Exhibit 10.2


    
      Exhibit
        10.2

      
        	 


      

       

       

      LIMITED
        PARTNERSHIP INTERESTS PURCHASE AGREEMENT

       

      dated
        as
        of January 19, 2006

       

      by
        and
        among

      


      AFFORDABLE
        HOSPITALITY, INC. 

      


      3344
        ASSOCIATES

      


      and

      


      HERSHA
        CAPITAL, INC.

      


      as
        Sellers,

      


      and

       

      HERSHA
        HOSPITALITY LIMITED PARTNERSHIP

      


      and

      


      RACE
        STREET, LLC

      


      as
        Purchasers

      


      IN
        CONNECTION WITH THAT CERTAIN 

      HAMPTON
        INN (CENTER CITY), PHILADELPHIA, PENNSYLVANIA

       

      
        	 


      

      

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

       

      LIMITED
        PARTNERSHIP INTERESTS PURCHASE AGREEMENT

      


      THIS
        LIMITED PARTNERSHIP INTERESTS PURCHASE AGREEMENT, dated as of the 19th
        day of
        January, 2006, (the “Agreement”) by and among Affordable Hospitality, Inc., a
        Pennsylvania corporation (“Affordable”), 3344 Associates, a Pennsylvania limited
        partnership (“3344”) and Hersha Capital, Inc., a Pennsylvania corporation
        (“Hersha Capital”, 3344 and Affordable, each, a “Seller” and collectively, the
“Sellers”), Affordable Hospitality Associates, LP, a Pennsylvania limited
        partnership (the “Partnership”), and Hersha Hospitality Limited Partnership, a
        Virginia limited partnership (“HHLP”) and Race Street, LLC, a Pennsylvania
        limited liability company (“Race Street”, together with HHLP, the “Purchasers”)
        provides:

       

      ARTICLE
        I

      


      DEFINITIONS;
        RULES OF CONSTRUCTION

      


      1.1    Definitions.
        The
        following terms shall have the indicated meanings:

       

      “3344
        Assignment”
shall
        mean that certain Assignment and Assumption Agreement with respect to the
        3344
        Interests, dated as of the Closing Date, by and between 3344 and
        HHLP.

      


      “3344
        Interests”
shall
        mean all right title and interest of 3344 in the Partnership, consisting
        of a
        49.5% limited partnership interest in the Partnership.

      


      “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 60 consecutive days.


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      “Affordable
        Assignment”
shall
        mean that certain Assignment and Assumption Agreement with respect to the
        Affordable Interests, dated as of the Closing Date, by and between Affordable
        and Race Street.

      


      “Affordable
        Interests”
shall
        mean all right title and interest of Affordable in the Partnership, consisting
        of a 1% general partnership interest in the Partnership.

      


       “Assignment
        and Assumption Agreements”
shall
        mean the Affordable Assignment, the Hersha Capital Assignment and the 3344
        Assignment.

       

      “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.

       

      “Certificate
        of Limited Partnership”
shall
        mean the certificate of limited partnership of the Partnership filed with
        the
        Secretary of State of the Commonwealth of Pennsylvania, a true and correct
        copy
        of which is attached hereto as Exhibit F.

      


      “Closing”
shall
        mean the Closing of the sale and purchase of the Interests pursuant to this
        Agreement.

       

      “Closing
        Date”
shall
        mean the date on which the Closing occurs.

       

      “Consideration”
shall
        be determined by subtracting the outstanding principal balance of the Existing
        Financing and the GMAC Debt as of Closing Date from the Partnership Valuation,
        and multiplying the balance by eighty percent (80%), payable to the Sellers
        at
        Closing in the manner described in Section
        2.3.

       

      “Continuing
        Liabilities”
shall
        include liabilities arising under Operating Agreements, equipment leases,
        loan
        agreements, or proration credits at Closing, including, without limitation,
        the
        GMAC Debt (subject to Section
        5.11),
        but
        shall exclude any liabilities arising from any other arrangement, agreement
        or
        pending litigation.

      


      “Deposit”
shall
        have the meaning set forth in Section 2.3. 

      


      “Employment
        Agreements”
shall
        mean any and all employment agreements, written or oral, between the Sellers
        or
        its managing agent and the persons employed with respect to the Property.
        A
        schedule indicating all pertinent information with respect to each Employment
        Agreement in effect as of the date hereof, name of employee, social security
        number, wage or salary, accrued vacation benefits, other fringe benefits,
        etc.,
        is attached hereto as Exhibit B.

       

      “Escrow
        Agent”
shall
        mean All American Abstract Company, Inc., 2854 Egypt Road, Audubon, PA 19403.
        


      
        
          
          

        

        
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      “Existing
        Financing”
shall
        mean any and all the existing loans to the Partnership made in connection
        with
        the Hotel or secured by the Property.

       

      “FIRPTA
        Certificate”
shall
        mean the affidavit of the Sellers under Section 1445 of the Internal
        Revenue Code certifying that such Sellers are not foreign corporations, foreign
        partnerships, foreign limited liability companies, foreign trusts, foreign
        estates or foreign persons (as those terms are defined in the Internal Revenue
        Code and the Income Tax Regulations), in form and substance satisfactory
        to the
        Purchasers.

      


      “GMAC
        Debt”
shall
        mean the capital lease of the Partnership in the approximate amount of
        $957,956.00.

       

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

      


      “Hersha
        Capital Assignment”
shall
        mean that certain Assignment and Assumption Agreement with respect to the
        Hersha
        Capital Interests, dated as of the Closing Date, by and between Hersha Capital
        and HHLP.

      


      “Hersha
        Capital Interests”
shall
        mean all right title and interest of Hersha Capital in the Partnership,
        consisting of a 49.5% limited partnership interest in the
        Partnership.

      


      “Hersha
        Construction Debt”
shall
        mean the debt owed by the Partnership to Hersha Construction in the approximate
        amount of $496,772.00, which shall be paid in full by the Sellers at Closing
        from the proceeds of the Consideration. 

       

      “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 C
        attached
        hereto.

       

      “Intangible
        Personal Property”
shall
        mean all intangible personal property owned or possessed by the Sellers 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
“Hampton Inn” and all variations thereof, the Authorizations, escrow accounts,
        insurance policies, general intangibles, business records, plans and
        specifications, surveys and title insurance policies pertaining to the real
        property and the personal property, all licenses, permits and approvals with
        respect to the construction, ownership, operation, leasing, occupancy or
        maintenance of the Property, any unpaid award for taking by condemnation
        or any
        damage to the Land by reason of a change of grade or location of or access
        to
        any street or highway, and the share of the Tray Ledger as hereinafter defined,
        excluding (a) any of the aforesaid rights the Purchasers elect not to
        acquire, (b) the Sellers’ 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.


      
        
          
          

        

        
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      “Interests”
shall
        mean, collectively, 100% of all right, title and interest in the Affordable
        Interests (consisting of a 1% general partnership interest in the Partnership),
        100% of all right, title and interest in the Hersha Capital Interests
        (consisting of a 49.5% limited partnership interest in the Partnership),
        and
        59.6% of all right title and interest in the 3344 Interests (consisting of
        a
        29.5% limited partnership interest in the Partnership), which in the aggregate,
        constitutes an 80% partnership interest in the Partnership.

       

      “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.

       

      "Knowledge"
        shall
        mean the knowledge of the Sellers that they would have had after making
        reasonable investigation. 

       

      “Land”
shall
        mean that certain parcel of real estate lying and being in Philadelphia County,
        Pennsylvania at 1301 Race Street, Philadelphia, PA 19107, as more particularly
        described on Exhibit A
        attached
        hereto, together with all easements, rights, privileges, remainders, reversions
        and appurtenances thereunto belonging or in any way appertaining, and all
        of the
        estate, right, title, interest, claim or demand whatsoever of the Partnership
        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
        D
        attached
        hereto.

       

      “Limited
        Partnership Agreement”
shall
        mean the current limited partnership agreement of the Partnership, a true
        and
        correct copy of which is attached hereto as Exhibit G.

       

      “Manager”
shall
        mean Hersha Hospitality Management, LP, a Pennsylvania limited partnership,
        the
        current operator of the Hotel.

       

      “Operating
        Agreements”
shall
        mean the management agreements, service contracts, supply contracts, leases
        (other than the Leases) and other agreements, if any, in effect with respect
        to
        the construction, ownership, operation, occupancy or maintenance of the
        Property. All of the Operating Agreements in force and effect as of the date
        hereof are listed on Exhibit E
        attached
        hereto.

       

      “Owner's
        Title Policy”
shall
        mean an owner's policy of title insurance issued to the Partnership by the
        Title
        Company, dated as of the Closing Date, pursuant to which the Title Company
        insures the Partnership’s ownership of fee simple title to the Real Property
        (including the marketability thereof) subject only to Permitted Title
        Exceptions. The Owner's Title Policy shall insure the Partnership in the
        amount
        of the Consideration and shall be acceptable in form and substance to the
        Purchasers. 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 Sellers to the Purchasers.


      
        
          
          

        

        
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      “Partnership”
shall
        mean Affordable Hospitality Associates, LP, a Pennsylvania limited partnership
        that owns, as its only assets, the Intangible Personal Property, Tangible
        Personal Property, Land and Improvements.

      


      “Partnership
        Valuation”
shall
        mean a valuation of $27,000,000.00 for all of the Partnership, including
        the
        Property and any other assets in connection with the Hotel.

      


      “Permitted
        Title Exceptions”
shall
        mean those exceptions to title to the Real Property that are satisfactory
        to the
        Purchasers 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.

       

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

       

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

       

      “Study
        Period”
shall
        mean the period commencing at 9:00 a.m. on 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 Partnership.

       

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

       

      “Title
        Company”
shall
        mean All American Abstract Company, Inc.

       

      “Tray
        Ledger”
shall
        mean the final night's room revenue (revenue from rooms occupied as of 12:01
        a.m. on the Closing Date, exclusive of food, beverage, telephone and similar
        charges which shall be retained by the Sellers), including any sales taxes,
        room
        taxes or other taxes thereon.

       

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

      


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


      
        
          
          

        

        
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      (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

      


      SALE
        AND PURCHASE; STUDY PERIOD;

      PAYMENT
        OF CONSIDERATION

      


      2.1    Sale
        and Purchase.
        Affordable agrees to sell, assign and transfer the Affordable Interests to
        Race
        Street; Hersha Capital and 3344 agree to sell, assign and transfer the Hersha
        Capital Interests and 3344 Interests, respectively, to HHLP; and the Purchasers
        each agree to accept such respective Interests in exchange for the Consideration
        and in accordance with the other terms and conditions set forth
        herein.

      


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

       

      (b)    During
        the Study Period, the Sellers shall make available to the Purchasers, their
        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 Sellers’ possession or
        control.


      
        
          
          

        

        
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      (c)    The
        Purchasers hereby indemnify and defend the Sellers against any loss, damage
        or
        claim arising from entry upon the Real Property by the Purchasers or any
        agents,
        contractors or employees of the Purchasers. The Purchasers, at their own
        expense, shall restore any damage to the Real Property caused by any of the
        tests or studies made by the Purchasers.

       

      (d)    During
        the Study Period, the Purchasers, at their 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 Sellers of any defects in title shown by such examination
        that the Purchasers are unwilling to accept. The Sellers shall notify the
        Purchasers whether the Sellers are willing to cure such defects and to proceed
        to Closing. Sellers 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
        Sellers, 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 Sellers are unwilling or unable to cure any such defects
        by
        Closing, the Purchasers shall elect (1) to waive such defects and proceed
        to Closing without any abatement in the Consideration or (2) to terminate
        this Agreement. The Sellers 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
        Purchasers' prior written consent, which consent shall not be unreasonably
        withheld or delayed. All title matters revealed by the Purchasers' title
        examination and not objected to by the Purchasers as provided above shall
        be
        deemed Permitted Title Exceptions. If Purchasers shall fail to examine title
        and
        notify the Sellers 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.
        The
        Consideration shall be paid to the Sellers in the following manner:

       

      (a)    Purchasers
        have made a deposit of $4,000,000.00 (the “Deposit”) into an interest-bearing
        escrow account, which account bears interest at a rate of 8% per annum. The
        Deposit shall be refundable to Purchasers until the Closing. In the event
        Closing occurs, Purchasers
        shall receive a credit against the Consideration in an amount equal to the
        Deposit.

      


      (b)    At
        Closing, the Purchasers shall pay the balance of the Consideration, as adjusted
        by the prorations pursuant to Section 6.5 hereof, in the form of lawful money
        of
        the United States.

      


      (c)    Sellers
        shall, simultaneously with Closing, pay off the full amount of the Hersha
        Construction Debt from the proceeds of the Consideration.


      
        
          
          

        

        
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      ARTICLE
        III

      


      SELLERS’
        REPRESENTATIONS, WARRANTIES AND COVENANTS

       

      To
        induce
        the Purchasers to enter into this Agreement and to purchase the Property,
        each
        of the Sellers hereby makes the following representations, warranties and
        covenants, upon each of which the Sellers acknowledge and agree that the
        Purchasers are entitled to rely and have relied:

      


      3.1    Identity
        and Power.
        The
        Sellers have all requisite powers and all governmental licenses, authorizations,
        consents and approvals necessary to carry on its business as now conducted,
        to
        own, lease and operate his properties, to execute and deliver this Agreement
        and
        any document or instrument required to be executed and delivered on behalf
        of
        the Sellers hereunder, to perform his 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 Sellers, and
        the
        consummation of the transactions contemplated hereby have been duly authorized,
        adopted and approved by the Sellers. No other proceedings are necessary to
        authorize this Agreement and the transactions contemplated hereby. This
        Agreement has been duly executed by Sellers and is a valid and binding
        obligation enforceable against him in accordance with its terms.

       

      (b)    Neither
        the execution, delivery, or performance by the Sellers of this Agreement,
        nor
        the consummation of the transactions contemplated hereby, nor compliance
        by the
        Sellers 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 or assets
        of
        the Partnership, under any of the terms, conditions, or provisions of, the
        Certificate of Limited Partnership, the Limited Partnership Agreement, or
        any
        note, bond, mortgage, indenture, deed of trust, license (including without
        limitation, the License), lease, agreement, organizational document or other
        instrument, or obligation to which the Partnership or either of the Sellers
        is a
        party, or by which the Partnership or either of the Sellers may be bound,
        or to
        which the Partnership or the Property or assets of the Partnership or either
        of
        the Sellers may be subject; or

       

      (ii)    violate
        any judgment, ruling, order, writ, injunction, decree, statute, rule, or
        regulation applicable to either of the Sellers, the Partnership or the Property
        that would not be violated by the execution, delivery or performance of this
        Agreement or the transactions contemplated hereby by the Sellers or compliance
        by the Sellers with any of the provisions hereof.


      
        
          
          

        

        
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      3.3    Litigation
        with respect to Sellers.
        There
        is no action, suit, claim or proceeding pending or, to the Sellers’ Knowledge,
        threatened against or affecting the Sellers 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 Sellers or the
        Interest, (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
        Sellers are not subject to any judgment, decree, injunction, rule or order
        of
        any court relating to the Sellers’ 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 Sellers have good, marketable
        title
        thereto and the right to convey same in accordance with the terms of this
        Agreement. Upon delivery of the Sellers’ Assignment and Assumption Agreements to
        the Purchasers at Closing, good valid and marketable title to the Sellers’
Interest, free and clear of all liens and encumbrances, will pass to the
        Purchasers. The Interests, and the remaining 20% limited partnership interests
        owned by 3344, constitute the only outstanding securities/interests of the
        Partnership.

       

      (b)    Except
        for the lien created in connection with the Existing Financing, the Property
        is,
        on the date hereof, and will be on the Closing Date, free and clear of all
        liens
        and encumbrances, and the Partnership has good, marketable title thereto
        and the
        right to convey same. The Partnership is the fee simple owner of the Real
        Property and the sole owner of the Property.

      


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

      


      3.6    Brokerage
        Commission.
        The
        Sellers have not engaged the services of, nor is it or will it or Purchasers
        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
        Sellers.

      


      3.7    The
        Partnership.

       

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

       

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


      
        
          
          

        

        
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      (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 Partnership, under any of the terms, conditions, or provisions
        of,
        the Certificate of Limited Partnership or Limited Partnership Agreement,
        or any
        note, bond, mortgage, indenture, deed of trust, license, lease, agreement,
        or
        other instrument or obligation to which the Partnership is a party, or by
        which
        the Partnership may be bound, or to which the Partnership or its properties
        or
        assets may be subject; or

       

      (ii)    violate
        any judgment, ruling, order, writ, injunction, decree, statute, rule, or
        regulation applicable to the Partnership or any of the Partnership’s properties
        or assets.

       

      (c)    Except
        for the Sellers, no party has any interest in the Partnership or the Property
        or
        any portion thereof, or the right or option to acquire any interest in the
        Partnership or the Property or any portion thereof. The Partnership has no
        subsidiaries and does not directly or indirectly own any securities of or
        interest in any other entity, including, without limitation, any Partnership
        or
        joint venture.

       

      (d)    The
        Partnership has conducted no business other that the ownership and operation
        of
        the Property.

      


      3.8    Liabilities,
        Debts and Obligations.
        Except
        for the Continuing Liabilities and the Existing Financing, the Partnership
        has
        no liabilities, debts or obligations.

      


      3.9    Tax
        Matters with respect to Partnership.

       

      (a)    The
        Sellers have caused the Partnership to file, and shall cause the Partnership
        to
        file all income tax information returns on IRS Form 1065 (including K-1s
        for
        each member) and applicable state and local income tax forms required to
        be
        filed with the United States Government and with all states and political
        subdivisions thereof where any such returns are required to be filed and
        where
        the failure to file such return or report would subject the Partnership or
        the
        Sellers, to any material liability or penalty. All taxes (other than sale
        taxes,
        rental taxes or the equivalent and real property taxes) imposed by the United
        States, or by any foreign country, or by any state, municipality, subdivision,
        or instrumentality of the United States or of any foreign country or by any
        other taxing authority, which are due and payable by the Partnership have
        been
        paid in full or adequately provided for by reserves shown in their records
        and
        books of account and in the Partnership’s financial information. The Partnership
        has not obtained or received any extension of time (beyond the Closing Date)
        for
        the assessment of deficiencies for any years or waived or extended the statute
        of limitations for the determination or collection of any tax. To the Sellers’
Knowledge, no unassessed tax deficiency is proposed or threatened against
        the
        Partnership.


      
        
          
          

        

        
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      (b)    All
        taxes, rental taxes or the equivalent, and all interest and penalties due
        thereon, required to be paid or collected by the Partnership 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 Sellers shall cause
        the
        Partnership to file, all necessary returns and petitions required to be filed
        through the Closing Date. The Sellers shall cause the Partnership 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
        Partnership. 

      


      3.10    Contracts
        and Agreements.
        There
        is no loan agreement, guarantee, note, bond, indenture and other debt
        instrument, lease and other contract to which the Partnership is a party
        or by
        which its assets are bound other than Permitted Title Exceptions, the Leases,
        the Operating Agreements and the Existing Financing, which shall be paid
        in full
        by the Sellers as of the Closing Date.

      


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

      


      3.12    Compliance
        with Existing Laws.
        The
        Partnership possesses all Authorizations, each of which is valid and in full
        force and effect, and, to Sellers’ Knowledge, no provision, condition or
        limitation of any of the Authorizations has been breached or violated. The
        Partnership has not misrepresented or failed to disclose any relevant fact
        in
        obtaining all Authorizations, and the Sellers 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 Sellers have
        no
        Knowledge, nor has he received written notice within the past three years,
        of
        any existing violation of any provision of any applicable building, zoning,
        subdivision, environmental or other governmental ordinance, resolution, statute,
        rule, order or regulation, including but not limited to those of environmental
        agencies or insurance boards of underwriters, with respect to the ownership,
        operation, use, maintenance or condition of the Property or any part thereof,
        or
        requiring any repairs or alterations other than those that have been made
        prior
        to the date hereof.

      


      3.13    Operating
        Agreements.
        The
        Partnership has performed all of its obligations under each of the Operating
        Agreements and no fact or circumstance has occurred which, by itself or with
        the
        passage of time or the giving of notice or both, would constitute a material
        default under any of the Operating Agreements. Without the prior written
        consent
        of the Purchasers, which consent will not be unreasonably withheld or delayed,
        the Sellers shall cause the Partnership 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 Sellers
        cause the Partnership to enter into any agreements modifying the Operating
        Agreements.

      


      3.14    Warranties
        and Guaranties.
        The
        Sellers shall cause the Partnership 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 Purchasers, 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 H.


      
        
          
          

        

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

      


      3.16    Condemnation
        Proceedings; Roadways.
        The
        Partnership has received no written notice of any condemnation or eminent
        domain
        proceeding pending or threatened against the Property or any part thereof.
        The
        Sellers 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    Litigation
        with respect to Partnership.
        Except
        as set forth on Exhibit
        I
        there is
        no action, suit or proceeding pending or known to be threatened against or
        affecting the Partnership or 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
        Partnership 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 Partnership, (c) could materially and adversely affect the ability of
        the
        Partnership 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. Sellers hereby acknowledge
        and
        represent to Purchasers that Sellers shall indemnify Purchasers and the
        Partnership against all matters set forth on Exhibit
        I
        and
        against all matters arising out of or related to such matters.

      


      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. The Partnership is not
        a
        party to any union or other collective bargaining agreement with employees
        employed in connection with the ownership, operation or maintenance of the
        Property. The Purchasers will not be obligated to give or pay any amount
        to any
        employee of the Partnership, and the Purchasers shall not have any liability
        under any pension or profit sharing plan that the Partnership may have
        established with respect to the Property or their or its
        employees.


      
        
          
          

        

        
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      3.19    Financial
        Information.
        To the
        Sellers’ Knowledge, except as otherwise disclosed in writing to the Purchasers
        prior to the end of the Study Period, for each of the Partnership’s accounting
        years, when a given year is taken as a whole, all of the Partnership’s financial
        information previously delivered or to be delivered to the Purchasers is
        and
        shall be correct and complete in all material respects and presents accurately
        the financial condition of the Partnership 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 Purchasers, the Sellers shall cause the Partnership to deliver promptly
        all
        four-week period ending financial information available to the Partnership.
        The
        Partnership’s financial information is prepared based on books and records
        maintained by the Partnership in accordance with the Partnership’s accounting
        system. The Partnership’s financial information has been provided to the
        Purchasers without any changes or alteration thereto. To the best of Sellers'
        Knowledge, since the date of the last financial statement included in the
        Partnership's financial information, there has been no material adverse change
        in the financial condition or in the operations of the Property.

      


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

      


      3.21    Operation
        of Property.
        The
        Sellers covenant that between the date hereof and the date of Closing Sellers
        shall cause the Partnership and Manager to (a) operate the Property only
        in the
        usual, regular and ordinary manner consistent with the Partnership’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 Sellers shall cause the Partnership 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 Partnership did prior to the execution of this Agreement.
        Except as otherwise permitted hereby, from the date hereof until Closing,
        the
        Sellers shall use its good faith efforts to ensure that the Partnership shall
        not take any action or fail to take action the result of which (i) would
        have a
        material adverse effect on the Property or the Purchasers’ 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 Sellers have operational control, or (iii) would
        cause
        any of the representations and warranties contained in this Article
        III
        to be
        untrue as of Closing.

      


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


      
        
          
          

        

        
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      3.23    Hazardous
        Substances.
        Except
        for matters in Partnership’s or Purchasers' audits, Sellers 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 Sellers 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). 

      


      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 Licensor's standards for the
        Hotel
        and room type.

      


      3.25    License.
        

       

      (a)
    The
        license from Promus Hotels, Inc. (the “Licensor”) with respect to the Hotel (the
“License”) is, and at Closing will be, valid and in full force and effect, and
        on the Closing Date neither the Manager nor the Partnership will be in default
        with respect thereto (with or without the giving of any required notice and/or
        lapse of time).

       

      (b)
    The
        Manager and the Partnership shall receive written approval from the Licensor
        consenting to the purchase and sale of the Interests and the Hotel to Purchasers
        as contemplated hereunder.

       

      (c)
    Neither
        the execution, delivery, or performance by the Sellers of this Agreement,
        nor
        the consummation of the transactions contemplated hereby, nor compliance
        by the
        Sellers or the Partnership with any of the provisions hereof, will 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 under any of the terms, conditions, or
        provisions of, the License.

      


      3.26    Independent
        Audit.
        Sellers
        shall provide access by Purchasers' representatives, to all financial and
        other
        information relating to the Property and the Partnership.

      


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


      
        
          
          

        

        
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      3.28    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 in accordance with Licensor’s standards; and

       

      (b)    a
        sufficient amount of towels, washcloths and bed linens, so that there are
        three
        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.

      


      3.29    Intentionally
        Omitted.

      


      3.30    Leases.
        True,
        complete copies of the Leases, are attached as Exhibit
        D
        hereto.
        The Leases are, and will at Closing be, in full force and effect and neither
        Sellers nor the Partnership, is in default and the Sellers shall make good
        faith
        efforts for himself and the Partnership not to be in default with respect
        thereto (with or without the giving of any notice and/or lapse of time).
        The
        Leases are, or will be at Closing, freely assignable by Sellers and Sellers
        will
        have obtained all consents of any third party necessary to assign the Leases
        to
        Purchasers.

      


      3.31    Noncontravention.
        The
        execution and delivery of, and the performance by the Sellers 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
        Sellers
        or the Partnership, or result in the creation of any lien or other encumbrance
        on any asset of the Sellers or the Partnerhsip. There are no outstanding
        agreements (written or oral) pursuant to which the Sellers (or any predecessor
        to or representative of the Sellers) has agreed to contribute or has granted
        an
        option or right of first refusal to acquire the Interests or the Property
        or any
        part thereof.

       

      Each
        of
        the representations, warranties and covenants contained in this Article
        III
        and its
        various subparagraphs are intended for the benefit of the Purchasers and
        may be
        waived in whole or in part, by the Purchasers, but only by an instrument
        in
        writing signed by the Purchasers. Each of said representations, warranties
        and
        covenants shall survive the closing of the transaction contemplated hereby
        for
        twenty-four (24) months, and no investigation, audit, inspection, review
        or the
        like conducted by or on behalf of the Purchasers shall be deemed to terminate
        the effect of any such representations, warranties and covenants, it being
        understood that the Purchasers have the right to rely thereon and that each
        such
        representation, warranty and covenant constitutes a material inducement to
        the
        Purchasers to execute this Agreement and to close the transaction contemplated
        hereby and to pay the Consideration to the Sellers. 


      
        
          
          

        

        
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      ARTICLE
        IV

      


      PURCHASERS'
        REPRESENTATIONS, WARRANTIES AND COVENANTS

       

      To
        induce
        the Sellers to enter into this Agreement and to sell the Interests, the
        Purchasers hereby make the following representations, warranties and covenants
        with respect to the Property, upon each of which the Purchasers acknowledge
        and
        agrees that the Sellers are entitled to rely and have relied:

      


      4.1    Organization
        and Power.
        HHLP 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 Purchasers hereunder. Race Street is a limited
        liability company duly organized, validly existing and in good standing under
        the laws of the Commonwealth of Pennsylvania, and has all limited liability
        company 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 Purchasers
        hereunder.

      


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

      


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

      


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

      


      4.5    No
        Brokers.
        The
        Purchasers have not engaged the services of, nor is it or will it become
        liable
        to, any real estate agent, broker, finder or any other person or entity for
        any
        brokerage or finder's fee, commission or other amount with respect to the
        transaction described herein.


      
        
          
          

        

        
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      ARTICLE
        V

      


      CONDITIONS
        AND ADDITIONAL COVENANTS

       

      The
        Purchasers' obligations hereunder are subject to the satisfaction of the
        following conditions precedent and the compliance by the Sellers with the
        following covenants:

      


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

      


      5.2    Representations,
        Warranties and Covenants; Obligations of Sellers; Certificate.
        All of
        the Sellers’ 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 or the Partnership since the date hereof, the Sellers shall
        have
        performed all of its material covenants and other obligations under this
        Agreement and the Sellers shall have executed and delivered to the Purchasers
        at
        Closing a certificate to the foregoing effect.

      


      5.3    Title
        Insurance.
        Good
        and indefeasible fee simple title to 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 Sellers 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 Sellers shall not have
        diminished the Inventory. The Sellers 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 Purchasers.

      


      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    License.
        From
        the date hereof to and including the Closing Date, Sellers shall comply with
        and
        perform all of the duties and obligations of licensee under the License.
        

      


      5.7    Interests.
        From
        the date hereof to and including the Closing Date, Sellers shall not sell,
        assign, pledge, hypothecate or otherwise transfer the Interests, except as
        contemplated by this Agreement, nor shall the Sellers cause or permit the
        Partnership to issue any securities or interests to any person or to sell,
        pledge, transfer or otherwise dispose of the Property or any interest
        therein.


      
        
          
          

        

        
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      5.8    Existing
        Financing.
        Sellers
        shall cause the Partnership to pay off the Existing Financing in full prior
        to
        or at Closing, and Purchaser shall not assume the Existing Financing at Closing.
        Sellers shall bear all costs and expenses associated with the satisfaction
        and/or termination of the Existing Financing. 

       

      5.9    Third
        Party Consents.
        As a
        condition to Closing, the Partnership shall receive written approval from
        the
        Licensor and any and all other third-parties whose consent is required (i)
        to
        the purchase and sale of the Interests to Purchasers as contemplated hereunder
        and (ii) to the percentage lease structure whereby, on the Closing Date,
        the
        Partnership shall lease the Property to Philly One TRS, LLC (“Lessee”) pursuant
        to a percentage lease, and Lessee shall enter into a new management agreement
        with Manager.

      


      5.10   Hersha
        Construction Debt.
        Sellers
        shall
        pay off the Hersha
        Construction Debt
        in full
        at Closing from the proceeds of the Consideration.

      


      5.11   GMAC
        Debt.
        The
        Partnership shall continue to maintain the GMAC Debt following the Closing,
        provided that the then-existing first-mortgage lender for the Property permits
        the Partnership to maintain the GMAC Debt. 

       

      ARTICLE
        VI

      


      CLOSING

      


      6.1    Closing.
        Closing
        shall be held at a location that is mutually acceptable to the parties, on
        or
        before February 28, 2006. 

      


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

       

      (a)    Certificates
        representing the Interests.

       

      (b)    The
        certificate required by Section 5.2.

       

      (c)    The
        Assignment and Assumption Agreements.

       

      (d)    Certificate(s)/Registration
        of Title for any vehicle owned by the Sellers and used in connection with
        the
        Property.

       

      (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.


      
        
          
          

        

        
          18

          
            

          

        

        
          
          

        

      


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

       

      (h)    Copies
        of
        the Partnership’s Organizational Documents.

       

      (i)    Appropriate
        consent of the Partnership, authorizing (A) the execution of any documents
        to be executed and delivered by the Partnership 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 Partnership of its
        obligations hereunder and under such documents.

       

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

       

      (k)    Such
        proof as the Purchasers may reasonably require with respect to Sellers’
compliance with the bulk sales laws or similar statutes.

       

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

       

      (m)   All
        current real estate and personal property tax bills in the Sellers’ possession
        or under its control.

       

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

       

      (o)    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.

       

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

       

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

       

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

       

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


      
        
          
          

        

        
          19

          
            

          

        

        
          
          

        

      


      (t)    To
        the
        extent permitted under applicable law, documents of transfer necessary to
        transfer to the Purchasers the Sellers’ employment rating for workmens'
        compensation and state unemployment tax purposes.

       

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

       

      (v)    Complete
        set of “as-built” drawings for the Improvements as available in Sellers’
possession.

       

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

      


      (x)
    Such
        proof as the Purchasers may reasonably require with respect to Sellers’
satisfaction of its obligations under the Existing Financing
        documents.

       

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

      


      6.3    Purchasers'
        Deliveries.
        At
        Closing, the Purchasers shall pay or deliver to the Sellers the
        following:

       

      (a)    The
        Consideration described in Section 2.3.

       

      (b)    The
        Assignment and Assumption Agreements.

       

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

      


      6.4    Closing
        Costs.
        Each
        party shall pay its own legal fees and expenses. All filing fees, and recording
        or other similar taxes, and all charges for title insurance premiums shall
        be
        paid by the Purchasers. The Purchasers shall pay all other costs in carrying
        out
        the transactions contemplated hereunder, including, without limitation, all
        franchise license transfer fees, if any, all PIP costs associated with the
        franchise license transfer, if any, and all costs associated with obtaining
        any
        new financing for the Property. Purchaser shall pay all fees and costs incurred
        in connection with the Partnership’s satisfaction and pay off of the Existing
        Financing. 

      


      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
        Sellers and the Purchasers. The Sellers 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 Purchasers 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
        Purchasers.
        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:


      
        
          
          

        

        
          20

          
            

          

        

        
          
          

        

      


      (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 Purchasers elect to
        employ.

       

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

       

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

       

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

       

      Purchasers
        shall not be obligated to collect any accounts receivable or revenues accrued
        prior to the Closing Date for Sellers, but if Purchasers collect same, such
        amounts will be promptly remitted to Sellers 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 Sellers or the Purchasers 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 Sellers shall
        pay at Closing all special assessments and taxes applicable to the
        Property.

       

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


      
        
          
          

        

        
          21

          
            

          

        

        
          
          

        

      


      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 Sellers shall give written notice thereof to the Purchasers
        promptly after the Sellers learn or receives notice thereof. If all or any
        part
        of the Real Property is, or is to be, so condemned or sold, the Purchasers
        shall
        have the right to terminate this Agreement pursuant to Section 8.3.
        If the
        Purchasers elect 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 Purchasers at Closing.

      


      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 the Sellers. 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 Purchasers shall have
        the
        right to terminate this Agreement pursuant to Section
        8.3.
        If the
        Purchasers elect 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 Purchasers at Closing.

       

      ARTICLE
        VIII

      


      LIABILITY
        OF PURCHASERS; INDEMNIFICATION BY SELLERS;

      TERMINATION
        RIGHTS

      


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

      


      8.2    Indemnification
        by Sellers.
        Each of
        the Sellers hereby indemnifies and holds the Purchasers 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 Purchasers or the Partnership, whether before
        or
        after Closing, (i) as a result of any breach by the Sellers of any of his
        representations, warranties, covenants or obligations set forth herein or
        in any
        other document delivered by the Sellers pursuant hereto, (ii) relating to
        any
        claims, suits, litigation or actions brought against any of the Sellers or
        the
        Partnership prior to the Closing Date, including, without limitation, those
        set
        forth on Exhibit
        I,
        (iii)
        in connection with any and all liabilities and obligations of Sellers or
        the
        Partnership occurring, accruing or arising prior to the Closing Date, and/or
        (iv) related to or as a result of the operation or use of the Property prior
        to
        the Closing Date.

      


      8.3    Termination
        by Purchasers.
        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 Purchasers
        to
        terminate this Agreement and its obligations hereunder, or if Sellers default
        in
        performing any of their covenants or obligations under this Agreement and
        the
        Sellers fail to cure any such matter within five days after notice thereof
        from
        the Purchasers, the Purchasers, at their option and as its sole remedy, shall
        elect either (a) to terminate this Agreement and receive a refund of the
        entire Deposit, with interest, and all other rights and obligations of the
        Sellers and the Purchasers hereunder shall terminate immediately, or (b) to
        waive its right to terminate and, instead, to proceed to Closing.



      
        
          
          

        

        
          22

          
            

          

        

        
          
          

        

      


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

       

      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
        Purchasers may assign their rights hereunder to any affiliate of Purchasers
        without the consent of the Sellers. No such assignment shall relieve the
        Purchasers of any of their 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 Purchasers and the Sellers and their respective party hereto.

      


      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.


      
        
          
          

        

        
          23

          
            

          

        

        
          
          

        

      


      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.

      


      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 Sellers:

              	
                c/o
                  Hersha Group

              
	 	
                148
                  Sheraton Drive, Box A

              
	 	
                New
                  Cumberland, PA 17070

              
	 	
                Phone:
                  (717) 770-2405

              
	 	
                Fax:
                  (717) 774-7383

              
	 	 
	
                With
                  a copy to:

              	
                Mayur
                  Patel, Esquire

              
	 	
                c/o
                  Hersha Group

              
	 	
                148
                  Sheraton Drive, Box A

              
	 	
                New
                  Cumberland, PA 17070

              
	 	
                Phone:
                  (717) 770-2405

              
	 	
                Fax:
                  (717) 774-7383

              
	 	 
	
                If
                  to the Purchasers:

              	
                Hersha
                  Hospitality Limited Partnership

              
	 	
                148
                  Sheraton Drive, Box A

              
	 	
                New
                  Cumberland, PA 17070

              
	 	
                Phone:
                  (717) 770-2405

              
	 	
                Fax:
                  (717) 774-7383

              
	 	
                Attn:
                  Ashish R. Parikh

              
	 	 
	
                With
                  a copy to:

              	
                Lok
                  Mohapatra, Esquire

              
	 	
                Shah
                  & Byler, LLP

              
	 	
                Penn
                  Mutual Towers

              
	 	
                510
                  Walnut Street, 9th
                  floor

              
	 	
                Philadelphia,
                  PA 19106

              
	 	
                Phone:
                  (215) 238-1045

              
	 	
                Fax:
                  (267) 238-1874

              


      


      
        
          
          

        

        
          24

          
            

          

        

        
          
          

        

      


      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 Sellers
        and the
        Purchasers made in, or pursuant to, this Agreement shall survive for a period
        of
        twenty-four (24) months following Closing and shall not merge into the Deed,
        the
        Assignment and Assumption Agreements or any other document or instrument
        executed and delivered in connection herewith.

      


      9.12    Further
        Assurances.
        The
        Sellers and the Purchasers 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 Sellers and Purchasers specifically established
        hereby.

      


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

      


      9.15    Confidentiality.
        Sellers
        and their representatives, including any professionals representing Sellers,
        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.

       

      [Signature
        Pages Follow]

      

        
          
            
            

          

          
            25

            
              

            

          

          
            
            

          

        

      

       

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

      


      
        	 	
                SELLERS:

              
	 	 
	 	
                Affordable
                  Hospitality, Inc.,
                  a
                  Pennsylvania corporation 

              
	 	 	 	 
	 	
                By:

              	 	 
	 	
                Name:

              	 	 
	 	
                Title:

              	 	 
	 	 	 	 
	 	 	 	 
	 	
                3344
                  Associates,
                  a
                  Pennsylvania limited partnership

              
	 	 
	 	
                By:

              	
                Shreenathji
                  Enterprises, Ltd., a Pennsylvania corporation, its sole general
                  partner

              
	 	 	 	 
	 	 	
                By:

              	 
	 	 	
                Name:

              	
                Hasu
                  P. Shah

              
	 	 	
                Title:

              	
                President

              
	 	 	 	 
	 	 	 	 
	 	
                Hersha
                  Capital, Inc.,
                  a
                  Pennsylvania corporation

              
	 	 	 	 
	 	
                By:

              	 	 
	 	
                Name:

              	 	 
	 	
                Title:

              	 	 
	 	 	 	 
	 	 	 	 
	 	
                PURCHASERS:

              
	 	 
	 	
                Hersha
                  Hospitality Limited Partnership,
                  a
                  Virginia limited partnership

              
	 	 
	 	
                By:

              	
                Hersha
                  Hospitality Trust, a Maryland business trust, its sole general
                  partner

              
	 	 	 	 
	 	 	
                By:

              	 
	 	 	 	
                Ashish
                  Parikh, CFO

              


      

       

      
        
          
          

        

        
          26

          
            

          

        

        
          
          

        

      

       

      
        	 	
                Race
                  Street, LLC
                  a
                  Pennsylvania limited liability company

              
	 	 	 	 
	 	
                By:

              	 	 
	 	 	
                Ashish
                  R. Parikh, Manager

              
	 	 	 	 
	 	 	 	 
	 	
                PARTNERSHIP:

              
	 	 
	 	
                Affordable
                  Hospitality Associates, LP,
                  a
                  Pennsylvania limited partnership

              
	 	 
	 	
                By:

              	
                Affordable
                  Hospitality, Inc., a Pennsylvania Corporation, its sole general
                  partner

              
	 	 	 	 
	 	 	
                By:

              	 
	 	 	
                Name:

              	 
	 	 	
                Title:

              	 


      

      

        
          
            
            

          

          
            27

            
              

            

          

          
            
            

          

        

      

       

      EXHIBIT
        A

      


      Legal
        Description of Land

      

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

       

      EXHIBIT
        B

      


      Employment
        Agreements

      


      None

      

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

       

      EXHIBIT
        C

      


      Insurance
        Policies

      

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

       

      EXHIBIT
        D

      


      Leases

      


      None

      

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

       

      EXHIBIT
        E

      


      Operating
        Agreements

      

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

       

      EXHIBIT
        F

      


      Certificate
        of Limited Partnership

      Affordable
        Hospitality Associates, LP

      

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

       

      EXHIBIT
        G

      


      Partnership
        Agreement

      

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

       

      EXHIBIT
        H

      


      Warranties
        and Guaranties

      

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

       

      EXHIBIT
        I

      


      Litigation
        Schedule

      


      


      


      
        	
                1.

              	
                Stephen
                  Guzzardi v. Affordable Hospitality Associates, LP and Affordable
                  Hospitality, Inc.

              


      

      


      Summons
        filed with Supreme Court of the State of New York, County of Westchester,
        dated
        12/16/05, alleging breach of contract for an amount in excess of $489,000.00
        (see attached Summons).

      


      
        	
                2.

              	
                Claims
                  by Sten Group

              


      

      


      
        	
                3.

              	
                Claims
                  by York Hunter