this
Agreement has been duly executed and delivered by the Seller, constitutes the
valid and binding agreement of the Seller enforceable against the Seller in
accordance with its terms; (iii) the Person executing this Agreement on behalf
of the Seller has the authority to do so; (iv) the Seller owns good title to the
Interest, free and clear of any and all liens, claims and encumbrances of any
kind or nature whatsoever, and has the legal right to sell the Interest to the
Purchaser pursuant to the terms of this Agreement; and (v) the Interest
comprises the entire Partnership interest of the Seller in the Partnership and
the Seller has no other legal or beneficial interest in the Partnership or any
of its assets.

5.3    Bankruptcy. The Seller is not subject to any pending, or to the knowledge
of the Seller, any threatened bankruptcy proceeding, receivership proceeding or
other insolvency, dissolution, reorganization or similar proceeding.

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5.4    Seller Is Not a “Foreign Person”. The Seller is not a “foreign person”
within the meaning of that term as used in Section 1445 of the Internal Revenue
Code.

5.5    Non-contravention. Assuming all Required Consents are obtained on or
before the Closing Date, the execution and delivery of this Agreement and the
other agreements contemplated hereby and the performance by the Seller of its
obligations hereunder do not and will not contravene, or constitute a default
under any judgment, injunction, order, decree or other instrument binding upon
the Seller or result in the creation of any lien on any asset of the Seller.

ARTICLE 6
 
REPRESENTATIONS AND WARRANTIES OF PURCHASER
 
To induce the Seller to enter into this Agreement and to consummate the
transactions contemplated hereby, the Purchaser represents and warrants to the
Seller as of the date hereof and on the Effective Date, as follows:
 
6.1    General Representation and Warranty of the Purchaser. (i) The Purchaser
is a limited partnership, duly formed and organized, validly existing, and in
good standing under the laws of the Commonwealth of Virginia; (ii) the
Purchaser’s general partner has full power and authority to execute and deliver
this Agreement and perform Purchaser’s respective obligations hereunder.
 
6.2    Authorization and Execution. The execution and delivery of this Agreement
by Purchaser and the performance of its obligations hereunder have been duly
authorized and approved pursuant to the applicable provisions of Purchaser’s
partnership documents and by all other necessary partnership authorizing action
on the part of Purchaser and, except for the Required Consents, no other
approvals or consents of any third party or governmental authority are required
in connection with the transactions contemplated hereunder; this Agreement has
been duly executed and delivered by the Purchaser and constitutes the valid and
binding agreement of the Purchaser enforceable against the Purchaser in
accordance with its terms. The Person executing this Agreement on behalf of the
Purchaser’s general partner has the authority to do so.
 
6.3    Non-contravention. Assuming all Required Consents are obtained on or
before the Closing Date, the execution and delivery of this Agreement and the
other agreements contemplated hereby and the performance by the Purchaser of its
obligations hereunder do not and will not contravene, or constitute a default
under, any judgment, injunction, order, decree or other instrument binding upon
the Purchaser or result in the creation of any lien on any asset of the
Purchaser.
 
6.4    Litigation. Except for suits publicly disclosed by Purchaser in its SEC
filings through the date hereof, the Purchaser knows of no action, suit or
proceeding, pending or known to be threatened against the Purchaser in any court
or before any arbitrator or before any governmental authority which (i) in any
manner raises any question affecting the validity or enforceability of this
Agreement or any other agreement or instrument to which the Purchaser is a party
or by which it is bound and that is to be used in connection with, or is
contemplated by, this Agreement, (ii) would materially and adversely affect the
business, financial position or results of operations of the Purchaser, or (iii)
would materially and adversely affect the ability of the Purchaser to perform
its obligations hereunder, or under any document to be delivered pursuant
hereto.
 
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ARTICLE 7
 
EXPENSES
 
Each of the Parties shall be responsible for, and shall pay, any and all costs
and expenses incurred by such Party in connection with this Agreement and the
transactions contemplated hereunder, including, but not limited to, the fees and
costs of such Party’s legal counsel. Any transfer taxes due and owing in
connection with the assignment of the Interest to Purchaser shall be paid as
follows: Seller shall pay two thirds of such taxes and Purchaser shall pay one
third of such taxes.
 
ARTICLE 8
 
CONDITIONS PRECEDENT TO CLOSE
 
8.1    Conditions as to the Purchaser’s Obligations to Close. The obligations of
the Purchaser to consummate the Closing and pay the Closing Payment to the
Seller are subject to satisfaction by Seller, or waiver by the Purchaser, of the
following conditions:
 
A.    The representations and warranties made in this Agreement by the Seller
shall be true and correct in all respects when made and as of the Closing and
the Seller shall have performed, in all material respects, its obligations under
this Agreement.
 
B.    Delivery by the Seller to the Purchaser of an Officer’s Certificate in the
form attached hereto as Exhibit B-1, reconfirming Seller’s representations and
warranties as of Closing.
 
C.    The receipt by Purchaser of the Lender Consent and Franchisor Consent.
 
8.2   Conditions as to Seller’s Obligations to Close: The obligations of the
Seller to consummate the sale and take the actions to be performed by it in
connection with the Closing are subject to the satisfaction by Purchaser, or
waiver by the Seller, of the following conditions:
 
A.    The delivery by Purchaser to Seller of the Required Consents.
 
B.    The representations and warranties made in this Agreement by the Purchaser
shall be true and correct in all material respects when made and as of the
Closing and the Purchaser shall have performed, in all material respects, its
obligations under this Agreement.
 
C.    Delivery by the Purchaser to the Seller of an Officer’s Certificate in the
form attached hereto as Exhibit B-2, reconfirming Purchaser’s representations
and warranties as of Closing.
 
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8.3    Efforts of the Parties. The Parties hereby agree to use good faith
diligent efforts to cause each of the conditions precedent to their respective
obligations to be fully satisfied, performed and discharged, on and as of the
Closing; provided that the Purchaser shall be solely responsible for obtaining
the Required Consents in accordance with its obligations under Section 8.2.A and
Section 10.1. Each party agrees to reasonably cooperate with the other party in
its efforts to cause conditions precedent to be satisfied, performed and
discharged.
 
8.4    Mutual Condition. The obligations of each of the Parties to consummate
the purchase and sale of the Interest and the other transactions contemplated by
this Agreement shall be subject to the following conditions: (i) no temporary
restraining order, preliminary or permanent injunction or other order or decree
which prevents the consummation of the purchase and sale of the Interest and the
other transactions contemplated by this Agreement shall have been issued and
remain in effect, and (ii) no statute, rule or regulation shall have been
enacted by any state or federal government or governmental agency which would
prevent the consummation of the purchase and sale of the Interest and the other
transactions contemplated by this Agreement.
 
ARTICLE 9
 
CLOSING PROCEDURES
 
9.1    Seller’s Deliveries. At the Closing, the Seller shall deliver to the
Purchaser the Closing Documents, signed by the Seller.
 
9.2    Purchaser’s Deliveries. At the Closing, the Purchaser shall deliver to
the Seller (i) the Closing Payment and (ii) the Closing Documents, signed by the
Purchaser.
 
ARTICLE 10
 
COVENANTS OF PARTIES
 
10.1   Required Consents. Purchaser shall use good faith and diligent efforts to
obtain the Required Consents and to deliver a copy of the same to Seller on or
prior to Closing. Purchaser expressly acknowledges that any request or
requirement of Franchisor for a Property Improvement Plan and/or to upgrade the
Hotel or any Hotel FF&E (as defined in the Management Agreement) or other
personalty therein shall be Purchaser’s sole responsibility and shall be at
Purchaser’s sole cost and expense and notwithstanding anything herein to the
contrary, the same is not and shall not be a condition precedent to or of
Closing.
 
10.2   CNL Name. Immediately following Closing, Purchaser shall cause to be
amended the name of all entities affiliated with the Partnership or in which
Seller had an interest by virtue of the Interest and which contain the CNL name
to remove all references to Seller and “CNL” therefrom, and shall provide
evidence of same to Seller. Seller shall cooperate with Purchaser in executing
necessary documents in connection with such name changes.
 
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ARTICLE 11
 
DEFAULT; TERMINATION RIGHTS; INDEMNITY
 
11.1   Termination; Default by Seller. If the Closing does not occur because of
the failure of a condition precedent under Section 8.1, Purchaser may terminate
this Agreement without liability to either party except as otherwise provided
herein and Escrow Agent shall return the Deposit to Purchaser. If (a) the Seller
defaults under this Agreement (a “Seller Default”) or (b) the Purchaser has
confirmed in writing that the conditions to its obligation to close in Section
8.1 of this Agreement have been satisfied (or that it has agreed to waive such
conditions) and a Closing fails to occur for any reason other than a Purchaser
Default or the failure of any of those conditions precedent to the Seller’s
obligations set forth in Section 8.2, then any one, and only one, of the
following shall be available to the Purchaser as its sole and exclusive remedy:
(i) to terminate this Agreement by giving the Seller written notice of such
election and a five (5) business day cure period after the Seller’s receipt of
such written notice, prior to or at the Closing (which five (5) business day
period shall, if necessary, automatically extend the Closing to the expiration
of such five (5) business day period) whereupon, the Escrow Agent shall promptly
return to the Purchaser the Deposit, and the Parties shall have no further
rights or liabilities under this Agreement except for those provisions which
specifically provide that they survive the termination of this Agreement; or
(ii) with respect to a default contemplated in (a) or (b) of this Section 11.1,
seek specific performance of the Seller’s obligations hereunder, provided that
the Purchaser must file a suit for specific performance in the appropriate
jurisdiction within ninety (90) days from the date of delivery by the Purchaser
to the Seller of written notice of such default, and in the event Purchaser is
unsuccessful in obtaining specific performance, the Escrow Agent shall upon
demand of Purchaser return the Deposit to Purchaser.
 
11.2   Termination; Default by the Purchaser. If the Closing does not occur
because of the failure of a condition precedent under Section 8.2, the Seller
may terminate this Agreement, without liability to either party except as
otherwise provided herein and Escrow Agent shall return the Deposit to
Purchaser. If (a) the Purchaser defaults under this Agreement (a “Purchaser
Default”) or (b) the Seller has confirmed in writing that the conditions to its
obligation to close in Section 8.2 of this Agreement have been satisfied (or
that it has agreed to waive such conditions) and a Closing fails to occur for
any reason other than a Seller Default or the failure of any condition precedent
to Purchaser’s obligation as set forth in Section 8.1, then the Seller may,
after written notice to the Purchaser of such default and a five (5) business
day cure period after the Purchaser’s receipt of such written notice prior to or
at the Closing (which five (5) business day period shall, if necessary,
automatically extend the Closing to the expiration of such five (5) business day
period), as its sole and exclusive remedy, terminate this Agreement by written
notice to the Purchaser in which event the Seller shall receive the Deposit as
liquidated damages for such default, the amount of which Deposit the Purchaser
and the Seller agree is not punitive or a penalty but is just, fair and
reasonable, and the Escrow Agent shall immediately pay the Deposit to the
Seller. Upon payment of the Deposit to the Seller, the Parties shall have no
further rights or liabilities under this Agreement except for those provisions
which specifically provide that they survive the termination of this Agreement.
 
11.3   Termination by Mutual Consent. This Agreement may be terminated at any
time prior to the Closing, by mutual written consent of the Parties, in which
case the Parties shall jointly instruct the Escrow Agent to return the Deposit
to the Purchaser and the Parties shall have no further rights or liabilities
under this Agreement except for those provision which specifically provide that
they survive the termination of this Agreement.
 
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11.4   Indemnity.
 
A.    Effective upon and following the Closing, the Seller shall indemnify the
Purchaser, its Affiliates and its and their respective partners, officers,
directors, employees, agents and representatives (each a “Purchaser Indemnified
Party”) and hold each of them harmless against any out-of-pocket damages, costs,
liabilities, losses, judgments, taxes, penalties, fines, expenses or other
costs, including reasonable attorney’s fees, costs of defense and costs of
collection but not lost profits, consequential damages or punitive damages
(collectively, “Losses”) incurred by the Purchaser Indemnified Parties with
respect to: (i) any breach of any of the representations and warranties made by
the Seller in this Agreement; and (ii) any breach of the covenants and
agreements made by the Seller in this Agreement or any of the Closing Documents;
provided, however, that (x) no amounts shall be payable by the Seller unless and
until the aggregate amount otherwise payable by the Seller in the absence of
this clause exceeds the sum of One Hundred Thousand Dollars ($100,000) (the
“Deductible”), in which event the Seller shall be liable to the Purchaser for
the amount (if any) in excess of the Deductible up to a maximum amount not to
exceed twenty percent (20%) of the Closing Payment; provided, however, with
respect to any defect in Seller’s title to the Interest or liens or claims upon
the Interest at the time of Closing, Seller shall be liable to the Purchaser for
damages not to exceed the amount of the Closing Payment. All representations and
warranties shall terminate twelve (12) months after Closing if no written claim
has been made.
 
B.    Effective upon and following the Closing, the Purchaser shall indemnify
the Seller, its Affiliates and its and their respective partners, officers,
directors, employees, agents and representatives (each a “Seller Indemnified
Party”) and hold each of them harmless against any Losses incurred by the Seller
Indemnified Parties with respect to: (i) any breach of any of the
representations and warranties made by the Purchaser in this Agreement; and (ii)
any breach of the covenants and agreements made by the Purchaser in this
Agreement or any of the Closing Documents; provided, however, that (x) no
amounts shall be payable by the Purchaser unless and until the aggregate amount
otherwise payable by the Purchaser in the absence of this clause exceeds the sum
of the Deductible, in which event the Purchaser shall be liable to Seller for
the amount (if any) in excess of the Deductible up to a maximum amount not to
exceed twenty percent (20%) of the Closing Payment. All representations and
warranties shall terminate twelve (12) months after Closing if no written claim
has been made.
 
C.    Effective upon and following the Closing, the Purchaser shall also
indemnify the Seller Indemnified Parties, and hold each of them harmless from
and against any and all Losses incurred by the Seller Indemnified Parties with
respect to or under the Franchise Agreement and the Mortgage Debt and any
liability which Seller may have or incur thereunder, and which Purchaser has not
caused to be fully released effective as of the Closing, including, without
limitation, any such liability which Seller may incur as a result of any claims,
demands, or suits asserted against Seller by Mortgage Lender, Franchisor,
Manager or any other party, together with interest and penalties thereon, and
all costs, expenses and fees incurred in defending any such claim, suit or
action, including reasonable attorneys’ fees at trial and appellate court
levels. The Parties acknowledge that until Closing, the Partnership Agreement
shall govern the liability of the Parties, but as of Closing Purchaser shall
indemnify Seller as provided herein. This provision shall survive Closing.
 
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11.5   Indemnification Procedures. Upon the occurrence of any event giving rise
to a claim for indemnification (an “Indemnification Claim”) under any provision
of this Agreement or any Closing Document, the Party seeking indemnification
(the “Indemnified Party”) shall promptly notify the other Party (the
“Indemnitor”) of such Indemnification Claim and provide the Indemnitor with
copies of any documents describing or otherwise bearing on the subject matter of
such indemnification obligation; provided, however, that the failure to notify
Indemnitor shall not relieve Indemnitor from any liability which Indemnitor may
have under the Indemnification Claim except to the extent that it has been
materially prejudiced by such failure. Indemnitor shall be entitled to
participate in any pending or threatened claim, action, suit or proceeding in
respect of the Indemnification Claim and, to the extent that it wishes, assume
the defense thereof with counsel reasonably satisfactory to the Indemnified
Party.
 
The Indemnitor will not settle or compromise or consent to the entry of any
judgment in any pending or threatened claim, action, suit or proceeding in
respect of the Indemnification Claim unless, (i) Indemnitor shall have given the
Indemnified Party reasonable prior written notice thereof and shall have
obtained an unconditional release of the Indemnified Party from all liability
arising out of such claim, action, suit or proceeding, or (ii) Indemnitor
reaffirms in writing its indemnity obligations hereunder regardless of
Applicable Laws to the contrary. As long as Indemnitor has complied with its
obligations to defend and indemnify, Indemnitor shall not be liable for any
settlement made by the Indemnified Party without the consent of Indemnitor
(which consent shall not be unreasonably withheld or delayed).
 
ARTICLE 12
 
MISCELLANEOUS PROVISIONS
 
12.1   Notices. All notices shall be given by certified mail, overnight delivery
service, telecopier, or hand delivery, and addressed as follows:
 

If to the Seller:

CNL Hospitality Partners, LP
c/o CNL Hospitality Corp.
420 South Orange Avenue
Suite 700
Orlando, FL 32801
Attention: Mr. Marcel Verbaas
Fax: 407-540-2702

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With a copy to:
 
Richard J. Fildes, Esq.
Lowndes, Drosdick, Doster, Kantor & Reed, P.A.
215 North Eola Drive
Orlando, Florida 32801
Fax: 407-843-4444
 
If to Purchaser:
 
Hersha Hospitality Limited Partnership
148 Sheraton Drive
Box A
New Cumberland, PA 17070
Attention: Mr. Hasu P. Shah
Fax: 717-974-7383
 
With a copy to:
 
Shah & Byler, LLP
510 Walnut Street, 9th Floor
Philadelphia, PA 19106
Attention: Lok Mahapatra, Esquire
Fax: 267-238-1874
 
12.2   Availability of Counsel. Each of the parties acknowledges that it has
reviewed this Agreement with independent legal counsel of its choosing or has
waived its right to do so. The Parties acknowledge that this Agreement has been
negotiated and that each of them has had equal input as to the drafting and
construction of this Agreement and, accordingly, the Parties intend that a court
construing this Agreement shall not construe it more strictly against either of
them for any reason whatsoever.
 
12.3   Survival. The provisions of this Agreement, including, without
limitation, Section 11.4(c), other than the obligations of the Parties to be
fulfilled at the Closing, will survive the Closing and remain fully enforceable.
Representations and warranties shall survive for a period of twelve (12) months
from the Closing.
 
12.4   Severability. If any provision of this Agreement is determined by
appropriate judicial authority to be illegal or otherwise unenforceable, such
provision shall be given its nearest legal meaning or otherwise be construed as
such authority determines, and the remainder of this Agreement shall remain in
full force and effect.
 
12.5   Binding Effect. This Agreement is binding upon and shall inure to the
benefit of the Parties and their successors and the permitted assigns of the
Purchaser. The Purchaser may not assign this Agreement, except to an affiliate
of the Purchaser; provided that the assignee assumes the obligations of the
Purchaser hereunder and provided Purchaser shall remain jointly liable for all
obligations of Purchaser hereunder before and following Closing. Notwithstanding
the foregoing, any permitted assignment by Purchaser shall not relieve the
Purchaser of any of its obligations under this Agreement. Seller may not assign
this Agreement.
 
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12.6   Entire Agreement. This Agreement contains the entire agreement (including
the representations and warranties) between the Parties pertaining to the
subject matter set forth herein and the Parties have not made any
representations or warranties to each other, either oral or written, other than
those contained herein or in the documents contemplated hereunder. This
Agreement may not be amended or otherwise modified, except by a writing executed
by both of the Parties.
 
12.7   Brokers. Each of the Parties represents and warrants that it has not
contracted for the services of any brokers in connection with this Agreement,
and each of such Parties shall indemnify, defend and hold the other Party
harmless from any damages (including attorney’s fees and costs) in the event
that any claim is made against such other Parties on account of any services
provided by a broker hired by the indemnifying Parties.
 
12.8   Public Announcements. Each of the Parties shall have the right to make a
public announcement regarding the transaction described in this Agreement,
provided, however, that, prior to and as a condition precedent to such public
announcement, the other Party shall approve the timing, form and substance of
any such public announcement, except if any of the Parties is required to make a
public announcement under any securities law, the Party making such public
announcement may do so only after having provided the other Party with a copy of
such public announcement and only as long as such public announcement is made in
strict accordance with the applicable law requiring such public announcement be
made. Further the Purchaser and the Seller may also make such other disclosures
to their respective officers, directors, partners, legal counsel, advisors and
accountants and other service providers with a need to know and as may be
required by applicable law. In all other respects, the Parties agree that this
Agreement shall be confidential and neither Party may make any disclosures or
announcements concerning the same without the prior written consent of the other
Party.
 
12.9   Governing Law. This Agreement shall be construed under, and governed by,
the Applicable Laws without regard to its conflict of laws principles.
 
12.10         Jurisdiction and Venue. Each Party hereto agrees and submits to
the personal jurisdiction of the state and federal courts sitting in the State
of Delaware. The Parties further agree that all disputes and causes of action
arising out of this Agreement shall be resolved in the state courts of Delaware,
and each Party hereby waives all questions of personal jurisdiction and venue of
such courts, including, without limitation, the claim or defense therein that
such courts constitute an inconvenient forum.
 
12.11         Attorney Fees. In any action or proceeding between any of the
Parties regarding this Agreement or its enforcement, the prevailing party in
such action or proceeding shall be entitled to collect and recover from the
non-prevailing Party or Parties all costs of such action or proceeding incurred
by such prevailing Party, including, but not limited to, reasonable attorney
fees and costs through all levels of proceedings, including appeals.
 
12.12         Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original and all of which shall together constitute
one and the same instrument. A facsimile, telecopy or other reproduction of this
Agreement may be executed by the Parties (in counterparts or otherwise).
Signatures received through facsimile transmission shall bind the Party whose
signature is so received as if such signature were an original. At the request
of any Party, the parties hereto agree to execute an original of this Agreement
as well as any facsimile, telecopy or other reproduction.
 
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12.13         No Third Party Beneficiaries. No Person other than Seller and
Purchaser is intended to be a beneficiary of the rights and obligations of
either Seller or Purchaser under this Agreement.
 
 
(THE REMAINDER OF THIS PAGE WAS LEFT BLANK INTENTIONALLY; THE PARTIES’
SIGNATURES ARE ON THE FOLLOWING PAGE)
 
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
and year first above written.
 

 
SELLER:
 
CNL HOSPITALITY PARTNERS, LP,
a Delaware limited partnership
 
By: CNL Hospitality GP Corp.,
its general partner
 
 
By:
   
Name:
   
Title:
     

 

 
PURCHASER:
 
 
HERSHA HOSPITALITY LIMITED PARTNERSHIP, a limited partnership formed under the
laws of the Commonwealth of Virginia
 
 
By: Hersha Hospitality Trust, a Maryland Business Trust, its general partner
 
 
By:
   
Name:
   
Title:
 

 
 
JOINDER OF ESCROW AGENT
 
Escrow Agent hereby joins in the execution of this Agreement solely for the
purpose of acknowledging and agreeing to the provisions of Section 3.6 hereof.
 

 
Lowndes, Drosdick, Doster, Kantor & Reed, P.A. (“Escrow Agent”)
 
 
 
By: Richard J. Fildes

 
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EXHIBIT “A”
 
ASSIGNMENT OF LIMITED PARTNERSHIP INTEREST IN LIMITED PARTNERSHIP
(HT/CNL METRO HOTELS, L.P.)
 
THIS ASSIGNMENT OF LIMITED PARTNERSHIP INTEREST (the “Assignment”) is made and
executed as of the _____ day of _________________, 2006 by CNL HOSPITALITY
PARTNERS, LP, a Delaware limited partnership (hereinafter referred to as
“Assignor”), to and in favor of
__________________________________________________, a
__________________________________________ (hereinafter referred to as
“Assignee”);
 
W I T N E S S E T H:
 
WHEREAS, Assignor owns a sixty-six and 66.7/100 percent (66.667%) limited
partnership interest in HT/CNL Metro Hotels, L.P., a Delaware limited
partnership (hereinafter referred to as the “Partnership”); and
 
WHEREAS, Assignor has agreed to transfer its entire sixty-six and 66.7/100
percent (66.667%) interest in the Partnership to Assignee;
 
NOW, THEREFORE, FOR AND IN CONSIDERATION of the sum of
____________________________________ Dollars and No/100 ($_______________), and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, Assignor hereby grants, bargains, sells, transfers, assigns
and conveys unto Assignee, absolutely, and not as security or upon any
condition, its entire sixty-six and 66.7/100 percent (66.667%) limited
partnership interest in the Partnership and all of Assignor’s other rights,
title and interest in the Partnership, including, but not limited to, Assignor’s
rights to distributions, capital accounts and equity interests.
 
TO HAVE AND TO HOLD until Assignee and its successors and assigns forever;

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IN WITNESS WHEREOF, the Assignor has caused these presents to be executed in
manner and form sufficient to bind them as of the date first written above.
 

Witnesses:
CNL HOSPITALITY PARTNERS, LP, a
Delaware limited partnership
 
 
By:  CNL Hospitality GP Corp., a Delaware
Name:
 
corp., its general partner

 
By:
 
Name:
 
Name:
   
Title:
 

 
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ACCEPTANCE OF ASSIGNMENT AGREEMENT
 
The undersigned Assignee hereby accepts the foregoing Assignment.
 

         
By:
 

       
By:
     
Name:
     
Title:
 

 
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EXHIBIT “B-1”
 
CERTIFICATE OF REPRESENTATIONS AND WARRANTIES
OF SELLER
 
This Certificate of Representations and Warranties of Seller (“Certificate”) is
given pursuant to Article 8 of that certain Purchase and Sale Agreement (the
“Purchase Agreement”) dated as of the _____ day of ________________, 2006, by
and between CNL HOSPITALITY PARTNERS, LP, a Delaware limited partnership
(“Seller”), and HERSHA HOSPITALITY LIMITED PARTNERSHIP, a limited partnership
organized under the laws of the Commonwealth of Virginia (“Purchaser”). Seller
hereby certifies to Purchaser that as of the date hereof, the representations
and warranties of Seller set forth in Article 5 of the Purchase Agreement are
true and correct in all material respects as though made at and as of the date
hereof.
 
IN WITNESS WHEREOF, Seller has executed this Certificate in the Purchase
Agreement this _____ day of _____________________, 2006.
 
Signed, sealed and delivered in the
Presence of the following witnesses:
CNL HOSPITALITY PARTNERS, LP,
a Delaware limited partnership
 
 
By:  CNL Hospitality GP Corp., a Delaware
 
corp., its general partner
Signature of Witness
     
Printed Name of Witness
 
By:
     
Name:
     
Title:
     
Signature of Witness
 
 
 
Printed Name of Witness
 

 

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EXHIBIT “B-2”
 
CERTIFICATE OF REPRESENTATIONS AND WARRANTIES OF PURCHASER
 
This Certificate of Representations and Warranties of Purchaser (“Certificate”)
is given pursuant to Article 8 of that certain Purchase and Sale Agreement (the
“Purchase Agreement”) dated as of the _____ day of ________________, 2006, by
and between HERSHA HOSPITALITY LIMITED PARTNERSHIP, a limited partnership
organized under the laws of the commonwealth of Virginia (“Purchaser”), and CNL
HOSPITALITY PARTNERS, LP, a Delaware limited partnership (“Seller”). Purchaser
hereby certifies to Seller that as of the date hereof, the representations and
warranties of Purchaser set forth in Article 6 of the Purchase Agreement are
true and correct in all material respects as though made at and as of the date
hereof.
 
IN WITNESS WHEREOF, Purchaser has executed this Certificate in the Purchase
Agreement this _____ day of _____________________, 2006.
 
Signed, sealed and delivered in the
Presence of the following witnesses:
PURCHASER:
 
HERSHA HOSPITALITY LIMITED PARTNERSHIP, a limited partnership formed under the
laws of the Commonwealth of Virginia
 
Signature of Witness
   
By: Hersha Hospitality Trust,
its general partner
Printed Name of Witness
     
By:
     
Name:
 
Signature of Witness
 
Title:
     
Printed Name of Witness
 

 
 

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