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EXHIBIT 10.3
 
EXECUTION VERSION

REGISTRATION RIGHTS AGREEMENT

This Registration Rights Agreement (this “Agreement”), dated as of August 4,
2009, is by and among Real Estate Investment Group L.P., a Bermuda limited
partnership, whose general partner and majority limited partner is Tyrus S.A., a
Uruguayan sociedad anónima wholly-owned by IRSA Inversiones y Representaciones
Sociedad Anónima, an Argentine sociedad anónima (the “Purchaser”), IRSA
Inversiones y Representaciones Sociedad Anónima, an Argentine sociedad anónima
(“IRSA”) (solely for purposes of Section 5.6 hereof), and Hersha Hospitality
Trust, a Maryland real estate investment trust (the “Company”).

WHEREAS, on or about the date hereof, the Purchaser is purchasing from the
Company 5,700,000 shares (the “Primary Shares”) of the Company’s Priority Class
A common shares of beneficial interest, par value $0.01 per share (“Common
Shares”), pursuant to that certain Purchase Agreement (the “Purchase
Agreement”), dated as of August 4, 2009, by and among  the Purchaser, the
Company and Hersha Hospitality Limited Partnership, L.P., a Virginia limited
partnership (the “Operating Partnership”);

WHEREAS, in connection with the sale and purchase of the Primary Shares, the
Company and the Purchaser intend to enter that certain Investor Rights and
Option Agreement, of even date herewith, by and among the Purchaser and the
Company (the “Investor Rights and Option Agreement”), pursuant to which the
Company shall grant the Purchaser the option (the “Option”) to purchase
5,700,000 additional Common Shares (the “Option Shares”) on the terms contained
therein; and

WHEREAS, in order to induce Purchaser to enter into the Purchase Agreement and
the Investor Rights and Option Agreement, the Company agrees that this Agreement
shall govern the rights of Purchaser and subsequent Holders (as defined below)
of Registrable Shares (as defined below) to cause the Company to register any
Registrable Shares held by Purchaser and such subsequent Holders.

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein
contained and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties to this Agreement hereby agree as
follows:

ARTICLE I

DEFINITIONS

Unless otherwise indicated to the contrary, capitalized terms not otherwise
defined herein shall have the meaning assigned to them in the Purchase
Agreement.  In addition, the following terms, as used herein, have the following
meanings:

“Business Day” means any day except a Saturday, Sunday or other day on which
banks in New York, New York and Buenos Aires, Argentina are authorized by law to
close.

“Commission” means the U.S. Securities and Exchange Commission.

 
 

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“Damages Payment Date” shall mean the later of (i) five (5) Business Days and
(ii) the first day of the calendar month, following the date on which a
Registration Default shall have occurred.

“Default Rate” has the meaning set forth in Section 2.1(e).

“Effectiveness Date” has the meaning set forth in Section 2.1(a).

“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated by the Commission thereunder.

“FINRA” has the meaning set forth in Section 3.1(l).

“Holder” means the Initial Holder and any direct or indirect transferee of any
Registrable Shares.

“Holders’ Counsel” means one counsel for the Holders that is selected by the
Holders holding a majority of the Registrable Shares included in the Shelf
Registration Statement, with such selection being effective by written consent
of Holders holding a majority of the Registrable Shares, whether record or
beneficial Holders.

“Indemnified Party” has the meaning set forth in Section 4.3.

“Indemnifying Party” has the meaning set forth in Section 4.3.

“Initial Holder” means the Purchaser.

“Inspectors” has the meaning set forth in Section 3.1(i).

“Liquidated Damages” has the meaning set forth in Section 2.1(e).

“Option” has the meaning set forth in the recitals.

“Option Shares” has the meaning set forth in the recitals.

“Person” or “Persons” means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or other entity or government or other agency or
political subdivision thereof.

“Primary Shares” has the meaning set forth in the recitals.

“Records” has the meaning set forth in Section 3.1(i).

“Registrable Shares” means (i) the Primary Shares acquired by the Initial Holder
or its transferees in connection with the Purchase Agreement, (ii) the Option
Shares acquired by the Initial Holder or its transferees in connection with the
exercise of the Option and (iii) any other security beneficially owned by a
Holder that was issued or is issuable with respect to the Primary Shares or the
Option Shares by way of exchange, stock dividend or stock split or in connection
with a combination of shares, recapitalization, merger, consolidation or other
reorganization or otherwise.  As to any particular Registrable Shares, such
securities shall only cease to be Registrable Shares when (a) a registration
statement with respect to the sale of such securities has been declared
effective by the Commission and all such Registrable Shares have been disposed
of under such registration statement or (b) such time as all such Registrable
Shares have been otherwise transferred to holders who may trade such shares
without restriction under the Securities Act, and the Company has delivered a
new certificate or other evidence of ownership for such securities not bearing a
restrictive legend.

 
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“Registration Default” has the meaning set forth in Section 2.1(e).

“Registration Expenses” has the meaning set forth in Section 3.2.

“Rule 144” means Rule 144 (or any successor rule of similar effect) promulgated
under the Securities Act.

“Rule 415” means Rule 415 (or any successor rule of similar effect) promulgated
under the Securities Act.

“Securities Act” means the U.S. Securities Act of 1933, as amended, and the
rules and regulations promulgated by the Commission thereunder.

“Selling Holder” means any Holder who is selling Registrable Shares pursuant to
a public offering registered hereunder.

“Shelf Filing Date” has the meaning set forth in Section 2.1(a).

“Shelf Registration Period” has the meaning set forth in Section 2.1(b).

“Shelf Registration Statement” has the meaning set forth in Section 2.1(a).

“Successor” has the meaning set forth in Section 5.11.

“Underwriter” means a securities dealer who purchases any Registrable Shares or
other securities of the Company as a principal for the resale of such securities
and not as part of such dealer’s market-making activities.

“Underwritten Offering” means any sale of Common Shares for the account of the
Company to an Underwriter or Underwriters on a firm commitment basis.

ARTICLE II

REGISTRATION RIGHTS

2.1           Shelf Registration.

(a)           The Company shall (i) use commercially reasonable efforts to
prepare and file with the Commission, as soon as reasonably practicable
following the date of this Agreement but in no event later than November 18,
2009 (the “Shelf Filing Date”), a registration statement (such registration
statement, including any replacement registration statement, the “Shelf
Registration Statement”) with respect to the Registrable Shares under the
Securities Act on Form S-3 (or any similar or successor form or other form to
the extent that Form S-3 is not available), which Shelf Registration Statement
(A) shall be an automatic shelf registration statement if the Company is then a
“well known seasoned issuer” (within the meaning of the Securities Act),
providing for the registration and the sale by the Holders on a continuous or
delayed basis pursuant to Rule 415 of the Registrable Shares, (B) shall comply
as to form in all material respects with the requirements of the applicable form
and include all financial statements required by the Commission to be filed
therewith or be incorporated therein and (C) shall be reasonably acceptable to
the Holders’ Counsel, and (ii) cause such Shelf Registration Statement to be
declared effective by the Commission as soon as practicable thereafter but in no
event later than March 15, 2009 (the “Effectiveness Date”). The Shelf
Registration Statement shall be on an appropriate form and shall provide for the
resale of the Registrable Shares from time to time, including pursuant to Rule
415, and subject to Section 2.2(b), pursuant to any method or combination of
methods legally available by the Holders, and the registration statement and any
form of prospectus included or incorporated by reference therein (or any
prospectus supplement relating thereto) shall reflect such plan of distribution
or method of sale.

 
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(b)           The Company shall use commercially reasonable efforts to keep the
Shelf Registration Statement continuously effective for the period beginning on
the Effectiveness Date and ending on the date that all of the Registrable Shares
registered under the Shelf Registration Statement cease to be Registrable Shares
(the “Shelf Registration Period”).  During the Shelf Registration Period, the
Company shall (i) subject to Section 2.1(c) hereof, prepare and file with the
Commission such amendments and post-effective amendments to the Shelf
Registration Statement as may be (A) necessary to keep the Shelf Registration
Statement continuously effective for the Shelf Registration Period or (B)
reasonably requested by the Holders (whether or not required by the form on
which the securities are being registered), and shall use commercially
reasonable efforts to cause each such amendment to be declared effective by the
Commission, if required, as soon as practicable after the filing thereof, (ii)
subject to Section 2.1(c) hereof, use commercially reasonable efforts to cause
any related prospectus to be supplemented by any required supplement, and as so
supplemented to be filed with the Commission pursuant to Rule 424 under the
Securities Act (or any similar provisions then in force under the Securities
Act), to the extent required, and (iii) comply in all material respects with the
provisions of the Securities Act with respect to the disposition of all
securities covered by the Shelf Registration Statement during the applicable
period in accordance with the intended methods of disposition as may be
reasonably requested from time to time by the Holders and set forth in such
Shelf Registration Statement as so amended or such prospectus as so
supplemented.

(c)            If a majority of the independent trustees of the Company’s Board
of Trustees (as determined in accordance with New York Stock Exchange and
Commission rules and regulations) determines in its good faith judgment that the
availability of the Shelf Registration Statement or the use of any related
prospectus would require the disclosure of material information that the Company
has a bona fide business purpose for preserving as confidential or the
disclosure of which would impede the Company’s ability to consummate a
significant transaction, and that the Company is not otherwise required by
applicable securities laws or regulations to disclose, upon written notice from
the Company of such determination by the Company’s Board of Trustees, the rights
of the Holders to offer, sell or distribute any Registrable Shares pursuant to
the Shelf Registration Statement or to require the Company to take action with
respect to the registration or sale of any Registrable Shares pursuant to the
Shelf Registration Statement shall be suspended until the earlier of (i) the
date upon which the Company notifies the Holders in writing that suspension of
such rights for the grounds set forth in this Section 2.1(c) is no longer
necessary and the Holders have received copies of any required amendment or
supplement to the relevant prospectus, and (ii) forty-five (45) days.  The
Company agrees to give such notice as promptly as practicable following the date
that such suspension of rights is no longer necessary.

 
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(d)           The Company may not utilize the suspension rights under Section
2.1(c) more than one time in any three-month period nor more than three times in
any 12-month period.  Each Holder agrees by acquisition of the Registrable
Shares that upon receipt of any notice from the Company of the happening of any
event of the kind described in Section 2.1(c), such Holder will forthwith
discontinue its disposition of Registrable Shares pursuant to the Shelf
Registration Statement relating to such Registrable Shares until the expiration
of the applicable suspension period as provided in Section 2.1(c).

(e)           If (i) the Shelf Registration Statement has not been filed with
the Commission by the Shelf Filing Date , (ii) the Shelf Registration Statement
has not been declared effective by the Commission by Effectiveness Date, or
(iii) to the extent that Registrable Shares remain outstanding, the Shelf
Registration Statement is filed and declared effective but shall thereafter
cease to be effective (without being succeeded by a replacement shelf
registration statement which is filed and declared effective) or usable
(including as a result of any suspension period under Section 2.1(c) hereof) for
the offer and sale of such Registrable Securities for any period of time
(including any suspension period under Section 2.1(c) hereof) which shall exceed
45 days in any three-month period or 135 days in any 12-month period (each such
event referred to in the immediately preceding clauses (i), (ii) and (iii), a
“Registration Default”), the Company shall pay liquidated damages (“Liquidated
Damages”) to the Holders, in cash, for the period (excluding the actual Shelf
Filing Date or the actual Effectiveness Date) during which any such Registration
Default shall be continuing, at a rate per week equal to 25 basis points of the
total purchase price of the Registrable Shares the held by Holders (prorated for
partial weeks).  All accrued Liquidated Damages shall be paid by the Company by
the following Damages Payment Date.  In the event that any Liquidated Damages
are not paid by the Company on the applicable Damages Payment Date, then to the
extent permitted by law, such overdue Liquidated Damages, if any, shall bear
interest until paid at the prime rate announced to be in effect from time to
time, as published as the average rate in The Wall Street Journal, plus 2% (the
“Default Rate”).  All accrued Liquidated Damages and any interest thereon shall
be paid by wire transfer of immediately available funds or by federal funds
check by the Company to Holders pro rata, based on the respective numbers of
Registrable Shares then held by such Holder.  The parties acknowledge that
damages from a failure to file the Registration Statement or a failure to have
the Shelf Registration Statement declared or remain effective are difficult to
measure and that the payments provided for in this Section 2.1(e) are reasonable
liquidated damages and not a penalty.  Promptly (but in no event more than five
Business Days) after the occurrence or the termination of a Registration
Default, the Company shall give the Holders at such time notice of such
occurrence or termination (as applicable); provided, however, that the failure
by the Company to give such notice shall not subject the Company to any further
Liquidated Damages following the termination of the Registration Default.

 
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2.2           Piggyback Rights.

(a)           If the Company proposes to conduct an Underwritten Offering, the
Company shall give written notice of such proposed Underwritten Offering to the
Holders as soon as reasonably practicable, but in no event less than ten (10)
Business Days before the anticipated offering date (five (5) Business Days
before the anticipated offering date if such Underwritten Offering is an
“overnight” offering or equivalent expedited offering (an “Expedited Offering”),
undertaking to provide each Holder the opportunity to participate in such
Underwritten Offering on the same terms and conditions as the Company.  Each
Holder will have seven (7) Business Days (three (3) Business Days in the case of
an Expedited Offering) after receipt of any such notice to notify the Company as
to whether it wishes to participate in such Underwritten Offering; provided that
should a Holder fail to provide timely notice to the Company, such Holder will
forfeit any rights to participate in such Underwritten Offering.  If the Company
shall determine in its sole discretion to delay the proposed Underwritten
Offering, the Company shall provide written notice of such determination to the
Holders and shall thereupon be permitted to delay such Underwritten
Offering.  In connection with any Underwritten Offering in which any Holder is
exercising piggyback rights pursuant to this Section 2.2, the Company shall be
entitled to select the Underwriters in connection with such Underwritten
Offering.

(b)           If the managing Underwriter of an Underwritten Offering advises
the Company that the inclusion of Registrable Shares by a Holder would
materially adversely affect such Underwritten Offering, the Company shall
include in such Underwritten Offering, as to each Holder exercising piggyback
rights pursuant to this Section 2.2 and any other Person or Persons having a
contractual right to request their Common Shares be included in such
Underwritten Offering, that number of Common Shares that the Company is so
advised can be sold in such Underwritten Offering without materially and
adversely affecting such Underwritten Offering, determined as follows:

 
(i)
First, for the Holders electing to participate in such Underwritten Offering,
such number of Registrable Shares equal to twenty-five percent (25%) of the
number of Common Shares able to be sold as determined by the managing
Underwriter;

 
(ii)
Second, for the Company, the remaining number of Common Shares able to be sold
as determined by the managing Underwriter;

 
(iii)
Third, for each remaining holder of Common Shares securities who holds
contractual piggyback rights, other than the Holders described above in clauses
(i), the fraction of such holder’s Common Shares proposed to be sold that is
obtained by dividing (A) the remaining number of Common Shares that such holder
proposes to include in such Underwritten Offering by (B) the total remaining
number of Common Shares proposed to be sold in such Underwritten Offering by all
such holders; and

 
(iv)
Fourth, for each remaining holder of Common Shares, other than the Holders
described above in clause (i) and the holders described above in clause (iii),
if any, who are permitted by the Company to so participate, such number of
Common Shares as is determined by multiplying (A) the remaining Common Shares
able to be sold as determined by the managing Underwriter, by (B) the fraction
obtained by dividing (1) the number of Common Shares that such holder proposes
to include in such Underwritten Offering by (2) the total number of Common
Shares proposed to be sold in such Underwritten Offering by all such remaining
holders.

 
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ARTICLE III

REGISTRATION PROCEDURES

3.1           Filings; Information.  In connection with the registration of
Registrable Shares pursuant to Section 2.1:

(a)           The Company will prepare and file with the Commission a
registration statement on any form for that the Company then qualifies and which
counsel for the Company shall deem appropriate and available for the sale of the
Registrable Shares to be registered thereunder in accordance with the intended
method of distribution thereof, as may be reasonably necessary to effect the
sale of such securities, the Company may require Selling Holders to promptly
furnish in writing to the Company such information regarding such Selling
Holders, the plan of distribution of the Registrable Shares and other
information as the Company may be legally required to disclose in connection
with such registration.

(b)           The Company will, if requested, prior to filing such registration
statement or any amendment or supplement thereto, furnish to the Selling
Holders, and each applicable managing Underwriter, if any, copies thereof, and
thereafter furnish to the Selling Holders and each such Underwriter, if any,
such number of copies of such registration statement, amendment and supplement
thereto (in each case including all exhibits thereto and documents incorporated
by reference therein) and the prospectus included in such registration statement
(including each preliminary prospectus) as the Selling Holders or each such
Underwriter may reasonably request in order to facilitate the sale of the
Registrable Shares by the Selling Holders.

(c)           After the filing of the registration statement, the Company will
promptly notify the Selling Holders of any stop order issued or, to the
Company’s knowledge, threatened to be issued by the Commission and use its
commercially reasonable efforts to prevent the entry of such stop order or to
remove it if entered.

(d)           In addition to the requirements imposed on the Company elsewhere
herein, the Company will qualify the Registrable Shares for offer and sale under
such other securities or blue sky laws of such jurisdictions in the United
States as the Selling Holders may reasonably request; keep each such
registration or qualification (or exemption therefrom) effective during the
period in which such registration statement is required to be kept effective;
and do any and all other acts and things which may be necessary or advisable to
enable each Selling Holder to consummate the disposition of the Registrable
Shares owned by such Selling Holder in such jurisdictions; provided that the
Company will not be required to (i) qualify to generally do business in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 3.1(d), (ii) subject itself to taxation in any such jurisdiction, or
(iii) consent to general service of process in any such jurisdiction.

 
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(e)           The Company will as promptly as is practicable notify the Selling
Holders, at any time when a prospectus relating to the sale of the Registrable
Shares is required by law to be delivered in connection with sales by an
Underwriter or dealer, of the occurrence of any event requiring the preparation
of a supplement or amendment to such prospectus so that, as thereafter delivered
to the purchasers of such Registrable Shares, such prospectus will not contain
an untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading and
promptly make available to the Selling Holders and to the Underwriters any such
supplement or amendment.  Upon receipt of any notice of the occurrence of any
event of the kind described in the preceding sentence, the Selling Holders will
forthwith discontinue the offer and sale of Registrable Shares pursuant to the
registration statement covering such Registrable Shares until receipt by the
Selling Holders and the Underwriters of the copies of such supplemented or
amended prospectus and, if so directed by the Company, the Selling Holders shall
deliver to the Company all copies, other than permanent file copies then in the
possession of the Selling Holders, of the most recent prospectus covering such
Registrable Shares at the time of receipt of such notice.  Furthermore, in the
event the Company shall give such notice, the Company shall, as promptly as is
practical, prepare a supplement or post-effective amendment to the registration
statement or a supplement to the related prospectus or any document incorporated
or deemed to be incorporated therein by reference, and file any other required
document so that, as thereafter delivered to the purchasers of the Registrable
Shares being sold thereunder, such prospectus will not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.

(f)            The Company will enter into customary agreements (including an
underwriting agreement in customary form) and take such other actions
(including, without limitation, participation in road shows and investor
conference calls) as are required in order to expedite or facilitate the sale of
such Registrable Shares.

(g)           At the request of any Underwriter in connection with an
underwritten offering, the Company will furnish (i) an opinion of counsel,
addressed to the Underwriters and the Selling Holders, covering such customary
matters as the managing Underwriter and the Selling Holders may reasonably
request and (ii) a comfort letter or comfort letters from the Company’s
independent public accountants addressed to the Underwriters and the Selling
Holders covering such customary matters as the managing Underwriter or the
Selling Holders may reasonably request.

(h)           If requested by the managing Underwriter or any Selling Holder,
the Company shall promptly incorporate in a prospectus supplement or post
effective amendment such information as the managing Underwriter or any Selling
Holder reasonably requests to be included therein, including without limitation,
with respect to the Registrable Shares being sold by such Selling Holder, the
purchase price being paid therefor by the Underwriters and with respect to any
other terms of the underwritten offering of the Registrable Shares to be sold in
such offering, and promptly make all required filings of such prospectus
supplement or post effective amendment.

 
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(i)            The Company shall promptly make available for inspection by any
Selling Holder or Underwriter participating in any disposition pursuant to any
registration statement, and any attorney, accountant or other agent or
representative retained by any such Selling Holder or Underwriter (collectively,
the “Inspectors”), all financial and other records, pertinent corporate
documents and properties of the Company (collectively, the “Records”), as shall
reasonably be necessary to enable them to exercise their due diligence
responsibility, and cause the Company’s officers, directors and employees to
supply all information requested by any such Inspector in connection with such
registration statement; provided, however, that unless the disclosure of such
Records is necessary to avoid or correct a misstatement or omission in the
registration statement or the release of such Records is ordered pursuant to a
subpoena or other order from a court of competent jurisdiction, the Company
shall not be required to provide any information under this subparagraph (i) if
(A) the Company believes, after consultation with counsel for the Company, that
to do so would cause the Company to forfeit an attorney-client privilege that
was applicable to such information or (B) if the Company has requested and been
granted from the Commission confidential treatment of such information contained
in any filing with the Commission or documents provided supplementally or
otherwise.

(j)            The Company shall cause the Common Shares included in any
registration statement to be listed on each securities exchange on which
securities issued by the Company are then listed, if the Registrable Shares so
qualify.

(k)           The Company shall provide a CUSIP number for the Registrable
Shares included in any registration statement not later than the effective date
of such registration statement.

(l)            The Company shall cooperate with each Selling Holder and each
Underwriter participating in the disposition of such Registrable Shares and
their respective counsel in connection with any filings required to be made with
the Financial Industry Regulatory Authority (“FINRA”).

(m)          The Company shall participate in any financial roadshow organized
for purposes of publicizing the sale or other disposition of the Registrable
Shares.  Such participation shall include, but not be limited to, dispatch by
the Company of personnel to assist in each presentation made during the
roadshow, and provision of the Company data needed for purposes of the roadshow.

(n)           The Company shall, during the period when the prospectus is
required to be delivered under the Securities Act, promptly file all documents
required to be filed with the Commission pursuant to Section 13(a) of the
Exchange Act.

3.2           Registration Expenses.  In connection with any registration
effected hereunder, the Company shall pay all expenses incurred in connection
with such registration (the “Registration Expenses”), including without
limitation: (i) registration and filing fees with the Commission and FINRA, (ii)
all fees and expenses of compliance with securities or blue sky laws (including
fees and disbursements of counsel in connection with blue sky qualifications of
the Registrable Shares), (iii) printing expenses, messenger and delivery
expenses, (iv) fees and expenses incurred in connection with the listing or
quotation of the Registrable Shares, (v) fees and expenses of counsel to the
Company and the fees and expenses of independent certified public accountants
for the Company (including fees and expenses associated with the special audits
or the delivery of comfort letters), (vi) the fees and expenses of any
additional experts retained by the Company in connection with such registration
and (vii) the fees and expenses of other persons retained by the Company,
whether or not any registration statement becomes effective; provided that in no
event shall Registration Expenses include any underwriting discounts or
commissions or transfer taxes.

 
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ARTICLE IV

INDEMNIFICATION AND CONTRIBUTION

4.1           Indemnification By the Company.  The Company agrees to indemnify,
and hold harmless each Selling Holder and their respective officers, directors,
partners, shareholders, members, employees, agents and representatives and each
Person (if any) which controls a Selling Holder within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act, from and
against any and all losses, claims, damages, liabilities, costs and expenses
(including reasonable attorneys’ fees) caused by, arising out of, resulting from
or related to any untrue statement or alleged untrue statement of a material
fact contained or incorporated by reference in any registration statement or
prospectus relating to the Registrable Shares (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto) or any
preliminary prospectus, including all documents attached thereto or incorporated
by reference therein, or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages or liabilities are caused by or based upon any information furnished in
writing to the Company by or on behalf of such Selling Holder or by such Selling
Holder’s failure to deliver a copy of the registration statement or prospectus
or any amendments or supplements thereto after the Company has furnished such
Selling Holder with copies of the same; provided, however, that the Company
shall have no obligation to indemnify under this sentence to the extent any such
losses, claims, damages or liabilities have been finally and non-appealably
determined by a court of competent jurisdiction to have resulted from such
Selling Holder’s willful misconduct or gross negligence.  The Company also
agrees to indemnify any Underwriter of the Registrable Shares, their officers
and directors and each person who controls such Underwriter on substantially the
same basis as that of the indemnification of the Selling Holders provided in
this Section 4.1, except insofar as such losses, claims, damages or liabilities
are caused by or based upon any information furnished in writing to the Company
by or on behalf of such Underwriter or by such Underwriter’s failure to deliver
a copy of the registration statement or prospectus or any amendments or
supplements thereto after the Company has furnished the Underwriter with copies
of the same; provided, however, that the Company shall have no obligation to
indemnify under this sentence to the extent any such losses, claims, damages or
liabilities have been finally and non-appealably determined by a court to have
resulted from any such Underwriter’s willful misconduct or gross
negligence.  The obligations of the Company under this Section 4.1 shall be in
addition to any liability that the Company may otherwise have to any Indemnified
Person and the obligations of any Indemnified Person under this Section 4.1
shall be in addition to any liability that such Indemnified Person may otherwise
have to the Company.  The remedies provided in this Section 4.1 are not
exclusive and shall not limit any rights or remedies which may otherwise be
available to an indemnified party at law or in equity.

 
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4.2           Indemnification By Selling Holders.  Each Selling Holder agrees to
indemnify, and hold harmless the Company, its officers and directors, and each
Person, if any, that controls the Company within the meaning of either Section
15 of the Securities Act or Section 20 of the Exchange Act, from and against any
and all losses, claims, damages, liabilities, costs and expenses (including
reasonable attorneys’ fees) caused by, arising out of, resulting from or related
to any untrue statement or alleged untrue statement of a material fact contained
or incorporated by reference in any registration statement or prospectus
relating to the Registrable Shares (as amended or supplemented if the Company
shall have furnished any amendments or supplements thereto) or any preliminary
prospectus, including all documents attached thereto or incorporated by
reference therein, or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, but only with reference to information
furnished in writing by or on behalf of such Selling Holder for use in any
registration statement or prospectus relating to the Registrable Shares, or any
amendment or supplement thereto or any preliminary prospectus.  Each Selling
Holder also agrees to indemnify and hold harmless any Underwriters of the
Registrable Shares, their officers and directors and each person who controls
such Underwriters on substantially the same basis as that of the indemnification
of the Company provided in this Section 4.2, but only with reference to
information furnished in writing by or on behalf of such Selling Holder for use
in any registration statement or prospectus relating to the Registrable Shares,
or any amendment or supplement thereto or any preliminary prospectus.  Each such
Selling Holder’s liability under this Section 4.2 shall be limited to an amount
equal to the net proceeds (after deducting the applicable underwriting discount
and expenses associated with such Selling Holder’s Registrable Shares sold
thereunder) received by such Selling Holder from the sale of such Registrable
Shares by such Selling Holder.  The obligation of each Selling Holder hereunder
shall be several and not joint.

4.3           Conduct Of Indemnification Proceedings.  In case any proceeding
(including any investigation by any court, governmental, regulatory or
administrative agency or commission or other governmental authority or
instrumentality, domestic (federal, state or municipal) or foreign governmental
entity) shall be instituted involving any Person in respect of which indemnity
may be sought pursuant to Section 4.1 or Section 4.2, such Person (the
“Indemnified Party”) shall promptly notify the Person against whom such
indemnity may be sought (the “Indemnifying Party”) in writing and the
Indemnifying Party, upon the request of the Indemnified Party, shall retain
counsel reasonably satisfactory to such Indemnified Party to represent such
Indemnified Party and any others the Indemnifying Party may designate in such
proceeding and shall pay the fees and disbursements of such counsel related to
such proceeding.  In any such proceeding, any Indemnified Party shall have the
right to retain its own counsel, but the fees and expenses of such counsel shall
be at the expense of such Indemnified Party unless (i) the Indemnifying Party
and the Indemnified Party shall have mutually agreed to the retention of such
counsel or (ii) the named parties to any such proceeding (including any
impleaded or joined parties) include both the Indemnified Party and the
Indemnifying Party and, in the written opinion of counsel for the Indemnified
Party, representation of both parties by the same counsel would be inappropriate
due to actual or potential differing interests between them.  It is understood
that the Indemnifying Party shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the fees and
expenses of more than one separate firm of attorneys (in addition to any local
counsel) at any time for all such Indemnified Parties, and that all such fees
and expenses shall be reimbursed as they are incurred.  In the case any such
separate firm for the Indemnified Parties exists, such firm shall be designated
in writing by the Indemnified Parties.  The Indemnifying Party shall not be
liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent (not to be unreasonably withheld), or
if a final judgment is entered for the plaintiff, the Indemnifying Party shall
indemnify and hold harmless such Indemnified Parties from and against any loss
or liability (to the extent stated above) by reason of such settlement or
judgment.

 
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4.4           Contribution.

(a)            If the indemnification provided for in this Article IV is, by
operation of law unavailable to an Indemnified Party in respect of any losses,
claims, damages or liabilities in respect of which indemnity is to be provided
hereunder, then each such Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall to the fullest extent permitted by law, contribute to
the amount paid or payable by such Indemnified Party as a result of such losses,
claims, damages or liabilities in such proportion as is appropriate to reflect
the relative fault of such party in connection with the statements or omissions
that resulted in such losses, claims, damages or liabilities, as well as any
other relevant equitable considerations.  The relative fault of the Company, a
Selling Holder and the Underwriters shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by such party and the parties’ relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.

(b)           The Company and each Selling Holder agrees that it would not be
just and equitable if contribution pursuant to this Section 4.4 were determined
by pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation that does not take account of
the equitable considerations referred to in the immediately preceding
paragraph.  The amount paid or payable by an Indemnified Party as a result of
the losses, claims, damages or liabilities referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such Indemnified
Party in connection with investigating or defending any such action or
claim.  Each Selling Holder shall not be required to contribute any amount in
excess of the amount by which the net proceeds of the offering (before deducting
expenses) received by such Selling Holder exceeds the amount of any damages that
such Selling Holder has otherwise been required to pay by reason of such untrue
or alleged untrue statement or omission or alleged omission.  No person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation.

 
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ARTICLE V

MISCELLANEOUS

5.1           Participation In Underwritten Offerings.  No Person may
participate in any underwritten registered offering contemplated hereunder,
unless such Person (a) agrees to sell its securities on the basis provided in
any underwriting arrangements approved by the Persons entitled hereunder to
approve such arrangements, (b) completes and executes all (to the extent
reasonable and customary) questionnaires, powers of attorney, custody
arrangements, indemnities, underwriting agreements and other documents
reasonably required under the terms of such underwriting arrangements and this
Agreement and (c) furnishes in writing to the Company such information regarding
such Person, the plan of distribution of the Registrable Shares and other
information as the Company may from time to time reasonably request or as may
legally be required in connection with such underwritten registered offering;
provided, however, that no such Person shall be required to make any
representations or warranties in connection with any such underwritten
registered offering other than representations and warranties as to (i) such
Person’s ownership of his or its Registrable Shares to be sold or transferred in
a manner that is free and clear of all liens, claims and encumbrances, (ii) such
Person’s power and authority to effect such transfer and (iii) such matters
pertaining to compliance with securities laws as may reasonably be requested;
provided further, however, that the obligation of such Person to indemnify
pursuant to any such underwriting agreements shall be several, and not joint and
several, among such Persons selling Registrable Shares, and the liability of
each such Person will be in proportion to, and; provided further that such
liability will be limited to, the net amount received by such Person from the
sale of such Person’s Registrable Shares pursuant to such underwritten
registered offering.  Notwithstanding anything contained herein to the contrary,
the Company’s Board of Trustees must approve any Underwriter engaged to conduct
any underwritten registered offering pursuant to this Agreement; provided,
however, that if such underwritten registered offering has been initiated by the
Purchaser and the Purchaser is the sole selling shareholder in such offering,
the Purchaser shall have the right to select the Underwriter for such
underwritten registered offering, subject to the approval of the Company’s Board
of Trustees, which approval shall not be unreasonably withheld.

5.2           Rule 144.  The Company shall file any and all reports required to
be filed by it under the Securities Act and the Exchange Act and shall take such
further action as the Holders may reasonably request to the extent required from
time to time to enable the Holders to sell Registrable Shares without
registration under the Securities Act within the limitation of the exemptions
provided by Rule 144 under the Securities Act, as such Rule may be amended from
time to time, or any similar rule or regulation hereafter adopted by the
Commission.  Upon the request of any Holder, the Company will deliver to such
Holder a written statement as to whether it has complied with such reporting
requirements.

5.3           Market Stand Off.  In connection with the registration or offering
of the Company’s securities, upon the reasonable request of the Company and the
managing Underwriter of any underwritten offering of the Company’s securities,
each Holder agrees not to sell, make any short sale of, loan, grant any option
for the purchase of, or otherwise dispose of, any Registrable Shares (other than
those included in the registration) without prior written consent of the
Company, or such Underwriters, as the case may be, for such period of time (not
to exceed 60 days from the effective date of such registration or offering) as
the Company and the managing Underwriter may reasonably specify (the “Stand-Off
Period”); provided, however, that:

 
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(a)           all executive officers and trustees of the Company then holding
Common Shares of the Company shall enter into similar agreements for not less
than the time period required of the Holders hereunder; and

(b)           the Holders shall be allowed any concession or proportionate
release allowed to any officer or trustee that entered into similar agreements.

In order to enforce the foregoing covenant in this Section 5.3, the Company
shall have the right to place restrictive legends on the certificates
representing the Registrable Shares subject to this Section 5.3 and to impose
stop transfer instructions with respect to the Registrable Shares and such other
Common Shares of each Holder (and the Common Shares or securities of every other
person subject to the foregoing restriction) until the end of such period.

Upon request, each such Holder agrees to execute a “lock-up” letter to such
effect for the benefit of the Company or any Underwriter.

5.4           Amendments, Waivers, Etc.  This Agreement may not be amended,
waived or otherwise modified or terminated except by an instrument in writing
signed by the Company and the Holders of at least two-thirds of the Registrable
Shares then held by all the Holders.

5.5           Counterparts.  This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, all of which
shall be considered one and the same agreement and shall become effective when
one or more counterparts have been signed by each of the parties and delivered
to the other parties, it being understood that all parties need not sign the
same counterpart.

5.6           IRSA Guarantee.  IRSA is a party to this Agreement solely for
purposes of guaranteeing the obligations of the Purchaser and IRSA shall be
liable to the Company, to the same extent as the Purchaser, for all obligations
of the Purchaser hereunder, including, without limitation, the obligations of
the Purchaser set forth in Article IV hereof.

5.7           Entire Agreement.  This Agreement, together with the Purchase
Agreement and the other agreements, instruments and documents referred to
therein, constitutes the entire agreement of the parties hereto and supersedes
all prior agreements, letters of intent and understandings, both written and
oral, among the parties with respect to the subject matter hereof.

5.8           Articles, Sections.  Unless the context indicates otherwise,
references to Articles, Sections and paragraphs shall refer to the corresponding
articles, sections and paragraphs in this Agreement.

5.9           Governing Law; Choice of Forum.  This Agreement shall be construed
in accordance with and governed by, the internal laws of the State of New York
(without giving effect to such State’s principles of conflicts of laws
principles).  Each of the parties hereto hereby irrevocably consents, to the
maximum extent permitted by law, that any action or proceeding relating to this
Agreement or the transactions contemplated hereby shall be brought, at the
option of the party instituting the action or proceeding, in any court of
general jurisdiction in New York County, New York, in the United States District
Court for the Southern District of New York or in any state or federal court
sitting in the area currently comprising the Southern District of New
York.  Each of the parties hereto waives any objection that it may have to the
conduct of any action or proceeding in any such court based on improper venue or
forum non conveniens, waives personal service of any and all process upon it,
and consents that all service of process may be made by mail or courier service
directed to it at the address set forth herein and that service so made shall be
deemed to be completed upon the earlier of actual receipt or ten days after the
same shall have been posted or delivered to a nationally recognized courier
service.  Nothing contained in this Section 5.9 shall affect the right of any
party hereto to serve legal process in any other manner permitted by law.

 
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5.10         Assignment of Registration Rights.  No Holder of Registrable Shares
may assign all or any part of its rights under this Agreement to any person
without the prior written consent of the Company, which consent shall not be
unreasonably withheld.

5.11         Parties in Interest.  This Agreement shall be binding upon and
inure to the benefit of the Company and any successor organization that shall
succeed to substantially all of the business and property of the Company,
whether by merger, consolidation, acquisition of all or substantially all of the
assets of the Company or otherwise, including by operation of law (each, a
“Successor”).  The Company hereby covenants and agrees that it shall cause any
Successor to adopt and assume this Agreement.  If a parent entity of the Company
or its Successor becomes the issuer of the Registrable Shares, then the Company
or such Successor shall cause such parent entity to adopt and assume this
Agreement to the same extent as if the parent entity were the Company or such
Successor.

5.12         Notices.  All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally, by facsimile, or
mailed by registered or certified mail (return receipt requested), or sent by
Federal Express or other recognized overnight courier, to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):

(a)            If to Purchaser, to:

Real Estate Investment Group L.P.
c/o IRSA Inversiones y Representaciones S.A.
Moreno 877, C1091AAQ
Buenos Aires, Argentina
Fax no. +54 (11) 4323-7449
Attention:  Eduardo S. Elsztain

with a copy to (which shall not constitute notice):

Zang, Bergel & Viñes Abogados,
Florida 537, 18th Floor, C1005AAK
Buenos Aires, Argentina
Fax no. +54 (11) 5166-7070
Attention:  Pablo Vergara del Carril

 
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(b)           If to the Company, to:

Hersha Hospitality Trust
510 Walnut Street, 9th Floor
Philadelphia, Pennsylvania 19106
Fax no. (717) 774-7383
Attention: Ashish R. Parikh

with a copy to (which shall not constitute notice):

Hunton & Williams LLP
951 East Byrd Street
Richmond, Virginia 23219
Fax no. (804) 788-8218
Attention: James S. Seevers, Jr.

Any of the above addresses may be changed at any time by notice given as
provided above; provided, however, that any such notice of change of address
shall be effective only upon receipt.  All notices, requests or instructions
given in accordance herewith shall be deemed received on the date of delivery,
if hand delivered, on the date of receipt, if by facsimile, three business days
after the date of mailing, if mailed by registered or certified mail, return
receipt requested, and one business day after the date of sending, if sent by
Federal Express or other recognized overnight courier.

5.13         Headings.  The headings contained in this Agreement are for
convenience of reference only and are not part of the substance of this
Agreement.

5.14         Limitations on Subsequent Registration Rights.  From and after the
date of this Agreement, the Company shall not, without the prior written consent
of Holders of not less than two-thirds of the then outstanding Registrable
Shares, enter into any agreement with any holder or prospective holder of any
equity securities of the Company that would allow such holder or prospective
holder (a) to include such equity securities in any registration statement filed
for the Registrable Shares pursuant to the terms of this Agreement, unless under
the terms of such agreement, such holder or prospective holder may include such
equity securities in any such registration only to the extent that the inclusion
of its equity securities will not reduce the amount of Registrable Shares of the
Holders or (b) to have its equity securities registered on a registration
statement that is declared effective prior to the Effectiveness Date.

[Signature page follows.]

 
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IN WITNESS WHEREOF, each of the Purchaser, IRSA and the Company has caused this
Agreement to be signed  by its duly authorized officer as of the date first
written above.
 

 
REAL ESTATE INVESTMENT GROUP L.P.
         
By:
Tyrus S.A., its sole general partner
             
By:
/s/ Eduardo S. Elsztain    
Name:
   
Title:
             
IRSA INVERSIONES Y REPRESENTACIONES S.A.
         
By:
/s/ Eduardo S. Elsztain    
Name:
   
Title:
             
HERSHA HOSPITALITY TRUST
         
By:
/s/ Ashish R. Parikh    
Name: Ashish R. Parikh
   
Title: Chief Financial Officer

Registration Rights Agreement Signature Page
 
 

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