ex10_1.htm


    
      

    

    Exhibti
10.1


     

    CONTRIBUTION
AGREEMENT

     

    dated as
of June 13, 2008

     

    by and
among

    


    


    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,

    PLM
ASSOCIATES LLC,

    DAVID
L. DESFOR AND

    ASHISH
R. PARIKH

    


    as
Contributors,

    


    and

     

    HERSHA
HOSPITALITY LIMITED PARTNERSHIP

    


     

    as
Acquirer,

     

    


    
      IN
CONNECTION WITH THE PURCHASE AND SALE OF

    

    
      MEMBERSHIP
INTERESTS IN HERSHA CONDUIT ASSOCIATES, LLC, MEMBER OF RISINGSAM HOSPITALITY
LLC, OWNER OF THE JFK SHERATON LOCATED AT

      132-26 S.
CONDUIT BOULEVARD, JAMAICA, NY

    

    
      

        
          
             


          

          
             


            
              

            

          

          
             


          

        

      

       

    

    THIS
CONTRIBUTION AGREEMENT, dated as of June 13, 2008 (the “Agreement”), by Shree
Associates, a Pennsylvania limited partnership (the “Shree Contributor”), Kunj
Associates, a Pennsylvania limited partnership (the “Kunj Contributor”), Devi
Associates, a Pennsylvania limited partnership (the “Devi Contributor”), Shanti III
Associates, a Pennsylvania limited partnership (the “Shanti III Contributor”),
Trust FBO Jay H. Shah under the Hasu and Hersha Shah 2004 Trust dated August 18,
2004 (the “Trust FBO Jay H.
Shah Contributor”), Trust FBO Neil H. Shah under the Hasu and Hersha Shah
2004 Trust dated August 18, 2004 (the “Trust FBO Neil H. Shah
Contributor”), PLM Associates LLC, a Pennsylvania limited liability
company (the “PLM
Contributor”), David L. Desfor, an individual (the “Desfor Contributor”) and
Ashish R. Parikh, an individual (the “Parikh Contributor”, and
collectively, all together the “Contributors”), Hersha Conduit
Associates, LLC, a New York limited Liability Company (the “LLC”) and Hersha Hospitality
Limited Partnership, a Virginia limited partnership (the “Acquirer”)
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 limited liability company action for the purpose of effecting any
of the foregoing; or if a proceeding or case shall be commenced, without the
application or consent of a party hereto or any general partner thereof, in any
court of competent jurisdiction seeking (1) the liquidation,
reorganization, dissolution or winding-up, or the composition or readjustment of
debts, of such party or general partner, (2) the appointment of a receiver,
custodian, trustee or liquidator or such party or general partner or all or any
substantial part of its assets, or (3) other similar relief under any law
relating to bankruptcy, insolvency, reorganization, winding-up or composition or
adjustment of debts, and such proceeding or case shall continue undismissed; or
an order (including an order for relief entered in an involuntary case under the
Federal Bankruptcy Code, as now or hereafter in effect) judgment or decree
approving or ordering any of the foregoing shall be entered and continue
unstayed and in effect, for a period of sixty (60) consecutive
days.

     

    “Apportionment Date”
shall mean the day immediately preceding the Closing Date.

     

    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

     

    “Articles of
Organization” shall mean the Articles of Organization of the LLC and the
Property Owner filed with the Secretary of State of the State of New York,
attached hereto as Exhibit
F.

     

    “Assignment and Assumption
Agreement” shall mean those certain Assignment and Assumption Agreements
with respect to the Interests (defined herein below), dated as of the Closing
Date, by and between Contributors and Acquirer.

     

     “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 the value of Five Hundred Seventy Four Thousand Three Hundred and Six
(574,306) LP Units, payable to the Contributors at Closing in the manner
described in Section
2.3 and Fifty Percent (50%) of the modification by Acquirer of the
existing loan from Commerce Bank, N.A. to the Property Owner, dated April 28,
2008, in the original principal amount of Twenty Four Million Eight Hundred
Thousand Dollars ($24,800,000.00), for which loan the Property Owner shall
remain the borrower.

     

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

     

     “Escrow Agent” shall
mean Summit Associates, 100 Lafayette Street, 3rd Floor,
New York, NY 10013; Phone 212-608-5866; Fax 212-227-8745.

     

    “Existing Mortgage”
shall mean that certain Leasehold Mortgage and Security Agreement dated as of
April 28, 2008, and securing a loan from Commerce Bank, N.A. to the Property
Owner, in the original principal amount of Twenty Four Million Eight Hundred
Thousand Dollars ($24,800,000.00).

     

    “FIRPTA Certificate”
shall mean the affidavit of the Contributors under Section 1445 of the
Internal Revenue Code certifying that such Contributors are not a foreign
corporation, foreign partnership, foreign limited liability company, foreign
trust, foreign estate or foreign person (as those terms are defined in the
Internal Revenue Code and the Income Tax Regulations), in form and substance
satisfactory to the Acquirer.

     

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

     

    “Ground Lease” shall
mean that certain Ground Lease dated June 19, 2003, as amended, by and between
MLT Canyon LLC, a New York limited liability company, as “Landlord” and the
Property Owner as “Tenant”.

     

    
      
         


      

      
        2

        
          

        

      

      
         


      

    

     

    “Hersha” shall mean
Hersha Hospitality Trust, a Maryland business trust.

     

    “Hotel” shall mean the
hotel and related amenities located on the Land.

     

    “Improvements” shall
mean the Hotel and all other buildings, improvements, fixtures and other items
of real estate located on the Land.

     

    “Insurance Policies”
shall mean those certain policies of insurance described on Exhibit B
attached hereto.

     

    “Intangible Personal
Property” shall mean all intangible personal property owned or possessed
by the Contributors, the LLC or the Property Owner and used in connection with
the ownership, operation, leasing, occupancy or maintenance of the Property,
including, without limitation, the right to use the trade name “JFK Sheraton”
and all variations thereof, the Authorizations, escrow accounts, insurance
policies, general intangibles, business records, plans and specifications,
surveys and title insurance policies pertaining to the real property and the
personal property, all licenses, permits and approvals with respect to the
construction, ownership, operation, leasing, occupancy or maintenance of the
Property, any unpaid award for taking by condemnation or any damage to the Land
by reason of a change of grade or location of or access to any street or
highway, and the share of the Tray Ledger as hereinafter defined, excluding
(a) any of the aforesaid rights the Acquirer elects not to acquire,
(b) the Contributors’ cash on hand, in bank accounts and invested with
financial institutions and (c) accounts receivable except for the above
described share of the Tray Ledger.

     

    “Interests” shall mean
the Shree Interests, the Kunj Interests, the Devi Interests, the Shanti III
Interests, the Trust FBO Jay H. Shah Interests, the Trust FBO Neil H. Shah
Interests, the PLM Interests, the Desfor Interests and the Parikh Interests,
consisting of One Hundred Percent (100%) of the interests in the
LLC.

     

    “Shree Interests”
shall mean all right, title and interest of Shree Contributor in the LLC,
consisting of a Three Percent (3%) membership interest in the LLC.

     

     “Kunj Interests” shall
mean all right, title and interest of Kunj Contributor in the LLC, consisting of
a Fourteen Percent (14%) membership interest in the LLC.

     

    “Devi Interests” shall
mean all right, title and interest of Devi Contributor in the LLC, consisting of
a Twelve Percent (12%) membership interest in the LLC.

     

     “Shanti III Interests”
shall mean all right, title and interest of Shanti III Contributor in the LLC,
consisting of a Ten Percent (10%) membership interest in the LLC.

     

    “Trust FBO Jay H. Shah
Interests” shall mean all right, title and interest of Trust FBO Jay H.
Shah Contributor in the LLC, consisting of a Twenty-Five Percent (25%)
membership interest in the LLC.

     

    
      
         


      

      
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    “Trust FBO Neil H. Shah
Interests” shall mean all right, title and interest of Trust FBO Neil H.
Shah Contributor in the LLC, consisting of a Twenty-Nine Percent (29%)
membership interest in the LLC.

     

    “PLM Interests” shall
mean all right, title and interest of PLM Contributor in the LLC, consisting of
a Two Percent (2%) membership interest in the LLC.

     

    “Desfor Interests”
shall mean all right, title and interest of Desfor Contributor in the LLC,
consisting of a Three Percent (3%) membership interest in the LLC.

     

    “Parikh Interests”
shall mean all right, title and interest of Parikh Contributor in the LLC,
consisting of a Two Percent (2%) membership interest in the LLC.

     

    “Inventory” shall mean
all inventory located at the Hotel, including without limitation, all
mattresses, pillows, bed linens, towels, paper goods, soaps, cleaning supplies
and other such supplies.

     

    “Joinder” shall have
the meaning set forth in Section
2.3(c).

     

    “Knowledge” shall mean
the actual knowledge of the Contributors that they would have had after making
reasonable investigation.

     

     “Land” shall mean the
ground lease to that certain parcel of real estate lying and being in the County
of Queens and State of New York at 132-26 S. Conduit Boulevard, Jamaica, New
York, as more particularly described on Exhibit A
attached hereto, together with all easements, rights, privileges and
appurtenances thereunto belonging or in any way appertaining, and all of the
leasehold estate, right, title, interest, claim or demand whatsoever of the
Property Owner therein, in the streets and ways adjacent thereto and in the beds
thereof, either at law or in equity, in possession or expectancy, now or
hereafter acquired.

     

    “Leases” shall mean
those leases of real property listed on Exhibit C attached
hereto.

     

    “LLC” shall mean
Hersha Conduit Associates, LLC, a New York limited liability company that owns,
as its only assets, interests in the Property Owner.

     

    “LLC Operating
Agreement” shall mean the current operating agreement of the LLC,
attached hereto as Exhibit
G.

     

    “LP Units” shall mean
limited partnership units of Acquirer.

     

    “Manager” shall mean
Hersha Hospitality Management, LP, a Pennsylvania limited
partnership.

     

    “Operating Agreements”
shall mean the management agreements, service contracts, supply contracts,
leases (other than the Leases) and other agreements, if any, in effect with
respect to the construction, ownership, operation, occupancy or maintenance of
the Property.

     

    
      
         


      

      
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    “Owner’s Title Policy”
shall mean an owner’s policy of title insurance issued to the Acquirer by the
Title Company, dated as of the Closing Date, pursuant to which the Title Company
insures the Property Owner’s ownership of title to the leasehold interest in the
Real Property (including the marketability thereof) subject only to Permitted
Title Exceptions.  The Owner’s Title Policy shall insure the Property
Owner in the amount of the Consideration and shall be acceptable in form and
substance to the Acquirer.  The description of the Land in the Owner’s
Title Policy shall be by courses and distances and shall be identical to the
description shown on a survey provided by the Contributors to the
Acquirer.

     

    “Permitted Title
Exceptions” shall mean those exceptions to title to the Real Property
that are satisfactory to the Acquirer as determined pursuant to Section 2.2.

     

    “Property” shall mean
collectively the Land, Improvements, the Inventory, the Reservation System, the
Tangible Personal Property and the Intangible Personal Property.

     

    “Property Owner” shall
mean Risingsam Hospitality LLC, a New York limited liability company that owns,
as its only assets, the leasehold interest in the Land, the Hotel and
Improvements located on the Land, in accordance with the Ground
Lease.

     

    “Property Owner Operating
Agreement” shall mean the current operating agreement of the Property
Owner, attached hereto as Exhibit
H.

     

    “Real Property” shall
mean the Land and the Improvements.

     

    “Reservation System”
shall mean the Property Owner’s Reservation Terminal and Reservation System
equipment and software, if any.

     

    “Securities Act” shall
mean the Securities Act of 1933, as amended.

     

    “Study Period” shall
mean the period commencing as of the date hereof, and continuing through the
time of Closing.

     

    “Tangible Personal
Property” shall mean the items of tangible personal property consisting
of all furniture, fixtures and equipment situated on, attached to, or used in
the operation of the Hotel, and all furniture, furnishings, equipment,
machinery, and other personal property of every kind located on or used in the
operation of the Hotel and owned by the Contributors, the LLC or the Property
Owner.

    


    “Title Commitment”
shall mean the commitment by the Title Company to issue the Owner’s Title
Policy.

     

    “Title Company” shall
mean Summit Associates, 100 Lafayette Street, 3rd Floor,
New York, NY 10013; Phone 212-608-5866; Fax 212-227-8745.

     

    “Tray Ledger” shall
mean the final night’s room revenue (revenue from rooms occupied as of 11:59:59
p.m. on the Apportionment Date, inclusive of food, beverage, telephone and
similar charges), net of any sales taxes, room taxes or other taxes
thereon.

     

    
      
         


      

      
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    “Utilities” shall mean
public sanitary and storm sewers, natural gas, telephone, public water
facilities, electrical facilities and all other utility facilities and services
necessary for the operation and occupancy of the Property as a
hotel.

     

    1.2           Rules of
Construction.  The following rules shall apply to the
construction and interpretation of this Agreement:

     

    (a)           Singular
words shall connote the plural number as well as the singular and vice versa,
and the masculine shall include the feminine and the neuter.

     

    (b)           All
references herein to particular articles, sections, subsections, clauses or
exhibits are references to articles, sections, subsections, clauses or exhibits
of this Agreement.

     

    (c)           Headings
contained herein are solely for convenience of reference and shall not
constitute a part of this Agreement nor shall they affect its meaning,
construction or effect.

     

    (d)           Each
party hereto and its counsel have reviewed and revised (or requested revisions
of) this Agreement, and therefore any usual rules of construction requiring that
ambiguities are to be resolved against a particular party shall not be
applicable in the construction and interpretation of this Agreement or any
exhibits hereto.

     

    ARTICLE II

     

    CONTRIBUTION AND ACQUISITION; STUDY
PERIOD;

    PAYMENT OF
CONSIDERATION

     

    2.1           Contribution and
Acquisition.  The Contributors agree to contribute, assign and
transfer their Interests to the Acquirer and the Acquirer agrees to accept the
Interests in exchange for the Consideration and in accordance with the other
terms and conditions set forth herein.

     

    2.2           Study
Period.  (a)  The Acquirer shall have the right,
until the end of the Study Period, to enter upon the Real Property and to
perform, at the Acquirer’s expense, such economic, surveying, engineering,
environmental, topographic and marketing tests, studies and investigations as
the Acquirer may deem appropriate.  If such tests, studies and
investigations warrant, in the Acquirer’s sole, absolute and unreviewable
discretion, the purchase of the Interests for the purposes contemplated by the
Acquirer, then the Acquirer may elect to proceed to Closing and shall so notify
the Contributors prior to the expiration of the Study Period.  If for
any reason the Acquirer does not so notify the Contributors of its determination
to proceed to Closing prior to the expiration of the Study Period, or if the
Acquirer notifies the Contributors, in writing, prior to the expiration of the
Study Period that it has determined not to proceed to Closing, this Agreement
automatically shall terminate, and the Acquirer shall be released from any
further liability or obligation under this Agreement.

     

    (b)      During
the Study Period, the Contributors shall make available to the Acquirer, its
agents, auditors, engineers, attorneys and other designees, for inspection
copies of all existing architectural and engineering studies, surveys, title
insurance policies, zoning and site plan materials, correspondence,
environmental audits and other related materials or information if any, relating
to the Property which are in, or come into, the Contributors’ possession or
control.

     

    
      
        
           


        

        
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    (c)      The
Acquirer hereby indemnifies and defends the Contributors against any loss,
damage or claim arising from entry upon the Real Property by the Acquirer or any
agents, contractors or employees of the Acquirer.  The Acquirer, at
its own expense, shall restore any damage to the Real Property caused by any of
the tests or studies made by the Acquirer.

     

    (d)      During the Study
Period, the Acquirer, at its expense, may cause an examination of title to the
Property to be made, and, prior to the expiration of the Study Period, may
notify the Contributors of any defects in title shown by such examination that
the Acquirer is unwilling to accept.  The Contributors shall notify
the Acquirer whether the Contributors are willing to cure such defects and to
proceed to Closing.  Contributors may cure, but shall not be obligated
to cure such defects.  If such defects consist of deeds of trust,
mechanics’ liens, tax liens or other liens or charges in a fixed sum or capable
of computation as a fixed sum, the Contributors, at their option, shall either
pay and discharge (in which event, the Escrow Agent is authorized to pay and
discharge at Closing) such defects at Closing.  If the Contributors
are unwilling or unable to cure any such defects by Closing, the Acquirer shall
elect (1) to waive such defects and proceed to Closing without any
abatement in the Consideration or (2) to terminate this
Agreement.  The Contributors shall not, after the date of this
Agreement, subject the Property to and shall take all reasonable best efforts to
prevent the Property from being subjected to any liens, encumbrances, covenants,
conditions, restrictions, easements or other title matters or seek any zoning
changes or take any other action which may affect or modify the status of title
without the Acquirer’s prior written consent, which consent shall not be
unreasonably withheld or delayed.  All title matters revealed by the
Acquirer’s title examination and not objected to by the Acquirer as provided
above shall be deemed Permitted Title Exceptions.  If Acquirer shall
fail to examine title and notify the Contributors of any such title objections
by the end of the Study Period, all such title exceptions (other than those
rendering title unmarketable and those that are to be paid at Closing as
provided above) shall be deemed Permitted Title Exceptions.

     

    2.3            Payment of the
Consideration. Acquirer shall pay the Consideration to the Contributors
in the following manner:

     

    (a)      Acquirer
shall pay to Contributors Five Hundred Seventy Four Thousand Three Hundred and
Six (574,306) LP Units, the price of such LP Units to be determined on the
Closing Date. Contributors shall be restricted from converting or selling such
LP Units for a period of one (1) year from the Closing Date.

    


    (b)      At
Closing, the Existing Mortgage shall be assumed or modified by Acquirer, and the
Property Owner shall remain the borrower.  Any adjustments and
prorations to be made pursuant to the terms of this Agreement shall be paid by
wire transfer of immediately available funds to an account specified by the
party due to receive same.

    


     (c)     Notwithstanding
the foregoing, no LP Units shall be issued by the Acquirer, and following such
issuance no LP Units shall be transferred by any Contributor to, any person or
entity that is not an accredited investor within the meaning of Regulation D
promulgated by the United States Securities and Exchange Commission (“SEC”)
under the Securities Act of 1933, as amended (the “Securities Act”), and
to the extent any such non-accredited person or entity is entitled to receive
any portion of the Consideration, such portion shall be paid in cash rather than
LP Units and the number of LP Units issuable in payment of the Consideration
shall be reduced accordingly. Each Contributor agrees to take such actions as
Acquirer may reasonably request in order to assure that the issuance of any LP
Units pursuant to this Agreement complies with the requirements of the
Securities Act and Regulation D promulgated thereunder. Except as otherwise
expressly set forth in this Agreement, the Contributors acknowledge and agree
that once the Closing occurs, the Contributors shall no longer hold any right,
title or interest in the Property Owner (except through its ownership of
Acquirer). Contributors hereby direct Acquirer to pay, issue and distribute (as
applicable) the Consideration on the Closing Date to the Contributors in such
amounts set forth in this Agreement. The Contributors that
acquire LP Units acknowledge that any certificates evidencing the LP Units will
bear appropriate legends indicating (i) that the LP Units have not been
registered under the Securities Act, and (ii) that Acquirer’s Limited
Partnership Agreement (the “Acquirer’s Limited
Partnership Agreement”, attached hereto as Exhibit K) restricts
the transfer of the LP Units. Each Contributor shall upon receipt of the LP
Units at Closing become a limited partner of Acquirer by executing the form of
joinder (the “Joinder”, attached
hereto as Exhibit
J) to the Acquirer’s Limited Partnership Agreement and deliver the
executed Joinder at closing pursuant to the terms of Section 6.2 hereof;
provided, however, that if any
Contributor is presently a limited partner of the Acquirer, such Contributor
shall not be required to execute and deliver the Joinder.  By
executing and delivering the Joinder in accordance with the terms hereof, each
Contributor acknowledges that it will be bound by the terms and provisions of
the Acquirer’s Limited Partnership Agreement.

     

    
      
         


      

      
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    ARTICLE III

     

    CONTRIBUTORS’
REPRESENTATIONS, WARRANTIES AND
COVENANTS

     

    To induce
the Acquirer to enter into this Agreement and to purchase the Property,
Contributors hereby make the following representations, warranties and
covenants, upon each of which Contributors acknowledge and agree that the
Acquirer is entitled to rely and has relied:

     

    3.1           Identity and
Power.

     

    (a)      The
Contributors have all requisite powers and all governmental licenses,
authorizations, consents and approvals necessary to carry on their business as
now conducted, to own, lease and operate their respective properties, to execute
and deliver this Agreement and any document or instrument required to be
executed and delivered on behalf of each such Contributor hereunder, to perform
their respective 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.  No other
proceedings are necessary to authorize this Agreement and the transactions
contemplated hereby.  This Agreement has been duly executed by the
Contributors and is a valid and binding obligation enforceable against them in
accordance with its terms.

     

    
      
         


      

      
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    (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 Property, the assets
of the LLC or assets of the Property Owner, under any of  the terms,
conditions, or provisions of, the Articles of Organization, the LLC Operating
Agreement, the Property Owner Operating Agreement or any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement, or other instrument, or
obligation to which the LLC or the Property Owner is a party, or by which the
LLC or the Property Owner may be bound, or to which the LLC or the Property
Owner or their respective properties or assets, or the Property may be subject;
or

     

    (ii)     violate
any judgment, ruling, order, writ, injunction, decree, statute, rule, or
regulation applicable to the LLC or the Property Owner, their respective
properties or assets, or the Property 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.  Except as set forth on Exhibit E, 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 materially adversely affect the Contributors or the
Interests, (ii) that seeks restraint, prohibition, damages or other relief in
connection with this Agreement or the transactions contemplated hereby, or (iii)
would delay the consummation of any of the transactions contemplated
hereby.  The Contributors are not subject to any judgment, decree,
injunction, rule or order of any court relating to the Contributors’
participation in the transactions contemplated by this Agreement.

     

    3.4            Interests and
Property.

     

    (a)       The
Interests are, on the date hereof, and will be on the Closing Date, free and
clear of all liens and encumbrances and the Contributors have good, marketable
title thereto and the right to convey same in accordance with the terms of this
Agreement.  Upon delivery of the Contributors’ Assignment and
Assumption Agreement to the Acquirer at Closing, good valid and marketable title
to the Contributors’ Interests, free and clear of all liens and encumbrances,
will pass to the Acquirer.   The Interests constitute the only
outstanding interests of the LLC.

     

    
      
         


      

      
        9

        
          

        

      

      
         


      

    

     

    (b)      Except
for liens disclosed by Contributors to Acquirer, the Interests are, on the date
hereof, and will be on the Closing Date, free and clear of all liens and
encumbrances, and the Contributors have good, marketable title thereto and the
right to convey same.  The Property Owner is the leasehold owner of
the Real Property and the sole owner of the Property.  The LLC owns
Fifty Percent (50%) of the only outstanding securities and membership interests
of the Property Owner.  As of the Closing Date, Acquirer will own the
remaining Fifty Percent (50%) of the only outstanding securities and membership
interests of the Property Owner.

     

    3.5            Bankruptcy.  No
Act of Bankruptcy has occurred with respect to the LLC or the Property
Owner.

     

    3.6            Brokerage
Commission.  The Contributors have not engaged the services of,
nor is it or will it or Acquirer 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 and the Property
Owner.

     

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

     

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

     

    (c)       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, the LLC or the Property Owner 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 Property or other
assets of the LLC or the Property Owner, under any of the terms, conditions, or
provisions of, the Articles of Organization, the LLC Operating Agreement, the
Property Owner Operating Agreement or any note, bond, mortgage, indenture, deed
of trust, license, lease, agreement, or other instrument or obligation to which
the LLC or the Property Owner is a party, or by which the LLC or the Property
Owner may be bound, or to which the LLC or the Property Owner or their
respective 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 the Property Owner or any of the LLC’s
properties or assets or the Property Owner’s properties or assets, as
applicable.

     

    
      
         


      

      
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    (d)       Except
for the Contributors, no party has any interest in the LLC, and except for
Sam Chang, an individual, no party has any interest in the Property Owner,
or any portion thereof, or the right or option to acquire any interest in the
LLC, the Property Owner 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 entity except for its interest in the Property Owner. The
Property Owner has no subsidiaries and does not directly or indirectly own any
securities of or interest in any other entity, including, without limitation,
any limited liability company or joint venture.

     

    (e)       The
LLC has conducted no business other than the ownership and operation of its
interests in the Property Owner. The Property Owner has conducted no business
other than the ownership and operation of the Property.

     

    3.8            Liabilities, Debts and
Obligations.  Except for the Continuing Liabilities and any
other liabilities disclosed by Contributors to Acquirer, the LLC and the
Property Owner have no liabilities, debts or obligations.

     

    3.9            Tax
Matters.

     

    (a)       Notwithstanding
anything to the contrary contained in this Agreement, including without
limitation the use of words and phrases such as “sell,” “sale,” purchase,” and
“pay,” the parties hereto acknowledge and agree that it is their intent that the
transaction contemplated hereby shall be treated for federal income tax purposes
pursuant to Section 721 of the Internal Revenue Code of 1986, as amended,
as the contribution of the Interests by the Contributors to the Acquirer in
exchange for the Consideration, and not as a transaction in which any
Contributors are acting other than in the capacity as a prospective partner in
the Acquirer.

    


    (b)      
The Contributors represent and warrant that they has obtained from their own
counsel advice regarding the tax consequences of (i) the transfer of the
Interests to the Acquirer and the receipt of the Consideration therefor, (ii)
the Contributors’ admission as a limited partner of the Acquirer, and (iii) any
other transaction contemplated by this Agreement.  Each Contributor
further represents and warrants that it has not relied on the Acquirer or the
Acquirer’s representatives or counsel for such tax advice.

     

    (c)       The
Contributors have caused the LLC and the Property Owner to file within the time
and in the manner prescribed by law all federal, state, and local tax returns
and reports, including but not limited to income, gross receipts, intangible,
real property, excise, withholding, franchise, sales, use, employment, personal
property, and other tax returns and reports, required to be filed by the LLC and
the Property Owner under the laws of the United States and of each state or
other jurisdiction in which the LLC and the Property Owner conduct business
activities requiring the filing of tax returns or reports.  All tax
returns and reports filed by the LLC and the Property Owner are true and correct
in all material respects.  The LLC and the Property Owner have paid in
full all taxes of whatever kind or nature for the periods covered by such
returns.  The LLC and the Property Owner have not been delinquent in
the payment of any tax, assessment, or governmental charge or deposit and has no
tax deficiency or claim outstanding, assessed, threatened, or proposed against
it.  The charges, accruals, and reserves for unpaid taxes on the books
and records of the LLC and the Property Owner as of the Closing Date are
sufficient in all respects for the payment of all unpaid federal, state, and
local taxes of the LLC and the Property Owner accrued for or applicable to all
periods ended on or before the Closing Date.  There are no tax liens,
whether imposed by the United States, any state, local, or other taxing
authority, outstanding against the LLC and the Property Owner or any of their
respective assets.  The federal, state, and local tax returns of the
LLC and the Property Owner have not been audited, nor have the LLC, the Property
Owner or the Contributors received any notice of any federal, state, or local
audit.  The LLC and the Property Owner have 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 or the Property Owner.


    
      
         


      

      
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    (d)       All
taxes, including real property taxes and rental taxes or the equivalent, and all
interest and penalties due thereon, required to be paid or collected by the LLC
or the Property Owner 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 Contributors shall cause the LLC and the Property Owner to
file, all necessary returns and petitions required to be filed through the
Closing Date.  The Contributors shall cause the LLC and the Property
Owner to 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 and the Property Owner.

    


    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
or the Property Owner is a party or by which their assets are bound other than
the Permitted Title Exceptions, the Leases, and the Operating
Agreements.

     

    3.11          No Special
Taxes.  The Contributors have no Knowledge of, nor have they
received any written notice of, any special taxes or assessments relating to the
LLC, the Property Owner or the Property or any part thereof or any planned
public improvements that may result in a special tax or assessment against the
Property.

     

    3.12         Compliance with Existing
Laws.  The LLC and the Property Owner possess all
Authorizations, each of which is valid and in full force and effect, and, to
Contributors’ Knowledge, no provision, condition or limitation of any of the
Authorizations has been breached or violated.   Neither the LLC
nor the Property Owner has misrepresented or failed to disclose any relevant
fact in obtaining all Authorizations, and the Contributors have no 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 Knowledge, nor have they
received written notice within the past three (3) 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.

     

    
      
         


      

      
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    3.13          Operating
Agreements.  The LLC and the Property Owner have performed all
of their respective 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.  Without the prior written consent of the
Acquirer, which consent will not be unreasonably withheld or delayed, the
Contributors shall cause the LLC and the Property Owner not to 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 Contributors cause the LLC or the Property Owner to enter into any
agreements modifying the Operating Agreements.

     

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

     

    3.15          Insurance.  All
of the LLC’s and the Property Owner’s Insurance Policies are valid and in full
force and effect, all premiums for such policies were paid when due and the
Contributors shall cause the LLC and the Property Owner to pay all future
premiums for such policies (and any replacements thereof) on or before the due
date therefor.  The Contributors shall cause the LLC and the Property
Owner to pay all premiums on, and shall cause the LLC and the Property Owner not
to cancel or allow to expire, any of their respective 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 Contributors shall
cause the LLC and the Property Owner to name the Acquirer as additional insureds
on each of the Insurance Policies.

     

    3.16          Condemnation Proceedings;
Roadways.  Neither the LLC nor the Property Owner have received
written notice of any condemnation or eminent domain proceeding pending or
threatened against the Property or any part thereof.  The Contributors
have no Knowledge of any change or proposed change in the route, grade or width
of, or otherwise affecting, any street or road adjacent to or serving the Real
Property.

     

    3.17          (a)
Litigation with
Respect to the LLC.  Except as set forth on Exhibit E there is no
action, suit or proceeding pending or known to be threatened against or
affecting the LLC or any part of or interest in the 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 material lien on the Property, any part thereof or any
interest therein, or (e) could otherwise materially and adversely affect the
Property, any part thereof or any interest therein or the use, operation,
condition or occupancy thereof.

     

    
      
         


      

      
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    (b) Litigation with Respect to
the Property Owner.  Except as set forth on Exhibit E there is no
action, suit or proceeding pending or known to be threatened against or
affecting the Property Owner or any part of or interest in the 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
Property Owner 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 Property Owner, (c) could materially and adversely affect the ability of
the Property Owner to perform its obligations hereunder, or under any document
to be delivered pursuant hereto, (d) could create a material lien on the
Property, any part thereof or any interest therein, or (e) could otherwise
materially and adversely affect the Property, any part thereof or any interest
therein or the use, operation, condition or occupancy thereof.

     

    3.18         
Labor Disputes and
Agreements.  There are not currently any labor disputes pending
or, threatened as to the operation or maintenance of the Property or any part
thereof.   Neither the LLC nor the Property Owner is a party to
any union or other collective bargaining agreement with employees employed in
connection with the ownership, operation or maintenance of the
Property.  The Acquirer will not be obligated to give or pay any
amount to any employee of the LLC or the Property Owner, and the Acquirer shall
not have any liability under any pension or profit sharing plan that the LLC or
the Property Owner may have established with respect to the Property or their or
its employees.

     

    3.19          Financial
Information.

     

    (a)       To
the Contributors’ Knowledge, except as otherwise disclosed in writing to the
Acquirer prior to the end of the Study Period, 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 Acquirer is and shall
be correct and complete in all material respects and presents accurately the
financial condition of the LLC and results of the operations of the Property for
the periods indicated, except that such statements do not have footnotes or
schedules that may otherwise be required by GAAP.  If requested by the
Acquirer, the Contributors shall cause the LLC to deliver promptly all four-week
period ending financial information available to the LLC.  The LLC’s
financial information is prepared based on books and records maintained by the
LLC in accordance with the LLC’s accounting system.  The LLC’s
financial information has been provided to the Acquirer 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.

     

     (b)    
To the Contributors’ Knowledge, except as otherwise disclosed in writing to the
Acquirer prior to the end of the Study Period, for each of the Property Owner’s
accounting years, when a given year is taken as a whole, all of the Property
Owner’s financial information previously delivered or to be delivered to the
Acquirer is and shall be correct and complete in all material respects and
presents accurately the financial condition of the Property Owner and results of
the operations of the Property for the periods indicated, except that such
statements do not have footnotes or schedules that may otherwise be required by
GAAP.  If requested by the Acquirer, the Contributors shall cause the
Property Owner to deliver promptly all four-week period ending financial
information available to the Property Owner.  The Property Owner’s
financial information is prepared based on books and records maintained by the
Property Owner in accordance with the Property Owner’s accounting
system.  The Property Owner’s financial information has been provided
to the Acquirer without any changes or alteration thereto.  To the
best of Contributors’ Knowledge, since the date of the last financial statement
included in the Property Owner’s financial information, there has been no
material adverse change in the financial condition or in the operations of the
Property.

     

    
      
         


      

      
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    3.20          Organizational
Documents.  The Articles of Organization, the LLC Operating
Agreement and the Property Owner Operating Agreement, are in full force and
effect and have not been modified or supplemented, and no fact or circumstance
has occurred that, by itself or with the giving of notice or the passage of time
or both, would constitute a default thereunder.

     

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

     

    3.22          Bankruptcy with respect to
LLC and the Property Owner.  No Act of Bankruptcy has occurred
with respect to the LLC or the Property Owner.

     

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

     

    
      
         


      

      
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    3.24          Room
Furnishings.  All public spaces, lobbies, meeting rooms, and
each room in the Hotel available for guest rental is furnished in accordance
with commercially reasonable standards for the Hotel and room type.

     

    3.25          Independent
Audit.  Contributors shall provide access by Acquirer’s
representatives, to all financial and other information relating to the
Property, the LLC and the Property Owner.

     

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

     

    3.27         Sufficiency of Certain
Items.  The Property contains not less than:

     

    (a)       a
sufficient amount of furniture, furnishings, color television sets, carpets,
drapes, rugs, floor coverings, mattresses, pillows, bedspreads and the like, to
furnish each guest room, so that each such guest room is, in fact, fully
furnished; and

     

    (b)       a
sufficient amount of towels, washcloths and bed linens, so that there are three
(3) sets of towels, washcloths and linens for each guest room (one on the beds,
one on the shelves, and one in the laundry), together with a sufficient supply
of paper goods, soaps, cleaning supplies and other such supplies and materials,
as are reasonably adequate for the current operation of the Hotel.

     

    3.28          Leases.  True,
complete copies of the Leases, are attached as Exhibit C
hereto.  The Leases are, and will at Closing be, in full force and
effect and neither Contributors, the LLC nor the Property Owner, are in default
and the Contributors shall make good faith efforts for themselves, the LLC and
the Property Owner not to be in default with respect thereto (with or without
the giving of any notice and/or lapse of time).

     

    3.29          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 has granted an
option or right of first refusal to acquire the Interests or the Property or any
part thereof.

     

    
      
         


      

      
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    3.30          Securities Law
Matters.

     

    (a)       The
Contributors are knowledgeable, sophisticated and experienced in business and
financial matters; the Contributors have previously invested in securities
similar to the LP Units and fully understand the limitations on transfer imposed
by the federal securities laws and as described in this Agreement. The
Contributors are able to bear the economic risk of holding the LP Units for an
indefinite period and are able to afford the complete loss of its investment in
the LP Units; the Contributors have received and reviewed all information and
documents about or pertaining to Acquirer and Hersha, the business and prospects
of Acquirer and Hersha and the issuance of the LP Units as the Contributors deem
necessary or desirable; and the Contributors have had the opportunity to review
public filings made with the SEC pursuant to the Exchange Act related to
Acquirer and Hersha; and the Contributors have been given the opportunity to
obtain any additional information or documents and to ask questions and receive
answers about such information and documents, Acquirer, Hersha, the business and
prospects of Acquirer and Hersha and the LP Units which the Contributors deem
necessary or desirable to evaluate the merits and risks related to their
investment in the LP Units and to conduct their own independent valuation of the
LP Units; and the Contributors understand and have taken cognizance of all risk
factors related to the purchase of the LP Units.  The Contributors
were at no time presented with or solicited by any form of general solicitation
or general advertising, including, but not limited to, any advertisement,
article, notice or other communication published in any newspaper, magazine, or
similar media or broadcast over television or radio, or any seminar or meeting
whose attendees have been invited by any general solicitation or general
advertising in connection with the acquisition of the LP Units contemplated
hereby.  The Contributors are sophisticated real estate investors. In
acquiring the LP Units and engaging in this transaction, the Contributors are
not relying upon any representations made to it by Acquirer or Hersha, or any of
the officers, employees, or agents of Acquirer or Hersha not contained herein.
The Contributors are relying upon their own independent analysis and assessment
(including with respect to taxes), and the advice of such Contributors’ advisors
(including tax advisors), and not upon that of Acquirer or Hersha or any of
Acquirer’s or Hersha’s advisors or affiliates, for purposes of evaluating,
entering into, and consummating the transactions contemplated by this Agreement.
The Contributors represent and warrant that they has reviewed and approved the
form of the Acquirer’s Limited Partnership Agreement.

    


    (b)           The
Contributors understand that the LP Units have not been registered under the
Securities Act or any state securities acts and are instead being offered and
sold in reliance on an exemption from such registration requirements. The LP
Units issuable to the Contributors are being acquired solely for the
Contributors’ own accounts, for investment, and are not being acquired with a
view to, or for resale in connection with, any distribution, subdivision, or
fractionalization thereof, in violation of such laws, and the Contributors have
no present intention to enter into any contract, undertaking, agreement, or
arrangement with respect to any such resale. The Contributors understand that
any certificates evidencing the LP Units will contain appropriate legends as
required by the Acquirer’s Limited Partnership Agreement that reflect the
non-negotiability of the certificate and that the LP Units represented by the
certificate are governed by and are transferable only in accordance with the
provisions of the Acquirer’s Limited Partnership Agreement.


    
      
         


      

      
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    (c)       Each
Contributor is an “accredited investor” as that term is defined in Rule 501 of
Regulation D under the Securities Act.  In order to be an “accredited
investor”, as such term is defined in Rule 501 of Regulation D promulgated under
the Securities Act, you must be one of the following:

     

    (i)           a
bank as defined in Section 3(a)(2) of the Securities Act, or a savings and loan
association or other institution as defined in Section 3(a)(5)(A) of the
Securities Act, whether acting in its individual or fiduciary
capacity;

     

    (ii)          a
broker or dealer registered pursuant to Section 15 of the Securities Exchange
Act of 1934, as amended (the “Exchange
Act”);

     

    (iii)         an
insurance company as defined in Section 2(13) of the Securities
Act;

     

    (iv)        an
investment company registered under the Investment Company Act of 1940, as
amended;

     

    (v)         a
business development company as defined in Section 2(a)(48) of the Investment
Company Act of 1940, as amended;

     

    (vi)        a
Small Business Investment Company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small Business Investment Act
of 1958, as amended;

     

    (vii)       a
plan established and maintained by a state, its political subdivisions, or any
agency or instrumentality of a state or its political subdivisions, for the
benefit of its employees, if such plan has total assets in excess
of  Five Million Dollars ($5,000,000.00);

     

    (viii)     
an employee benefit plan within the meaning of the Employee Retirement Income
Security Act of 1974, as amended if the investment decision is made by a plan
fiduciary, as defined in Section 3(21) of such Act, which is either a bank,
savings and loan association, insurance company or registered investment
adviser, or if the employee benefit plan has total assets in excess of Five
Million Dollars ($5,000,000.00) or, if a self-directed plan, with investment
decisions made sole by persons that are accredited investors;

     

    (ix)         a
private business development company as defined in Section 202(a)(22) of the
Investment Advisors Act of 1940, as amended;

     

    (x)          an
(a) organization described in Section 501(c)(3) of the Internal Revenue Code of
1986, as amended, (b) corporation, (c) Massachusetts or similar business trust,
(d) partnership, or (e) limited liability company, in each case not formed for
the specific purpose of acquiring LP Units of the Acquirer or shares of Hersha’s
common stock, with total assets in excess of Five Million Dollars
($5,000,000.00);

     

    
      
         


      

      
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    (xi)         a
director or executive officer of Acquirer or Hersha;

     

    (xii)        a
natural person whose individual net worth, or joint net worth with his or her
spouse, at the time of his or her acquisition of the LP Units exceeds One
Million Dollars ($1,000,000.00);

     

    (xiii)       a
natural person who has an individual income in excess of Two Hundred Thousand
Dollars ($200,000.00) in each of the two most recent years or joint income with
that person’s spouse in excess of Three Hundred Thousand Dollars ($300,000.00)
in each of those years and has a reasonable expectation of reaching the same
income level in the current year;

     

    (xiv)      a
trust, with total assets in excess of Five Million Dollars ($5,000,000.00), not
formed for the specific purpose of acquiring LP Units of the Acquirer or shares
of Hersha’s common stock whose acquisition of LP Units of the Acquirer or shares
of Hersha’s common stock is directed by a sophisticated person as described in
Rule 506(b)(2)(ii) of Regulation D under the Securities Act; or

     

    (xv)        an
entity in which all of the equity owners are accredited investors.

     

    3.31                      Patriot Act
Representations.  Each Contributor and, to the actual knowledge
of each such Contributor, any direct owner of the LLC, the Property Owner or
such Contributor, (i) are not included on any Government List (as defined
below), (ii) are not persons who have been determined by competent authority to
be subject to the prohibitions contained in the Presidential Executive Order No.
13224 or any other similar prohibitions contained in the rules and regulations
of the OFAC or in any enabling legislation or other Presidential Executive
Orders in respect thereof, (iii) have not been indicted or convicted of any
Patriot Act Offenses, or (iv) are not currently under investigation by any
governmental authority for alleged criminal activity.  For purposes of
this Agreement, (i) “Government List” means (A) the Specially Designated
Nationals and Blocked Persons List maintained by OFAC, (B) any other list of
terrorists, terrorist organizations or narcotics traffickers maintained pursuant
to any of the Rules and Regulations of OFAC, or (C) any similar list maintained
by the United States Department of State, the United States Department of
Commerce or any other governmental authority or pursuant to any Executive Order
of the President of the United States of America; (ii) “OFAC” means the Office
of Foreign Asset Control, U.S. Department of the Treasury, (iii) “Patriot Act”
means the Uniting and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism (USA PATRIOT ACT) Act of 2001, as
the same may be amended from time to time, and corresponding provisions of
future laws, and (iv) “Patriot Act Offense” means any violation of the criminal
laws of the United States of America or of any of the several states, or that
would be a criminal violation if committed within the jurisdiction of the United
States of America or any of the several states, relating to terrorism or the
laundering of monetary instruments, including any offense under (A) the criminal
laws against terrorism, (B) the criminal laws against money laundering, (C) the
Bank Secrecy Act, as amended, (D) the Money Laundering Control Act of 1986, as
amended, or (E) the Patriot Act and also includes the crimes of conspiracy to
commit, or aiding and abetting another to commit, any of the
foregoing.

     

    
      
         


      

      
        19

        
          

        

      

      
         


      

    


    Each of
the representations, warranties and covenants contained in this Article III and its
various subparagraphs are intended for the benefit of the Acquirer and may be
waived in whole or in part, by the Acquirer, but only by an instrument in
writing signed by the Acquirer.  Each of said representations,
warranties and covenants shall survive the closing of the transaction
contemplated hereby for twelve (12) months, and no investigation, audit,
inspection, review or the like conducted by or on behalf of the Acquirer shall
be deemed to terminate the effect of any such representations, warranties and
covenants, it being understood that the Acquirer has the right to rely thereon
and that each such representation, warranty and covenant constitutes a material
inducement to the Acquirer to execute this Agreement and to close the
transaction contemplated hereby and to pay the Consideration to the
Contributors.  Acquirer acknowledges and agrees that, except for the
representations and warranties expressly set forth herein, Acquirer is acquiring
the LLC, the Property Owner and the Property “AS-IS, WHERE-IS” with no
representations or warranties by or from Contributors, express or implied, or
any nature whatsoever.  

     

    ARTICLE IV

     

    ACQUIRER’S REPRESENTATIONS,
WARRANTIES AND
COVENANTS

     

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

     

    4.1           Organization and
Power. The Acquirer 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 business 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 Acquirer
hereunder.

     

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

     

    4.3            Litigation.  There
is no action, suit or proceeding, pending or known to be threatened, against or
affecting the Acquirer 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 Acquirer are 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 ability of the Acquirer to
perform its obligations hereunder, or under any document to be delivered
pursuant hereto.

     

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

     

    
      
         


      

      
        20

        
          

        

      

      
         


      

    


    4.5            No
Brokers.  The Acquirer 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.

     

    ARTICLE
V

     

    CONDITIONS AND ADDITIONAL
COVENANTS

     

    The
Acquirer’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 Acquirer, 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 Closing Date as if then
made, there shall have occurred no material adverse change in the financial
condition of the Property, the LLC or the Property Owner 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 Acquirer at Closing a certificate to the foregoing
effect.

     

    5.3            Title
Insurance.  Good and indefeasible title to the leasehold
interest in the Real Property shall be insurable as such by the Title Company at
or below its regularly scheduled rates subject only to Permitted Title
Exceptions as determined in accordance with Section 2.2.

     

    5.4            Condition of
Improvements.  The Improvements and the Tangible Personal
Property (including but not limited to the mechanical systems, plumbing,
electrical, wiring, appliances, fixtures, heating, air conditioning and
ventilating equipment, elevators, boilers, equipment, roofs, structural members
and furnaces) shall be in the same condition at Closing as they are as of the
date hereof, reasonable wear and tear excepted.  Prior to Closing, the
Contributors shall not have diminished the quality or quantity of maintenance
and upkeep services heretofore provided to the Real Property and the Tangible
Personal Property and the Contributors shall not have diminished the
Inventory.  The Contributors shall not have removed or caused or
permitted to be removed any part or portion of the Real Property or the Tangible
Personal Property unless the same is replaced, prior to Closing, with similar
items of at least equal quality and acceptable to the Acquirer.

     

    5.5            Utilities.  All
of the Utilities shall be installed in and operating at the Property, and
service shall be available for the removal of garbage and other waste from the
Property.

     

    5.6            Interests.  From
the date hereof to and including the Closing Date, Contributors shall not sell,
assign, pledge, hypothecate or otherwise transfer the Interests, except as
contemplated by this Agreement, nor shall the Contributors cause or permit the
LLC or the Property Owner to issue any securities, partnership or membership
interests, as the case may be, to any person or to sell, pledge, transfer or
otherwise dispose of the Property or any interest therein.

     

    
      
         


      

      
        21

        
          

        

      

      
         


      

    

     

    5.7           Existing
Mortgage.  Acquirer acknowledges that the Property and the
Property Owner are subject to the Existing Mortgage, a loan in the sum of Twenty
Four Million Eight Hundred Thousand Dollars ($24,800,000.00) from Commerce Bank,
N.A.  Acquirer will assume or modify the Existing
Mortgage.

     

    5.8           Third Party
Consents.  In the event of an assumption or modification of the
Existing Mortgage as contemplated in Sections 2.3(b) and
5.7, then as a condition to Closing, the LLC shall cause the Property
Owner to receive approval from Commerce Bank, N.A. (i) to the contribution of
the Interests to Acquirer as contemplated hereunder and (ii) to the percentage
lease structure whereby, on the Closing Date, the Property Owner shall lease the
Property to a REIT subsidiary (“Lessee”) pursuant to a percentage lease, and
Lessee shall enter into a new management agreement with Manager.

     

    ARTICLE VI

     

    CLOSING

     

    6.1            Closing.  Closing
shall be held at a location that is mutually acceptable to the parties. The
anticipated Closing Date is June 13, 2008, which date may be modified by the
mutual consent of the parties.

     

    6.2            Contributor’
Deliveries.  At Closing, the Contributors shall deliver to
Acquirer 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)          
Certificates
representing the Interests.

     

    (b)         
 The
closing certificate required by Section 5.2.

     

    (c)           
The
Assignment and Assumption Agreement.

     

    (d)          
Any
and all service contracts, space leases, and agreements.

     

    (e)           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.

     

    (f)           
The
FIRPTA Certificate.

     

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

     

    (h)           Copies
of the Articles of Organization, the LLC Operating Agreement and the Property
Owner Operating Agreement.

     

    
      
         


      

      
        22

        
          

        

      

      
         


      

    

     

    (i)           
Appropriate consent of the LLC, authorizing (A) the execution of any
documents to be executed and delivered by the LLC prior to, at or otherwise in
connection with Closing and in connection with the transactions contemplated by
this Agreement, and (B) the performance by the LLC of its obligations
hereunder and under such documents.

     

    (j)           
Appropriate consent of the Property Owner, authorizing (A) the execution of
any documents to be executed and delivered by the Property Owner prior to, at or
otherwise in connection with Closing and in connection with the transactions
contemplated by this Agreement, and (B) the performance by the Property
Owner of its obligations hereunder and under such documents.

     

    (k)           Valid,
final and unconditional certificate(s) of occupancy for the Real Property and
Improvements, issued by the appropriate Governmental Body.

     

    (l)           
Such proof, reasonably acceptable to the Acquirer, evidencing the payment by
Contributors of all transfer taxes incurred in connection with the transactions
contemplated by this Agreement.

     

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

     

    (n)           All
current real estate and personal property tax bills in the Contributors’
possession or under their control.

     

    (o)           A
complete set of all guest registration cards, guest transcripts, guest
histories, and all other available guest information.

     

    (p)           An
updated schedule of employees, showing salaries and duties with a statement of
the length of service of each such employee, brought current to a date not more
than 48 hours prior to the Closing.

     

    (q)           A
complete list of all advance room reservations, functions and the like, in
reasonable detail so as to enable the Acquirer to honor the Contributors’
commitments in that regard.

     

    (r)           A
list of the Contributors’ outstanding accounts receivable as of midnight on the
date prior to the Closing, specifying the name of each account and the amount
due the Contributors.

     

    (s)           Possession
of the Property and all keys for the Property.

     

    (t)           All
books, records, operating reports, appraisal reports, files and other materials
in the Contributors’, the LLC’s or the Property Owner’s possession or control
which are necessary in the Acquirer’s discretion to maintain continuity of
operation of the Property.

     


    
      
         


      

      
        23

        
          

        

      

      
         


      

    


    (u)           To
the extent permitted under applicable law, documents of transfer necessary to
transfer to the Acquirer the Contributors’ employment rating for workmens’
compensation and state unemployment tax purposes.

     

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

     

    (w)           Complete
set of “as-built” drawings for the Improvements as available in Contributors’,
the LLC’s or the Property Owner’s possession.

     

    (x)            The
Joinder.

     

    (y)           
Any other document or instrument reasonably requested by the Acquirer or
required hereby.

     

    6.3            Acquirer’s
Deliveries.  At Closing, the Acquirer shall pay or deliver to
the Contributor the following:

     

    (a)           The
Consideration described in Section 2.3.

     

    (b)           The
Assignment and Assumption Agreement.

     

    (c)           The
Joinder.

     

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

     

    6.4            Closing
Costs.    Each party shall pay its own legal fees and
expenses.  All filing fees and all charges for title insurance
premiums shall be paid by Acquirer.  Any other costs, expenses or
taxes shall be paid by Contributor.

     

    6.5           Income and Expense
Allocations.  All income, except any Intangible Personal
Property, and expenses with respect to the Property, determined in accordance
with United States generally accepted accounting principles consistently
applied, shall be allocated between the Contributors and the
Acquirer.  The Contributors shall be entitled to all income (including
all cash box receipts and cash credits for unused expendables), and responsible
for all expenses for the period of time up to but not including 12:01 a.m. on
the Closing Date, and the Acquirer shall be entitled to all income and
responsible for all expenses for the period of time from, after and including
12:01 a.m. on the Closing Date.  Only adjustments for ground rent, if
applicable, and real estate taxes shall be shown on the settlement statements
(with such supporting documentation as the parties hereto may require being
attached as exhibits to the settlement statements) and shall increase or
decrease (as the case may be) the amount payable by the Acquirer.  All
other such adjustments shall be made by separate agreement between the parties
and shall be payable by check or wire directly between the
parties.  Without limiting the generality of the foregoing, the
following items of income and expense shall be allocated as of the Closing
Date:

     

    
      
         


      

      
        24

        
          

        

      

      
         


      

    


    (a)           Current
and prepaid rents, including, without limitation, prepaid room receipts,
function receipts and other reservation receipts.

     

    (b)           Real
estate and personal property taxes.

     

    (c)           Amounts
under the Operating Agreements.

     

    (d)           Utility
charges (including but not limited to charges for water, sewer and
electricity).

     

    (e)           Wages,
vacation pay, pension and welfare benefits and other fringe benefits of all
persons employed at the Property who the Acquirer elects to employ.

     

    (f)           Value
of fuel stored on the Property at the price paid for such fuel by the
Contributors, including any taxes.

     

    (g)           All
prepaid reservations and contracts for rooms confirmed by Contributors prior to
the Closing Date for dates after the Closing Date, all of which Acquirer shall
honor.

     

    The Tray
Ledger shall be retained by the Contributors.  The Contributors shall
be required to pay all sales taxes and similar impositions currently up to the
Closing Date.

     

    Acquirer
shall not be obligated to collect any accounts receivable or revenues accrued
prior to the Closing Date for Contributors, but if Acquirer collects same, such
amounts will be promptly remitted to Contributor in the form
received.

     

    If
accurate allocations cannot be made at Closing because current bills are not
obtainable (as, for example, in the case of utility bills or tax bills), the
parties shall allocate such income or expenses at Closing on the best available
information, subject to adjustment upon receipt of the final bill or other
evidence of the applicable income or expense.  Any income received or
expense incurred by the Contributors or the Acquirer with respect to the
Property after the date of Closing shall be promptly allocated in the manner
described herein and the parties shall promptly pay or reimburse any amount
due.  The Contributors shall pay at Closing all special assessments
and taxes applicable to the Property.

     

    The
certificates evidencing the Contributors’ ownership of the Interests will be
dated as of the Closing Date

     

    ARTICLE VII

     

    CONDEMNATION; RISK OF
LOSS

     

    7.1            Condemnation.  In
the event of any actual or threatened taking, pursuant to the power of eminent
domain, of all or any portion of the Real Property, or any proposed sale in lieu
thereof, the Contributors shall give written notice thereof to the Acquirer
promptly after the Contributors learn or receive notice thereof.  If
all or any part of the Real Property is, or is to be, so condemned or sold, the
Acquirer shall have the right to terminate this Agreement pursuant to Section 8.3.  If
the Acquirer elects not to terminate this Agreement, all proceeds, awards and
other payments arising out of such condemnation or sale (actual or threatened)
shall be paid or assigned, as applicable, to the Acquirer at
Closing.

     

    
      
         


      

      
        25

        
          

        

      

      
         


      

    


    7.2            Risk of
Loss.   The risk of any loss or damage to the Property
prior to the recordation of the Deed shall remain upon
Contributors.  If any such loss or damage to more than Ten Percent
(10%) of the value of the Improvements occurs prior to Closing or any such loss
or damage is uninsured or underinsured, the Acquirer shall have the right to
terminate this Agreement pursuant to Section 8.3.  If
the Acquirer elects not to terminate this Agreement, all insurance proceeds and
rights to proceeds arising out of such loss or damage shall be paid or assigned,
as applicable, to the Acquirer at Closing.

     

    ARTICLE VIII

     

    LIABILITY OF ACQUIRER;
INDEMNIFICATION BY CONTRIBUTORS;

    TERMINATION
RIGHTS

     

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

     

    8.2           
Indemnification by
Contributors.  The Contributors hereby indemnify and hold the
Acquirer harmless from and against any and all suits, actions, claims, costs,
penalties, damages, losses, liabilities and expenses, subject to Section  9.11,
that may at any time be incurred by the Acquirer, whether before or after
Closing, (i) 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, (ii) relating to
any suits, litigation or actions brought against any Contributors, the LLC or
the Property Owner prior to the Closing Date, (iii) in connection with any and
all liabilities and obligations of the LLC or the Property Owner occurring,
accruing or arising prior to the Closing Date, and/or (iv) as a result of or in
connection with the use or operation of the Property prior to the Closing
Date.

     

    8.3            Termination by
Acquirer.  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 Acquirer to terminate this Agreement and its obligations
hereunder, and the Contributors fail to cure any such matter within five (5)
days after notice thereof from the Acquirer, the Acquirer, 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 Acquirer hereunder
shall terminate immediately, or (b) to waive its right to terminate and,
instead, to proceed to Closing.

     

    8.4           
Termination by
Contributors.  If, prior to Closing, the Acquirer defaults in
performing any of their obligations under this Agreement, and the Acquirer fails
to cure any such default within five (5) business days after notice thereof from
the Contributors, then the Contributors’ sole remedy for such default shall be
to terminate this Agreement.

     

    
      
         


      

      
        26

        
          

        

      

      
         


      

    


    ARTICLE IX

     

    MISCELLANEOUS
PROVISIONS

     

    9.1            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.

     

    9.2           
Assignments.  The
Acquirer may assign its rights hereunder to any affiliate of Acquirer without
the consent of the Contributors.  No such assignment shall relieve the
Acquirer of any of its obligations and liabilities hereunder.

     

    9.3            Successors and
Assigns.  The benefits and burdens of this Agreement shall
inure to the benefit of and bind the Acquirer and the Contributors and their
respective successors and assigns.

     

    9.4            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.

     

    9.5            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.

     

    9.6            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.

     

    9.7            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.

     

    9.8            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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    9.9            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:

            	
              c/o
      The Hersha Group

            
	 
      	
              44
      Hersha Drive

            
	 
      	
              Harrisburg,
      PA 17102

            
	 
      	
              Phone:

            	
              (717)
      236-4400

            
	 
      	
              Fax:

            	
              (717)
      774-7383

            
	 
      	 
      	 
      
	
              With
      a copy to:

            	
              Annette S.L. Evans,
      Esquire

            
	 
      	
              Franklin Firm,
      LLP

            
	 
      	
              Penn Mutual Towers

            
	 
      	
              510
      Walnut Street, 9th
      floor

            
	 
      	
              Philadelphia,
      PA 19106

            
	 
      	
              Phone:

            	
              (215)
      238-1045

            
	 
      	
              Fax:

            	
              (267)
      238-1874

            
	 
      	 
      	 
      
	
              If to
      the Acquirer:

            	
              Hersha
      Hospitality Limited Partnership

            
	 
      	
              44
      Hersha Drive

            
	 
      	
              Harrisburg,
      PA 17102

            
	 
      	
              Phone:

            	
              (717)
      236-4400

            
	 
      	
              Fax:

            	
              (717)
      774-7383

            
	 
      	
              Attn:
      Ashish R. Parikh

            
	 
      	 
      	 
      
	
              With
      a copy
      to:

            	
              Annette S.L. Evans,
      Esquire

            
	 
      	
              Franklin Firm,
      LLP

            
	 
      	
              Penn Mutual Towers

            
	 
      	
              510
      Walnut Street, 9th
      floor

            
	 
      	
              Philadelphia,
      PA 19106

            
	 
      	
              Phone:

            	
              (215)
      238-1045

            
	 
      	
              Fax:

            	
              (267)
      238-1874

            


    

    


     

    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.

     

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

     

    9.11          Survival.  All of the representations, warranties, covenants and
agreements of the Contributors and the Acquirer made in, or pursuant to, this
Agreement shall survive for a period of twelve (12) months following Closing and
shall not merge into the Deed or any other document or instrument executed and
delivered in connection herewith, except for the representations and warranties
set forth in Sections
3.4, 3.7
and 3.9, which
shall survive for periods coterminous with applicable statutes of
limitations.

     

    
      
         


      

      
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    9.12         Further
Assurances.  The Contributors and the Acquirer 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.

     

    9.13          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 Acquirer
specifically established hereby.

     

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

     

    9.15          Confidentiality.  Contributors
and their representatives, including any professionals representing
Contributors, shall keep the existence and terms of this Agreement strictly
confidential, except to the extent disclosure is compelled by law, and then only
to the extent of such compulsion.

     

    [The remainder of this page is left
intentionally blank.]

     

    

      
        
           


        

        
          29

          
            

          

        

        
           


        

      



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

    


    CONTRIBUTERS:

    


    
      	 
      	
              SHREE ASSOCIATES, a
      Pennsylvania limited partnership

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
              By:

            	 
      
	 
      	
              Name:

            	
              Hasu
      P. Shah

            
	 
      	
              Title:

            	
              General
      Partner

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
              KUNJ ASSOCIATES, a
      Pennsylvania limited partnership

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
              By:

            	 
      
	 
      	
              Name:

            	
              Kiran
      P. Patel

            
	 
      	
              Title:

            	
              General
      Partner

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
              DEVI ASSOCIATES, a
      Pennsylvania limited Partnership

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
              By:

            	 
      
	 
      	
              Name:

            	
              Bharat
      C. Mehta

            
	 
      	
              Title:

            	
              General
      Partner

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
              SHANTI III ASSOCIATES, a
      Pennsylvania limited partnership

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
              By:

            	 
      
	 
      	
              Name:

            	
              Kanti
      D. Patel

            
	 
      	
              Title:

            	
              General
      Partner

            


    

     

    
      
         

      

      
        30

        
          

        

      

      
         

      

    

     

    
      	 
      	
              TRUST
      FBO JAY H. SHAH UNDER THE HASU AND HERSHA SHAH 2004 TRUST DATED AUGUST 18,
      2004

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
              By:

            	 
      
	 
      	
              Name:

            	
              Jay
      H. Shah

            
	 
      	
              Title:

            	
              Trustee

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
              TRUST
      FBO NEIL H. SHAH UNDER THE HASU AND HERSHA SHAH 2004 TRUST DATED AUGUST
      18, 2004

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
              By:

            	 
      
	 
      	
              Name:

            	
              Neil
      H. Shah

            
	 
      	
              Title:

            	
              Trustee

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
              PLM ASSOCIATES LLC, a
      Pennsylvania limited liability company

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
              By:

            	 
      
	 
      	
              Name:

            	
              Kiran
      P. Patel

            
	 
      	
              Title:

            	
              Secretary

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
              David
      L. Desfor, an individual

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
              Ashish
      R. Parikh, an individual

            


    

    

      
        
           


        

        
          31

          
            

          

        

        
           


        

      

    

     

    ACQUIRER:

    


    
      	 
      	
              HERSHA
      HOSPITALITY LIMITED

            
	 
      	
              PARTNERSHIP, a Virginia
      limited partnership

            
	 
      	 
      	 
      
	 
      	
              By:

            	
              Hersha
      Hospitality Trust, a Maryland real estate investment trust, its sole
      general partner

            
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	
              By:

            	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	
              Name:

            	
              Ashish
      R. Parikh

            
	 
      	 
      	
              Title:

            	
              CFO

            


    

     

    
32