Document:

ex10_2.htm

    
      

    

    
      Exhibit
        10.2

       

      

      April
        23,
        2007

       

      Mr.
        Jeffrey M. Levy

      701
        Waldens Pond Rd

      Albany,
        NY  12203

      

      Dear
        Mr.
        Levy:

      

      NBT
        Bancorp Inc. (which, together with
        its wholly-owned subsidiary, NBT Bank, National Association, is referred
        to as
        the "Company") considers the stability of its key management group to be
        essential to the best interests of the Company and its
        share­holders.  The Company recognizes that, as is the case with
        many publicly-held corporations, the possibility of a change in control may
        arise and that the attendant uncertainty may result in the departure or
        distraction of key management personnel to the detriment of the Company and
        its
        shareholders.

      

      Accordingly,
        the Board of Directors of
        the Company (the "Board") has determined that appropriate steps should be
        taken
        to encourage members of the Company's key management group to continue as
        employees notwithstanding the possibility of a change in control of the
        Company.

      

      The
        Board also believes it important
        that, in the event of a proposal for transfer of control of the Company,
        you be
        able to assess the proposal and advise the Board without being influenced
        by the
        uncertainties of your own situation.

      

      In
        order to induce you to remain in the
        employ of the Company, this Agreement, which has been approved by the Board,
        sets forth the severance compensation which the Company agrees will be provided
        to you in the event your employment with the Company is terminated subsequent
        to
        a “change in control” of the Company under the circumstances described
        below.

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      1.            
        Agreement to Provide Services; Right to Terminate.

      

      (a)           Termination
        Prior to Certain Offers.  Except as otherwise provided in
        paragraph (b) below, or in any written employment agreement between you and
        the
        Company, the Company or you may terminate your employment at any
        time.  If, and only if, such termination occurs after a "change in
        control of the Company" (as defined in section 6), the provisions of this
        Agreement regarding the payment of severance compensation and benefits shall
        apply.

      

      (b)           Termination
        Subsequent to Certain Offers.  In the event a tender offer or
        exchange offer is made by a "person" (as defined in section 6) for more than
        30
        percent of the combined voting power of the Company's outstanding securities
        ordinarily having the right to vote at elections of directors ("Voting
        Securities"), including shares of common stock, no par value, of the Company
        (the "Company Shares"), you agree that you will not leave the employ of the
        Company (other than as a result of Disabil­ity as such term is defined in
        section 6) and will render services to the Company in the capacity in which
        you
        then serve until such tender offer or exchange offer has been abandoned or
        terminated or a change in control of the Company has occurred as a result
        of
        such tender offer or exchange offer.  If, during the period you are
        obligated to continue in the employ of the Company pursuant to this section
        1(b), the Company reduces your compensation, terminates your employment without
        Cause, or you provide written notice of your decision to terminate your
        employment for Good Reason, your obligations under this section 1(b) shall
        thereupon terminate and you will be entitled to payments provided under Section
        3(b).

      

      2.            
        Term of Agreement.  This Agreement shall commence on the date
        hereof and shall continue in effect until December 31, 2009; provided, however,
        that commencing December 31, 2007 and each December 31st thereafter, the
        remaining term of this Agreement shall auto­mati­cally be extended for
        one additional year (to a total of three years) unless at least 90 days prior
        to
        such anniversary, ­the Company or you shall have given notice that this
        Agree­ment shall not be ex­tended; and provided, however, that if a
        change in control of the Company shall occur while this Agree­ment is in
        effect, this Agree­ment shall auto­mati­cally be extended for 24
        months from the date the change in control of the Company
        occurs.  This Agreement shall terminate if you or the Compa­ny
        termi­nates your employ­ment prior to a change in control of the Company
        but without preju­dice to any remedy the Company may have for breach of your
        obligations, if any, under section 1(b).

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

      3.           
         Severance Payment and Benefits If Termination Occurs Following Change
        in Control for Disability, Without Cause, With Good Reason Within 24 Months
        of
        the Change or Without Good Reason within 12 Months of the
        Change.  If, (I) within 24 months from the date of occurrence of
        any event constituting a change in control of the Company (it being recognized
        that more than one such event may occur in which case the 24-month period
        shall
        run from the date of occurrence of each such event), your employment with
        the
        Company is terminated (i) by the Company for Disability, (ii) by the Company
        without Cause, or (iii) by you with Good Reason (as defined in section 6),
        or
        (II) within 12 months from the date of occurrence of any event constituting
        a
        change in control of the Company (it being recognized that more than one
        such
        event may occur in which case the 12-month period shall run from the date
        of
        occurrence of each such event) you terminate your employment either with
        or
        without Good Reason, you shall be entitled to a sever­ance payment and other
        benefits as follows:

      

      (a)           Disability.  If
        your employment with the Company is terminated for Disability, your benefits
        shall thereafter be determined in accordance with the Company's long-term
        disability income insurance plan.  If the Company's long-term
        disability income insurance plan is modified or terminated following a change
        in
        control, the Company shall substitute such a plan with benefits applicable
        to
        you substantially similar to those provided by such plan prior to its
        modification or termination.  During any period that you fail to
        perform your duties hereunder as a result of incapacity due to physical or
        mental illness, you shall continue to receive your full base salary at the
        rate
        then in effect until your employment is termi­nated by the Company for
        Disability.

      

      (b)           Termination
        Without Cause or With Good Reason or Within 24 Months of Change in Control
        or
        Without Good Reason within 12 Months of the Change.  If your
        employment with the Company is terminated without Cause by the Company or
        with
        Good Reason by you within 24 months of a change in control, or by you within
        12
        months of a change in control of the Company without Good Reason, then the
        Company shall pay to you, upon demand, the following amounts (net of applicable
        payroll taxes):

      

      (i)           Your
        full base salary through the Date of Termination at the rate in effect on
        the
        date the change in control of the Company occurs plus year-to-date ac­crued
        vacation.

      

      (ii)           As
        severance pay, an amount equal to the product of 1.00 multiplied by the greater
        of (A) the sum of your annualized salary for the calendar year in which the
        change in control of the Company occurs, the maximum target bonus that could
        have been paid to you for such year if all applicable targets and objectives
        had
        been achieved, or if no formal bonus program is in effect, the largest bonus
        amount paid to you during any one of the three preceding calendar years,
        your
        income from the exercise of nonqualified options during such year, your
        compensation income from any disqualifying disposition during such year of
        stock
        acquired pursuant to the exercise of incentive stock options and other
        annualized amounts that constitute taxable income to you from the Company
        for
        such year, without reduction for salary reduction amounts excludible from
        income
        under Section 402(e)(3) or 125 of the Internal Revenue Code of 1986, as amended
        (the "Code"), or (B) your average "Compensation" (as defined below) for the
        three calendar years preceding the calendar year in which the change in control
        of the Company occurs.  As used in this subsection 3(b)(ii) your
        "Compensation" shall mean your base salary, bonus, income from the exercise
        of
        nonqualified options, compensation income from any disqualifying disposition
        of
        stock acquired pursuant to the exercise of incentive stock options and any
        other
        amounts that constitute taxable income to you from the Company, without
        reduction for salary reduction amounts excludible from income under Section
        402(e)(3) or 125 of the Code.

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

      (c)           Related
        Benefits.  Unless you die or your employment is terminated by the
        Company for Cause or Disability, or by you other than for Good Reason and
        not
        within 12 months after a change in control of the Company, the Company shall
        maintain in full force and effect, for your continued benefit and, if
        applicable, for the continued benefit of your spouse and family, for three
        years
        after the Date of Termina­tion, or such longer period as may be provided by
        the terms of the appropriate plan, certain noncash employee benefit plans,
        programs, or arrangements (including, without limitation, pension and retirement
        plans and arrangements, life insurance and accident plans and arrange­ments,
        medical insurance plans and disability plans, but excluding stock option
        plans
        and vacation plans) in which you were entitled to participate immediately
        prior
        to the Date of Termination, as in effect at the Date of Termination, or,
        if more
        favorable to you and, if applicable, your spouse and family, as in effect
        generally at any time thereafter with respect to executive employees of the
        Company or any successor; provided that your continued participation is possible
        after Termination under the general terms and provisions of such plans,
        programs, and arrangements; provided, however, that if you become eligible
        to
        participate in a benefit plan, program, or arrangement of another employer
        which
        confers substantially similar benefits upon you, you shall cease to receive
        benefits under this subsection in respect of such plan, program, or
        arrange­ment.  In the event that your participation in any such
        plan, program, or arrangement is not possible after Termination under the
        general terms and provisions of such plans, programs, and arrangements, the
        Company shall arrange to provide you with benefits substantially similar
        to
        those which you are entitled to receive under such plans, programs and
        arrangements or alternatively, pay an amount equal to the reasonable value
        of
        such substantially similar benefits.  If, after termination of
        employment following a change in control of the Company, you elect or, if
        applicable, your spouse or family elects, COBRA continuation coverage, the
        Company will pay the applicable COBRA premium for the maximum period during
        which such coverage is available.  If termination follows a change in
        control of the Company specified in Section 6(b)(iii), then you and, if
        applicable, your spouse and family may elect in lieu of COBRA continuation
        coverage to have the acquiring entity obtain an individual or group health
        insurance coverage and the acquiring entity will pay premiums thereunder
        for the
        maximum period during which you and, if applicable, your spouse and family
        could
        have elected to receive COBRA continuation coverage.

      
        
          
          

        

        
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      (d)           Establishment
        of Trust.  Within five days following conclusion of a change in
        control of the Company, the Company shall establish a trust that conforms
        in all
        regards with the model trust published in Revenue Procedure 92-64 and deposit
        an
        amount sufficient to satisfy all liabilities of the Company under Section
        3(b)
        of this Agreement.

      

      (e)           Automatic
        Extension.  Notwithstanding the prior provisions of this Section,
        if an individual is elected to the Board of Directors who has not been nominated
        by the Board of Directors as constituted prior to his election, then the
        term of
        this Agreement will automatically be extended until two years from the date
        on
        which such individual was elected if such extended termination date is later
        than the normal termination date of this Agreement, otherwise, the termination
        date of this Agreement will be as provided above.  This extension will
        take effect only upon the first instance of an individual being elected to
        the
        Board of Directors without having been nominated by the original
        Board.

      

      (f)           Alternative
        to Lump Sum Payout.  The amount described in this subsection will
        be paid to you in a single lump-sum unless, at least 30 days before the
        conclusion of a change in control of the Company, you elect in writing to
        receive the severance pay in 3 equal annual payments with the first payment
        to
        be made within 30 days of demand and the subsequent payments to be made by
        January 31st of each year subsequent to the year in which the first payment
        is
        made, provided that under no circumstances will two payments be made during
        a
        single tax year of the recipient.

      

      (g)           Section
        409A Compliance.  Section 409A was added to the Internal Revenue
        Code by the American Jobs Creation Act of 2004 (the “Act”).  The Act
        made significant changes in the tax law as it applies to executive
        compensation.  One change involves delaying distributions to “key
        employees” (as defined below) by a minimum of six months.  Therefore,
        severance payments payable hereunder must be made in compliance with the
        Act or
        a substantial excise tax (payable by you) would be imposed. For purposes
        of the
        Act, a “key employee” is generally one who is an officer of the Company with
        annual compensation greater than $130,000 as provided in Section 416(i) of
        the
        Internal Revenue Code and the regulations promulgated thereunder. If you
        become
        entitled to the severance payments provided hereunder and if you are in fact
        a
        key employee at time payment is owed to you, the Act provides that these
        payments will be subject to a 20% excise tax.  Under the Act, one of
        the ways to avoid application of the excise tax to severance due a “key
        employee” is to defer payment for six (6) months after separation from
        employment.

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

      Accordingly,
        if you become entitled to payments hereunder and if at this time you are
        in fact
        a “key employee” with the Company, the Company will defer commencement of your
        severance payments until six (6) months after your Date of
        Termination.

      

      4.            
        Payment If Termination Occurs Following Change in Control, Because of
        Death,
        For Cause, or Without Good Reason and not within 12 Months of the Change
        in
        Control.  If your employment shall be terminated following any
        event constitut­ing a change in control of the Company because of your
        death, or by the Company for Cause, or by you other than for Good Reason
        and not
        within 12 months after a change in control of the Company, the Company shall
        pay
        you your full base salary through the Date of Termination at the rate in
        effect
        on the date the change in control of the Company occurs plus year-to-date
        accrued vacation.  The Company shall have no further obligations to
        you under this Agreement.

      

      5.           
         No Mitigation.  You shall not be required to mitigate the
        amount of any payment provided for in this Agreement by seeking other employment
        or otherwise, nor, except as express­ly set forth herein, shall the amount
        of any payment provided for in this Agreement be reduced by any compensation
        earned by you as the result of employment by another employer after the Date
        of
        Termination, or otherwise.

      

      6.           
         Definitions of Certain Terms.  For the purpose of this
        Agreement, the terms defined in this section 6 shall have the meanings assigned
        to them herein.

      

      (a)           Cause.  Termination
        of your employment by the Company for "Cause" shall mean termination because,
        and only because, you committed an act of fraud, embezzle­ment, or theft
        constituting a felony or an act intention­ally against the interests of the
        Company which causes the Company material injury.  Notwithstanding the
        foregoing, you shall not be deemed to have been terminat­ed for Cause unless
        and until there shall have been delivered to you a copy of a resolution duly
        adopted by the affirmative vote of not less than three-quarters of the entire
        membership of the Board at a meeting of the Board called and held for the
        purpose (after reasonable notice to you and an opportunity for you, together
        with your counsel, to be heard before the Board), finding that in the good
        faith
        opinion of the Board you were guilty of conduct constituting Cause as defined
        above and specify­ing the particulars thereof in detail.

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

      (b)           Change
        in Control of the Company.  A "change in control of the Company"
        shall mean:

      

      (i)           A
        change in control of a nature that would be required to be reported in response
        to Item 6(e) of Schedule 14A of Regulation 14A as in effect on the date hereof
        pursuant to the Securities Exchange Act of 1934 (the "Exchange Act"); provided
        that, without limitation, such a change in control shall be deemed to have
        occurred at such time as any Person hereafter becomes the "Beneficial Owner"
        (as
        defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
        30
        percent or more of the combined voting power of the Company's Voting
        Securi­ties; or

      

      (ii)           During
        any period of two consecutive years, individuals who at the beginning of
        such
        period constitute the Board cease for any reason to con­stitute at least a
        majority thereof unless the election, or the nomination for election by the
        Company's shareholders, of each new director was approved by a vote of at
        least
        two-thirds of the directors then still in office who were directors at the
        beginning of the period; or

      (iii)           There
        shall be consummated (x) any consoli­dation or merger of the Company in
        which the Compa­ny is not the continuing or surviving corporation or
        pursuant to which Voting Securities would be converted into cash, securities,
        or
        other property, other than a merger of the Company in which the holders of
        Voting Securities immediately prior to the merger have the same
        propor­tionate ownership of common stock of the surviving corporation
        immedi­ately after the merger, or (y) any sale, lease, exchange, or other
        transfer (in one transaction or a series of related transac­tions) of all,
        or sub­stantially all of the assets of the Company, pro­vided that any
        such consolidation, merger, sale, lease, exchange or other transfer consummated
        at the insistence of an appropriate banking regulatory agency shall not
        constitute a change in control of the Company; or

      

      (iv)           Approval
        by the shareholders of the Company of any plan or proposal for the liquidation
        or dissolution of the Company.

      

      (c)           Date
        of Termination.  "Date of Termination" shall mean (i) if your
        employment is terminated by the Company for Disability, 30 days after Notice
        of
        Termination is given (provided that you shall not have returned to the
        performance of your duties on a full-time basis during such 30-day period),
        and
        (ii) if your employment is terminated for any other reason, the date on which
        a
        Notice of Termination is given; provided that if within 30 days after any
        Notice
        of Termination is given the party receiving such Notice of Termination notifies
        the other party that a dispute exists concerning the termination, the Date
        of
        Termination shall be the date on which the dispute is finally determined,
        either
        by mutual written agreement of the parties or by a final judg­ment, order,
        or decree of a court of competent jurisdiction (the time for appeal therefrom
        having expired and no appeal having been perfect­ed).  The term of
        this Agreement shall be extended until the Date of Termination.

      
        
          
          

        

        
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      (d)           Disability.  Termination
        of your employment by the Company for "Disability" shall mean termination
        because of your absence from your duties with the Company on a full-time
        basis
        for 180 consecutive days as a result of your incapacity due to physical or
        mental illness and your failure to return to the performance of your duties
        on a
        full-time basis during the 30-day period after Notice of Termination is
        given.

      

      (e)           Good
        Reason.  Termination by you of your employment for "Good Reason"
        shall mean termination based on any of the following:

      

      (i)           
         A change in your status or position(s) with the Company, which in your
        reasonable judgment, does not represent a promotion from your status or
        position(s) as in effect immediately prior to the change in control of the
        Company, or a change in your duties or responsibili­ties which, in your
        reasonable judgment, is inconsis­tent with such status or position(s), or
        any removal of you from, or any failure to reappoint or reelect you to, such
        position(s), except in connection with the termination of your employment
        for
        Cause or Disability or as a result of your death or by you other than for
        Good
        Reason.

      

      (ii)          
         A reduction by the Company in your base salary as in effect immediately
        prior to the change in control of the Company.

      

      (iii)           The
        failure by the Company to continue in effect any Plan (as hereinafter defined)
        in which you are participat­ing at the time of the change in control of the
        Company (or Plans providing you with at least substantial­ly similar
        benefits) other than as a result of the normal expiration of any such Plan
        in
        accordance with its terms as in effect at the time of the change in control
        of
        the Company, or the taking of any action, or the failure to act, by the Company
        which would adversely affect your continued participation in any of such
        Plans
        on at least as favorable a basis to you as is the case on the date of the
        change
        in control of the Company or which would materially reduce your benefits
        in the
        future under any of such Plans or deprive you of any material benefit enjoyed
        by
        you at the time of the change in control of the Company.

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

      (iv)           The
        failure by the Company to provide and credit you with the number of paid
        vacation days to which you are then entitled in accordance with the Company's
        normal vacation policy as in effect immediately prior to the change in control
        of the Company.

      

      (v)        
           The Company's requiring you to be based anywhere other than
        where your office is located immediately prior to the change in control of
        the
        Company except for required travel on the Company's business to an extent
        substantially consistent with the business travel obligations which you
        undertook on behalf of the Company prior to the change in control of the
        Company.

      

      (vi)         
          The failure by the Company to obtain from any successor the assent
        to this Agreement contemplated by section 8 hereof.

      

      (vii)           Any
        purported termination by the Company of your employment which is not effected
        pursuant to a Notice of Termina­tion satisfying the requirements of this
        Agree­ment; and for purposes of this Agreement, no such purported
        termination shall be effective.

      

      (viii)           Any
        refusal by the Company to continue to allow you to attend to matters or engage
        in activities not directly related to the business of the Company which,
        prior
        to the change in control of the Company, you were permitted by the Board
        to
        attend to or engage in.

      

      For
        purposes of this subsection, "Plan" shall mean any compensation plan such
        as an
        incentive or stock option plan or any employee benefit plan such as a thrift,
        pension, profit sharing, medical, disability, accident, life insurance plan,
        or
        a relocation plan or policy or any other plan, program, or policy of the
        Company
        intended to benefit employees.

       

      (f)           Notice
        of Termination.  A "Notice of Termination" of your employment
        given by the Company shall mean a written notice given to you of the termination
        of your employment which shall indicate the specific termination provision
        in
        this Agreement relied upon, and shall set forth in reasonable detail the
        facts
        and circumstanc­es claimed to provide a basis for termination of your
        employment under the provision so indicat­ed.

      

      (g)           Person.  The
        term "Person" shall mean and include any individual, corporation, partnership,
        group, association, or other "person," as such term is used in section 14(d)
        of
        the Exchange Act, other than the Company or any employee benefit plan(s)
        sponsored by the Company.

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

      7.            
        Notice.  For the purposes of this Agreement, notices and all
        other communications provided for in the Agreement shall be in writing and
        shall
        be deemed to have been duly given when delivered or mailed by United States
        certified or registered mail, return receipt requested, postage prepaid,
        addressed to the respective addresses set forth on the first page of this
        Agreement, provided that all notices to the Company shall be directed to
        the
        attention of the Chief Executive Officer of the Company with a copy to the
        Secretary of the Company, or to such other address as either party may have
        furnished to the other in writing in accordance herewith, except that notices
        of
        change of address shall be effective only upon receipt.

      

      8.            
        Successors; Binding Agreement.

      

      (a)           This
        Agreement shall inure to the benefit of, and be binding upon, any corporate
        or
        other successor or assignee of the Company which shall acquire, directly
        or
        indirectly, by merger, consolida­tion or purchase, or otherwise, all or
        substantially all of the business or assets of the Company.  The
        Company shall require any such successor, by an agreement in form and substance
        satisfactory to you, expressly to assume and agree to perform this Agreement
        in
        the same manner and to the same extent as the Company would be required to
        perform if no such succession had taken place.

      

      (b)           This
        Agreement shall inure to the benefit of and be enforce­able by your personal
        or legal representatives, execu­tors, adminis­trators, successors,
        heirs, distributees, devisees and legatees.  If you should die while
        any amount would still be payable to you hereunder if you had continued to
        live,
        all such amounts, unless otherwise provided herein, shall be paid in accordance
        with the terms of this Agreement to your devisee, legatee, or other designee
        or,
        if there is no such designee, to your estate.

      

      9.            
        Maximization of After-Tax Amounts.  Notwithstanding any other
        provision of this Agreement, and notwithstanding any other agreement or formal
        or informal compensation plan or arrangement, if you are a “disqualified
        individual,” as defined in Section 280G(c) of the Internal Revenue Code of
        1986, as amended (the “Code”), your right to receive any payment or benefit
        under this Agreement shall be limited to the extent
        that:  (i) such payment or benefit, taking into account any other
“payment in the nature of compensation” (within the meaning of Section 280G of
        the Code) to you or for your benefit (“Compensation”), would cause any payment
        or benefit under this Agreement to be considered a “parachute payment” within
        the meaning of Section 280G(b)(2) of the Code as then in effect (a
“Parachute Payment”) and (ii) as a result of receiving a Parachute
        Payment, the aggregate after-tax amount you would receive (under this Agreement
        and otherwise) would be less than the maximum after-tax amount that you could
        receive without causing any such payment or benefit to be considered a Parachute
        Payment.  In the event that the receipt of any such payment or benefit
        under this Agreement, in conjunction with your other Compensation, would
        cause
        you to be considered to have received a Parachute Payment that would have
        the
        effect of decreasing the after-tax amount received by you as described in
        clause (ii) of the preceding sentence, then you shall have the right, in
        your sole discretion, to designate any payments or benefits under this
        Agreement, and any other Compensation, that shall be reduced or eliminated
        so as
        to avoid having the payment or benefit to you under this Agreement be deemed
        to
        be a Parachute Payment.

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

      10.           Miscellaneous.  No
        provision of this Agreement may be modified, waived, or discharged unless
        such
        modification, waiver, or discharge is agreed to in a writing signed by you
        and
        the Chief Executive Officer or President of the Company.  No waiver by
        either party hereto at any time of any breach by the other party hereto of,
        or
        of compliance with, any condition or provision of this Agreement to be performed
        by such other party shall be deemed a waiver of similar or dissimilar provisions
        or conditions at the same, or at any prior or subsequent, time.  No
        agreements or representations, oral or otherwise, express or implied, with
        respect to the subject matter hereof have been made by either party which
        are
        not expressly set forth in this Agreement.  The validity,
        interpretation, construction, and performance of this Agreement shall be
        governed by laws of the State of New York without giving effect to the
        principles of conflict of laws thereof.

      

      11.           Legal
        Fees and Expenses.  The Company shall pay or reimburse any
        reasonable legal fees and expenses you may incur in connection with any legal
        action to enforce your rights under, or to defend the validity of, this
        Agreement.  The Company will pay or reimburse such legal fees and
        expenses on a regular, periodic basis upon presentation by you of a statement
        or
        statements prepared by your counsel in accordance with its usual
        practices.

      

      12.           Validity.  The
        invalidity or unenforceability of any provision of this Agreement shall not
        affect the validity or enforceability of any other provision of this Agreement,
        which shall remain in full force and effect.

      

      13.           Payments
        During Controversy.  Notwithstanding the pendency of any dispute
        or controversy, the Company will continue to pay you your full compensation
        in
        effect when the notice giving rise to the dispute was given (including, but
        not
        limited to, base salary and installments of incentive compensation) and continue
        you as a participant in all compensation, benefit, and insurance plans in
        which
        you were participating when the notice giving rise to the dispute was given,
        until the dispute is finally resolved in accordance with section
        7(c).  Amounts paid under this section are in addition to all other
        amounts due under this Agreement and shall not be offset against or reduce
        any
        other amounts due under this Agreement.  You shall be entitled to seek
        specific performance of your right to be paid until the Date of Termination
        during the pendency of any dispute or controversy arising under or in connection
        with this Agreement.

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

      14.           Illegality.  Anything
        in this Agreement to the contrary notwithstanding, this Agreement is not
        intended and shall not be construed to require any payment to you which would
        violate any federal or state statute or regulation, including without limitation
        the "golden parachute payment regulations" of the Federal Deposit Insurance
        Corporation codified to Part 359 of title 12, Code of Federal
        Regulations.

      

      If
        this letter correctly sets forth our
        agreement on the subject matter hereof, kindly sign and return to the Company
        the enclosed copy of this letter, which will then constitute our agreement
        on
        this subject.

      

      
        	 	
                Very
                  truly yours,

              
	 	 
	 	
                NBT
                  BANCORP INC.

              
	 	 
	 	 
	 	
                By:
                  /S/ Martin A. Dietrich

              
	 	 
	 	 
	 	
                AGREED
                  TO:

              
	 	 
	 	 
	 	
                /S/
                  Jeffrey M. Levy

              
	 	
                Jeffrey
                  M. Levy

              

      

       

       

    

     12ex10_6.htm

    
      

    

    
      Exhibit
        10.6

       

      AMENDED
        EMPLOYMENT AGREEMENT

      

      

      THIS
        AGREEMENT,
        effective May 7, 2007, is by and between HERSHA HOSPITALITY TRUST, a Maryland
        real estate investment trust (the Company), and HASU P. SHAH (the
“Executive”).

      

      WITNESSETH:

      

      WHEREAS,
        the Company and the Executive
        entered into an Employment Agreement effective as of January 1, 2005 (the
“Prior
        Agreement”); and

      

      WHEREAS,
        the Company and the Executive
        desire to amend the Prior Agreement in certain respects and otherwise continue
        the terms and conditions of the Prior Agreement as set forth
        herein;

      

      NOW,
        THEREFORE, in consideration of the
        premises and mutual obligations hereinafter set forth the parties agree as
        follows:

      

      1.           Employment.  The
        Company shall employ the Executive, and the Executive agrees to be so employed,
        as the Chairman of the Company’s Board of Trustees on the terms set forth
        herein.

      

      2.           Term.  The
        term (the "Term") of the Executive’s employment hereunder shall commence on May
        7, 2007 and unless earlier terminated in accordance with the terms hereof,
        shall
        expire on December 31, 2008, if written notice of non-renewal is given not
        later than July 3, 2008 by either party to the other party, and if no such
        notice is given, this Agreement shall continue until terminated by either
        party
        upon not less than one hundred eighty (180) days’ prior notice to the other
        party setting forth the effective date of termination (which may be given
        as
        early as July 4, 2008).  Notwithstanding the foregoing,
        termination of this Agreement and any termination of the Executive’s employment
        hereunder shall be subject to the provisions of Sections 9, 10 and 11 of
        this
        Agreement.

      

      3.           Services.  The
        Executive shall devote such amount of his time and attention to the Company’s
        affairs as are necessary to perform his duties to the Company as determined
        by
        the Company's Board of Directors (the "Board").  The Executive shall
        have authority and responsibility with respect to the day-to-day operations
        and
        management of the Company and Hersha Hospitality Limited Partnership (the
        "Partnership"), for which the Company currently serves as sole general partner,
        and the Company’s other subsidiaries ("Subsidiary") (collectively "Affiliates"),
        as well as implementation of the long range growth strategy of the Company
        and
        Affiliates consistent with direction from the Board.

      

      4.           Compensation.

      

      (a)           During
        the Term, the Company shall pay the Executive for his services an initial
        annual
        base salary of one hundred fifty thousand dollars ($150,000.00), to be paid
        in
        accordance with the Company’s regular payroll procedures, subject to any
        increases approved by the Board.

      

      (b)           In
        addition to the base salary, the Executive may be entitled to receive other
        incentive compensation, including but not limited to, grants of stock options
        or
        shares of stock of the Company, which awards shall be made (if at all) in
        consideration of and as an incentive for services performed solely for the
        Company, in accordance with rules and criteria established by the Compensation
        Committee and approved by the Board.  Such criteria may include, but
        not be limited to, the growth in the Company’s net income per share, funds from
        operations per share or other performance goals.

      

      5.           [Intentionally
        Left Blank]

      

      6.           Expenses.  The
        Company recognizes that the Executive will have to incur certain out-of-pocket
        expenses, including but not limited to travel expenses, related to his services
        and the Company’s business and the Company agrees to reimburse the Executive for
        all reasonable expenses necessarily incurred by him in the performance of
        his
        duties upon presentation of a voucher or documentation indicating the amount
        and
        business purposes of any such expenses and in accordance with applicable
        rules
        of the Internal Revenue Service.  The documentation and expense
        reimbursement payment must be completed no later than March 15 of the calendar
        year following the calendar year in which the Executive incurred the
        expense.

       

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

      7.           [Intentionally
        Left Blank]

      

      8.           Definitions.  For
        purposes of this Agreement, the following terms shall have the following
        definitions:

      

      (a)           "Voluntary
        Termination" means, subject to the provisions of Section 11 hereof, the
        Executive’s voluntary termination of his employment hereunder, which may be
        effected by the Executive giving the Board not less than sixty (60) days’ prior
        written notice of the Executive’s desire to terminate his employment as of a
        specified date or the Executive’s failure to provide the services described in
        Section 3 hereof for a period greater than four consecutive weeks by reason
        of
        the Executive’s voluntary refusal to perform such services as determined by the
        Board.  Notwithstanding the foregoing, if the Executive gives notice
        of Voluntary Termination and, prior to the expiration of the notice period,
        the
        Executive voluntarily refuses or fails to provide the services described
        in
        Section 3 hereof for a period greater than two consecutive weeks, the Company
        may, in its discretion, accelerate the Voluntary Termination effective the
        date
        on which the Executive so ceases to carry out his duties as determined by
        the
        Board.  For purposes of this Section 8, voluntary refusal to perform
        services shall not include taking vacation otherwise permitted, the Executive’s
        failure to perform services on account of his illness or the illness of a
        member
        of his immediate family (provided such illness is adequately substantiated
        at
        the reasonable request of the Company), or any other absence from service
        with
        the written consent of the Board.  A Voluntary Termination shall not
        include the Executive’s resignation with Good Reason following a Change in
        Control (as defined below).

      

      (b)           "Termination
        Without Cause" means the termination of the Executive’s employment by the
        Company for any reason other than Voluntary Termination or Termination With
        Cause.

      

      (c)           "Termination
        With Cause" means the termination of the Executive’s employment by
        act of the Board for any of the following reasons:

      

      (i)           the
        Executive’s conviction of a felony;

      

      (ii)           the
        Executive’s theft, embezzlement, misappropriation of or intentional and
        malicious infliction of damage to the Company’s (or its subsidiaries’) property
        or business opportunity;

      

      (iii)           the
        Executive’s breach of the covenants in Section 12 hereof;

      

      (iv)           the
        Executive’s neglect of his duties or responsibilities hereunder or his failure
        or refusal to follow any written direction of the Board or any duly constituted
        committee thereof, which failure continues for a period of twenty (20) calendar
        days after Company provides Employee written notice (other than as a result
        of
        the Executive’s physical or mental inability to perform the services described
        in Section 3 above, which is addressed in Section 10 below); and

      

      (v)           the
        Executive’s abuse of alcohol, drugs or other substances, or his engaging in
        other deviant personal activities in a manner that, in the reasonable judgment
        of the Board, adversely affects the reputation, goodwill or business position
        of
        the Company.

      

      9.           Voluntary
        Termination; Termination With Cause.  If
        (i) the Executive shall cease being an employee of the Company on account
        of a
        Voluntary Termination or (ii) there shall be a Termination With Cause, the
        Executive shall not be entitled to any compensation after the effective date
        of
        such Voluntary Termination or Termination With Cause (except base salary
        and
        vacation accrued but unpaid on the effective date of such event).  In
        the event of a Voluntary Termination (which shall not include the Executive’s
        resignation for Good Reason following a Change in Control as defined by
        Paragraph 11), or Termination With Cause, the Executive shall continue to
        be
        subject to the covenants contained in Section 12 hereof.

      

      10.           Death
        or Disability; Termination Without
        Cause.

      

      (a)           Upon
        (i) the death of the Executive, or (ii) Disability of the Executive, this
        Agreement shall terminate and the Company shall continue to pay the Executive
        or
        his heirs, devisees, executors, legatees or personal representatives, as
        appropriate, the payments of the Executive’s base salary then in effect through
        the month following the month in which such event occurs plus vacation accrued
        but unpaid as of the termination date.  For purposes hereof, a
        "Disability" means the Executive's becoming permanently disabled within the
        meaning of the Company's long-term disability plan then in effect for, or
        applicable to, the Executive.  If the Company does not provide any
        such benefit, then at the request of the Company, the Executive shall promptly
        make himself available for an examination by a physician selected by the
        Company
        who is board certified in a practice area selected by the Company, and to
        follow
        the recommendation of such physician regarding further examination and
        testing.  The issue to be presented to the physician for determination
        is whether the Executive suffers from a mental or physical incapacity which
        materially inhibits or prevents him from carrying out the duties of his
        full-time employment as described herein, and, if so, whether such condition
        is
        more likely than not to exist for a period in excess of one hundred twenty
        (120)
        days.  The Executive intends for the Company to be treated as
        Executive would be with respect to his rights regarding the use and disclosure
        of his individually identifiable health information or other medical
        records.  This release authority applies to any information governed
        by the Health Insurance Portability and Accountability Act of 1996 (a/k/a
        HIPAA), 42 USC 1320d and 45 CFR 160-164 and authorizes:  any
        physician, health-care professional, dentist, health plan, hospital, clinic,
        laboratory, pharmacy or other covered health-care provider, any insurance
        company and the Medical Information Bureau Inc. or other health-care
        clearinghouse that has provided treatment or services to him, or that has
        paid
        for or is seeking payment from him for such services, to give, disclose and
        release to the Company, without restriction, all of his individually
        identifiable health information and medical records regarding any past, present
        or future medical or mental health condition, including all information relating
        to the diagnosis and treatment of HIV/AIDS, sexually transmitted diseases,
        mental illness, and drug or alcohol abuse.

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

      (b)           Upon
        a Termination Without Cause, the non-recruitment restrictions contained in
        Section 13(a)(iii) shall apply, except for a Termination Without Cause during
        the 12-month period following a Change of Control (as defined
        below).  In all other respects, upon a Termination Without Cause
        (other than a Termination Without Cause during the 12 month period following
        a
        Change of Control (as defined below), which shall be governed by the provisions
        of Section 11 below) this Agreement shall terminate and, subject to Section
        12
        below,  the Company shall make a lump sum payment to the Executive
        within ten (10) days after Termination Without Cause equal to the sum of
        the
        Executive’s accrued but unused vacation to the date of termination plus the
        amount of the Executive’s monthly base salary then in effect for the lesser of
        12 months or the number of months (including a fractional month) remaining
        in
        the Term.

      

      11.           Change
        of Control Compensation.

      

      (a)           Compensation.  Subject
        to Section 11(e) below, in the event of a Termination Without Cause or the
        Executive’s resignation for Good Reason (as defined below) within 12 months
        following a Change of Control (as defined below), the Company shall (i) fully
        vest the Executive in any outstanding share awards and stock options that
        have
        not previously vested or become exercisable, (ii) pay the Executive any base
        salary and expenses reimbursable to the Executive by the Company, each through
        the date of the termination, (iii) pay a benefit (the “Change of Control Bonus”)
        equal to two (2) times the sum of (x) the Executive’s then annual base
        salary, (y) the maximum annual bonus that the Executive could earn for
        the year that includes the date of termination (or if no maximum bonus amount
        has been set, the Executive’s target bonus for that year) and (z) the
        fair market value (determined as of the date of the Change of Control (as
        defined below)) of the share award(s) received by the Executive for the year
        that includes the date of termination (or if no share awards were made in
        that
        year, the next preceding year in which the Executive received a share award)
        and
        (iv) pay the insurance benefit described below.  Subject to Section 12
        below, the base salary, expense reimbursement and Change of Control Bonus
        shall
        be paid in one lump sum within ten days after the Executive’s Termination
        Without Cause of the Executive’s resignation for Good Reason.  In
        addition, the Company shall cause the Executive’s insurance benefits, as in
        effect immediately prior to the termination, to remain in effect for eighteen
        (18)  months following the date of termination upon the same terms,
        and at the same cost to the Executive, as in effect immediately prior to
        termination.  The Executive shall also receive payment of accrued but
        unused vacation to the date of termination.

      

      (b)           A
        "Change of Control", for purposes of this Agreement, shall be deemed to
        have occurred if, at any time during the Term, any of the following events
        occurs:

      

      (i)           any
        "person", as that term is used in Section 13(d) and Section 14(d)(2) of the
        Securities Exchange Act of 1934, as amended (the "Exchange Act"), becomes,
        is
        discovered to be, or files a report on Schedule 13D or 14D-1 (or any successor
        schedule, form or report) disclosing that such person is, a beneficial owner
        (as
        defined in Rule 13d-3 under the Exchange Act or any successor rule or
        regulation), directly or indirectly, of securities of the Company representing
        20% or more of the combined voting power of the Company’s then outstanding
        securities entitled to vote generally in the election of
        directors;

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

      (ii)           individuals
        who, as of the election to the Board of Directors of the Company, without
        the
        recommendation or approval of the incumbent Board of Directors constituting
        a
        majority of the numbers of directors of Company then in office;

      

      (iii)           the
        Company is merged, consolidated or reorganized into or with another corporation
        or other legal person, or securities of the Company are exchanged for securities
        of another corporation or other legal person, and immediately after such
        merger,
        consolidation, reorganization or exchange less than a majority of the combined
        voting power of the then-outstanding securities of such corporation or person
        immediately after such transaction are held, directly or indirectly, in the
        aggregate by the holders of securities entitled to vote generally in the
        election of directors of the Company immediately prior to such
        transaction;

      

      (iv)           the
        Company in any transaction or series of related transactions, sells all or
        substantially all of its assets to any other corporation or other legal person
        and less than a majority of the combined voting power of the then-outstanding
        securities of such corporation or person immediately after such sale or sales
        are held, directly or indirectly, in the aggregate by the holders of securities
        entitled to vote generally in the election of directors of the Company
        immediately prior to such sale;

      

      (v)           the
        Company and its affiliates shall sell or transfer of (in a single transaction
        or
        series of related transactions) to a non-affiliate business operations or
        assets
        that generated at least two-thirds of the consolidated revenues (determined
        on
        the basis of the Company’s four most recently completed fiscal quarters for
        which reports have been filed under the Exchange Act) of the Company and
        its
        subsidiaries immediately prior thereto;

      

      (vi)           the
        Company files a report or proxy statement with the Securities and Exchange
        Commission pursuant to the Exchange Act disclosing in response to Form 8-K
        (or
        any successor, form or report or item therein) that a change in control of
        the
        Company has occurred; or

      

      (vii)           any
        other transaction or series of related transactions occur that have
        substantially the effect of the transactions specified in any of the preceding
        clauses in this sentence.

      

      (c)           Certain
        Transactions.  Notwithstanding the provisions of Section 11(b)(i)
        or 11(b)(vi) hereof, unless otherwise determined in a specific case by majority
        vote of the Board of Directors of the Company, a Change of Control shall
        not be
        deemed to have occurred for purposes of this Agreement solely because (i)
        the
        Company, (ii) an entity in which the Company directly or indirectly beneficially
        owns 20% or more of the voting securities or (iii) any Company-sponsored
        employee stock ownership plan, or any other employee benefit plan of the
        Company, either files or becomes obligated to file a report or a proxy statement
        under or in response to Schedule 13D, Schedule 14D-1, Form 8-K or Schedule
        14A
        (or any successor schedule, form or report or item thereon) under the Exchange
        Act, disclosing beneficial ownership by it of shares of stock of the Company,
        or
        because the Company reports that a Change of Control of the Company has or
        may
        have occurred or will or may occur in the future by reason of such beneficial
        ownership.

      

      (d)           Good
        Reason.  "Good Reason," for purposes of this Agreement, shall be
        deemed to mean any of the following:

      

      (i)           a
        change in the Executive’s position or responsibilities (including reporting
        responsibilities) which materially diminishes the Executive’s position or
        responsibilities as in effect immediately prior to a Change of Control; the
        assignment to the Executive of any duties or responsibilities which are
        materially inconsistent with such position or responsibilities; or any removal
        of the Executive from or failure to reappoint or reelect the Executive to
        any of
        such positions, except in connection with a Termination with Cause as defined
        in
        Section 8(c) as a result of the Executive’s death or Disability, or by Voluntary
        Termination;

      

      (ii)           a
        reduction (unless performance justified) in the Executive’s base salary bonus
        arrangement as in effect on the date hereof or as the same may be increased
        from
        time to time;

      

      (iii)           the
        Company’s requiring the Executive to be based at any place other than a location
        within a thirty-mile radius of Harrisburg, Pennsylvania or Philadelphia,
        Pennsylvania, except for reasonably required travel on the Company’s business
        which is not materially greater than such travel requirements prior to the
        Change of Control;

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

      (iv)           the
        failure by the Company to continue to provide the Executive with compensation
        and benefits provided for under this agreement or benefits substantially
        similar
        to those provided to the Executive under any of the employee benefit plans
        in
        which the Executive is or becomes a participant, or the taking of any action
        by
        the Company which would directly or indirectly materially reduce any of such
        benefits or deprive the Executive of any material fringe benefit enjoyed
        by the
        Executive at the time of the Change of Control;

      

      (v)           any
        material breach by the Company of any provision of this Agreement;
        or

      

      (vi)           the
        failure of the Company to obtain a satisfactory agreement from any successor
        or
        assign of the Company to assume and agree to perform this
        Agreement.

      

                              
          (e)               Limitation
        on Benefits.

      (i)           The
        benefits that the Executive may be entitled to receive under this Agreement
        and
        other benefits that the Executive is entitled to receive under other plans,
        agreements and arrangements (which, together with the benefits provided under
        this Agreement, are referred to as “Payments”), may constitute Parachute
        Payments that are subject to Sections 280G and 4999 of the Internal Revenue
        Code
        of 1986 (the “Code”).  As provided in this Section 11(e), the
        Parachute Payments will be reduced if, and only to the extent that, a reduction
        will allow the Executive to receive a greater Net After Tax Amount than the
        Executive would receive absent a reduction.

       

      (ii)           The
        Accounting Firm will first determine the amount of any Parachute Payments
        that
        are payable to the Executive.  The Accounting Firm also will determine
        the Net After Tax Amount attributable to the Executive’s total Parachute
        Payments.

       

      (iii)           The
        Accounting Firm will next determine the largest amount of Payments that may
        be
        made to the Executive without subjecting the Participant to tax under Section
        4999 of the Code (the “Capped Payments”).  Thereafter, the Accounting
        Firm will determine the Net After Tax Amount attributable to the Capped
        Payments.

       

      (iv)           The
        Executive will receive the total Parachute Payments or the Capped Payments,
        whichever provides the Executive with the higher Net After Tax
        Amount.  If the Executive will receive the Capped Payments, the total
        Parachute Payments will be adjusted by first reducing the amount of any noncash
        benefits under this Agreement or any other plan, agreement or arrangement
        (with
        the source of the reduction to be directed by the Executive) and then by
        reducing the amount of any cash benefits under this Agreement or any other
        plan,
        agreement or arrangement (with the source of the reduction to be directed
        by the
        Executive).  The Accounting Firm will notify the Executive and the
        Company if it determines that the Parachute Payments must be reduced to the
        Capped Payments and will send the Executive and the Company a copy of its
        detailed calculations supporting that determination.

       

      (v)           As
        a result of the uncertainty in the application of Sections 280G and 4999
        of the
        Code at the time that the Accounting Firm makes its determinations under
        this
        Section 11(e), it is possible that amounts will have been paid or distributed
        to
        the Executive that should not have been paid or distributed under this Section
        11(e) (“Overpayments”), or that additional amounts should be paid or distributed
        to the Executive under this Section 11(e) (“Underpayments”).  If the
        Accounting Firm determines, based on either the assertion of a deficiency
        by the
        Internal Revenue Service against the Company or the Executive, which assertion
        the Accounting Firm believes has a high probability of success or controlling
        precedent or substantial authority, that an Overpayment has been made, that
        Overpayment will be treated for all purposes as a loan ab initio that
        the Executive must repay to the Company together with interest at the applicable
        Federal rate under Section 7872 of the Code; provided, however, that no loan
        will be deemed to have been made and no amount will be payable by the Executive
        to the Company unless, and then only to the extent that, the deemed loan
        and
        payment would either reduce the amount on which the Executive is subject
        to tax
        under Section 4999 of the Code or generate a refund of tax imposed
        thereunder.  If the Accounting Firm determines, based upon controlling
        precedent or substantial authority, that an Underpayment has occurred, the
        Accounting Firm will notify the Executive and the Company of that determination
        and the amount of that Underpayment will be paid to the Executive promptly
        by
        the Company.

       

      (vi)           For
        purposes of this Section 11(e), the term “Accounting Firm” means the independent
        accounting firm engaged by the Company immediately before the Control Change
        Date.  For purposes of this Section 11(e), the term “Net After Tax
        Amount” means the amount of any Parachute Payments or Capped Payments, as
        applicable, net of taxes imposed under Sections 1, 3101(b) and 4999 of the
        Code
        and any State or local income taxes applicable to the Executive on the date
        of
        payment.  The determination of the Net After Tax Amount shall be made
        using the highest combined effective rate imposed by the foregoing taxes
        on
        income of the same character as the Parachute Payments or Capped Payments,
        as
        applicable, in effect on the date of payment.  For purposes of this
        Section 11(e), the term “Parachute Payment” means a payment that is described in
        Section 280G(b)(2) of the Code, determined in accordance with the regulations
        promulgated or proposed thereunder.

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

      12.           Section
        409A.  The Company and the Executive intend that the
        benefits and payments provided under this Agreement shall be exempt from
        the
        requirements of Section 409A of the Code (“Section
        409A”).  Notwithstanding that intent, if the Company determines that
        any benefit or payment under this Agreement is, or may reasonably be expected
        to
        be, subject to Section 409A, then such benefit shall be provided and such
        payment shall be made in a manner that complies with Section 409A and the
        regulations and other guidance issued pursuant to Section 409A.  By
        way of example, if the Company determines that the Change of Control Bonus
        is
        subject to Section 409A and that the Executive is a “specified employee” (as
        defined for purposes of Section 409A), then the payment of the Change of
        Control
        Bonus shall be postponed until the first day of the seventh month beginning
        after the Executive’s termination.  If any cash payment under this
        Agreement is postponed on account of the application of Section 409A, then
        such
        payment shall accrue interest at the applicable federal rate provided for
        in
        Section 7872(f)(2)(A) of the Code from the date that the payment is due under
        this Agreement (but for the requirements of Section 409A) until the date
        of
        payment.

      

      13.           Protection
        of Confidential Information; Noncompetition;
        Non-Recruitment

      

      (a)           Covenant.  The
        Executive acknowledges that his employment by the Company, will, throughout
        the
        Term, bring him into close contact with many confidential affairs of the
        company, including, without limitation, information about ownership of the
        company, customer lists, costs, profits, markets, sales, key personnel, pricing
        polices, and other business affairs and methods and other information not
        readily available to the public, and plans for future
        development.  The Executive further acknowledges that the services to
        be performed under this Agreement are of a special, unique, unusual,
        extraordinary and intellectual character.  In recognition of the
        foregoing, Executive covenants and agrees:

      

      (i)           the
        Executive shall use all reasonable efforts to protect the confidential matters
        of the Company and shall keep secret all such confidential matters, including
        without limitation, the terms and provisions of this Agreement, and shall
        not
        intentionally disclose such matters to anyone outside of the Company except
        as
        required in the performance of his duties under this Agreement, either during
        or
        after the Term, except with the Company’s written consent, provided
        that:  (1) Executive shall have no such obligation to the extent such
        matters are or become publicly known other than as a result of Executive’s
        breach of his obligations hereunder; (2) Executive may, after giving prompt
        written notice to the Company to the extent practicable under the circumstances,
        disclose such matters to the extent required by applicable laws or governmental
        regulations or judicial or regulatory proceedings; and (3) Executive may
        disclose the terms and provisions of this Agreement to his spouse and legal
        tax
        and financial advisors, provided however, they agree in writing to be bound
        by
        the confidentiality provisions hereof;

      

      (ii)           The
        Executive shall deliver promptly to the Company on termination of his employment
        by the Company, or at any other time the Company may so request, at the
        Company’s expense, all memoranda, notes, records, reports and other documents,
        and all copies thereof relating to the Company’s business, which Executive
        obtained while employed, or otherwise serving or acting on behalf of, the
        Company and which he may then possess or have under his control other than
        publicly available documents or documents related to the terms and conditions
        of
        Executive employment;

      

      (iii)           Non-Recruitment.  Independent
        of the foregoing provisions, the Executive agrees that, during the term of
        the
        Executive’s employment by the Company and for a period of twelve (12) months
        thereafter, except for a Termination without Cause during the 12 month period
        following a Change of Control or a Voluntary Termination for Good Reason
        during
        the 12 month period following a Change of Control, the Executive shall not,
        without the prior written consent of the Company:  (1) directly or
        indirectly, cause any person engaged or employed by the Company or any of
        its
        subsidiaries, (whether part-time or full-time and whether as an officer,
        employee, consultant, agent, adviser or independent contractor) to voluntarily
        leave the employ of or engagement with, the Company or any of its subsidiaries
        or to cease providing services to or on behalf of the Company or any of its
        subsidiaries, or (2) in any manner seek to engage or employ any such person
        (whether or not for compensation) as an officer, employee, consultant, agent,
        adviser or independent contractor for any person other than the Company or
        any
        of its subsidiaries (other than legal or accounting advisors).

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

      (b)           Noncompete.  The
        Executive expressly covenants and agrees that he will not directly or
        indirectly, without the prior written consent of the Board, at any time while
        employed by the Company and for a period of one year (plus the length of
        time
        that Executive is in violation of this provision) following the date of that
        Executive’s employment terminates (1) for cause (as defined in Section 8(c)) or
        (2) for voluntary termination (as defined by Section 8(a)), other than for
        Good
        Reason following a Change in Control (as defined in Section 11), enter into
        or
        engage generally in direct or indirect competition with the Company either
        as an
        individual on his own or as a partner or joint venture, or as a director,
        officer, shareholder, employee or agent for any person nor render any services
        to any person or entity that competes with the Company or any
        Affiliate.  For the purposes of this Section, the Executive or any
        person or entity shall be deemed to "compete" with the Company or any Affiliate
        if the Executive personally engages, owns or provides services to any entity
        engaged in the ownership or management of hospitality units located in the
        United States east of the Mississippi including but not limited to Ashford
        Hospitality Trust, Inc., Boykin Lodging Company, Equity Inns, Inc., Highland
        Hospitality Corp., Innkeepers USA Trust, LaSalle Hotel Properties and Winston
        Hotels, Inc.

      

      (c)           Specific
        Remedy — Injunctive Relief.  The parties agree that the
        restrictions outlined in Sections 13(a) and (b) are reasonable and necessary
        protections of the immediate interests of the Company and that the Company
        would
        not have entered into this Agreement without receiving additional consideration
        offered by Executive and binding himself to these restrictions.  In
        addition to such other rights and remedies as the Company may have at equity
        or
        in law with respect to any breach of this Agreement, if Executive commits
        a
        breach of any of the provisions of Section 13(a) or 13(b), the Company shall
        have the right and remedy to have such provision specifically enforced by
        any
        Court having equity jurisdiction, it being acknowledged and agreed that any
        such
        breach or threatened breach will cause irreparable injury to the Company
        and
        that monetary damages will not provide an adequate remedy to the
        Company.  In the event that, notwithstanding the foregoing, a
        restriction or any portion thereof, contained in Section 13(a) or 13(b) is
        deemed to be unreasonable by a court of competent jurisdiction, Executive
        and
        the Company agree that such restriction, or portion thereof, shall be modified
        in order to make it reasonable and shall be enforceable
        accordingly.

      

      (d)           Consideration.  The
        parties acknowledge the requirement that the currently employed Executive
        be
        provided good and valuable consideration for providing the restrictions set
        forth in Section 13(a) and 13(b).  Therefore, in consideration of the
        foregoing restrictions, the Company shall allow the Executive to participate
        in
        the Company’s long-term incentive program, the terms of which shall be
        separately specified and incorporated by reference herein.

      

      14.           Notices.  All
        notices or deliveries authorized or required pursuant to this Agreement shall
        be
        deemed to have been given when in writing and personally delivered or when
        deposited in the U.S. mail, certified, return receipt requested, postage
        prepaid, addressed to the parties at the following addresses or to such other
        addresses as either may designate in writing to the other party:

      

      

      
        	To
                the Company:	 	Hersha
                Hospitality Trust	 
	 	 	
                44
                  Hersha Drive

              	 
	 	 	
                Harrisburg,
                  PA 17102

              	 
	 	 	 	 
	
                To
                  the Executive:

              	 	
                Hasu
                  P. Shah

              	 
	 	 	 	 
	 	 	 	 

      

      

      15.           Entire
        Agreement; Prior Agreement.  This
        Agreement contains the entire understanding between the parties hereto with
        respect to the subject matter hereof and shall not be modified in any manner
        except by instrument in writing signed, by or on behalf of the parties hereto;
        provided, however, that any amendment or termination of the covenant of
        noncompetition in Section 13 must be approved by a majority of the directors
        of
        the Company other than the Executive, if the Executive is then a director
        of the
        Company.  This Agreement shall be binding upon and inure to the
        benefit of the heirs, successors and assigns of the parties
        hereto.  This Agreement supersedes and replaces the Prior Agreement
        and the Prior Agreement shall have no further force or effect after the
        execution of this Agreement.

      

      16.           Arbitration.

      

      (a)           All
        disputes (except for those arising pursuant to Section 13) arising out of,
        relating to or concerning this Agreement, the breach of this Agreement, the
        employment of Executive, or the termination of Executive's employment shall
        be
        resolved pursuant to this Section 16.  This includes all claims or
        disputes whether arising in tort or contract and whether arising under statute
        or common law, including Title VII, the ADA, the ADEA, and all other federal
        and
        state employment statutes.  Any such dispute will be resolved by
        arbitration held in Harrisburg, Pennsylvania under the Employment Dispute
        rules
        of the American Arbitration Association.  This agreement to arbitrate
        will be specifically enforceable.

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

      (b)           Executive
        and Company agree that he or it must file any arbitration with the AAA and
        serve
        on the other party within sixty (60) days after the date on which the dispute
        arose.

      

      (c)           Subject
        to Section 16(e) below, each party shall bear its own expenses for arbitration,
        including attorney and witness fees and expenses, except that the fee of
        the
        arbitrator shall be borne solely by the Company.

      

      (d)           Upon
        a request for arbitration under this Agreement, the parties shall confer
        with
        each other for the purpose of attempting to select a single independent
        arbitrator.  In the event that the parties cannot agree to the
        selection of an arbitrator within thirty days of notice of arbitration, three
        (3) individuals shall serve as arbitrators in accordance with the Expedited
        Procedures of the Commercial Arbitration Rules of the American Arbitration
        Association.  One of the arbitrators shall be selected by Executive
        and another by Company.  The two arbitrators so selected shall select
        a third arbitrator.  The finding of a majority of the arbitrators
        shall be final and binding on the parties.  The agreement to arbitrate
        shall be specifically enforceable under applicable law in any court having
        jurisdiction.

      

      (e)           The
        prevailing party in connection with such arbitration shall be entitled to
        recover from the other party reasonable sums as attorney fees and expenses
        in
        connection with such action, except that the fee of the arbitrator shall
        be
        borne solely by the Company regardless of outcome.

      

      (f)           The
        arbitrators will have no authority to extend, modify, or suspend any of the
        terms of this Agreement.  The arbitrators will make the award in
        writing and shall accompany it with an opinion discussing the evidence and
        setting forth the reasons for the award.  The decision of the
        arbitrators within the scope of the submission will be final and binding
        on both
        parties, and any right to judicial action on any matter subject to arbitration
        hereunder is waived (unless otherwise required by applicable law), except
        suit
        to enforce this arbitration award and any rights to vacate or modify the
        arbitration award in accordance with the Uniform Arbitration Act as enacted
        in
        Pennsylvania.  The arbitrators shall have authority to award all
        relief provided for by such relevant laws at issue.  If the rules of
        the AAA differ from those of this Section, the provisions of this Agreement
        will
        control.

      

      17.           Applicable
        Law.  Except to the extent pre-empted by
        federal law, this Agreement shall be construed in accordance with the laws
        of
        the Commonwealth of Pennsylvania without regard to internal conflict of law
        principles and any litigation or legal action concerning this Agreement,
        not
        otherwise waived or subject to arbitration, shall be brought before a state
        or
        federal court of competent jurisdiction in Harrisburg,
        Pennsylvania.

      

      18.           Assignment.  The
        Executive acknowledges that his services are unique and
        personal.  Accordingly, the Executive may not assign his rights or
        delegate his duties or obligations under this Agreement.  The
        Company’s rights and obligations under this Agreement shall inure to the benefit
        of and shall be binding upon the Company’s successors and assigns.

      

      19.           Headings.  Headings
        in this Agreement are for convenience only and shall not be used to interpret
        or
        construe its provisions.

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

      IN
        WITNESS WHEREOF, the Parties hereto
        have executed this Employment Agreement as of the date first set forth
        above.

      

      
        

          
            	 	
                    HERSHA
                      HOSPITALITY TRUST

                  
	 	 	 
	 	 	 
	 	
                    BY:

                  	/s/
                    Michael A. Leven	 
	 	 	
                    Michael
                      A. Leven, Lead Trustee

                  
	 	 	
                    Board
                      of Trustees

                  
	 	 	 
	 	 	 
	 	
                    EXECUTIVE

                  
	 	 	 
	 	 	 
	 	/s/
                    Hasu P. Shah 	 
	 	Hasu
                    P. Shah

          

        

      

       

    

     

    9

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