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EXCEPTED HOLDER AGREEMENT
BETWEEN
CNL HOSPITALITY PROPERTIES, INC.,
CNL HOSPITALITY PARTNERS, L.P.
AND
HERSHA HOSPITALITY TRUST
DATED APRIL 21, 2003
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This EXCEPTED HOLDER AGREEMENT (this "Agreement") is made and entered into
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as of April 21, 2003, by and between Hersha Hospitality Trust, a Maryland real
estate investment trust ("HT"), CNL Hospitality Properties, Inc., a Maryland
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corporation ("CHP") and CNL Hospitality Partners, L.P., a Delaware limited
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partnership ("CHPLP").
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WHEREAS, CHPLP proposes to purchase from HT's subsidiary (the
"Acquisition") preferred limited partnership interests of Hersha Hospitality
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Limited Partnership, a limited partnership organized under the laws of the
Commonwealth of Virginia ("HLP"), and preferred limited partnership interests of
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HT/CNL Metro Hotels, L.P., a limited partnership organized under the laws of
Delaware ("JV"), pursuant to that certain Securities Purchase Agreement entered
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into by CHPLP, HT and HLP as of April 21, 2003.
WHEREAS, the preferred limited partnership interests of HLP (the "Preferred
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OP Units") are exchangeable for shares of HT's Series A Preferred Shares, par
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value $.01 per share (the "Series A Preferred Shares"), and for shares of HT's
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Class A Common Shares, par value $.01 per share (the "Class A Common Shares"),
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and the preferred limited partnership interests of JV (the "JV Units") are
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exchangeable for Class A Common Shares.
WHEREAS, HT's Articles of Amendment and Restatement of its Declaration of
Trust (the "Declaration"), imposes certain limitations on the ownership of HT's
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shares of beneficial interest, which limitations include a general restriction
prohibiting any Person from "Beneficially Owning" or "Constructively Owning"
more than 9.9% of any class or series of "Equity Shares" of HT, as such terms
are defined therein (the "Ownership Limit"). Capitalized terms used in this
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Agreement that are not otherwise defined shall have the meanings given to them
in the Declaration and in that certain Securities Purchase Agreement dated April
21, 2003 by and among CHPLP, HT and HLP (the "Purchase Agreement").
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WHEREAS, pursuant to Article VII, Section 1(G) of the Declaration, HT's
Board of Trustees is permitted to exempt a Person from the Ownership Limit (as
to such Person, an "Excepted Holder Limit") and allow ownership of Equity Shares
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by such Person in excess of the Ownership Limit if certain conditions described
in Article VII, Section 1(G) of the Declaration are satisfied.
WHEREAS, the Board of Trustees of HT has resolved to exempt CHPLP from the
Ownership Limit conditioned upon each of CHP and CHPLP agreeing to be bound by
the terms of this Agreement.
NOW, THEREFORE, in consideration of the mutual provisions and
representations, warranties, agreements and covenants herein contained, the
parties hereto, intending to be legally bound, hereby agree as follows:
1. REPRESENTATIONS AND COVENANTS OF CHP AND CHPLP
Commencing on the date hereof, and during any period that an Excepted
Holder Limit established pursuant to this Agreement (as may be amended from time
to time) remains in effect, CHP and CHPLP represent and agree as follows, and,
to the extent set forth in paragraph 1.6 below, HT agrees:
1.1 No "individual", as such term is defined in Section 542(a)(2) of
the Internal Revenue Code of 1986, as amended (the "Code"), (hereinafter, an
"Individual"), owns, or will own at any time while the Excepted Holder Limit is
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in effect, directly (including through a nominee or similar arrangement) or
indirectly, after taking into account the provisions of Section 544 of Code, as
modified by Section 856(h)(3) of the Code (such ownership being referred to
herein as "Beneficial Ownership" or variations thereof), in excess of 9.8% of
any class of the issued and outstanding common or preferred equity shares of
CHP.
1.2 Article VII of CHP's Articles of Incorporation restricts any
"Person", as defined therein, from Beneficially Owning in excess of 9.8% of any
class of CHP's issued and outstanding common and preferred stock (the "CHP
Ownership Limitation"), unless the CHP Ownership Limitation is waived by a
majority of the Board of Directors of CHP, provided any such waiver will not
jeopardize CHP's status as a REIT. CHP's Board of Directors has not granted any
such waiver of the CHP Ownership Limitation so as to permit any Individual to
Beneficially Own in excess of 9.8% of any class of CHP's issued and outstanding
common or preferred stock; and CHP hereby covenants and agrees not to grant any
such waiver of the CHP Ownership Limitation if such waiver would jeopardize
CHP's status as a REIT.
1.3 (a) After applying the constructive ownership rules of Section 318
of the Code, as modified by Section 856(d)(5) of the Code, the Acquisition or
ownership by CHPLP of the Preferred OP Units, the Series A Preferred Shares, the
Class A Common Shares or the JV Units as contemplated by this Agreement
(excluding, for this purpose, constructive ownership of any such Units or Shares
by CHPLP or any other Person as a direct or indirect result of CHPLP's ownership
of interests in HLP or the JV as contemplated by the Purchase Agreement) will
not cause HT to be treated as "related" to any tenant of HT or any subsidiary of
HT within the meaning of Section 856(d)(2)(B) of the Code. Each of CHP and
CHPLP agrees that, to the extent that its Beneficial or Constructive Ownership
of Equity Shares would cause HT to be treated as "related" to any tenant of HT
or any subsidiary of HT within the meaning of Section 856(d)(2)(B) of the Code,
the Equity Shares the ownership of which otherwise would cause HT to be treated
as "related" to any tenant of HT or any subsidiary of HT within the meaning of
Section 856(d)(2)(B) of the Code will be subject to the treatment described in
Article VII, Section 1(C) of the Declaration to the extent that the application
of such provision of the Declaration is necessary to maintain HT's status as a
REIT; provided, however, such treatment shall not be applied to the extent that
CHPLP is treated as constructively owning Equity Shares as a result of its
ownership of interests in HLP or the JV as contemplated by the Purchase
Agreement.
(b) The Acquisition or ownership by CHPLP of the Preferred OP Units,
the Series A Preferred Shares, the Class A Common Shares or the JV Units as
contemplated by this Agreement will not cause (i) persons owning, or being
deemed to own, directly or indirectly (determined after applying the provisions
of Section 318 of the Code, as modified, by the provisions of Section 856(d)(5)
of the Code), 35% or more of the voting stock or value of the shares of HT to be
deemed to own, directly or indirectly (determined after applying the provisions
of Section 318 of the Code, as modified, by the provisions of Section 856(d)(5)
of the Code), 35% or more of (x) the voting stock or total number of shares of a
corporate independent
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contractor providing services to a tenant of HT, HLP, or any other entity in
which either HT or HLP has an equity interest or (y) the net assets or profits
of a non-corporate independent contractor providing services to a tenant of HT,
HLP, or any other entity in which either HT or HLP has an equity interest, each
within the meaning of Section 856(d)(3) of the Code (an "Independent
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Contractor"), or (ii) an Independent Contractor to own or be deemed to own,
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directly or indirectly (determined after applying the provisions of Section 318
of the Code, as modified, by the provisions of Section 856(d)(5) of the Code),
35% or more of the voting stock or value of the shares of HT (excluding, for
this purpose, constructive ownership of shares of HT as a direct or indirect
result of constructive ownership of Preferred OP Units, the Series A Preferred
Shares, the Class A Common Shares or the JV Units by CHPLP or any other Person,
or CHPLP's ownership of interests in HLP or the JV as contemplated by the
Purchase Agreement). Each of CHP and CHPLP agrees that, to the extent that its
Beneficial or Constructive Ownership of Equity Shares would cause an Independent
Contractor not to satisfy the requirements described above, the Equity Shares
the ownership of which otherwise would cause the Independent Contractor not to
meet those requirements will be subject to the treatment described in Article
VII, Section 1(C) of the Declaration to the extent that the application of such
provision of the Declaration is necessary to maintain HT's status as a REIT;
provided, however, such treatment shall not be applied to the extent that the
Independent Contractor requirements are not satisfied as a result of CHPLP's
ownership of interests in HLP or the JV as contemplated by the Purchase
Agreement.
1.4 In the event that CHPLP is no longer a wholly-owned subsidiary of
CHP at any time after the date of this Agreement when the Excepted Holder Limit
is in effect, no partner of CHPLP other than CHP will own a partnership interest
in CHPLP that would cause any individual to Beneficially Own or Constructively
Own (as determined pursuant to Article VII of the Articles), as a result of
CHPLP's ownership of Preferred OP Units, Series A Preferred Shares, Class A
Common Shares, or JV Units, more than 9.9% of the outstanding Equity Shares at
any time.
1.5 CHPLP agrees that it shall not Beneficially Own or Constructively
Own Equity Shares that would violate the Excepted Holder Limit established for
CHPLP pursuant to this Agreement and the resolutions of HT's Board of Trustees
or cause any Individual to Beneficially Own Equity Shares that would violate the
Ownership Limit and acknowledges that the exemption of CHPLP from the Ownership
Limit and granting of the Excepted Holder Limit to CHPLP is made in reliance
upon the representations contained herein and shall be effective only for so
long as and to the extent such representations continue to be true, accurate and
complete, and further agrees that any violation or attempted violation by CHPLP
of the Excepted Holder Limit granted pursuant to this Agreement or the
provisions of HT's Board of Trustees' resolution implementing this Agreement (or
other action contrary to the ownership restrictions imposed under the
Declaration except as otherwise permitted pursuant to CHPLP's Excepted Holder
Limit, this Agreement or the provisions of HT's Board of Trustees' resolution
implementing this Agreement) will automatically subject that number of the
Equity Shares Beneficially Owned or Constructively Owned by CHPLP that otherwise
would result in the violation, to the treatment described in Article VII,
Section 1(C) of the Declaration.
1.6 Each of HT and CHPLP agrees that if at any time subsequent to the
date hereof, any Person would be treated as Beneficially Owning or
Constructively Owning Equity Shares in excess of the Ownership Limit or, if
applicable, the Excepted Holder Limit with respect to such Person, in violation
of Article VII of the Declaration, then it is agreed that Article VII, Section
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1(C) of the Declaration shall be applied first to the Equity Shares actually
owned by any such Person other than CHPLP, second to the Equity Shares
Beneficially Owned or Constructively Owned by such Person other than Equity
Shares actually owned by CHPLP, and third to the Equity Shares actually owned by
CHPLP.
2. ESTABLISHMENT OF AN EXCEPTED HOLDER LIMIT FOR CHPLP
Based on the representations and agreements contained in this Agreement,
HT, effective as of the execution of this Agreement, is exempting CHPLP from the
Ownership Limit, by adopting a resolution of its Board of Trustees in the form
attached hereto as Exhibit A, provided, however, that as set forth in such
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resolution, in no event shall CHPLP's Beneficial Ownership or Constructive
Ownership of Series A Preferred Shares and Class A Common Shares exceed 100% of
the issued and outstanding Series A Preferred Shares or 60% of the issued and
outstanding Class A Common Shares of HT outstanding at any time (or such higher
percentage as is necessary to accommodate the issuance of additional Class A
Common Shares due to an adjustment of the applicable exchange price or
conversion price of the Series A Preferred Units, Series A Preferred Shares or
JV Units); provided however that there shall be no limit on CHP's and CHPLP's
Beneficial Ownership or Constructive Ownership of Class A Common Shares, subject
to CHP's and CHPLP's compliance with the representations, warranties and
covenants contained in this Agreement, if (x) HT fails to pay in full for two
consecutive quarters the dividend required pursuant to Section 2 of the Articles
Supplementary designating the Series A Preferred Shares, or HLP fails to pay in
full for two consecutive quarters the distributions with respect to its 10.5%
Series A Preferred Units required by the Second Amendment to the Amended and
Restated Limited Partnership Agreement of HLP, or (y) HT fails to maintain its
status as a real estate investment trust under the Internal Revenue Code of
1986, as amended, (the "Code").
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3. RELATED PARTIES
3.1 For purposes of the representation contained in paragraph 1.3
above, each of CHP and CHPLP hereby represent that, to the best of its
knowledge, none of CHP, CHPLP, and each Indirect Equity Owner (as defined below)
owns an interest in any Tenant of HT or its subsidiaries listed on Schedule 1
attached hereto that would cause HT to own (directly or constructively through
the application of Code Section 318, as modified by Code Section 856(d)(5)),
more than a 9.9% interest (within the meaning of Section 856(d)(2)(B) of the
Code) in such entity. CHP has reviewed the most recently received copies of all
financial reports received from (i) each partnership or limited liability
company in which CHP directly holds an equity interest and (ii) each corporation
or trust in which CHP, as the case may be, directly or indirectly owns a 10% or
greater equity interest (which financial reports describe all entities in which
such partnerships, limited liability companies, corporations and trusts own an
equity interest as of the date of such reports) and compared the information
contained in such financial reports to Schedule 1. For purposes of this
Agreement, an "Indirect Equity Owner" means any Person (i) that is deemed to
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Beneficially Own or Constructively Own an interest in shares of HT that are held
by CHP or CHPLP, and (ii) whose direct or indirect ownership of any interest in
any tenant of HT would be attributed to HT through the application of Section
318 of the Code, as modified by Code Section 856(d)(5) (excluding, for this
purpose, constructive ownership as a result of CHPLP's ownership of interests in
HLP or the JV as contemplated by the Purchase
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Agreement). In addition, CHP has received representations from each of its
Indirect Equity Owners that the Indirect Equity Owner does not own more than a
9.9% interest (within the meaning of Section 856(d)(2)(B) of the Code) in an
entity described on Schedule 1. These representations are made only with respect
to the date hereof assuming the Acquisition has already taken place and do not
constitute continuing representations or covenants with respect to the matters
described in this Section 3.1, provided that CHP will provide the information
described in Section 3.2 to HT on a continuing basis.
3.2 CHP will provide the following information to HT and HT will
provide the following information to CHP and CHPLP:
(a) No later than the last business day of each calendar quarter,
HT shall update the information contained in Schedule 1 (the "Tenant List")
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and provide such information to CHP, who agrees to provide such information
to each of CHPLP and to any Indirect Equity Owner;
(b) No later than 30 days after receipt of the Tenant List, CHP,
CHPLP and any Indirect Equity Owner shall inform HT of their direct equity
ownership of any entity in which it owns a 10% or greater equity interest
(as described in Section 856(d)(2)(B) of the Code), and whose name appears
on the Tenant List;
(c) No later than the last day of each calendar quarter (but only
for so long as CHP or CHPLP Beneficially Owns or Constructively Owns at
least 10% of the Equity Shares of HT), CHP and CHPLP shall deliver to HT a
certification stating that each of CHP and CHPLP has reviewed the
information regarding investments of each (i) partnership or limited
liability company in which CHP, CHPLP, or any Indirect Equity Owner
directly or indirectly holds an equity interest; and (ii) each corporation
or trust in which CHP, CHPLP, or any Indirect Equity Owner directly or
indirectly owns a 10% or greater equity interest (each such partnership,
limited liability company, corporation or trust referred to as a "CHP
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Entity"), together with the Tenant List most recently provided by HT, and
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that, to the best of its knowledge, none of CHP, CHPLP, any Indirect Equity
Owner and any CHP Entity owns (directly or constructively through the
application of Section 318 (as modified by Code Section 856(d)(5)) more
than a 9.9% equity interest (as described in Section 856(d)(2)(B) of the
Code) in any such entity.
3.3 No later than 20 days after receipt of the Tenant List, CHP shall
provide the Tenant List to each CHP Entity and any Indirect Equity Owner. CHP
agrees and CHP will cause each CHP Entity and Indirect Equity Owner to agree on
or prior to the First Closing Date (as defined in the Purchase Agreement), that
they shall not acquire an equity interest in any of the entities listed on the
Tenant List without the consent of HT.
4. MISCELLANEOUS
4.1 Amendment and Modification. This Agreement may not be amended or
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modified except by an instrument in writing signed by all of the parties hereto.
4.2 Specific Performance. The parties recognize that in the event the
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other should refuse to perform under the provisions of this Agreement, monetary
damages alone will not be
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adequate. Accordingly, each shall be entitled, in addition to any other remedies
which may be available, including money damages, to obtain specific performance
of the terms of this Agreement. In the event of any action to enforce this
Agreement specifically, each party hereby waives the defense that there is an
adequate remedy at law.
4.3 Parties in Interest. This Agreement shall be binding upon and,
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except as provided below, inure solely to the benefit of each party hereto and
their successors, assigns and transferees, and nothing in this Agreement, except
as set forth below, express or implied, is intended to confer upon any other
person any rights or remedies of any nature whatsoever under or by reason of
this Agreement.
4.4 Communications. All communications hereunder shall be in writing
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and shall be deemed given if delivered personally, telecopied, or mailed by
registered or certified mail (return receipt requested), or sent by Federal
Express or other recognized overnight courier, to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(a) If to CHP or CHPLP, to:
CNL Hospitality Properties, Inc.
CNL Center at City Commons
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Facsimile: 000-000-0000
Attn: Xxxxx Xxxxxxxxxx
with a copy to:
Xxxxxxxxx Traurig, LLP
The MetLife Building
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: 212-801-6400
Attn: Xxxxxx Xxxxx, Esq.
Xxxx X. Xxxxxx, Esq.
(b) If to HT, to:
Hersha Hospitality Trust
000 Xxxxxxxx Xxxxx
Xxx X
Xxx Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Facsimile: 000-000-0000
Attn: Xxxx X. Xxxx
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with a copy to:
Hunton & Xxxxxxxx
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Facsimile: 804-788-8218
Attn: Xxxxxxx X. Xxxxx, Esq.
Xxxxxxx X. Xxxxx, Esq.
Any of the above addresses may be changed at any time by notice given as
provided above; provided, however, that any such notice of change of address
shall be effective only upon receipt. All communications given in accordance
herewith shall be deemed received on the date of delivery, if hand delivered, on
the date of receipt, if telecopied, three Business Days after the date of
mailing, if mailed by registered or certified mail, return receipt requested,
and one Business Day after the date of sending, if sent by Federal Express or
other recognized overnight courier.
4.5 Counterparts. This Agreement may be executed and delivered
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(including by facsimile transmission) in one or more counterparts, all of which
shall be considered one and the same agreement and shall become effective when
one or more counterparts have been signed by each of the parties and delivered
to the other parties, it being understood that all parties need not sign the
same counterpart.
4.6 Entire Agreement. This Agreement (which term, for purposes of this
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Section, shall be deemed to include the exhibits and schedules hereto and the
other certificates, documents and instruments delivered hereunder) together with
the Purchase Agreement and other agreements, instruments and documents referred
to therein, constitutes the entire agreement of the parties hereto and
supersedes all prior agreements, letters of intent and understandings, both
written and oral, among the parties with respect to the subject matter hereof.
4.7 Assignment. Neither this Agreement nor any of the rights,
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interests, or obligations hereunder shall be assigned by any of the parties
hereto, whether by operation of law or otherwise.
4.8 Headings. The headings of this Agreement are for convenience of
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reference only and are not part of the substance of this Agreement.
4.9 Governing Law. This Agreement shall be construed in accordance
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with and governed by the internal laws of the State of Maryland (without giving
effect to such State's conflicts of laws principles).
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed
by its duly authorized officers as of the date first written above.
HERSHA HOSPITALITY TRUST,
a Maryland real estate investment trust
By: /s/ Xxxxxx X. Xxxxxx
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
CNL HOSPITALITY PARTNERS, L.P.
By: CNL HOSPITALITY GP CORP., its general
partner
By: /s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: Senior Vice President
CNL HOSPITALITY PROPERTIES, INC.
By: /s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: Senior Vice President
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SCHEDULE 1
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HHMLP Hunters Point, LLC
Hersha Hospitality Management, XX
Xxxxxx Hospitality Conduit Management, XX
Xxxxx Investments - Leaseback, LLC
Noble Investments - Leaseback South, LLC
HHMLP JFK III, LLC
EXHIBIT A
EXCERPTS FROM ACTION BY UNANIMOUS WRITTEN CONSENT
OF THE BOARD OF TRUSTEES
OF
HERSHA HOSPITALITY TRUST
The Board of Trustees (the "Board") of Hersha Hospitality Trust, a Maryland real
estate investment trust (the "Trust") hereby adopt and approve, on behalf of the
Trust in its own capacity and as the General Partner of Hersha Hospitality
Limited Partnership, a Virginia limited partnership (the "Operating
Partnership"), the following resolutions by unanimous written consent in lieu of
a meeting:
OWNERSHIP LIMITATION
WHEREAS, in accordance with Article VII, Section 1(G) of the Articles of
Amendment and Restatement of the Trust's Declaration of Trust (the
"Declaration"), the Board, having received the advice of counsel to the effect
that the restrictions contained in Article VII of the Declaration of Trust will
not be violated and the Trust's REIT status will not otherwise be lost and the
representations and undertakings of CNL Hospitality Properties, Inc., a Maryland
corporation ("CHP") and CNL Hospitality Partners, L.P., a Delaware limited
partnership ("CHP LP") required by said Article VII, Section 1(G) of the
Declaration of Trust being contained in the Excepted Holder Agreement, has
determined to authorize an exemption from the Ownership Limit set forth in the
Declaration, effective upon the purchase by CHP of Series A Preferred Units
pursuant to the terms of the Purchase Agreement;
NOW THEREFORE, BE IT RESOLVED, that any capitalized terms used in this
resolution that are not otherwise defined shall have the meanings given to those
terms in the Declaration; and further
RESOLVED, that, the Board hereby exempts CHP (the "Exemption") from the
Ownership Limit set forth in the Declaration with respect to the Beneficial and
Constructive Ownership (as determined pursuant to Article VII of the
Declaration) by CHP of Series A Preferred Shares or Class A Common Shares
issuable in exchange for the Series A Preferred Units and the JV Units, subject
to the terms and conditions described in these resolutions; and further
RESOLVED, that the Exemption is conditioned on neither CHP Inc. nor CHP LP
Owning, Beneficially or Constructively more than 100% of the issued and
outstanding Series A Preferred Shares or 60% of the issued and outstanding Class
A Common Shares at any time (or such higher percentage as is necessary to
accommodate the issuance of additional Class A Common Shares due to an
adjustment of the applicable exchange price or conversion price of the Series A
Preferred Units, Series A Preferred Shares or JV Units); provided, however, that
there shall be no limit on CHP Inc.'s and CHP LP's Beneficial Ownership or
Constructive Ownership of Class A Common Shares, subject to CHP's and CHP LP's
compliance with the representations, warranties and covenants contained in the
Excepted Holder Agreement, if (x) the Trust fails to pay in full for two
consecutive quarters the dividend required pursuant to Section 2 of the Articles
Supplementary, or the Operating Partnership fails to pay in full for two
consecutive quarters the distributions with respect to the Series A Preferred
Units required by the Second
Amendment, or (y) the Trust fails to maintain its status as a real estate
investment trust under the Internal Revenue Code of 1986, as amended, (the
"Code"); and further
RESOLVED, that the Exemption is further conditioned on (A) no individual Owning,
Beneficially or Constructively, as a result of CHP Inc.'s and CHP LP's ownership
of the Series A Preferred Shares and Class A Common Shares, more than 9.8% of
any class or series of the outstanding equity shares of the Trust at any time,
and (B) the representations, warranties, agreements and covenants of CHP Inc.
and CHP LP contained in the Excepted Holder Agreement and Standstill Agreement
continuing to be accurate and to be performed and complied with while the
Exemption is in place; and further
RESOLVED, that as a further condition to the Exemption, CHP Inc. and CHP LP
shall execute and deliver each of the Excepted Holder Agreement and Standstill
Agreement; and further
RESOLVED, that the Exemption will be automatically revoked to the extent that
any of the conditions specified above are breached; and further
RESOLVED, that the Board retains the right to revoke or modify the Exemption in
order to prevent disqualification of the Trust as a real estate investment trust
(a "REIT") under the Internal Revenue Code, and the rules, regulations, orders
and rulings thereunder; and further
RESOLVED, that the Authorized Officers shall notify CHP Inc. and CHP LP as soon
as possible prior to any revocation or modification of the Exemption; and
further
RESOLVED, that the Authorized Officers are authorized and directed to review
periodically the level of ownership of the Series A Preferred Shares and the
Class A Common Shares by CHP Inc. and CHP LP, and their transferees, including
if necessary, making appropriate inquiries of CHP Inc. and CHP LP, and their
transferees, and report to the Board any facts or circumstances as a result of
which ownership of Series A Preferred Shares and Class A Common Shares by CHP
Inc. and CHP LP, and their transferees threatens or jeopardizes the Trust's
status as a REIT.
