Document:

Exhibit 10.1

    
      

    

    Exhibit
      10.1

    

    OREGON
      PACIFIC
      BANCORP
      2006 NON-EMPLOYEE DIRECTOR 

    DEFERRED
      COMPENSATION PLAN

    

    This
      Oregon Pacific Bancorp Director Non-Employee Deferred Compensation Plan (the
      "Plan"), is hereby established on and as of the date of adoption of the Plan
      by
      the Board of Directors. The Plan, as structured, is designed to provide
      non-employee directors with the opportunity to defer payment of their directors'
      fees in accordance with the provisions of this Plan.  It is the intention
      of Oregon Pacific Bancorp and it is the understanding of the Directors
      participating in the Plan, that the Plan constitutes a nonqualified deferred
      compensation plan under the provisions of Section 409A of the Code and
      applicable regulations issued thereunder.

    

    ARTICLE
      I
      - DEFINITIONS

    

    For
      the
      purposes hereof, the following words and phrases shall have the meanings
      indicated.

    

    1.1    "ACCOUNT"
      shall mean the bookkeeping account established in accordance with Article II
      hereof, including the Interest Bearing Account, the Common Stock Account, and
      the Dividend Account.

    

    1.2    ”BENEFICIARY"
      shall mean any person designated by a Participant in accordance with the Plan
      to
      receive payment of all or a portion of the remaining balance of the
      Participant's Account in the event of the death of the Participant prior to
      receipt by the Participant of the entire amount credited to the Participant's
      Account.

    

    1.3    "CHANGE
      OF CONTROL" shall be deemed to have occurred in accordance with the requirements
      of Section 409A of the Code and applicable regulations issued thereunder, if
      a
      change in the ownership or the effective control of the Corporation occurs,
      or
      if there occurs a change in the ownership of a substantial portion of the assets
      of the Corporation.

    

    1.4    "CODE"
      means the U. S. Internal Revenue Code of 1986, as amended. 

    

    1.5    "CORPORATION"
      shall mean Oregon Pacific Bancorp, a bank holding company and its corporate
      successors, including the surviving corporation resulting from any merger of
      Oregon Pacific Bancorp with any other corporation or corporations.

    

    1.6    "COMMON
      STOCK" shall mean the common stock of Oregon Pacific Bancorp.

    

    1.7    "DIRECTOR"
      shall mean (i) any non-employee member of the Board of Directors of the
      Corporation and (ii) any non-employee member of the Board of Directors of a
      Subsidiary.

    

    1.8    "ELECTION
      AGREEMENT" shall mean the written election to defer Fees signed in writing
      by
      the Director and in the form provided by the Corporation.

    

    1.91  
         "FEES"
      shall mean the fees earned as a Director.

     

    
      
        
        

      

      
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    1.10   
        "PARTICIPANT"
      shall mean any Director who has at any time elected to defer the receipt of
      Fees
      in accordance with the Plan.

    

    1.11   
        "PLAN"
      shall mean this Director Deferred Compensation Plan, together with all
      amendments hereto.

    

    1.12      "SUBSIDIARY"
      shall mean a corporation organized and existing under the laws of the United
      States or of any state of which more than 50% percent of the issued and
      outstanding stock is owned by the Corporation or by a Subsidiary of the
      Corporation, and which has been designated by the Board of Directors or the
      Chief Executive Officer of the Corporation as a Subsidiary eligible to
      participate in the Plan.

    

    1.13   
        "YEAR"
      shall mean the calendar year.

    

    ARTICLE
      II - ELECTION TO DEFER

    

    2.1    ELIGIBILITY. 
      Any Director may elect to defer receipt of all or a specified portion of his
      or
      her Fees for any Year in accordance with Article II.

    

    2.2    ELECTION
      TO
      DEFER.  A Director who desires to defer the payment of all or a portion of
      his or her Fees for any Year must complete and deliver an Election Agreement
      to
      the Corporation no later than the last day of the Year prior to the Year for
      which the Fees are earned by the Director; provided, however, that any Director
      hereafter elected to the Board of Directors of the Corporation or a Subsidiary
      who was not a Director on the preceding December 31 may make an election to
      defer payment of Fees for the Year in which he or she is elected to the Board
      of
      Directors by delivering the Election Agreement to the Corporation within 30
      days
      of first becoming eligible to participate in the Plan.  A Director who
      timely delivers the Election Agreement to the Corporation shall be a Participant
      in the Plan upon the Corporation's acceptance of such Election
      Agreement.

    

    2.3    AMOUNT
      DEFERRED; DATE OF DEFERRAL.  A Participant shall designate on the Election
      Agreement (a) the amount of his or her Fees that are to be deferred to the
      Plan
      for any Year, (b) the date on which the Participant's Fees shall be distributed,
      (c) whether the distribution of deferred Fees is to be paid in its entirety
      or
      whether such Fees shall be paid in installments, and (d) if in installments,
      the
      number of quarterly installments.  Deferrals shall be until the earlier to
      occur: (i) the date specified by the Participant which may be not later than
      the
      date on which the Participant would attain age 72, or (ii) the date of death
      of
      the Participant, at which time payment of the amount deferred shall be made
      in
      accordance with Section 2.8 or 2.11 of this Article.  A Participant may
      select not more than one date in each Election Agreement upon which distribution
      shall be made or when installments shall begin. Distribution dates shall be
      the
      first business day of a calendar quarter.

    

    2.4    ACCOUNT. 
The
      Corporation shall maintain an Account of the Fees deferred by each
      Participant.  A Participant shall designate on the Election Agreement
      whether to have the Account valued on the basis of Oregon Pacific Bancorp Common
      Stock in accordance with Section 2.5 of this Article, or whether the Participant
      is to receive interest in accordance with Section 2.6 of this Article.  The
      Corporation may, if necessary or desirable, establish separate Accounts for
      a
      Participant to properly account for amounts deferred under the different
      alternatives and Years; all such Accounts are collectively referred to herein
      as
      the Account.  The Account based on Oregon Pacific Bancorp Common Stock
      shall be known as the "Common Stock Account", and the interest bearing account
      shall be known as the "Interest Bearing Account." A Participant may defer a
      portion of his or her Fees into each type of Account. Each Account shall reflect
      all investment income and gains from investments as credits, and all losses
      and
      transaction costs as debits. The Account shall not be debited for federal,
      state
      or local income or other taxes attributable to net investment income or
      gains.

     

    
      
        
        

      

      
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    2.5    COMMON
      STOCK
      ACCOUNT.  If a Participant elects to have all or a portion of his or her
      Fees deferred into the Common Stock Account, the Corporation shall credit to
      the
      Common Stock Account that number of whole shares of Common Stock that could
      be
      purchased with an amount equal to the amount deferred in accordance with the
      following procedure:

    

    2.5.1  
        Beginning
      with fees earned in the Year 2007, crediting to the Common Stock Account shall
      occur on March 31, June 30, September 30 and December 31.

    

    2.5.2
          Crediting
      to the Common Stock Account shall be at a price per share equal to a weighted
      average, consisting of the average of the most recent aggregate sales of no
      less
      than 1% of the Corporation’s issued and outstanding stock determined as of
      crediting date. 

    

    2.5.3  
        There
      shall be no credits in the Common Stock Account for fractional shares of Common
      Stock. Any cash deferral amount not credited to the Common Stock Account because
      such amount is insufficient to purchase a whole share of Common Stock shall
      be
      credited to the Dividend Account described in Section 2.5.4. 

    

    2.5.4  
        The
      Corporation shall establish a Dividend Account to which it shall credit (I)
      fractional deferral amounts as described in Section 2.5.3, and (ii)
“hypothetical dividends” on shares of Common Stock which have been credited to a
      Participant’s Common Stock Account, in an amount equal to actual cash dividends
      paid on shares of the Corporation’s Common Stock from time to time. On the last
      day of each quarter
      all sums in the Dividend Account shall be credited to the Participant’s Common
      Stock Account at the price determined under Section 2.5.2.

    

    2.6    INTEREST
      BEARING ACCOUNT.  If a Participant elects to have all or a portion of his
      or her Fees deferred into the Interest Bearing Account, there shall be added
      to
      the Account on the first day of each month the dollar amount of such Fees
      payable for such period plus all interest payable on such Interest Bearing
      Account for such period as follows:  A Participant's Interest Bearing
      Account will be credited with interest on the average daily balance in the
      Interest Bearing Account during each month at a rate equal to the effective
      annual yield of the average of the Moody's Average Corporate Bond Yield Index
      for the preceding month, as published by Moody's Investor Service, Inc. or
      any
      successor publisher thereto, or, if such index is no longer published, a
      substantially similar index selected by the Board.

    

    2.7    STATUS
      OF
      ACCOUNT. Neither Participant, nor Participant’s heirs, beneficiaries, creditors,
      successors, assigns, probate estate or legal representative, shall have any
      right, title or interest in any Account established under the Plan, nor in
      the
      values, benefits or proceeds of the Account. The Account and all cash, values,
      benefits, holdings, funds and proceeds of the Account shall be and remain part
      of the general assets of Bancorp. Nothing in the Agreement shall create or
      be
      construed to create a trust of any kind, or a fiduciary relationship between
      the
      Bank or Bancorp and Participant, Participant’s beneficiaries or any other
      person. Nothing in the Agreement shall give rise to a duty or obligation on
      the
      part of the Bank or Bancorp toward Participant or Participant’s heirs,
      beneficiaries, creditors, successors, assigns, probate estate or legal
      representatives.

     

    
      
        
        

      

      
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    2.8    PAYMENT
      OF
      ACCOUNT; PERIOD OF DEFERRAL.  The amount of a Participant's Account shall
      be paid to the Participant in a single payment and/or in a number of
      substantially equal consecutive quarterly installments (not to exceed 40)
      payable March 31, June 30, September 30 and December 31, as elected by the
      Participant in the Election Agreement.  Distributions from the Interest
      Bearing Account shall be in cash. Distributions from the Common Stock Account
      shall be in shares of Common Stock issued by the Corporation.  The amount
      of any Account remaining after payment of an installment shall continue to
      be
      valued in accordance with Section 2.5 of this Article or bear interest in
      accordance with Section 2.6 of this Article.  Full payment or the first
      quarterly installment, as the case may be, shall be made as soon as
      administratively possible after (i) the date specified in Section 2.3 of this
      Article, or (ii) the date of the Participant's death. The election as to the
      time for and method of payment of the amount of the Account relating to Fees
      deferred for a particular Year shall be made on the Election Agreement(s) and
      may not thereafter be altered except as provided in Section 11 of this Article.
      

    

    In
      the
      event that a Participant elects to receive installment payments under this
      Section 2.8:

    

    (a)  The
      amount of the
      distribution of shares from the Common Stock Account shall be valued based
      on a
      price per share equal to a weighted average, consisting of the average of the
      most recent aggregate sales of no less than 1% of the Corporation’s issued and
      outstanding stock determined as of ten (10) days prior to the distribution
      date.

    

    (b)  The
      amount of the
      distribution of cash from the Interest Bearing Account shall be valued based
      on
      the value of such Account on the last business day of the calendar quarter
      immediately prior to such distribution date;

    

    (c)  The
      amount of each
      installment shall be determined by dividing the value of the Common Stock
      Account, the Interest Bearing Account, or both, as the case may be, by the
      number of installments remaining to be paid to the Participant.

    

    2.9    SMALL
      PAYMENTS.  Notwithstanding the foregoing, if the quarterly installment
      payment elected under any Election Agreement would result in a quarterly payment
      of less than $500 in cash or Common Stock value, as the case may be, the
      Participant shall receive an immediate lump sum payment of the entire amount
      of
      the Account to the Participant on the day the installment payments were to
      begin.

    

    2.10   
        DEATH OF
      PARTICIPANT.  In the event of the death of a Participant, the amount of the
      Participant's Account shall be paid to the Beneficiary or Beneficiaries
      designated in writing signed by the Participant in the form provided by the
      Corporation. In the event there is more than one Beneficiary, such form shall
      include the proportion to be paid to each Beneficiary and indicate the
      disposition of such share if a Beneficiary does not survive the Participant,
      and
      in the absence of any such designation, payment from the Account shall be
      divided equally among all other Beneficiaries.  A Participant's Beneficiary
      designation may be changed at any time prior to the Participant's death by
      execution and delivery of a new Beneficiary designation form.  The form on
      file with the Corporation at the time of the Participant's death which bears
      the
      latest date shall govern.  In the absence of a Beneficiary designation or
      the failure of any Beneficiary to survive the Participant, the amount of the
      Participant's Account shall be paid to the Participant's estate in its entirety
      ninety days after the appointment of an executor or administrator.  In the
      event of the death of any Beneficiary after the death of a Participant, the
      remaining amount of the Account payable to such Beneficiary shall be paid in
      its
      entirety to the estate of such Beneficiary ninety days after the appointment
      of
      an executor or administrator for such estate or within a reasonable time
      thereafter.

     

    
      
        
        

      

      
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    2.11   
        ACCELERATION.

    

    2.11.1  Notwithstanding
      any other provision of the Plan to the contrary, upon the occurrence of a Change
      of Control, a Participant shall be entitled to receive from the Corporation
      the
      payment of his or her Account in the manner selected as follows: within 30
      days
      following the date that a person first becomes eligible to become a Participant,
      the Participant shall be entitled to make a Change of Control Election which
      will be applicable in the event of a Change of Control (the "Change of Control
      Election").  The Change of Control Election will provide the following
      distribution options to a participant in the event of a Change of Control:
      (i) upon the occurrence of a Change of Control, the entire amount of the
      Participant's Account will be immediately paid in full, to the Participant
      regardless of whether the Participant continues as a Director after the Change
      of Control; (ii) upon and after the occurrence of a Change of Control, the
      entire amount of the Participant's Account will be immediately paid in full
      to
      the Participant, but only if either (a) the Participant is not a Director as
      of
      immediately after the Change of Control, or (b) the Participant ceases to be
      a
      Director within two Years after the Change of Control; or (iii) upon the
      occurrence of a Change of Control, the payment elections specified in the
      Participant's Election Agreement shall govern irrespective of the Change of
      Control.

    

    2.11.2  The
      Corporation may accelerate the making of payment of the amount of a
      Participant's Account to a Participant in the event of an "unforeseeable
      emergency" of the Participant.  For purposes of this Section 2.11.2, the
      term "unforeseeable emergency" shall mean a severe financial hardship to the
      Participant resulting from a sudden and unexpected illness or accident of the
      Participant, the Participant's spouse, or the Participant's dependent (as
      defined in Section 152(a) of the Code), the loss of the Participant's property
      due to casualty, or such other similar extraordinary and unforeseeable
      circumstances arising as a result of events beyond the control of the
      Participant.  The determination of an "unforeseeable emergency" and the
      ability of the Corporation to accelerate the payment of Participant's Account
      shall be determined in accordance with the requirements of Section 409A of
      the
      Code and applicable regulations issued thereunder.

    

    2.12   
        CHANGE OF
      CONTROL.  Notwithstanding any other provision of the Plan to the contrary,
      in the event of a Change of Control, no amendment or modification of this Plan
      may be made at any time on or after such Change of Control (a) to reduce or
      modify a Participant's Pre-Change of Control Account Balance, (b) to reduce
      or
      modify the Interest Bearing Account's rate of earnings on or method of crediting
      such earnings to a Participant's Pre-Change of Control Account Balance, (d)
      to
      reduce or modify the Common Stock Account's method of calculating all earnings,
      gains, and/or losses on a Participant's Pre-Change of Control Account Balance,
      or (e) to reduce or modify the Participant's deferrals to be credited to a
      Participant's Plan Account for the applicable deferral period.  For
      purposes of this Section 2.12, the term "Pre-Change of Control Account Balance"
      shall mean, with regard to any Plan Participant, the aggregate amount of such
      Participant's prior deferrals with all earnings, gains, and losses thereon
      which
      are credited to the Participant's Plan Account through the close of the calendar
      Year in which such Change of Control occurs.

    
      
        
        

      

      
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    2.13   
        INTEREST BEARING
      ACCOUNT AFTER CHANGE OF CONTROL.  In accordance with the provisions of
      Section 2.6 hereof, in the event that Moody's Average Corporate Bond Yield
      Index
      ceases to be published on or after a Change of Control, the Corporation shall
      reasonably select a substantially similar index to be used in crediting earnings
      on Participants' Pre-Change of Control Account Balances held in the Plan's
      Interest Bearing Account.

    

    2.14   
        COMMON STOCK
      CONVERSION.  In the event of a Change of Control in which the Common Stock
      of the Corporation are converted into or exchanged for securities, cash and/or
      other property as a result of any capital reorganization or reclassification
      of
      the capital stock of the Corporation, or as a result of the consolidation or
      merger of the Corporation with or into another corporation or entity, or the
      sale of all or substantially all of its assets to another corporation or entity,
      the Corporation shall cause the Common Stock Account to reflect the securities,
      cash and other property to be received in such reorganization, reclassification,
      consolidation, merger or sale on the balance in the Common Stock Account and,
      from and after such reorganization, reclassification, consolidation, merger
      or
      sale, the Common Stock Account shall reflect all dividends, interest, earnings
      and losses attributable to such securities, cash, and other property (with
      any
      cash earning interest at the rate applicable to the Interest Bearing Account).
      If in such a consolidation, merger or other Change of Control, holders of the
      Company’s Common Stock shall receive any consideration other than common shares
      of the resulting or surviving corporation, the Plan Administrator, in its sole
      discretion, shall determine the appropriate change in Participants’ Common Stock
      Account.

    

    2.15   
        AMENDMENT IN THE
      EVENT OF A CHANGE OF CONTROL.  On or after a Change of Control, the
      provisions of Article I and Article II may not be amended or modified as such
      provisions apply to Participants' Pre-Change of Control Account
      Balances.

    

    2.16   
        STATEMENT. 
Each Participant shall
      receive a statement of his or her Account not less than
      annually.

    

    2.17   
        VALUATION OF
      ACCOUNTS.  

    

    2.17.1  Each
      Account shall be valued as of the last day of each calendar quarter until
      payment of a Participant's Fees in full.  

     

    
      
        
        

      

      
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    2.17.2  If
      a
      Participant has elected to have Fees deferred into the Common Stock Account,
      the
      Corporation shall ascertain the number of shares in the Account after taking
      into all credits and distributions. Automatically and without further action
      by
      the Corporation, if at any time the number of outstanding shares of Common
      Stock
      shall be increased as the result of any stock dividend, stock split,
      recapitalization, merger, consolidation, spin-off, reorganization, subdivision,
      reclassification, combination, exchange of shares, or a similar corporate
      change, the number of shares of Common Stock to which each Participant’s stock
      credit account is equivalent shall be increased in the same proportion as the
      outstanding number of shares of Common Stock is increased, or if the number
      of
      outstanding shares of Common Stock shall at any time be decreased as the result
      of any such corporate change, the number of shares of Common Stock to which
      each
      Participant’s stock credit account is equivalent shall be decreased in the same
      proportion as the outstanding number of shares of Common Stock is
      decreased.

    

    2.17.3  If
      a
      Participant has elected to have Fees deferred into the Interest Bearing Account,
      the Corporation shall ascertain the value of such Interest Bearing Account
      by
      adding to the value of the Account at the beginning of such calendar quarter
      the
      dollar amount of the Fees deferred into the Account for such quarter, plus
      the
      value of any interest paid on the Account in accordance with this Article,
      less
      any distributions made from the Account in accordance with this
      Article.

    

    2.18   
        PLAN
      TRANSFERS.  Participants may elect to transfer vested performance awards
      (other than stock option awards) granted to the Participant under one or more
      compensation plans established by the Corporation to the Plan, provided that
      the
      Participant's election to transfer such vested award is made in accordance
      with
      the requirements of the grant agreement under which the award was issued and
      in
      accordance with the requirements of Section 409A of the Code.  Transferred
      awards shall be subject to full investment diversification if cash based, and
      transferred awards shall be invested in a
      separate Account to be established by the Corporation as Plan administrator
      if
      equity based.  Awards invested in the Plan's Common Stock Account will not
      be subject to investment direction or diversification.  Transferred awards
      shall be separately maintained under the Plan.

    

    ARTICLE
      III - ADMINISTRATION

    

    The
      Corporation shall be responsible for the general administration of the Plan
      and
      for carrying out the provisions hereof.  The Corporation shall have all
      such powers as may be necessary to carry out its duties under the Plan,
      including the power to determine all questions relating to eligibility for
      and
      the amount in an Account, all questions pertaining to claims for benefits and
      procedures for claim review, and the power to resolve all other questions
      arising under the Plan, including any questions of construction.  The
      Corporation may take such further action as the Corporation shall deem advisable
      in the administration of the Plan.  The actions taken and the decisions
      made by the Corporation hereunder shall be final and binding upon all interested
      parties.

    

    ARTICLE
      IV - AMENDMENT AND TERMINATION

    

    The
      Corporation reserves the right to amend or terminate the Plan at any time by
      action of its Board of Directors or any duly authorized Committee of the Board
      of Directors; provided, however, that no such action shall adversely affect
      any
      Participant or Beneficiary with respect to the amount credited to an Account,
      and provided further that any such action shall be subject to the limitations
      set forth in Article II, Sections 2.10 and 2.13.  No amendment or
      termination of the Plan shall result in an acceleration of Plan benefits in
      violation of Section 409A of the Code.

    
      
        
        

      

      
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    ARTICLE
      V
      - MISCELLANEOUS

    

    5.1    NO
      PRESENT
      INTEREST.  Subject to any federal statute to the contrary, no right or
      benefit under the Plan and no right or interest in each Participant's Plan
      Account shall be subject to anticipation, alienation, sale, assignment, pledge,
      encumbrance, or charge, and any attempt to anticipate alienate, sell, assign,
      pledge, encumber, or charge any right or benefit under the Plan, or
      Participant's Plan Account shall be void.  No right, interest, or benefit
      under the Plan or Participant's Plan Account shall be liable for or subject
      to
      the debts, contracts, liabilities, or torts of the Participant or
      Beneficiary.  If the Participant or Beneficiary becomes bankrupt or
      attempts to alienate, sell, assign, pledge, encumber, or charge any right under
      the Plan or Participant's Plan Account, such attempt shall be void and
      unenforceable.

    

    5.2    PLAN
      NONCONTRACTUAL.  Nothing herein contained shall be construed as a
      commitment to or agreement with any Director of the Corporation or a Subsidiary
      to continue such person's directorship with the Corporation or Subsidiary,
      and
      nothing herein contained shall be construed as a commitment or agreement on
      the
      part of the Corporation or any Subsidiary to continue the directorship or the
      rate of director compensation of any such person for any period.  All
      Directors shall remain subject to removal to the same extent as if the Plan
      had
      never been put into effect.

    

    5.3    INTEREST
      OF
      DIRECTOR.  The obligation of the Corporation under the Plan to make payment
      of amounts reflected on an Account merely constitutes the unsecured promise
      of
      only the Corporation to make payments from its general assets as provided
      herein.  Further, no Participant or Beneficiary shall have any claim
      whatsoever against any Subsidiary for amounts reflected on an Account.  At
      its discretion, the Corporation may establish one or more trusts, with such
      trustees as the Corporation may approve, for the purpose of providing for the
      payment of benefits owed under the Plan.  Although such a trust may be
      irrevocable, in the event of insolvency or bankruptcy of the Corporation, such
      assets will be subject to the claims of the Corporation's general creditors.
      To
      the extent any benefits provided under the Plan are paid from any such trust,
      the Corporation shall have no further obligation to pay them.  If not paid
      from the trust, such benefits shall remain the obligation of the
      Corporation.

    

    5.4.   CLAIMS
      OF OTHER
      PERSONS.  The provisions of the Plan shall in no event be construed as
      giving any person, firm, or corporation any legal or equitable rights against
      the Corporation or any Subsidiary, or the officers, employees, or directors
      of
      the Corporation or any Subsidiary, except any such rights as are specifically
      provided for in the Plan or are hereafter created in accordance with the terms
      and provisions of the Plan.

    

    5.4    DELEGATION
      OF
      AUTHORITY.  Any action to be taken by the Corporation's Board of Directors
      under this Plan may be taken by any duly authorized Committee of the Board
      of
      Directors.

    

    5.6    SEVERABILITY. 
      The invalidity and unenforceability of any particular provision of the Plan
      shall not affect any other provision hereof, and the Plan shall be construed
      in
      all respects as if such invalid or unenforceable provisions were omitted
      herefrom.

    

    5.7    GOVERNING
      LAW.  The provisions of the Plan shall be governed and construed in
      accordance with the laws of the State of Oregon and applicable federal
      law.

    
      
        
        

      

      
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    5.8    COMPLIANCE
      WITH CODE SECTION 409A. The Plan is intended to provide for the deferral of
      compensation in accordance with the provisions of Section 409A of the Code
      and
      regulations and published guidance issued pursuant thereto.  Accordingly,
      the Plan shall be construed in a manner consistent with those provisions and
      may
      at any time be amended in the manner and to the extent determined necessary
      or
      desirable by the Corporation to reflect or otherwise facilitate compliance
      with
      such provisions with respect to amounts deferred on and after January 1, 2005,
      including as contemplated by Section 855(f) of the American Jobs Creation Act
      of
      2004.  Notwithstanding any provision of the Plan to the contrary, no
      otherwise permissible election, deferral, accrual, or distribution shall be
      made
      or given effect under the Plan that would result in early taxation or assessment
      of penalties or interest of any amount under Section 409A of the
      Code.

    

    Date
      of
      Adoption by Board of Directors: December 19, 2006.

    
 

    9Exhibit 10.1

    
      

      

    

    
      PURCHASE
        AND SALE AGREEMENT

       

      dated
        as
        of December 18, 2006

       

      between

       

      BRIDGEWATER
        HOTELWORKS ASSOCIATES, L.P., CHARLOTTE HOTELWORKS ASSOCIATES, L.P., GAITHERSBURG
        HOTELWORKS ASSOCIATES, L.P., PLEASANT HILL LODGING PARTNERS, L.P., PLEASANTON
        HOTELWORKS ASSOCIATES, L.P., SCOTTSDALE HOTELWORKS ASSOCIATES, L.P.
and
        HARRISON HOTELWORKS ASSOCIATES, L.P.

       

      collectively,
        as Sellers,

       

      and

       

      Hersha
        Hospitality Limited Partnership

       

      as
        Purchaser

       

      
        

        

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      Table
        of Contents

      

      Page

       

      
        
          	
                  ARTICLE
                    1  DEFINITIONS; RULES OF CONSTRUCTION

                	
                  1

                
	
                  1.1
                     Definitions

                	
                  1

                
	
                  1.2 
                    Rules of Construction

                	
                  11

                
	
                  ARTICLE
                    2  PURCHASE AND SALE; STUDY PERIOD; PAYMENT OF
                    CONSIDERATION

                	
                  12

                
	
                  2.1
                     Purchase and Sale

                	
                  12

                
	
                  2.2 
                    Study Period.

                	
                  13

                
	
                  ARTICLE
                    3  SELLERS’ REPRESENTATIONS, WARRANTIES AND COVENANTS

                	
                  15

                
	
                  3.1
                     Identity and Power.

                	
                  15

                
	
                  3.2 
                    Authorization, No Violations and Notices.

                	
                  16

                
	
                  3.3 
                    Litigation With Respect to Sellers

                	
                  17

                
	
                  3.4 
                    Property

                	
                  17

                
	
                  3.5
                     Bankruptcy with Respect to Sellers

                	
                  17

                
	
                  3.6
                     Brokerage Commission

                	
                  18

                
	
                  3.7 
                    Contracts and Agreements

                	
                  18

                
	
                  3.8 
                    No Special Taxes

                	
                  18

                
	
                  3.9 
                    Compliance with Existing Laws.

                	
                  18

                
	
                  3.10 
                    Operating Agreements

                	
                  19

                
	
                  3.11
                     Warranties and Guaranties

                	
                  19

                
	
                  3.12 
                    Insurance

                	
                  19

                
	
                  3.13 
                    Condemnation Proceedings; Roadways

                	
                  20

                
	
                  3.14
                     Labor Disputes and Agreements

                	
                  20

                
	
                  3.15
                     Financial Information

                	
                  20

                
	
                  3.16
                     Organizational Documents

                	
                  20

                
	
                  3.17 
                    Hazardous Substances

                	
                  21

                
	
                  3.18 
                    Franchise Licenses

                	
                  21

                
	
                  3.19
                     Leases

                	
                  21

                
	
                  3.20 
                    Sufficiency of Certain Items

                	
                  21

                
	
                  3.21
                     FF&E; Fixed Asset Supplies and Inventories

                	
                  22

                
	
                  3.22
                     Disclosure Schedules

                	
                  22

                
	
                  ARTICLE
                    4  PURCHASER’S REPRESENTATIONS, WARRANTIES AND
                    COVENANTS

                	
                  22

                
	
                  4.1
                     Identity and Power.

                	
                  22

                
	
                  4.2 
                    Authorization, No Violations and Notices.

                	
                  23

                
	
                  4.3 
                    Noncontravention

                	
                  24

                
	
                  4.4
                     Litigation

                	
                  24

                
	
                  4.5 
                    Bankruptcy

                	
                  24

                
	
                  4.6 
                    No Brokers

                	
                  24

                
	
                  ARTICLE
                    5  PURCHASER’S CONDITIONS AND SELLERS’ ADDITIONAL
                    COVENANTS

                	
                  24

                
	
                  5.1 
                    Sellers’ Deliveries

                	
                  24

                
	
                  5.2 
                    Representations, Warranties and Covenants; Obligations of Sellers;
                    Certificate

                	
                  24

                
	
                  5.3 
                    Title Insurance

                	
                  25

                
	
                  5.4 
                    Condition of Improvements

                	
                  25

                
	
                  5.5 
                    Utilities

                	
                  25

                
	
                  5.6 
                    Management Agreements.

                	
                  25

                

        

         

        
          
            
            

          

          
            i

            
              

            

          

          
            
            

          

        

        Table
          of Contents

        (continued)

        Page

        

        
          	
                  5.7 
                    Liquor License

                	
                  26

                
	
                  5.8 
                    Property

                	
                  26

                
	
                  5.9 
                    Property Material Adverse Effect

                	
                  26

                
	
                  5.10 
                    Form of Agreements

                	
                  27

                
	
                  ARTICLE
                    6  CLOSING

                	
                  27

                
	
                  6.1
                     Closing

                	
                  27

                
	
                  6.2 
                    Sellers’ Deliveries

                	
                  27

                
	
                  6.3
                     Purchaser’s Deliveries

                	
                  29

                
	
                  6.4 
                    Closing Costs

                	
                  30

                
	
                  6.5 
                    Apportionments and Other Economic Adjustments.

                	
                  30

                
	
                  6.6
                     Safes and Baggage.

                	
                  35

                
	
                  6.7 
                    Pre-Closing Interim Operation

                	
                  36

                
	
                  ARTICLE
                    7  CONDEMNATION; RISK OF LOSS

                	
                  38

                
	
                  7.1 
                    Condemnation

                	
                  38

                
	
                  7.2
                     Risk of Loss

                	
                  39

                
	
                  ARTICLE
                    8  LIABILITY OF PURCHASER; INDEMNIFICATION BY SELLERS; TERMINATION
                    RIGHTS

                	
                  39

                
	
                  8.1 
                    Liability of Purchaser

                	
                  39

                
	
                  8.2 
                    Indemnification by Sellers

                	
                  40

                
	
                  8.3 
                    Termination by Purchaser.

                	
                  40

                
	
                  8.4 
                    Termination by Sellers.

                	
                  41

                
	
                  8.5 
                    Limitation on Indemnity Obligations

                	
                  42

                
	
                  8.6
                     Survival of Article 8

                	
                  42

                
	
                  ARTICLE
                    9  SELLERS’ CONDITIONS AND PURCHASER’S ADDITIONAL
                    COVENANTS

                	
                  42

                
	
                  9.1
                     Sellers’ Deliveries

                	
                  42

                
	
                  9.2
                     Representations, Warranties and Covenants; Obligations of Sellers;
                    Certificate

                	
                  42

                
	
                  9.3 
                    Franchise Licenses

                	
                  42

                
	
                  9.4 
                    Form of Agreements

                	
                  43

                
	
                  ARTICLE
                    10  ESCROW TERMS

                	
                  43

                
	
                  10.1 
                    The Escrow Agent shall hold the Deposit in escrow on the following
                    terms
                    and conditions:

                	
                  43

                
	
                  ARTICLE
                    11  MISCELLANEOUS PROVISIONS

                	
                  44

                
	
                  11.1 
                    Completeness; Modification

                	
                  44

                
	
                  11.2 
                    Assignments

                	
                  45

                
	
                  11.3 
                    Successors and Assigns

                	
                  45

                
	
                  11.4 
                    Days

                	
                  45

                
	
                  11.5 
                    Governing Law

                	
                  45

                
	
                  11.6 
                    Counterparts

                	
                  45

                
	
                  11.7 
                    Severability

                	
                  45

                
	
                  11.8 
                    Costs

                	
                  45

                
	
                  11.9 
                    Notices

                	
                  46

                
	
                  11.10
                     Incorporation by Reference

                	
                  47

                
	
                  11.11
                     Survival

                	
                  47

                

        

         

        
          
            
            

          

          
            ii

            
              

            

          

          
            
            

          

        

        Table
          of Contents

        (continued)

        Page

        

        
          	
                  11.12 
                    Further Assurances

                	
                  47

                
	
                  11.13 
                    No Partnership

                	
                  48

                
	
                  11.14
                     Time of Essence

                	
                  48

                
	
                  11.15
                     Confidentiality

                	
                  48

                
	
                  11.16
                     Publicity

                	
                  48

                
	
                  11.17 
                    Joint and Several

                	
                  48

                
	
                  11.18
                     Exchange

                	
                  48

                
	
                  11.19 
                    Sellers’ Representatives

                	
                  49

                
	
                  11.20 
                    Financials

                	
                  49

                

        

      

       

      
        
          
          

        

        
          iii

          
            

          

        

        
          
          

        

      

      

      PURCHASE
        AND SALE AGREEMENT

       

      This
        PURCHASE AND SALE AGREEMENT, dated as of the 18th day of December, 2006,
        (this
“Agreement”) between BRIDGEWATER
        HOTELWORKS ASSOCIATES, L.P., CHARLOTTE HOTELWORKS ASSOCIATES,
        L.P., GAITHERSBURG
        HOTELWORKS ASSOCIATES, L.P., PLEASANT
        HILL LODGING PARTNERS, L.P., PLEASANTON HOTELWORKS ASSOCIATES, L.P., SCOTTSDALE
        HOTELWORKS ASSOCIATES, L.P., and
        HARRISON HOTELWORKS ASSOCIATES, L.P.,
        each a
        Kansas
        limited partnership (each, a “Seller”
and
        collectively, “Sellers”),
        and
HERSHA
        HOSPITALITY LIMITED PARTNERSHIP,
        a
        Virginia limited partnership, (“Purchaser”),
        provides:

       

      ARTICLE
        1

      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 member, general partner or shareholder 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 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 member, general
        partner or shareholder 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, member
        or shareholder, (2) the appointment of a receiver, custodian, trustee or
        liquidator for such party or general partner, member or shareholder 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.

       

      
        
          
          

        

        
          -
            1 -

          
            

          

        

        
          
          

        

      

      “Agreement
        Date”
shall
        mean the date first written above in the preamble of this
        Agreement.

       

      “Allocated
        Purchase Price”
shall
        mean, for each Property, the Allocated Purchase Price for such Property as
        set
        forth in Exhibit
        A.

       

      “Amended
        and Restated Space Lease” shall
        mean the Amended and Restated Space Lease substantially in the form annexed
        hereto as Exhibit
        F-2.

       

      “Apportionment
        Date”
shall
        mean December 31, 2006.

       

      “Assignment
        and Assumption Agreement”
shall
        mean one or more Assignment and Assumption Agreements, dated as of the Closing
        Date by and between Sellers and Purchaser or its designees, whereby Sellers
        assign and Purchaser or its designees assume all of Sellers’ right, title and
        interest in, to and under all licenses, contracts, leases, permits and
        agreements affecting the Portfolio that Purchaser has expressly agreed to
        assume
        in writing on or before the Closing Date. 

       

      “Authorizations”
shall
        mean all licenses (including, without limitation, the liquor licenses for
        the
        Hotels, if any), permits and approvals required by any governmental or
        quasi-governmental agency, body or officer for the ownership, operation and
        use
        of any Property or any part thereof.

       

      “Brand”
shall
        mean Summerfield Suites by Hyatt.

       

      “Chicago
        HotelWorks”
shall
        mean Chicago HotelWorks Hospitality Corporation, a Kansas corporation.

       

      
        
          
          

        

        
          -
            2 -

          
            

          

        

        
          
          

        

      

      “Closing”
shall
        mean the closing of the sale and acquisition of the Portfolio pursuant to
        this
        Agreement.

       

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

       

      “Code”
shall
        mean the Internal Revenue Code of 1986, as amended.

       

      “Consideration”
shall
        mean the excess of (a) One Hundred Sixty Nine Million Dollars ($169,000,000.00)
        over (b) the sum of (i) the Allocated Purchase Prices for the Excluded
        Properties and (ii) Sellers’ CapX Amount.

       

      “Deposit”
shall
        mean the amount of Eleven Million Dollars ($11,000,000) (or, at Purchaser’s
        election, an irrevocable letter of credit in like amount in the form annexed
        hereto as Exhibit
        C, together
        with interest accrued thereon, which shall be fully refundable in accordance
        with the provisions of this Agreement. 

       

      “Earn-Out
        Agreement”
shall
        mean the Earn-Out Agreement to be entered into by Hersha Hospitality Limited
        Partnership and Sellers on the Closing Date, which Earn-Out Agreement shall
        be
        in the form annexed hereto as Exhibit
        K.

       

      “Employees”
shall
        mean the personnel employed to operate the Hotels.

       

      “Employment
        Agreements”
shall
        mean any and all employment agreements, written or oral, between any Seller
        or
        its managing agent and any Employee.

       

      “Environmental
        Laws”
        shall
        mean any federal, state or local environmental laws, ordinances, rules,
        regulations, administrative or judicial orders, or any other environmental
        requirements. 

       

      “Escrow
        Agent”
shall
        mean All American Abstract Company, Inc., having an address at 2854 Egypt
        Road,
        Audubon, Pennsylvania 19403.

       

      “Excluded
        Assets”
shall
        mean:

       

      
        
          
          

        

        
          -
            3 -

          
            

          

        

        
          
          

        

      

       

      (a) 
        all
        cash
        (other than House Banks to the extent Purchaser elects to purchase the same),
        bank accounts and money invested with financial institutions and other liquid
        assets of Sellers;

       

      (b) 
        any
        interest in and to any refund of Property Taxes (hereinafter defined) relating
        to the Portfolio or its operations for
        the
        period on or before the Apportionment Date;

       

      (c)
         all
        credits, claims for refund, prepaid expenses, deferred charges, escrow accounts,
        advance payments, security or other deposits, including recoverable deposits,
        and prepaid items (and, in each case, security interests relating thereto)
        arising from or in connection with, or related to, the Portfolio, its contracts
        or assets;

       

      (d) 
        all
        claims or rights of Sellers against anyone arising on or before the
        Apportionment Date;

       

      (e) 
        all
        insurance policies owned by any Seller and all rights, claims, proceeds and
        causes of action of any Seller under insurance policies and all rights in
        the
        nature of insurance, indemnification or contribution relating to such Seller
        or
        its Property, except as otherwise provided in this Agreement;

       

      (f) 
        all
        of
        Sellers’ rights under this Agreement and any other agreement to sell assets of
        Sellers now existing or in the future and all cash and non-cash consideration
        payable or deliverable to Sellers pursuant to the terms and provisions hereof
        and thereof;

       

      (g) 
        Sellers’
        interest in any Land Lease or Operating Agreement that is not assumable by
        Purchaser;

       

      (h) 
        all
        items
        listed on Exhibit
        B;
        

       

      (i) 
        Sellers’
        interest in, and obligations under, any Employment Agreements; 

       

      (j) 
        all
        books
        and records of Sellers that do not relate primarily to the Hotels, financial
        statements, and accounting ledgers, records, and work-papers; 

      
        
          
          

        

        
          -
            4 -

          
            

          

        

        
          
          

        

      

       

      (k) 
        Sellers’ interest in, to and under the Disposition and Development Agreement
        dated May 31, 2001 between the Pleasant Hill Redevelopment Agency and Pleasant
        Hill Lodging Partners, L.P., as amended; and

       

      (l) 
        the Excluded Properties.

       

      “Excluded
        Properties”
is
        a
        collective reference to the Properties which have been excluded from the
        within
        purchase and sale pursuant to the express provisions hereof.

       

      “Existing
        Franchise Licenses”
shall
        mean the existing Franchise Licenses, pursuant to which Sellers operate the
        Properties under the Brand.

       

      “FF&E”
shall
        mean all tangible property and fixtures (which are not part of the Real
        Property) of any kind attached to or located upon, and used in connection
        with
        the ownership, maintenance, use or operation of, the Hotels as of the date
        hereof (or acquired by any Seller and so employed prior to Closing) including,
        but not limited to, all furniture, fixtures, equipment, signs; all heating,
        lighting, plumbing, drainage, electrical, air conditioning, and other mechanical
        fixtures and equipment and systems; all copy machines, computers, software,
        facsimile machines and other office equipment; all elevators, escalators,
        and
        related motors and electrical equipment and systems; all hot water heaters,
        furnaces, heating controls, motors and boiler pressure systems and equipment;
        all shelving and partitions; all ventilating equipment, and all incinerating
        and
        disposal equipment; all tennis, pool and health club and fitness equipment
        and
        furnishings; all vans, automobiles and other motor vehicles; all carpets,
        drapes, beds, furniture, furnishings, televisions, telephones and similar
        property; all stoves, ovens, freezers, refrigerators, dishwashers, disposals,
        kitchen equipment and utensils, tables, chairs, plates and other dishes,
        glasses, silverware, serving pieces and other restaurant and bar equipment,
        apparatus and utensils; all audiovisual equipment, banquet equipment and
        laundry
        equipment; exclusive of (a) any personal property leased under the Operating
        Agreements, (b) items belonging to guests and tenants under the rooms
        agreements, and (c) the items, if any, listed on Exhibit
        G.

       

      “FF&E
        Reserve”
shall
        mean the balance of funds reserved for the future replacement of furniture
        fixtures and equipment and/or for other capital projects that are required
        under
        the Existing Franchise Licenses to be on deposit on the Closing Date, taking
        into account permitted withdrawals.

       

      
        
          
          

        

        
          -
            5 -

          
            

          

        

        
          
          

        

      

       

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

       

      “Fixed
        Asset Supplies”
        shall
        mean all items included within the category “Property and Equipment” under the
        Uniform System of Accounts including, but not limited to linens, china,
        glassware, tableware, uniforms and similar items whether used in connection
        with
        public spaces or guest rooms.  

       

       “Franchise
        License”
shall
        mean, for each Hotel, the license granted by the Franchisor enabling such
        Hotel
        to operate under the Brand. 

       

      “Franchisor”
shall
        mean Summerfield Hotel Company, L.L.C.

       

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

       

      “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: (1) potentially
        injurious to the public health, safety or welfare, the environment or any
        Property, (2) regulated, monitored or defined as a hazardous or toxic substance
        or waste by any Governmental Body, or (3) a basis for liability of the owner
        of
        any Property to any Governmental Body or third party. Hazardous Substances
        shall
        include, but not be limited to, hydrocarbons, petroleum, gasoline, crude
        oil, or
        any products, by-products or components thereof, and asbestos and
        mold.

       

      “Hotel”
shall
        mean any of the hotels (together with its related amenities) listed on
Exhibit
        A.

       

      “House
        Banks”
shall
        mean petty cash funds and cashiers’ banks.

       

      
        
          
          

        

        
          -
            6 -

          
            

          

        

        
          
          

        

      

       

      “Immediate
        CapX”
shall
        mean the PIP (hereinafter defined) required by Franchisor in connection with
        the
        New Franchise Licenses and any Lender Required CapX.

       

      “Immediate
        CapX Amount”
shall
        mean the cost of the Immediate CapX.

       

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

       

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

       

      “Intangible
        Personal Property”
shall
        mean all intangible personal property owned or possessed by any Seller and
        used
        in connection with the ownership, operation, leasing, occupancy or maintenance
        of the Hotels (other than the Excluded Assets and the Existing Franchise
        Licenses) including, without limitation, the Authorizations, Sellers’ interest
        in any Land Leases, Sellers’ interest in any Operating Agreements that Purchaser
        or its designees have agreed to assume, Sellers’ interest in any construction,
        equipment, service or other types of guarantees and warranties, general
        intangibles, business records, plans and specifications, surveys, all other
        licenses which are transferable, permits and approvals with respect to the
        construction, ownership, operation, leasing, occupancy or maintenance of
        the
        Properties, and 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, excluding (a) the Excluded Assets which shall be maintained and/or
        distributed to Sellers prior to the Closing Date and (b) any of the aforesaid
        rights Purchaser elects not to acquire. 

       

      “Inventory”
or
        “Inventories”
shall
        mean all inventories of supplies of any kind owned by any Seller and used
        in the
        operation of the Hotels (irrespective of whether such are located on the
        premises or stored off premises) including without limitation, all mattresses,
        pillows, bed linens, towels, paper goods, soaps, cleaning supplies, foodstuff,
        beverage inventories, utensils, and other such supplies.

       

      “Knowledge”
shall
        mean,
        with
        respect to Sellers,
        the
        actual knowledge of B.
        Anthony Isaac,
        Donald
        Marvin, John Cantele, Greg Epp, Roy Baker, Michael Daood, Stuart Shannon
        and
        Alan Mass; and, with respect to Purchaser, the actual knowledge of
        Robert
        Hazard, Neil H. Shah and Ashish R. Parikh.

       

      
        
          
          

        

        
          -
            7 -

          
            

          

        

        
          
          

        

      

       

      “Land”
shall
        mean the parcels of real estate more particularly described on Exhibit
        E
        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 any Seller
        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.

       

      “Land
        Leases”
shall
        mean any lease of real property or other occupancy agreement relating to
        any
        Property pursuant to which any Seller or its affiliate is the
        lessee.

       

      “Lender”
is
        a
        collective reference to any mortgage lenders providing financing to Purchaser
        to
        pay any part of the Consideration.

       

      “Lender
        Required CapX”
shall
        mean any repairs and replacements proposed by Purchaser’s third-party property
        condition inspector(s) (other than the PIP) for which Lender requires that
        funds
        at Closing be escrowed.

       

      “Manager”
shall
        mean LodgeWorks, L.P.

       

      “Management
        Agreement”
shall
        mean with respect to each Property in the Portfolio, a Management Agreement
        for
        such Property between Manager and an affiliate of Purchaser, which Management
        Agreement shall be substantially in the form annexed hereto as Exhibit G.

       

      “Material
        Authorizations”
is
        a
        collective reference to all Authorizations other than those which if not
        obtained and kept in full force and effect, individually or in the aggregate,
        could not have a Property Material Adverse Effect.

       

      “New
        Franchise Licenses”
shall
        mean the Franchise Licenses that Purchaser or its affiliate(s) shall enter
        into
        with Franchisor as a condition to Closing.

       

      
        
          
          

        

        
          -
            8 -

          
            

          

        

        
          
          

        

      

       

      “Operating
        Agreements”
shall
        mean the service contracts, supply contracts, Space Leases, leases (other
        than
        the Land Leases) and other agreements, if any, in effect with respect to
        the
        construction, ownership, operation, occupancy or maintenance of the Properties.
        

       

      “Outside
        Closing Date”
shall
        mean January 3, 2007; provided,
        however,
        if any
        of the events referred to in Sections 7.1
        or
7.2
        shall
        occur within thirty (30) days prior to the Outside Closing Date, at Purchaser’s
        election, the Outside Closing Date shall be extended to the day that is thirty
        (30) days after such occurrence. 

       

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

       

      “Pooling
        Agreement”
shall
        mean the Pooling Agreement to be entered into on the Closing Date by Purchaser
        or its designees and Manager, which Pooling Agreement shall be in the form
        annexed hereto as Exhibit
        H.

       

      “Portfolio”
is
        a
        collective reference to the Properties excluding the Excluded
        Properties.

       

      “Portfolio
        Material Adverse Effect”
shall
        mean any circumstance or event which individually or in the aggregate could
        have
        a material adverse effect on the Portfolio or the use thereof contemplated
        by
        Purchaser excluding any change in general economic, business or political
        conditions affecting the lodging industry.

       

      “Property”
shall
        mean with respect to each Hotel, the Land, Improvements, the Inventory, Systems,
        FF&E Reserve, the Tangible Personal Property and the Intangible Personal
        Property associated with such Hotel.

       

      “Property
        Material Adverse Effect”
shall
        mean any circumstance or event which individually or in the aggregate could
        have
        a material adverse effect on any Property or the use of such Property
        contemplated by Purchaser
        excluding any change in general economic, business or political conditions
        affecting the lodging industry.

       

      “Purchaser’s
        CapX Amount”
shall
        mean $2,500,000; provided, however, (a) if the Property in Charlotte, NC
        shall
        be excluded from the within sale pursuant to the terms hereof, Purchaser’s CapX
        Amount shall be reduced by $1,500,000 and (b) if any other Property shall
        be
        excluded from the within sale pursuant to the terms hereof, Purchaser’s CapX
        Amount shall be reduced by an amount equal to $1,161 multiplied by the number
        of
        guest rooms in such Property.

       

      
        
          
          

        

        
          -
            9 -

          
            

          

        

        
          
          

        

      

       

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

       

      “Sellers’
        CapX Amount”
shall
        mean the excess of the Immediate CapX Amount over the Purchaser’s CapX
        Amount.

       

      “Sellers’
        Representative”
shall
        mean LodgeWorks, L.P.

       

      “Space
        Lease”
shall
        mean a lease or other occupancy agreement with a term in excess of thirty
        (30)
        days between any Seller, as lessor, and a third party, as lessee, for any
        portion of the Properties.

       

      “Study
        Period”
shall
        mean a period terminating on the date of execution of this
        Agreement.

       

      “Systems”
shall
        mean, without limitation, the equipment, supplies, licenses and software
        required to operate the Franchisor’s reservation system, the property management
        system, point-of-sales system, telephone system, wireless or cabled internet
        service system, back office system, fire-life safety system, surveillance
        system, time clock system and other systems used in the marketing or operations
        of the Hotels, all of which include requisite cabling, user manuals, warranty
        certificates, software and any written and any electronic books and records
        produced by the Systems. Systems shall not include any Seller’s interest in any
        Operating Agreements applicable to a particular system that is not assumable
        or
        that Purchaser or its designees have not agreed to assume.

       

      “Tangible
        Personal Property”
shall
        mean all tangible items of personal property, other than the Excluded Assets,
        used in or requisite to the operations of the Hotels including, but not limited
        to all FF&E situated on, attached to, or used in the operation of the
        Hotels.

       

      “Target
        Closing Date”
shall
        mean December 27, 2006.

       

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

       

      
        
          
          

        

        
          -
            10 -

          
            

          

        

        
          
          

        

      

       

      “Title
        Policy”
shall
        mean one or more policies of title insurance with appropriate endorsements
        issued to Purchaser or its designees by the Title Company, dated as of the
        Closing Date, pursuant to which the Title Company insures Purchaser’s or its
        designees’ ownership of fee simple title to the Real Property forming part of
        the Portfolio (including the marketability thereof) subject only to Permitted
        Title Exceptions. The aggregate amount of the Title Policies shall equal
        the
        Consideration, and each Title Policy shall be acceptable in all respects
        in form
        and substance to Purchaser. 

       

      “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 Properties as a
        hotel.

       

      
        	
                1.2

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

              

      

       

      
        	 	
                (a)

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

              

      

       

      
        	 	
                (b)

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

              

      

       

      
        	 	
                (c)

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

              

      

       

      
        	 	
                (d)

              	
                Each
                  party hereto and its counsel have reviewed and revised (or requested
                  revisions of) this Agreement, and, therefor, 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.

              

      

       

      
        	 	
                (e)

              	
                Any
                  reference to a “business day” shall mean Monday through Friday, United
                  States federal and bank holidays
                  excepted.

              

      

       

      
        
          
          

        

        
          -
            11 -

          
            

          

        

        
          
          

        

      

       

      
        	 	
                (f)

              	
                Wherever
                  the word “including” is used in this Agreement, it shall be deemed to be
                  followed by the words “without limitation”.

              

      

       

      ARTICLE
        2

      PURCHASE
        AND SALE; STUDY PERIOD;

      PAYMENT
        OF CONSIDERATION

       

      
        	
                2.1

              	
                Purchase
                  and Sale.
                  In consideration of the payment of the Consideration by Purchaser
                  to
                  Sellers, other good and valuable consideration received by each
                  of the
                  parties hereto, and intending to be legally bound hereby, Sellers
                  agree to
                  sell, assign and transfer the Portfolio to Purchaser or one or
                  more of its
                  designees, and Purchaser agrees to, or to cause one or more of
                  its
                  designees to, purchase the Portfolio, in accordance with the terms
                  and
                  conditions set forth herein. 

              

      

       

      
        	 	
                (a)

              	
                The
                  Consideration shall be paid as
                  follows:

              

      

       

      
        	 	
                (i)

              	
                On
                  or prior to the date hereof, Purchaser shall have deposited the
                  Deposit
                  with Escrow Agent;

              

      

       

      
        	 	
                (ii)

              	
                Upon
                  Closing, at Purchaser’s election, the Deposit shall be credited to the
                  Consideration or, provided the Consideration is simultaneously
                  paid in
                  full to Escrow Agent, returned to
                  Purchaser;

              

      

       

      
        	 	
                (iii)

              	
                The
                  balance of the Consideration shall be paid by Purchaser by wire
                  transfer
                  to the Escrow Agent at the Closing in cash. The Escrow Agent shall
                  provide
                  Purchaser at least two (2) days prior to the Closing with Escrow
                  Agent’s
                  wiring instructions for the payment of the
                  Consideration.

              

      

       

      
        	 	
                (b)

              	
                The
                  Consideration shall be held by the Escrow Agent to be released
                  to Sellers’
                  Representative in accordance with the provisions of this Agreement.
                  Sellers’
                  Representative shall
                  provide Escrow Agent at least two (2) days prior to the Closing
                  with
                  Sellers’ Representative’s wiring instructions for the payment of the
                  Consideration.

              

      

       

      
        	 	
                (c)

              	
                If
                  all or any part of the Deposit is in the form of a letter of credit
                  and
                  Purchaser is entitled to the return of the Deposit, Seller shall
                  promptly
                  deliver to Purchaser a letter authorizing the cancellation and
                  termination
                  thereof. The terms of this Section
                  2.1(c)
                  shall survive the Closing and termination of this
                  Agreement.

              

      

       

      
        
          
          

        

        
          -
            12 -

          
            

          

        

        
          
          

        

      

       

      
        	 	
                (d)

              	
                Upon
                  its receipt of payments on account of the Consideration, Sellers’
                  Representative will remit to each of the Sellers so much thereof
                  as each
                  such other party may be entitled. Purchaser shall have no responsibility
                  with respect to the allocation or distribution of the Consideration
                  among
                  Sellers except for the payment thereof to Sellers’
                  Representative.

              

      

       

      
        	
                2.2

              	
                Study
                  Period. 

              

      

       

      
        	 	
                (a)

              	
                Purchaser
                  has been granted the right to enter upon the Real Property and
                  to perform,
                  at Purchaser’s expense, such economic, surveying, engineering,
                  topographic
                  and marketing tests, studies and investigations,
                  including a Phase I environmental study,
                  as
                  Purchaser may have deemed appropriate.
                  Sellers have provided to Purchaser all Phase I environmental studies
                  that
                  Sellers have with respect to the Properties.
                  Purchaser shall indemnify Sellers for any loss, damage or liabilities
                  to
                  the extent caused by Purchaser’s acts or omissions at the Properties in
                  connection with exercising its rights under this Section
                  2.2(a).

              

      

       

      
        	 	
                (b)

              	
                Sellers
                  have provided Purchaser access to all records and information concerning
                  the Properties in Sellers’ possession or control, and have made available
                  to Purchaser, its agents, auditors, engineers, attorneys and other
                  designees, for inspection copies of all such records and information
                  including existing architectural and engineering studies, ALTA
                  surveys,
                  existing title insurance policies, zoning and site plan materials,
                  correspondence relating to environmental or title issues, environmental
                  audits, environmental reports, zoning compliance letters, tax returns,
                  accounts, financial reports from the date of commencement of hotel
                  operations, existing franchise agreements, current property improvement
                  plans, the current deed, historical reports on capital expenditures,
                  forward-looking capital budgets, permits, licenses, operating and
                  services
                  contracts, Sellers’ organizational and governing documents, and all other
                  materials or information relating to the Properties requested by
                  Purchaser
                  and in Sellers’ possession or
                  control.

              

      

       

      
        
          
          

        

        
          -
            13 -

          
            

          

        

        
          
          

        

      

       

      
        	 	
                (c)

              	
                Purchaser
                  has caused an examination of title to the Properties to be made
                  and has
                  notified Sellers of any defects in title shown by such examination
                  that
                  Purchaser is unwilling to accept. Sellers have notified Purchaser
                  whether
                  Sellers are willing to cure such defects and to proceed to Closing.
                  Sellers may cure, but shall not be obligated to cure such defects;
                  provided,
                  however,
                  if such defects consist of mortgages, deeds of trust, mechanics’ liens,
                  tax liens or other liens or charges in a fixed sum or capable of
                  computation as a fixed sum or results from anything done by any
                  Seller
                  after the Agreement Date, Sellers shall pay and discharge (in which
                  event,
                  the Escrow Agent is authorized to pay and discharge at Closing)
                  all such
                  obligations at or prior to Closing such that all such defects are
                  removed.
                  If Sellers are unwilling or unable to cure any defects by Closing
                  (other
                  than those which it is obligated to cure), Purchaser shall elect
                  (1) to
                  waive such defects and proceed to Closing or (2) to terminate this
                  Agreement and immediately receive a return of the Deposit. Sellers
                  shall take all commercially reasonable efforts to prevent the Properties
                  from being subjected to any liens, encumbrances, covenants, conditions,
                  restrictions, easements or other title matters or seek any zoning
                  changes
                  or take any other action which may affect or modify the status
                  of title
                  without Purchaser’s prior written consent, which consent shall not be
                  unreasonably withheld or delayed. All title exceptions other than
                  those
                  that are to be paid or cured as provided above, those first disclosed
                  by
                  the Title Company after the date of Purchaser’s title examination for a
                  Property and those objected to by Purchaser prior to the end of
                  the Study
                  Period shall be deemed Permitted Title Exceptions. Further,
                  any title exception which is waived by Purchaser shall be a Permitted
                  Title Exception.

              

      

       

      
        	 	
                (d)

              	
                [INTENTIONALLY
                  OMITTED]

              

      

       

      
        	 	
                (e)

              	
                Sellers
                  have contacted Franchisor and (i) formally notified Franchisor
                  of the
                  transaction contemplated in this Agreement, (ii) scheduled an inspection
                  of the Hotels for the purpose of issuing New Franchise Licenses
                  and (iii)
                  taken such other actions as may be required under the Existing
                  Franchise
                  Licenses to facilitate Purchaser’s ability to secure New Franchise
                  Licenses. Sellers shall copy Purchaser on all correspondence between
                  Sellers and Franchisor in this
                  regard.

              

      

       

      
        
          
          

        

        
          -
            14 -

          
            

          

        

        
          
          

        

      

       

      
        	 	
                (f)

              	
                Purchaser
                  has initiated the application process for New Franchise
                  Licenses. 

              

      

       

      ARTICLE
        3

      SELLERS’
        REPRESENTATIONS, WARRANTIES AND COVENANTS

       

      To
        induce
        Purchaser to enter into this Agreement and to purchase the Portfolio, subject to
        the matters disclosed in Schedule
        3.1 through
        Schedule
        3.22 (collectively,
        the "Disclosure
        Schedules"),
        each
        Seller hereby makes the representations, warranties and covenants set forth
        in
        this Article
        3,
        each
        of
        which are true and correct, and shall be true and correct as of the Closing,
        and
upon
        each
        of which the Sellers acknowledge and agree that Purchaser is entitled to
        rely
        and has relied upon. Any information set forth in one section of the Disclosure
        Schedules will be deemed to apply to each other Section or subsection of
        this
        Agreement. If Sellers first discover after the date hereof that they failed
        to
        include any matter which should have been included in the Disclosure Schedules,
        Sellers shall be entitled to update the Disclosure Schedules to include such
        matter by written notice given to Purchaser on or before the expiration of
        the
        Study Period. To the extent that prior to the expiration of the Study Period
        Purchaser has Knowledge that any of the representations or warranties contained
        in this Article
        3 have
        been
        breached and Purchaser elects to proceed with Closing, Purchaser shall be
        deemed
        to have waived such breach. 

       

      
        	
                3.1

              	
                Identity
                  and Power. 

              

      

       

      
        	 	
                (a)

              	
                Each
                  Seller has all requisite powers and all governmental licenses,
                  authorizations, consents and approvals necessary to carry on its
                  business
                  as now conducted, to execute and deliver this Agreement and any
                  document
                  or instrument required to be executed and delivered on behalf of
                  it
                  hereunder, to perform its obligations under this Agreement and
                  any such
                  other documents or instruments and to consummate the transactions
                  contemplated hereby; and

              

      

       

      
        	 	
                (b)

              	
                Each
                  Seller is a limited partnership duly organized, validly existing
                  under the
                  laws of the State of Kansas, and has all requisite power and authority
                  under the laws of such State and under its charter documents to
                  conduct
                  its business and enter into and perform its obligations under this
                  Agreement and to consummate the transactions contemplated hereby.
                  Each
                  Seller has duly qualified and is in good standing as a limited
                  partnership
                  in the State in which any Property owned by it is
                  located.

              

      

       

      
        
          
          

        

        
          -
            15 -

          
            

          

        

        
          
          

        

      

       

      
        	
                3.2

              	
                Authorization,
                  No Violations and Notices. 

              

      

       

      
        	 	
                (a)

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

              

      

       

      
        	 	
                (b)

              	
                Neither
                  the execution, delivery, or performance by any Seller of this Agreement,
                  nor the consummation of the transactions contemplated hereby, nor
                  compliance by such Seller 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, which, with the passage of time, the giving
                  of
                  notice, 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 any Sellers, under any of the terms, conditions, or provisions
                  of its Certificate of Limited Partnership, Articles of Organization,
                  Articles of Incorporation, the Limited Partnership Agreement, Operating
                  Agreement or Bylaws, as applicable, licenses, leases, agreements,
                  or other
                  instruments, or obligation to which Seller is a party, or by which
                  Seller
                  may be bound, or to which any Seller, any Property or any of its
                  other
                  assets may be subject other than the Existing Franchise Licenses
                  and the
                  documents executed in connection with Sellers’ existing mortgage
                  financings which will be fully discharged on the Closing
                  Date;

              

      

       

      
        
          
          

        

        
          -
            16 -

          
            

          

        

        
          
          

        

      

       

      
        	 	
                (ii)

              	
                violate
                  any judgment, ruling, order, writ, injunction or decree applicable
                  to any
                  Seller, or the Properties or any of Sellers’ other assets;
                  or

              

      

       

      
        	 	
                (iii)

              	
                to
                  Sellers’ Knowledge, violate any statute, rule, or regulation applicable
                  to
                  any Seller, or the Properties or any of Sellers’ other
                  assets.

              

      

       

      
        	 	
                (c)

              	
                Sellers
                  have conducted no business other than the ownership of the
                  Properties.

              

      

       

      
        	
                3.3

              	
                Litigation
                  With Respect to Sellers.
                  There is no action, suit, claim or proceeding pending or, to Sellers’
                  Knowledge, threatened against or affecting any Seller, any of its
                  assets,
                  or any part of or interest in any Property before any Governmental
                  Body
                  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 any Seller is a party or by which it is bound
                  and that
                  is or is to be used in connection with, or is contemplated by,
                  this
                  Agreement, (b) could materially and adversely affect the business,
                  financial position or results of operations of Sellers or the Properties,
                  (c) could materially and adversely affect the ability of any Seller
                  to
                  perform its obligations hereunder, or under any document to be
                  delivered
                  pursuant hereto, or (d) could create a lien on any Property. 

              

      

       

      
        	
                3.4

              	
                Property.
                  As of the date of this Agreement, Sellers have no Knowledge of
                  any
                  material title defects to the Properties not reflected in their
                  existing
                  title insurance policies or any
                  zoning or other land use restrictions affecting the Real Property
                  that
                  could
                  have a Property Material Adverse Effect. On
                  the Closing Date, the Portfolio will be free and clear of all liens
                  and
                  encumbrances, except for the Permitted Title Exceptions. Sellers
                  have
                  good, marketable title to the Properties and the right to convey
                  same.
                  Sellers are the fee simple owners of the Real Property and the
                  sole owners
                  of the Properties. To
                  Sellers’ Knowledge and except as set forth on Schedule 3.4, the Properties
                  are in good order and condition, and Sellers have no Knowledge
                  of
                  any
                  material, structural or mechanical problems or
                  conditions affecting
                  the Improvements.

              

      

       

      
        	
                3.5

              	
                Bankruptcy
                  with Respect to Sellers.
                  No Act of Bankruptcy has occurred or is contemplated with respect
                  to any
                  Seller.

              

      

       

      
        
          
          

        

        
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            17 -

          
            

          

        

        
          
          

        

      

       

      
        	
                3.6

              	
                Brokerage
                  Commission.
                  Sellers are wholly liable for any claims brought by any real estate
                  agent,
                  broker, finder or any other person or entity for any brokerage
                  or finder’s
                  fee, commission or other amount with respect to the transactions
                  described
                  herein other than such fees, commissions or other amounts owed
                  to any one
                  engaged by Purchaser.

              

      

       

      
        	
                3.7

              	
                Contracts
                  and Agreements.
                  There is no loan agreement, guarantee, note, bond, indenture and
                  other
                  debt instrument, lease and other contract to which any Seller is
                  a party
                  and which encumber any Property or by which any Seller’s assets are bound
                  other than the Permitted Title Exceptions, the Leases, the Operating
                  Agreements, the Existing Franchise Licenses and the existing loan
                  documents respecting Sellers’ existing financing which shall be paid off
                  in full by Sellers prior to or at Closing at no cost or expense
                  to
                  Purchaser. 

              

      

       

      
        	
                3.8

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

              

      

       

      
        	
                3.9

              	
                Compliance
                  with Existing Laws. 

              

      

       

      
        	 	
                (a)

              	
                Sellers
                  possess all Material Authorizations, each of which is valid and
                  in full
                  force and effect, and, to Sellers’ Knowledge, no provision, condition or
                  limitation of any of such Material Authorization has been breached
                  or
                  violated. Sellers have not misrepresented or failed to disclose
                  any
                  relevant fact in obtaining any Material Authorization, and Sellers
                  have no
                  Knowledge of any change in the circumstances under which any Material
                  Authorization were obtained that could result in their termination,
                  suspension, modification or limitation.

              

      

       

      
        	 	
                (b)

              	
                Sellers
                  have no Knowledge, nor has any Seller received written notice within
                  the
                  past three (3) years, of any existing violation of any provision
                  of any
                  applicable building, zoning, subdivision, environmental or other
                  governmental ordinance, resolution, statute, rule, order or regulation
                  including but not limited to those of environmental agencies or
                  insurance
                  boards of underwriters, with respect to the ownership, operation,
                  use,
                  maintenance or condition of the Properties or any part thereof,
                  or
                  requiring any repairs or alterations other than those that have
                  been made
                  prior to the date hereof.

              

      

       

      
        
          
          

        

        
          -
            18 -

          
            

          

        

        
          
          

        

      

       

      
        	 	
                (c)

              	
                Sellers
                  or Chicago HotelWorks own any liquor license used in connection
                  with the
                  operations of the Hotels.

              

      

       

      
        	
                3.10

              	
                Operating
                  Agreements.
                  All of the written Operating Agreements in force and effect as
                  of the date
                  hereof are listed on Exhibit
                  J
                  attached hereto. To each Seller’s Knowledge, no fact or circumstance has
                  occurred which, by itself or with the passage of time or the giving
                  of
                  notice or both, would constitute a material default under any of
                  the
                  Operating Agreements. Without the prior written consent of Purchaser,
                  which consent will not be unreasonably withheld or delayed, no
                  Seller
                  shall enter into any new Operating Agreement or Land Lease that
                  will be
                  binding on Purchaser or any Property following the Closing unless
                  the same
                  can be cancelled without penalty on not more than thirty (30) days’
                  notice, nor shall any Seller enter into any agreements modifying
                  the
                  Operating Agreements or Land Leases that will be binding on Purchaser
                  or
                  any Property following the Closing unless the same can be cancelled
                  without penalty on not more than thirty (30) days’
                  notice.

              

      

       

      
        	
                3.11

              	
                Warranties
                  and Guaranties.
                  Sellers shall not release or modify any warranties or guarantees,
                  if any,
                  of manufacturers, suppliers and installers relating to the Improvements
                  and the Tangible Personal Property or any part thereof, except
                  with the
                  prior written consent of Purchaser, which consent shall not be
                  unreasonably withheld or delayed. Sellers have no Knowledge of
                  any such
                  warranties or guaranties and make no representation in that respect
                  to the
                  transferability of any such warranties or
                  guaranties.

              

      

       

      
        	
                3.12

              	
                Insurance.
                  All of Sellers’ Insurance Policies are valid and in full force and effect,
                  and Sellers shall pay all future premiums for such policies up
                  to the
                  Closing Date (and any replacements thereof) on or before the due
                  date
                  therefor. Sellers shall pay all premiums on, and shall not cancel
                  or allow
                  to expire any of, the 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.

              

      

       

      
        
          
          

        

        
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            19 -

          
            

          

        

        
          
          

        

      

       

      
        	
                3.13

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

              

      

       

      
        	
                3.14

              	
                Labor
                  Disputes and Agreements.
                  There are not currently any labor disputes pending or, to Sellers’
                  Knowledge,
                  threatened as to the operation or maintenance of any Property or
                  any part
                  thereof. Neither Seller nor Manager is a party to any union or
                  other
                  collective bargaining agreement with the Employees. To Sellers’
                  Knowledge,
                  there is no labor organizing activity pending or threatened with
                  respect
                  to any Employees. All of the Employees are at will employees to
                  the extent
                  that at will employment is permitted under applicable law. Sellers
                  have no employees.

              

      

       

      
        	
                3.15

              	
                Financial
                  Information.
                  Sellers have provided to Purchaser financial information regarding
                  the
                  Properties and the business operations of the Hotels, including
                  profit and
                  loss statements, occupancy reports and net income statements for
                  years
                  2003 though 2005 and the period January 1, 2006 through July
                  31, 2006.
                  All of the foregoing information has been prepared in conformity
                  with
                  generally accepted accounting procedures and the Uniform System
                  of
                  Accounts for the Lodging Industry, and present fairly the results
                  of
                  operations by Sellers of the Hotels, subject, in the case of unaudited
                  financial statements, to normal nonmaterial year-end audit adjustments,
                  accruals and footnotes. To Sellers’ Knowledge, except as otherwise
                  disclosed in writing to Purchaser prior to the Agreement Date,
                  for each of
                  the accounting years, when a given year is taken as a whole, all
                  of
                  Sellers’ and the Properties’ financial information previously delivered or
                  to be delivered to Purchaser is and shall be correct and complete
                  in all
                  material respects. 

              

      

       

      
        	
                3.16

              	
                Organizational
                  Documents.
                  Sellers’ 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.

              

      

       

      
        
          
          

        

        
          -
            20 -

          
            

          

        

        
          
          

        

      

       

      
        	
                3.17

              	
                Hazardous
                  Substances.
                  Except for matters disclosed in written environmental reports and
                  statements previously delivered by Sellers to Purchaser, and except
                  for
                  cleaning supplies, pool supplies and the like used in the ordinary
                  course
                  of the operations of the Hotels, Sellers have no Knowledge of (a)
                  the
                  presence of any Hazardous Substances on or at any Property, or
                  any portion
                  thereof, or (b) any spills, releases, discharges, or disposal of
                  Hazardous
                  Substances that have occurred or are presently occurring on or
                  onto any
                  Property, and or any portion thereof, or (c) the presence of any
                  PCB
                  transformers serving, or stored on, any Property, or any portion
                  thereof,
                  or (d) 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.
                  To
                  Sellers’ Knowledge, there are no violations of any Environmental Laws or
                  regulations respecting the Properties or the Hotels. In addition,
                  without
                  limiting the generality of the foregoing, to Sellers’ Knowledge there are
                  no instances and there has not at any time been any evidence of
                  mold at
                  any Property. 

              

      

       

      
        	
                3.18

              	
                Franchise
                  Licenses.
                  The
                  Existing Franchise Licenses are valid and in full force and effect
                  as of
                  the date hereof and will remain so until the Closing. Until the
                  Closing,
                  Sellers will not be in default thereunder (with or without the
                  giving of
                  any required notice and/or lapse of
                  time).

              

      

       

      
        	
                3.19

              	
                Leases.
                  The
                  Space Lease listed on Exhibit
                  F-1
                  is
                  the only Space Lease currently in effect. A true and complete copy
                  of the
                  Space Lease has been delivered to Purchaser. There is no default
                  under
                  such Space Lease. Seller shall 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). Such Space Lease is to be amended and restated
                  at
                  Closing, and, if any, Seller will have obtained all consents of
                  any third
                  party necessary to assign such Space Lease to Purchaser. There
                  are no Land
                  Leases.

              

      

       

      
        	
                3.20

              	
                Sufficiency
                  of Certain Items.
                  Each Property includes:

              

      

       

      
        	 	
                (a)

              	
                a
                  sufficient amount of furniture, furnishings, color television sets,
                  carpets, drapes, rugs, floor coverings, mattresses, pillows, bedspreads
                  and the like, of requisite quality and condition, to furnish each
                  guest
                  room in accordance with Franchisor’s standards applicable to the Hotels on
                  the Agreement Date; and

              

      

       

      
        
          
          

        

        
          -
            21 -

          
            

          

        

        
          
          

        

      

       

      
        	 	
                (b)

              	
                a
                  sufficient amount of towels, washcloths and bed linens 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 Hotels and as are required by Franchisor’s standards
                  applicable to the Hotels on the Agreement
                  Date.

              

      

       

      
        	
                3.21

              	
                FF&E;
                  Fixed Asset Supplies and Inventories.
                  Attached hereto as Exhibit
                  L
                  is
                  a listing of all FF&E and Fixed Asset Supplies (excluding, in each
                  case, any items located in any guest rooms) located at the Hotels
                  as of
                  the date hereof. On the Closing Date the FF&E, Fixed Asset Supplies
                  and Inventories shall be comparable in all material respects to
                  the
                  FF&E, Fixed Asset Supplies and Inventories currently at the
                  Hotels.

              

      

       

      
        	
                3.22

              	
                Disclosure
                  Schedules.
                  Sellers have used all commercially reasonable efforts to make sure
                  that
                  the Disclosure Schedules are true, complete, accurate and not
                  misleading.

              

      

       

      ARTICLE
        4

      PURCHASER’S
        REPRESENTATIONS, WARRANTIES AND COVENANTS

       

      To
        induce
        Sellers to enter into this Agreement, Purchaser hereby makes the following
        representations, warranties and covenants, each
        of
        which is true and correct and shall be true and correct as of the Closing,
        and
upon
        each
        of which Purchaser acknowledges and agrees that Sellers are entitled to rely
        and
        have relied upon:

       

      
        	
                4.1

              	
                Identity
                  and Power. 

              

      

       

      
        	 	
                (a)

              	
                Purchaser
                  has all requisite powers and all governmental licenses, authorizations,
                  consents and approvals necessary to carry on its business as now
                  conducted, to execute and deliver this Agreement and any document
                  or
                  instrument required to be executed and delivered on behalf of Purchaser
                  hereunder, to perform its obligations under this Agreement and
                  any such
                  other documents or instruments and to consummate the transactions
                  contemplated hereby; and

              

      

       

      
        
          
          

        

        
          -
            22 -

          
            

          

        

        
          
          

        

      

       

      
        	 	
                (b)

              	
                Purchaser
                  is a Virginia limited partnership duly organized, validly existing
                  under
                  the laws of the State of Virginia, and has all requisite power
                  and
                  authority under the laws of such State and under its charter documents
                  to
                  enter into and perform its obligations under this Agreement and
                  to
                  consummate the transactions contemplated hereby. Purchaser is in
                  good
                  standing as a limited partnership in the State of
                  Virginia.

              

      

       

      
        	
                4.2

              	
                Authorization,
                  No Violations and Notices.

              

      

       

      
        	 	
                (a)

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

              

      

       

      
        	 	
                (b)

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

              

      

       

      
        	 	
                (i)

              	
                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 Purchaser or any
                  assets of
                  Purchaser, under any of the terms, conditions, or provisions of,
                  the
                  Certificate of Limited Partnership or the Agreement of Limited
                  Partnership
                  of Purchaser, licenses, leases, agreements, or other instruments,
                  or
                  obligations to which Purchaser is a party, or by which Purchaser
                  may be
                  bound, or to which Purchaser may be subject;
                  or

              

      

       

      
        	 	
                (ii)

              	
                violate
                  any judgment, ruling, order, writ, injunction, decree, statute,
                  rule, or
                  regulation applicable to Purchaser.

              

      

       

      
        	
                4.3

              	
                Noncontravention.
                  The execution and delivery of this Agreement and the performance
                  by
                  Purchaser of its obligations hereunder do not and will not contravene,
                  or
                  constitute a default under, any provisions of applicable law or
                  regulation, or any agreement, judgment, injunction, order, decree
                  or other
                  instrument binding upon Purchaser.

              

      

       

      
        
          
          

        

        
          -
            23 -

          
            

          

        

        
          
          

        

      

       

      
        	
                4.4

              	
                Litigation.
                  There is no action, suit or proceeding pending against Purchaser
                  or
                  Purchaser’s assets 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 Purchaser
                  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 ability of Purchaser to perform its obligations hereunder,
                  or
                  under any document to be delivered pursuant hereto, or (c) could
                  materially and adversely affect the financial position of
                  Purchaser. 

              

      

       

      
        	
                4.5

              	
                Bankruptcy.
                  No Act of Bankruptcy has occurred with respect to
                  Purchaser.

              

      

       

      
        	
                4.6

              	
                No
                  Brokers.
                  Purchaser has not engaged the services of 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
        5

      PURCHASER’S
        CONDITIONS AND SELLERS’ ADDITIONAL COVENANTS

       

      The
        obligations of Purchaser hereunder are subject to the satisfaction of the
        following conditions precedent and the compliance by Sellers with the following
        covenants, any of which may be waived by Purchaser:

       

      
        	
                5.1

              	
                Sellers’
                  Deliveries.
                  Sellers and Manager shall have delivered to the Escrow Agent or
                  Purchaser,
                  as the case may be, on or before the Closing Date, all of the documents,
                  materials and other information required of Sellers or Manager
                  pursuant to
                  Section
                  6.2.

              

      

       

      
        	
                5.2

              	
                Representations,
                  Warranties and Covenants; Obligations of Sellers;
                  Certificate.
                  All of Sellers’ representations and warranties made in this Agreement
                  shall be true and correct in all material respects as of the date
                  hereof
                  and as of the Closing Date as if then made (provided, however,
                  representations and warranties that are qualified as to materiality
                  (including by reference to Property Material Adverse Effect or
                  Portfolio
                  Material Adverse Effect) shall not be deemed to be so qualified
                  for this
                  purpose), Sellers shall have performed all of their covenants and
                  other
                  obligations under this Agreement in all material respects, and
                  Sellers
                  shall have executed and delivered to Purchaser at Closing a certificate
                  to
                  the foregoing effect.

              

      

       

      
        
          
          

        

        
          -
            24 -

          
            

          

        

        
          
          

        

      

       

      
        	
                5.3

              	
                Title
                  Insurance.
                  Purchaser shall have received a title policy from the Title Company
                  insuring good and indefeasible fee simple title to the Real Property
                  issued by the Title Company at or below its regularly scheduled
                  rates
                  subject only to Permitted Title Exceptions. 

              

      

       

      
        	
                5.4

              	
                Condition
                  of Improvements.
                  The
                  Improvements and the Tangible Personal Property shall be in the
                  same
                  condition at Closing as they are as of the date hereof, reasonable
                  wear
                  and tear excepted. Except for the Excluded Assets, no Seller shall
                  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 condition and acceptable to
                  Purchaser.

              

      

       

      
        	
                5.5

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

              

      

       

      
        	
                5.6

              	
                Management
                  Agreements.

              

      

       

      
        	 	
                (a)

              	
                Sellers
                  shall cause all the existing management agreements for the Portfolio
                  to be
                  terminated as of the Closing Date, and Sellers shall be responsible
                  for
                  all fees and costs associated with such
                  termination.

              

      

       

      
        	 	
                (b)

              	
                There
                  shall be no default (or other event or circumstance which with
                  notice, the
                  passage of time or both would constitute a default) on the part
                  of Manager
                  under the Management Agreements (determined as though the Management
                  Agreements were fully executed and
                  delivered).

              

      

       

      
        	 	
                (c)

              	
                Without
                  limiting the foregoing, Manager shall have fully and faithfully
                  performed
                  its obligations under Section 5.2 of the Management
                  Agreements.

              

      

       

      
        	
                5.7

              	
                Liquor
                  License.
                  Sellers, Chicago HotelWorks and Purchaser shall use commercially
                  reasonable efforts, which
                  efforts shall commence no later than thirty (30) days after Closing,
                  at
                  the sole cost of Purchaser, to obtain all governmental approvals
                  to
                  transfer any liquor license used in connection with the operation
                  of the
                  Portfolio to Purchaser as soon as reasonably possible. Sellers
                  shall, and
                  shall cause Chicago HotelWorks to, cooperate with Purchaser, to
                  the extent
                  not prohibited by applicable law, in endeavoring to allow Purchaser
                  or its
                  designee to use the existing liquor licenses for the Portfolio
                  to operate
                  the facilities in the Portfolio presently serving liquor until
                  Purchaser
                  can obtain the transfer of the existing liquor licenses or new
                  liquor
                  licenses; provided, that, Purchaser indemnifies Sellers and Chicago
                  HotelWorks against any liability which may arise by reason of Purchaser’s
                  use of the existing liquor licenses for the Portfolio while the
                  same are
                  held by Sellers or Chicago HotelWorks. To the extent not prohibited
                  by
                  applicable law, Sellers shall, and shall cause Chicago HotelWorks
                  to,
                  execute all documents necessary to effectuate the transfer of such
                  existing liquor licenses and shall, and shall cause Chicago HotelWorks
                  to,
                  enter into one or more agreements (each an, “Interim
                  Beverage Service Agreement”)
                  with Purchaser or its designees, in form and substance reasonably
                  acceptable to the parties, which will permit Purchaser or its designees
                  to
                  have use of each such existing liquor license from the Closing
                  Date until
                  the earlier of (i) Purchaser’s receipt of a replacement liquor license
                  (which Purchaser agrees to make diligent efforts to procure), or
                  (ii)
                  six
                  (6)
                  months after the Closing Date,
                  except that this six (6) month period shall be extended for an
                  additional
                  reasonable period of time (not to exceed one (1) year) to the extent
                  Purchaser is continuing to use commercially reasonable efforts
                  to obtain a
                  replacement liquor license, but due to circumstances beyond the
                  control of
                  Purchaser, such license cannot be obtained within the six (6) month
                  period.
                  The terms of this Section 5.7
                  shall survive Closing.

              

      

       

      
        
          
          

        

        
          -
            25 -

          
            

          

        

        
          
          

        

      

       

      
        	
                5.8

              	
                Property.
                  The Portfolio shall be free and clear of all liens and encumbrances,
                  except for the Permitted Title
                  Exceptions.

              

      

       

      
        	
                5.9

              	
                Property
                  Material Adverse Effect.
                  Sellers shall promptly notify Purchaser if any Seller becomes aware
                  of
                  circumstances or conditions that could have
                  a Property Material Adverse Effect or
                  result in a breach on the part of Sellers of any of the representations,
                  warranties and/or covenants set forth herein. If there is a Property
                  Material Adverse Effect that results from a breach hereof on the
                  part of
                  Seller or if any representation or warranty of Sellers fails to
                  be true on
                  the Closing Date in a manner that results in a Property Material
                  Adverse
                  Effect, Purchaser shall have the right to elect to exclude the
                  affected
                  Property from the within purchase and
                  sale.

              

      

       

      
        
          
          

        

        
          -
            26 -

          
            

          

        

        
          
          

        

      

       

      
        	
                5.10

              	
                Form
                  of Agreements.
                  All agreements, certificates and other documents required to be
                  delivered
                  pursuant to the provisions of this Agreement for which a form is
                  not
                  attached hereto shall be reasonably satisfactory in form, scope
                  and
                  substance to Purchaser. 

              

      

       

      ARTICLE
        6

      CLOSING

       

      
        	
                6.1

              	
                Closing.
                  Closing shall be held at a location that is mutually acceptable
                  to the
                  parties and may be conducted via telephone, facsimile and mail
                  on the
                  Target Closing Date, but in all events on or before the Outside
                  Closing
                  Date, time being of the essence.

              

      

       

      
        	
                6.2

              	
                Sellers’
                  Deliveries.
                  At Closing, Sellers shall deliver (or cause to be delivered) to
                  Purchaser
                  or the Escrow Agent all of the following instruments, each of which
                  shall
                  have been duly executed and, where applicable, acknowledged and
                  shall be
                  dated as of the Closing Date; provided, the items listed in Sections
                  6.2(d),
                  (g),
                  (i),
                  (j)
                  and (k)
                  shall be deemed delivered to Purchaser if the same are in the possession
                  or control of Manager:

              

      

       

      
        	 	
                (a)

              	
                For
                  each Property in the Portfolio, a special warranty deed, or other
                  customary form of deed with covenants only against grantor’s acts,
                  conveying fee simple title of the Real Property comprising a portion
                  of
                  such Property to Purchaser or its designee (“Deed”).

              

      

       

      
        	 	
                (b)

              	
                An
                  Assignment
                  and Assumption Agreement for each Property in the
                  Portfolio.

              

      

       

      
        	 	
                (c)

              	
                The
                  FIRPTA Certificate.

              

      

       

      
        	 	
                (d)

              	
                True,
                  correct and complete copies of all warranties, if any, of manufacturers,
                  suppliers and installers possessed by any Seller and relating to
                  the
                  Portfolio, or any part thereof.

              

      

       

      
        	 	
                (e)

              	
                The
                  certificate required by Section
                  5.2.

              

      

       

      
        
          
          

        

        
          -
            27 -

          
            

          

        

        
          
          

        

      

       

      
        	 	
                (f)

              	
                Appropriate
                  consent of Sellers authorizing (i) the execution of any documents
                  to be
                  executed and delivered by Sellers prior to, at or otherwise in
                  connection
                  with Closing and in connection with the transactions contemplated
                  by this
                  Agreement, and (ii) the performance by Sellers of their obligations
                  hereunder and under such documents.

              

      

       

      
        	 	
                (g)

              	
                Valid,
                  final and unconditional certificate(s) of occupancy for the Portfolio,
                  issued by appropriate Governmental
                  Bodies.

              

      

       

      
        	 	
                (h)

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

              

      

       

      
        	 	
                (i)

              	
                A
                  set of all guest registration cards, guest transcripts, guest histories,
                  and all other available guest information for the
                  Portfolio.

              

      

       

      
        	 	
                (j)

              	
                A
                  list of advance room reservations, functions and the like for the
                  Portfolio, in reasonable detail so as to enable Purchaser or its
                  designees
                  to honor Sellers’ commitments in that
                  regard.

              

      

       

      
        	 	
                (k)

              	
                All
                  keys for the Portfolio.

              

      

       

      
        	 	
                (l)

              	
                To
                  the extent not previously delivered to Purchaser during the Study
                  Period,
                  all books, records, operating reports, appraisal reports, files
                  and other
                  materials relating to the Portfolio in Sellers’ possession or
                  control.

              

      

       

      
        	 	
                (m)

              	
                Evidence,
                  reasonably acceptable to Purchaser, of the payment of all transfer
                  taxes,
                  if any, incurred in connection with the transactions contemplated
                  by this
                  Agreement.

              

      

       

      
        	 	
                (n)

              	
                A
                  current payroll run for the Employees.

              

      

       

      
        	 	
                (o)

              	
                One
                  or more bills of sale conveying Sellers’ interest in the Intangible
                  Personal Property and Tangible Personal Property for each Property
                  in the
                  Portfolio.

              

      

       

      
        	 	
                (p)

              	
                An
                  escrow of funds or a deposit with the Manager in the amount of
                  all sales
                  taxes relating to revenue from the Portfolio owed by Sellers, if
                  any.

              

      

       

      
        
          
          

        

        
          -
            28 -

          
            

          

        

        
          
          

        

      

       

      
        	 	
                (q)

              	
                Transfer
                  tax forms, and tax clearance certificates required by law in connection
                  with the transaction.

              

      

       

      
        	 	
                (r)

              	
                The
                  Management Agreements for the Portfolio and the Pooling Agreement,
                  all
                  duly executed and acknowledged by Manager, and each document or
                  instrument
                  required to be delivered by Manager pursuant to the terms
                  thereof.

              

      

       

      
        	 	
                (s)

              	
                Right
                  of First Offer Agreements, subject to any right of first refusal
                  granted
                  to the Franchisor which is still in effect, each in the form annexed
                  hereto as Exhibit
                  M
                  with respect to the Hyatt Summerfield Suites in Burlington, Massachusetts
                  and the Hyatt Summerfield Suites in Plymouth Meeting, Pennsylvania
                  duly
                  executed and acknowledged
                  by
                  the owners of those hotels and in form for
                  recording.

              

      

       

      
        	 	
                (t)

              	
                The
                  Earn-Out Agreement duly executed by
                  Sellers.

              

      

       

      
        	 	
                (u)

              	
                Any
                  other document or instrument reasonably requested by Purchaser
                  or the
                  Title Company or required herein.

              

      

       

      
        	 	
                (v)

              	
                The
                  Amended and Restated Space Lease.

              

      

       

      
        	
                6.3

              	
                Purchaser’s
                  Deliveries.
                  At Closing, Purchaser or its designees shall pay or deliver to
                  Sellers,
                  the Escrow Agent or Manager the
                  following:

              

      

       

      
        	 	
                (a)

              	
                The
                  Consideration, paid in accordance with the provisions set forth
                  in this
                  Agreement;

              

      

       

      
        	 	
                (b)

              	
                The
                  Assignment and Assumption Agreements for the Properties in the
                  Portfolio;

              

      

       

      
        	 	
                (c)

              	
                Appropriate
                  consent of Purchaser, authorizing (i) the execution of any documents
                  to be
                  executed and delivered by Purchaser prior to, at or otherwise in
                  connection with Closing and in connection with the transactions
                  contemplated by this Agreement, and (ii) the performance by Purchaser
                  of
                  its obligations hereunder and under such
                  documents;

              

      

       

      
        	 	
                (d)

              	
                The
                  Management Agreements and the Pooling Agreement, all duly executed,
                  by
                  Purchaser’s affiliate and each document and instrument required thereby to
                  be delivered by such affiliate; 

              

      

       

      
        
          
          

        

        
          -
            29 -

          
            

          

        

        
          
          

        

      

       

      
        	 	
                (e)

              	
                The
                  Earn-Out Agreement duly executed by Hersha Hospitality Limited
                  Partnership; 

              

      

       

      
        	 	
                (f)

              	
                [INTENTIONALLY
                  OMITTED]

              

      

       

      
        	 	
                (g)

              	
                Any
                  other document or instrument reasonably requested by Sellers or
                  the Title
                  Company or required hereby; and

              

      

       

      
        	 	
                (h)

              	
                The
                  Amended and Restated Space Lease.

              

      

       

      
        	
                6.4

              	
                Closing
                  Costs.
                  All filing fees, recording, transfer or other similar taxes due
                  with
                  respect to the transfer of each Property and all costs for obtaining
                  the
                  Title Policy for such Property shall be paid as is customary in
                  the
                  jurisdiction where such Property is located. All fees and costs
                  associated
                  with the satisfaction, discharge and/or termination of Sellers’ financing
                  shall be paid by Sellers.

              

      

       

      
        	
                6.5

              	
                Apportionments
                  and Other Economic Adjustments.

              

      

       

      
        	 	
                (a)

              	
                Items
                  to be Apportioned.
                  The following shall be prorated and apportioned between Sellers
                  and
                  Purchaser as of 11:59 PM eastern time on the Apportionment Date,
                  except as
                  otherwise expressly provided to the contrary
                  below:

              

      

       

      
        	 	
                (i)

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

              

      

       

      
        
          
          

        

        
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                (ii)

              	
                Utilities.
                  The Utilities shall be apportioned (A) by having the utility companies
                  servicing the Portfolio make final meter readings on the Apportionment
                  Date, the payment of which shall be Sellers’ responsibility, or (B) if
                  such readings cannot be obtained, on the basis of the most recent
                  bills
                  that are available. If the apportionment is not based on an actual
                  current
                  reading, then, upon the taking of a subsequent actual reading,
                  or upon
                  receipt of a subsequent bill, such apportionment shall be recalculated
                  and
                  Sellers or Purchaser, as the case may be, shall promptly pay to
                  the other
                  the amount determined to be due upon such recalculation. Purchaser
                  shall
                  be under no obligation to assume or reimburse Sellers for any utility
                  deposits made by Sellers, provided that, in the event Purchaser
                  either
                  receives the monetary benefit of such deposit or a credit from
                  the
                  applicable utility company for such deposit or, at its sole discretion,
                  assumes a utility deposit made by Sellers, Purchaser shall credit
                  Sellers
                  the amount of such monetary benefit, credit or assumed utility
                  deposit, as
                  applicable, at Closing. In the event Purchaser elects not to assume
                  a
                  utility deposit made by Sellers and does not receive a credit or
                  monetary
                  benefit from the utility company for such utility deposit made
                  by Sellers,
                  the collection of such deposit shall be Sellers’ sole
                  responsibility.

              

      

       

      
        	 	
                (iii)

              	
                Licenses.
                  Prepaid fees or other charges for transferable licenses agreed
                  to be
                  assumed by Purchaser, if any, shall be apportioned on the basis
                  of the
                  fiscal period covered by such license, but all amounts refundable
                  under
                  unassigned or unassignable licenses shall remain the property of
                  Sellers.
                  

              

      

       

      
        	 	
                (iv)

              	
                Operating
                  Agreements and Leases.
                  Amounts paid or payable under the Operating Agreements and Leases
                  agreed
                  to be assumed by Purchaser or its designees shall be apportioned
                  on the
                  basis of the period covered by such
                  payments.

              

      

       

      
        	 	
                (v)

              	
                Revenues.
                  Revenue from the rental of guest rooms for the night before the
                  Closing
                  Date shall belong to Sellers. All revenues from the food and beverage
                  and
                  other sales or services posted to a guest room account through
                  11:59 PM
                  eastern time on the Apportionment Date shall belong to Sellers
                  and all
                  revenues from food and beverage and other sales or services posted
                  to a
                  guest room account after this time shall belong to Purchaser. For
                  purpose
                  of these apportionments, the hotel personnel shall promptly post
                  all
                  charges as they are incurred. Revenues from any meeting room occupied
                  but
                  vacated prior to midnight of the Apportionment Date shall belong
                  to
                  Sellers. Revenues from any meeting room that was not occupied until
                  after
                  this time shall belong to Purchaser. Revenues for any meeting room
                  that
                  was occupied by the same customer on both the Apportionment Date
                  and the
                  Closing Date shall be allocated between Sellers and Purchaser based
                  on the
                  number of days that the room was occupied and unavailable for rental
                  to
                  other customers. 

              

      

       

      
        
          
          

        

        
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                (vi)

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

              

      

       

      
        	 	
                (b)

              	
                Receivables.
                  Sellers will retain, and Manager shall collect on Seller’s behalf all
                  accounts receivable of Sellers.

              

      

       

      
        	 	
                (c)

              	
                House
                  Banks.
                  Purchaser shall have the option, at its sole discretion, to purchase
                  the
                  House Banks, provided Purchaser, if it chooses to do so, shall
                  only
                  purchase cash on hand and shall in no event purchase any receipts.
                  

              

      

       

      
        	 	
                (d)

              	
                Employee
                  Wages and Other Compensation.
                  Purchaser shall be entitled to a credit against the Consideration
                  in an
                  amount equal to all unpaid wages or salaries for Employees accrued
                  through
                  the Apportionment Date, including any earned (but unused) vacation
                  days
                  accrued through the Apportionment Date (whether or not vested),
                  any
                  employment taxes due thereon and any retirement plan, medical or
                  other
                  similar deductions therefrom through the Apportionment Date (collectively,
                  the “Sellers’
                  Employee Payment”).
                  Notwithstanding anything herein to the contrary, Sellers shall
                  be
                  responsible for, and Purchaser shall be entitled to a credit for,
                  Sellers’
                  Employee Payment accruing (i) through the Closing Date for housekeeping
                  and laundry service employees, (ii) through the posted check-out
                  time for
                  front desk employees, (iii) through 7:00 AM eastern time on the
                  Closing
                  Date for the night auditor, and (iv) through 11:59 PM eastern time
                  on the
                  Apportionment Date for service and kitchen staff employees. After
                  the
                  Closing, Purchaser shall be responsible to pay all costs for which
                  it
                  received such credit, but only to the extent of such credit. Further,
                  Purchaser shall remit to Sellers’ Representative any portion of such
                  credit attributable to any earned but unvested vacation or sick
                  days to
                  the extent such vacation or sick days fail to ever vest or be
                  used.

              

      

       

      
        
          
          

        

        
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                (e)

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

              

      

       

      
        
          
          

        

        
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                (f)

              	
                Sellers’
                  Acknowledgement.
                  It is expressly acknowledged and agreed by Sellers that Purchaser
                  has no
                  intention of assuming, and does not and will not, in any way, assume,
                  undertake, agree to perform or accept responsibility for any debts,
                  liabilities or obligations of Sellers of any kind whatsoever, whether
                  absolute, contingent or otherwise, known or unknown, pending or
                  threatened, concerning the Properties or otherwise, other than
                  liabilities
                  and obligations that Purchaser expressly assumes under the terms
                  of this
                  Agreement or under any of the documents executed by Purchaser at
                  the
                  Closing. Sellers shall remain fully and solely responsible for
                  the
                  satisfaction of all of Sellers’ own liabilities and obligations, absolute,
                  contingent or otherwise, known or unknown, liquidated or unliquidated,
                  pending or threatened, whether incurred before or after the Closing
                  Date,
                  except as aforesaid.

              

      

       

      
        	 	
                (g)

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

              

      

       

      
        	 	
                (h)

              	
                Sellers’
                  CapX Amount.
                  The parties shall use Lender’s estimate of the Immediate CapX Amount for
                  purpose of determining Sellers’ CapX Amount and the amount of the
                  Consideration to be paid at Closing. Promptly after completion
                  of the
                  Immediate CapX, the parties shall make the appropriate adjustment
                  required
                  if the actual CapX Amount differs from such estimate. Purchaser
                  shall
                  negotiate on behalf of itself and Sellers with Lender to limit
                  the
                  Immediate CapX to appropriate items and to limit the Lender’s estimates
                  thereof to appropriate amounts.

              

      

       

      
        
          
          

        

        
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            34 -

          
            

          

        

        
          
          

        

      

       

      
        	 	
                (i)

              	
                Survival.
                  The provisions of this Section
                  6.5
                  shall survive the Closing provided
                  that all demands under this Section
                  6.5
                  (other than under Section
                  6.5(h))
                  shall be made within one
                  (1)
                  year
                  after the Closing Date. 

              

      

       

      
        	
                6.6

              	
                Safes
                  and Baggage.

              

      

       

      
        	 	
                (a)

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

              

      

       

      
        	 	
                (b)

              	
                Baggage.
                  On the Closing Date, representatives of Purchaser and Sellers shall
                  take
                  an inventory of all baggage, valises and trunks checked or left
                  in the
                  care of Sellers at the Portfolio. From and after the Closing Date,
                  Purchaser shall be responsible for all baggage listed in said inventory
                  and Purchaser hereby indemnifies and agrees to hold Sellers harmless
                  from
                  any liability therefor. Sellers shall remain liable for any negligence
                  or
                  malfeasance with respect to such baggage which occurred prior to
                  the
                       Closing Date as well as for claimed omissions from said inventory,
                  and
                  hereby indemnify and agree to hold Purchaser harmless from any
                  liability
                  therefor.

              

      

       

      
        
          
          

        

        
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                6.7

              	
                Pre-Closing
                  Interim Operation.
                  Sellers hereby covenant and agree that between the date of this
                  Agreement
                  and the Closing:

              

      

       

      
        	 	
                (a)

              	
                Operating
                  in Ordinary Course.
                  Sellers
                  covenant that between the date hereof and the Closing Date, Sellers
                  shall
                  and shall cause the Manager
                  to
                  (i) operate the Properties only in the usual, regular and ordinary
                  manner
                  consistent with Sellers’ prior practice, (ii) maintain the books of
                  account and records in the usual, regular and ordinary manner,
                  in
                  accordance with Sellers’ accounting system, (iii) use all commercially
                  reasonable efforts to preserve intact the present business organization,
                  (iv) maintain the quality and condition of the Improvements and
                  Tangible
                  Personal Property in the same or better quality and condition as
                  they are
                  as of the date hereof, and (v) keep available the services of the
                  present
                  Manager
                  and preserve their relationships with suppliers and others having
                  business
                  dealings with them. Sellers shall continue to make good faith efforts
                  to
                  take guest room reservations and to book functions and meetings
                  and
                  otherwise to promote the business of the Properties in generally
                  the same
                  manner as Sellers did prior to the execution of this Agreement.
                  Except as
                  otherwise permitted hereby, from the date hereof until Closing,
                  Sellers
                  shall not take any action or fail to take action the result of
                  which would
                  be
                  to encourage any employees of Manager to terminate their employment
                  prior
                  to Closing or otherwise have a Property Material Adverse
                  Effect
                  or
                  Portfolio Material Adverse Effect. Sellers
                  may terminate or modify existing Operating Agreements and room
                  agreements
                  and enter into new Operating Agreements and room agreements on
                  commercially reasonable terms only with the prior written consent
                  of
                  Purchaser, which consent shall not be unreasonably withheld, conditioned
                  or delayed; provided,
                  however,
                  that no such consent shall be required in the case of an Operating
                  Agreement or room agreement which is terminable without penalty
                  on not
                  more than thirty (30) days notice. If Purchaser fails to respond
                  to a
                  written request for consent within seven (7) days after receipt
                  of such
                  request, such consent shall be deemed given. Sellers shall provide
                  Purchaser with copies of any such terminations and modifications,
                  and new
                  Operating Agreements and room agreements promptly after the execution
                  thereof. Except in the ordinary course of business, Sellers shall
                  not
                  transfer to any third party or remove any FF&E from the Hotels after
                  the date hereof, except for repair or replacement thereof with
                  items of
                  substantially similar quality. Sellers will not take any action
                  which will
                  adversely affect title to the Properties or cause the representations
                  and
                  warranties set forth in Article
                  3
                  above to be untrue as of the Closing
                  Date.

              

      

       

      
        
          
          

        

        
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                (b)

              	
                Contract
                  Defaults.
                  If any Seller shall receive written notice of any default under
                  any room
                  agreement, Operating Agreement or Land Lease, Sellers shall promptly
                  deliver a copy of said notice to
                  Purchaser.

              

      

       

      
        	 	
                (c)

              	
                Transition
                  of Management, Communications with Employees.
                  Sellers shall, and shall cause Manger to, permit Purchaser’s transition
                  asset management team to witness and review the management and
                  operation
                  of the Portfolio (including operations conducted in Manager’s home office)
                  for a period of fourteen (14) days prior to the Closing Date. Personnel
                  from Purchaser’s transition asset management team shall have reasonable
                  access during normal business hours to all books and records to
                  be
                  transferred to Purchaser and shall have the right (at Purchaser’s expense)
                  to establish duplicate books in order to effect a smooth transition
                  in the
                  ownership and asset management of the Hotels; provided,
                  however,
                  that Purchaser and its transition asset management team (i) shall
                  not
                  unreasonably interfere with the normal management and operation
                  of the
                  Hotels, (ii) shall hold all information acquired from such books
                  and
                  records confidential, (iii) shall repair any damage to the physical
                  condition of the Hotels caused by Purchaser, its agents or their
                  respective employees, and (iv) shall not be deemed to have assumed
                  asset
                  management responsibilities for the Hotels prior to Closing by
                  virtue of
                  their presence at the Hotels. Purchaser shall indemnify Sellers
                  from and
                  against any and all loss, damage, liability, cost or expense resulting
                  from the violation or breach of any of the covenants set forth
                  in clauses
                  (i) through (iv) of the preceding sentence, which indemnity shall
                  survive
                  the Closing or the termination of this Agreement for six (6) months.
                  All
                  expenses of Purchaser’s transition asset management team, including the
                  cost of rooms, food and beverage and other services, shall be paid
                  by
                  Purchaser; provided,
                  however,
                  that Sellers will endeavor to make available to Purchaser (at no
                  cost or
                  expense to Purchaser) rooms for Purchaser’s transition asset management
                  team, subject to availability. During such period, Purchaser shall
                  be
                  permitted to communicate with the general managers and directors
                  of sales
                  of the Hotels and Manager’s home office
                  personnel.

              

      

       

      
        
          
          

        

        
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            37 -

          
            

          

        

        
          
          

        

      

       

      
        	 	
                (d)

              	
                Representations
                  and Warranties.
                  Each of the parties hereto shall refrain from taking any action
                  which
                  knowingly violates any representation or warranty contained in
                  this
                  Agreement. 

              

      

       

      
        	 	
                (e)

              	
                Existing
                  Franchise Licenses Termination and New Franchise
                  Licenses.
                  Provided the New Franchise Licenses are issued by Franchisor, Sellers
                  shall cause Franchisor to terminate, effective on the Closing Date,
                  the
                  Existing Franchise Licenses, which termination shall create no
                  liability
                  to Purchaser as the result of the Existing Franchise License or
                  its
                  termination including, without limitation, liability for the payment
                  of
                  any termination fee. Sellers
                  shall use commercially reasonable efforts, at no costs or expense
                  to
                  Sellers, to assist Purchaser in securing New Franchise Licenses,
                  which
                  shall include consulting with Purchaser on the initial scope of
                  any
                  renovation work that the Franchisor presents as a condition to
                  the
                  issuance of the New Franchise License (the “PIP”)
                  and negotiating with the Franchisor to revise the initial PIP to
                  conform
                  to the PIP that Purchaser, in consultation with Sellers, believes
                  to be
                  appropriate. 

              

      

       

      
        	 	
                (f)

              	
                No
                  Material Changes.
                  From and after the date hereof and up to the Closing Date, Sellers
                  shall
                  not, without the prior written consent of Purchaser, (i) make,
                  cause to be
                  made, or permit to be made any material physical change to the
                  Properties
                  or (ii) sell or otherwise dispose of any of the
                  Properties.

              

      

       

      ARTICLE
        7

      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 a Property, or any proposed
                  sale
                  in lieu thereof, Sellers shall give written notice thereof to Purchaser
                  promptly after any Seller learns or receives notice thereof. If
                  all or a
                  material portion of such Property is, or is to be, so condemned
                  or sold,
                  Purchaser shall have the right to exclude such Property from the
                  within
                  purchase and sale. If Purchaser elects not to so exclude such Property
                  or
                  if less than a material portion of Property is, or is to be, so
                  condemned
                  or sold, all proceeds, awards and other payments arising out of
                  such
                  condemnation or sale (actual or threatened) shall be paid or assigned,
                  as
                  applicable, to Purchaser at Closing.

              

      

       

      
        
          
          

        

        
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                7.2

              	
                Risk
                  of Loss.
                  The risk of any loss or damage to each Property prior to the Closing
                  shall
                  remain upon Sellers. If any such loss or damage to a Property is
                  not
                  material to such Property, Purchaser shall be obligated to purchase
                  such
                  Property in accordance with the terms of this Agreement as if the
                  loss or
                  damage did not occur, provided that such loss and/or damage is
                  fully
                  insured or Sellers, at Closing, shall reimburse Purchaser for the
                  balance
                  of the cost to fully repair such loss and/or damage not fully covered
                  by
                  the proceeds of insurance, and provided that Sellers shall have
                  the
                  obligation to pay the deductible on any insurance relating to the
                  loss
                  and/or damage and all insurance proceeds and rights to proceeds
                  arising
                  out of such loss and/or damage shall be paid or assigned, as applicable,
                  by Sellers to Purchaser at Closing. If any such loss or damage
                  is material
                  to such Property or any such loss or damage is uninsured or underinsured,
                  Purchaser shall have the right, at its sole and absolute discretion,
                  to
                  exclude the affected Property from the within purchase and sale.
                  If
                  Purchaser does not elect to so exclude such Property, Sellers shall
                  have
                  the obligation to pay the deductible for all insurance covering
                  such loss
                  and/or damage, and all insurance proceeds and rights to proceeds
                  arising
                  out of such loss or damage shall be paid or assigned, as applicable,
                  to
                  Purchaser at Closing. 

              

      

       

      ARTICLE
        8

      LIABILITY
        OF PURCHASER; INDEMNIFICATION BY SELLERS; TERMINATION
        RIGHTS

       

      
        	
                8.1

              	
                Liability
                  of Purchaser.
                  Purchaser
                  hereby indemnifies and holds Sellers harmless from and against
                  any and all
                  claims, costs, penalties, damages, losses, liabilities and expenses
                  that
                  may at any time be incurred by Sellers arising out of the operation
                  or use
                  of the Portfolio by Purchaser or its designees after Closing. Except
                  for any obligation expressly assumed or agreed to be assumed by
                  Purchaser
                  or its designees hereunder or in the Assignment and Assumption
                  Agreement,
                  Purchaser
                  does not assume any obligation of Sellers’ or any liability for claims
                  arising out of any occurrence prior to Closing,
                  or arising out of any representation, warranty, covenant, or other
                  obligation of Sellers arising out of this Agreement.

              

      

       

      
        
          
          

        

        
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                8.2

              	
                Indemnification
                  by Sellers.
                  Each Seller hereby indemnifies and holds Purchaser harmless from
                  and
                  against any and all claims, costs, penalties, damages, losses,
                  liabilities
                  and expenses, that
                  may at any time be incurred by Purchaser, whether before or after
                  Closing,
                  arising out of the Excluded Assets or the operations of the Hotels
                  or use
                  of the Properties prior to the Closing Date or,
                  subject to Section
                  11.11,
                  resulting from
                  any breach or violation by any Seller of any of its representations,
                  warranties, covenants or obligations set forth herein or in any
                  other
                  document delivered by any Seller pursuant
                  hereto.

              

      

       

      
        	
                8.3

              	
                Termination
                  by Purchaser. 

              

      

       

      
        	 	
                (a)

              	
                If
                  any condition (other than a condition which has been waived) set
                  forth in
                  this Agreement is not satisfied on the date on which the Closing
                  is
                  scheduled to occur and Sellers fail to satisfy such condition on
                  or before
                  the Outside Closing Date, any Seller defaults in performing any
                  of its
                  material obligations under this Agreement (including its obligation
                  to
                  sell the Portfolio), any
                  representation or warranty given by any Seller in this Agreement
                  is not
                  true and correct as of the Closing
                  in
                  all material respects,
                  shall have occurred or
                  upon the occurrence of any other event that would entitle Purchaser
                  to
                  terminate this Agreement and its obligations hereunder, Purchaser,
                  at its
                  option, shall elect either (i) to terminate this Agreement and
                  receive a
                  full refund of the Deposit plus, if any Seller is in default hereunder,
                  a
                  reimbursement not to exceed $175,000 from Sellers for Purchaser’s actual
                  out-of-pocket costs (including, without limitation, reasonable
                  attorney
                  fees) incurred in negotiating this Agreement, due diligence and
                  enforcing
                  Purchaser’s rights under this Agreement, and all other rights and
                  obligations of Sellers and Purchaser hereunder shall terminate
                  immediately, or (ii) to waive its right to terminate and, instead,
                  to
                  proceed to Closing, or (iii) to seek specific performance of the
                  consummation of the transaction contemplated herein.
                  

              

      

       

      
        
          
          

        

        
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                (b)

              	
                [INTENTIONALLY
                  OMITTED]

              

      

       

      
        	 	
                (c)

              	
                If
                  the New Franchise Licenses are not issued on or before the Closing
                  Date
                  and this Agreement has not previously been terminated, Purchaser
                  may terminate this Agreement. Upon
                  such termination, Sellers shall be entitled to receive the Deposit
                  as
                  LIQUIDATED DAMAGES in full and complete satisfaction of any and
                  all claims
                  of Sellers.

              

      

       

      
        	
                8.4

              	
                Termination
                  by Sellers. 

              

      

       

      
        	 	
                (a)

              	
                If,
                  prior to Closing, Purchaser materially defaults under this Agreement
                  and
                  Purchaser fails to cure any such default on or before the Outside
                  Closing
                  Date and Closing does not occur as a result of Purchaser’s material
                  default or if the Closing does not occur because the New Franchise
                  Licenses were not issued on or before the Closing Date, then Sellers’ sole
                  remedy shall be to terminate this Agreement. Upon such termination
                  by
                  Sellers pursuant to this Section
                  8.4,
                  Sellers shall be entitled to receive the Deposit as LIQUIDATED
                  DAMAGES in
                  full and complete satisfaction of any and all damages incurred
                  by Sellers,
                  it being acknowledged and agreed that it would be difficult or
                  impossible
                  to ascertain the precise amount of such damages, and the amount
                  of the
                  Deposit is fair and reasonable estimates of the amount of such
                  damages.
                  Sellers waive all other remedies.

              

      

       

      
        	 	
                (b)

              	
                If
                  the portion of Sellers’ CapX Amount attributable to Lender Required CapX,
                  based on Lender’s estimate of the Immediate CapX Amount at Closing,
                  exceeds $700,000 and Purchaser does not agree to reduce Sellers’ CapX
                  Contribution so that such portion shall no longer exceed $700,000,
                  then
                  Sellers shall have the right to terminate this Agreement prior
                  to Closing
                  provided that simultaneously with such termination Sellers pay
                  to
                  Purchaser one-half (1/2) of all out-of-pocket costs and expenses
                  incurred
                  by Purchaser in obtaining property condition and environmental
                  reports for
                  the Properties. Upon such termination and payment, the Deposit
                  shall be
                  returned to Purchaser whereupon this Agreement shall be of no further
                  force or effect except for those obligations which survive
                  termination.

              

      

       

      
        
          
          

        

        
          -
            41 -

          
            

          

        

        
          
          

        

      

      
        	
                8.5

              	
                Limitation
                  on Indemnity Obligations.
                  Notwithstanding anything contained herein to the contrary, Sellers
                  shall
                  not have any obligation for any claim for indemnification made
                  against
                  them under Section
                  8.2
                  for breach of a representation or warranty relating to an individual
                  Property to the extent that
                  such claims with respect to such Property do not exceed $25,000
                  in the
                  aggregate. However, once the aggregate of such claims for any individual
                  Property exceeds $25,000 for such Property, then Sellers shall
                  be liable
                  for the full amount of all such claims
                  for such Property. Sellers’ aggregate liability for any breaches of
                  representation and warranties hereunder shall not exceed
                  $8,450,000.

              

      

       

      
        	
                8.6

              	
                Survival
                  of Article 8.
                  The provisions of this Article
                  8
                  shall survive the Closing or earlier termination of this
                  Agreement.

              

      

       

      ARTICLE
        9

      SELLERS’
        CONDITIONS AND PURCHASER’S ADDITIONAL COVENANTS

       

      The
        obligations of Sellers hereunder are subject to the satisfaction of the
        following conditions precedent and the compliance by Purchaser with the
        following covenants, any of which may be waived by Sellers:

       

      
        	
                9.1

              	
                Sellers’
                  Deliveries.
                  Purchaser
                  (or its designees) shall
                  have delivered to the Escrow Agent or Sellers, as the case may
                  be, on or
                  before the Closing Date, all of the documents and other information
                  required of Purchaser (or its designees) pursuant to Section
                  6.3.

              

      

       

      
        	
                9.2

              	
                Representations,
                  Warranties and Covenants; Obligations of Sellers;
                  Certificate.
                  All of Purchaser’s representations and warranties made in this Agreement
                  shall be true and correct in all material respects as of the date
                  hereof
                  and as of the Closing Date as if then made, Purchasers shall have
                  performed all of its covenants and other obligations under this
                  Agreement
                  in all material respects, and Purchaser shall have executed and
                  delivered
                  to Sellers at Closing a certificate to the foregoing
                  effect.

              

      

       

      
        	
                9.3

              	
                Franchise
                  Licenses.
                  Franchisor shall have approved and granted New Franchise Licenses
                  to
                  Purchaser or its affiliate or subsidiary and copies of such new
                  Franchise
                  Licenses shall have been delivered to Sellers. Purchaser shall
                  have the
                  right, but not the obligation, to extend the Closing until up to
                  the
                  Outside Closing Date as reasonably required by Purchaser to obtain
                  the New
                  Franchise Licenses. 

              

      

       

      
        
          
          

        

        
          -
            42 -

          
            

          

        

        
          
          

        

      

       

      
        	
                9.4

              	
                Form
                  of Agreements.
                  All agreements, certificates and other documents required to be
                  delivered
                  pursuant to the provisions of this Agreement for which a form is
                  not
                  attached hereto shall be reasonably satisfactory in form, scope
                  and
                  substance to Sellers. 

              

      

       

      ARTICLE
        10

      ESCROW
        TERMS

       

      
        	
                10.1

              	
                Escrow
                  Terms.
                  The Escrow Agent shall hold the Deposit in escrow on the following
                  terms
                  and conditions:

              

      

       

      
        	 	
                (a)

              	
                The
                  Deposit (to the extent in the form of cash) shall be deposited
                  in an
                  interest-bearing account. The maturity of the investment for the
                  Deposit
                  so deposited shall not exceed thirty (30) days or the anticipated
                  date of
                  the Closing, whichever is earlier, and if such maturity shall occur
                  prior
                  to the Closing, the Deposit shall be reinvested under the same
                  terms and
                  conditions. 

              

      

       

      
        	 	
                (b)

              	
                The
                  Escrow Agent shall deliver the Deposit to Sellers or Purchaser,
                  as the
                  case may be, in accordance with the provisions of this
                  Agreement.

              

      

       

      
        	 	
                (c)

              	
                Any
                  notice to or demand upon the Escrow Agent shall be in writing and
                  shall be
                  sufficient only if received by the Escrow Agent within the applicable
                  time
                  periods set forth herein, if any. Notices to or demands upon the
                  Escrow
                  Agent shall be sent by electronic mail, or overnight courier service,
                  with
                  respect for next day delivery, to the address set forth in Section
                  11.9
                  of
                  this Agreement, or served personally upon the Escrow Agent with
                  receipt
                  acknowledged in writing by the Escrow Agent. Notices from the Escrow
                  Agent
                  to Sellers or Purchaser shall be sent to them in accordance with
                  Section
                  11.9
                  of
                  this Agreement.

              

      

       

      
        	 	
                (d)

              	
                If
                  the Escrow Agent shall have received notice signed by either party
                  advising that litigation between the parties over entitlement to
                  the
                  Deposit has been commenced, the Escrow Agent shall, on demand of
                  either
                  party, deposit the Deposit with the clerk of the court in which
                  such
                  litigation is pending. If at any time the Escrow Agent is uncertain
                  of its
                  duties hereunder or if the Escrow Agent for any other reason is
                  no longer
                  willing to serve as escrow agent, the Escrow Agent may, on notice to the
                  parties, take such affirmative steps as it may, at its option,
                  elect in
                  order to terminate its duties as the Escrow Agent including, but
                  not
                  limited to, the deposit of the Deposit with a court of competent
                  jurisdiction and the commencement of an action for interpleader,
                  the
                  reasonable costs of which shall be borne by whichever of the parties
                  is
                  the losing party. Upon the taking by the Escrow Agent of such action
                  described, the Escrow Agent shall be released of and from all liability
                  hereunder. 

              

      

       

      
        
          
          

        

        
          -
            43 -

          
            

          

        

        
          
          

        

      

      
        	 	
                (e)

              	
                The
                  Escrow Agent shall not incur any liability in acting upon any signature,
                  notice, demand, request, waiver, consent, receipt or other paper
                  or
                  document believed by the Escrow Agent to be genuine. The Escrow
                  Agent may
                  assume that any person purporting to give it any notice on behalf
                  of any
                  party in accordance with the provisions hereof has been duly authorized
                  to
                  do so, or is otherwise acting or failing to act under this Section
                  except
                  in the case of the Escrow Agent’s gross negligence or willful misconduct.
                  

              

      

       

      
        	 	
                (f)

              	
                The
                  terms and provisions of this Article shall create no right in any
                  person,
                  firm or corporation other than the parties and their respective
                  successors
                  and permitted assigns, and no third party shall have the right
                  to enforce
                  or benefit from the terms hereof.

              

      

       

      
        	 	
                (g)

              	
                The
                  Escrow Agent has executed this Agreement for the sole purpose of
                  agreeing
                  to act as such in accordance with the terms of this
                  Agreement.

              

      

       

      ARTICLE
        11

      MISCELLANEOUS
        PROVISIONS

       

      
        	
                11.1

              	
                Completeness;
                  Modification.
                  This Agreement and the documents and instruments to be executed
                  pursuant
                  to the terms hereof constitute 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.

              

      

       

      
        
          
          

        

        
          -
            44 -

          
            

          

        

        
          
          

        

      

      
        	
                11.2

              	
                Assignments.
                  Purchaser may assign its rights hereunder to any affiliate without
                  the
                  consent of Sellers. No such assignment shall relieve Purchaser
                  of any of
                  its obligations and liabilities hereunder; provided,
                  however,
                  only the Purchaser’s assignees or designees who acquired the Portfolio
                  shall be liable, jointly and severally, for any liability hereunder
                  after
                  the Closing.

              

      

       

      
        	
                11.3

              	
                Successors
                  and Assigns.
                  The benefits and burdens of this Agreement shall inure to the benefit
                  of
                  and bind Purchaser and Sellers and their permitted successors and
                  assigns.

              

      

       

      
        	
                11.4

              	
                Days.
                  If any action is required to be performed, or if any notice, consent
                  or
                  other communication is given, other than on a business day, such
                  performance shall be deemed to be required, and such notice, consent
                  or
                  other communication shall be deemed to be given, on the next business
                  day.
                  Unless otherwise specified herein, all references herein to a “day” or
                  “days” shall refer to calendar days and not business
                  days.

              

      

       

      
        	
                11.5

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

              

      

       

      
        	
                11.6

              	
                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.

              

      

       

      
        	
                11.7

              	
                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 provided the parties realize the material benefits
                  of
                  this Agreement, and each term, covenant or condition of this Agreement
                  shall be valid and enforceable to the fullest extent permitted
                  by
                  law.

              

      

       

      
        	
                11.8

              	
                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.

              

      

       

      
        
          
          

        

        
          -
            45 -

          
            

          

        

        
          
          

        

      

      
        	
                11.9

              	
                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 (or the date delivery
                  is
                  refused by) the intended recipient.

              

      

       

      
        	
                If
                  to Purchaser:

              	 	
                Hersha
                  Hospitality Limited Partnership

                148
                  Sheraton Drive 

                New
                  Cumberland, PA 17070

                Attn:
                  Ashish R. Parikh

                Electronic
                  mail address: ashish@hersha.com

                Telephone:
                  717-770-2405

                Facsimile:  
                  717-774-7383

              
	 	 	 
	
                With
                  a copy to:

              	 	
                Sullivan
                  & Worcester LLP

                One
                  Post Office Square

                Boston,
                  MA 02109

                Attn:
                  Sander Ash

                Electronic
                  mail address: sash@sandw.com

                Telephone:
                  617-338-2967

                Facsimile:   617-338-2880

              
	 	 	 
	
                If
                  to any Seller:

              	 	
                LodgeWorks,
                  L.P.

                8100
                  East 22nd Street

                Building
                  500

                Wichita,
                  Kansas 67226

                Attn:
                  B. Anthony Isaac

                Electronic
                  mail address:tony.isaac@lodgeworks.com

                With
                  a copy to the same address attn: General Counsel

                Electronic
                  mail address:john.morse@lodgeworks.com

                Telephone:
                  316-861-5100

                Facsimile:  
                  316-681-0905

              

      

       

      
        
          
          

        

        
          -
            46 -

          
            

          

        

        
          
          

        

      

      

      
        	
                With
                  a copy to:

              	 	
                Harvey
                  R. Sorensen

                Foulston
                  Siefkin LLP

                1551
                  N. Waterfront Parkway, Suite 100

                Wichita,
                  Kansas 667206

                Electronic
                  mail address: hsorensen@foulston.com

                Telephone:
                  316-291-9774

                Facsimile:  
                  316-267-6345

              
	 	 	 
	
                If
                  to the Escrow Agent:

              	 	
                All
                  American Abstract Company, Inc.

                2854
                  Egypt Road

                Audubon,
                  PA 19403

                Attn:
                  Leo T. White, Esq.

                Electronic
                  mail address: LTWEsquire@aol.com

                Telephone:
                  610-666-4885

                Facsimile:  
                  866-514-9554

              

      

       

      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.

       

      
        	
                11.10

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

              

      

       

      
        	
                11.11

              	
                Survival.
                  All of the representations, warranties, covenants and agreements
                  of
                  Sellers and Purchaser made in, or pursuant to, this Agreement shall
                  survive the
                  Closing, and shall not merge into the Deeds or any other document
                  or
                  instrument executed and delivered in connection herewith; provided
                  any
                  action with respect to any breach of a representation or warranty
                  shall be
                  commenced not later than the first anniversary of the Closing
                  Date.

              

      

       

      
        	
                11.12

              	
                Further
                  Assurances.
                  Sellers and Purchaser 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.

              

      

       

      
        
          
          

        

        
          -
            47 -

          
            

          

        

        
          
          

        

      

       

      
        	
                11.13

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

              

      

       

      
        	
                11.14

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

              

      

       

      
        	
                11.15

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

              

      

       

      
        	
                11.16

              	
                Publicity.
                  The parties agree that except as required by law, no party shall
                  contact
                  or conduct negotiations with public officials, make any public
                  pronouncements, issue press releases or otherwise furnish information
                  regarding the business terms of this Agreement to a third party
                  without
                  obtaining the prior written consent of all parties. No party, or
                  its
                  employees with Knowledge
                  of
                  the transactions contemplated herein, shall trade in the securities
                  of any
                  affiliate of Purchaser until a public announcement of the transactions
                  contemplated by this Agreement has been made public. Notwithstanding
                  anything in Section
                  11.15
                  and Section
                  11.16
                  to
                  the contrary, Purchaser shall have the right to report any information
                  relating to this transaction required to be reported to any governmental
                  entity, in connection with tax reporting information filed by Purchaser
                  with the governmental entity or as may be required by any other
                  governmental regulatory entity without obtaining Sellers’
                  consent.

              

      

       

      
        	
                11.17

              	
                Joint
                  and Several.
                  The obligations of Sellers hereunder shall be joint and
                  several.

              

      

       

      
        	
                11.18

              	
                Exchange.
                  Purchaser and Sellers acknowledge that either party may wish to
                  structure
                  this transaction as a tax deferred exchange of like-kind property
                  within
                  the meaning of Section 1031 of the Code. Each party agrees to reasonably
                  cooperate with the other party to effect such an exchange; provided,
                  however,
                  that (i) the cooperating party shall not be required to acquire
                  or take
                  title to any exchange property, (ii) the cooperating party shall
                  not be
                  required to incur any expense (including attorneys’ fees) or liability
                  whatsoever in connection with the exchange, and the cooperating
                  party
                  shall be periodically reimbursed upon request in the event any
                  such
                  expenses are, in fact, incurred, and (iii) no substitution of the
                  effectuating party shall release said party from any of its obligations
                  under this Agreement.

              

      

       

      
        
          
          

        

        
          -
            48 -

          
            

          

        

        
          
          

        

      

       

      
        	
                11.19

              	
                Sellers’
                  Representatives.
                  Each Seller hereby appoints Sellers’ Representative as its exclusive
                  representative and agent to act for it with respect to all matters
                  relating to this Agreement including, without limitation, (a) waiver
                  of
                  one or more of the terms hereof, (b) the giving and receiving of
                  notices
                  and (c) the amendment or modification of this Agreement or any
                  of the
                  documents or instruments delivered in connection herewith. The
                  appointment
                  of the Sellers’ Representatives is coupled with an interest, is
                  irrevocable and shall not be revoked by, and shall survive, the
                  death,
                  incompetency, liquidation, dissolution or bankruptcy of any
                  Seller.

              

      

       

      
        	
                11.20

              	
                Financials.
                  Sellers shall provide Purchaser with access to the books and records
                  of
                  Sellers for the purpose of preparing audited financial statements
                  for the
                  Portfolio with respect to the 2003, 2004, 2005 calendar years and
                  stub
                  2006 period, such financial statements to be prepared at the Purchaser’s
                  sole cost and expense. Sellers shall provide Purchaser and its
                  accountants
                  with such truthful certifications with respect to such financials
                  as they
                  shall from time to time reasonably require. Sellers shall provide
                  to
                  Purchaser copies of all audited financial reports with respect
                  to the
                  Portfolio and hereby consent to their use by Purchaser in connection
                  with
                  Purchaser complying with applicable securities laws, rules and
                  regulations
                  including any requirements of the Securities and Exchange Commission.
                  Sellers shall, at no out-of-pocket cost or expense to Sellers,
                  cooperate
                  with Purchaser in obtaining similar consents from the auditors
                  of such
                  financing reports. The provisions of this Section
                  11.20
                  shall survive the Closing. 

              

      

       

      [The
        remainder of the page is intentionally left blank

      
        
          
          

        

        
          -
            49 -

          
            

          

        

        
          
          

        

      

      IN
        WITNESS WHEREOF,
        Sellers
        and Purchaser, intending to be legally bound, have caused this Agreement
        to be
        executed in their names by their respective duly-authorized
        representatives.

       

      

      
        	 	
                SELLERS:

              
	 	 
	 	
                BRIDGEWATER
                  HOTELWORKS ASSOCIATES, L.P.

              
	 	
                By:

              	
                Bridgewater
                  Hotelworks Corporation, its general partner

                 

              
	 	 	
                By:

              	 	 	 

	 	 	 	
                Name:

              	 
	 	 	 	
                Title:

              	 
	 	 	 	 	 
	 	
                CHARLOTTE
                  HOTELWORKS ASSOCIATES, L.P. 

              
	 	
                By:

              	
                HotelWorks
                  Ownership Corporation, its general partner

                 

              
	 	 	
                By:

              	 	 	 

	 	 	 	
                Name:

              	 
	 	 	 	
                Title:

              	 
	 	 	 	 	 
	 	
                GAITHERSBURG
                  HOTELWORKS ASSOCIATES, L.P. 

              
	 	
                By:

              	
                Gaithersburg
                  HotelWorks Corporation, its general partner

                 

              
	 	 	
                By:

              	 	 	 

	 	 	 	
                Name:

              	 
	 	 	 	
                Title:

              	 
	 	 	 	 	 
	 	
                PLEASANT
                  HILL LODGING PARTNERS L.P. 

              
	 	
                By:

              	
                Pleasant
                  Hill Partners Corporation, its general partner

                 

              
	 	 	
                By:

              	 	 	 

	 	 	 	
                Name:

              	 
	 	 	 	
                Title:

              	 

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        	 	
                PLEASANTON
                  HOTELWORKS ASSOCIATES, L.P. 

              
	 	
                By:

              	
                Pleasanton
                  HotelWorks Corporation, its general partner

                 

              
	 	 	
                By:

              	 	
                 

              	 

	 	 	 	
                Name:

              	 
	 	 	 	
                Title:

              	 
	 	 	 	 	 
	 	
                SCOTTSDALE
                  HOTELWORKS ASSOCIATES, L.P. 

              
	 	
                By:

              	
                Scottsdale
                  HotelWorks Corporation, its general partner

              
	 	 	 	 	 
	 	 	
                By:

              	 	 	 
	 	 	 	
                Name:

              	 
	 	 	 	
                Title:

              	 
	 	 	 	 	 
	 	
                HARRISON
                  HOTELWORKS ASSOCIATES, L.P. 

              
	 	
                By:

              	
                Harrison
                  HotelWorks Corporation, its general partner

                 

              
	 	 	
                By:

              	 	 	 

	 	 	 	
                Name:

              	 
	 	 	 	
                Title:

              	 
	 	 	 	 	 
	 	
                PURCHASER:

              
	 	 
	 	
                HERSHA
                  HOSPITALITY LIMITED PARTNERSHIP

              
	 	
                By:

              	
                Hersha
                  Hospitality Trust, its general partner

                 

              
	 	 	
                By:

              	 	 	 

	 	 	 	
                Name:

              	 
	 	 	 	
                Title:

              	 

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      In
        consideration of good and valuable consideration, the receipt and sufficiency
        of
        which is hereby acknowledged, Chicago HotelWorks Hospitality Corporation
        agrees
        to be bound by the terms of the foregoing applicable to it.

       

       

      
        	 	
                Chicago
                  HotelWorks Hospitality Corporation

              
	 	 	 
	 	 	 
	 	
                By:

              	 
	 	 	
                Name:

              
	 	 	
                Title:

              

      

       

       

      The
        Title
        Company executes this Agreement for the purposes of acknowledging its Agreement
        to serve as escrow agent in accordance with the terms of the Agreement and
        to
        acknowledge receipt of the Deposit (if in the form of a check, subject to
        clearance) from Purchaser.

       

      
        	 	
                By:

              	 

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      List
        of
        Exhibits and Disclosure Schedules

      

       

      
        	
                Exhibit
                  A -

              	
                Schedule
                  of Properties and Allocated Purchase Prices 

              
	
                Exhibit
                  B -

              	
                Additional
                  Excluded Assets

              
	
                Exhibit
                  C -

              	
                Form
                  of Deposit Letter of Credit

              
	
                Exhibit
                  D -

              	
                Insurance
                  Policies

              
	
                Exhibit
                  E -

              	
                Legal
                  Descriptions of the Land

              
	
                Exhibit
                  F-1 -

              	
                Space
                  Lease

              
	
                Exhibit
                  F-2 -

              	
                Amended
                  and Restated Space Lease

              
	
                Exhibit
                  G -

              	
                Form
                  of Management Agreement

              
	
                Exhibit
                  H -

              	
                Form
                  of Pooling Agreement

              
	
                Exhibit
                  I -

              	
                Litigation

              
	
                Exhibit
                  J -

              	
                Operating
                  Agreements

              
	
                Exhibit
                  K -

              	
                Form
                  of Earn-Out Agreement

              
	
                Exhibit
                  L -

              	
                FF&E,
                  and Fixed Asset Supplies

              
	
                Exhibit
                  M -

              	
                Form
                  of Right of First Offer Agreement

              
	
                Exhibit
                  N -

              	
                [INTENTIONALLY
                  OMITTED]

              
	 	
                Disclosure
                  Schedule 3.4

              
	
              	Disclosure
                Schedules Identified

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