ex10_1.htm


    
      
        

      

    

    Exhibit
      10.1

     

    
      CONTRIBUTION
        AGREEMENT

       

      dated
        as
        of January 4, 2008

       

      by
        and
        among

      


      


      SHREE
        ASSOCIATES,

      KUNJ
        ASSOCIATES,

      SHANTI
        III ASSOCIATES,

      TRUST
        FBO SAJNI MEHTA BROWNE UNDER THE BHARAT AND DEVYANI MEHTA 2005 TRUST DATED
        JANUARY 13, 2006,

      TRUST
        FBO NEELAY MEHTA UNDER THE BHARAT AND DEVYANI MEHTA 2005 TRUST DATED JANUARY
        13,
        2006,

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

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

      PLM
        ASSOCIATES LLC,

      DAVID
        L. DESFOR AND

      ASHISH
        R. PARIKH

      


      as
        Contributors,

      


      and

       

      HERSHA
        HOSPITALITY LIMITED PARTNERSHIP

      


       

      as
        Acquirer,

       

      


      
        IN
          CONNECTION WITH THE PURCHASE AND SALE OF

      

      
        MEMBERSHIP
          INTERESTS IN 44 DUANE STREET, LLC, SOLE GENERAL PARTNER OF 5444 ASSOCIATES
          AND
          PARTNERSHIP INTERESTS IN 5444 ASSOCIATES, OWNER OF THE DUANE STREET HOTEL
          LOCATED AT

        130
          DUANE
          STREET, NEW YORK, NY

         

        
          

        

      


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      THIS
        CONTRIBUTION AGREEMENT, dated as of January 4, 2008 (the “Agreement”), by Shree
        Associates, a Pennsylvania limited partnership (the “Shree Contributor”), Kunj
        Associates, a Pennsylvania limited partnership (the “Kunj Contributor”), Shanti
        III Associates, a Pennsylvania limited partnership (the “Shanti III
        Contributor”), Trust FBO Sajni Mehta Browne under The Bharat and Devyani Mehta
        2005 Trust dated January 13, 2005 (the “Trust FBO Sajni Mehta Browne
        Contributor”), Trust FBO Neelay Mehta under The Bharat and Devyani Mehta 2005
        Trust dated January 13, 2005 (the “Trust FBO Neelay Mehta Contributor”), Trust
        FBO Jay H. Shah under the Hasu and Hersha Shah 2004 Trust dated August 18,
        2004
        (the “Trust FBO Jay H. Shah Contributor”), Trust FBO Neil H. Shah under the Hasu
        and Hersha Shah 2004 Trust dated August 18, 2004 (the “Trust FBO Neil H. Shah
        Contributor”), PLM Associates LLC, a Pennsylvania limited liability company (the
“PLM Contributor”), David L. Desfor, an individual (the “Desfor Contributor”)
        and Ashish R. Parikh, an individual (the “Parikh Contributor”, collectively, the
“Contributors”), 5444 Associates, a Pennsylvania limited partnership (the “LP”),
        44 Duane Street, LLC, a Delaware limited liability company (the “LLC”) and
        Hersha Hospitality Limited Partnership, a Virginia limited partnership (the
        “Acquirer”) provides:

       

      


       

      ARTICLE
I

      


       

      DEFINITIONS;
        RULES OF
        CONSTRUCTION

       

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

       

      “Act
        of Bankruptcy”
shall mean if a party hereto or any general partner thereof shall
        (a) apply
        for or consent to the appointment of, or the taking of possession by, a
        receiver, custodian, trustee or liquidator of itself or of all or a substantial
        part of its property, (b) admit in writing its inability to pay its debts
        as they become due, (c) make a general assignment for the benefit of its
        creditors, (d) file a voluntary petition or commence a voluntary case or
        proceeding under the Federal Bankruptcy Code (as now or hereafter in effect),
        (e) be adjudicated a bankrupt or insolvent, (f) file a petition
        seeking to take advantage of any other law relating to bankruptcy, insolvency,
        reorganization, winding-up or composition or adjustment of debts, (g) fail
        to controvert in a timely and appropriate manner, or acquiesce in writing
        to,
        any petition filed against it in an involuntary case or proceeding under
        the
        Federal Bankruptcy Code (as now or hereafter in effect), or (h) take any
        corporate or limited liability company action for the purpose of effecting
        any
        of the foregoing; or if a proceeding or case shall be commenced, without
        the
        application or consent of a party hereto or any general partner thereof,
        in any
        court of competent jurisdiction seeking (1) the liquidation,
        reorganization, dissolution or winding-up, or the composition or readjustment
        of
        debts, of such party or general partner, (2) the appointment of a receiver,
        custodian, trustee or liquidator or such party or general partner or all
        or any
        substantial part of its assets, or (3) other similar relief under any law
        relating to bankruptcy, insolvency, reorganization, winding-up or composition
        or
        adjustment of debts, and such proceeding or case shall continue undismissed;
        or
        an order (including an order for relief entered in an involuntary case under
        the
        Federal Bankruptcy Code, as now or hereafter in effect) judgment or decree
        approving or ordering any of the foregoing shall be entered and continue
        unstayed and in effect, for a period of sixty (60) consecutive
        days.


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


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

       

      “Articles
        of
        Organization” shall mean the Articles of Organization of the LLC filed
        with the Secretary of State of the State of Delaware, a true and correct
        copy of
        which is attached hereto as Exhibit F.

       

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

       

       “Authorizations”
shall
        mean all licenses, permits and approvals required by any governmental or
        quasi-governmental agency, body or officer for the ownership, operation and
        use
        of the Property or any part thereof.

       

      “Certificate
        of Limited
        Partnership” shall mean the Certificate of Limited Partnership of the LP
        filed with the Secretary of State of the Commonwealth of Pennsylvania, a
        true
        and correct copy of which is attached here to as Exhibit
        L.

       

      “Closing”
shall
        mean
        the Closing of the contribution and acquisition of the Interests pursuant
        to
        this Agreement.

       

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

       

      “Consideration”
shall
        mean the value of Twenty Four Million Seven Hundred Fifty Thousand Dollars
        ($24,750,000.00) including the principal amount of the Loan, payable to the
        Contributors at Closing in the manner described in Section
        2.3.

       

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

       

      “Deed”
shall
        mean the
        deed by which the LP received title to the Real Property.

       

      “Employment
        Agreements” shall mean any and all employment agreements, written or
        oral, between the Contributors 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 Summit Associates, 100 Lafayette Street, 3rd
        Floor,
        New York, NY 10001; Phone 212-736-0600; Fax 212-947-3590.

       

       “Loan”
shall
        mean a
        new loan from Wells Fargo Bank, National Association, to the LP, in the
        principal amount of Fifteen Million Dollars ($15,000,000.00).


      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      


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

       

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

       

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

       

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

       

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

       

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

       

      “Intangible
        Personal
        Property” shall mean all intangible personal property owned or possessed
        by the Contributors, the LP or the LLC 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 “Holiday Inn
        Norwich” and all variations thereof, the Authorizations, escrow accounts,
        insurance policies, general intangibles, business records, plans and
        specifications, surveys and title insurance policies pertaining to the real
        property and the personal property, all licenses, permits and approvals with
        respect to the construction, ownership, operation, leasing, occupancy or
        maintenance of the Property, any unpaid award for taking by condemnation
        or any
        damage to the Land by reason of a change of grade or location of or access
        to
        any street or highway, and the share of the Tray Ledger as hereinafter defined,
        excluding (a) any of the aforesaid rights the Acquirer elects not to
        acquire, (b) the Contributors’ cash on hand, in bank accounts and invested
        with financial institutions and (c) accounts receivable except for the above
        described share of the Tray Ledger.

       

      “Interests”
shall
        mean
        the LP Interests and the Shree LLC Interests.

       

      “Shree
        Interests”
shall mean all right, title and interest of Shree Contributor in the
        LP,
        consisting of a Six Percent (6%) partnership interest in the LP.

       

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

       

       “Shanti
        III Interests”
shall mean all right, title and interest of Shanti III Contributor
        in the LP,
        consisting of an Eleven Percent (11%) partnership interest in the
        LP.

       

      “Trust
        FBO Sajni Mehta Browne
        Interests” shall mean all right, title and interest of Trust FBO Sajni
        Mehta Browne Contributor in the LP, consisting of a Six Percent (6%) partnership
        interest in the LP.


      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      


       “Trust
        FBO Neelay Mehta
        Interests” shall mean all right, title and interest of Trust FBO Neelay
        Mehta Contributor in the LP, consisting of a Six Percent (6%) partnership
        interest in the LP.

       

      “Trust
        FBO Jay H. Shah
        Interests” shall mean all right, title and interest of Trust FBO Jay H.
        Shah Contributor in the LP, consisting of a Twenty Two Percent (22%) partnership
        interest in the LP.

       

      “Trust
        FBO Neil H. Shah
        Interests” shall mean all right, title and interest of Trust FBO Neil H.
        Shah Contributor in the LP, consisting of a Twenty Eight Percent (28%)
        partnership interest in the LP.

       

      “PLM
        Interests” shall
        mean all right, title and interest of PLM Contributor in the LP, consisting
        of a
        One and One-Half Percent (1.5%) partnership interest in the LP.

       

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

       

      “Parikh
        Interests”
shall mean all right, title and interest of Parikh Contributor in
        the LP,
        consisting of a One and One-Half (1.5%) partnership interest in the
        LP.

       

       “LP
        Interests” shall
        mean the Shree Interests, the Kunj Interests, the Shanti III Interests, the
        Trust FBO Sajni Mehta Browne Interests, the Trust FBO Neelay Mehta Interests,
        the Trust FBO Jay H. Shah Interests, the Trust FBO Neil H. Shah Interests,
        the
        PLM Interests, the Desfor Interests and the Parikh Interests.

       

      “Shree
        LLC Interests”
shall mean all right, title and interest of Shree Contributor in the
        LLC,
        consisting of a One Hundred Percent (100%) membership interest in the
        LLC.

       

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

       

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

       

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

       

       “Land”
shall
        mean that
        certain parcel of real estate lying and being in the City of New York, County
        of
        New York and State of New York at 130 Duane Street, New York, New York, 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
        Contributor 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.


      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      


      “LLC”
shall
        mean 44
        Duane Street, LLC, a Delaware limited liability company that owns, as its
        only
        assets, the one percent (1%) general partnership interest in the
        LP.

       

      “LLC
        Operating
        Agreement” shall mean the current operating agreement of the LLC, a true
        and correct copy of which is attached hereto as Exhibit G.

       

      “LP”
shall
        mean 5444
        Associates, a Pennsylvania limited partnership that owns, as its only assets,
        the fee interest in the Land and the Hotel and Improvements located on the
        Land.

       

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

       

      “LP
        Partnership
        Agreement” shall mean the current partnership agreement of the LP, a true
        and correct copy of which is attached here to as Exhibit
        M.

       

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

       

      “Operating
        Agreements”
shall mean the management agreements, service contracts, supply contracts,
        leases (other than the Leases) and other agreements, if any, in effect with
        respect to the construction, ownership, operation, occupancy or maintenance
        of
        the Property.  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 Acquirer
        by the
        Title Company, dated as of the Closing Date, pursuant to which the Title
        Company
        insures the Acquirer’s ownership of title to the fee interest in the Real
        Property (including the marketability thereof) subject only to Permitted
        Title
        Exceptions.  The Owner's Title Policy shall insure the Acquirer in the
        amount of the Consideration and shall be acceptable in form and substance
        to the
        Acquirer.  The description of the Land in the Owner's Title Policy
        shall be by courses and distances and shall be identical to the description
        shown on a survey provided by the Contributors to the Acquirer.

       

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

       

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

       

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

       

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

       

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


      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      


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

       

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

      


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

       

      “Title
        Company” shall mean
Summit Associates,
        100 Lafayette Street, 3rd
        Floor,
        New York, NY 10001; Phone 212-736-0600; Fax 212-947-3590.

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      


      ARTICLE
        II

       

       

      CONTRIBUTION
        ANDACQUISITION;
        STUDY PERIOD;

       

      PAYMENT
        OF
        CONSIDERATION

       

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

       

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

       

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

       

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

       

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

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

      2.3          Payment
        of
        the Consideration. Acquirer
        shall obtain the Loan, and the remainder of the Consideration shall be paid
        to
        the Contributors in the following manner:

       

      (a)           
        Acquirer shall pay to Contributors the sum of Seven Million Seven Hundred
        Fifty
        Thousand Dollars ($7,750,000.00) in the form of LP Units, the number of such
        LP
        Units determined at the rate of an LP Unit price per unit of Nine and
        Approximately 94/100 Dollars ($9.94118). Contributors shall be restricted
        from
        converting or selling such LP Units for a period of one (1) year from the
        Closing Date.

      


      (b)           
        Acquirer shall pay to Contributors the remainder of the Consideration in
        the
        form of immediately available good funds of lawful money of the United
        States.

      


      (c)           
        Any adjustments and prorations to be made pursuant to the terms of this
        Agreement shall be paid by wire transfer of immediately available funds to
        an
        account specified by the party due to receive same.

      


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

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

      ARTICLE
        III

       

       

      CONTRIBUTOR’S
        REPRESENTATIONS, WARRANTIES ANDCOVENANTS

       

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

       

      3.1          Identity
        and
        Power.

       

      (a)           
        The Contributors have all
        requisite powers and all governmental licenses, authorizations, consents
        and
        approvals necessary to carry on their business as now conducted, to own,
        lease
        and operate its properties, to execute and deliver this Agreement and any
        document or instrument required to be executed and delivered on behalf of
        each
        such Contributor hereunder, to perform their respective obligations under
        this
        Agreement and any such other documents or instruments and to consummate the
        transactions contemplated hereby.

       

      3.2          Authorization,
        No Violations and Notices.

       

      (a)           
        The execution, delivery and
        performance of this Agreement by the Contributors, and the consummation of
        the
        transactions contemplated hereby have been duly authorized, adopted and approved
        by the Contributors.  No other proceedings are necessary to authorize
        this Agreement and the transactions contemplated hereby.  This
        Agreement has been duly executed by the Contributors and is a valid and binding
        obligation enforceable against them in accordance with its
        terms.

       

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

       

      (i)           
        violate, conflict with, result
        in
        a breach of any provision of, constitute a default (or an event that, which,
        with or lapse of time or both, would constitute a default) under, result
        in the
        termination of, accelerate the performance required by, or result in a right
        of
        termination or acceleration, or the creation of any lien, security interest,
        charge, or encumbrance upon any of the Property, the assets of the LP or
        assets
        of the LLC, under any of  the terms, conditions, or provisions of, the
        Articles of Organization, the LLC Operating Agreement, the Certificate of
        Limited Partnership, the LP Partnership Agreement or any note, bond, mortgage,
        indenture, deed of trust, license, lease, agreement, or other instrument,
        or
        obligation to which the LP or the LLC is a party, or by which the LP or the
        LLC
        may be bound, or to which the LP or the LLC or their respective properties
        or
        assets, or the Property may be subject; or

       

      
        
          
          

        

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

       

      3.3          Litigation
        with respect to Contributors.  Except as set forth
        on
Exhibit
        I, there is no action,
        suit, claim or proceeding pending or, to the Contributors’ Knowledge, threatened
        against or affecting the Contributors or their assets in any court, before
        any
        arbitrator or before or by any governmental body or other regulatory authority
        (i) that would materially adversely affect the Contributors or the Interests,
        (ii) that seeks restraint, prohibition, damages or other relief in connection
        with this Agreement or the transactions contemplated hereby, or (iii) would
        delay the consummation of any of the transactions contemplated
        hereby.  The Contributors are not subject to any judgment, decree,
        injunction, rule or order of any court relating to the Contributors’
participation in the transactions contemplated by this
        Agreement.

       

      3.4          Interests
        and Property.

       

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

       

      (b)           
        Except for liens disclosed
        by
        Contributors to Acquirer, the Property is, on the date hereof, and will be
        on
        the Closing Date, free and clear of all liens and encumbrances, and the LP
        has
        good, marketable title thereto and the right to convey same.  The LP
        is the fee simple owner of the Real Property and the sole owner of the
        Property.  The LLC is the sole general partner of the
        LP.

       

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

       

      3.6          Brokerage
        Commission.  The
        Contributors have not engaged the services of, nor is it or will it or Acquirer
        become liable to, any real estate agent, broker, finder or any other person
        or
        entity for any brokerage or finder’s fee, commission or other amount with
        respect to the transactions described herein on account of any action by
        the
        Contributors.

       

      3.7          The
        LLC and
        the LP.

       

      
        
          
          

        

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

       

      (b)           
        The LP 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.

       

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

       

      (i)           
        violate, conflict with, result
        in
        a breach of any provision of, constitute a default (or an event that, with
        notice or lapse of time or both, would constitute a default) under, result
        in
        the termination of, accelerate the performance required by, or result in
        a right
        of termination or acceleration, or the creation of any lien, security interest,
        charge, or encumbrance upon any of the Property or other assets of the LP
        or the
        LLC, under any of the terms, conditions, or provisions of, the Articles of
        Organization, the LLC Operating Agreement, the Certificate of Limited
        Partnership, the LP Partnership Agreement or any note, bond, mortgage,
        indenture, deed of trust, license, lease, agreement, or other instrument
        or
        obligation to which the LP or the LLC is a party, or by which the LP or the
        LLC may
        be bound, or to which the LP or the
        LLC or
        their respective properties or assets
        may be subject; or

       

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

       

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

       

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

       

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

       

      
        
          
          

        

        
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      3.9          Tax
        Matters.

       

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

      


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

       

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

      


      (d)           
        All taxes, including real
        property
        taxes and rental taxes or the equivalent, and all interest and penalties
        due
        thereon, required to be paid or collected by the LP or the LLC in connection
        with the operation of
        the Property as of the Closing Date will have been collected and/or paid
        to the
        appropriate governmental authorities, as required or such amounts shall be
        pro-rated as of the Closing Date. The Contributors shall cause the LP and
        the LLC to file, all necessary
        returns and petitions required to be filed through the Closing
        Date.  The Contributors shall cause the LP and the LLC 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 LP and the LLC.

      


      
        
          
          

        

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

       

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

       

      3.12        Compliance
        with Existing Laws.  The LP and the
        LLC possess all Authorizations, each of
        which is valid and in full force and effect, and, to Contributors’ Knowledge, no
        provision, condition or limitation of any of the Authorizations has been
        breached or violated.   Neither the LP nor the LLC has
        misrepresented or failed to disclose any relevant fact in obtaining all
        Authorizations, and the Contributors have no Knowledge of any change in the
        circumstances under which those Authorizations were obtained that result
        in
        their termination, suspension, modification or limitation.  The
        Contributors have no Knowledge, nor have they received written notice within
        the
        past three (3) years, of any existing violation of any provision of any
        applicable building, zoning, subdivision, environmental or other governmental
        ordinance, resolution, statute, rule, order or regulation, including but
        not
        limited to those of environmental agencies or insurance boards of underwriters,
        with respect to the ownership, operation, use, maintenance or condition of
        the
        Property or any part thereof, or requiring any repairs or alterations other
        than
        those that have been made prior to the date hereof.

       

      3.13        Operating
        Agreements.  The
        LP and the LLC have performed all of their respective obligations under each
        of
        the Operating Agreements and no fact or circumstance has occurred which,
        by
        itself or with the passage of time or the giving of notice or both, would
        constitute a material default under any of the Operating
        Agreements.  Without the prior written consent of the Acquirer, which
        consent will not be unreasonably withheld or delayed, the Contributors shall
        cause the LP and the LLC
        not to enter into any new management agreement, maintenance or repair contract,
        supply contract, lease in which it is lessee or other agreements with respect
        to
        the Property, nor shall the Contributors cause the LP or the LLC to enter into
        any agreements
        modifying the Operating Agreements.

       

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

       

      
        
          
          

        

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

       

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

       

      3.17        
        (a) Litigation
        with Respect to the LLC.  Except as set forth
        on
Exhibit
        I
there is no action,
        suit or
        proceeding pending or known to be threatened against or affecting the LLC
        or any
        part of or interest in the Property in any court, before any arbitrator or
        before or by any governmental agency which (a) in any manner raises any question
        affecting the validity or enforceability of this Agreement or any other material
        agreement or instrument to which the LLC is a party or by which it is bound
        and
        that is or is to be used in connection with, or is contemplated by, this
        Agreement, (b) could materially and adversely affect the business, financial
        position or results of operations of the LLC, (c) could materially and adversely
        affect the ability of the LLC to perform its obligations hereunder, or under
        any
        document to be delivered pursuant hereto, (d) could create a material lien
        on
        the Property, any part thereof or any interest therein, or (e) could otherwise
        materially and adversely affect the Property, any part thereof or any interest
        therein or the use, operation, condition or occupancy
        thereof.

       

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

       

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

       

      
        
          
          

        

        
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      3.19        Financial
        Information.

       

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

       

      (b)          
        To the Contributors’ Knowledge,
        except as otherwise disclosed in writing to the Acquirer prior to the end
        of the
        Study Period, for each of the LP’s accounting years, when a given year is taken
        as a whole, all of the LP’s financial information previously delivered or to be
        delivered to the Acquirer is and shall be correct and complete in all material
        respects and presents accurately the financial condition of the LP and results
        of the operations of the Property for the periods indicated, except that
        such
        statements do not have footnotes or schedules that may otherwise be required
        by
        GAAP.  If requested by the Acquirer, the Contributors shall cause the
        LP to deliver promptly all four-week period ending financial information
        available to the LP.  The LP’s financial information is prepared based
        on books and records maintained by the LP in accordance with the LP’s accounting
        system.  The LP’s financial information has been provided to the
        Acquirer without any changes or alteration thereto.  To the best of
        Contributors’ Knowledge, since the date of the last financial statement included
        in the LP'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
        Articles of Organization, LLC Operating Agreement, Certificate of Limited
        Partnership and LP Partnership Agreement are in full force and effect and
        have
        not been modified or supplemented, and no fact or circumstance has occurred
        that, by itself or with the giving of notice or the passage of time or both,
        would constitute a default thereunder.

       

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

       

      
        
          
          

        

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

       

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

       

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

       

      3.25        Intentionally
        Omitted.

       

      
        
          
          

        

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

       

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

       

      3.28        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; and

       

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

       

      3.29        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
        Contributors, the LP nor the LLC, are in default and the Contributors shall
        make
        good faith efforts for themselves, the LP and the LLC 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
        Contributors and Contributors will have obtained all consents of any third
        party
        necessary to assign the Leases to Acquirer.

       

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

       

      3.32        Securities
        Law
        Matters.

       

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

      


      
        
          
          

        

        
          17

          
            

          

        

        
          
          

        

      

       

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

      


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

       

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

       

      
        
          
          

        

        
          18

          
            

          

        

        
          
          

        

      

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

      
        
          
          

        

        
          19

          
            

          

        

        
          
          

        

      

       

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

       

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

       

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

       

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

       

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

       

      
        
          
          

        

        
          20

          
            

          

        

        
          
          

        

      

       

      ARTICLE
        IV

      


       

      ACQUIRER'S
        REPRESENTATIONS, WARRANTIES ANDCOVENANTS

       

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

       

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

       

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

       

      4.3          Litigation.  There
        is no action, suit or
        proceeding, pending or known to be threatened, against or affecting the Acquirer
        in any court or before any arbitrator or before any Governmental Body which
        (a) in any manner raises any question affecting the validity or
        enforceability of this Agreement or any other agreement or instrument to
        which
        the Acquirer are a party or by which it is bound and that is to be used in
        connection with, or is contemplated by, this Agreement, (b) could
        materially and adversely affect the ability of the Acquirer to perform its
        obligations hereunder, or under any document to be delivered pursuant
        hereto.

       

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

       

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

       

      
        
          
          

        

        
          21

          
            

          

        

        
          
          

        

      

       

      ARTICLE
V

      


       

      CONDITIONS
        ANDADDITIONAL
        COVENANTS

       

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

       

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

       

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

       

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

       

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

       

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

       

      5.6         
        Intentionally
        Omitted.

       

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

       

      
        
          
          

        

        
          22

          
            

          

        

        
          
          

        

      

       

      ARTICLE
        VI

      


       

      CLOSING

       

      6.1          Closing.  Closing
        shall be held at a
        location that is mutually acceptable to the parties, on or before January 4, 2008.

       

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

       

      (a)           
        Certificates representing
        the
        Interests.

       

      (b)           
        The certificate required by
        Section 5.2.

       

      (c)           
        The Assignment and Assumption
        Agreement.

       

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

       

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

       

      (f)           
        The Deed.

       

      (g)           
        The FIRPTA
        Certificates.

       

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

       

      (i)           
        Copies of the Articles of
        Organization, LLC Operating Agreement, Certificate of Limited Partnership
        and LP
        Partnership Agreement.

       

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

       

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

       

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

       

      
        
          
          

        

        
          23

          
            

          

        

        
          
          

        

      

       

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

       

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

       

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

       

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

       

      (q)           
        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 forty eight (48) hours
        prior to the Closing.

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

      
        
          
          

        

        
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       (z)           
        The Joinder.

       

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

       

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

       

      (a)           
        The Consideration described
        in
Section 2.3.

       

      (b)           
        The Assignment and Assumption
        Agreement.

       

      (c)           
        The Joinder.

       

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

       

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

       

      6.5          Income
        and
        Expense Allocations.

       

      
        	
                 

              	
                (a)

              	
                Items
                  to be Apportioned.  The following
                  shall
                  be prorated and apportioned between Contributors and the Acquirer
as
                  of 11:59:59 P.M. (local Hotel
                  time) on the Apportionment Date, except as otherwise expressly
                  provided to
                  the contrary below:

              


      

       

      
        	
                 

              	
                (i)

              	
                Property
                  Taxes.  Real estate
                  taxes, ad
                  valorem taxes, personal property taxes, special assessments, sewer
                  rents
                  and taxes, and any other governmental tax or charge levied or assessed
                  against the Property (collectively, the “Property
                  Taxes”), shall be
                  apportioned on the basis of the respective periods for which each
                  is
                  assessed or imposed.  If the Closing Date shall occur either
                  before an assessment is made or a tax rate is fixed for the tax
                  period in
                  which the Closing occurs, the apportionment of such Property Taxes
                  shall
                  be calculated on the basis of the prior year’s Property Taxes, but, after
                  the assessment and tax rate for the current year are fixed, the
                  apportionment thereof shall be recalculated and the Contributors
                  or the
                  Acquirer,
                  as the case may be, shall
                  promptly pay to the other the amount determined to be due based
                  on such
                  recalculation.

              


      

       

      
        	
                 

              	
                (ii)

              	
                Utilities. The
                  Utilities shall be apportioned
                  (i) by having the utility companies servicing the Property make
                  final
                  meter readings on the Apportionment Date, the payment of which
                  shall be
                  the Contributors’ responsibility, or (ii) if such readings cannot be
                  obtained, on the basis of the most recent bills that are available,
                  reasonably adjusted (if necessary) to reflect any changes in occupancy,
                  temperature or other relevant variables between the respective
                  periods
                  covered by such bills and the most recent relevant at period, to
                  the
                  extent such changes would have a material impact on the amount
                  of the
                  estimated charges for the most recent period for the utility in
                  question.  If the apportionment is not based on an actual
                  current reading, then, upon the taking of a subsequent actual reading,
                  or
                  upon receipt of a subsequent bill, such apportionment shall be
                  recalculated and the Contributors or the Acquirer,
                  as the case may be, shall
                  promptly pay to the other the amount determined to be due upon
                  such
                  recalculation.  The Acquirer
shall
                  reimburse the Contributors
                  for any outstanding utility deposits made by the
                  Contributors

              


      

       

      
        
          
          

        

        
          25

          
            

          

        

        
          
          

        

      

       

      
        	
                 

              	
                (iii)

              	
                Licenses.  All
                  repaid fees or
                  other charges for transferable licenses, if any, shall be apportioned
                  on
                  the basis of the fiscal period covered by such license, but all
                  amounts
                  refundable under unassigned or unassignable licenses shall remain
                  the
                  property of Contributors.

              


      

       

      
        	
                 

              	
                (iv)

              	
                Service
                  Contracts, Space Leases and Agreements.  Amounts paid
                  or
                  payable under any service contract, space lease and agreement,
                  shall be
                  apportioned on the basis of the period covered by such
                  payments.

              


      

       

      
        	
                 

              	
                (v)

              	
                Revenues. All
                  revenues from the rental of
                  guestrooms and from food and beverage and other sales or services,
                  net of
                  applicable sales taxes and other governmental impositions (whether
                  such
                  revenues, sales taxes or other governmental impositions are collected
                  or
                  not) that are posted to a guest room account through 11:59:59 pm
                  on the
                  Apportionment Date shall be divided equally among the Contributors
                  and the
                  Acquirer.  After
                  this time all
                  revenues from the rental of guestrooms and from food and beverage
                  and
                  other sales or services posted to a guest room account shall belong
                  to the
                  Acquirer.  For
                  purpose of these
                  apportionments, the hotel personnel shall promptly post all charges
                  as
                  they are incurred.  Guestroom rental charges of those guests who
                  check-in on the Apportionment Date shall be deemed incurred at
                  check-in.  Revenues from any meeting room occupied, but vacated
                  prior to midnight
                  of the Apportionment
                  Date shall belong to the Contributors.  Revenues from any
                  meeting room that was not occupied until after this time shall
                  belong to
                  the Acquirer.  Revenues
                  for any
                  meeting room that was occupied by the same customer on both the
                  Apportionment Date and the Closing Date shall be allocated between
                  the
                  Contributors and the Acquirer
based
                  on the number of hours on
                  each such date that the room was occupied and unavailable for rental
                  to
                  other customers.

              


      

       

      
        
          
          

        

        
          26

          
            

          

        

        
          
          

        

      

       

      
        	
                 

              	
                (vi)

              	
                Sales
                  Taxes.  All
                  sales, use and occupancy taxes, if any, due or to become due in
                  connection
                  with revenues from the Hotel apportioned or allocated to the Contributors
                  in accordance with Section
                  6.5(a)(v) shall be
                  paid by the Contributors, and all sales, use and occupancy taxes
                  due or to
                  become due in connection with revenues apportioned or allocated
                  to the
                  Acquirer
in
                  accordance with Section
                  6.5(a)(v) shall be
                  paid by the Acquirer.  The
                  Contributors and
                  the Acquirer
                  shall each
                  indemnify
                  the other from and against any liability for unpaid sales, use
                  or
                  occupancy tax resulting from the indemnifying party’s failure to make the
                  payments required
                  under this Section
                  6.5(a)(vi).

              


      

       

      
        	
                 

              	
                (b)

              	
                Receivables.  The
Acquirer shall
                  not purchase the book of
                  accounts receivable.

              


      

       

      
        	
                 

              	
                (c)

              	
                House
                  Banks. The Acquirer
                  shall purchase the petty cash funds and cashiers’ banks, provided
                  that the Acquirer shall only purchase cash on hand and shall in
                  no event
                  purchase any receipts. 

              


      

       

      
        	
                 

              	
                (d)

              	
                Employee
                  Wages and Other Compensation.  On or before
                  the
                  Closing Date, the
                  Contributors shall pay or cause
                  to be paid (i) all unpaid wages or salaries (including any earned
                  but
                  unused vacation days accrued, irrespective of whether such vacation
                  days are actually
                  vested) of all persons employed at the Property; (ii) any
                  employment taxes or
                  government levies on item (i) above; and (iii) any retirement plan
                  payments, medical insurance payments or other similar
                  deductions.  Hereinafter, (i) through (iii) above shall be
                  referred to as the “Contributors’
Employee
                  Payment.”  The Contributors shall be responsible for
                  Contributors’ Employee Payment accruing through 11:59:59 pm on the
                  Apportionment Date.  From that point forward, the Acquirer
shall
                  be responsible for these
                  expenses for those
                  persons who the Acquirer elect to employ.

              


      

       

      
        	
                 

              	
                (e)

              	
                Reconciliation
                  and Final Payment; Intent of Section.  The Contributors
                  and
                  the Acquirer,
                  shall cooperate after Closing to
                  make a final determination of the prorations and adjustments required
                  hereunder as soon as reasonably practicable, but in no event later
                  than
                  ninety (90) days after the Closing Date (except with respect to
                  any item
                  which is not determinable within such time frame, as to which the
                  time
                  period shall be extended until such item is determinable).  Upon
                  the final reconciliation of the prorations and adjustments under
                  this
                  Section
                  6.5, the party
                  which
                  owes the other party any sums hereunder shall pay such party such
                  sums
                  within ten (10) days after the reconciliation thereof.  It is
                  the intent of the parties that all items herein which are subject
                  to
                  apportionment shall, except as otherwise specifically provided
                  in
                  this Section
                  6.5, result
                  in the
                  Contributors receiving all of the economic benefits and burdens
                  of the
                  Hotel with respect to the period prior to the Closing Date, and
                  the
                  Acquirer
receiving
                  all of the economic
                  benefits and burdens of the Hotel with respect to the period from
                  and
                  after the Closing Date.

              


      

       

      
        
          
          

        

        
          27

          
            

          

        

        
          
          

        

      

       

      
        	
                 

              	
                (f)

              	
                Accounts
                  Payable.  The Contributors
                  shall retain and be responsible for the payment of all accounts
                  payable
                  and other debts and liabilities of the Contributors or otherwise
                  relating
                  to the Hotel, which have accrued prior to the Closing, whether
                  or not
                  invoiced (the “Accounts
                  Payable”), except to the
                  extent the Acquirer
                  has
received
                  a credit for any such
                  item under this Section
                  6.5.  The
                  parties acknowledge and agree that except as may be expressly set
                  forth in
                  this Agreement, the Acquirer isin
                  no way assuming any
                  responsibility for the payment of any Accounts Payable of the
                  Contributors.

              


      

       

      
        	
                 

              	
                (g)

              	
                Survival.  The
                  provisions of
                  this Section
                  6.5 shall
                  survive the Closing for a
                  period of six (6) months.

              


      

       

      6.6          Safes.  On
        the Closing Date
Contributors shall
        cause the delivery to Acquirer of
        all of Contributors’ keys
        to all safes and safe deposit boxes
        (collectively, the “safes”)
        at the Property.  On
        or prior to the Closing Date, Contributors shall
        give written notices to those
        persons who have deposited items in any central safes (excluding in-room
        safes),
        advising them of the sale of the Hotel to Acquirer and
        requesting the removal or
        verification of their contents in the safes on the Closing Date.  All
        such removals or verifications on the Closing Date shall be under the
        supervision of Contributors’ and
Acquirer’s
respective
        representatives.  All contents which are to remain in the safes shall
        be recorded.  Items belonging to guests who have not responded to such
        written notice by so removing or verifying their safe contents by the end
        of the
        day shall be recorded in the presence of the respective
        representatives.  Any such contents so verified or recorded and
        thereafter remaining in the hands of Acquirer shall
        be the responsibility of
Acquirer and
Acquirer
        hereby agrees to indemnify, defend
        and hold
Contributors harmless
        from any liability
        therefor.  Contributors hereby
        agree to indemnify and hold
Acquirer
harmless
        from any liability arising from
        claims by guests for any loss of contents in the safes not verified or recorded
        on the Closing Date.

       

      
        
          
          

        

        
          28

          
            

          

        

        
          
          

        

      

       

      ARTICLE
        VII

      


       

      CONDEMNATION;
        RISK OF LOSS

       

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

       

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

       

      ARTICLE
        VIII

      


       

      LIABILITY
        OF
        ACQUIRER; INDEMNIFICATION BY CONTRIBUTORS;

       

      TERMINATION
        RIGHTS

       

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

       

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

       

      8.3          Termination
        by Acquirer.  If
        any condition set forth herein cannot or will not be satisfied prior to Closing,
        or upon the occurrence of any other event that would entitle the Acquirer
        to
        terminate this Agreement and its obligations hereunder, and the Contributors
        fail to cure any such matter within five (5) days after notice thereof from
        the
        Acquirer, the Acquirer, at its option and as its sole remedy, shall elect
        either
        (a) to terminate this Agreement, and all other rights and obligations of
        the Contributors and the Acquirer hereunder shall terminate immediately,
        or
        (b) to waive its right to terminate and, instead, to proceed to
        Closing.

       

      
        
          
          

        

        
          29

          
            

          

        

        
          
          

        

      

       

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

       

      ARTICLE
        IX

      


       

      MISCELLANEOUS
        PROVISIONS

       

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

       

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

       

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

       

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

       

      9.5          Governing
        Law.  This
        Agreement and all
        documents referred to herein shall be governed by and construed and interpreted
        in accordance with the laws of the State of New York.

       

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

       

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

       

      
        
          
          

        

        
          30

          
            

          

        

        
          
          

        

      

       

      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 Contributors:

              	 	
                c/o
                  The Hersha
                  Group

              
	 	 	 	
                44
                  Hersha
                  Drive

              
	 	 	 	
                Harrisburg,
PA 17102

              
	 	 	 	
                Phone:
                  (717)
                  236-4400

              
	 	 	 	
                Fax:
                  (717)
                  774-7383

              
	 	 	 	 
	 	
                With
                  a copy to:

              	 	
                Lok Mohapatra,
                  Esquire

              
	 	 	 	
                Franklin Firm,
                  LLP

              
	 	 	 	
                Penn Mutual Towers

              
	 	 	 	
                510
                  Walnut Street, 9thfloor

              
	 	 	 	
                Philadelphia,
PA 19106

              
	 	 	 	
                Phone:  (215)
                  238-1045

              
	 	 	 	
                Fax:  (267)
                  238-1874

              
	 	 	 	 
	 	
                If
                  to the Acquirer:

              	 	
                Hersha
                  Hospitality Limited
                  Partnership

              
	 	 	 	
                44
                  Hersha
                  Drive

              
	 	 	 	
                Harrisburg,
PA 17102

              
	 	 	 	
                Phone:
                  (717)
                  236-4400

              
	 	 	 	
                Fax:
                  (717)
                  774-7383

              
	 	 	 	
                Attn:
                  Ashish R. Parikh

              
	 	 	 	 
	 	
                With
                  a copy to:

              	 	
                Lok Mohapatra,
                  Esquire

              
	 	 	 	
                Franklin Firm,
                  LLP

              
	 	 	 	
                Penn Mutual Towers

              
	 	 	 	
                510
                  Walnut Street, 9thfloor

              
	 	 	 	
                Philadelphia,
PA 19106

              
	 	 	 	
                Phone:  (215)
                  238-1045

              
	 	 	 	
                Fax:  (267)
                  238-1874

              


      

      


      
        
          
          

        

        
          31

          
            

          

        

        
          
          

        

      

       

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

       

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

       

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

       

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

       

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

       

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



      
        
          
          

        

        
          32

          
            

          

        

        
          
          

        

      


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

      


      
        	 	 	
                CONTRIBUTERS:

              
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	
                SHREE
                  ASSOCIATES, a
                  Pennsylvania limited partnership

              
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	
                By:

              	 
	 	 	 	
                Name:  
                  

              	
                Hasu
                  P. Shah

              
	 	 	 	
                Title:

              	
                General
                  Partner

              
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	
                KUNJ
                  ASSOCIATES, a
                  Pennsylvania limited partnership

              
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	
                By:

              	 
	 	 	 	
                Name:

              	
                Kiran
                  P. Patel

              
	 	 	 	
                Title:

              	
                General
                  Partner

              
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	
                SHANTI
                  III ASSOCIATES, a
                  Pennsylvania limited partnership

              
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	
                By:

              	 
	 	 	 	
                Name:

              	
                Kanti
                  D. Patel

              
	 	 	 	
                Title:

              	
                General
                  Partner

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

              
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	
                By:

              	 
	 	 	 	
                Name:

              	
                Jay
                  H. Shah

              
	 	 	 	
                Title:

              	
                Trustee

              


      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

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

              
	 	 	 	 	 	 
	 	 	 	
                By:

              	 
	 	 	 	
                Name:  
                  

              	
                Neil
                  H. Shah

              
	 	 	 	
                Title:

              	
                Trustee

              
	 	 	 	 	 	 
	 	 	 	
                TRUST
                  FBO SAJNI MEHTA BROWNE UNDER THE BHARAT AND DEVYANI MEHTA 2005
                  TRUST DATED
                  JANUARY 13, 2005

              
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	
                By:

              	 
	 	 	 	
                Name:

              	
                Bharat
                  C. Mehta

              
	 	 	 	
                Title:

              	
                Trustee

              
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	
                TRUST
                  FBO NEELAY MEHTA UNDER THE BHARAT AND DEVYANI MEHTA 2005 TRUST
                  DATED
                  JANUARY 13, 2005

              
	 	 	 	 	 	 
	 	 	 	
                By:

              	 
	 	 	 	
                Name:

              	
                Bharat
                  C. Mehta

              
	 	 	 	
                Title:

              	
                Trustee

              
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	
                PLM
                  ASSOCIATES LLC

              
	 	 	 	 	 	 
	 	 	 	
                By:

              	 
	 	 	 	
                Name:

              	
                Lokanath
                  Mohapatra

              
	 	 	 	
                Title:

              	
                Manager

              
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 
	 	 	 	
                David
                  L. Desfor, Individually

              
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 
	 	 	 	
                Ashish
                  R. Parikh, Individually

              


      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        	 	 	
                ACQUIRER:

              
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	
                HERSHA
                  HOSPITALITY LIMITED
                  PARTNERSHIP, a Virginia limited partnership

              
	 	 	 	 	 	 
	 	 	 	
                By:

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

              
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	
                By:

              	 
	 	 	 	 	
                Name:  
                  

              	
                Ashish
                  R. Parikh

              
	 	 	 	 	
                Title:

              	
                CFO