Document:

Exhibit 10.6

    
      

    

    Exhibit
      10.6

    SECOND
      AMENDMENT TO

    LIMITED
      LIABILITY COMPANY OPERATING AGREEMENT

    OF
      MYSTIC
      PARTNERS, LLC

    

    This
      Second Amendment to Limited Liability Company Operating Agreement (this
      "Amendment") of MYSTIC PARTNERS, LLC (the "Company"), is dated as
      of February __, 2006 and entered into by and among the following:

    

    
      	
              Name

            	 	
              Current
                Address

            
	 	 	 
	
              Mystic
                Hotel Investors, LLC 

            	 	
              Post
                Office Box 715 

            
	
              (a
                Delaware limited liability company) 

            	 	
              914
                Hartford Turnpike 

            
	
               

            	 	
              Waterford,
                CT 06385 

            
	
               

            	 	
               

            
	
              Hersha
                Hospitality Limited Partnership 

            	 	
              5
                10 Walnut Street, 9th Floor 

            
	
              (a
                Virginia limited partnership) 

            	 	
              Philadelphia,
                PA 19106 

            

    

    

    hereinafter
      collectively, the "Members".

    

    W I T N E S S E T H:

    

    WHEREAS,
      the Company was formed pursuant to a Certificate of Formation filed with the
      Delaware Secretary of State on June 15, 2005 and by execution of a Limited
      Liability Company Operating Agreement on August 9, 2005, as amended by the
      First
      Amendment to Limited Liability Company Operating Agreement, dated September
      30,
      2005 (the "LLC Agreement"); capitalized terms used herein but not
      otherwise defined shall have the meanings set forth for such terms in the LLC
      Agreement; and

    

    WHEREAS,
      the Members desire to restructure the capital sharing ratios and related equity
      and cost sharing mechanisms with respect to the Development Assets (the
      "Equity Restructuring") contained in the LLC Agreement to reflect the
      Equity Restructuring;

    

    WHEREAS,
      pursuant to Section 3.2.2 of the LLC Agreement, the Members have agreed
      to amend certain provisions of the LLC Agreement upon the occurrence of any
      contribution of a Deferred Property; and

    

    WHEREAS,
      the Members hereby desire to amend the LLC Agreement as set forth herein as
      follows:

    

    1.    Exhibits
      A, 1.1 and 1.2 of the LLC Agreement are hereby deleted in
      their entirety and replaced with Exhibits A, 1.1 and 1.2
      attached hereto and made a part hereof. All references to Exhibits A,
1.1 and 1.2 in the LLC Agreement shall be deemed to refer to the
      replacements of same attached hereto.

    

    2.    The
      Definition of Capital Sharing Ratio is hereby amended such that Investor Class
      B
      Member shall have a 15% interest with respect to the Hartford Marriott and
      a 10%
      interest with respect to the Hartford Hilton and such that Mystic Member shall
      have a 85% interest with respect to the Hartford Marriott and a 90% interest
      with respect to the Hartford Hilton.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    3.    The
      definition of Contribution Agreement is hereby amended such that after the
      words
      "August 8, 2005,", the following text shall appear:

    

    (A)
      Fourth Amendment to Membership Interests Contribution Agreement dated as of
      September 15, 2005, a Fifth Amendment to Membership Interests Contribution
      Agreement dated as of November 1, 2005, and a Sixth Amendment to Membership
      Interests Contribution Agreement dated as of February___, 2006, and as further
      amended, modified or supplemented from time to time.

    

    4.    The
      definition of Residual Sharing Ratios is hereby amended such that Investor
      Class
      A Member shall have 0% with respect to Hartford Hilton and 0% with respect
      to
      the Hartford Marriott, Investor Class B Member shall have 7% with respect to
      the
      Hartford Hilton and 10.5% with respect to the Hartford Marriott and Mystic
      Member shall have 93% with respect to the Hartford Hilton and 89.5% with respect
      to the Hartford Marriott.

    

    5.    Section
      3.2.2
      is hereby amended such that subclause (A) is hereby deleted and replaced in
      its
      entirety with the following text:

    

    (A)
      Mystic Member shall transfer all of its interests in the applicable Deferred
      Property to the Company (which shall be the percentage of the outstanding
      interests in the Deferred Property as shown on Exhibit A), free and clear of
      any
      and all Encumbrances and with a net fair market value to be credited as a
      Capital Contribution equal to (i) 90% with respect to the Hartford Hilton,
      (ii)
      85% with respect to the Hartford Marriott and (iii) 33.3% with respect to the
      remainder of the Deferred Property, in each case, of the adjusted Contribution
      Value (as defined in the Contribution Agreement) attributable to the Hartford
      Hilton, the Hartford Marriott and the other applicable Deferred Property,
      respectively (after giving effect to payments made to Mystic Member in
      accordance with the Contribution Agreement);

    

    6.    Section
      4.5.1
      is hereby amended such that the words "at the rate of 50% Investor Member
      participation/50% Mystic Member participation, in the case of a Competitive
      Venture located within five miles of a Development Asset" is deleted and
      replaced with the words "at the rate of 10% Investor Member participation/90%
      Mystic Member participation, in the case of a Competitive Venture located within
      five miles of the Hartford Hilton and the rate of 15% Investor Member
      participation/85% Mystic Member participation, in the case of a Competitive
      Venture located within five miles of the Hartford Marriott".

    

    7.    Section
      4.5.1
      is hereby amended such that the last sentence thereof is deleted and replaced
      with the following text:

    

    If
      the
      proposed Competitive Venture is within five miles of both a Stabilized Asset
      and
      a Development Asset or within five miles of both the Hartford Marriott and
      the
      Hartford Hilton, the participation percentage shall be determined by the nearest
      asset.

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    8.    Section
      4.10
      is hereby amended such that the words "0.25% of Operating Revenues, with respect
      to the Development Assets" are hereby deleted and replaced with the words "0.25%
      of Operating Revenues, with respect to the Hartford Marriott".

    

    9.    The
      definition of Distributable Funds set forth in Section 5.2.1 is hereby
      deleted in its entirety and replaced with the following text:

    

    "Distributable
      Funds" shall mean (a) with respect to Investor Member, the sum of (i) 100%
      of the Net Cash Flow on hand (after repayment of any outstanding Member Loans)
      in respect of Stabilized Assets, plus (ii) 10% of the Net Cash Flow on
      hand (after repayment of any outstanding Member Loans) in respect of the
      Hartford Hilton, plus (iii) 15% of the Net Cash Flow on hand (after
      repayment of any outstanding Member Loans) in respect of the Hartford Marriott,
      plus (iv) Capital Proceeds actually received and (b) with respect to
      Mystic Member, the sum of (i) 100% of the Net Cash Flow on hand (after repayment
      of any outstanding Member Loans) in respect of Stabilized Assets, plus
      (ii) 90% of the Net Cash Flow on hand (after repayment of any outstanding Member
      Loans) in respect of the Hartford Hilton, plus (iii) 85% of the Net Cash
      Flow on hand (after repayment of any outstanding Member Loans) in respect of
      the
      Hartford Marriott, plus (iv) Capital Proceeds actually received. Attached
      hereto as Exhibit B for illustrative purposes is a hypothetical
      calculation of Distributable Funds.

    

    10.    The
      following
      text is hereby added as a new Section 15:

    

    15.1    Investor
      Member Option. Mystic Member hereby grants to Investor Member the option
      (the "Option") to purchase up to 50% (in the aggregate, which 50% maximum
      percentage interest shall include Investor Member's percentage interest in
      the
      Company as evidenced by its Capital Sharing Ratio as of each of the Option
      Exercise Dates (as defined below)) of Mystic Member's interest in the
      Development Asset Entity that own each of the Hartford Hilton ("Hartford
      Hilton Owner") and the Hartford Marriott ("Hartford Marriott Owner"),
      respectively. Investor Member shall have the right to close on the purchase
      of
      additional percentage interests acquired pursuant to the Option only on either
      December 29, 2006 or December 31, 2007 (collectively, the "Option Purchase
      Dates") and on no other date. The Option shall expire on the occurrence of
      the Option Purchase Dates. Investor Member may exercise the Option in any
      increment of 10%. The amount of the percentage interest desired to be purchased
      by Investor Member as of the applicable Option Purchase Date in either the
      Hartford Marriott or the Hartford Hilton shall herein be referred to as the
      "Additional Percentage Interest".

    

    15.2    Option
      Price. The price for Investor Member's acquisition of a percentage interest
      in Hartford Hilton Owner (the "Hilton Option Price") shall equal the sum
      of (a) the product obtained by multiplying (i) the Contribution Value of the
      Hartford Hilton as set forth in the Contribution Agreement by (ii) the
      Additional Percentage Interest plus (b) the product obtained by multiplying
      (i)
      all operational funding (i.e. capital calls to fund operational shortfalls)
      and
      capital expenditures incurred by Hartford Hilton Owner from the period since
      the
      acquisition by the Company of the interests in Hartford Hilton Owner to the
      applicable Option Purchase Date by (ii) the Additional Percentage Interest
      plus
      (c) the product obtained by multiplying (i) 10% by (ii) the sum of (a) plus
      (b).
      The price for Investor Member's acquisition of the Additional Percentage
      Interest in Hartford Marriott Owner (the "Marriott Option Price") shall equal
      the sum of (x) the product obtained by multiplying (i) the total amount of
      actual costs incurred in the construction and development of the Hartford
      Marriott (as of the date hereof, the Members hereby acknowledge and agree that
      such costs are estimated to be approximately $94,000,000) by (ii) the Additional
      Percentage Interest plus (y) the product obtained by multiplying (i) all
      operational funding (i.e. capital calls to fund operational shortfalls) and
      capital expenditures incurred by Hartford Marriott Owner from the period since
      the acquisition by the Company of the interests in Hartford Hilton Owner to
      the
      applicable Option Purchase Date by (ii) the Additional Percentage Interest
      plus (z) the product obtained by multiplying (i) 10% by (i) the sum of
      (x) plus (y).

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    15.3    Exercise
      of the Option. In the event that Investor Member desires to exercise the
      Option, Investor Member shall provide written notice of such desire (an
      "Option Notice") to Mystic Member on or prior to October 1, 2006 at 6:00
      p.m., New York time (the "First Option Exercise Date") with respect to
      the Option Purchase Date occurring on December 29, 2006 and October 1, 2007
      at
      6:00 p.m., New York time (the "Second Option Exercise Date", together
      with the First Option Exercise Date, the "Option Exercise Dates") with
      respect to the Option Purchase Date occurring on December 31, 2007. The Option
      Notice shall include Investor Member's desired Additional Percentage Interest
      with respect to the Hartford Hilton and the Hartford Marriott, as applicable.
      Within ten days after Mystic Member's receipt of the Option Notice, Mystic
      Member shall notify Investor Member in writing of the Hilton Option Price and
      the Marriott Option Price, as applicable. In the event that Investor Member
      and
      Mystic Member do not agree on the calculation of the Option Price, Investor
      Member and Mystic Member shall negotiate the Option Price in good faith. Section
      6 of the Contribution Agreement shall govern the calculation of all prorations
      and post closing adjustments necessary in connection with Investor Member's
      exercise of the Option.

    

    15.4    Closing
      of
      the Purchase of the Additional Percentage Interest. The parties shall agree
      on a mutually acceptable location at which to close on Investor Member's
      purchase of the Additional Percentage Interests (which may be by mail). On
      each
      of the Option Purchase Dates, as applicable, the parties shall do the
      following:

    

    15.4.1   Execute
      and deliver
      an amendment to the LLC Agreement evidencing revised Capital Sharing Ratios
      and
      Residual Sharing Ratios (which shall be determined in the same manner as prior
      to the date hereof) of Investor Member and Mystic Member reflecting Investor
      Member's acquisition of the Additional Percentage Interests for the Hartford
      Hilton and/or the Hartford Marriott, as the case may be;

    

    15.4.2   Investor
      Member
      shall pay the Hilton Option Price and/or the Marriott Option Price, as the
      case
      may be;

    

    15.4.3   The
      parties shall
      calculate the prorations and deliver a Settlement Statement in accordance with
      the procedures set forth in the Contribution Agreement.

    

    11.    All
      references to Waterford Class Member contained in the LLC Agreement shall be
      modified to be references to Mystic Member.

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    12.    As
      specifically modified hereby, the LLC Agreement shall remain in full force
      and
      effect and is hereby ratified and confirmed. All references to the LLC Agreement
      shall mean and refer to the LLC Agreement as amended and modified
      hereby.

    

    13.    This
      Amendment may be executed in one or more counterparts, and all such counterparts
      shall together constitute the same agreement.

    

    13.    This
      Amendment shall be construed and interpreted according to the laws of the State
      of Delaware. Accordingly, all questions with respect to construction of this
      Amendment and the rights and liabilities of the parties shall be determined
      in
      accordance with the applicable provisions of the laws of the State of Delaware
      and this Amendment is intended to be performed in accordance with and only
      to
      the extent permitted by all applicable laws, ordinances, rules and regulations
      of such State. In the event that there is a direct conflict between the
      provisions of Delaware law and the provisions of any other jurisdiction
      applicable to a particular transaction, the laws of Delaware shall nevertheless
      apply except and to the extent that such interpretation or application would
      render the action or proposed action of the Company to be invalid or illegal,
      in
      which event, the law of the jurisdiction of the State or country which would
      be
      applicable under general rules regarding conflict of laws or rules of comity
      shall apply.

    

    [SIGNATURE
      PAGE FOLLOWS]

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the Members have caused this Amendment to be duly
      executed by their respective and duly authorized representatives as of the
      date
      first above written.

    

      
        	
                 

              	
                MEMBERS:
                  

              
	
                 

              	 
	
                 

              	
                HERSHA
                  HOSPITALITY LIMITED PARTNERSHIP

              
	 	 
	
                 

              	
                BY
                  

              	 	
                /s/
                  Ashish Parikh

              
	
                 

              	
                Name:

              	
                Ashish
                  R. Parikh

              
	
                 

              	
                Title:

              	
                CFO
                  

              
	
                 

              	
                 

              
	
                 

              	
                MYSTIC
                  HOTEL INVESTORS, LLC 

              
	
                 

              	 
	
                 

              	
                By:
                  

              	 	 
	
                 

              	
                Name:
                  

              	 
	
                 

              	
                Title:

              	
                Authorized
                  Representative 

              

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF, the Members have caused this Amendment to be duly
      executed by their respective and duly authorized representatives as of the
      date
      first above written.

     

    
      
        	
                 

              	
                MEMBERS:
                  

              
	
                 

              	
                 

              
	
                 

              	
                HERSHA
                  HOSPITALITY LIMITED PARTNERSHIP 

              
	
                 

              	
                 

              
	
                 

              	
                By:
                  

              	 	 
	
                 

              	
                Name:
                  

              	 
	
                 

              	
                Title:
                  

              	 
	
                 

              	
                 

              
	
                 

              	
                MYSTIC
                  HOTEL INVESTORS, LLC 

              
	
                 

              	
                 

              
	
                 

              	
                By:
                  

              	 	
                /s/
                  G Jette

              
	
                 

              	
                Name:

              	
                Glen
                  A. Jette

              
	
                 

              	
                Title:

              	
                Authorized
                  Representative 

              

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      1.1

    

    MEMBERSHIP
      INTERESTS AND OWNER ENTITIES

    MEMBERSHIP
      INTERESTS AND OWNER ENTITIES

    

    
      	
              Property
                

            	
              Ownership
                

               

            
	
              1
                .
                Residence Inn Southington

              778
                West St.

              Southington,
                CT 06489 

            	
              Southington
                Suites, LLC, composed of:

              67%
                Mystic Hotel Investors, LLC

              33%
                Minority Interests 

            
	
              2.
                Dunkin Donuts

              790
                West St.

              Southington,
                CT 06489 

            	
              790
                West Street LLC, composed of:

              67%
                Mystic Hotel Investors, LLC

              33%
                Minority Interests 

            
	
              3.
                Residence Inn by Marriott

              22
                Segar St.

              Danbury,
                CT 06810 

            	
              Danbury
                Suites, LLC, composed of:

              100%
                Mystic Hotel Investors, LLC 

            
	
              4.
                Mystic Marriott Hotel and Spa

              625
                North Road

              Groton,
                CT 06320 

            	
              Exit
                88 Hotel, LLC composed of:

              99.9%
                Mystic Hotel Investors, LLC

              0.10%
                Mystic Hotel Investors Remote Entity Incorporated 

            
	
              5.
                Courtyard Hotel Warwick

              55
                Jefferson Park Road

              Warwick,
                RI 02888 

            	
              Warwick
                Lodgings, LLC, composed of:

              100%
                Mystic Hotel Investors, LLC 

            
	
              6.
                Courtyard by Marriott and Rosemont Suites

              181
                West Town St.

              Norwich,
                CT 06360 

            	
              Norwich
                Hotel, LLC, composed of:

              100%
                Mystic Hotel Investors, LLC 

            
	
              7.
                Springhill Suites by Marriott

              40
                1 North Frontage Road

              Waterford,
                CT 06385 

            	
              Waterford
                Suites, LLC, composed of:

              100%
                Mystic Hotel Investors, LLC 

            
	
              8.
                Residence Inn by Marriott and Whitehall Mansion

              40-42
                Whitehall Avenue

              Mystic,
                CT 06355 

            	
              Whitehall
                Mansion Partners, LLC

              100%
                Mystic Hotel Investors, LLC 

            
	
              9.
                Hartford Hilton

              315
                Trumbull Street

              Hartford,
                CT 06103 

            	
              3
                1
                5 Trumbull Street Associates, LLC, composed of:

              88%
                Mystic Hotel Investors, LLC

              12%
                Minority Interests 

            
	
              10.
                Hartford Marriott

              Columbus
                Blvd.

              Hartford,
                CT 06106 

            	
              Adriaen's
                Landing Hotel, LLC, composed of:

              95.66155%
                Mystic Hotel Investors, LLC

              4.33845%
                Minority Interests 

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      1.2

    

    DESCRIPTION
      OF PROPERTY

    

    (see
      attached)

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Exhibit
      A

    

    Members,
      Capital Contributions,

    And
      Capital Sharing Ratios

    

    
      	
              Name
                and Address of Members 

            	
              Cash
                Contribution 

            	
              Gross
                Fair Market Value of Contributed Property 

            	
              Less
                Debt Assumed or Taken Subject to by Company 

            	
              Net
                Agreed Value of Contributed Property 

            	
              Capital
                Sharing Ratio 

            
	
              Mystic
                Hotel Investors, LLC 

            	
              $1,789,385    
                 

            	
              $120,864,548    
                 

            	
              $67,542,820      
                

            	
              $53,321,728    
                 

            	
              33.3%
                with respect to Stabilized Assets 

            
	
              Mystic
                Hotel Investors, LLC 

            	
              $567,557    
                 

            	
              $31,072,620    
                 

            	
              $18,678,125    
                 

            	
              $12,394,495    
                 

            	
              50%
                with respect to Development Assets 

            
	
              Hersha
                Hospitality Limited Partnership 

            	
              $39,149,738    
                 

            	
              $0    
                 

            	
              $0
                

            	
              $0    
                 

            	
              66.7%
                with respect to Stabilized Assets 

            
	
              Hersha
                Hospitality Limited Partnership 

            	
              $6,764,805    
                 

            	
              $0    
                 

            	
              $0
                

            	
              $0    
                 

            	
              50%
                with respect to Development Assets 

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    EXHIBIT
      A
      - CONTINUED

    The
      Contribution Value of the contributed property is allocated among the various
      Properties as follows:

     

    
      
        	 	 	
                Cash
                  Contributed by Investor Member

              	 	
                Cash
                  Contributed by Waterford Member

              	 	
                Gross
                  FMV of Contributed Prop

              	 	
                (Less
                  Debt)

              	 	
                Net
                  Agreed Value of Prop

              
	
                Courtyard
                  by Marriott & 

              	 	
                (working
                  cap)

              	
                33,350
                  

              	 	
                (working
                  cap)

              	
                16,650
                  

              	 	
                12,660,090
                  

              	 	
                7,269,605
                  

              	 	
                5,390,485
                  

              
	
                Rosemont
                  Suites, Norwich, CT 

              	 	
                (shared
                  costs)

              	
                389,960
                  

              	 	
                (shared
                  costs)

              	
                194,688
                  

              	 	
                 

              	 	
                 

              	 	
                 

              
	
                (Norwich
                  Hotel, LLC) 

              	 	 	
                3,595,453
                  

              	 	 	 	 	
                 

              	 	
                 

              	 	
                 

              
	
                Springfield
                  Suites by Marriott, 

              	 	
                (working
                  cap)

              	
                33,350
                  

              	 	
                (working
                  cap)

              	
                16,650
                  

              	 	
                8,049,269
                  

              	 	
                6,191,340
                  

              	 	
                1,857,929
                  

              
	
                Waterford,
                  CT (Waterford 

              	 	
                (shared
                  costs)

              	
                254,446
                  

              	 	
                (shared
                  costs)

              	
                127,032
                  

              	 	
                 

              	 	
                 

              	 	
                 

              
	
                Suites,
                  LLC) 

              	 	 	
                1,239,239
                  

              	 	 	 	 	
                 

              	 	
                 

              	 	
                 

              
	
                Residence
                  Inn by Marriott, 

              	 	
                (working
                  cap)

              	
                50,025
                  

              	 	
                (working
                  cap)

              	
                24,975
                  

              	 	
                9,099,530
                  

              	 	
                7,198,757
                  

              	 	
                1,900,773
                  

              
	
                Danbury,
                  CT (Danbury Suites, 

              	 	
                (shared
                  costs)

              	
                887,837
                  

              	 	
                (shared
                  costs)

              	
                443,253
                  

              	 	
                 

              	 	
                 

              	 	
                 

              
	
                LLC)
                  

              	 	 	
                1,267,815
                  

              	 	 	 	 	
                 

              	 	
                 

              	 	
                 

              
	
                Courtyard
                  Hotel, Warwick, RI 

              	 	
                (working
                  cap)

              	
                33,350
                  

              	 	
                (working
                  cap)

              	
                16,650
                  

              	 	
                9,094,108
                  

              	 	
                6,247,403
                  

              	 	
                2,846,705
                  

              
	
                (Warwick
                  Lodgings, LLC) 

              	 	
                (shared
                  costs)

              	
                230,971
                  

              	 	
                (shared
                  costs)

              	
                115,312
                  

              	 	
                 

              	 	
                 

              	 	
                 

              
	
                 

              	 	 	
                1,898,752
                  

              	 	 	 	 	
                 

              	 	
                 

              	 	
                 

              
	
                Residence
                  Inn by Marriott, 

              	
                 

              	
                (shared
                  costs)

              	
                234,
                  678 

              	 	
                (shared
                  costs)

              	
                117,163
                  

              	 	
                9,259,089
                  

              	
                1 

              	
                7,298,305
                  

              	
                1 

              	
                1,960,784
                  

              
	
                Southington,
                  CT (Southington 

              	 	 	
                1,307,844
                  

              	 	 	 	 	
                 

              	 	
                 

              	 	
                 

              
	
                Suites,
                  LLC) 

              	 	 	 	 	 	 	 	
                 

              	 	
                 

              	 	
                 

              
	
                Mystic
                  Marriott Hotel & Spa, 

              	 	
                (working
                  cap)

              	
                590,979
                  

              	 	
                (working
                  cap)

              	
                295,046
                  

              	 	
                54,658,165
                  

              	 	
                25,330,607
                  

              	 	
                29,327,558
                  

              
	
                Groton,
                  CT (Exit 88 Hotel, 

              	 	
                (shared
                  costs)

              	
                401,215
                  

              	 	
                (shared
                  costs)

              	
                200,306
                  

              	 	
                 

              	 	
                 

              	 	
                 

              
	
                LLC)
                  

              	 	 	
                19,561,481
                  

              	 	 	 	 	
                 

              	 	
                 

              	 	
                 

              
	
                Dunkin
                  Donuts, 790 West St., 

              	 	
                Combined
                  with Residence Inn by Marriott, Southington, CT 

              	
                 

              	 	
                 

              
	
                Southington,
                  CT (790 West 

              	 	 	 	 	 	 	 	
                 

              	 	
                 

              	 	
                 

              
	
                Street
                  LLC) 

              	 	 	 	 	 	 	 	
                 

              	 	
                 

              	 	
                 

              
	
                Residence
                  Inn by Marriott and 

              	 	
                (working
                  cap)

              	
                166,750
                  

              	 	
                (working
                  cap)

              	
                83,250
                  

              	 	
                18,044,297
                  

              	 	
                8,006,803
                  

              	 	
                10,037,494
                  

              
	
                Whitehall
                  Mansion (Whitehall 

              	 	
                (shared
                  costs)

              	
                277,235
                  

              	 	
                (shared
                  costs)

              	
                138,410
                  

              	 	
                 

              	 	
                 

              	 	
                 

              
	
                Mansion
                  Partners, LLC) 

              	 	 	
                6,695,008
                  

              	 	 	 	 	
                 

              	 	
                 

              	 	
                 

              
	
                Hartford
                  Hilton (315 Trumbull 

              	 	
                (working
                  cap)

              	
                264,000
                  

              	 	
                (working
                  cap)

              	
                264,000
                  

              	 	
                31,072,620
                  

              	
                1 

              	
                18,678,125
                  

              	
                1

              	
                12,394,495
                  

              
	
                Street
                  Associates, LLC) 

              	 	
                (shared
                  costs)

              	
                303,557
                  

              	 	
                (shared
                  costs)

              	
                303,557
                  

              	 	
                 

              	 	
                 

              	 	
                 

              
	
                 

              	 	 	
                6,197,248
                  

              	 	 	 	 	
                 

              	 	
                 

              	 	
                 

              
	
                Hartford
                  Marriott (Adriaen's 

              	 	
                (working
                  cap)

              	
                121,968
                  

              	 	
                (working
                  cap)

              	
                691,155
                  

              	 	
                83,369,041
                  

              	
                1 

              	
                42,948,478
                  

              	 	
                40,420,563
                  

              
	
                Landing
                  Hotel, LLC) 

              	 	
                (shared
                  costs)

              	
                [6,063,084]
                  

              	 	
                (shared
                  costs)

              	
                [64,089]
                  

              	 	
                 

              	 	
                 

              	 	
                 

              
	
                TOTAL:
                  

              	 	 	
                $45,914,543
                  

              	 	 	
                $2,356,942
                  

              	 	
                $151,937,168
                  

              	 	
                 

              	 	
                $65,716,223
                  

              

      

    

    __________________________

    1
      Adjusted to take into account Minority Interests.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Exhibit
      B

    Mystic
      Partners, LLC

    Second
      Amendment to the LLC Agreement - Distributable Funds
      Exhibit

    December
      31, 20XX

    

    
      	 	 	
              NET
                OPERATING INCOME

            	 	
              LESS:
                DEBT PRINCIPAL AND INTEREST

            	 	
              NET
                CASH FLOW

            	 	
              MYSTIC
                PARTNERS PERCENTAGE INTEREST

            	 	
              MYSTIC
                PARTNERS NET CASH FLOW

            	 	
              INVESTOR
                MEMBER DISTRIBUTABLE FUNDS

            	 	
              MYSTIC
                MEMBER DISTRIBUTABLE FUNDS

            	 
	
              Norwich
                Hotel, LLC 

            	 	
              $

            	
              1,130,000

            	 	
              $

            	
              (536,809

            	
              )

            	
              $

            	
              593,191

            	 	 	
              100%

            	
               

            	
              $

            	
              593,191

            	 	
              $

            	
              593,191

            	 	
              $

            	
              
              

            	 
	
              Waterford
                Suites, LLC 

            	 	 	
              675,000
                

            	 	 	
              (361,775

            	
              )

            	 	
              313,225
                

            	 	 	
              100%

            	
               

            	 	
              313,225
                

            	 	 	
              313,225
                

            	 	 	
              - 
                 

            	 
	
              Exit
                88 Hotel, LLC 

            	 	 	
              4,125,000
                

            	 	 	
              (2,981,360

            	
              )

            	 	
              1,143,640
                

            	 	 	
              100%

            	
               

            	 	
              1,143,640
                

            	 	 	
              1,143,640
                

            	 	 	
              - 
                 

            	 
	
              Southington
                Suites, LLC and 790 West Street, L 

            	 	 	
              1,150,000
                

            	 	 	
              (625,325

            	
              )

            	 	
              524,675
                

            	 	 	
              67%

            	
               

            	 	
              351,532
                

            	 	 	
              351,532
                

            	 	 	
              - 
                 

            	 
	
              Warwick
                Lodgings, LLC 

            	 	 	
              810,000
                

            	 	 	
              (368,342

            	
              )

            	 	
              441,658
                

            	 	 	
              100%

            	
               

            	 	
              441,658
                

            	 	 	
              441,658
                

            	 	 	
              - 
                 

            	 
	
              Danbury
                Suites, LLC 

            	 	 	
              925,000
                

            	 	 	
              (459,714

            	
              )

            	 	
              465,286
                

            	 	 	
              100%

            	
               

            	 	
              465,286
                

            	 	 	
              465,286
                

            	 	 	
              - 
                 

            	 
	
              Whitehall
                Mansion Partners, LLC 

            	 	 	
              1,450,000
                

            	 	 	
              (688,581

            	
              )

            	 	
              761,419
                

            	 	 	
              100%

            	
               

            	 	
              761,419
                

            	 	 	
              761,419
                

            	 	 	
              - 
                 

            	 
	
               

            	 	 	
              10,265,000
                

            	 	 	
              (6,021,906

            	
              )

            	 	
              4,243,094
                

            	 	 	
              
              

            	 	 	
              4,069,951
                

            	 	 	
              4,069,951
                

            	 	 	
              414,951
                

            	 
	
               

            	 	 	
              
              

            	 	 	
              
              

            	 	 	
              
              

            	 	 	
              
              

            	 	 	
              
              

            	 	 	
              
              

            	 	 	
              
              

            	 
	
              315
                Trumbull Street Associates, LLC 

            	 	 	
              635,012
                

            	 	 	
              (1,544,103

            	
              )

            	 	
              (909,091

            	
              )

            	 	
              88%

            	
               

            	 	
              (800,000

            	
              )

            	 	
              (80,000

            	
              )

            	 	
              (720,000

            	
              )

            
	
              Adriaen's
                Landing Hotel, LLC 

            	 	 	
              4,712,359
                

            	 	 	
              (3,149,859

            	
              )

            	 	
              1,562,500
                

            	 	 	
              96%

            	
               

            	 	
              1,500,000
                

            	 	 	
              225,000
                

            	 	 	
              1
                ,275,000 

            	 
	
               

            	 	 	
              5,347,371
                

            	 	 	
              (4,693,962

            	
              )

            	 	
              653,409
                

            	 	 	
              
              

            	 	 	
              700,000
                

            	 	 	
              145,000
                

            	 	 	
              555,000
                

            	 
	
               

            	 	 	
              
              

            	 	 	
              
              

            	 	 	
              
              

            	 	 	
              
              

            	
               

            	 	
              
              

            	 	 	
              
              

            	 	 	
              
              

            	 
	
              Parent
                company expenses 

            	 	 	
              (400,000

            	
              )

            	 	
              -
                

            	 	 	
              (400,000

            	
              )

            	 	
              100%

            	
               

            	 	
              (400,000

            	
              )

            	 	
              (400,000

            	
              )

            	 	
              - 
                 

            	 
	
               

            	 	 	
              
              

            	 	 	
              
              

            	 	 	
              
              

            	 	 	
              
              

            	 	 	
              
              

            	 	 	
              
              

            	 	 	
              
              

            	 
	
               

            	 	
              $

            	
              15,212,371

            	 	
              $

            	
              (10,715,868

            	
              )

            	
              $

            	
              4,496,503

            	 	 	
              
              

            	 	
              $

            	
              4,369,951

            	 	 	
              3,814,951
                

            	 	 	
              969,951
                

            	 
	
              Less:
                Preferential return payments 

            	 	 	
              
              

            	 	 	
              
              

            	 	 	
              
              

            	 	 	
              
              

            	 	 	
              
              

            	 	 	
              (3,400,000

            	
              )

            	 	
              (969,951

            	
              )Exhibit 10.7

    
      

    

    Exhibit
      10.7

     

    FIRST
      AMENDMENT TO

    LIMITED
      LIABILITY COMPANY OPERATING AGREEMENT

    OF
      MYSTIC
      PARTNERS LEASECO, LLC

    

    This
      First Amendment to Limited Liability Company Operating Agreement (this
“Amendment”)
      of
      MYSTIC PARTNERS LEASECO, LLC (the “Company”),
      is
      dated as of February 8, 2006 and entered into by and among the following:

     

    
      	
              Name

            	
              Current
                Address

            
	 	 
	
              Mystic
                Hotel Investors, LLC

              (a
                Delaware limited liability company)

            	
              Post
                Office Box 715

              914
                Hartford Turnpike

              Waterford,
                CT 06385

            
	 	 
	
              Hersha
                Hospitality Limited Partnership

              (a
                Virginia limited partnership)

            	
              510
                Walnut Street, 9th
                Floor

              Philadelphia,
                PA 19106

            

    

    

    hereinafter
      collectively, the “Members”.

     

    W
      I T
      N E S S E T H:

     

    WHEREAS,
      the Company was formed pursuant to a Certificate of Formation filed with the
      Delaware Secretary of State on June 24, 2005 and by execution of a Limited
      Liability Company Operating Agreement on August 9, 2005 (the “LLC
      Agreement”);
      capitalized terms used herein but not otherwise defined shall have the meanings
      set forth for such terms in the LLC Agreement; and

     

    WHEREAS,
      the Members desire to restructure the capital sharing ratios and related equity
      and cost sharing mechanisms with respect to the Development Assets (the
“Equity
      Restructuring”)
      contained in the LLC Agreement to reflect the Equity Restructuring;

     

    WHEREAS,
      the Members hereby desire to amend the LLC Agreement as set forth herein as
      follows: 

     

    1.           
      The
      Definition of Capital Sharing Ratio is hereby amended such that TRS Class B
      Member shall have a 15% interest with respect to the Hartford Marriott and
      a 10%
      interest with respect to the Hartford Hilton and such that Mystic Member shall
      have an 85% interest with respect to the Hartford Marriott and a 90% interest
      with respect to the Hartford Hilton.

     

    2.           
      The
      definition of Residual Sharing Ratios is hereby amended such that TRS Class
      A
      Member shall have 0% with respect to Hartford Hilton and 0% with respect to
      the
      Hartford Marriott, TRS Class B Member shall have 7% with respect to the Hartford
      Hilton and 10.5% with respect to the Hartford Marriott and Mystic Class Member
      shall have 93% with respect to the Hartford Hilton and 89.5% with respect to
      the
      Hartford Marriott.

     

    3.           
      The
      reference to Article 14 in Section
      4.2.1(D)
      shall be
      amended to refer to Article 13. 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    4.             The
      definition of Distributable Funds set forth in Section
      5.2.1
      is
      hereby deleted in its entirety and replaced with the following
      text:

     

    “Distributable
      Funds”
shall
      mean (a) with respect to TRS Member, the sum of (i) 100% of the Net Cash Flow
      on
      hand (after repayment of any outstanding Member Loans) in respect of Stabilized
      Assets, plus
      (ii) 10%
      of the Net Cash Flow on hand (after repayment of any outstanding Member Loans)
      in respect of the Hartford Hilton, plus
      (iii)
      15% of the Net Cash Flow on hand (after repayment of any outstanding Member
      Loans) in respect of the Hartford Marriott, plus
      (iv)
      Capital Proceeds actually received and (b) with respect to Mystic Member, the
      sum of (i) 100% of the Net Cash Flow on hand (after repayment of any outstanding
      Member Loans) in respect of Stabilized Assets, plus
      (ii) 90%
      of the Net Cash Flow on hand (after repayment of any outstanding Member Loans)
      in respect of the Hartford Hilton, plus
      (iii)
      85% of the Net Cash Flow on hand (after repayment of any outstanding Member
      Loans) in respect of the Hartford Marriott, plus
      (iv)
      Capital Proceeds actually received. Attached
      hereto as Exhibit
      A
      for
      illustrative purposes is a hypothetical calculation of Distributable
      Funds.

     

    5.            
      The
      following text is hereby added as a new Article 14:

     

    14.1      
       TRS
      Member Option.
      Mystic
      Member hereby grants to TRS Member the option (the “Option”)
      to
      purchase up to 50% (in the aggregate, which 50% maximum percentage interest
      shall include TRS Member’s percentage interest in the Company as evidenced by
      its Capital Sharing Ratio as of each of the Option Exercise Dates (as defined
      below)) of Mystic Member’s interest in the entities that own each of the
      Hartford Hilton (“Hartford
      Hilton Owner”)
      and
      the Hartford Marriott (“Hartford
      Marriott Owner”),
      respectively. TRS Member shall have the right to close on the purchase of
      additional percentage interests acquired pursuant to the Option only on either
      December 29, 2006 or December 31, 2007 (collectively, the “Option
      Purchase Dates”)
      and on
      no other date. The Option shall expire on the occurrence of the Option Purchase
      Dates. TRS Member may exercise the Option in any increment of 10%. The amount
      of
      the percentage interest desired to be purchased by TRS Member as of the
      applicable Option Purchase Date in either the Hartford Marriott or the Hartford
      Hilton shall herein be referred to as the “Additional
      Percentage Interest”.

     

    14.2      
       Option
      Price.
      The
      price for TRS Member’s acquisition of a percentage interest in Hartford Hilton
      Owner (the “Hilton
      Option Price”)
      shall
      equal the sum of (a) the product obtained by multiplying (i) the Contribution
      Value of the Hartford Hilton as set forth in the Contribution Agreement by
      (ii)
      the Additional Percentage Interest plus (b) the product obtained by multiplying
      (i) all operational funding (i.e. capital calls to fund operational shortfalls)
      and capital expenditures incurred by Hartford Hilton Owner from
      the
      period since the acquisition by the Company of the interests in Hartford Hilton
      Owner to the applicable Option Purchase Date by
      (ii)
      the Additional Percentage Interest plus (c) the product obtained by multiplying
      (i) 10% by (ii) the sum of (a) plus (b). The price for TRS Member’s acquisition
      of the Additional Percentage Interest in Hartford Marriott Owner (the “Marriott
      Option Price”) shall equal the sum of (x) the product obtained by multiplying
      (i) the total amount of actual costs incurred in the construction and
development
      of the Hartford Marriott (as of the date hereof, the Members hereby acknowledge
      and agree that such costs are estimated to be approximately $94,000,000) by
      (ii)
      the Additional Percentage Interest plus (y) the product obtained by multiplying
      (i) all operational funding (i.e. capital calls to fund operational shortfalls)
      and capital expenditures incurred by Hartford Marriott Owner from
      the
      period since the acquisition by the Company of the interests in Hartford Hilton
      Owner to the applicable Option Purchase Date by
      (ii)
      the Additional Percentage Interest plus
      (z) the
      product obtained by multiplying (i) 10% by (i) the sum of (x) plus
      (y).

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

           
      14.3         Exercise
      of the Option.
      In the
      event that TRS Member desires to exercise the Option, TRS Member shall provide
      written notice of such desire (an “Option
      Notice”)
      to
      Mystic Member on or prior to October 1, 2006 at 6:00 p.m., New York time (the
      “First
      Option Exercise Date”)
      with
      respect to the Option Purchase Date occurring on December 29, 2006 and October
      1, 2007 at 6:00 p.m., New York time (the “Second
      Option Exercise Date”,
      together with the First Option Exercise Date, the “Option
      Exercise Dates”)
      with
      respect to the Option Purchase Date occurring on December 31, 2007. The Option
      Notice shall include TRS Member’s desired Additional Percentage Interest with
      respect to the Hartford Hilton and the Hartford Marriott, as applicable. Within
      ten days after Mystic Member’s receipt of the Option Notice, Mystic Member shall
      notify TRS Member in writing of the Hilton Option Price and the Marriott Option
      Price, as applicable. In the event that TRS Member and Mystic Member do not
      agree on the calculation of the Option Price, TRS Member and Mystic Member
      shall
      negotiate the Option Price in good faith. Section 6 of the Contribution
      Agreement between TRS Member and Mystic Member (as amended) shall govern the
      calculation of all prorations and post closing adjustments necessary in
      connection with TRS Member’s exercise of the Option. 

     

    14.4       
       Closing
      of the Purchase of the Additional Percentage Interest.
      The
      parties shall agree on a mutually acceptable location at which to close on
      TRS
      Member’s purchase of the Additional Percentage Interests (which may be by mail).
      On each of the Option Purchase Dates, as applicable, the parties shall do the
      following:

     

    14.4.1   
      Execute
      and deliver an amendment to the LLC Agreement evidencing revised Capital Sharing
      Ratios and Residual Sharing Ratios (which shall be determined in the same manner
      as prior to the date hereof) of TRS Member and Mystic Member reflecting TRS
      Member’s acquisition of the Additional Percentage Interests for the Hartford
      Hilton and/or the Hartford Marriott, as the case may be; 

     

    14.4.2   
      TRS
      Member shall pay the Hilton Option Price and/or the Marriott Option Price,
      as
      the case may be;

     

    14.4.3   
      The
      parties shall calculate the prorations and deliver a Settlement Statement in
      accordance with the procedures set forth in the Contribution Agreement.

     

    12.           
      As
      specifically modified hereby, the LLC Agreement shall remain in full force
      and
      effect and is hereby ratified and confirmed. All references to the LLC Agreement
      shall mean and refer to the LLC Agreement as amended and modified hereby.

    

    13.           
      This
      Amendment may be executed in one or more counterparts, and all such counterparts
      shall together constitute the same agreement. 

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    

    13.           
      This
      Amendment shall be construed and interpreted according to the laws of the State
      of Delaware. Accordingly, all questions with respect to construction of this
      Amendment and the rights and liabilities of the parties shall be determined
      in
      accordance with the applicable provisions of the laws of the State of Delaware
      and this Amendment is intended to be performed in accordance with and only
      to
      the extent permitted by all applicable laws, ordinances, rules and regulations
      of such State. In the event that there is a direct conflict between the
      provisions of Delaware law and the provisions of any other jurisdiction
      applicable to a particular transaction, the laws of Delaware shall nevertheless
      apply except and to the extent that such interpretation or application would
      render the action or proposed action of the Company to be invalid or illegal,
      in
      which event, the law of the jurisdiction of the State or country which would
      be
      applicable under general rules regarding conflict of laws or rules of comity
      shall apply. 

    

    [SIGNATURE
      PAGE FOLLOWS]

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF,
      the
      Members have caused this Amendment to be duly executed by their respective
      and
      duly authorized representatives as of the date first above written.

     

    
      	
              MEMBERS:
                

            
	 
	 
	
              HERSHA
                HOSPITALITY LIMITED PARTNERSHIP

            
	 
	
              By:

            	 

	 	
              Name:

            	  

	 	
              Title:

            	  

	 	 
	
              MYSTIC
                HOTEL INVESTORS, LLC

            
	 
	
              By:

            	 

	 	
              Name:

            	  

	 	
              Title:
                Authorized Representative

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      A

    

    Distributable
      Funds Illustration

    

    (see
      attached)

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00097-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00097-of-00352.parquet"}]]