Exhibit 10.1


    
      
        
          

        

      

      Exhibit
        10.1

       

      CONTRIBUTION
        AGREEMENT

      


      dated
        as
        of January 10, 2007

      between

      


      SHREE
        ASSOCIATES, KUNJ ASSOCIATES, SHANTI III ASSOCIATES, TRUST FBO NEIL H. SHAH
        UNDER
        THE HASU AND HERSHA SHAH 2004 TRUST, TRUST FBO JAY H. SHAH UNDER THE HASU
        AND
        HERSHA SHAH 2004 TRUST, DEVI ASSOCIATES, DAVID L. DESFOR, AND SHREENATHJI
        ENTERPRISES, LTD.

      


      


      as
        Contributors,

      


      and

      


      HERSHA
        HOSPITALITY LIMITED PARTNERSHIP AND HERSHA HOSPITALITY, LLC

      


      as
        Acquirors

      


      IN
        CONNECTION WITH THE CONTRIBUTION AND ACQUISITION

      OF
        PARTNERSHIP INTERESTS IN 44 CARLISLE ASSOCIATES, LP,

      OWNER
        OF
        RESIDENCE INN, CARLISLE, PENNSYLVANIA

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      CONTRIBUTION
        AGREEMENT

      


      THIS
        CONTRIBUTION AGREEMENT (the “Agreement”), dated this 10th day of January, 2007,
        between SHREE ASSOCIATES ("Shree"), KUNJ ASSOCIATES ("Kunj"), SHANTI III
        ASSOCIATES ("Shanti III"), DEVI ASSOCIATES (“Devi”), all Pennsylvania limited
        partnerships (the “Partnership Contributors”), TRUST FBO NEIL H. SHAH UNDER THE
        HASU AND HERSHA SHAH 2004 TRUST (“NHS Trust”), TRUST FBO JAY H. SHAH UNDER THE
        HASU AND HERSHA SHAH 2004 TRUST (“JHS Trust”) (the “Trust Contributors”), and
        Shreenathji Enterprises, Ltd. (“SEL”), a Pennsylvania corporation, (the
“Corporate Contributor”), (collectively, the “Contributors”), DAVID L. DESFOR
        (“Desfor”) (the “Individual Contributor”), AND HERSHA HOSPITALITY LIMITED
        PARTNERSHIP, a Virginia limited partnership (the “Partnership Acquiror” or
“HHLP”) and HERSHA HOSPITALITY, LLC, a Virginia limited liability company (the
        “LLC Acquiror” or “HHLLC”) (collectively, the “Acquirors”) and
        provides:

      


      


      ARTICLE
        I

      DEFINITIONS;
        RULES OF CONSTRUCTION

      


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

      


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


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      "HHLP-
        JHS Trust Assignment and Assumption Agreement"
        shall
        mean that certain assignment and assumption agreement whereby JHS Trust assigns
        and HHLP assumes the HHLP- JHS Trust Interest. 

       

      “HHLP-NHS
        Trust Assignment and Assumption Agreement”
shall
        mean that certain assignment and assumption agreement whereby NHS Trust assigns
        and HHLP assumes the HHLP - NHS Trust Interest.

      


      “HHLP-Shree
        Assignment and Assumption Agreement”
shall
        mean that certain assignment and assumption agreement whereby Shree assigns
        and
        HHLP assumes the HHLP-Shree Interest.  

       

      “HHLP-Kunj
        Assignment and Assumption Agreement”
shall
        mean that certain assignment and assumption agreement whereby Kunj assigns
        and
        HHLP assumes the HHLP-Kunj Interest.

      


      “HHLP-Shanti
        III Assignment and Assumption Agreement”
shall
        mean that certain assignment and assumption agreement whereby Shanti III
        assigns
        and HHLP assumes the HHLP-Shanti III Interest.  

      


      “HHLP-Devi
        Assignment and Assumption Agreement”
shall
        mean that certain assignment and assumption agreement whereby Devi assigns
        and
        HHLP assumes the HHLP-Devi Interest.

      


      “HHLP-Desfor
        Assignment and Assumption Agreement”
shall
        mean that certain assignment and assumption agreement whereby Desfor assigns
        and
        HHLP assumes the HHLP-Desfor Interest.

      


      “HHLLC-SEL
        Assignment and Assumption Agreement”
shall
        mean that certain assignment and assumption agreement whereby SEL assigns
        and
        HHLLC assumes the HHLLC-SEL Interest.

      


      “Assignment
        and Assumption Agreements”
shall
        mean the HHLP-Shree Assignment and Assumption Agreement, the HHLP-Kunj
        Assignment and Assumption Agreement, the HHLP-Shanti III Assignment and
        Assumption Agreement, the HHLP-JHS Trust Assignment and Assumption Agreement,
        the HHLP- NHS Trust Assignment and Assumption Agreement, the HHLP-Devi
        Assignment and Assumption Agreement, the HHLP-Desfor Assignment and Assumption
        Agreement, and the HHLLC-SEL Assignment and Assumption Agreement. 

      


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


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      "Closing"
        shall
        mean the closing of the contribution and acquisition of the Interests pursuant
        to this Agreement.

      


      "Closing
        Date"
        shall
        mean the date on which the Closing occurs.

      


      “Consideration”
        shall
        mean $8,615,000 payable to the Contributors at Closing in the manner described
        in Section
        2.3.

      


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

      


      "Escrow
        Agent"
        shall
        mean All American Abstract Co., Inc., 2854 Egypt Road, Audubon, PA
        19403.

      


      "FIRPTA
        Certificates"
        shall
        mean the affidavit of each of the Contributors under Section 1445 of the
        Internal Revenue Code certifying that such Contributor is not a foreign
        corporation, foreign partnership, foreign trust, foreign estate or foreign
        person (as those terms are defined in the Internal Revenue Code and the Income
        Tax Regulations), in form and substance satisfactory to the
        Acquirors.

      


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

      


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

      


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

      


      “HHLP-JHS
        Trust Interest”
shall
        mean all right, title and interest of JHS Trust in the Partnership, consisting
        of a 20% limited partnership interest in the Partnership.

       

      “HHLP-NHS
        Trust Interest”
shall
        mean all right, title and interest of NHS Trust in the Partnership, consisting
        of a 20% limited partnership interest in the Partnership.

      


      “HHLP-Shree
        Interest”
shall
        mean all right, title and interest of Shree in the Partnership, consisting
        of a
        14% limited partnership interest in the Partnership.

       

      “HHLP-Kunj
        Interest”
shall
        mean all right, title and interest of Kunj in the Partnership, consisting
        of a
        15% limited partnership interest in the Partnership.


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      “HHLP-Shanti
        III Interest”
shall
        mean all right, title and interest of Shanti III in the Partnership, consisting
        of a 14% limited partnership interest in the Partnership.

      


      “HHLP-Devi
        Interest”
shall
        mean all right, title and interest of Devi in the Partnership, consisting
        of a
        14% limited partnership interest in the Partnership.

      


      “HHLP-Desfor
        Interest”
shall
        mean all right, title and interest of Desfor in the Partnership, consisting
        of a
        2% limited partnership interest in the Partnership.  

      


      “HHLLC-SEL
        Interest” shall
        mean all right, title and interest of SEL in the Partnership, consisting
        of a 1%
        general partnership interest in the Partnership.

         

      "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
        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 "Residence Inn" and all variations thereof, the Authorizations,
        escrow accounts, insurance policies, general intangibles, business records,
        plans and specifications, surveys and title insurance policies pertaining
        to the
        Real Property and the Personal Property, all licenses, permits and approvals
        with respect to the construction, ownership, operation, leasing, occupancy
        or
        maintenance of the Property, any unpaid award for taking by condemnation
        or any
        damage to the Land by reason of a change of grade or location of or access
        to
        any street or highway, and the share of the Tray Ledger as hereinafter defined,
        excluding (a) any of the aforesaid rights the Acquirors elect 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 HHLP-Shree Interest, the HHLP-Kunj Interest, the HHLP-Shanti III
        Interest, the HHLP- JHS Trust Interest, the HHLP-NHS Trust Interest, the
        HHLP-Devi Interest, the HHLP-Desfor Interest, and the HHLLC-SEL
        Interest.

      


      "Inventory"
        shall
        mean all "inventories of merchandise" and "inventories of supplies", as such
        terms are defined in the Uniform System of Accounts for Hotels [9th
        Revised
        Edition] as published by the Hotel Association of New York City, Inc., as
        revised, and similar consumable supplies.

      


      "Land"
        shall
        mean that certain parcel of real estate lying and being at, more commonly
        known
        as the, as more particularly described on Exhibit A
        attached
        hereto, 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 Contributors
        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 attached hereto as Exhibit
        D.

      


      “Lessee”
shall
        mean 44 New England Management Company.

      


      "Manager"
        shall
        mean Hersha Hospitality Management, L.P.

      


      "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.

      


      “Organizational
        Documents”
        shall
        mean the current partnership agreements and certificates of limited partnership
        of the Partnership Contributors, true and correct copies of which are attached
        hereto as Exhibit
        F
        and
Exhibit
        G,
        respectively. 

      


      "Owner's
        Title Policy"
        shall
        mean an owner's policy of title insurance issued to the Acquirors by the
        Title
        Company, pursuant to which the Title Company insures the Acquirors' ownership
        of
        fee simple title to the Real Property (including the marketability thereof)
        subject only to Permitted Title Exceptions. The Owner's Title Policy shall
        insure the Acquirors in the amount of the Consideration and shall be acceptable
        in form and substance to the Acquirors. 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 the Survey.

      


      “Partnership”
        shall
        mean 44 Carlisle Associates, LP, a Pennsylvania limited partnership that
        owns as
        its sole assets hotel improvements situated at 1 Hampton Court, Carlisle,
        PA
        17013.  

      


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

      


      "Property"
        shall
        mean collectively the Real Property, 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.


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      "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; provided, however, that the Acquirors agree that,
        all
        Inventory shall be conveyed to the Acquirors' property manager.

      


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

      


      "Title
        Company"
        shall
        mean All American Abstract Co., Inc., 2854 Egypt Road, Audubon, PA
        19403.

      


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

      


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

      


      


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

      


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

      


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

      


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

      


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


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      ARTICLE
        II

      CONTRIBUTION
        AND ACQUISITION; PAYMENT OF CONSIDERATION AND CONTINGENT
        CONSIDERATION

      


      2.1   Contribution
        and Acquisition.
        Each of
        the Contributors agrees to contribute, assign and transfer its respective
        Interest to the Acquirors and the Acquirors agree to accept each Contributor’s
        Interest in exchange for the Consideration and in accordance with the other
        terms and conditions set forth herein.

      


      2.2   Intentionally
        Omitted.
        

      


      2.3   Payment
        of the Consideration.
        The
        consideration shall be paid to the Contributor in the following
        manner:

      


      (a)
        The
        Acquirors shall receive a credit against the Consideration in an amount equal
        to
        the Contributors’ closing costs assumed and paid for by the Acquirors pursuant
        to Section 6.4 hereof.

      


      (b)
        The
        Acquirors shall receive a credit against the Consideration in an amount equal
        to
        the outstanding balance (principal, interest, fees and the like), as of the
        date
        of Closing (approximately $7million), of the existing mortgage loan encumbering
        the property as such balance is evidenced by a letter from the lender, which
        loan the Acquirors shall take subject to or, if requested, assume.

      


      (c)
        The
        Acquirors shall issue units of Hersha Hospitality Limited Partnership for
        the
        amount of $1,330,000.00.

      


      (d)
        The
        Acquirors shall pay in the lawful money of the United States for the balance
        of
        the Consideration.

      


      The
        parties agree that the transfer of the assets to the Acquirors pursuant to
        this
        Agreement shall be treated for federal income tax purposes as a contribution
        of
        such assets solely in exchange for partnership interests in the Partnership
        Contributor that qualifies as a tax-free contribution under Section 721 of
        the
        Internal revenue Code of 1986, as amended.

       

       

      ARTICLE
        III

      CONTRIBUTORS’
        REPRESENTATIONS, WARRANTIES AND COVENANTS

      


      To
        induce
        the Acquirors to enter into this Agreement and to acquire the Interests,
        the
        Contributors hereby make the following representations, warranties and covenants
        on a joint and several basis, upon each of which the Contributors acknowledge
        and agree that the Acquirors is entitled to rely and has
        relied:


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      3.1   Organization
        and Power.
        The
        Partnership Contributors are each limited partnerships duly formed, validly
        existing and in good standing under the laws of the Commonwealth of
        Pennsylvania, and the Corporate Contributor is a corporation duly formed,
        validly existing and in good standing under the laws of the Commonwealth
        of
        Pennsylvania and have all requisite powers and all governmental licenses,
        authorizations, consents and approvals necessary to carry on its business
        as now
        conducted, to own, lease and operate its properties, to execute and deliver
        this
        Agreement and any document or instrument required to be executed and delivered
        on behalf of the Contributors hereunder, to perform their obligations under
        this
        Agreement and any such other documents or instruments and to consummate the
        transactions contemplated hereby.

      


      3.2   Authorization,
        No Violations and Notices. 

      


      
        	
              	(a)	
                   The
                  execution, delivery and performance of this Agreement by the Contributors,
                  and the consummation of the transactions contemplated hereby have
                  been
                  duly authorized, adopted and approved by the Contributors, and
                  the
                  partners of the Contributors for those Contributors that are partnerships,
                  and the shareholders of the Corporate Contributor, to the extent
                  required
                  by their organizational documents and applicable law. No other
                  proceedings
                  are necessary to authorize this Agreement and the transactions
                  contemplated hereby. This Agreement has been duly executed by Shree,
                  Kunj,
                  Shanti III, Devi, JHS Trust, NHS Trust, Desfor, and SEL, and is
                  a valid
                  and binding obligation enforceable against them in accordance with
                  its
                  terms.

              


      

      


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

              


      

       

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

              


      

      


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

              


      


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


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

      


      3.4   Interests.
        The
        Interests will be free and clear of all liens and encumbrances on the Closing
        Date and the Contributors have good, merchantable title thereto and the right
        to
        convey same in accordance with the terms of this Agreement. Upon delivery
        of the
        Assignment and Assumption Agreements to the Acquirors at Closing, good valid
        and
        merchantable title to the Interests, free and clear of all liens and
        encumbrances, will pass to the Acquirors.

      


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

      


      3.6   Brokerage
        Commission.
        The
        Contributors have not engaged the services of, nor are they or will they
        or
        Acquirors 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
        Partnership.

      


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

              


      

      


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

              


      

      


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

              


      


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


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

              


      

      


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

              


      

      


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

      


      3.9   Tax
        Matters with respect to Partnership.

      


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

              


      

      


      
        	
              	(b)	
                All
                  taxes, rental taxes or the equivalent, and all interest and penalties
                  due
                  thereon, required to be paid or collected by the Partnership in
                  connection
                  with the operation of the Property as of the Closing Date will
                  have been
                  collected and/or paid to the appropriate governmental authorities,
                  as
                  required or such amounts shall be pro-rated as of the Closing Date.
                  The
                  Partnership shall file, all necessary returns and petitions required
                  to be
                  filed through the Closing Date. The Partnership shall prepare and
                  file all
                  federal and state income tax returns for the tax period ending
                  on the
                  Closing Date, which shall reflect the termination for tax purposes
                  of the
                  Partnership. If requested by the Acquirors, the Contributors shall
                  cause
                  the Partnership to make an election under Section 754 of the Code
                  for the
                  period ending on the Closing
                  Date.

              


      


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      3.10   Contracts
        and Agreements.
        There is
        no loan agreement, guarantee, note, bond, indenture and other debt instrument,
        lease and other contract to which the Partnership is a party or by which
        its
        assets are bound other than Permitted Title Encumbrances, the Leases, and
        the
        Operating Agreements. 

      


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

      


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

      


      3.13   Operating
        Agreements.
        The
        Partnership has performed all of its obligations under each of the Operating
        Agreements and no fact or circumstance has occurred which, by itself or with
        the
        passage of time or the giving of notice or both, would constitute a material
        default under any of the Operating Agreements. The Partnership shall not
        enter
        into any new management agreement, maintenance or repair contract, supply
        contract, lease in which it is lessee or other agreements with respect to
        the
        Property, nor shall the Partnership enter into any agreements modifying the
        Operating Agreements, unless (a) any such agreement or modification will
        not bind the Acquirors or the Property after the date of Closing or (b) the
        Contributors have obtained the Acquirors' prior written consent to such
        agreement or modification, which consent shall not be unreasonably withheld
        or
        delayed. 


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


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

      


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

      


      3.16   Condemnation
        Proceedings; Roadways.
        The
        Partnership has received no written notice of any condemnation or eminent
        domain
        proceeding pending or threatened against the Property or any part thereof.
        The
        Contributors have no actual knowledge of any change or proposed change in
        the
        route, grade or width of, or otherwise affecting, any street or road adjacent
        to
        or serving the Real Property. 

      


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

      


      3.18   Labor
        Disputes and Agreements.
        The
        Partnership currently has no labor disputes pending or, threatened as to
        the
        operation or maintenance of the Property or any part thereof. The Partnership
        is
        not a party to any union or other collective bargaining agreement with employees
        employed in connection with the ownership, operation or maintenance of the
        Property. The Acquirors will not be obligated to give or pay any amount to
        any
        employee of the Partnership, and the Acquirors shall not have any liability
        under any pension or profit sharing plan that the Partnership may have
        established with respect to the Property or their or its employees.



      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      3.19   Financial
        Information.
        To the
        best of the Contributors’ knowledge except as otherwise disclosed in writing to
        the Acquirors prior to the closing, for each of the Partnership’s accounting
        years, when a given year is taken as a whole, all of the Partnership’s financial
        information previously delivered or to be delivered to the Acquirors is and
        shall be correct and complete in all material respects and presents accurately
        the results of the operations of the Property for the periods indicated,
        except
        such statements do not have footnotes or schedules that may otherwise be
        required by GAAP. If requested by the Acquirors, Contributors will forward
        promptly all four-week period ending financial information they receive from
        the
        Partnership. Contributors’ financial information is prepared based on
        information provided by the Partnership based on books and records maintained
        by
        the Partnership in accordance with the Partnership’s accounting system.
        Partnership financial information provided by the Acquirors has been provided
        to
        the Acquirors without any changes or alteration thereto. To the best of
        Contributors’ knowledge, since the date of the last financial statement included
        in the Partnership’s financial information, there has been no material adverse
        change in the financial condition or in the operations of the
        Property.

      


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

      


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


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


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

      


      3.23   Hazardous
        Substances.
        Except
        for matters in Partnership’s or Acquirors' 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 actual 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 Environmental Authority, or
        (3) a basis for liability of the owner of the Property to any Environmental
        Authority 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 Acquirors
        for any Hazardous Substances of which Contributors have no actual
        knowledge.

      


      3.24   Room
        Furnishings.
        All
        public spaces, lobbies, meeting rooms, and each room in the Hotel available
        for
        guest rental are furnished in accordance with Licensor's standards for the
        Hotel
        and room type.

      


      3.25   License.
        The
        license from Residence Inn Carlisle (Marriott International) (the "Licensor")
        with respect to the Hotel (the "License") is, and at Closing will be, valid
        and
        in full force and effect, and Contributors will make good faith efforts not
        to
        be in default with respect thereto (with or without the giving of any required
        notice and/or lapse of time).

      


      3.26   Independent
        Audit.
        Contributors shall provide access by Acquirors' representatives, to all
        financial and other information relating to the Property which would be
        sufficient to enable them to prepare audited financial statements in conformity
        with Regulation S-X of the Securities and Exchange Commission (the "Commission")
        and to enable them to prepare report or disclosure statement for filing with
        the
        Commission. Contributors shall also provide to Acquirors' representatives
        a
        signed representative letter and a hold harmless letter, which would be
        sufficient to enable an independent public accountant to render an opinion
        on
        the financial statements related to the Property.


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


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

      


      3.28   Intentionally
        Omitted.

      


      3.29   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
        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.

      


      3.30   Intentionally
        Omitted.

      


      3.31   Leases.
        True,
        complete copies of the Leases, if any, are attached as Exhibit D hereto.
        The
        Leases are, and will at Closing be, in full force and effect and Contributors,
        is not in default and will make good faith efforts not to be in default with
        respect thereto (with or without the giving of any notice and/or lapse of
        time).
        The Leases are, or will be at Closing, freely assignable by Contributors
        and
        Contributors will have obtained consents all necessary consents of any third
        party.

      


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

      


      3.33   Tax
        Matters with Respect to Contributors.
        The
        Contributors represent and warrant that they (and each of its partners) have
        obtained from its own counsel advice regarding the tax consequences of (i)
        the
        transfer of the Partnership Interest to the Acquirors and the receipt of
        lawful
        money of the United States as consideration therefor, (ii) the Contributors’
admission as partners of the Acquirors, and (iii) any other transaction
        contemplated by this Agreement. The Contributors further represent and warrant
        that they have not relied on the Acquirors or the Acquirors' representatives
        or
        counsel for such advice.


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      3.34   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, the Contributors’
Organizational Documents 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 Contributor. There are
        no
        outstanding agreements (written or oral) pursuant to which the Contributors
        (or
        any predecessor to or representative of the Contributors) have agreed to
        contribute or have granted an option or right of first refusal to acquire
        the
        Property or any part thereof.

      


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

       

       

      ARTICLE
        IV

      ACQUIRORS'
        REPRESENTATIONS, WARRANTIES AND COVENANTS

      


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

      


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


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


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

      


      4.3   Litigation.
        There is
        no action, suit or proceeding, pending or known to be threatened, against
        or
        affecting the Acquirors 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 Acquirors are a party or by which they are bound
        and
        that is to be used in connection with, or is contemplated by, this Agreement,
        (b) could materially and adversely affect the business, financial position
        or results of operations of the Acquirors, (c) could materially and
        adversely affect the ability of the Contributors to perform their obligations
        hereunder, or under any document to be delivered pursuant hereto, (d) could
        create a lien on the Property, any part thereof or any interest therein or
        (e) could adversely affect the Property, any part thereof or any interest
        therein or the use, operation, condition or occupancy thereof.

      


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

      


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

       

       

      ARTICLE
        V

      CONDITIONS
        AND ADDITIONAL COVENANTS

      


      The
        Acquirors' 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 Acquirors, as
        the
        case may be, on or before the date of Closing, all of the documents and other
        information required of Contributors pursuant to Section 6.2.

      


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


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      5.3   Title
        Insurance.
        Good and
        indefeasible fee simple title to the Real Property shall be insurable as
        such by
        the Title Company at or below its regularly scheduled rates subject only
        to
        Permitted Title Exceptions. 

      


      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
        Acquirors.

      


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

      


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

       

       

      ARTICLE
        VI

      CLOSING

      


      6.1   Closing.
        Closing
        shall be held at a location that is mutually acceptable to the parties, on
        or
        before January 10,
        2007.


      


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

      


      (a)   The
        certificate required by Section 5.2.

      


      (b)   The
        Assignment and Assumption Agreements.


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


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

      


      (d)   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.

      


      (e)   The
        FIRPTA Certificates.

      


      (f)   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.

      


      (g)   Certified
        copies of the Contributors’ and the Partnership’s Organizational
        Documents.

      


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

      


      (i)   Valid,
        final and unconditional certificate(s) of occupancy for the Real Property
        and
        Improvements, issued by the appropriate governmental authority.

      


      (j)   The
        written consent of the Licensor to the transfer of the license, if applicable,
        and if so required.

      


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

      


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

      


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

      


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


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


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

       

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

      


      (q)   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.

      


      (r)   All
        keys
        for the Property.

      


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

      


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

      


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

      


      (v)   Complete
        set of "as-built" drawings for the Improvements.

      


      (w)   Such
        agreements, affidavits or other documents as may be required by the Title
        Company in order to issue affirmative mechanics lien coverage in the Owner's
        Title Policy for the Property.

       

      (x)   Any
        other
        document or instrument reasonably requested by the Acquirors or required
        hereby.

      


      6.3   Acquirors's
        Deliveries.
        At
        Closing, the Acquirors shall pay or deliver to the Contributors the
        following:

      


      (a)   The
        Consideration described in Section 2.3.

      


      (b)   The
        Assignment and Assumption Agreements.


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


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

      


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

      


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

      


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

      


      (b)   Real
        estate and personal property taxes.

      


      (c)   Amounts
        under the Operating Agreements. 

      


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

      


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

      


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


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


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

      


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

      


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

      


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

       

       

      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 Acquirors
        promptly after the Contributors learns or receives notice thereof. If all
        or any
        part of the Real Property is, or is to be, so condemned or sold, the Acquirors
        shall have the right to terminate this Agreement pursuant to Section 8.3.
        If the
        Acquirors 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 Acquirors at Closing.

      


      7.2   Risk
        of Loss.
        The risk
        of any loss or damage to the Property prior to the Closing shall remain upon
        the
        Contributors. If any such loss or damage to more than twenty five percent
        (25%)
        of the value of the improvements occurs prior to Closing, the Acquirors shall
        have the right to terminate this Agreement pursuant to Section 8.3.
        If the
        Acquirors 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 Acquirors at Closing.


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      ARTICLE
        VIII

      LIABILITY
        OF ACQUIRORS; INDEMNIFICATION BY CONTRIBUTORS;

      TERMINATION
        RIGHTS

      


      8.1   Liability
        of Acquirors.
        Except
        for any obligation expressly assumed or agreed to be assumed by the Acquirors
        hereunder and in the Assignment and Assumption Agreement, the Acquirors do
        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 Acquirors harmless from and against
        any and all claims, costs, penalties, damages, losses, liabilities and expenses
        (including reasonable attorneys' fees), subject to Section
        9.11
        that may
        at any time be incurred by the Acquirors, whether before or after Closing,
        as a
        result of any breach by the Contributors of any of their representations,
        warranties, covenants or obligations set forth herein or in any other document
        delivered by the Contributors pursuant hereto.

      


      8.3   Termination
        by Acquirors.
        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 Acquirors to
        terminate this Agreement and their obligations hereunder, and the Contributors
        fails to cure any such matter within ten business days after notice thereof
        from
        the Acquirors, the Acquirors, at their option and as their sole remedy, shall
        elect either (a) to terminate this Agreement and all other rights and
        obligations of the Contributors and the Acquirors hereunder shall terminate
        immediately, or (b) to waive their right to terminate and, instead, to
        proceed to Closing. 

      


      8.4   Termination
        by Contributors.
        If,
        prior to Closing, the Acquirors default in performing any of their obligations
        under this Agreement (including their obligation to purchase the Property),
        and
        the Acquirors fail to cure any such default within ten business days after
        notice thereof from the Contributors, then the Contributors’ sole remedy for
        such default shall be to terminate this Agreement. 

       

       

      ARTICLE
        IX

      MISCELLANEOUS
        PROVISIONS

      


      9.    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
        Acquirors may assign their rights hereunder to any affiliate of Acquirors
        without the consent of the Contributors. No such assignment shall relieve
        the
        Acquirors of any of their obligations and liabilities hereunder.

      


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

      


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

      


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

      


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

      


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

      


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

      


      9.9   Notices.
        All
        notices, requests, demands and other communications hereunder shall be in
        writing and shall be delivered by hand, transmitted by facsimile transmission,
        sent prepaid by Federal Express (or a comparable overnight delivery service)
        or
        sent by the United States mail, certified, postage prepaid, return receipt
        requested, at the addresses and with such copies as designated below. Any
        notice, request, demand or other communication delivered or sent in the manner
        aforesaid shall be deemed given or made (as the case may be) when actually
        delivered to the intended recipient.


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        	
                If
                  to the Contributors:

              	
                Kiran
                  P. Patel

              


      

      
        	 	
                c/o
                  Hersha Enterprises, Ltd.

              


      

      
        	 	
                44
                  Hersha Drive

              


      

      
        	 	
                Harrisburg,
                  PA 17102

              


      

      
        	 	
                Phone:
                  (717) 657-3965

              


      

      
        	 	
                Fax:
                  (717) 412-5518

              


      

      


      
        	
                With
                  a copy to:

              	
                Lok
                  Mohapatra, Esquire

              


      

      
        	 	
                Franklin
                  Firm, LLP

              


      

      
        	 	
                Penn
                  Mutual Towers

              


      

      
        	 	
                510
                  Walnut Street, 9th
                  floor

              


      

      
        	 	
                Philadelphia,
                  PA 19106

              


      

      
        	 	
                Phone:(215)
                  238-1045

              


      

      
        	 	
                Fax:(267)
                  238-1874

              


      

      


      
        	
                If
                  to the Acquirors:

              	
                Ashish
                  R. Parikh

              


      

      
        	 	
                Hersha
                  Hospitality Limited Partnership

              


      

      
        	 	
                44
                  Hersha Drive

              


      

      
        	 	
                Harrisburg,
                  PA 17102

              


      

      
        	 	
                Phone:
                  (717) 979-4217

              


      

      
        	 	
                Fax:
                  (717) 412-5518

              


      

       

      
        	
                With
                  a copy to:

              	
                Lok
                  Mohapatra, Esquire 

              


      

      
        	 	
                Franklin
                  Firm, LLP

              


      

      
        	 	
                Penn
                  Mutual Towers

              


      

      
        	 	
                510
                  Walnut Street, 9th
                  floor

              


      

      
        	 	
                Philadelphia,
                  PA 19106

              


      

      
        	 	
                Phone:
                  (215) 238-1045

              


      

      
        	 	
                Fax:
                  (267) 238-1874

              


      

      


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

      


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


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      9.11   Survival.
        All of
        the representations, warranties, covenants and agreements of the Contributors
        and the Acquirors made in, or pursuant to, this Agreement, including the
        confidentiality provision of Article 9.15 of this Agreement, shall survive
        for a
        period of twelve (12) months following Closing and shall not merge into any
        document or instrument executed and delivered in connection
        herewith.

      


      9.12   Further
        Assurances.
        The
        Contributors and the Acquirors 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 Acquirors specifically established
        hereby.

      


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

      


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

      


      


      [SIGNATURES
        ON NEXT PAGE]


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


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

      


      


      
        	 	
                CONTRIBUTORS:

              	 	 
	 	 	 	 	 
	 	
                SHREE
                  ASSOCIATES, a Pennsylvania limited partnership

              	 
	 	 	 	 	 
	 	
                By:
                  

              	
                 

              	 	 
	 	 	
                Hasu
                  P. Shah, General Partner

              	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	
                KUNJ
                  ASSOCIATES a Pennsylvania limited partnership

              	 
	 	 	 	 	 
	 	 	 	 	 
	 	
                By:
                  

              	
                 

              	 	 
	 	 	
                Kiran
                  P. Patel, General Partner

              	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	
                SHANTI
                  III ASSOCIATES, a Pennsylvania limited partnership

              	 
	 	 	 	 	 
	 	 	 	 	 
	 	
                By:
                  

              	
                 

              	 	 
	 	 	
                K.
                  D. Patel, General Partner

              	 	 
	 	 	 	 	 
	 	
                DEVI
                  ASSOCIATES, a Pennsylvania limited partnership

              	 
	 	 	 	 	 
	 	 	 	 	 
	 	
                By:
                  

              	
                 

              	 	 
	 	 	
                Bharat
                  C. Mehta, General Partner

              	 	 
	 	 	 	 	 
	 	
                TRUST
                  FBO JAY H. SHAH UNDER THE HASU AND HERSHA SHAH 2004 TRUST

              	 
	 	 	 	 	 
	 	 	 	 	 
	 	
                By:
                  

              	
                 

              	 	 
	 	 	
                Jay
                  H. Shah, Trustee

              	 	 


      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        	 	TRUST
                FBO NEIL H. SHAH UNDER THE HASU AND HERSHA SHAH 2004 TRUST	 
	 	 	 	 	 
	 	
                By:

              	
                 

              	 	 
	 	 	
                Neil
                  H. Shah, Trustee

              	 	 
	 	 	
                DAVID
                  L. DESFOR, individually

              	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	
                By:

              	
                 

              	 	 
	 	 	
                David
                  L. Desfor

              	 	 
	 	 	 	 	 
	 	
                SHREENATHJI
                  ENTERPRISES, LTD., a Pennsylvania corporation

              	 
	 	 	 	 	 
	 	 	 	 	 
	 	
                By:
                  

              	
                 

              	 	 
	 	 	
                Hasu
                  P. Shah, President

              	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	
                ACQUIRORS:

              	 	 
	 	 	 	 	 
	 	
                HERSHA
                  HOSPITALITY LIMITED PARTNERSHIP, a Virginia limited
                  partnership

              	 
	 	 	 	 	 
	 	 	 	 	 
	 	
                By:

              	
                HERSHA
                  HOSPITALITY TRUST, a Maryland business trust, its sole general
                  partner

              	 
	 	 	 	 	 
	 	 	 	 	 
	 	
                By:
                  

              	
                 

              	 	 
	 	
                Name:

              	 	 	 
	 	
                Title:

              	 	 	 


      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        	 	
                HERSHA
                  HOSPITALITY, LLC, a Virginia limited liability company

              	 
	 	 	 	 	 
	 	 	 	 	 
	 	
                By

              	
                HERSHA
                  HOSPITALITY LIMITED PARTNERSHIP, a Virginia limited partnership,
                  its sole
                  member

              	 
	 	 	 	 	 
	 	 	 	 	 
	 	
                By:
                  

              	
                HERSHA
                  HOSPITALITY TRUST, a Maryland business trust, its sole general
                  partner

              	 
	 	 	 	 	 
	 	
                By:
                  

              	
                 

              	 	 
	 	
                Name:

              	 	 	 
	 	
                Title: