Exhibit 10.1

SIXTH AMENDMENT

TO

AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP

OF

HERSHA HOSPITALITY LIMITED PARTNERSHIP

December 23, 2014

THIS SIXTH AMENDMENT TO AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
(this “Sixth Amendment”), dated as of December 23, 2014, is entered into by
HERSHA HOSPITALITY TRUST, a Maryland real estate investment trust, as general
partner (the “General Partner”) of HERSHA HOSPITALITY LIMITED PARTNERSHIP, a
Virginia limited partnership (the “Partnership”), for itself and on behalf of
the limited partners of the Partnership.

WHEREAS, the Amended and Restated Agreement of Limited Partnership of the
Partnership was executed on January 26, 1999, a First Amendment thereto was
executed on December 31, 1999, a Second Amendment thereto was executed on April
21, 2003, a Third Amendment thereto was executed on August 5, 2005, a Fourth
Amendment thereto was executed on May 18, 2011, and a Fifth Amendment thereto
was executed on March 6, 2013 (the “Agreement”); and

WHEREAS, Section 4.02(a) of the Partnership Agreement authorizes the General
Partner to cause the Partnership to issue additional Partnership Units in one or
more classes or series, with such designations, preferences and relative,
participating, optional or other special rights, powers and duties as shall be
determined by the General Partner, without the approval of the Limited Partners;
and

WHEREAS, pursuant to the authority granted to the General Partner pursuant to
Sections 4.02(a) and Article XI of the Partnership Agreement, the General
Partner desires to amend the Partnership Agreement to establish a new series of
Partnership Units, the LTIP Units, and to set forth the designations, rights,
powers, preferences and duties of such LTIP Units.

NOW, THEREFORE, in consideration of good and valuable consideration, the receipt
and sufficiency of which hereby are acknowledged, the General Partner hereby
amends the Partnership Agreement as follows:

1. Defined Terms.    

A. The following defined terms shall be added to Article I of the Agreement:

“Adjustment Events” has the meaning set forth in Section 4.09(a)(i) hereof.

“Capital Account Limitation” has the meaning set forth in Section 4.10(b)
hereof.

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“Common Partnership Unit Distribution” has the meaning set forth in Section
4.09(a)(ii) hereof.

“Common Unit” means a Partnership Unit other than a Series B Preferred
Partnership Unit, Series C Preferred Partnership Unit, LTIP Unit or any other
Partnership Unit that may be established after the date hereof pursuant to a
Partnership Unit Designation in accordance with the terms of Section 4.02(a)(i)
hereof.

“Common Unit Economic Balance” has the meaning set forth in Section 5.01(g)
hereof.

“Common Unit Transaction” has the meaning set forth in Section 4.10(f) hereof.

“Constituent Person” has the meaning set forth in Section 4.10(f) hereof.

“Conversion Date” has the meaning set forth in Section 4.10(b) hereof.

“Conversion Notice” has the meaning set forth in Section 4.10(b) hereof.

“Conversion Right” has the meaning set forth in Section 4.10(a) hereof.

“Economic Capital Account Balances” has the meaning set forth in Section 5.01(g)
hereof.

“Equity Incentive Plan” means any equity incentive or compensation plan in
effect on the date hereof or hereafter adopted by the Partnership or the
Company, including, but not limited to, the Company’s Amended and Restated 2012
Equity Incentive Plan, as amended from time to time.

“Forced Conversion” has the meaning set forth in Section 4.10(c) hereof.

“Forced Conversion Notice” has the meaning set forth in Section 4.10(c) hereof.

“Liquidating Gains” has the meaning set forth in Section 5.01(g) hereof.

“LTIP Unit” means a Partnership Unit which is designated as an LTIP Unit and
which has the rights, preferences and other privileges designated in Section
4.09 hereof and elsewhere in this Agreement in respect of holders of LTIP Units,
including both Vested LTIP Units and Unvested LTIP Units.  The allocation of
LTIP Units among the Partners shall be set forth on Exhibit A hereto, as it may
be amended from time to time.

“LTIP Unitholder” means a Partner that holds LTIP Units.

“Partnership Unit Designation” has the meaning set forth in Section 4.02(a)(i)
hereof.

“Safe Harbor” has the meaning set forth in Section 10.05(d) hereof.

“Safe Harbor Election” has the meaning set forth in Section 10.05(d) hereof.

“Safe Harbor Interest” has the meaning set forth in Section 10.05(d) hereof.

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“Unvested LTIP Units” has the meaning set forth in Section 4.09(c) hereof.

“Vested LTIP Units” has the meaning set forth in Section 4.09(c) hereof.

“Vesting Agreement” means each or any, as the context implies, agreement or
instrument, other than this Agreement, entered into by a LTIP Unitholder upon
acceptance of an award of LTIP Units under an Equity Incentive Plan.

B. The definition of “Partnership Unit” shall be deleted in its entirety and
replaced with the following:

“Partnership Unit” means a fractional, undivided share of the Partnership
Interests of all Partners issued hereunder, and includes Common Units, LTIP
Units, Series B Preferred Partnership Units, Series C Preferred Partnership
Units and any other class or series of Partnership Units that may be established
after the date hereof in accordance with the terms hereof.  The number of
Partnership Units outstanding and the Percentage Interests represented by such
Partnership Units are set forth on Exhibit A hereto, as it may be amended from
time to time.

C. The definition of “Percentage Interest” shall be deleted in its entirety and
replaced with the following:

 “Percentage Interest” means the percentage determined by dividing the number of
Common Units of a Partner by the sum of the number of Common Units of all
Partners, treating LTIP Units, in accordance with Section 4.09(a), as Common
Units for this purpose.

2. Issuances of Additional Partnership Units.  Section 4.02(a)(i) of the
Agreement shall be deleted in its entirety and replaced with the following:

(a)Issuances of Additional Partnership Units.

 

(i)General. As of the effective date of this Agreement, the Partnership has four
classes of Partnership Units, Common Units, LTIP Units, Series B Preferred Units
and Series C Preferred Units.  The General Partner is hereby authorized to cause
the Partnership to issue such additional Partnership Interests, in the form of
Partnership Units, for any Partnership purpose at any time or from time to time
to the Partners (including the General Partner) or to other Persons for such
consideration and on such terms and conditions as shall be established by the
General Partner in its sole and absolute discretion, all without the approval of
any Limited Partners. The General Partner’s determination that consideration is
adequate shall be conclusive insofar as the adequacy of consideration relates to
whether the Partnership Units are validly issued and fully paid. Any additional
Partnership Units issued thereby may be issued in one or more classes, or one or
more series of any of such classes, with such designations, preferences and
relative, participating, optional or other special rights, powers and duties,
including rights, powers and duties senior to the then-outstanding Partnership
Units held by the Limited Partners, all as shall be determined by the General
Partner in its sole and absolute discretion and without the approval of any
Limited Partner, subject to Virginia law that cannot be preempted by the terms
hereof and, except with respect to LTIP Units, as set forth in a written
document hereafter attached to and made an exhibit to this Agreement (each, a
“Partnership Unit Designation”), including, without limitation, (i) the
allocations of items of Partnership income, gain, loss,

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deduction and credit to each such class or series of Partnership Units; (ii) the
right of each such class or series of Partnership Units to share in Partnership
distributions; and (iii) the rights of each such class or series of Partnership
Units upon dissolution and liquidation of the Partnership; provided, that no
additional Partnership Units shall be issued to the General Partner (or any
direct or indirect wholly owned Subsidiary of the General Partner) unless:

 

(1) (A) the additional Partnership Units are issued in connection with an
issuance of REIT Shares or other capital stock of, or other interests in, the
Company, which REIT Shares, capital stock or other interests have designations,
preferences and other rights, all such that the economic interests are
substantially similar to the designations, preferences and other rights of the
additional Partnership Units issued to the General Partner (or any direct or
indirect wholly owned Subsidiary of the General Partner) by the Partnership in
accordance with this Section 4.02 and (B) the General Partner (or any direct or
indirect wholly owned Subsidiary of the General Partner) shall make a Capital
Contribution to the Partnership in an amount equal to the cash consideration
received by Company from the issuance of such REIT Shares, capital stock or
other interests in the Company;

 

(2) the additional Partnership Units are issued in connection with an issuance
of REIT Shares or other capital stock of, or other interests in, the Company
pursuant to a taxable share dividend declared by the Company, which REIT Shares,
capital stock or interests have designations, preferences and other rights, all
such that the economic interests are substantially similar to the designations,
preferences and other rights of the additional Partnership Units issued to the
General Partner (or any direct or indirect wholly owned Subsidiary of the
General Partner) by the Partnership in accordance with this Section 4.02,
provided that (A) if the Company allows the holders of its REIT Shares to elect
whether to receive such dividend in REIT Shares or other capital stock of, or
other interests in the Company or cash, the Partnership will give the Limited
Partners (excluding the General Partner or any direct or indirect Subsidiary of
the General Partner) the same election to elect to receive (I) Partnership Units
or cash or, (II) at the election of the Company, REIT Shares, capital stock or
other interests in the Company or cash, and (B) if the Partnership issues
additional Partnership Units pursuant to this Section 4.02(a)(i)(2), then an
amount of income equal to the value of the Partnership Units received will be
allocated to those holders of Common Units that elect to receive additional
Partnership Units;

 

(3) the additional Partnership Units are issued in exchange for property owned
by the General Partner (or any direct or indirect wholly owned Subsidiary of the
General Partner) with a fair market value, as determined by the General Partner,
in good faith, equal to the value of the Partnership Units; or

 

(4) the additional Partnership Units are issued to all Partners in proportion to
their respective Percentage Interests.

 

3. LTIP Units. The following new Section 4.09 shall be added to the Agreement:

(a)Issuance of LTIP Units. Notwithstanding anything contained herein to the
contrary, the General Partner may from time to time issue LTIP Units to Persons
who provide services to or for the benefit of the Partnership for such
consideration as the General Partner may

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determine to be appropriate, and admit such Persons as Limited Partners. Subject
to the following provisions of this Section 4.09 and the special provisions of
Section 4.10 and Section 5.01(g) hereof, LTIP Units shall be treated as Common
Units, with all of the rights, privileges and obligations attendant thereto. For
purposes of computing the Partners’ Percentage Interests, holders of LTIP Units
shall be treated as Common Unit holders and LTIP Units shall be treated as
Common Units.  In particular, the Partnership shall maintain at all times a
one-to-one correspondence between LTIP Units and Common Units for conversion,
distribution and other purposes, including, without limitation, complying with
the following procedures:

 

(i) If an Adjustment Event (as defined below) occurs, then the General Partner
shall make a corresponding adjustment to the LTIP Units to maintain a
one-for-one conversion and economic equivalence ratio between Common Units and
LTIP Units. The following shall be “Adjustment Events”: (A) the Partnership
makes a distribution on all outstanding Common Units in Partnership Units, (B)
the Partnership subdivides the outstanding Common Units into a greater number of
units or combines the outstanding Common Units into a smaller number of units,
or (C) the Partnership issues any Partnership Units in exchange for its
outstanding Common Units by way of a reclassification or recapitalization of its
Common Units. If more than one Adjustment Event occurs, the adjustment to the
LTIP Units need be made only once using a single formula that takes into account
each and every Adjustment Event as if all Adjustment Events occurred
simultaneously. For the avoidance of doubt, the following shall not be
Adjustment Events: (x) the issuance of Partnership Units in a financing,
reorganization, acquisition or other similar business Common Unit Transaction,
(y) the issuance of Partnership Units pursuant to any employee benefit or
compensation plan or distribution reinvestment plan or (z) the issuance of any
Partnership Units to the General Partner (or any direct or indirect wholly owned
Subsidiary of the General Partner) in respect of a capital contribution to the
Partnership of proceeds from the sale of Additional Securities by the Company.
If the Partnership takes an action affecting the Common Units other than actions
specifically described above as “Adjustment Events” and in the opinion of the
General Partner such action would require an adjustment to the LTIP Units to
maintain the one-to-one correspondence described above, the General Partner
shall have the right to make such adjustment to the LTIP Units, to the extent
permitted by law and by any Equity Incentive Plan and Vesting Agreement, in such
manner and at such time as the General Partner, in its sole discretion, may
determine to be appropriate under the circumstances. If an adjustment is made to
the LTIP Units, as herein provided, the Partnership shall promptly file in the
books and records of the Partnership an officer’s certificate setting forth such
adjustment and a brief statement of the facts requiring such adjustment, which
certificate shall be conclusive evidence of the correctness of such adjustment
absent manifest error. Promptly after filing of such certificate, the
Partnership shall deliver a notice to each LTIP Unitholder setting forth the
adjustment to his or her LTIP Units and the effective date of such adjustment;
provided, the failure to deliver such notice shall not invalidate the adjustment
or the authority granted hereunder, and

 

(ii)The LTIP Unitholders shall, when, as and if authorized and declared by the
General Partner out of assets legally available for that purpose, be entitled to
receive distributions in an amount per LTIP Unit equal to the distributions per
Common Unit (the “Common Partnership Unit Distribution”), paid to holders of
Common Units on such Partnership Record Date established by the General Partner
with respect to such distribution;

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provided, that distributions of assets on liquidation, dissolution or winding up
shall be made solely in accordance with the Partners’ positive Capital Account
balances as provided in Section 5.06(a). So long as any LTIP Units are
outstanding, no distributions (whether in cash or in kind) shall be authorized,
declared or paid on Common Units, unless equal distributions have been or
contemporaneously are authorized, declared and paid on the LTIP Units; provided,
that distributions of assets on liquidation, dissolution or winding up shall be
made solely in accordance with the Partners’ positive Capital Account balances
as provided in Section 5.06(a).

 

(b)Priority. Subject to the provisions of this Section 4.09, the special
provisions of Section 4.10 and Section 5.01(g) hereof and any Vesting Agreement,
the LTIP Units shall rank pari passu with the Common Units as to the payment of
regular and special periodic or other distributions; provided, that
distributions of assets on liquidation, dissolution or winding up shall be made
solely in accordance with the Partners’ positive Capital Account balances as
provided in Section 5.06(a). As to the payment of distributions and as to
distribution of assets upon liquidation, dissolution or winding up, any class or
series of Partnership Units which by its terms specifies that it shall rank
junior to, on a parity with, or senior to the Common Units shall also rank
junior to, or pari passu with, or senior to, as the case may be, the LTIP Units;
provided, that distributions of assets on liquidation, dissolution or winding up
shall be made solely in accordance with the Partners’ positive Capital Account
balances as provided in Section 5.06(a). Subject to the terms of any Vesting
Agreement, an LTIP Unitholder shall be entitled to transfer his or her LTIP
Units to the same extent, and subject to the same restrictions as holders of
Common Units are entitled to transfer their Common Units pursuant to Article IX.

 

(c) Special Provisions. LTIP Units shall be subject to the following special
provisions:

 

(i)Vesting Agreements. LTIP Units may, in the sole discretion of the General
Partner, be issued subject to vesting, forfeiture and additional restrictions on
transfer pursuant to the terms of a Vesting Agreement. The terms of any Vesting
Agreement may be modified by the General Partner from time to time in its sole
discretion, subject to any restrictions on amendment imposed by the relevant
Vesting Agreement or by the Equity Incentive Plan, if applicable. LTIP Units
that have vested under the terms of a Vesting Agreement are referred to as
“Vested LTIP Units”; all other LTIP Units shall be treated as “Unvested LTIP
Units.” Upon grant, the grantee of any LTIP Unit shall be treated as a Partner
for all purposes. The Partners acknowledge that the liquidation value of each
LTIP Unit shall be zero upon grant, the amount equal to the zero Capital Account
balance of such LTIP Unit upon grant, for all purposes (including Section
10.05(d)).

 

(ii)Forfeiture. Unless otherwise specified in the Vesting Agreement or in any
applicable compensatory plan, program or arrangement pursuant to which LTIP
Units are issued, upon the occurrence of any event specified in a Vesting
Agreement, plan, program or arrangement as resulting in either the right of the
Partnership or the General Partner to repurchase LTIP Units at a specified
purchase price or some other forfeiture of any LTIP Units, then if the
Partnership or the General Partner exercises such right to repurchase or
forfeiture or upon the occurrence of the event causing forfeiture in accordance
with the applicable Vesting Agreement, plan, program or arrangement, the
relevant LTIP Units shall immediately, and without any further action, be
treated as cancelled and no longer outstanding for any purpose.

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Unless otherwise specified in the Vesting Agreement, plan, program or
arrangement, no consideration or other payment shall be due with respect to any
LTIP Units that have been forfeited, other than any distributions declared with
respect to a Partnership Record Date prior to the effective date of the
forfeiture. In connection with any repurchase or forfeiture of LTIP Units, the
balance of the portion of the Capital Account of the LTIP Unitholder that is
attributable to all of his or her LTIP Units shall be reduced by the amount, if
any, by which it exceeds the product of (A) the balance of the LTIP Unitholder’s
Capital Account attributable to all of the LTIP Units held prior to the
repurchase or forfeiture and (B) the quotient obtained by dividing (x) the
number of LTIP Units, if any, held by the LTIP Unitholder after the repurchase
or forfeiture and (y) the number of LTIP Units held by the LTIP Unitholder prior
to the repurchase or forfeiture.

 

(iii) Allocations. LTIP Unitholders shall be entitled to certain special
allocations of gain under Section 5.01(g) hereof.

 

(iv) Redemption. The Redemption Right provided to Limited Partners under Section
8.05 hereof shall not apply with respect to LTIP Units unless and until they are
converted to Common Units as provided in clause (v) below and Section 4.10
hereof.

 

(v) Conversion to Common Units. Vested LTIP Units are eligible to be converted
into Common Units in accordance with Section 4.10 hereof.

 

(d) Voting. LTIP Unitholders shall (a) have the same voting rights as the
holders of Common Units, with all Vested LTIP Units and Unvested LTIP Units
voting as a single class with the Common Units and having one vote per LTIP
Unit; and (b) have the additional voting rights that are expressly set forth
below. So long as any LTIP Units remain outstanding, the Partnership shall not,
without the affirmative vote of the holders of a majority of the LTIP Units
(Vested LTIP Units and Unvested LTIP Units) outstanding at the time, given in
person or by proxy, either in writing or at a meeting (voting separately as a
class), amend, alter or repeal, whether by merger, consolidation or otherwise,
the provisions of this Agreement applicable to LTIP Units so as to materially
and adversely affect (as determined in good faith by the General Partner) any
right, privilege or voting power of the LTIP Units or the LTIP Unitholders as
such, unless such amendment, alteration, or repeal affects equally, ratably and
proportionately the rights, privileges and voting powers of the holders of
Common Units; but subject, in any event, to the following provisions:

 

(i)With respect to any Common Unit Transaction, so long as the LTIP Units are
treated in accordance with Section 4.10(f) hereof, the consummation of such
Common Unit Transaction shall not be deemed to materially and adversely affect
such rights, preferences, privileges or voting powers of the LTIP Units or the
LTIP Unitholders as such; and

 

(ii)Any creation or issuance of any Partnership Units or of any class or series
of Partnership Interest including without limitation additional Common Units or
LTIP Units, whether ranking senior to, junior to, or on a parity with the LTIP
Units with respect to distributions and the distribution of assets upon
liquidation, dissolution or winding up, shall not be deemed to materially and
adversely affect such rights, preferences, privileges or voting powers of the
LTIP Units or the LTIP Unitholders as such.

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The foregoing voting provisions will not apply if, at or prior to the time when
the act with respect to which such vote would otherwise be required will be
effected, all outstanding LTIP Units shall have been converted into Common
Units.

 

4. Conversion of LTIP Units. The following new Section 4.10 shall be added to
the Agreement:

(a)Subject to the provisions of this Section 4.10, an LTIP Unitholder shall have
the right (the “Conversion Right”), at such holder’s option, at any time to
convert all or a portion of such holder’s Vested LTIP Units into Common Units;
provided, that a holder may not exercise the Conversion Right for less than
1,000 Vested LTIP Units or, if such holder holds less than 1,000 Vested LTIP
Units, all of the Vested LTIP Units held by such holder. LTIP Unitholders shall
not have the right to convert Unvested LTIP Units into Common Units until they
become Vested LTIP Units; provided, that when an LTIP Unitholder is notified of
the expected occurrence of an event that will cause such LTIP Unitholder’s
Unvested LTIP Units to become Vested LTIP Units, such LTIP Unitholder may give
the Partnership a Conversion Notice conditioned upon and effective as of the
time of vesting and such Conversion Notice, unless subsequently revoked by the
LTIP Unitholder, shall be accepted by the Partnership subject to such condition.
The General Partner shall have the right at any time to cause a conversion of
Vested LTIP Units into Common Units. In all cases, the conversion of any LTIP
Units into Common Units shall be subject to the conditions and procedures set
forth in this Section 4.10.

 

(b)A holder of Vested LTIP Units may convert such LTIP Units into an equal
number of fully paid and non-assessable Common Units, giving effect to all
adjustments (if any) made pursuant to Section 4.09 hereof. Notwithstanding the
foregoing, in no event may a holder of Vested LTIP Units convert a number of
Vested LTIP Units that exceeds (x) the Economic Capital Account Balance of such
Limited Partner, to the extent attributable to its ownership of LTIP Units,
divided by (y) the Common Unit Economic Balance, in each case as determined as
of the effective date of conversion (the “Capital Account Limitation”).

 

In order to exercise the Conversion Right, an LTIP Unitholder shall deliver a
notice (a “Conversion Notice”) in the form attached as Exhibit D to the
Partnership (with a copy to the General Partner) not less than ten nor more than
60 days prior to a date (the “Conversion Date”) specified in such Conversion
Notice; provided, that if the General Partner has not given to the LTIP
Unitholders notice of a proposed or upcoming Common Unit Transaction at least 30
days prior to the effective date of such Common Unit Transaction, then LTIP
Unitholders shall have the right to deliver a Conversion Notice until the
earlier of (x) the tenth day after such notice from the General Partner of a
Common Unit Transaction or (y) the third Trading Day immediately preceding the
effective date of such Common Unit Transaction. A Conversion Notice shall be
provided in the manner provided in Section 12.01 hereof. Each LTIP Unitholder
covenants and agrees with the Partnership that all Vested LTIP Units to be
converted pursuant to this Section 4.10(b) shall be free and clear of all liens.
Notwithstanding anything herein to the contrary, a holder of LTIP Units may
deliver a Notice of Redemption pursuant to Section 8.05(a) hereof relating to
those Common Units that will be issued to such holder upon conversion of such
LTIP Units into Common Units in advance of the Conversion Date; provided, that
the redemption of such Common Units by the Partnership shall in no event take
place until after the

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Conversion Date. For clarity, it is noted that the objective of this paragraph
is to put an LTIP Unitholder in a position where, if such holder so wishes, the
Common Units into which such holder’s Vested LTIP Units will be converted can be
tendered to the Partnership for redemption simultaneously with such conversion,
with the further consequence that, if the Company elects to assume the
Partnership’s redemption obligation with respect to such Common Units under
Section 8.05(b) hereof by delivering to such holder the REIT Shares Amount, then
such holder can have the REIT Shares Amount issued to such holder simultaneously
with the conversion of such holder’s Vested LTIP Units into Common Units. The
General Partner and LTIP Unitholder shall reasonably cooperate with each other
to coordinate the timing of the events described in the foregoing sentence.

 

(c)The Partnership, at any time at the election of the General Partner, may
cause any number of Vested LTIP Units held by an LTIP Unitholder to be converted
(a “Forced Conversion”) into an equal number of Common Units, giving effect to
all adjustments (if any) made pursuant to Section 4.09 hereof; provided, that
the Partnership may not cause Forced Conversion of any LTIP Units that would not
at the time be eligible for conversion at the option of such LTIP Unitholder
pursuant to Section 4.10(b) hereof. In order to exercise its right of Forced
Conversion, the Partnership shall deliver a notice (a “Forced Conversion
Notice”) in the form attached as Exhibit E to the applicable LTIP Unitholder not
less than ten nor more than 60 days prior to the Conversion Date specified in
such Forced Conversion Notice. A Forced Conversion Notice shall be provided in
the manner provided in Section 12.01 hereof and shall be revocable by the
General Partner at any time prior to the Forced Conversion.

(d)A conversion of Vested LTIP Units for which the holder thereof has given a
Conversion Notice or the Partnership has given a Forced Conversion Notice shall
occur automatically after the close of business on the applicable Conversion
Date without any action on the part of such LTIP Unitholder, as of which time
such LTIP Unitholder shall be credited on the books and records of the
Partnership with the issuance as of the opening of business on the next day of
the number of Common Units issuable upon such conversion. After the conversion
of LTIP Units as aforesaid, the Partnership shall deliver to such LTIP
Unitholder, upon his or her written request, a certificate of the General
Partner certifying the number of Common Units and remaining LTIP Units, if any,
held by such person immediately after such conversion. The assignee of any
Limited Partner pursuant to Article IX hereof may exercise the rights of such
Limited Partner pursuant to this Section 4.10 and such Limited Partner shall be
bound by the exercise of such rights by the assignee.

(e)For purposes of making future allocations under Section 5.01(g) hereof and
applying the Capital Account Limitation, the portion of the Economic Capital
Account Balance of the applicable LTIP Unitholder that is treated as
attributable to his or her LTIP Units shall be reduced, as of the date of
conversion, by the product of the number of LTIP Units converted and the Common
Unit Economic Balance.

(f)If the Partnership or the General Partner shall be a party to any Common Unit
Transaction (including without limitation a merger, consolidation, unit
exchange, self tender offer for all or substantially all Common Units or other
business combination or reorganization, or sale of all or substantially all of
the Partnership’s assets, but excluding any Common Unit Transaction which
constitutes an Adjustment Event) in each case as a result of which Common

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Units shall be exchanged for or converted into the right, or the holders of
Common Units shall otherwise be entitled, to receive cash, securities or other
property or any combination thereof (each of the foregoing being referred to
herein as a “Common Unit Transaction”), then the General Partner shall, subject
to the terms of any applicable Equity Incentive Plan or Vesting Agreement,
exercise immediately prior to the Common Unit Transaction its right to cause a
Forced Conversion with respect to the maximum number of LTIP Units then eligible
for conversion, taking into account any allocations that occur in connection
with the Common Unit Transaction or that would occur in connection with the
Common Unit Transaction if the assets of the Partnership were sold at the Common
Unit Transaction price or, if applicable, at a value determined by the General
Partner in good faith using the value attributed to the Partnership Units in the
context of the Common Unit Transaction (in which case the Conversion Date shall
be the effective date of the Common Unit Transaction).

In anticipation of such Forced Conversion and the consummation of the Common
Unit Transaction, the Partnership shall use commercially reasonable efforts to
cause each LTIP Unitholder to be afforded the right to receive in connection
with such Common Unit Transaction in consideration for the Common Units into
which such LTIP Unitholder’s LTIP Units will be converted the same kind and
amount of cash, securities and other property (or any combination thereof)
receivable upon the consummation of such Common Unit Transaction by a holder of
the same number of Common Units, assuming such holder of Common Units is not a
Person with which the Partnership consolidated or into which the Partnership
merged or which merged into the Partnership or to which such sale or transfer
was made, as the case may be (a “Constituent Person”), or an affiliate of a
Constituent Person. In the event that holders of Common Units have the
opportunity to elect the form or type of consideration to be received upon
consummation of the Common Unit Transaction, prior to such Common Unit
Transaction the General Partner shall give prompt written notice to each LTIP
Unitholder of such election, and shall use commercially reasonable efforts to
afford the LTIP Unitholders the right to elect, by written notice to the General
Partner, the form or type of consideration to be received upon conversion of
each LTIP Unit held by such holder into Common Units in connection with such
Common Unit Transaction. If an LTIP Unitholder fails to make such an election,
such holder (and any of its transferees) shall receive upon conversion of each
LTIP Unit held by such LTIP Unitholder (or by any of such LTIP Unitholder’s
transferees) the same kind and amount of consideration that a holder of a Common
Unit would receive if such Common Unit holder failed to make such an election.

Subject to the rights of the Partnership and the General Partner under any
Vesting Agreement and any Equity Incentive Plan, the Partnership shall use
commercially reasonable efforts to cause the terms of any Common Unit
Transaction to be consistent with the provisions of this Section 4.10(f) and to
enter into an agreement with the successor or purchasing entity, as the case may
be, for the benefit of any LTIP Unitholders whose LTIP Units will not be
converted into Common Units in connection with the Common Unit Transaction that
will (i) contain provisions enabling the holders of LTIP Units that remain
outstanding after such Common Unit Transaction to convert their LTIP Units into
securities as comparable as reasonably possible under the circumstances to the
Common Units and (ii) preserve as far as reasonably possible under the
circumstances the distribution, special allocation, conversion, and other rights
set forth in this Agreement for the benefit of the LTIP Unitholders.

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5. Capital Accounts. Section 4.04 of the Agreement shall be deleted in it
entirety and replaced with the following:

A separate capital account (a “Capital Account”) shall be established and
maintained for each Partner in accordance with Regulations Section
1.704-1(b)(2)(iv). If (i) a new or existing Partner acquires an additional
Partnership Unit in exchange for more than a de minimis Capital Contribution,
(ii) the Partnership distributes to a Partner more than a de minimis amount of
Partnership property as consideration for a Partnership Unit, (iii) the
Partnership is liquidated within the meaning of Regulation Section
1.704-1(b)(2)(ii)(g) or (iv) the Partnership grants a Partnership Unit (other
than a de minimis Partnership Unit) as consideration for the provision of
services to or for the benefit of the Partnership to an existing Partner acting
in a Partner capacity, or to a new Partner acting in a Partner capacity or in
anticipation of being a Partner, the General Partner shall revalue the property
of the Partnership to its fair market value (as determined by the General
Partner, in its sole and absolute discretion, and taking into account Section
7701(g) of the Code) in accordance with Regulations Section
1.704-1(b)(2)(iv)(f); provided, that (i) the issuance of any LTIP Unit shall be
deemed to require a revaluation pursuant to this Section 4.04 and (ii) the
General Partner may elect not to revalue the property of the Partnership in
connection with the issuance of additional Partnership Units pursuant to Section
4.02 to the extent it determines, in its sole and absolute discretion, that
revaluing the property of the Partnership is not necessary or appropriate to
reflect the relative economic interests of the Partners. When the Partnership’s
property is revalued by the General Partner, the Capital Accounts of the
Partners shall be adjusted in accordance with Regulations Sections
1.704-1(b)(2)(iv)(f) and (g), which generally require such Capital Accounts to
be adjusted to reflect the manner in which the unrealized gain or loss inherent
in such property (that has not been reflected in the Capital Accounts
previously) would be allocated among the Partners pursuant to Section 5.01
hereof if there were a taxable disposition of such property for its fair market
value (as determined by the General Partner, in its sole and absolute
discretion, and taking into account Section 7701(g) of the Code) on the date of
the revaluation.

 

6. Allocation of Profit and Loss. Sections 5.01(a) and (b) of the Agreement
shall be deleted in their entirety and replaced with the following:

(a)Net Profit. Except as otherwise provided herein, Net Profit for any fiscal
year or other applicable period shall be allocated in the following order and
priority:

(i)first, to the General Partner in respect of its Series B Preferred
Partnership Units and its Series C Preferred Partnership Units, to the extent
that Net Loss previously allocated to such holder pursuant to Section
5.01(b)(iii) below for all prior fiscal years or other applicable periods
exceeds Net Profit previously allocated to the General Partner pursuant to this
Section 5.01(a)(i) for all prior fiscal years or other applicable periods,

(ii)second, to the General Partner and the Limited Partners holding Common Units
and LTIP Units in proportion to their respective Percentage Interests to the
extent that Net Loss previously allocated to such holders pursuant to Section
5.01(b)(ii) below for all prior fiscal years or other applicable periods exceeds
Net Profit previously allocated to such Partners pursuant to this Section
5.01(a)(ii) for all prior fiscal years or other applicable periods,

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(iii)third, to the General Partner in respect of its Series B Preferred
Partnership Units and its Series C Preferred Partnership Units, until it has
been allocated Net Profit equal to the excess of (x) the cumulative amount of
distributions the General Partner has received for all fiscal years or other
applicable period or to the date of redemption, to the extent such Series B
Preferred Partnership Units and Series C Preferred Partnership Units are
redeemed during such period, over (y) the cumulative Net Profit allocated to the
General Partner, pursuant to this Section 5.01(a)(iii) for all prior fiscal
years or other applicable periods, and

(iv)thereafter, to the Partners holding Common Units and LTIP Units in
accordance with their respective Percentage Interests.

(b)Net Loss. Except as otherwise provided herein, Net Loss for any fiscal year
or other applicable period shall be allocated in the following order and
priority:

(i)first, to the Partners holding Common Units and LTIP Units in accordance with
their respective Percentage Interests to the extent of Net Profit previously
allocated to such Partners pursuant to Section 5.01(a)(iv) above for all prior
fiscal years or other applicable period exceeds Net Loss previously allocated to
such Partners pursuant to this Section 5.01(b)(i) for all prior fiscal years or
other applicable periods,

(ii)second, to the General Partner and the Limited Partners holding Common Units
and LTIP Units in proportion to their proportionate adjusted Capital Account
balances (including for this purpose any amounts a Partner is obligated to
contribute to the capital of the Partnership or is deemed obligated to
contribute pursuant to Regulations Section 1.704-1(b)(2)(ii)(c)(2)) until the
adjusted Capital Account of each Partner with respect to such Common Units and
LTIP Units is reduced to zero, and

(iii)thereafter, to the General Partner in respect of its Series B Preferred
Partnership Units and its Series C Preferred Partnership Units until the
adjusted Capital Account (modified in the same manner as in clause (ii)) of the
General Partner with respect to such Series B Preferred Partnership Units and
Series C Preferred Partnership Units is reduced to zero.

It is the intention of the parties hereunder that the aggregate Capital Account
balance of the General Partner in respect of its Series B Preferred Partnership
Units and its Series C Preferred Partnership Units at any date shall not exceed
the amount of the original Capital Contributions made in respect of its Series B
Preferred Partnership Units and its Series C Preferred Partnership Units plus
all accrued and unpaid distributions thereon, whether or not declared, to the
extent not previously distributed.

7. Special Allocations Regarding LTIP Units.  The following new Section 5.01(g)
shall be added to the Agreement and the current Section 5.01(g) shall be
redesignated as Section 5.01(h):

(g)Special Allocations Regarding LTIP Units. Notwithstanding the provisions of
Sections 5.01(a) and (b) hereof, Liquidating Gains shall first be allocated to
the LTIP Unitholders until their Economic Capital Account Balances, to the
extent attributable to their ownership of LTIP Units, are equal to (i) the
Common Unit Economic Balance, multiplied by (ii) the number of their LTIP Units.
For this purpose, “Liquidating Gains” means net capital gains

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realized in connection with the actual or hypothetical sale of all or
substantially all of the assets of the Partnership, including but not limited to
net capital gain realized in connection with an adjustment to the value of
Partnership assets under Section 704(b) of the Code. The “Economic Capital
Account Balances” of the LTIP Unit holders will be equal to their Capital
Account balances plus shares of Partner Nonrecourse Debt Minimum Gain or
Partnership Minimum Gain (after reduction to reflect the items described in
Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6)) to the extent
attributable to their ownership of LTIP Units. Similarly, the “Common Unit
Economic Balance” shall mean (i) the Capital Account balance of the Company,
plus the amount of the Company’s share of any Partner Nonrecourse Debt Minimum
Gain or Partnership Minimum Gain (after reduction to reflect the items described
in Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6)), in either case to
the extent attributable to the Company’s direct or indirect ownership of Common
Units and computed on a hypothetical basis after taking into account all
allocations through the date on which any allocation is made under this Section
5.01(g), divided by (ii) the number of Common Units directly or indirectly owned
by the Company. Any such allocations shall be made among the LTIP Unitholders in
proportion to the amounts required to be allocated to each under this Section
5.01(g). The parties agree that the intent of this Section 5.01(g) is to make
the Capital Account balance associated with each LTIP Unit to be economically
equivalent to the Capital Account balance associated with Common Units directly
or indirectly owned by the Company (on a per-Unit basis).

 

8. Redemption Right. The first sentence of Section 8.05 shall be deleted and
replaced with the following:

(a)Subject to Sections 8.05(b), 8.05(c), 8.05(d), 8.05(e) and 8.05(f) and the
provisions of any agreement between the Partnership and one or more Limited
Partners, beginning on the date that is twelve months after the date of issuance
of any Common Units, or, in the case of any Common Units that are issued upon
the conversion of LTIP Units, the date that is twelve months after the date of
issuance of any LTIP Units that have been converted into Common Units, each
Limited Partner (other than the Company or any Subsidiary of the Company) shall
have the right (the “Redemption Right”) to require the Partnership to redeem on
a Specified Redemption Date all or a portion of such Limited Partner’s Common
Units at a redemption price equal to and in the form of the Cash Amount.

9. Tax Matters Partner; Tax Elections; Special Basis Adjustments.  The following
new Section 10.05(d) is added to the end of Section 10.05:

(d) The Partners, intending to be legally bound, hereby authorize the
Partnership to make an election (the “Safe Harbor Election”) to have the
“liquidation value” safe harbor provided in Proposed Treasury Regulation §
1.83-3(1) and the Proposed Revenue Procedure set forth in Internal Revenue
Service Notice 2005-43, as such safe harbor may be modified when such proposed
guidance is issued in final form or as amended by subsequently issued guidance
(the “Safe Harbor”), apply to any interest in the Partnership transferred to a
service provider while the Safe Harbor Election remains effective, to the extent
such interest meets the Safe Harbor requirements (collectively, such interests
are referred to as “Safe Harbor Interests”). The Tax Matters Partner is
authorized and directed to execute and file the Safe Harbor Election on behalf
of the Partnership and the Partners. The Partnership and the Partners (including
any person to whom an interest in the Partnership is transferred in connection
with the performance

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of services) hereby agree to comply with all requirements of the Safe Harbor
(including forfeiture allocations) with respect to all Safe Harbor Interests and
to prepare and file all U.S. federal income tax returns reporting the tax
consequences of the issuance and vesting of Safe Harbor Interests consistent
with such final Safe Harbor guidance. The Partnership is also authorized to take
such actions as are necessary to achieve, under the Safe Harbor, the effect that
the election and compliance with all requirements of the Safe Harbor referred to
above would be intended to achieve under Proposed Treasury Regulation § 1.83-3,
including amending this Agreement. In the event the Safe Harbor Election is
rendered moot or obsolete by future legislation that amends Section 83 of the
Code, this Section 10.05(d) shall have no effect. The liquidation value of each
LTIP Unit shall be zero upon grant as provided in Section 4.09(c)(i).

 

10. In order to reflect the issuance of the LTIP Units, Exhibit A to the
Agreement is hereby amended by adding to the end of such Exhibit A the following
table:

 

 

 

 

 

Partner

Cash Contribution

Agreed Value of Cash Contribution

LTIP Units

Percentage Interest of LTIP Units

 

$0

$0

 

 

 

11. New Exhibit D and Exhibit E to the Agreement are added to the Agreement in
the form attached hereto.

12. The foregoing recitals are incorporated in and are part of this Sixth
Amendment.

13. Except as specifically defined herein, all capitalized terms shall have the
definitions provided in the Partnership Agreement.  This Sixth Amendment has
been authorized by the General Partner pursuant to Article XI of the Partnership
Agreement and does not require execution by the Limited Partners.  No other
changes to the Partnership Agreement are authorized under this Sixth Amendment.

[Signature Page Follows.]

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IN WITNESS WHEREOF, this Sixth Amendment has been executed as of the date first
above written.

GENERAL PARTNER:

 

HERSHA HOSPITALITY TRUST,

a Maryland real estate investment trust

 

 

By:/s/ Ashish R. Parikh

Name:       Ashish R. Parikh

Title:         Chief Financial Officer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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EXHIBIT D

NOTICE OF ELECTION BY PARTNER TO CONVERT
LTIP UNITS INTO COMMON UNITS

 

The undersigned holder of LTIP Units hereby irrevocably: (i) elects to convert
the number of LTIP Units in Hersha Hospitality Limited Partnership (the
“Partnership”) set forth below into Common Units in accordance with the terms of
the Agreement of Limited Partnership of the Partnership, as amended; and (ii)
directs that any cash in lieu of Common Units that may be deliverable upon such
conversion be delivered to the address specified below. The undersigned hereby
represents, warrants and certifies that the undersigned: (a) has title to such
LTIP Units, free and clear of the rights or interests of any other person or
entity other than the Partnership or the General Partner; (b) has the full
right, power, and authority to cause the conversion of such LTIP Units as
provided herein; and (c) has obtained the consent to or approval of all persons
or entities, if any, having the right to consent to or approve such conversion.

Name of Holder:________________________________________________________________

(Please Print: Exact Name as Registered with Partnership)

Number of LTIP Units to be Converted: ___________________________

Date of this Notice: ____________________________________________

 

____________________________________________________________

(Signature of Holder: Sign Exact Name as Registered with Partnership)

____________________________________________________________

(Street Address)

____________________________________________________________

(City) (State) (Zip Code)

Signature Guaranteed by:_______________________________________

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EXHIBIT E

NOTICE OF ELECTION BY PARTNERSHIP TO FORCE CONVERSION
OF LTIP UNITS INTO COMMON UNITS

 

Hersha Hospitality Limited Partnership (the “Partnership”) hereby elects to
cause the LTIP Units held by the holder of the LTIP Units set forth below to be
converted into Common Units in accordance with the terms of the Agreement of
Limited Partnership of the Partnership, as amended, effected as of
_______________ (the “Conversion Date”).

 

Name of Holder: _____________________________________________________________

(Please Print: Exact Name as Registered with Partnership)

Number of LTIP Units to be Converted: ______________________________

Date of this Notice: _______________________________________________

 

 

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