Document:

ex10_2.htm

    
      

    

    Exhibit
      10.2

    AMENDED
      AND RESTATED EMPLOYMENT AGREEMENT

    

    

    THIS
      AGREEMENT,
      effective June 28, 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 21, 2005 as amended
      May 7, 2007 (the “Prior Agreement”); and

    

    WHEREAS,
      the Company and the Executive
      desire to amend and restate 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.

     

    
      
        
        

      

      
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    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.

    

    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;

     

    
      
        
        

      

      
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    (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.

    

    (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.

     

    
      
        
        

      

      
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    11.           Change
      of Control Compensation.

    

    (a)            Compensation.  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;

    

    (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;

     

    
      
        
        

      

      
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    (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)            Excise
      Tax Indemnification.  The Executive shall be entitled to a
      payment under this Section 11(e) if any payment or benefit provided under this
      Agreement or any other plan or agreement with the Company constitutes a
“parachute payment” (as defined in Section 280G(b)(2)(A) of the Internal Revenue
      Code of 1986 (the “Code”), but without regard to Code Section 280G(b)(2)(A)(ii))
      and the Executive incurs a liability under Code Section 4999.  The
      amount payable to the Executive under this Section 11(e) shall be the amount
      required to indemnify the Executive and hold him harmless from the application
      of Code Sections 280G and 4999 with respect to benefits, payments, accelerated
      vesting and exercisability and other rights under this Agreement or otherwise,
      and any income, employment, hospitalization, excise and other taxes attributable
      to the indemnification payment.  Except as required by Section 12, the
      benefit payable under this Section 11(e) shall be calculated and paid not later
      than the date (or extended filing date) on which the tax return reflecting
      liability for the Code Section 4999 excise tax is required to be filed with
      the
      Internal Revenue Service.  To the extent that any other plan or
      agreement requires that the Executive be indemnified and held harmless from
      the
      application of Code Sections 280G and 4999, any such indemnification and the
      amount required to be paid to the Executive under this Section 11(e) shall
      be
      coordinated so that such indemnification is paid only once and the Company’s
      obligations under this Section 11(e) shall be satisfied to the extent of any
      such other payment (and vice versa).  The Executive shall be entitled
      to the benefit described in this Section 11(e) without regard to whether he
      becomes entitled to receive the benefits described in Section
      11(a).

     

    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.

     

    
      
        
        

      

      
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    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).

    

    (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.

     

    
      
        
        

      

      
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    (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.

     

    
      
        
        

      

      
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    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.

    

    (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.

     

    
      
        
        

      

      
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    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.

    

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

     

     

    
      
        	 	
                HERSHA
                  HOSPITALITY TRUST 

              
	 	 	 
	 	 	 
	 	
                BY:

              	 
	 	 	
                Michael
                  A. Leven, Lead Trustee,

              
	 	 	
                Board
                  of Trustees

              
	 	 	 
	 	 	 
	 	
                EXECUTIVE 

              
	 	 	 
	 	  
	 	
                Jay
                  H. Shah 

              

      

    

     

     

     Page
      10 of 10ex10_3.htm

    
      

    

    Exhibit
      10.3

    AMENDED
      AND RESTATED EMPLOYMENT AGREEMENT

    

    

    THIS
      AGREEMENT,
      effective June 28, 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 21, 2005 as amended
      May 7, 2007 (the “Prior Agreement”); and

    

    WHEREAS,
      the Company and the Executive
      desire to amend and restate 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.

     

    
      
        
        

      

      
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    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.

    

    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;

     

    
      
        
        

      

      
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    (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.

    

    (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.

     

    
      
        
        

      

      
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    11.           Change
      of Control Compensation.

    

    (a)           Compensation.  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;

    

    (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;

     

    
      
        
        

      

      
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    (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)           Excise
      Tax Indemnification.  The Executive shall be entitled to a
      payment under this Section 11(e) if any payment or benefit provided under this
      Agreement or any other plan or agreement with the Company constitutes a
“parachute payment” (as defined in Section 280G(b)(2)(A) of the Internal Revenue
      Code of 1986 (the “Code”), but without regard to Code Section 280G(b)(2)(A)(ii))
      and the Executive incurs a liability under Code Section 4999.  The
      amount payable to the Executive under this Section 11(e) shall be the amount
      required to indemnify the Executive and hold him harmless from the application
      of Code Sections 280G and 4999 with respect to benefits, payments, accelerated
      vesting and exercisability and other rights under this Agreement or otherwise,
      and any income, employment, hospitalization, excise and other taxes attributable
      to the indemnification payment.  Except as required by Section 12, the
      benefit payable under this Section 11(e) shall be calculated and paid not later
      than the date (or extended filing date) on which the tax return reflecting
      liability for the Code Section 4999 excise tax is required to be filed with
      the
      Internal Revenue Service.  To the extent that any other plan or
      agreement requires that the Executive be indemnified and held harmless from
      the
      application of Code Sections 280G and 4999, any such indemnification and the
      amount required to be paid to the Executive under this Section 11(e) shall
      be
      coordinated so that such indemnification is paid only once and the Company’s
      obligations under this Section 11(e) shall be satisfied to the extent of any
      such other payment (and vice versa).  The Executive shall be entitled
      to the benefit described in this Section 11(e) without regard to whether he
      becomes entitled to receive the benefits described in Section
      11(a).

    

    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.

     

    
      
        
        

      

      
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    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).

    

    (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.

     

    
      
        
        

      

      
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    (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.

     

    
      
        
        

      

      
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    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.

    

    (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.

     

    
      
        
        

      

      
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    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.

    

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

     

     

    
      
        	 	
                HERSHA
                  HOSPITALITY TRUST 

              
	 	 	 
	 	 	 
	 	
                BY:

              	 
	 	 	
                Michael
                  A. Leven, Lead Trustee,

              
	 	 	
                Board
                  of Trustees

              
	 	 	 
	 	 	 
	 	
                EXECUTIVE 

              
	 	 	 
	 	  
	 	
                Neil
                  H. Shah 

              

      

    

     

     

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