Document:

ex10_96.htm

Exhibit 10.96

 

PERFORMANCE SHARE AND RESTRICTED STOCK AWARD AGREEMENT

THIS PERFORMANCE SHARE AND RESTRICTED STOCK AWARD AGREEMENT (the “Agreement”) is made and entered into effective as of the 25th day of March, 2011 by and between CHROMCRAFT REVINGTON, INC. (the “Company”), a Delaware corporation, and RONALD H. BUTLER (the “Executive”), who is the Chairman and Chief Executive Officer of the Company,

WITNESSETH:

WHEREAS, the Compensation Committee of the Board of Directors of the Company (the “Compensation Committee”) has determined that the Executive should be granted an award opportunity of performance shares under the Company’s 2007 Executive Incentive Plan, as currently or hereafter in effect (the “Plan”), for the performance period beginning on January 1, 2011 and ending on December 31 2011, which shares, if earned, would be converted into restricted common stock of the Company (and/or a cash payment in lieu of any shares of Restricted Stock); and

WHEREAS, the Compensation Committee has approved the award of performance shares contemplated by this Agreement, and the Board of Directors of the Company has authorized and approved the issuance of shares of restricted common stock into which the performance shares may be converted if earned; and

WHEREAS, the Plan, this Agreement and Exhibit A hereto, which exhibit is made a part of this Agreement and is incorporated herein by reference, contain the terms, conditions and restrictions of such performance shares and, if converted into restricted stock and/or cash in lieu thereof, such shares of restricted stock and such cash payment.

NOW, THEREFORE, in consideration of the foregoing premises, the award of performance shares to the Executive, the respective covenants, agreements and obligations contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Executive hereby agree as follows:

Section 1.          Capitalized Terms.  All capitalized terms used but not otherwise defined in this Agreement or in Exhibit A hereto shall have the same meaning ascribed to such terms in the Plan.

Section 2.          Award of Performance Shares.  Subject to the terms and conditions of the Plan and this Agreement, the Company hereby grants to the Executive an Award of performance shares, the number of which shall be determined as set forth in Exhibit A hereto and which shares shall be maintained by the Company under the Plan and be subject to and restricted in accordance with the Plan and this Agreement (the “Performance Shares”).  If earned, the Performance Shares shall be converted into shares of restricted common stock of the Company (and/or a cash payment in lieu of any shares of Restricted Stock) as set forth in Exhibit A hereto.  All shares of restricted common stock shall be issued under the Plan and be subject to and restricted in accordance with the Plan and this Agreement (the “Restricted Stock”).  Any cash payment made in lieu of any shares of Restricted Stock shall be subject to and restricted in accordance with the Plan and this Agreement.

 

  

  

  

Section 3.          Award Date.  The Award Date for the Award of Performance Shares is March 24, 2011.

Section 4.          Earning of Performance Shares and Vesting of Restricted Stock.  The Performance Period, Performance Measures, performance targets for each of the Performance Measures, Award Rates, manner of converting the Performance Shares into Restricted Stock and/or cash in lieu thereof and vesting schedule relating to the shares of Restricted Stock and/or cash in lieu thereof are set forth in Exhibit A hereto.  In order for the Executive to earn any portion of the Performance Shares, the Compensation Committee must first make a determination that the Award of Performance Shares (or any portion thereof) has been earned.  In order for the shares of Restricted Stock and/or the cash payment in lieu thereof to become vested, the Compensation Committee must first make a determination that such shares and/or cash payment have been so vested.

If the Compensation Committee makes a determination that any portion of the Award of Performance Shares has been earned, then such shares shall promptly be converted in the sole discretion of the Board of Directors of the Company into shares of Restricted Stock (and/or a cash payment in lieu of any or all shares of Restricted Stock), subject to a vesting requirement as set forth in Exhibit A hereto.  If shares of Restricted Stock (and/or the cash payment in lieu thereof) become vested, then they shall be free of restriction, except as may be provided by applicable law, and risk of forfeiture.

If the Compensation Committee makes a determination that any portion of the Award of Performance Shares has not been earned, then such shares shall be forfeited and the Executive shall have no right or claim to any Performance Shares and no right or claim to have such shares converted into Restricted Stock.  If shares of Restricted Stock are issued to the Executive (and/or the cash payment in lieu thereof is accrued for the benefit of the Executive) but do not subsequently become vested, then such shares and cash payment shall be forfeited and the Executive shall have no right or claim to such shares.

Notwithstanding the foregoing or anything to the contrary set forth in the Plan, with respect to Performance Shares and shares of Restricted Stock (and/or the cash payment in lieu thereof) being treated as earned and vested, respectively, Section 11 of this Agreement shall control in the event of (a) a Change in Control, or (b) a termination of the Executive’s employment with the Company for any reason.

Section 5.          Dividend, Voting and Other Rights.  The Performance Shares shall not be issued or outstanding for any corporate purposes and the Executive shall not have any right to (a) receive any dividends or distributions, if any, with respect to the Performance Shares, (b) exercise any voting rights with respect to the Performance Shares, or (c) exercise or possess any other rights and attributes of ownership of common stock of the Company by virtue of the Award of Performance Shares.  If the Performance Shares are earned and converted into shares of Restricted Stock, such shares of Restricted Stock shall be issued and outstanding for all corporate purposes and the Executive shall be entitled during the vesting period of the Restricted Stock to (x) receive all dividends and distributions, if any, paid with respect to the unvested shares of Restricted Stock, (y) exercise all voting rights with respect to the unvested shares of Restricted Stock, and (z) exercise and possess all other rights and attributes of ownership with respect to the unvested shares of Restricted Stock, except as provided otherwise in the Plan and this Agreement.

 

  

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Section 6.          Certain Agreements of the Executive.  The Executive hereby understands and agrees as follows:

(a)          the Executive is the Chief Executive Officer of the Company;

(b)          none of the Performance Shares and, if issued, none of the shares of Restricted Stock will be registered or qualified by the Company under any federal or state securities laws in reliance upon certain exemptions from registration or qualification under such laws;

(c)          because the shares of Restricted Stock, if issued, will not be registered or qualified under any federal or state securities laws and because the Executive may be deemed to be an affiliate of the Company under the federal securities laws, such shares upon vesting will be subject to restrictions on resale and transfer imposed by applicable federal and state law;

(d)          the Executive is (and his heirs, executors, administrators and representatives are) bound by, and the Performance Shares are and, if issued, the shares of Restricted Stock shall be, subject to, the terms, conditions and restrictions set forth in the Plan, this Agreement, the Company’s Certificate of Incorporation and By-Laws and applicable law (all as currently or hereafter in effect);

(e)          there is no obligation of the Company to have any shares of the Company’s common stock (including, but not limited to, the shares of Restricted Stock, if issued) listed, traded or quoted on any securities exchange or on any quotation system or other established trading market;

(f)           no representations, promises or commitments have been made to the Executive relating to (i) the repurchase by the Company of any Performance Shares or, if issued, any shares of Restricted Stock (whether before or after any of such shares may become earned or vested), or (ii) the amount of dividends or distributions, the percentage of profit or the return on investment, if any, that he might expect to receive as a result of the Award of the Performance Shares or, if issued, the ownership of shares of Restricted Stock (whether before or after any of such shares may become earned or vested); and

(g)          the Performance Shares and, if issued, the shares of Restricted Stock shall be held by the Executive for his own account and not for another person and not with a view toward resale, distribution, subdivision or fractionalization of such shares.

Section 7.          Non-transferability.  Except in the event of the Executive’s death and then only in the manner set forth in the Plan, the Performance Shares (a) cannot be sold, transferred, assigned, margined, encumbered, bequeathed, gifted, alienated, hypothecated, pledged or otherwise disposed of, nor can a lien, security interest or option be placed thereon, whether by operation of law, whether voluntarily or involuntarily, or otherwise, (b) are not subject to execution, attachment or similar process or otherwise available to the creditors of the Executive, and (c) cannot be used to satisfy, pay or set-off against any debts or obligations of the Executive to the Company or any other party.  Except in the event of the Executive’s death and then only in the manner set forth in the Plan, the shares of Restricted Stock (x) cannot be sold, transferred, assigned, margined, encumbered, bequeathed, gifted, alienated, hypothecated, pledged or otherwise disposed of, nor can a lien, security interest or option be placed thereon, whether by operation of law, whether voluntarily or involuntarily, or otherwise, (y) are not subject to execution, attachment or similar process or otherwise available to the creditors of the Executive, and (z) cannot be used to satisfy, pay or set-off against any debts or obligations of the Executive to the Company or any other party.  At such time as shares of Restricted Stock, if issued, may become vested, such vested shares may be sold, transferred, bequeathed, gifted or otherwise disposed of in accordance with applicable law and the requirements then in effect of the principal securities exchange or market (or of any quotation system or other established trading market) on which the Company’s shares of common stock are then listed or traded, if any.  Any attempted or purported sale, transfer, disposition or other act in breach of or contrary to this Section shall be null and void and of no force or effect whatsoever.

 

  

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Section 8.          Issuance of Shares.  Promptly following the execution of this Agreement, the Company shall maintain the Performance Shares only in book-entry form either in the name of or for the benefit of the Executive.  If the Performance Shares are earned and converted into shares of Restricted Stock, the Company shall promptly issue the required number of shares of Restricted Stock either in the name or for the benefit of the Executive.  Until the time that the shares of Restricted Stock become vested or are forfeited, (a) the Company shall maintain the unvested shares only in book-entry form in the name or for the benefit of the Executive, (b) the Company shall not issue any certificate representing any unvested shares of Restricted Stock in the name or for the benefit of the Executive, (c) the Executive shall not be entitled to hold any unvested shares in “street name,” and (d) such unvested shares shall be outstanding for all corporate purposes.  Upon request by the Executive following the date on which shares of Restricted Stock become vested, the Company shall release such vested shares to the Executive and shall, in accordance with the instructions of the Executive, either cause such shares to be placed in “street name” with a broker designated by the Executive or issue a stock certificate representing such shares in the name of the Executive with a legend in substantially the following form imprinted thereon:

RESTRICTIONS ON TRANSFER

The securities represented by this Certificate have not been registered or qualified under the Securities Act of 1933, as amended (the “Act”), the laws of the State of Delaware or any other state securities laws and may not be sold, transferred, gifted, pledged or otherwise disposed of in the absence of such registration or qualification or an exemption therefrom under the Act and any applicable state securities laws.

Section 9.          Income and Employment Tax Withholding.  All applicable federal, state and local income and employment taxes (and all interest and penalties thereon) that arise or are imposed by virtue of the Award of Performance Shares and the Restricted Stock (including, but not limited to, the Performance Shares having become earned, the conversion of the Performance Shares into Restricted Stock and the shares of Restricted Stock having become vested) shall be the responsibility of and paid by the Executive.  The Company shall have the right to require payment to it from the Executive of the taxes and other charges required by law to be withheld as a result of the Performance Shares having been earned and the shares of Restricted Stock having become vested.  The Company also is hereby entitled, and the Executive hereby authorizes the Company, to withhold such number of shares of Restricted Stock that the Compensation Committee may determine is appropriate to satisfy any withholding tax liability of the Company.  The value of the shares of Restricted Stock that may be withheld shall be based upon the closing price of the Company’s common stock, as quoted by the principal securities exchange or market on which the Company’s common stock is then traded, on the date the Compensation Committee determines that any withholding tax liability of the Company shall have arisen.  If the Company’s common stock is not listed, traded or quoted on any securities exchange or on any quotation system or other established trading market on such date, then the value of the shares shall be the fair market value of such shares as determined by the Compensation Committee.  The Company understands and agrees that the Executive is entitled to make an election under Section 83(b) of the Internal Revenue Code with respect to the Restricted Stock.

 

  

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Section 10.        Employment; Certain Conflicts.  Neither this Agreement nor the Award of Performance Shares or, if issued, the shares of Restricted Stock into which the Performance Shares may be converted (a) constitute an agreement, understanding or commitment relating to the continued employment of the Executive by the Company, or (b) affect or alter the employment of the Executive by the Company pursuant to the Employment Agreement dated July 1, 2008 between the Company and the Executive (the “Employment Agreement”).  In the event of any conflict between the Plan and this Agreement, then this Agreement shall control; provided, however, that in the event this Agreement is silent with respect to a particular matter relating to the Performance Shares or the Restricted Stock, then the Plan shall control with respect to such matter.  In the event of any conflict between this Agreement and the Employment Agreement with respect to the Award, then this Agreement shall control.

Section 11.        Effect of Change in Control or Termination of Employment.  In the event of a Change in Control or a Termination of Service of the Executive, all Performance Shares that have not yet been earned and, if issued, all shares of Restricted Stock (and/or the cash payment in lieu of any shares of Restricted Stock) that have not yet become vested as of the time of such event shall be treated in accordance with Section 3.6 of the Plan, except as expressly set forth below in this Section 11.

(a)           Notwithstanding any provision in the Plan (including, but not limited to, Section 3.6 thereof) or in the Employment Agreement to the contrary, in the event of a Change in Control before the Performance Shares shall have been earned or forfeited or, if earned, before the shares of Restricted Stock (and/or the cash payment in lieu of any shares of Restricted Stock) shall have become vested or forfeited, (i) in the case of Performance Shares, all of such shares shall be deemed to be and shall become, immediately prior to the effectiveness of the Change in Control, earned at the “target” award level for the entire Performance Period and shall immediately thereafter (and prior to the effectiveness of the Change in Control) be converted into shares of common stock of the Company instead of shares of Restricted Stock, which shares of common stock shall not be subject to any (A) restrictions other than as provided by applicable law, (B) risk of forfeiture, or (C) Period of Restriction; and (ii) in the case of Restricted Stock (and/or the cash payment in lieu of any shares of Restricted Stock), all of such shares and/or the cash payment shall be deemed to be and shall become, immediately prior to the effectiveness of the Change in Control, fully vested and shall no longer be subject to any (A) restrictions other than as provided by applicable law, (B) risk of forfeiture, or (C) Period of Restriction.  In the event that the Company’s common stock is not listed, traded or quoted on any securities exchange or on any quotation system or other established trading market immediately prior to the effectiveness of a Change in Control, then the Performance Shares shall be converted into such number of shares of Restricted Stock as determined by the Board of Directors of the Company.

 

  

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(b)          Notwithstanding any provision in the Plan (including, but not limited to, Section 3.6 thereof) or in the Employment Agreement to the contrary, in the event of a Termination of Service of the Executive due to his death or Disability before the Performance Shares shall have been earned or forfeited or, if earned, before the shares of Restricted Stock (and/or the cash payment in lieu of any shares of Restricted Stock) shall have become vested or forfeited, (i) in the case of Performance Shares, all of such shares shall be deemed to be and shall become, immediately on the day that the Termination of Service of the Executive occurs, earned at the “target” award level for the entire Performance Period and shall immediately thereafter be converted into shares of common stock of the Company instead of shares of Restricted Stock, which shares of common stock shall not be subject to any (A) restrictions other than as provided by applicable law, (B) risk of forfeiture, or (C) Period of Restriction; and (ii) in the case of Restricted Stock (and/or the cash payment in lieu of any shares of Restricted Stock), all of such shares and/or the cash payment shall be deemed to be and shall become, immediately on the day that the Termination of Service of the Executive occurs, fully vested and shall no longer be subject to any (A) restrictions other than as provided by applicable law, (B) risk of forfeiture, or (C) Period of Restriction.  In the event that the Company’s common stock is not listed, traded or quoted on any securities exchange or on any quotation system or other established trading market on the day that a Termination of Service of the Executive occurs due to his death or Disability, then the Performance Shares shall be converted into such number of shares of Restricted Stock as determined by the Board of Directors of the Company.

(c)           The Performance Shares and the Restricted Stock (and/or the cash payment in lieu of any shares of Restricted Stock) shall be earned or become vested as provided in Subsections 11(a) and 11(b) regardless of (i) the length of time that the Executive was employed by the Company during the applicable Performance Period or vesting period, and (ii) whether or not the performance targets relating to the applicable Performance Measures are ultimately achieved by the Company.

Section 12.        Miscellaneous.

(a)           Binding Effect; Assignment.  This Agreement shall be binding upon and inure to the benefit of the Company and the Executive and their respective heirs, executors, representatives, successors and assigns; provided, however that neither party may assign this Agreement without the prior written consent of the other party hereto except that the Company may, without the consent of the Executive, assign this Agreement in connection with any merger, consolidation, share exchange, combination, sale of stock, sale of assets or other similar transaction involving the Company or any transaction or series of transactions constituting a Change in Control.  In the event of any such permitted assignment by the Company of this Agreement, all references to the “Company” shall thereafter mean and refer to the successor or assignee of the Company.

(b)          Waiver.  Either party hereto may, by a writing signed by the waiving party, waive the performance by the other party of any of the covenants or agreements to be performed by such other party under this Agreement or any breach of or noncompliance with any provision of this Agreement.  Any waiver by either party hereto shall not operate or be construed as a continuing or subsequent waiver or a waiver of any other or subsequent failure of performance, breach or noncompliance hereunder.  The failure or delay of either party at any time to insist upon the strict performance of any provision of this Agreement or to enforce its rights or remedies under this Agreement shall not be construed as a waiver or relinquishment of the right to insist upon strict performance of such provision, or to pursue any of its rights or remedies for any breach hereof, at a future time.

 

  

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(c)          Amendment.  This Agreement may be amended, modified or supplemented only by a written agreement executed by both of the parties hereto; provided, however, that in the event of a permitted assignment of this Agreement by the Company contemplated by Section 12(a) hereof by virtue of a successor or assignee of the Company becoming a party to this Agreement, no amendment, modification or additional agreement shall be required.

(d)          Headings.  The headings in this Agreement have been inserted solely for ease of reference and shall not be considered in the interpretation or construction of this Agreement.

(e)          Severability.  In case any one or more of the provisions (or any portion thereof) contained in this Agreement shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement, but this Agreement shall be construed as if such invalid, illegal or unenforceable provision or provisions (or portion thereof) had never been contained herein.

(f)           Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be an original, but such counterparts shall together constitute one and the same agreement.

(g)          Construction.  This Agreement shall be deemed to have been drafted by both parties hereto.  This Agreement shall be construed in accordance with the fair meaning of its provisions and its language shall not be strictly construed against, nor shall ambiguities be resolved against, either party.

(h)          Entire Agreement.  This Agreement and the Plan constitute the entire understanding and agreement (and supersede all other prior understandings, commitments, representations and communications), whether oral or written, between the parties hereto relating to the Performance Shares and the Restricted Stock.

(i)           Governing Law.  Because the Company’s headquarters are in Indiana, this Agreement shall be governed by and construed in accordance with the laws of the State of Indiana, without reference to any choice of law provisions, principles or rules thereof (whether of the State of Indiana or any other jurisdiction) that would cause the application of any laws of any jurisdiction other than the State of Indiana.

 

(j)           Recitals; Exhibit.  The recitals, premises and “Whereas” clauses contained on page 1 of this Agreement, and Exhibit A attached to this Agreement, are expressly incorporated into and made a part of this Agreement.

 

  

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(k)          Review and Consultation.  The Executive hereby understands and agrees that he (i) has read and is familiar with this Agreement and the Plan, (ii) understands the provisions and effects of this Agreement and the Plan, and (iii) has consulted with such of his attorneys, accountants and other advisors as he has deemed advisable prior to executing this Agreement.  THE EXECUTIVE HEREBY FURTHER UNDERSTANDS, ACKNOWLEDGES AND AGREES THAT HE HAS NOT RECEIVED ANY ADVICE, COUNSEL OR RECOMMENDATION WITH RESPECT TO THIS AGREEMENT OR THE PLAN FROM ANY DIRECTOR, OFFICER OR EMPLOYEE OF, OR ANY ATTORNEY OR REPRESENTATIVE FOR, THE COMPANY.

(l)           Certain Approvals Required.  Any amendment, modification or supplement of or any waiver under this Agreement on behalf of the Company may be made and will be effectual only upon the approval thereof by the Compensation Committee.

(m)         Jurisdiction; Venue; Wavier of Trial by Jury.  The Company and the Executive agree that all actions, proceedings, claims and counterclaims arising in connection with this Agreement shall be filed, tried and litigated, at the Company’s sole election, only in the state courts located in the County of Marion, State of Indiana, or the federal courts whose venue includes the County of Marion, State of Indiana, or, at the Company’s sole election, in any other court in which the Company shall initiate legal or equitable proceedings and which has subject matter jurisdiction over the matter in controversy.  The Executive irrevocably consents to the jurisdiction and venue of such courts and waives any right that he may have to assert the doctrine of “forum non conveniens” or to object to venue or jurisdiction of such courts to the extent any action, proceeding, claim or counterclaim is brought in accordance with this Subsection.  THE EXECUTIVE WAIVES, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, THE RIGHT TO A TRIAL BY JURY IN CONNECTION WITH ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM UNDER OR RELATING TO THIS AGREEMENT.

*         *         *

[Remainder of this page intentionally left blank.  Signature page follows this page.]

  

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IN WITNESS WHEREOF, the Company and the Executive have entered into, executed and delivered this Agreement as of the day and year first above written.

 

 

	
 

	
/s/ Ronald H. Butler

	 	Ronald H. Butler
	 	 	 
	 	 	 
	 	CHROMCRAFT REVINGTON, INC.
	 	 	 
	 	 	 
	 	By: 	/s/ James M. La Neve
	 	 	James M. La Neve 
	 	 	Vice President and Chief Financial Officer 

 

 

9ex10_1.htm

EXHIBIT 10.1

 

FORM OF FOURTH AMENDMENT

TO

AGREEMENT OF LIMITED PARTNERSHIP

OF

HERSHA HOSPITALITY LIMITED PARTNERSHIP

May 18, 2011

THIS FOURTH AMENDMENT TO THE AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP (this “Fourth Amendment”), dated as of May 18, 2011, is entered into by HERSHA HOSPITALITY TRUST, a Maryland real estate investment trust, as general partner (the “General Partner”) of HERSHA HOSPITALITY LIMITED PARTNERSHIP, a Virginia limited partnership (the “Partnership”), for itself and on behalf of the limited partners of the Partnership.

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

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

WHEREAS, on May 18, 2011, the General Partner issued 4,600,000 shares of its 8.00% Series B Cumulative Redeemable Preferred Shares of Beneficial Interest, par value $0.01 per share (the “Series B Preferred Shares”) at a gross offering price of $25.00 per Series B Preferred Share and, in connection therewith, the General Partner, pursuant to Section 4.02(b) of the Partnership Agreement, is contributing the net proceeds of such issuance to the Partnership and is causing the Partnership to issue to the General Partner Series B Preferred Partnership Units (as hereinafter defined); and

WHEREAS, pursuant to the authority granted to the General Partner pursuant to Sections 4.02(a) and Article XI of the Partnership Agreement and as authorized by the resolutions of the General Partner dated May 6, 2011, the General Partner desires to amend the Partnership Agreement (i) to set forth the designations, rights, powers, preferences and duties of the Series B Preferred Partnership Units and (ii) to issue the Series B Preferred Partnership Units to the General Partner.

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

  

  

  

 

1.           The Partnership Agreement is hereby amended by the addition of a new annex thereto, entitled Annex B, in the form attached hereto, which sets forth the designations, allocations, preferences and other special rights, powers and duties of the Series B Preferred Partnership Units and which shall be attached to and made a part of the Agreement.

2.           Pursuant to Section 4.02(a) of the Partnership Agreement, effective as of May 18, 2011, the issuance date of the Series B Preferred Shares by the General Partner, the Partnership hereby issues 4,600,000 Series B Preferred Partnership Units to the General Partner.  The Series B Preferred Partnership Units have been created and are being issued in conjunction with the General Partner’s issuance of the Series B Preferred Shares, and as such, the Series B Preferred Partnership Units are intended to have designations, preferences and other rights, all such that the economic interests are substantially identical to the designations, preferences and other rights of the Series B Preferred Shares, and the terms of this Fourth Amendment, including without limitation the attached Annex B, shall be interpreted in a fashion consistent with this intent.  In return for the issuance to the General Partner of the Series B Preferred Partnership Units, the General Partner has contributed to the Partnership the funds raised through its issuance of the Series B Preferred Shares (the General Partner’s capital contribution shall be deemed to equal the amount of the gross proceeds of that share issuance (i.e., the net proceeds actually contributed, plus any underwriter’s discount or other expenses incurred, with any such discount or expense deemed to have been incurred by the General Partner on behalf of the Partnership)).

3.           In order to reflect the issuance of the Series B Preferred Partnership Units, Exhibit A to the Partnership Agreement is hereby amended by adding to the end of such Exhibit A the following table:

 

	
 

Partner

	 	
Cash Contribution

	 	 	
Agreed Value of Capital Contribution

	 	 	
Series B Preferred

Partnership Units

	 	 	
Percentage Interest

of

Series

	 
	
 

Hersha Hospitality Trust

	 	$	111,377,500	 	 	$	115,000,000	 	 	 	4,600,000	 	 	 	100.00%	 

4.           The foregoing recitals are incorporated in and are part of this Fourth Amendment.

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

[Signature Page Follows.]

  

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

 

 

	 	GENERAL PARTNER:	 
	 	 	 
	 	HERSHA HOSPITALITY TRUST,	 
	 	a Maryland real estate investment trust	 
	 	 	 
	 	 	 
	
 

	
By: 

	 	 
	 	 	Name:   Ashish R. Parikh 	 
	 	 	Title:     Chief Financial Officer	 

 

SIGNATURE PAGE TO FOURTH AMENDMENT TO PARTNERSHIP AGREEMENT

  

  

  

 

ANNEX B

DESIGNATION OF THE SERIES B PREFERRED PARTNERSHIP UNITS

OF

HERSHA HOSPITALITY LIMITED PARTNERSHIP

1.           Designation and Number. A series of preferred partnership units, designated the “Series B Preferred Partnership Units” (the “Series B Preferred Partnership Units”), is hereby established.  The number of Series B Preferred Partnership Units hereby authorized shall be 4,600,000.

2.           Rank. The Series B Preferred Partnership Units shall, with respect to distribution rights and rights upon liquidation, dissolution or winding up of the Partnership, rank (a) senior to all classes or series of Partnership Units the terms of which do not specifically provide that such units rank on a parity with or senior to the Series B Preferred Partnership Units (the “Common Units”); (b) on a parity with the Series A Preferred Partnership Units of the Partnership and all other Partnership Units issued by the Partnership the terms of which specifically provide that such Partnership Units rank on a parity with the Series B Preferred Partnership Units as to the payment of distributions and the distribution of assets in the event of any liquidation, dissolution or winding up; and (c) junior to (i) all indebtedness of the Partnership and (ii) Partnership Units issued by the Partnership the terms of which specifically provide that such Partnership Units rank senior to the Series B Preferred Partnership Units as to the payment of distributions and the distribution of assets in the event of any liquidation, dissolution or winding up.

3.           Distributions.

(a)           Holders of the then outstanding Series B Preferred Partnership Units shall be entitled to receive, when and as declared by the Partnership, out of funds legally available for the payment of distributions, cumulative cash distributions at the rate of 8.00% per year of the $25.00 liquidation preference (equivalent to a fixed annual amount of $2.00 per share). Distributions on the Series B Preferred Partnership Units are payable quarterly in arrears on January 15, April 15, July 15 and October 15 of each year and, if such day is not a business day, the next succeeding business day, commencing on July 15, 2011 (each, a “Distribution Payment Date”). The quarterly period between Distribution Payment Dates is referred to herein as a “distribution period” and the distribution which shall accrue in respect of any full distribution period shall be $0.50 regardless of the actual number of days in such full distribution period. The first distribution will be for less than a full quarter and will cover the period from May 18, 2011 to June 30, 2011. Such distribution and any distribution payable on the Series B Preferred Partnership Units for any partial distribution period will be computed on the basis of a 360-day year consisting of twelve 30-day months. Distributions will be payable to holders of record as they appear in the stock records of the Partnership at the close of business on the applicable record date, which shall be the first day of the calendar month in which the applicable Distribution Payment Date falls or on such other date designated by the Partnership as the record date for the payment of distributions on the Series B Preferred Partnership Units that is not more than 30 nor less than 10 days prior to such Distribution Payment Date (each, a “Distribution Record Date”).

  

B- 1

  

 

(b)           No distributions on Series B Preferred Partnership Units shall be declared by the Partnership or paid or set apart for payment by the Partnership at such time as the terms and provisions of any agreement of the Partnership, including any agreement relating to its indebtedness, (i) prohibits such declaration, payment or setting apart for payment of distributions or (ii) provides that such declaration, payment or setting apart for payment of distributions would constitute a breach thereof or a default thereunder, or if such declaration or payment shall be restricted or prohibited by law.

(c)           Notwithstanding the foregoing, distributions on the Series B Preferred Partnership Units shall accrue whether or not the terms and provisions set forth in Section 3(b) hereof at any time prohibit the current payment of distributions, whether or not the Partnership has earnings, whether or not there are funds legally available for the payment of such distributions and whether or not such distributions are declared.

(d)           Accrued but unpaid distributions on the Series B Preferred Partnership Units will accumulate as of the Distribution Payment Date on which they first become payable. Except as provided in Section 3(e) below, no distributions will be declared or paid or set apart for payment, and no distribution will be made on any Common Units or any other class or series of Partnership Units ranking, as to distributions, on a parity with or junior to the Series B Preferred Partnership Units other than a distribution that consists of the Partnership’s Common Units or units of any other class or series of Partnership Units ranking junior to the Series B Preferred Partnership Units as to distributions and upon liquidation, for any period unless full cumulative distributions on the Series B Preferred Partnership Units have been or contemporaneously are declared and paid, or declared and a sum sufficient for the payment thereof is set apart for such payment on the Series B Preferred Partnership Units for all distribution periods ending on or prior to the date of such action with respect to the Common Units or any other class or series of Partnership Units ranking, as to distributions, on a parity with or junior to the Series B Preferred Partnership Units.

(e)           When distributions are not paid in full (or a sum sufficient for such full payment is not so set apart) upon the Series B Preferred Partnership Units and the units of any other class or series of Partnership Units ranking on a parity as to distributions with the Series B Partnership Units, all distributions declared upon the Series B Preferred Partnership Units and any other class or series of Partnership Units ranking on a parity as to distributions with the Series B Preferred Partnership Units shall be declared pro rata so that the amount of distributions declared per unit of Series B Preferred Partnership Units and such other class or series of Partnership Units shall in all cases bear to each other the same ratio that accrued distributions per unit on the Series B Preferred Partnership Units and such other class or series of Partnership Units (which shall not include any accrual in respect of unpaid distributions for prior distribution periods if such Partnership Units do not have a cumulative distribution) bear to each other. No interest, or sum of money in lieu of interest, shall be payable in respect of any distribution payment or payments on Series B Preferred Partnership Units which may be in arrears.

(f)           Except as provided in the immediately preceding paragraph, unless full cumulative distributions on the Series B Preferred Partnership Units have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof is set apart for payment for all past distribution periods, no distributions (other than distributions paid in Common Units or any other class or series of Partnership Units ranking junior to the Series B Preferred Partnership Units as to distributions and upon liquidation) shall be declared or paid or set aside for payment, nor shall any other distribution be declared or made, upon the Common Units or any other class or series of Partnership Units ranking junior to or on a parity with the Series B Preferred Partnership Units as to distributions or upon liquidation, nor shall any Common Units, or any other class or series of Partnership Units ranking junior to or on a parity with the Series B Preferred Partnership Units as to distributions or upon liquidation be redeemed, purchased or otherwise acquired for any consideration (or any moneys be paid to or made available for a sinking fund for the redemption of any such units) by the Partnership (except by conversion into or exchange for any other class or series of Partnership Units ranking junior to the Series B Preferred Partnership Units as to distributions and upon liquidation) and except in connection with the redemption of Partnership Units in connection with a redemption of “Shares-in-Trust” under the Articles of Amendment and Restatement, which intended to assist the General Partner in qualifying as a REIT for federal income tax purposes.

 

  

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(g)           Holders of the Series B Preferred Partnership Units shall not be entitled to any distribution, whether payable in cash, property or Partnership Units in excess of full cumulative distributions on the Series B Preferred Partnership Units as provided above. Any distribution payment made on Series B Preferred Partnership Units shall first be credited against the earliest accrued but unpaid distribution due with respect to such units which remains payable.

4.           Liquidation Preference.

(a)            Upon any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Partnership, the holders of Series B Preferred Partnership Units then outstanding are entitled to be paid out of the assets of the Partnership legally available for distribution to its partners a liquidation preference of $25.00 per share, plus an amount equal to any accrued and unpaid distributions to the date of payment, before any distribution of assets is made to holders of Common Units or any other class or series of Partnership Units that ranks junior to the Series B Preferred Partnership Units as to liquidation rights.  After payment of the full amount of the liquidating distributions to which they are entitled, the holders of Series B Preferred Partnership Units will have no right or claim to any of the remaining assets of the Partnership.

(b)           In the event that, upon any such voluntary or involuntary liquidation, dissolution or winding up, the available assets of the Partnership are insufficient to pay the amount of the liquidating distributions on all outstanding Series B Preferred Partnership Units and the corresponding amounts payable on all Partnership Units of other classes or series of Partnership Units ranking on a parity with the Series B Preferred Partnership Units in the distribution of assets, then the holders of the Series B Preferred Partnership Units and all other such classes or series of Partnership Units shall share ratably in any such distribution of assets in proportion to the full liquidating distributions to which they would otherwise be respectively entitled.

(c)           Written notice of any such liquidation, dissolution or winding up of the Partnership, stating the payment date or dates when, and the place or places where, the amounts distributable in such circumstances shall be payable, shall be given by first class mail, postage pre-paid, not less than 30 nor more than 60 days prior to the payment date stated therein, to each record holder of the Series B Preferred Partnership Units at the respective addresses of such holders as the same shall appear in the books and records of the Partnership.

 

  

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(d)           The consolidation, combination or merger of the Partnership with or into any other corporation, partnership or entity or consolidation or merger of any other corporation with or into the Partnership, or the sale, lease or conveyance of all or substantially all of the Partnership’s assets, property or business or any statutory share exchange, shall not be deemed to constitute a liquidation, dissolution or winding up of the Partnership.

5.           Redemption.

(a)           Right of Optional Redemption.  Except as expressly provided herein, the Series B Preferred Partnership Units are not redeemable prior to May 18, 2016.  On and after May 18, 2016, the Partnership, at its option and upon not less than 30 nor more than 60 days’ written notice, may redeem the Series B Preferred Partnership Units, in whole or in part, at any time or from time to time, for cash at a redemption price of $25.00 per share, plus an amount equal to all accrued and unpaid distributions thereon to the date fixed for redemption (except as provided in Section 5(c) below), without interest. If less than all of the outstanding Series B Preferred Partnership Units are to be redeemed, the Series B Preferred Partnership Units to be redeemed shall be selected pro rata (as nearly as may be practicable without creating fractional units) or by any other equitable method determined by the Partnership.

(b)           Limitations on Redemption.  Unless full cumulative distributions on all Series B Preferred Partnership Units shall have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof set apart for payment for all past distribution periods, no Series B Preferred Partnership Units shall be redeemed unless all outstanding Series B Preferred Partnership Units are simultaneously redeemed, and the Partnership shall not purchase or otherwise acquire directly or indirectly any Series B Preferred Partnership Units (except by exchange for Partnership Units ranking junior to the Series B Preferred Partnership Units as to distributions and upon liquidation); provided, however, that the foregoing shall not prevent the purchase or acquisition of Series B Preferred Partnership Units pursuant to a purchase or exchange offer made on the same terms to holders of all outstanding Series B Preferred Partnership Units.

(c)           Payment of Distributions in Connection with Redemption.  Immediately prior to any redemption of Series B Preferred Partnership Units, the Partnership shall pay, in cash, any accumulated and unpaid distributions through the redemption date, unless a redemption date falls after a Distribution Record Date and prior to the corresponding Distribution Payment Date, in which case each holder of Series B Preferred Partnership Units at the close of business on such Distribution Record Date shall be entitled to the distribution payable on such units on the corresponding Distribution Payment Date notwithstanding the redemption of such units before such Distribution Payment Date. Except as provided above, the Partnership will make no payment or allowance for unpaid distributions, whether or not in arrears, on Series B Preferred Partnership Units which are redeemed.

 

  

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(d)           Other Redemptions.  At any time that the General Partner exercises its right to redeem all or any of the Series B Preferred Shares, the General Partner shall cause the Partnership to concurrently redeem an equal number of Series B Preferred Partnership Units, at a redemption price per Series B Preferred Partnership Unit payable in cash and equal to the same price per share paid by the General Partner to redeem the Series B Preferred Shares (i.e., a redemption price of $25.00 per Series B Preferred Share, plus any accrued and unpaid dividends thereon).  No interest shall accrue for the benefit of the Series B Preferred Partnership Units to be redeemed on any cash set aside by the Partnership.

(e)            Notwithstanding anything to the contrary contained herein, the Partnership may redeem one Series B Preferred Partnership Unit for each Series B Preferred Share purchased in the open market, through tender or by private agreement with the General Partner.

(f)            Notwithstanding anything to the contrary contained herein, the Partnership may redeem Series B Preferred Partnership Units at any time in connection with any redemption by the General Partner of Series B Preferred Shares.

(g)           Status of Redeemed Units.  Any Series B Preferred Partnership Units that shall at any time have been redeemed shall, after such redemption, have the status of authorized but unissued Partnership Units, without designation as to class or series until such Partnership Units are thereafter classified or designated as part of a particular series.

6.           Voting Rights.  Except as provided by law, the General Partner, in its capacity as the holder of the Series B Preferred Partnership Units, shall not be entitled to vote for any purpose or otherwise participate in any action taken by the Partnership or the Partners.

7.           Conversion.

(a)           Except as otherwise set forth herein, the Series B Preferred Partnership Units are not convertible into or exchangeable for any other property or units of the Partnership.

(b)           In the event that a holder of Series B Preferred Shares of the General Partner exercises its right to convert the Series B Preferred Shares into Common Shares of the General Partner in accordance with the terms of the Articles Supplementary, then, concurrently therewith, an equivalent number of Series B Preferred Partnership Units held by the General Partner shall automatically be converted into a number of Common Units of the Partnership equal to the number of Common Shares issued upon conversion of such Series B Preferred Shares; provided, however, that if a holder of Series B Preferred Shares of the General Partner receives cash or other consideration in addition to or in lieu of Common Shares in connection with such conversion, then the General Partner, as the holder of Series B Preferred Partnership Units, shall be entitled to receive cash or such other consideration

  

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8.           Allocations.

(a)           Sections 5.01(a) and (b) of the Partnership Agreement are hereby deleted and replaced by sections (a) and (b), below.

 

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

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

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

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

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

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

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

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

  

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..

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

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

(b)           Notwithstanding anything to the contrary contained herein, in connection with the liquidation of the Partnership or the interest of a holder of Series A Preferred Partnership Units and Series B Preferred Partnership Units, and prior to making any other allocations of Net Profit or Net Loss, items of income and gain or deduction and loss shall first be allocated to the General Partner in respect of its Series A Preferred Partnership Units and its Series B Preferred Partnership Units in such amounts as is required to cause the General Partner’s adjusted Capital Account Balance (taking into account any amounts such Partner is obligated to contribute to the capital of the Partnership or is deemed obligated to contribute pursuant to Regulations Section 1.704-1(b)(2)(ii)(c)(2)) to equal the amount such Partner is entitled to receive pursuant to the provisions of Sections 4 and 5 hereof.

(c)           For purposes of this Section 8, “Net Profit” means the excess of the Partnership’s Profit over the Partnership’s Loss for any fiscal year or portion thereof, and “Net Loss” means the excess of the Partnership’s Loss over the Partnership’s Profit for any fiscal year or portion thereof.

 

 

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