Document:

ex10_7.htm

    
      

    

    
      Exhibit
        10.7

       

      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 JAY H. 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 Chief Executive Officer of the Company 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 four hundred thousand dollars ($400,000.00), 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.

      
        
          
          

        

        
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      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.

      
        
          
          

        

        
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      (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 four (4) 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;

      
        
          
          

        

        
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      (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;

      
        
          
          

        

        
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      (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.

       

      
        
          
          

        

        
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      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).

      
        
          
          

        

        
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      (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:

              	 	
                Jay
                  H. 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/
                Jay H. Shah 	 
	 	 Jay
                H. Shah 

      

       

       

    

    9ex10_8.htm

    
      

    

    
      Exhibit
        10.8

       

      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 NEIL H. 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 Chief Operating Officer of the Company 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 three hundred seventy-five thousand dollars ($375,000.00),
        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 three (3) 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:

              	 	
                Neil
                  H. 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/
                Neil H. Shah
	 	Neil
                H. Shah 

      

      

       

    

    9

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