CONTRIBUTION AGREEMENT

                           dated as of March 8, 2000
                                     between

            SHREE ASSOCIATES, JSK II ASSOCIATES, SHREEJI ASSOCIATES,
            KUNJ ASSOCIATES, SHANTI III ASSOCIATES, DEVI ASSOCIATES,
        NEIL H. SHAH, DAVID L. DESFOR, AND SHREENATHJI ENTERPRISES, LTD.



                                as Contributors,

                                       and

                     HERSHA HOSPITALITY LIMITED PARTNERSHIP,
                         a Virginia limited partnership,

                                   as Acquiror




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                             CONTRIBUTION AGREEMENT

              THIS CONTRIBUTION AGREEMENT, dated as of the 8th  day of March,
2000, between SHREE ASSOCIATES ("Shree"),  JSK II ASSOCIATES ("JSK II"), SHREEJI
ASSOCIATES ("Shreeji"), KUNJ ASSOCIATES ("Kunj"), SHANTI III ASSOCIATES ("Shanti
III"), DEVI ASSOCIATES ("Devi") all Pennsylvania limited  partnerships,  NEIL H.
SHAH ("Shah"),  DAVID L. DESFOR ("Desfor"),  AND SHREENATHJI  ENTERPRISES,  LTD.
("SEL"), a Pennsylvania  corporation  (collectively,  the  "Contributors"),  and
HERSHA  HOSPITALITY  LIMITED  PARTNERSHIP,  a Virginia limited  partnership (the
"Acquiror"), 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.

             "Shree Assignment and Assumption Agreement" shall mean that certain
assignment  and  assumption  agreement  whereby  Shree  assigns and the Acquiror
assumes the Shree Interest.

            "JSK II Assignment and Assumption Agreement" shall mean that 1

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certain  assignment  and  assumption  agreement  whereby  JSK II assigns and the
Acquiror assumes the JSK II Interest.

             "Shreeji  Assignment  and  Assumption  Agreement"  shall  mean that
certain  assignment and assumption  agreement  whereby  Shreeji  assigns and the
Acquiror assumes the Shreeji Interest.

             "Kunj Assignment and Assumption  Agreement" shall mean that certain
assignment  and  assumption  agreement  whereby  Kunj  assigns and the  Acquiror
assumes the Kunj Interest.

             "Shanti III Assignment and  Assumption  Agreement"  shall mean that
certain  assignment and assumption  agreement whereby Shanti III assigns and the
Acquiror assumes the Shanti Interest.

             "Devi Assignment and Assumption  Agreement" shall mean that certain
assignment  and  assumption  agreement  whereby  Devi  assigns and the  Acquiror
assumes the Devi Interest.

             "Shah Assignment and Assumption  Agreement" shall mean that certain
assignment  and  assumption  agreement  whereby  Shah  assigns and the  Acquiror
assumes the Shah Interest.

             "Desfor  Assignment  and  Assumption  Agreement"  shall  mean  that
certain  assignment  and  assumption  agreement  whereby  Desfor assigns and the
Acquiror assumes the Desfor Interest.

             "SEL Assignment and Assumption  Agreement"  shall mean that certain
assignment and assumption agreement whereby SEL assigns and the Acquiror assumes
the SEL Interest.

             "Assignment  and  Assumption   Agreements"  shall  mean  the  Shree
Assignment  and  Assumption   Agreement  ,  JSK  II  Assignment  and  Assumption
Agreement,  the Shreeji Assignment and Assumption Agreement, the Kunj Assignment
and Assumption  Agreement,  the Shanti III Assignment and Assumption  Agreement,
the Devi Assignment and Assumption Agreement, the Shah Assignment and Assumption
Agreement,   the  Desfor  Assignment  and  Assumption  Agreement,  and  the  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.

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             "Consideration" shall mean $1.8 million 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 Sentinel Agency, 2146 North Second
Street, Harrisburg, Pennsylvania, 17110, Telephone: (717) 234-2666, Fax: (717)
234-8198.

             "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 Acquiror.

             "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.

                  "Shree  Interest" shall mean all right,  title and interest of
Shree in the Partnership, consisting of a 5% limited partnership interest in the
Partnership.

                  "JSK II Interest" shall mean all right,  title and interest of
JSK II in the Partnership,  consisting of a 20% limited partnership  interest in
the Partnership.

                  "Shreeji Interest" shall mean all right, title and interest of
Shreeji in the Partnership,  consisting of a 12% limited partnership interest in
the Partnership.

                  "Kunj  Interest"  shall mean all right,  title and interest of
Kunj in the Partnership, consisting of a 12% limited partnership interest in the
Partnership.

                  "Shanti III Interest" shall mean all right, title and interest
of  Shanti  III in the  Partnership,  consisting  of a 20%  limited  partnership
interest in the Partnership.

                  "Devi  Interest"  shall mean all right,  title and interest of
Devi in the Partnership,  consisting of a 6% limited partnership interest in the
Partnership.

                  "Shah  Interest"  shall mean all right,  title and interest of
Shah in the Partnership, consisting of a 20% limited partnership interest in the
Partnership.

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<PAGE>

                  "Desfor Interest" shall mean all right,  title and interest of
Desfor in the Partnership,  consisting of a 4% limited  partnership  interest in
the Partnership.

                  "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
"Comfort 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 Acquiror  elects not to acquire,
(b) the Contributors' cash on hand, in bank accounts and invested with financial
institutions and (c) accounts receivable except for the above described share of
the Tray Ledger.

                  "Interests"  shall  mean  the  Shree  Interest,   the  JSK  II
Interest,  the Shreeji Interest, the Kunj Interest, the Shanti III Interest, the
Devi Interest, the Shah Interest, the Desfor Interest and the 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 HCR 2-Box 11, Deep Creek Drive, McHenry,  Maryland, more commonly known
as the Deep Creek  Comfort  Inn,  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 as
Exhibit D attached hereto.

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

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<PAGE>

                  "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
agreement  and  certificate  of  limited  partnership  of  each  of the  limited
partnership  Contributors,  true and correct copies of which are attached hereto
as Exhibits F and G and Articles of  Incorporation  and Bylaws of SEL,  true and
correct copies of which are attached hereto as Exhibits O and P.

                  "Shree's  Organizational  Documents"  shall  mean the  current
partnership  agreement and certificate of limited partnership of Shree, true and
correct copies of which are attached hereto as Exhibits F and G.

                  "JSK II's  Organizational  Documents"  shall mean the  current
partnership agreement and certificate of limited partnership of JSK II, true and
correct copies of which are attached hereto as Exhibits F and G.

                  "Shreeji's  Organizational  Documents"  shall mean the current
partnership  agreement and certificate of limited  partnership of Shreeji,  true
and correct copies of which are attached hereto as Exhibits F and G.

                  "Kunj's  Organizational  Documents"  shall  mean  the  current
partnership  agreement and certificate of limited  partnership of Kunj, true and
correct copies of which are attached hereto as Exhibits F and G.

                   "Shanti  III's  Organizational   Documents"  shall  mean  the
current  partnership  agreement and certificate of limited partnership of Shanti
III, true and correct copies of which are attached hereto as Exhibits F and G.

                  "Devi's  Organizational  Documents"  shall  mean  the  current
partnership  agreement and certificate of limited  partnership of Devi, true and
correct copies of which are attached hereto as Exhibits F and G.

                  "SEL's  Organizational   Documents"  shall  mean  the  current
Articles of  Incorporation  and Bylaws of SEL, true and correct  copies of which
are attached hereto as Exhibits O and P.

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

                                       5

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                  "Partnership"  shall  mean  1544  Associates,  a  Pennsylvania
limited  partnership  that owns as its sole assets  land and hotel  improvements
situate in McHenry, Garrett County, Maryland.

                  "Partnership  Units" shall mean the limited  partnership units
of Hersha Hospitality Limited Partnership.

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

                  "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  Acquiror  agrees  that,  all  Inventory  shall be
conveyed to the Acquiror's property manager.

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

                   "Title  Company"  shall mean  Sentinel  Agency,  2146 North
Second  Street, Harrisburg, Pennsylvania, 17110, Telephone: (717) 234-2666,
Fax: (717) 234-8198.

                  "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.

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<PAGE>

                  (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 Interest to the Acquiror and the Acquiror
agrees to accept each  Contributor's  Interest in exchange for the Consideration
and the  Contingent  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 Acquiror shall receive a credit against the Consideration in an
amount  equal to the  Contributor's  closing  costs  assumed and paid for by the
Acquiror pursuant to Section 6.4 hereof.

         (b) The Acquiror 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,  of the existing mortgage loan encumbering the
property as such balance is  evidenced  by a letter from the lender,  which loan
the Acquiror shall take subject to or, if requested, assume.

         (c) The Acquiror 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,  of the  Contributor's  loan to  Shreenathji
Enterprises,  Ltd.  as such  balance is  evidenced  by a letter from the lender,
which loan the Acquiror shall assume.

         (d)  The  Acquiror  shall  pay the  balance  of the  Consideration,  as
adjusted by the prorations  pursuant to Section 6.5 hereof, in the form of units
of  Partnership  Units or in the  lawful  money of the  United  States or in any
combination thereof as acceptable to the Contributors.

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<PAGE>

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

         2.4.  Determination  of Number of  Partnership  Units.  For purposes of
determining  the number of Partnership  Units to be delivered by the Acquiror at
the  Closing,  each  Partnership  Unit shall be deemed to have a value  equal to
$6.00. No fractional Partnership Units will be issued at Closing; in lieu of any
such fraction, the value shall be rounded up to a whole share value.

         2.5  Contributors'  Distribution of Partnership  Units. On the Closing
Date, the Partnership Units shall be distributed among the Contributors, as set
forth on Exhibit K attached  hereto , in the amount  specified  on Exhibit K. On
the date hereof, Contributors shall deliver or cause to be delivered to Acquiror
an Investor Questionnaire and Agreement in the form attached hereto as Exhibit F
(a "Questionnaire"), completed and executed by each of the Contributors. On the
Closing  Date,  Acquiror  shall  issue  certificates   reflecting  each  of  the
Contributors ownership of the Partnership Units. The certificates evidencing the
Partnership  Units  will  bear  appropriate  legends  indicating  (i)  that  the
Partnership  Units have not been registered under the Securities Act of 1933, as
amended ("Securities Act"), and (ii) that the Acquiror's  Partnership  Agreement
restricts  the  transfer of  Partnership  Units.  The  Acquiror  shall assume no
responsibility  for any allocation of the consideration,  including  Partnership
Units, to any of the Contributors' partners. Contributors agree to hold Acquiror
and its affiliates harmless and to indemnify Acquiror and its affiliates for all
costs,  claims,  damages and expenses,  including  reasonable  attorney's  fees,
incurred  by Acquiror  in  connection  with such  allocations.  Upon  receipt of
Partnership Units, the Acquiror's  Partnership Agreement shall be executed by or
on behalf of each of the Contributors and the Contributors  shall become limited
partners of Acquiror and agree to be bound by the Partnership Agreement.

         2.6      Intentionally Omitted.

         2.7      Intentionally Omitted.

         2.8 Redemption.  The Partnership Units may be redeemed upon delivery of
a  notice  ("Redemption  Notice")  from the  Contributors  , for  common  shares
("Common  Shares")  of  beneficial  interest  in Hersha  Hospitality  Trust (the
"REIT")  or  for  cash,  in  accordance  with  the  Hersha  Hospitality  Limited
Partnership Agreement, attached hereto as Exhibit M, and incorporated herein.

         2.9      Registration of Common Shares.

                  The  Contributors  acknowledge that the issuance of the Common
Shares  issuable upon  redemption of the  Partnership  Units shall not have been
registered  under the  applicable  provisions of the  Securities  Act, as of the
Closing  Date.  The REIT shall have the Common Shares  issuable upon  redemption
registered  in  accordance  with  the  Hersha  Hospitality  Limited  Partnership
Agreement attached hereto as Exhibit M and incorporated herein.


                                       8

<PAGE>

         2.10       Consideration Contingency.

         The Contributors  shall value the Hotel on December 31, 2001. The value
of the Hotel  shall be computed  by  applying a 12%  capitalization  rate to the
audited  trailing 12 months net operating  income,  adjusted for a 2% of revenue
management fee and a 4% of revenue furniture, fixture and equipment reserve.

         If the then current value of the Hotel exceeds the  consideration  paid
by Acquiror hereunder,  the Acquiror will issue additional  Partnership Units at
$6.00 per Partnership Unit or the lawful money of the United States equal to the
difference  between the then current value and the consideration  paid hereunder
and all distributions paid on those units since Closing Date.

         If the then current  value of the Hotel is less than the  Consideration
paid by the Acquiror  hereunder,  the  Contributors  will return to the Acquirer
Partnership  Units at $6.00  per  Partnership  Unit or the  lawful  money of the
United  States equal to the  difference  between the then  current  value of the
Hotel and the Consideration  paid hereunder and all distributions  paid on those
units since the Closing Date.

                                   ARTICLE III
             CONTRIBUTORS' REPRESENTATIONS, WARRANTIES AND COVENANTS

         To induce the Acquiror 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 Acquiror is entitled to rely and has
relied:

         3.1 Organization  and Power. The Contributors are limited  partnerships
duly  formed,  validly  existing  and in good  standing  under  the  laws of the
Commonwealth of Pennsylvania, a corporation duly formed, validly existing and in
good standing under the laws of the Commonwealth of Pennsylvania or individuals,
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   partners  of  the   Contributors   for  those
               Contributors  that are  partnerships  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, JSK II, Shreeji, Kunj, Shanti III, Devi, Shah,

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<PAGE>

               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
Contribtuors' 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
Acquiror at Closing,  good valid and merchantable  title to the Interests,  free
and clear of all liens and encumbrances, will pass to the Acquiror.

        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 Acquiror  become  liable to, any real
estate agent, broker,  finder or any other person or entity for any brokerage or

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<PAGE>

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.

                                       11

<PAGE>


         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  Acquiror,  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 Acquiror or the Property after the


                                       12

<PAGE>

date of Closing or (b) the  Contributors  have  obtained  the  Acquiror's  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 Acquiror,  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 Acquiror 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

                                       13

<PAGE>

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 Acquiror will not
be obligated to give or pay any amount to any employee of the  Partnership,  and
the Acquiror  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 Acquiror  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  Acquiror  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
Acquiror,  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 Acquiror has been provided to the Acquiror 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  Acquiror's
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

                                       14

<PAGE>

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     Intentionally Omitted.

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

         3.24  Hazardous  Substances.  Except for  matters in  Partnership's  or
Acquiror's  audits,  Contributors have no knowledge:  (a) of the presence of any
"Hazardous  Substances"  (as  defined  below) on the  Property,  or any  portion
thereof, or, (b) of any spills, releases,  discharges,  or disposal of Hazardous
Substances  that  have  occurred  or are  presently  occurring  on or  onto  the
Property, or any portion thereof, or (c) of the presence of any PCB transformers
serving,  or stored on, the Property,  or any portion thereof,  and Contributors
have no 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 Acquiror for any Hazardous  Substances of which  Contributors  have no actual
knowledge.

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

         3.26  License.  The  license  from  Choice  Hotels  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).

         3.27 Independent Audit. Contributors shall provide access by Acquiror's
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  Acquiror's

                                       15
<PAGE>

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.

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

          3.29 Intentionally Omitted.

          3.30  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.

         3.31  Noncompetition.  If Contributors develop or acquire other lodging
facilities, not owned at the time of the execution of this Agreement,  within 15
miles of any facility  owned or to be owned by the  Acquiror,  the  Contributors
shall give the  Acquiror the option to purchase the facility for a period of two
years following the opening or acquisition of such facility.

         3.32 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  all necessary consents
of any third party.

         3.33 Securities Law Matters. Contributors 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 Acquiror's 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.

         3.34  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  Acquiror and the receipt of  Partnership  Units or

                                       16
<PAGE>

lawful  money  of  the  United  States  as  consideration   therefor,  (ii)  the
Contributors'  admission  as  partners  of the  Acquiror,  and  (iii)  any other
transaction  contemplated by this Agreement.  The Contributors further represent
and  warrant  that  they  have not  relied  on the  Acquiror  or the  Acquiror's
representatives or counsel for such advice.

         3.35   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
Acquiror and may be waived in whole or in part, by the Acquiror,  but only by an
instrument  in writing  signed by the  Acquiror.  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 Acquiror shall
be deemed to terminate the effect of any such  representations,  warranties  and
covenants,  it being  understood that the Acquiror has the right to rely thereon
and that each such representation,  warranty and covenant constitutes a material
inducement  to  the  Acquiror  to  execute  this  Agreement  and  to  close  the
transaction   contemplated   hereby  and  to  pay  the   Consideration   to  the
Contributors.   Acquiror   acknowledges   and  agrees   that,   except  for  the
representations and warranties expressly set forth herein, Acquiror 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
              ACQUIROR'S REPRESENTATIONS, WARRANTIES AND COVENANTS

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

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

                                       17

<PAGE>

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

         4.3  Litigation.  There is no action,  suit or  proceeding,  pending or
known to be threatened, against or affecting the Acquiror 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 Acquiror is a party or by which it is
bound and that is to be used in  connection  with, or is  contemplated  by, this
Agreement,  (b) could  materially and adversely  affect the business,  financial
position or results of  operations  of the Acquiror,  (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
Acquiror.

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


                                    ARTICLE V
                       CONDITIONS AND ADDITIONAL COVENANTS

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

          5.1 Contributors' Deliveries. The Contributors shall have delivered to
the Escrow Agent or the  Acquiror,  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 Acquiror at Closing a certificate to the foregoing
effect.

                                       18
<PAGE>

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

         5.4      Intentionally Omitted.

         5.5  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 Acquiror.

         5.6 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.

         5.7      Intentionally Omitted.

         5.8 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.

         5.9      Intentionally Omitted.


                                   ARTICLE VI
                                     CLOSING

         6.1  Closing.  Closing  shall be held at a location  that is  mutually
acceptable to the parties, on or before March 8, 2000.

         6.2  Contributors'  Deliveries.  At  Closing,  the  Contributors  shall
deliver to Acquiror 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.

                                       19
<PAGE>

                    (d) Such agreements, affidavits or other documents as may be
required by the Title  Company to issue the Owner's  Title Policy with affirma-
tive 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 Contri-
butors  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
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 Acquiror 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 Acquiror 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
Acquiror  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.

                                       20
<PAGE>

                    (p) A  complete  list  of  all  advance  room  reservations,
functions  and the like,  in  reasonable  detail so as to enable the Acquiror 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) Intentionally Omitted

                    (s) All keys for the Property.

                    (t)  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.

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

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

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

                    (x) 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.

                    (y) a  completed  version  of  the  Questionnaire  from  the
Contributors and each Transferee.

                    (z) Any other document or instrument reasonably requested by
the Acquiror or required hereby.

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

                    (a) The Consideration described in Section 2.3.

                    (b) The Assignment and Assumption Agreements.

                    (c) The certificates described in Section 2.5 evidencing the
Transferees  ownership  of  the  Partnership  Units  and  the  admission  of the
Transferees as limited partners in the Acquiror.

                                       21
<PAGE>

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

         6.4 Closing Costs.  The Acquiror 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 Acquiror.  The Acquiror shall pay reasonable fees for the preparation of the
documents to be delivered by the Contributor  hereunder.  Contributor  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 Acquiror  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 Acquiror.  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 Acquiror 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  Acquiror.  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 Acquiror
elects to employ.

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


                                       22
<PAGE>

                   (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 Acquiror 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.

         Acquiror  shall not be obligated to collect any accounts  receivable or
revenues  accrued  prior to the Closing Date for  Contributors,  but if Acquiror
collects 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  Acquiror  with  respect  to the
Property  after the date of Closing  shall be promptly  allocated  in the manner
described herein and the parties shall promptly pay or reimburse any amount due.
The  Contributors  shall  pay at  Closing  all  special  assessments  and  taxes
applicable to the Property.

         The  certificates   evidencing  the  Contributors'   ownership  of  the
Partnership  Units will be dated as of the Closing  Date,  and the  Contributors
will be  entitled  to any  dividends  accruing  thereon on and after the Closing
Date.


                                   ARTICLE VII
                           CONDEMNATION; RISK OF LOSS

         7.1  Condemnation.  In the event of any  actual or  threatened  taking,
pursuant  to the power of  eminent  domain,  of all or any  portion  of the Real
Property,  or any proposed sale in lieu  thereof,  the  Contributors  shall give
written notice thereof to the Acquiror 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 Acquiror  shall have the right to terminate  this
Agreement  pursuant to Section 8.3. If the Acquiror 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 Acquiror 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 Acquiror shall have the right to terminate this Agreement
pursuant to Section 8.3. If the Acquiror 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 Acquiror at Closing.


                                       23
<PAGE>


                                  ARTICLE VIII
             LIABILITY OF ACQUIROR; INDEMNIFICATION BY CONTRIBUTORS;
                               TERMINATION RIGHTS

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

         8.2   Indemnification   by  Contributors.   The   Contributors   hereby
indemnifies and holds the Acquiror 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 Acquiror,  whether before or after  Closing,  as a result of any
breach by the Contributors of any of its representations,  warranties, covenants
or  obligations  set  forth  herein or in any other  document  delivered  by the
Contributors pursuant hereto.

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

         8.4  Termination by  Contributors.  If, prior to Closing,  the Acquiror
defaults in performing any of its  obligations  under this Agreement  (including
its  obligation to purchase the  Property),  and the Acquiror  fails 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

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

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

         9.3 Successors and Assigns.  The benefits and burdens of this Agreement
shall inure to the benefit of and bind the  Acquiror  and the  Contributors  and
their respective party hereto.
                                       24
<PAGE>

         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.


                                       25
<PAGE>

If to the Contributors:             Kiran P. Patel
                                    Hersha Enterprises, Ltd.
                                    148 Sheraton Drive, Box A
                                    New Cumberland, PA 17070
                                    Phone:(717) 770-2405
                                    Fax:(717)  774-7383

With a copy to:                     Jay H. Shah, Esquire
                                    The Shah Law Firm
                                    The Lafayette Building
                                    437 Chestnut Street, Suite 615
                                    Philadelphia. PA 19106
                                    Phone:(215) 238-1045
                                    Fax:(215) 238-0157

If to the Acquiror:
                                    Hasu P. Shah
                                    Hersha Hospitality Trust
                                    148 Sheraton Drive, Box A
                                    New Cumberland, PA 17070
                                    Phone:(717) 770-2405
                                    Fax:(717)  774-7383

With a copy to:                     Jay H. Shah, Esquire
                                    The Shah Law Firm
                                    The Lafayette Building
                                    437 Chestnut Street, Suite 615
                                    Philadelphia, PA 19106
                                    Phone: (215) 238-1045
                                    Fax: (215) 238-0157

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 Acquiror made in, or pursuant to, this
Agreement,  including  the  confidentiality  provision  of Article  9.15 of this
Agreement,  shall  survive for a period of  twenty-four  (24)  months  following
Closing  and  shall not merge  into any  document  or  instrument  executed  and
delivered in connection herewith.

                                       26
<PAGE>

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

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

                                       27
<PAGE>



          9.15 Confidentiality.  Except as hereinafter provided,  from and after
the execution of this Agreement,  the Acquiror 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 Acquiror 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 Acquiror 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
Acquiror'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.

         IN WITNESS WHEREOF,  the Contributors and the Acquiror 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

                      JSK II ASSOCIATES, a Pennsylvania limited partnership

                      By:  _______________________
                              Jay H. Shah, General Partner


                      SHREEJI ASSOCIATES, a Pennsylvania limited partnership

                      By: ______________________________
                             Rajendra O. Gandhi, General Partner


                                       28
<PAGE>

                      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

                      NEIL H. SHAH, individually

                      By: ______________________
                             Neil H. Shah

                      DAVID L. DESFOR, individually

                      By: _______________________
                             David L. Desfor


                      SHREENATHJI ENTERPRISES, LTD., a Pennsylvania
                      corporation

                      By: _____________________
                            Kiran P. Patel, Secretary

                      ACQUIROR:

                      HERSHA HOSPITALITY LIMITED PARTNERSHIP, a Virginia
                      limited partnership

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


                               By:
                                  ------------------------------------
                                        Hasu P. Shah, President

                                       29

<PAGE>







                                    EXHIBIT A

                                LEGAL DESCRIPTION





<PAGE>



                                    EXHIBIT B

                              EMPLOYMENT AGREEMENTS





<PAGE>



                                    EXHIBIT C

                               INSURANCE POLICIES






<PAGE>



                                    EXHIBIT D

                                     LEASES




<PAGE>



                                    EXHIBIT E

                              OPERATING AGREEMENTS




<PAGE>



                                    EXHIBIT F

                       CONTRIBUTORS' PARTNERSHIP AGREEMENT


<PAGE>



                                    EXHIBIT G

                CONTRIBUTORS' CERTIFICATE OF LIMITED PARTNERSHIP


<PAGE>



                                    EXHIBIT H

                     CONTRIBUTORS' WARRANTIES AND GUARANTIES






<PAGE>



                                    EXHIBIT I

                               LITIGATION SCHEDULE



                                      NONE





<PAGE>



                                    EXHIBIT J

                           ALLOCATION OF CONSIDERATION



Hotel:
         Land                                          $____________

         Tangible Personal Property                     ____________

         Intangible Personal Property                   ____________
                                                        ____________

TOTAL                                                  $
                                                        ------------
                                                        ------------






<PAGE>



                                    EXHIBIT K


Transferee                                         Number of Partnership Units
----------                                         ---------------------------




<PAGE>



                                    EXHIBIT L

                             INVESTOR QUESTIONNAIRE

                                  AND AGREEMENT


<PAGE>



                      AGREEMENT AND INVESTOR QUESTIONNAIRE


         THIS AGREEMENT AND INVESTOR  QUESTIONNAIRE is dated as of         ,
2000 by and  between         (the "Investor") and Hersha Hospitality Limited
Partnership, a Virginia limited partnership (the "Partnership").

          WHEREAS,   the  Investor  has  entered  into  a  certain  Contribution
Agreement dated as of          , 2000 (the "Contribution  Agreement"),  pursuant
to  which  the    Investor is  contributing  certain  assets  described  in the
Contribution Agreement (the   "Assets")  in  exchanges for Limited Partner Units
("Units") issued by the Partnership; and

         WHEREAS,  in order to comply with certain  exemptions from registration
under the  Securities Act of 1933, as amended (the  "Securities  Act") and state
securities laws, the Partnership must determine  whether the Investor  qualifies
as an "accredited  investor" (as defined in Regulation D promulgated pursuant to
the Securities Act);

         NOW, THEREFORE, in consideration of the foregoing,  and intending to be
legally bound hereby, the Investor and the Partnership agree as follows:

         1.       Representations and Agreements of the Investor

         (a)  The  Investor   acknowledges,   represents  and  warrants  to  the
Partnership  that the  Investor,  pursuant to and by reason of the knowledge and
experience  of the Investor in business and  financial  matters in general,  and
investments  in the same type of  security  or issuer as the  securities  of the
Company in particular (which  experience,  education and business  background is
summarized in the responses to the questions set forth below),  the  undersigned
is capable of evaluating and has in fact evaluated an investment in the Units.

         (b)  The  Investor  acknowledges  that  he,  she  or  it  has  had  the
opportunity to request,  has received and reviewed,  and fully  understands  any
information  the Investor deems  necessary or appropriate to evaluate the merits
and risks of the exchange of the Assets for the Units.  The undersigned  further
acknowledges that he, she or it has had sufficient  opportunity to ask questions
of, and receive answers from,  representatives of the Partnership concerning the
terms of the exchange pursuant to the Contribution Agreement and the information
received concerning the Partnership.

         (c) To  the  best  of the  knowledge  of  the  undersigned,  all of the
statements made by the Investor in the Investor Questionnaire attached hereto as
Exhibit A are true, complete and accurate.

         (d) The Investor hereby  acknowledges  and  understands  that the Units
will be issued pursuant to an exemption from  registration  under the Securities
Act and the securities laws of the state where the Investor maintains his or her
domicile (if the Investor is an individual)  or principal  place of business (if

                                      -42-
<PAGE>

the Investor is not a natural person),  and that the Units may not be offered or
sold unless first  registered  under the Securities Act and any applicable state
securities laws or unless such offer or sale is exempt from such registration.

         (e) The Investor is acquiring the Units for investment purposes, has no
current intention to sell the Units, and will not sell the Units in violation of
applicable state and federal securities laws.

         (f) The  Investor  has full power and  authority to execute and deliver
this Investor  Questionnaire and Agreement,  the Investor  Questionnaire and the
Power of Attorney and to carry out the  transactions  contemplated  hereby,  and
this  Agreement,  the Investor  Questionnaire  Power of Attorney  constitute the
valid and binding obligations of the Investor,  enforceable against the Investor
in accordance with their terms.

         IN WITNESS WHEREOF, the Investor and the Partnership have duly executed
this  Agreement,  or have caused  this  Agreement  to be duly  executed on their
behalf, as of the date and year first above written.

Witness:


-----------------------------      -------------------------------------------
                                                    [Investor]

                                   HERSHA HOSPITALITY LIMITED PARTNERSHIP

Attest:                            By:      Hersha Hospitality Trust, a Maryland
                                            business trust, its General Partner



_____________________________      By:_________________________________________
                                      Name:____________________________________
                                      Title:___________________________________



                                      -43-
<PAGE>





                                    EXHIBIT A


                  INVESTOR SUITABILITY EVALUATION QUESTIONNAIRE



1)       Investor
         Name:____________________________________

2)       Investor
         Address:_________________________________
         _________________________________________
         _________________________________________
         _________________________________________



         Address of
         Principal
         Residence (if Investor is an individual and if different from above):
         _________________________________________
         _________________________________________
         _________________________________________
         _________________________________________





3)       Phone Number:

         Business:________________________

         Principal
         Residence:_______________________

4)       Social Security Number or Taxpayer Identification Number:___________

5)       Occupation (if Investor is an individual) or nature of business
         (if Investor is an entity):__________________________________________

6)       Previous Illiquid Investment Activity:

         Please  describe your  investment  activities  in illiquid  investments
(e.g.,  private  placements  of  securities,  investment  partnerships,  venture
capital  investments,  real  estate  investments)  during the past  three  years
(Attach additional sheets if necessary):


<PAGE>



<TABLE>
<CAPTION>

------------------------------------- ----------------------------------- -----------------------------------
         Type of Investment                   Date of investment               Aggregate Dollar Amount
<S> <C>
------------------------------------- ----------------------------------- -----------------------------------


------------------------------------- ----------------------------------- -----------------------------------


------------------------------------- ----------------------------------- -----------------------------------


------------------------------------- ----------------------------------- -----------------------------------


------------------------------------- ----------------------------------- -----------------------------------


------------------------------------- ----------------------------------- -----------------------------------


------------------------------------- ----------------------------------- -----------------------------------


------------------------------------- ----------------------------------- -----------------------------------

</TABLE>

7)  Education Background (if Investor is an individual):

_____ High School Degree
_____ College Degree    Major: __________________
_____ Graduate Degree   Major: __________________
_____ Other (describe): _________________________

8)  Type Of Entity (if Investor is an entity):

Corporation ______

General Partnership ______

Limited Partnership ______

Limited Liability Company ______

Limited Liability Partnership _______

Trust _______

Other entity (describe): ____________________________


Exhibit L
Page 2

<PAGE>


(a) Owners of or parties in interest of such  entity (add  additional  sheets if
required):

<TABLE>
<CAPTION>

------------------------------------- ----------------------------------- -----------------------------------
           Name of owner                           Address                        % of entity owned
<S> <C>
------------------------------------- ----------------------------------- -----------------------------------


------------------------------------- ----------------------------------- -----------------------------------


------------------------------------- ----------------------------------- -----------------------------------


------------------------------------- ----------------------------------- -----------------------------------


------------------------------------- ----------------------------------- -----------------------------------


------------------------------------- ----------------------------------- -----------------------------------
</TABLE>

          (b) Such entity was  incorporated or organized on:  _____________  and
currently exists under the laws of the state of ______________.

          (c) The primary purpose for which this entity was formed is:__________
________________________________________________________________________________

9)  Investor Representations:  Investor should initial the appropriate blanks
to which an affirmative representation can be made:

_____ I am an  individual  and have a net  worth,  or joint  net  worth  with my
spouse, of One Million Dollars ($1,000,000) or more.

_____ I am an individual and have an individual  income of Two Hundred  Thousand
Dollars  ($200,000)  or more in each 1998 and 1999,  or a joint  income  with my
spouse,  of at least Three Hundred Thousand  Dollars  ($300,000) in each of same
years, and reasonably expect income in such amount during 2000.

_____ The value of the asset(s) which I am contributing to the Partnership  does
not exceed Twenty Percent (20%) of my net worth or joint net worth of my spouse,
if married, exclusive of personal residence, furnishings and automobiles.

_____  Investor  is  a  private  venture  capital  firm  which  is  a  "Business
Development Company."

_____  Investor  is a  corporation,  trust,  partnership  non-profit  charitable
organization or other entity with total assets greater than Five Million Dollars
($5,000,000).

_____  Investor is an employee  benefit plan subject to ERISA which has either a
corporate trustee or Five Million Dollars ($5,000,000) in assets.

_____  Investor  is an  entity  which is owned  One  Hundred  Percent  (100%) by
"accredited   investors"   (i.e.,   persons  or  entities  meeting  any  of  the
classifications listed above).


Exhibit L
Page 3

<PAGE>







                                    EXHIBIT M

                HERSHA HOSPITALITY LIMITED PARTNERSHIP AGREEMENT




<PAGE>



                                    EXHIBIT N

                               CONTINGENT PURCHASE

                                PRICE CALCULATION


<PAGE>



                                    EXHIBIT O

                          SHREENATHJI ENTERPRISES, LTD

                            ARTICLES OF INCORPORATION


<PAGE>



                                    EXHIBIT P

                          SHREENATHJI ENTERPRISES, LTD.

                                     BYLAWS