Document:

<PAGE>

                                                                   Exhibit 4.01

                                                     SEE LEGEND ON REVERSE SIDE

                                      [LOGO]

                                     DELAWARE

             NUMBER                                                 SHARES

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

                             NEON COMMUNICATIONS, INC.

     FULLY PAID                                                  NON-ASSESSABLE

                                 COMMON STOCK

                           $0.01 PAR VALUE PER SHARE

THIS CERTIFIES THAT            XXX   SPECIMEN   XXX
                    -----------------------------------------------------------

IS THE OWNER OF       --- ZERO ---        SHARES OF THE CAPITAL STOCK OF
                -------------------------

TRANSFERABLE ONLY ON THE BOOKS OF THE CORPORATION BY THE HOLDER HEREOF IN
PERSON OR BY ATTORNEY UPON SURRENDER OF THIS CERTIFICATE PROPERLY ENDORSED.

IN WITNESS WHEREOF, THE SAID CORPORATION HAS CAUSED THIS CERTIFICATE TO BE
SIGNED BY ITS DULY AUTHORIZED OFFICERS AND ITS CORPORATE SEAL TO BE HEREUNTO
AFFIXED

                      THIS      XXxx           DAY OF       XX       A.D.  XX
                           -------------------        --------------      ----

------------------------------                --------------------------------
        PRESIDENT                                        TREASURER

<PAGE>

FOR VALUE RECEIVED, _______ HEREBY SELL, ASSIGN AND TRANSFER
UNTO _________________________________________________________________________
_______________________________________________________________________ SHARES
OF THE CAPITAL STOCK REPRESENTED BY THE WITHIN CERTIFICATE, AND DO HEREBY
IRREVOCABLY CONSTITUTE AND APPOINT ___________________________________________
TO TRANSFER THE SAID STOCK ON THE BOOKS OF THE WITHIN NAMED CORPORATION WITH
FULL POWER OF SUBSTITUTION IN THE PREMISES.

       DATED ___________________________________

             IN PRESENCE OF:

____________________________________      ____________________________________

                NOTICE. THE SIGNATURE ON THIS ASSIGNMENT
           MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE
           FACE OF THE CERTIFICATE, IN EVERY PARTICULAR, WITHOUT
           ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.

                       NEON COMMUNICATIONS, INC.

                               [LOGO]

                            CERTIFICATE

                                FOR

                                 0
                          -----------------
                               SHARES

                            CAPITAL STOCK

                              ISSUED TO

                          XXX SPECIMEN XXX
                       ---------------------

                               DATED

                            XXXX XX XXXX
                        -------------------

The Corporation has more than one class of stock authorized to be issued. The
Corporation will furnish without charge to each stockholder upon written
request a copy of the full text of the preferences, voting powers,
qualifications and special and relative rights of the shares of each class of
stock (and any series thereof) authorized to be issued by the Corporation as
set forth in the Certificate of Incorporation and amendments thereto filed
with the Secretary of the State of Delaware.<PAGE>

                                                                    EXHIBIT 10.1

                          PURCHASE-LEASEBACK AGREEMENT
                          ----------------------------

          THIS  PURCHASE-LEASEBACK AGREEMENT (the "Agreement"), dated as of the
___ day of December, 1999, between ________________________________, a Georgia
limited liability company ("Seller"), and HERSHA HOSPITALITY LIMITED
PARTNERSHIP, a Pennsylvania 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 general
partner thereof shall (a) apply for or consent to the appointment of, or the
taking of possession by, a receiver, custodian, trustee or liquidator of itself
or of all or a substantial part of its property, (b) admit in writing its
inability to pay its debts as they become due, (c) make a general assignment for
the benefit of its creditors, (d) file a voluntary petition or commence a
voluntary case or proceeding under the Federal Bankruptcy Code (as now or
hereafter in effect), (e) be adjudicated a bankrupt or insolvent, (f) file a
petition seeking to take advantage of any other law relating to bankruptcy,
insolvency, reorganization, winding-up or composition or adjustment of debts,
(g) fail to controvert in a timely and appropriate manner, or acquiesce in
writing to, any petition filed against it in an involuntary case or proceeding
under the Federal Bankruptcy Code (as now or hereafter in effect), or (h) take
any corporate or partnership action for the purpose of effecting any of the
foregoing; or if a proceeding or case shall be commenced, without the
application or consent of a party hereto or any general partner thereof, in any
court of competent jurisdiction seeking (1) the liquidation, reorganization,
dissolution or winding-up, or the composition or readjustment of debts, of such
party or general partner, (2) the appointment of a receiver, custodian, trustee
or liquidator or such party or general partner or all or any substantial part of
its assets, or (3) other similar relief under any law relating to bankruptcy,
insolvency, reorganization, winding-up or composition or adjustment of debts,
and such proceeding or case shall continue undismissed; or an order (including
an order for relief entered in an involuntary case under the Federal Bankruptcy
Code, as now or hereafter in effect) judgment or decree approving or ordering
any of the foregoing shall be entered and continue unstayed and in effect, for a
period of 60 consecutive days.

               "Assignment and Assumption Agreement" shall mean that certain
assignment and assumption agreement whereby the Seller (a) assigns and the
Purchaser assumes the Leases, (b) assigns and the Purchaser assumes the
Operating Agreements that have not been canceled at Purchaser's request and (c)
assigns all of the Seller's right, title and interest in and to the Intangible
Personal Property, to the extent assignable.
<PAGE>

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

          "Bill of Sale -Personal Property" shall mean that certain bill of sale
conveying title to the Tangible Personal Property, Intangible Personal Property
and the Reservation System from the Seller to the Purchaser's property manager,
lessee or designee.

          "Closing" shall mean the closing of the sale and purchase of the
Property.

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

          "Deed" shall mean that certain deed conveying title to the Real
Property with limited warranty covenants of title from the Seller to the
Purchaser, subject only to Permitted Title Exceptions.  The description of the
Land as shown on Exhibit "A" attached hereto shall be the description of the
                 -----------
Land to be contained in the Deed.

          "Deposit"  shall mean the sum of Sixty-Two Thousand Five Hundred and
No/100 Dollars ($62,500.00) deposited by Purchaser with the Escrow Agent upon
Purchaser's execution hereof.

          "Escrow Agent" shall mean WJ Title & Escrow Company, Suite 1200/Tower
Place, 3340 Peachtree Road, N.E., Atlanta, Georgia 30326, Telephone: 404/261-
0500, Fax: 404/261-6779.

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

          "Guest Ledger" shall mean that certain guest ledger dated as of the
date hereof, certified by the Seller, a copy of which is attached hereto as
Exhibit D. The Guest Ledger shall be updated and recertified as of the Closing
---------
Date.

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

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

          "FIRPTA Certificate" shall mean the affidavit of the Seller certifying
(i) that the Seller is not a foreign corporation, foreign partnership, foreign
trust, foreign estate or foreign person (as those terms are defined in the
Internal Revenue Code and the Income Tax Regulations) under Section 1445 of the
Internal Revenue Code, (ii) the information to complete IRS Form 1099S, and
(iii) the information to complete any required state income or recordation tax
reporting requirement, prepared by counsel to the Purchaser and in form and
substance reasonably acceptable to the Purchaser.

                                       2
<PAGE>

          "Intangible Personal Property" shall mean all intangible personal
property owned or possessed by the Seller and used in connection with the
ownership, operation, leasing, occupancy or maintenance of the Property,
including, without limitation, the right to use any trade name associated with
the Real Property and all variations thereof, all of the Leases and any future
leases of space in the Property, all Operating Agreements (to the extent
transferable), Authorizations (to the extent transferable), escrow accounts,
business records, plans and specifications, all licenses, permits and approvals
with respect to the construction, ownership, operation, leasing, occupancy or
maintenance of the Property 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, and the share of the Tray Ledger determined under
Section 7.5, but excluding (i) any of the aforesaid rights the Purchaser elects
not to acquire and (ii) the Seller's cash on hand, in bank accounts and invested
with financial institutions, and (iii) the accounts receivable except for the
above described share of the Tray Ledger.

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

          "Land" shall mean that certain parcel of real estate lying and being
in ______________, Georgia, more commonly known as the "Comfort Suites Inn", as
more particularly described on Exhibit "A" attached hereto, together with all
                               -----------
easements, rights, privileges, remainders, reversions and appurtenances
thereunto belonging or in any way appertaining, and all of the estate, right,
title, interest, claim or demand whatsoever of the 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.

          "Leases" shall mean all of the leases, if any, now in effect with
respect to the Property or the Land or any portion thereof, under which the
Seller are either a landlord or tenant, and all addenda, modifications or
amendments thereto, certified true copies of which have been delivered by the
Seller to the Purchaser.

          "Operating Agreements" shall mean the management agreements, service
contracts and other agreements, if any, in effect with respect to the
construction, ownership, operation, leasing, occupancy or maintenance of the
Property. All of the Operating Agreements in force and effect as of the date
hereof are listed on Exhibit "C" attached hereto.
                     -----------

          "Owner's Title Policy" shall mean an owner's policy of title insurance
(ALTA Form B-1970) issued to the Purchaser by the Title Company, pursuant to
which the Title Company insures the Purchaser's ownership of fee simple title to
the Real Property (including the marketability thereof), subject only to
Permitted Title Exceptions (which shall exclude all preprinted, standard,
general or similar exceptions), and which provides such affirmative coverages
and endorsements reasonably requested by the Purchaser. The Owner's Title Policy

                                       3
<PAGE>

shall insure the Purchaser in the amount of the Purchase Price and shall be in
form and substance customary for similar transactions in Georgia.  The
description of the Land in the Owner's Title Policy shall be by courses and
distances and shall be identical to the description shown on the Survey.

          "Permitted Title Exceptions" shall mean those exceptions to title to
the Real Property set forth in the Title Commitment (a) which do not require or
secure the payment of money and (b) which are set forth on Exhibit "B" attached
                                                           -----------
hereto.

          "Property" shall mean collectively the Real Property, the Inventory,
the Tangible Personal Property and the Intangible Personal Property.

          "Purchase Price" [Form Purchase Price]

          "Real Property" shall mean the Land and the Improvements.

          "Reservation System" shall mean the Seller's Reservation Terminal and
Reservation System equipment and software, if any.

          "Seller's  Financial Information" shall mean that certain financial
information relative to the Seller and the Property, including the income and
expense statements for the Property for the period January 1, 1999 through
October 31, 1999, copies of which are attached hereto as Exhibit "E".
                                                         -----------

          "Survey" shall mean the survey to be delivered pursuant to Section
5.4.

          "Tangible Personal Property" shall mean the Inventory and all other
items of personal property owned by the Seller used in connection with the
Property.

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

          "Title Company" shall mean a title insurance company selected by the
Purchaser.

          "Tray Ledger" shall mean fifty percent (50%) of the final night's room
revenue (revenue from rooms occupied as of 12:01 a.m. on the Closing Date,
exclusive of food, beverage, telephone and similar charges which accrue prior to
Closing), including any sales taxes, room taxes or other taxes thereon.

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

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

                                       4
<PAGE>

          (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 or
subsections, subsections or clauses are references to articles, sections,
subsections or clauses of this Agreement.

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

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

                                   ARTICLE 2
                                   ---------
                    PURCHASE AND SALE; ACCESS; STUDY PERIOD;
                    ----------------------------------------
                           PAYMENT OF PURCHASE PRICE
                           -------------------------

     2.1  Purchase and Sale.
          ------------------

          (a) The Seller agrees to sell and the Purchaser agrees to acquire the
Property for the Purchase Price and in accordance with the other terms and
conditions set forth herein.  In addition, the Purchaser agrees to lease the
Property back to the Seller pursuant to the terms of a Percentage Lease
Agreement, the final terms of which shall be agreed upon between the parties
prior to the Closing.  However, the material terms of that Percentage Lease
Agreement will include, but shall not be limited to the following:

          .  Seller, or its affiliate, shall lease the Property pursuant to
             Percentage Lease for an initial period of three (3) years.

          .  Seller, or its affiliate, shall guarantee to pay a minimum rent of
             12% per year of the Purchase Price during the initial term.

          .  At Closing, Seller shall place on deposit, a total security deposit
             of $250,000 with the Purchaser ("Security Deposit"). This Security
             Deposit shall secure the lease payments on the Percentage Lease for
             this Property, as well as the lease payments for those other
             properties that will be sold, and leased back to Seller's
             affiliates in conjunction with the sale of this Property, namely,
             [other three hotels purchased from Seller's affiliates]

                                       5
<PAGE>

          . During the term of the Percentage Lease, Purchaser shall pay Seller
            annual interest of Eight percent (8%).

          . During the second term of the Percentage Lease, Seller shall pay a
            minimum base rent equal to ten percent (10%) of the Purchase Price
            to Purchaser.

          . If Seller elects not to extend the Percentage Lease for a second or
            any subsequent term, then Purchaser shall pay to Seller the entire
            Security Deposit within thirty (30) days of the conclusion of the
            Lease. Any costs associated with the transfer of any applicable
            franchise agreement, including franchise fees, royalties or past
            dues, shall be borne by Seller: provided, however, that Purchaser
                                            --------  -------
            shall pay for any Property Improvement Plans required by the
            Franchisor at the time of transfer.

          (b)    Seller and Purchaser acknowledge that it is the intention of
the Seller to effect the transaction contemplated in this Agreement by means of
an exchange of property of like-kind so as to qualify for the non-recognition of
gain in accordance with the provisions of Section 1031 of the Internal Revenue
Code of 1986, as amended, and the Treasury Regulations promulgated thereunder.
Purchaser agrees to cooperate with Seller in effecting the exchange but without
incurring any obligations, liabilities or expenses. Seller and Purchaser agree
to execute such other agreements including escrow agreements and agreements with
third party exchange facilitators and to comply with the terms thereof to enable
the location and acquisition of suitable exchange properties for the purpose of
effecting the exchange of properties, it being understood by Purchaser that
Seller prefers and will prefer the receipt of such property to the receipt of
cash in exchange for the conveyance of the Property to Purchaser as set forth in
the Agreement.

     2.2  Due Diligence Period.
          --------------------

          (a)  The Purchaser shall have the right, from the date of the
execution of this Agreement until 5:00 p.m. on January 15, 2000 ("Due Diligence
Period"), and thereafter if the Purchaser notifies the Seller that it has
elected to proceed to Closing in the manner described below, to enter upon the
Real Property and to perform, at the Purchaser's expense, such economic,
surveying, engineering, environmental, topographic and marketing tests, studies
and investigations as the Purchaser may deem appropriate.  Purchaser shall give
Seller at least twenty-four (24) hours prior written notice of its desire to
conduct such tests at the Property and shall not conduct such tests on the
Property or otherwise visit the Property

                                       6
<PAGE>

without Seller's prior written approval. If such tests, studies and
investigations warrant, in the Purchaser sole, absolute and unreviewable
discretion, the purchase of the Property for the purposes contemplated by the
Purchaser, then the Purchaser may elect to proceed to Closing and shall so
notify the Seller prior to the expiration of the Due Diligence Period. If for
any reason the Purchaser does not so notify the Seller of its determination to
proceed to Closing prior to the expiration of the Due Diligence Period, or if
the Purchaser notifies the Seller, in writing, prior to the expiration of the
Due Diligence Period that it has determined not to proceed to Closing, this
Agreement automatically shall terminate, and the Purchaser shall be released
from any further liability or obligation under this Agreement, except for such
liabilities and obligations which, by the terms of this Agreement, survive
termination of the Agreement.

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

          (c)  The Purchaser hereby indemnifies and defends the Seller against
any loss, damage or claim arising from entry upon the Real Property by the
Purchaser or any agents, contractors or employees of the Purchaser.  The
Purchaser, at its own expense, shall restore any damage to the Real Property
caused by any of the tests or studies made by the Purchaser.  Purchaser's
obligations under this Section 2.2(c) shall survive termination of this
Agreement or Closing of the transactions contemplated hereunder.

          (d) During the Due Diligence Period, the Purchaser, at its expense,
shall cause an examination of title to the Property to be made, and, prior to
the expiration of the Due Diligence Period, shall notify the Seller of any
defects in title shown by such examination that the Purchaser is unwilling to
accept, other than the Permitted Title Exceptions.  At or prior to Closing, the
Seller shall notify the Purchaser whether the Seller is willing to cure such
defects.  Seller may cure, but shall not be obligated to cure such defects.  If
such defects consist of deeds of trust, mechanics' liens, tax liens or other
liens or charges in a fixed sum or capable of computation as a fixed sum, the
Seller, at its option, shall either pay and discharge such defects at Closing,
or provide bonds or indemnities in favor of the Title Company in order to remove
such items from the Title Policy at Closing.  If the Seller is unwilling or
unable to cure any other such defects by Closing, the Purchaser shall elect (1)
to waive such defects and proceed to Closing without any abatement in the
Purchase Price or (2) to terminate this Agreement.  The Seller shall not, after
the date of this Agreement, subject the Property 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 in any
material adverse manner the status of title without the Purchaser's prior
written consent, which consent shall not be unreasonably withheld or delayed.
All title matters revealed by the Purchaser's title examination and not objected
to by the Purchaser as provided above shall be deemed Permitted Title
Exceptions.  If Purchaser shall fail to examine title and notify the Seller of
any

                                       7
<PAGE>

such title objections by the end of the Due Diligence Period, all such title
exceptions (other than those that are to be paid at Closing as provided above)
shall be deemed Permitted Title Exceptions.

     2.3  Intentionally Omitted.
          ---------------------

     2.4  Inspection of Books and Records; Access.    The Purchaser, from the
          ---------------------------------------
date hereof until termination of this Agreement, shall have access during normal
business hours to all documents, agreements and other information in the
possession of the Seller and their agents pertaining to the ownership, use and
operation of the Property and to the Seller's representations, warranties and
covenants set forth herein, including but not limited to financial records, tax
assessments, bills and leases, and the Purchaser shall have the right to inspect
and make copies of the same.  Purchaser shall give Seller at least twenty-four
(24) hours prior written notice of its desire to inspect such books and records,
together with a detailed listing of which materials it would like to inspect.
Any such inspection of books and records shall take place at the office of the
Management Company, _________________________, in Atlanta, Georgia.
Purchaser hereby agrees to keep all of such business records and the information
which it reviews in connection therewith confidential and, upon any termination
of this Agreement, return all of such information or copies thereof to Seller
and not retain any copies thereof.

     2.5  Payment of Purchase Price. The Purchase Price shall be paid to the
          -------------------------
Seller in the following manner:

          (a)  The Purchaser shall receive a credit against the Purchase Price
in an amount equal to the Seller's closing costs assumed and paid for by the
Purchaser pursuant to Section 7.4 hereof.

          (b)  The Purchaser shall pay the balance of the Purchase Price, as
adjusted by the prorations pursuant to Section 7.5 hereof by wire transfer of
immediately available funds.

     2.6  Allocation of Purchase Price. The parties agree that the Purchase
          ----------------------------
Price shall be allocated among the various components of the Property in the
manner agreed to by the Purchaser and Seller during the Due Diligence Period.

     2.7  Confidentiality. Except as hereinafter provided, from and after the
          ---------------
execution of this Agreement, the Purchaser and the Seller shall keep the terms,
conditions and provisions of this Agreement confidential and neither shall make
any public announcements hereof unless the other first approves of same in
writing, nor shall either disclose the terms, conditions and provisions hereof,
except to persons who "need to know", such as their respective agents,
attorneys, accountants, engineers, surveyors, financiers and bankers.  Purchaser
and Seller acknowledge that Purchaser is a publicly traded entity that is
governed by the laws and rules of the Securities Exchange Commission, including
rules governing insider trading.  Purchaser and Seller agree that it is
therefore of the utmost importance that all parties abide by this
confidentiality provision.

                                       8
<PAGE>

                                   ARTICLE 3
                                   --------
               SELLER'S REPRESENTATIONS, WARRANTIES AND COVENANTS
               --------------------------------------------------

     To induce the Purchaser to enter into this Agreement and to purchase the
Property, and to pay the Purchase Price therefor, the Seller hereby makes the
following representations, warranties and covenants, upon each of which the
Seller acknowledges and agrees that the Purchaser is entitled to rely and has
relied:

     3.1   Organization and Power. The Seller is an entity duly formed and
           ----------------------
validly existing and in good standing under the laws of the State of its
organization and has all requisite powers and all governmental licenses,
authorizations, consents and approvals to carry on its business as now conducted
and to enter into and perform its obligations hereunder and under any document
or instrument required to be executed and delivered on behalf of the Seller
hereunder.

     3.2   Authorization and Execution. This Agreement has been duly authorized
           ---------------------------
by all necessary action on the part of the Seller, has been duly executed and
delivered by the Seller, constitutes the valid and binding agreement of the
Seller and is enforceable in accordance with its terms.

     3.3  Noncontravention. The execution and delivery of, and the performance
          ----------------
by the Seller of its obligations under this Agreement does not and will not
contravene, or constitute a default under, any provision of applicable Law or
regulation, the Seller's organizational documents or, except as set forth on
Schedule 3.3 hereof, any agreement, judgment, injunction, order, decree or other
------------
instrument binding upon the Seller, or result in the creation of any lien or
other encumbrance on any asset of the Seller. There are no outstanding
agreements (written or oral) pursuant to which the Seller (or any predecessor to
or representative of the Seller) has agreed to sell or has granted an option to
purchase the Property (or any part thereof).

     3.4  No Special Taxes. The Seller has no knowledge of, nor has it received
          -----------------
any notice of, any special taxes or assessments relating to the Property or any
part thereof or any planned public improvements that may result in a special tax
or assessment against the Property.

     3.5  Compliance with Existing Laws. To the best of Seller's knowledge, the
          -----------------------------
Seller possesses all Authorizations, each of which is valid and in full force
and effect, and no provision, condition or limitation of any of the
Authorizations has been breached or violated.  The Seller has no knowledge, nor
has it received notice within the past three years, of any existing or
threatened violation of any provision of any applicable building, zoning,
subdivision, environmental or other governmental ordinance, resolution, statute,
rule, order or regulation, including but not limited to those of environmental
agencies or insurance boards of underwriters, with respect to the ownership,
operation, use, maintenance or condition of the Property or any part thereof,
the violation of which would have a material adverse effect upon

                                       9
<PAGE>

Seller or the Property, or requiring any material repairs or alterations other
than those that have been made prior to the date hereof.

     3.6  Personal Property. All of the Tangible Personal Property and
          -----------------
Intangible Personal Property are owned and, at Closing, will be conveyed by the
Seller free and clear of all liens and encumbrances. The Seller has good,
merchantable title thereto and the right to convey same in accordance with the
terms of this Agreement.

     3.7  Title and Survey Matters. The Seller is the sole owner of full legal,
          ------------------------
equitable and beneficial title to the Property and no consent of or joinder by
any other person is required for the Seller to convey the full legal, equitable
and beneficial title to and ownership of the Property to the Purchaser in
accordance with this Agreement. Except to the extent such obligations may be
inconsistent herewith, the Seller shall perform all of its material obligations
under all material documents affecting title to all or any part of the Property
and shall not permit or allow to continue any defaults thereunder, the
occurrence of which defaults would have a material adverse effect upon the
Property or the Seller.

     3.8  [Intentionally Deleted]

     3.9  Operating Agreements.  To the best of Seller's knowledge, the Seller
          --------------------
has performed all of its obligations under each of the Operating Agreements and
no fact or circumstance has occurred which, by itself or with the passage of
time or the giving of notice or both, would constitute a default under any of
the Operating Agreements, which default would have a material adverse effect
upon Seller or the Property. The Seller shall not enter into any new management
agreement, maintenance or repair contract, supply contract, lease (as lessor or
lessee) or other agreements with respect to the Property, nor shall the Seller
enter into any agreements modifying the Operating Agreements, unless (a) any
such agreement or modification will not bind the Purchaser or the Property after
the Closing Date or (b) the Seller has obtained the express prior written
consent of the Purchaser to such agreement or modification, which consent shall
not be unreasonably withheld or delayed.

     3.10 Warranties and Guaranties. The Seller shall not, before or after
          -------------------------
Closing, release or modify any warranties or guarantees, if any, of
manufacturers, suppliers and installers relating to the Improvements and the
Tangible Personal Property and Intangible Personal Property or any part thereof,
except with the prior written consent of the Purchaser.

     3.11 Insurance. All of the Seller's insurance policies are valid and in
          ---------
full force and effect, all premiums for such policies were paid when due and all
future premiums for such policies (and any replacements thereof) shall be paid
by the Seller on or before the due date therefor. The Seller shall pay all
premiums on, and shall not cancel or voluntarily allow to expire prior to
Closing, any of the Seller's insurance policies 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.

                                       10
<PAGE>

     3.12 Condemnation Proceedings; Roadways. The Seller has not received notice
          ----------------------------------
of any condemnation or eminent domain proceeding pending or threatened against
the Property or any part thereof. The Seller has 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.

     3.13 Litigation. There is no action, suit or proceeding pending or, to the
          ----------
best of Seller's knowledge, overtly threatened against or affecting the Seller
in any court, before any arbitrator or before or by any Governmental Body which
(a) in any manner raises any question affecting the validity or enforceability
of this Agreement or any other agreement or instrument to which the Seller are
parties or by which they are bound and that is or is to be used in connection
with, or is contemplated by, this Agreement, (b) could materially and adversely
affect the business, financial position or results of operations of the Seller,
(c) could adversely affect the ability of the Seller to perform its obligations
hereunder, or under any document to be delivered pursuant hereto, (d) could
create a lien on the Property, any part thereof or any interest therein, (e) the
subject matter of which concerns any past or present employee of the Seller or
(f) could otherwise materially adversely affect the Property, any part thereof
or any interest therein or the use, operation, condition or occupancy thereof.

     3.14 Labor and Employment Agreements. There are no labor disputes pending
          -------------------------------
or, to the best of the Seller's knowledge, threatened in writing as to the
operation or maintenance of the Property or any part thereof. The Seller is not
party to any union or other collective bargaining agreement with employees
employed in connection with the ownership, operation or maintenance of the
Property. The Seller is not a party to any employment contracts or agreements,
written or oral, with any persons employed with respect to the Property that
will be binding on the Purchaser on or after the Closing. Neither the Seller nor
their managing agent (if any) will, between the date hereof and the Closing
Date, enter into any new employment contracts or agreements or hire any new
employees that will be binding on the Purchaser on or after the Closing. The
Purchaser will not be obligated to give or pay any amount to any employee of the
Seller or the Seller's managing agent. The Purchaser shall not have any
liability under any pension or profit sharing plan that the Seller or its
managing agent may have established with respect to the Property or their or its
employees.

     3.15 Financial Information. All of the Seller's Financial Information is
          ---------------------
correct and complete in all material respects and presents accurately the
results of the operations of the Property for the period commencing on the 1st
of January 1999 and ending on October 31, 1999. Since the date of the last
financial statement included in the Seller's Financial Information, there has
been no material adverse change in the financial condition or in the operations
of the Property. The Seller will provide access by Purchaser's representatives,
to all financial and other information relating to the Property, and such
representatives shall determine that such information is sufficient to enable
them to prepare audited financial statements in conformity with Regulation S-X
of the Securities and Exchange Commission and any registration statement, report
or disclosure statement filed with and any rule issued by, the Securities and
Exchange Commission. The Seller will provide a signed representation letter as
prescribed by Generally Accepted Auditing Standards as promulgated by the
Auditing

                                       11
<PAGE>

Standards Division of the American Institute of Public Accountants which
representation is required to enable an independent public accountant to render
an opinion on such financial statements.

     3.16 Organizational Documents. The Seller's Organizational Documents are in
          ------------------------
full force and effect, and no fact or circumstance has occurred that, by itself
or with the giving of notice or the passage of time or both, would constitute a
default thereunder.

     3.17 Excluded Liabilities.
          --------------------

          (a)  The Purchaser is not assuming or undertaking to assume and shall
have no responsibility for any expenses, debts, obligations, liabilities,
claims, demands, fines or penalties, whether fixed or contingent, past, present
or future, or direct or indirect, arising out of or in connection with the
conduct by the Seller of its business or the ownership and use of the Property
prior to the Closing (the "Excluded Liabilities''), including without
limitation, any of the Excluded Liabilities arising out of or in connection with
the failure by the Seller to comply with any applicable Environmental Laws
including, without limitation any Environmental Laws regarding pollution
control, underground storage tanks, asbestos or other environmental matters
applicable to the Property.

          (b)  The Seller agrees to defend, indemnify and hold harmless the
Purchaser from and against any of the Excluded Liabilities and any other
damages, losses, costs, expenses, claims or demands (including fines, penalties,
diminution in value of the Property, court costs and reasonable attorneys' fees)
that may be incurred by or imposed on the Purchaser as a result of (i) the
conduct by the Seller of its business in connection with the Property prior to
the Closing and (ii) any material breach by the Seller of any representation or
warranty of the Seller contained herein applicable to the Property.

     3.18 Brokerage Commission.  Except for Hotel Partners, Seller has not
          --------------------
engaged the services of, nor is it or will it or Purchaser become liable to, any
real estate agent, broker, finder or any other person or entity for any
brokerage or finder's fee, commission or other amount with respect to the
transactions described herein on account of any action by the Seller.

     3.19 Environmental.  To the best of Seller's knowledge:
          -------------

          (a) The Seller, and any person or entity for whose conduct the Seller
is liable, has no liability under, has never materially violated, and is
presently in material compliance with, all federal, state and local
environmental or health and safety-related laws, rules, regulations and
ordinances (together, Environmental Laws) applicable to the Property.

          (b) There exist no environmental conditions with respect to the
Property that could or do result in any material damage, loss, cost, expense or
liability to or against the Seller or the Purchaser.

                                       12
<PAGE>

          (c)  Other than those hazardous or toxic substances commonly used in
the operation of a hotel, which hazardous or toxic substances are stored in
accordance with all applicable Environmental Laws, the Seller, and any other
person or entity for whose conduct Seller is liable, has not generated,
transported, stored, handled or disposed of any hazardous or toxic substances at
the Property, and has no knowledge of any release or threatened release of any
hazardous or toxic substance at the Property or in the vicinity of the Property.

          (c) The Seller, and any person or entity for whose conduct the Seller
is responsible, has not (i) entered into or been the subject of any order or
decree with respect to environmental matters with respect to the Property, (ii)
received notice under the citizen suit provisions of any Environmental Law in
connection with the Property, (iii) received any request for information,
notice, demand letter, administrative inquiry or formal or informal complaint or
claim in respect of any environmental condition relating to the Property, or
(iv) been subject to or threatened in writing with any governmental or citizen
enforcement action with respect to the Property; and the Seller, and any other
person for whose conduct the Seller is liable, has no reason to believe that any
of the foregoing will be forthcoming.

          (d) The Seller has all licenses, permits or approvals, if any,
required for the activities and operations conducted at the Property and for any
past or ongoing alterations or improvements on the Property, except for such
license, permits and approvals the failure to obtain which would not have a
material adverse effect upon the Property or Seller.

     3.20 Sufficiency of Certain Items. The Property contains not less than:
          ----------------------------

          (a)  a sufficient amount of furniture, furnishings, color television
sets, carpets, drapes, rugs, floor coverings, mattresses, pillows, bedspreads
and the like, to furnish each guest room, so that each such guest room is, in
fact, fully furnished; and

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

     3.21 Operation of Property Prior to Closing. Between the date of this
          --------------------------------------
Agreement and the Closing Date, Seller shall operate the Property in substantial
compliance with all material laws and in the same manner in which Seller
operated the Property prior to the execution of this Agreement, so as to keep
the Property in good condition, reasonable wear and tear excepted, and so as to
maintain the existing caliber of the Hotel operations conducted at the Property
and the reasonable good will of the tenants, the Hotel guests, the employees and
other customers of the Hotel. The Seller shall continue to use reasonable
efforts to take guest room reservations and to book functions and meetings and
otherwise to promote the business of the Property in generally the same manner
as the Seller did prior to the execution of this Agreement.  Between the date
hereof and the Closing Date, the Seller shall deliver to the Purchaser monthly
reports (or for the partial monthly period up to the Closing Date)

                                       13
<PAGE>

showing the income and expenses of the Hotel and all departments thereof,
together with such periodic information with respect to room reservations and
other bookings, as the Seller customarily keeps internally for its own use.
Seller agrees that it will operate the Property and the Hotel in accordance with
the provisions of this section between the date hereof and the Closing Date.

     3.22 Room Furnishings. Each room in the Hotel available for guest rental is
          ----------------
and at Closing will be furnished substantially in accordance with Licensor's
standards for the Hotel and room type.

     3.23 Franchise Agreement.  To the best of Seller's knowledge, the franchise
          -------------------
agreement with respect to the Hotel is, and at Closing will be, in full force
and effect.

                                   ARTICLE 4
                                   ---------
             PURCHASER'S REPRESENTATIONS; WARRANTIES AND COVENANTS
             -----------------------------------------------------

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

     4.1  Organization and Power. The Purchaser is an entity duly formed and
          ----------------------
validly existing and in good standing under the laws of the State of its
organization and has all requisite powers and all governmental licenses,
authorizations, consents and approvals to carry on its business as now conducted
and to enter into and perform its obligations hereunder and under any document
or instrument required to be executed and delivered on behalf of the Purchaser
hereunder.

     4.2  Authorization and Execution. This Agreement has been duly authorized
          ---------------------------
by all necessary action on the part of the Purchaser, has been duly executed and
delivered by the Purchaser, constitutes the valid and binding agreement of the
Purchaser and is enforceable in accordance with its terms.

     4.3  Noncontravention. The execution and delivery of and the performance by
          ----------------
the Purchaser of its obligations hereunder do not and will not contravene, or
constitute a default under any provisions of applicable Law or regulation,
Purchaser's organizational documents or any agreement, judgment, injunction,
order, decree or other instrument binding upon the Purchaser or result in the
creation of any lien or other encumbrance on any asset of the Purchaser.

     4.4  Litigation. There is no action, suit or proceeding, pending or known
          ----------
to be threatened, against or affecting the Purchaser or any principal,
subsidiary or affiliate of the Purchaser in any court or before any arbitrator
or before any Governmental Body which (a) in any manner raises any question
affecting the validity or enforceability of this Agreement or any other
agreement or instrument to which the Purchaser is a party or by which it is
bound and

                                       14
<PAGE>

that is to be used in connection with, or is contemplated by, this Agreement,
(b) could materially and adversely affect the business, financial position or
results of operations of the Purchaser or any principal, subsidiary or affiliate
of the Purchaser, (c) could adversely affect the ability of the Purchaser to
perform its obligations hereunder, or under any document to be delivered
pursuant hereto, (d) could create a lien on the Property, any part thereof or
any interest therein or (e) could adversely affect the Property, any part
thereof or any interest therein or the use, operation, condition or occupancy
thereof.

     4.5  Bankruptcy. No Act of Bankruptcy has occurred with respect to the
          ----------
Purchaser.

     4.6  Brokerage Commission. The Purchaser has not engaged the services of,
          --------------------
nor is it or will it or the Seller become liable to, any real estate agent,
broker, finder or any other person or entity for any brokerage or finder's fee,
commission or other amount with respect to the transaction described herein.

                                   ARTICLE 5
                                   ---------
                 CONDITIONS AND ADDITIONAL COVENANTS OF SELLER
                 ---------------------------------------------

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

     5.1  Seller's Deliveries. The Seller shall have delivered to the Purchaser,
          -------------------
on or before the Closing Date, all of the documents and other information
required of Seller pursuant to Section 7.2.

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

     5.3  Title Matters. Purchaser has received from Seller a copy of Seller's
          -------------
Owner's Title Policy.  The Seller shall not have taken any action from the date
hereof and through and including the Closing Date that would materially
adversely affect the status of title to the Real Property. Fee simple title to
the Real Property shall be insurable as such by the Title Company at its
regularly scheduled rates subject only to Permitted Title Exceptions.

     5.4  Survey. Purchaser has received the most recent Survey of the Land in
          ------
the possession of Seller. The Survey provided by the Seller (or a survey
obtained by Purchaser if Seller's Survey was prepared more than one year
earlier) shall be adequate for the Title Company to delete any exception for
survey in the Owner's Title Policy.

                                       15
<PAGE>

     5.5  Condition of Improvements and the Tangible Personal Property. At the
          ------------------------------------------------------------
time of Closing, the Improvements and the Tangible Personal Property (including
but not limited to, the mechanical systems, plumbing, electrical, wiring,
appliances, fixtures, heating, air conditioning and ventilating equipment,
elevators, boilers, equipment, roofs, structural members and furnaces) shall be
in good condition and working order, reasonable wear and tear excepted, and
shall have no material defects, structural or otherwise, and the Seller shall
not have substantially diminished the Inventory. The Seller, at its expense,
shall have maintained the Real Property and the Tangible Personal Property in
substantial compliance with all applicable Laws and in at least as good
condition as they are in as of the date hereof, normal wear and tear excepted.
The Seller shall not have diminished the quality or quantity of maintenance and
upkeep services heretofore provided to the Real Property and the Tangible
Personal Property.  The Seller shall not have removed or caused or permitted to
be removed any part or portion of the Real Property or the Tangible Personal
Property unless the same is replaced, prior to Closing, with similar items of at
least equal quality and acceptable to the Purchaser.

     5.6  Franchise.  In the event that Purchaser elects to assume the existing
          ---------
franchise agreement, the Purchaser or its designee shall have received, at the
Seller's expense, an assignment or transfer of any existing franchise agreement
currently applicable to the Hotel or a new franchise agreement from Comfort Inn
(the "Franchisor''), together with an estoppel certificate from the Franchisor
in form and substance reasonably acceptable to the Purchaser, which the Seller
agrees to use its reasonable efforts to cooperate with Purchaser to obtain.  Any
such assignment must include a release of Seller and any of its principals which
guaranteed such Franchise Agreement.

     5.7  Operational Licenses. Seller shall have all material permits,
          --------------------
licenses, approvals and Authorizations necessary to operate the Hotel. To that
end, the Seller and the Purchaser shall have cooperated with each other, and
each shall have executed such transfer forms, license applications and other
documents as may be necessary or desirable for Seller to obtain such permits,
licenses, approvals and Authorizations.

     5.8  Securities Compliance. Seller shall reasonably cooperate with
          ---------------------
Purchaser at Purchaser's expense, to provide all information and execute all
documents necessary for Purchaser to comply with all applicable state and
federal securities laws.

     5.9  Lease.  As a further condition to Closing, Seller and Purchaser shall
          -----
have executed a Percentage Lease Agreement pursuant to which Seller shall lease
the Hotel (the "Percentage Lease Agreement").  Such Percentage Lease Agreement
shall be agreed upon in writing prior to the Closing in accordance with the
material terms set forth in Section 2.01(a) hereof.

          Each of the conditions and additional covenants contained in this
Section are intended for the benefit of the Purchaser and may be waived in whole
or in part, by the Purchaser, but only by an instrument in writing signed by the
Purchaser.

                                       16
<PAGE>

                                   ARTICLE 6
                                   ---------
               CONDITIONS AND ADDITIONAL COVENANTS OF PURCHASER
               ------------------------------------------------

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

     6.1. Purchaser's Deliveries. The Purchaser shall have delivered to the
          ----------------------
Seller, on or before the Closing Date, all of the documents, Purchase Price and
other information required of Purchaser pursuant to Section 7.3

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

     6.3  Franchise. Pursuant to this Agreement and the Percentage Lease
          ---------
Agreement, Seller shall remain as the Franchisee of the Hotel, but shall execute
at Closing an Assignment of Franchise Rights and License Agreement in favor of
Purchaser or its assignee ("Franchise Assignment Agreement").  This Franchise
Assignment Agreement shall be executed by Purchaser and Seller and Seller shall
use commercially reasonable efforts to obtain the execution thereof by the
Franchisor.  The Franchise Assignment Agreement shall require the Seller to
assist in the transfer of the franchise to Purchaser in the event that Seller
defaults under the terms of the Percentage Lease Agreement, or terminates said
Percentage Lease Agreement in accordance with its terms.

     6.4  Operational Licenses. Seller shall have all material permits,
          --------------------
licenses, approvals  and Authorizations necessary to operate the Hotel.  To that
end, the Seller and the Purchaser shall have cooperated with each other, in
obtaining such permits, licenses and approvals.

     6.5  Lease.  As a further condition to Closing, Seller and Purchaser shall
          -----
have executed the Percentage Lease Agreement.

          Each of the conditions and additional covenants contained in this
Section are intended for the benefit of Seller and may be waived in whole or in
part, by Seller, and only by an instrument in writing signed by Seller.

                                   ARTICLE 7
                                   ---------
                           DUE DILIGENCE AND CLOSING
                           -------------------------

     7.1  Closing. Closing shall be held at the offices of Wagner, Johnston &
          -------
Rosenthal, P.C., Suite 1200/Tower Place, 3340 Peachtree Road, N.E., Atlanta,
Georgia 30326, on January 31, 2000. Possession of the Property shall be
delivered to the Purchaser at Closing, subject only to Permitted Title
Exceptions.

                                       17
<PAGE>

     7.2  Seller's Deliveries.
          -------------------

          (a)  At Closing, the Seller shall deliver to Purchaser all of the
following instruments, each of which shall have been duly executed and, where
applicable, acknowledged on behalf of the Seller or its affiliate and shall be
dated as of the Closing Date:

               (i)    The certificate required by Section 5.2.

               (ii)   The Percentage Lease Agreement.

               (iii)  Estoppel Certificates from the Franchisor.

               (iv)   The FIRPTA Certificate.

               (v)    Settlement Statement.

               (vi)   Bill of Sale - Personal Property

               (vii)  Limited Warranty Deed.

               (viii) Evidence (such as organization documents including
certificates and authorizing resolutions) satisfactory to Purchaser as to
Seller's authority to enter into and consummate this Agreement.

               (ix)   A Franchise Assignment Agreement.

               (x)    An Owner's Affidavit in a form customarily used in
Atlanta, Georgia.

               (xi)   An Assignment and Assumption of Operating Agreements.

               (xii)  Such agreements, affidavits or other documents as may be
reasonably required by Purchaser or its attorneys.

          (b)  At Closing, the Seller shall also deliver or cause to be
delivered to the Purchaser the following:

               (i)    A valid, final and unconditional certificate of occupancy
as to the Real Property issued by the appropriate governmental authority, if in
Seller's possession.

               (ii)   If part of the Tangible Personal Property consists of a
motor vehicle titled under state law, a duly executed and delivered document
transferring title pursuant to applicable state law and related documents.

                                       18
<PAGE>

               (iii)  True, correct and complete copies of all plans,
specifications, guaranties and warranties, if any, of contractors,
subcontractors, manufacturers, suppliers and installers possessed by the Seller
and relating to the Improvements and the Tangible Personal Property and
Intangible Personal Property, or any part thereof.

               (iv)   Copies of all correspondence, files, documents, records
and data relating the operation of the Property for the period commencing on
January 1, 1999 until Closing.

               (v)    All keys for the Property.

               (vi)   A complete list of all advance room reservations,
functions and the like, including all deposits thereon, in reasonable detail
specified by the Purchaser.

               (vii)  Updated Guest Ledger.

               (viii) Any other document, instrument, information or item
reasonably requested by the Purchaser or required hereby.

     7.3  Purchaser's Deliveries.
          ----------------------

          (a)  At Closing, the Purchaser shall pay, deliver or cause to be
delivered to the Seller, as appropriate, the following, each of which shall have
been duly executed and, where applicable, acknowledged on behalf of the
Purchaser or its affiliate and shall be dated as of the Closing Date:

               (i)    The Purchase Price in the manner set forth in Section 2.5
hereof.

               (ii)   The Franchise Assignment Agreement.

               (iii)  Settlement Statement.

               (iv)   The Certificate required by Section 6.2.

               (v)    The Percentage Lease Agreement.

               (vi)   The Assignment and Assumption Agreement of Operating
Agreements.
               (vii)  Any other document or instrument reasonably required by
the Seller or its attorneys.

     7.4  Closing Costs. The Seller shall pay (i) all applicable sales and use
          -------------
taxes (if any) levied on the transfer of the Tangible or Intangible Personal
Property; (ii) any expenses incurred by or on behalf of the Seller;  and (iii)
all fees charged by the Franchise for the transfer of the Franchise. The
Purchaser shall pay (i) all Title Company and survey charges,

                                       19
<PAGE>

(ii) all of the recording fees, and (iii) any expenses incurred by or on behalf
of the Purchaser. Each party hereto shall pay its own legal fees and expenses.

     7.5  Income and Expense Allocations.
          ------------------------------

          (a)  At Closing, all income and expenses with respect to the Property,
and applicable to the period of time before and after Closing, determined in
accordance with generally accepted accounting principles consistently applied,
shall be allocated between the Seller and the Purchaser as of the Closing Date.
The Seller shall be entitled to all income, including the Tray Ledger, and
responsible for all expenses for the period of time up to but not including the
Closing Date, and the Purchaser shall be entitled to all income and responsible
for all expenses for the period of time from, after and including the Closing
Date. Without limiting the generality of the foregoing, Seller shall pay to
Purchaser or Purchaser shall pay to Seller at Closing, or   there shall be an
appropriate Closing adjustment for, the net cash payable to the Purchaser or
Seller, as appropriate, based on the allocation set forth above.  All
adjustments shall be shown on the settlement statement or may be done outside
the settlement statement (with such supporting documentation as the parties may
reasonably require being attached as exhibits to the settlement statements or
submit to the parties as appropriate) and if on the settlement statement shall
increase or decrease (as the case may be) the balance of the Purchase Price
payable by the Purchaser at Closing. The Seller shall pay at Closing all special
assessments and taxes applicable to the Property and relating to the period
prior to Closing.

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

                                   ARTICLE 8
                                   ---------
                          CONDEMNATION: RISK OF LOSS
                          --------------------------

     8.1  Condemnation. In the event of any actual or threatened taking,
          ------------
pursuant to the power of eminent domain, of all or any material portion of the
Real Property, or any proposed sale in lieu thereof, the Seller shall give
written notice thereof to the Purchaser promptly after the Seller learns or
receives notice thereof.  If all or any material part of the Real Property is,
or is to be, so condemned or sold, the Purchaser shall have the right to
terminate this Agreement pursuant to Section 9.3. If the Purchaser elects not to
terminate this Agreement, all proceeds, awards and other payments arising out of
such condemnation or sale (actual or threatened) shall be paid to the Purchaser
at Closing.

     8.2  Risk of Loss. The risk of any loss or damage to the Property prior to
          ------------
the Closing shall remain upon the Seller. If any material loss or material
damage occurs prior to Closing, the Purchaser shall have the right to terminate
this Agreement pursuant to Section

                                       20
<PAGE>

9.3. If the Purchaser elects not to terminate this Agreement, it may choose to
restore the Property itself, in which event Seller shall assign or pay, or cause
to be paid, to Purchaser all insurance proceeds payable on account of such loss
or damage and the Seller shall not be responsible to the Purchaser for any
additional sums required to restore the Property.

                                   ARTICLE 9
                                   ---------
              LIABILITY OF PURCHASER; INDEMNIFICATION BY SELLER;
              --------------------------------------------------
                              TERMINATION RIGHTS
                              ------------------

     9.1  Liability of Purchaser. Except for any obligation expressly assumed or
          ----------------------
agreed to be assumed by the Purchaser hereunder, the Purchaser does not assume
any obligation of the Seller or any liability for claims arising out of any
occurrence prior to Closing.

     9.2  Indemnification.
          ---------------

          (a)  The Seller hereby indemnifies and holds the Purchaser harmless
from and against any and all claims, costs, penalties, damages, losses,
liabilities and expenses (including reasonable attorneys' fees) that may at any
time be incurred by the Purchaser, whether before or after Closing, as a result
of any material breach by the Seller of any of Seller's representations,
warranties, covenants or obligations set forth herein or in any other document
delivered by the Seller under this Agreement, or as a result of acts or events
occurring prior to the Closing Date; provided, however, that Seller's
                                     --------  -------
representations and warranties shall terminate and expire twelve (12) months
from the date of Closing.

          (b)  The Purchaser hereby indemnifies and holds the Seller harmless
from and against any and all claims, costs, penalties, damages, losses,
liabilities and expenses (including reasonable attorneys' fees) that may at any
time be incurred by the Seller, whether before or after Closing, as a result of
any material breach by the Purchaser of any of Purchaser's representations,
warranties, covenants or obligations set forth herein or in any other document
delivered by the Purchaser under this Agreement, or as a result of acts or
events occurring after the Closing Date.

     9.3  Termination by Purchaser. If any condition set forth herein cannot or
          ------------------------
will not be satisfied prior to Closing, or upon the occurrence of any other
event that would entitle the Purchaser to terminate this Agreement and its
obligations hereunder, the Purchaser, at its option, may elect either (a) to
terminate this Agreement and all other rights and obligations of the Seller and
the Purchaser hereunder shall terminate immediately except for such obligations
which, by their terms, survive the termination of this Agreement and the
Deposit, if any, shall be returned to the Purchaser or (b) to waive its right to
terminate and to proceed to Closing. If the Purchaser terminates this Agreement
as a consequence of a material misrepresentation or breach of a warranty or
covenant by the Seller, or a failure by the Seller to perform its obligations
hereunder, the Purchaser shall have, in addition to the rights set forth in
Section 9.3(a) and (b) above, the right to seek specific performance of this
Agreement.  Under no circumstances shall Purchaser have the right to seek
damages against Seller for any breach or

                                       21
<PAGE>

termination of this Agreement; provided, however, that Purchaser shall be
                               --------  -------
entitled to prove and recover its actual, out-of-pocket costs paid to unrelated
third parties for services in performing its due diligence studies hereunder in
a total amount not to exceed Fifty Thousand and No/100 Dollars ($50,000.00).
Notwithstanding the foregoing, in no event shall Seller be liable to Purchaser
for lost profits or consequential damages.

     9.4  Termination by Seller. If any conditions set forth herein cannot or
          ---------------------
will not be satisfied prior to Closing, or if Seller terminates this Agreement
as a consequence of a material misrepresentation or breach of a warranty or
covenant by Purchaser or a failure by Purchaser to perform its obligations
hereunder, then Seller may, at its option elect either (a) to waive its right to
terminate this Agreement and proceed to Closing; or (b) to terminate this
Agreement, and, at Seller's option, each other agreement between Seller's
affiliates and Purchaser and receive payment of the Deposit. The Seller and the
Purchaser agree that, in the event of such a default, the damages that the
Seller would sustain as a result thereof would be difficult if not impossible to
ascertain. The Seller hereby waives and releases any and all other rights and
remedies for a default by the Purchaser. Therefore, the Seller and the Purchaser
agrees that the Seller shall retain the Deposit as full and complete liquidated
damages and as the Seller's sole remedy.

                                  ARTICLE 10
                                  ----------
                           MISCELLANEOUS PROVISIONS
                           ------------------------

     10.1 Completeness; Modification. This Agreement constitutes the entire
          --------------------------
agreement among the parties hereto with respect to the transactions contemplated
hereby and supersedes all prior discussions, understandings, agreements and
negotiations between the parties hereto. The provisions of the prior sentence
reflects the true intent of the Seller and the Purchaser and is intended to be
enforceable, notwithstanding any existing or further case law to the contrary.
This Agreement may be modified only by a written instrument duly executed by the
parties hereto.

     10.2 Successors and Assigns. This Agreement shall bind and inure to the
          ----------------------
benefit of the parties hereto and their respective successors and permitted
assigns. Neither Purchaser nor Seller may assign or delegate any of their
rights, duties or obligations under this Agreement without the prior written
consent of the other party and any attempt to do so shall be null and void and
of no force or effect upon the other.

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

                                       22
<PAGE>

     10.4 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 Georgia.

     10.5 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.

     10.6 Severability. If any term, covenant or condition of this Agreement, or
          ------------
the application thereof to any person or circumstance, shall to any extent be
invalid or unenforceable, the remainder of this Agreement, or the application of
such term, covenant or condition to other persons or circumstances, shall not be
affected thereby, and each term, covenant or condition of this Agreement shall
be valid and enforceable to the fullest extent permitted by law and shall be
construed so as to give effect to the intent of the parties.

     10.7 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.

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

If to the Purchaser:     Kiran P. Patel
                         Hersha Enterprises, Ltd.
                         148 Sheraton Drive, Box A
                         New Cumberland, PA 17070

With a copy to:          James L. Ray, Esquire
                         The Shah Law Firm
                         The Lafayette Building
                         437 Chestnut Street, 6/th/ Floor
                         Philadelphia, PA 19106

If to the Seller:        Mitesh B. Shah
                         _________________________
                         Suite 800/East Tower
                         Atlanta Financial Center
                         3343 Peachtree Road, N.E.
                         Atlanta, Georgia 30326

                                       23
<PAGE>

With a copy to:     Craig A. Wagner, Esq.
                    Wagner, Johnston & Rosenthal, P.C.
                    Suite 1200/Tower Place
                    3340 Peachtree Road, N.E.
                    Atlanta, Georgia 30326

            Any party hereto may change its address or designate different or
other persons or entities to receive copies by notifying the other party in a
manner described in this Section.

     10.9   Escrow Agent. The Escrow Agent referred to in the definition thereof
            ------------
contained in Section 1.1 hereof has agreed to act as such for the convenience of
the parties without fee or other charges for such services as Escrow Agent. The
Escrow Agent shall not be liable: (a) to any of the parties for any act or
omission to act except for its own willful misconduct; (b) for any legal effect,
insufficiency, or undesirability of any instrument deposited with or delivered
by Escrow Agent or exchange by the parties hereunder, whether or not Escrow
Agent prepared such instrument; (c) for any loss or impairment of funds that
have been deposited in escrow while those funds are in the course of collection,
or while those funds are on deposit in a financial institution, if such loss or
impairment results from the failure, insolvency or suspension of a financial
institution; (d) for the expiration of any time limit or other consequence of
delay, unless a properly executed written instruction, accepted by Escrow Agent,
has instructed the Escrow Agent to comply with said time limit; (e) for the
default, error, action or omission of either party to the escrow. The Escrow
Agent shall be entitled to rely on any document or paper received by it,
believed by such Escrow Agent, in good faith, to be bona fide and genuine. It is
agreed that the Escrow Agent shall not be disqualified from representing either
party in connection with any litigation which might arise out or in connection
with this Agreement, merely by virtue of the fact that such Escrow Agent has
agreed to act as Escrow Agent hereunder. Further, in that event of any dispute
as to the disposition of the Deposit, if any, or any other monies held in
escrow, the Escrow Agent may, if such Escrow Agent so elects, interplead the
parties by filing an interpleader action in any court having subject matter
jurisdiction of such a matter (to the personal jurisdiction of which both
parties do hereby consent), and pay into the registry of the court the Deposit,
if any, and any other monies held in escrow, including all interest earned
thereon, whereupon such Escrow Agent shall be relieved and released from any
further liability as Escrow Agent hereunder. In the event of such interpleader
action, the Escrow Agent shall not be disabled from representing a party hereto.
Escrow Agent shall not be liable for Escrow Agent's compliance with any legal
process, subpoena, writs, orders, judgments and decree of any court, whether
issued with or without jurisdiction, and whether or not subsequently vacated,
modified, set aside or reversed.

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

     10.11  Survival. All of the representations and warranties of the Seller
            --------
and the Purchaser made in, or pursuant to, this Agreement shall survive Closing
for a period of twelve

                                       24
<PAGE>

(12) months subsequent to Closing and shall not merge into any document or
instrument executed and delivered in connection herewith.

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

     10.13  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 Seller and Purchaser specifically
established hereby.

     IN WITNESS WHEREOF, the Seller and the Purchaser have caused this Agreement
to be executed in their names by their respective duly-authorized
representatives as a sealed instrument.

                         SELLER:

                         ___________________________________________

                         By:  The Noble Companies, LLC, Sole Manager

                              By:___________________________________
                              Name:_________________________________
                              Title:________________________________

                         PURCHASER:

                         HERSHA HOSPITALITY LIMITED PARTNERSHIP

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

                              By:___________________________________
                              Name:_________________________________
                              Title:________________________________

                                       25

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