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REGISTRATION RIGHTS AGREEMENT
BETWEEN
CNL HOSPITALITY PARTNERS, L.P.
AND
HERSHA HOSPITALITY TRUST
DATED April 21, 2003
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TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II REGISTRATION RIGHTS. . . . . . . . . . . . . . . . . . . . . 3
2.1 Demand Registration. . . . . . . . . . . . . . . . . . . . . 3
2.2 Piggyback Registration . . . . . . . . . . . . . . . . . . . 4
2.3 Form S-3 . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE III REGISTRATION PROCEDURES. . . . . . . . . . . . . . . . . . . 7
3.1 Filings; Information . . . . . . . . . . . . . . . . . . . . 7
3.2 Registration Expenses. . . . . . . . . . . . . . . . . . . . 10
ARTICLE IV INDEMNIFICATION AND CONTRIBUTION 11
4.1 Indemnification By HT. . . . . . . . . . . . . . . . . . . . 11
4.2 Indemnification By Selling Holders . . . . . . . . . . . . . 11
4.3 Conduct Of Indemnification Proceedings . . . . . . . . . . . 12
4.4 Contribution . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE V MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . 13
5.1 Participation In Underwritten Registrations. . . . . . . . . 13
5.2 Rule 144 . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.3 Market Stand-Off . . . . . . . . . . . . . . . . . . . . . . 14
5.4 Amendments, Waivers, Etc . . . . . . . . . . . . . . . . . . 14
5.5 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 14
5.6 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . 14
5.7 Articles, Sections . . . . . . . . . . . . . . . . . . . . . 14
5.8 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . 15
5.9 Assignment of Registration Rights. . . . . . . . . . . . . . 15
5.10 Parties in Interest. . . . . . . . . . . . . . . . . . . . . 15
5.11 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.12 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.13 Specific Enforcement . . . . . . . . . . . . . . . . . . . . 16
(i)
This REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated as of
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April 21, 2003, is by and between CNL Hospitality Partners, L.P., a Delaware
limited partnership ("CHP") and Hersha Hospitality Trust, a Maryland real estate
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investment trust, ("HT").
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WHEREAS, CHP, HT, and Hersha Hospitality Limited Partnership, a
limited partnership organized under the laws of the Commonwealth of Virginia
("HLP"), entered into that certain Securities Purchase Agreement dated as of
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April 21, 2003 (the "Securities Purchase Agreement") and that certain Joint
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Venture Agreement between HLP and CHP dated as of April 21, 2003 (the "Joint
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Venture Agreement");
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WHEREAS, pursuant to the Securities Purchase Agreement, HLP issued and
sold to CHP and CHP purchased HLP's Preferred Units convertible into shares of
HT's Series A Preferred Shares (as defined herein) and Class A Shares (as
defined herein);
WHEREAS, it is a condition precedent to the closing of the
transactions contemplated by the Securities Purchase Agreement that the parties
hereto execute and deliver this Agreement;
NOW, THEREFORE, in consideration of the mutual premises, agreements
and covenants contained in this Agreement, the parties hereto, intending to be
legally bound, agree as follows:
ARTICLE I
DEFINITIONS
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1.1 DEFINITIONS. Unless otherwise indicated to the contrary,
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capitalized terms not otherwise defined herein shall have the meaning assigned
to them in the Securities Purchase Agreement. In addition, the following terms,
as used herein, have the following meanings:
"Business Day" means any day except a Saturday, Sunday or other day on
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which banks in New York, New York are authorized by law to close.
"Class A Shares" means HT's Priority Class A Common Shares, par value
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$.01 per share.
"Commission" means the Securities and Exchange Commission.
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"Demand Registration" means a registration under the Securities Act
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(as hereinafter defined) requested in accordance with Section 2.1 hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
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and the rules and regulations promulgated by the Commission thereunder.
"Holders" or "Holder," as appropriate, means the Initial Holder and
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any direct or indirect transferee of any Registrable Securities held by any such
Persons.
"Initial Holder" means CHP.
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"Person" or "Persons" means any individual, corporation, partnership,
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limited liability company, joint venture, association, joint-stock company,
trust, unincorporated organization or other entity or government or other agency
or political subdivision thereof.
"Piggyback Registration" has the meaning set forth in Section 2.2.
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"Registrable Securities" means (i) any Series A Preferred Shares
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acquired by the Initial Holder or its transferees in connection with the
conversion or exchange of the Preferred Units, (ii) any Class A Shares acquired
by the Initial Holder or its transferees in connection with the conversion or
exchange of the Preferred Units or Series A Preferred Shares, and (iii) any
other security beneficially owned by a Holder that was issued or is issuable
with respect to the Series A Preferred Shares and/or the Class A Shares by way
of exchange, stock dividend or stock split or in connection with a combination
of shares, recapitalization, merger, consolidation or other reorganization or
otherwise. As to any particular Registrable Securities, issued, such securities
shall only cease to be Registrable Securities when (a) a registration statement
with respect to the sale of such securities has been declared effective by the
Commission and all such Registrable Securities have been disposed of under such
registration statement, (b) all such Registrable Securities have been sold under
circumstances under which all of the applicable conditions of Rule 144 (or any
similar provision then in force) under the Securities Act are met, (c) such time
as all such Registrable Securities have been otherwise transferred to holders
who may trade such shares without restriction under the Securities Act, and HT
has delivered a new certificate or other evidence of ownership for such
securities not bearing a restrictive legend or (d) in the opinion of counsel to
HT, which counsel, if other than the counsel listed in Section 5.11 hereof,
shall be reasonably acceptable to the Holders, all such Registrable Securities
may be sold by the Holders without registration and without any time, volume or
manner limitations pursuant to Rule 144(k) (or any similar provision then in
effect) under the Securities Act.
"Registration Expenses" has the meaning set forth in Section 3.2.
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"Requesting Holders" has the meaning set forth in Section 2.1.
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"Rule 144" means Rule 144 (or any successor rule of similar effect)
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promulgated under the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended, and the
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rules and regulations promulgated by the Commission thereunder.
"Selling Holder" means any Holder who is selling Registrable
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Securities pursuant to a public offering registered hereunder.
"Series A Preferred Shares" means shares of HT's Series A Convertible
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Preferred Shares, par value, $.01 per share.
"Underwriter" means a securities dealer who purchases any Registrable
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Securities as a principal for the resale of such securities and not as part of
such dealer's market-making activities.
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ARTICLE II
REGISTRATION RIGHTS
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2.1 Demand Registration.
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(a) The Holders of at least a majority of the then outstanding
Registrable Securities (subject to Section 2.1(d) below) may make up to two
written requests to HT to register their Registrable Securities during each
twelve month period (each such Holder making such request being referred to
hereinafter as a "Requesting Holder"), under the Securities Act and under the
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securities or "blue sky" laws of any jurisdiction reasonably designated by such
Requesting Holder (a "Demand Registration"), which may, at the election of the
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Requesting Holder, include all or any portion of the Registrable Securities held
by such Requesting Holder unless in the case of an underwritten offering, the
managing Underwriter advises that shares should be excluded (in which case such
Registrable Securities shall be excluded in accordance with the provisions of
this Section 2.1 below). Within ten (10) Business Days after receipt by HT of
such a written registration request, HT shall promptly give written notice to
all other Holders of the proposed demand registration, and such other Holders
shall have the right to join in the proposed registration and sale, upon written
request to HT within ten (10) Business Days after receipt of such notice from HT
(such participating Holder additionally, hereinafter referred to as a
"Requesting Holder"). At the request of the Requesting Holders, HT shall use its
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commercially reasonable efforts to cause each offering pursuant to this Section
to be managed, on a firm commitment basis, by a recognized regional or national
Underwriter selected by the Requesting Holders and approved by HT, such approval
not to be unreasonably withheld. HT shall use its commercially reasonable
efforts to cause such Demand Registration to become effective not later than
three (3) months after it receives an initial request for a Demand Registration
and to remain continuously effective for a period of at least one-hundred
thirty-five (135) days from the effective date of such Demand Registration
Statement or such shorter period which shall terminate when all of the
Registrable Securities covered by the Demand Registration Statement have been
sold pursuant thereto. HT shall not be required to effect more than two Demand
Registrations at the request of the Holders in any twelve month period;
provided, however, that any such request shall only be deemed the use of one of
the two Demand Registrations hereunder, when a registration statement covering
not less than seventy-five percent (75%) of the Registrable Securities specified
in notices requesting registration are included for sale in the Demand for
Registration Statement that has been declared.
(b) If a Demand Registration Statement involves an underwritten
offering and the managing Underwriter advises HT in writing that, in its
opinion, the number of securities requested to be included in such Demand
Registration Statement exceeds the number which can be sold without materially
and adversely affecting the offering, HT will include in such Demand
Registration Statement the number of such securities which HT is so advised can
be sold in such offering without materially and adversely affecting the
offering, determined as follows:
(i) first, for each Requesting Holder, such number of
securities as is determined by multiplying (x) the securities that are able
to be registered as determined by the managing Underwriter, by (y) the
fraction of (A) the aggregate number of securities of HT that such
Requesting Holder proposes to include in such registration
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divided by (B) the total number of securities proposed to be sold in such
offering by all Requesting Holders initiating the Demand Registration;
(ii) second, for each remaining holder of HT's securities who
holds contractual piggyback registration rights, other than the holders
described above in clause (i), if any, such number of securities that is
determined by multiplying (x) the remaining securities that are able to be
registered as determined by the managing Underwriter, by (y) the fraction
of (A) the number of the securities of HT that such holder proposes to
include in such registration divided by (B) the total remaining number of
securities proposed to be sold in such offering by all such holders
exercising piggybank registration rights; and
(iii) third, for HT and each remaining holder of HT's
securities other than the holders described above in clauses (i), and (ii),
if any, who are permitted by HT to so participate, such number of
securities as is determined by multiplying (x) the remaining number of
securities that are able to be registered as determined by the managing
Underwriter, by (y) the fraction of (A) the number of the securities of HT
that HT and such holder proposes to include in such registration divided by
(B) the total remaining number of securities proposed to be sold in such
offering by HT and all such remaining holders.
(c) If at the time of any demand to register Registrable
Securities pursuant to this Section 2.1, HT is engaged in, or has plans to
engage in (demonstrated by previously adopted resolutions of HT's Board of
Trustees to such effect or a signed engagement letter or letter of intent with
respect to such action) within three (3) months of the time of such request, a
registered public offering or is engaged in any other significant action which,
in the good faith determination of HT's Board of Trustees, would be adversely
affected by the requested registration to the material detriment of HT, then HT
may at its option direct that such request be delayed for a reasonable period
not in excess of ninety (90) days from the effective date of such offering or
the date of completion of such other material activity, as the case may be, such
right to delay a request under this Section to be exercised by HT not more than
once in any one-year period.
(d) HT shall not be required to file a Registration Statement
pursuant to this Section 2.1 unless the Holder or Holders demanding such
registration propose to dispose of shares of Registrable Securities having an
aggregate disposition price (before deduction of underwriting discounts and
expenses of sale) of at least the lower of $1,000,000 or, 10% of the fair market
value of the Registrable Securities.
2.2 Piggyback Registration.
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(a) If HT proposes to file a registration statement under the
Securities Act with respect to an offering or sale of Class A Shares or Series A
Preferred Shares for its own account or for the account of another Person (other
than a registration statement on Form S-4 or S-8 (or any substitute form or
rule, respectively, that may be adopted by the Commission)), HT shall give
written notice of such proposed filing to the Holders as soon as reasonably
practicable (but in no event less than 30 days before the anticipated filing
date), undertaking to provide each
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Holder the opportunity to register on the Same terms and conditions such number
of shares of Registrable Securities as such Holder may request (a "Piggyback
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Registration"). Each Holder will have 20 days after receipt of any such notice
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to notify HT as to whether it wishes to participate in a Piggyback Registration
(which notice shall not be deemed to be a request for a Demand Registration);
provided that should a Holder fail to provide timely notice to HT, such Holder
will forfeit any rights to participate in the Piggyback Registration with
respect to such proposed offering. If HT or the Person for whose account such
offering is being made shall determine in its sole discretion not to register or
to delay the proposed offering, HT shall, provide written notice of such
determination to the Holders and (i) in the case of a determination not to
effect the proposed offering, shall thereupon be relieved of the obligation to
register such Registrable Securities in connection therewith, and (ii) in the
case of a determination to delay a proposed offering, shall thereupon be
permitted to delay registering such Registrable Securities for the same period
as the delay in respect of the proposed offering. As between HT or any other
Person for whose account any such offering is being made, on the one hand, and
the Holders, exercising piggyback rights hereunder, on the other hand, HT or
such other Person, as the case may be, with the consent of the Holders
exercising piggyback rights hereunder (which consent shall not be unreasonably
withheld), shall be entitled to select the Underwriters in connection with any
Piggyback Registration.
(b) If the managing Underwriter advises HT that the inclusion of
Registrable Securities would materially adversely affect the offering (it being
agreed that variations in class or series of Registrable securities to be
included in such registration statement shall not be deemed to materially and
adversely affect the offering), HT shall include in such registration statement,
as to each Holder and any other Person or Persons having a contractual right to
request their shares be included in such registration, that number of securities
which HT is so advised can be sold in such offering without materially and
adversely affecting the offering, determined as follows:
(i) In the event HT initiated such registration:
1. first, for the Holders electing to participate in such
registration, such number of securities equal to fifty percent
(50%) of the number of securities able to be registered as
determined by the managing Underwriter provided however, that
upon the one time election of HT during each seven-hundred and
thirty (730) day period of time hereunder, thirty percent (30%)
of the number of securities able to be registered as determined
by the managing Underwriter;
2. second, for HT, the remaining number of securities able to be
registered as determined by the managing Underwriter; and
3. third, for each remaining Holder of HT's securities who holds
contractual piggyback registration rights, other than the Holders
described above in clauses (1) and (2), the fraction of such
holder's securities proposed to be registered which is obtained
by dividing (i) the remaining number of the securities of HT that
such holder proposes to include in such registration by (ii) the
total remaining number of securities proposed to be sold in
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such offering by all such holders; and
4. fourth, for each remaining holder of HT's securities, other than
the holders described above in clauses (1), (2) and (3), if any,
who are permitted by HT to so participate, such number of
securities as is determined by multiplying (a) the remaining
securities able to be registered as determined by the managing
Underwriter, by (b) the fraction obtained by dividing (i) the
number of the securities of HT that such holder proposes to
include in such registration by (ii) the total number of
securities proposed to be sold in such offering by all such
remaining holders.
(ii) In the event a shareholder other than a Holder initiated such
registration pursuant to a contractual demand registration right:
1. first, for the Holders electing to participate in such
registration, such number of securities equal to seventy-five
percent (75%) of the number of securities able to be registered
as determined by the managing Underwriter;
2. Second, for the shareholders who are not Holders hereunder, the
remaining number of securities able to be registered as
determined by the managing Underwriter;
3. third, for each remaining holder of HT's securities who holds
contractual piggyback registration rights, other than the holders
described above in clauses (1) and (2), the fraction of such
holder's securities proposed to be registered which is obtained
by dividing (i) the remaining number of the securities of HT that
such holder proposes to include in such registration by (ii) the
total remaining number of securities proposed to be sold in such
offering by all such holders; and
4. fourth, for each remaining holder of HT's securities, other than
the holders described above in clauses (1), (2) and (3), if any,
who are permitted by HT to so participate, such number of
securities as is determined by multiplying (a) the remaining
securities able to be registered as determined by the managing
Underwriter, by (b) the fraction obtained by dividing (i) the
number of the securities of HT that such holder proposes to
include in such registration by (ii) the total number of
securities proposed to be sold in such offering by all such
remaining holders.
If as a result of the provisions of this Section 2.2(b) any Holder shall
not be entitled to include all of its Registrable Securities in a registration
that such Holder has requested to be so included, such Holder may withdraw such
Holder's request to include its Registrable Securities in such registration
statement prior to its effectiveness.
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2.3 Form S-3. HT shall use its reasonable efforts to qualify, and to
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thereafter remain qualified, for registration on Form S-3 or its successor form.
After HT has qualified for the use of Form S-3, Holders of not less than twenty
percent (20%) of the then outstanding Registrable Securities shall have the
right at any time to request registrations on Form S-3 (such requests shall be
in writing and shall state the number of shares of Registrable Securities to be
disposed of and the intended method of disposition of shares by such Holders),
subject only to the following:
(i) HT shall not be required to file an S-3 Registration
Statement pursuant to this Section 2.3 within ninety (90) days after the
effective date of any registration referred to in Sections 2.1 or 2.2
above.
(ii) HT shall not be required to file a Registration
Statement pursuant to this Section 2.4 unless the Holder or Holders
requesting registration propose to dispose of shares of Registrable
Securities having an aggregate disposition price (before deduction of
underwriting discounts and expenses of sale) of at least the lower of
$1,000,000 or, 10% of the fair market value of the Registrable Securities.
(iii) If at the time of any request to register Registrable
Securities pursuant to this Section 2.3, HT is engaged in, or has plans to
engage in (demonstrated by previously adopted resolutions of HT's Board of
Trustees to such effect or a signed engagement letter with a proposed
Underwriter) within three months of the time of such request, a registered
public offering or is engaged in any other significant action which, in the
good faith determination of HT's Board of Trustees, would be adversely
affected by the requested registration to the material detriment of HT ,
then HT may at its option direct that such request be delayed for a
reasonable period not in excess of one hundred twenty (120) days from the
effective date of such offering or the date of completion of such other
material activity, as the case may be, such right to delay a request under
this Section to be exercised by HT not more than once in any one-year
period.
(iv) HT shall give written notice to all Holders of
Registrable Securities of the receipt of a request for registration
pursuant to this Section 2.3 and shall provide a reasonable opportunity for
other Holders to participate in the registration. At the written request of
the Holders requesting such registration, such registration shall be for a
delayed or continuous offering under Rule 415 under the Securities Act.
Subject to the provisions of Section 3.1 hereof, HT will use its reasonable
efforts to effect promptly the registration of all shares of Registrable
Securities on Form S-3 to the extent requested pursuant to this Section 2.3
by the Holder or Holders of such Registrable Securities for purposes of
disposition.
ARTICLE III
REGISTRATION PROCEDURES
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3.1 Filings; Information. In connection with the registration of
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Registrable Securities pursuant to Section 2.1 and Section 2.2 hereof, HT will
use all commercially reasonable efforts to effect the registration of such
Registrable Securities as promptly as is reasonably practicable, and in
connection with any such request:
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(a) HT will expeditiously prepare and file with the Commission a
registration statement on any form for which HT then qualifies and which counsel
for HT shall deem appropriate and available for the sale of the Registrable
Securities to be registered thereunder in accordance with the intended method of
distribution thereof, and use its commercially reasonable efforts to cause such
filed registration statement to become and remain effective with respect to any
Demand Registration or Piggyback Registration, for such period, equal to at
least ninety (90) days, as may be reasonably necessary to effect the sale of
such securities, HT may require Selling Holders to promptly furnish in writing
to HT such information regarding such Selling Holders, the plan of distribution
of the Registrable Securities and other information as HT may be legally
required to disclose in connection with such registration.
(b) HT will, if requested, prior to filing such registration
statement or any amendment or supplement thereto, furnish to the Selling
Holders, and each applicable managing Underwriter, if any, copies thereof, and
thereafter furnish to the Selling Holders and each such Underwriter, if any,
such number of copies of such registration statement, amendment and supplement
thereto (in each case including all exhibits thereto and documents incorporated
by reference therein) and the prospectus included in such registration statement
(including each preliminary prospectus) as the Selling Holders or each such
Underwriter may reasonably request in order to facilitate the sale of the
Registrable Securities by the Selling Holders.
(c) After the filing of the registration statement, HT will
promptly notify the Selling Holders of any stop order issued or, to HT's
knowledge, threatened to be issued by the Commission and use its commercially
reasonable efforts to prevent the entry of such stop order or to remove it if
entered.
(d) In addition to the requirements imposed on HT elsewhere
herein, HT will use its commercially reasonable efforts to qualify the
Registrable Securities for offer and sale under such other securities or blue
sky laws of such jurisdictions in the United States as the Selling Holders may
reasonably request; keep each such registration or qualification (or exemption
therefrom) effective during the period in which such registration statement is
required to be kept effective; and do any and all other acts and things which
may be necessary or advisable to enable each Selling Holder to consummate the
disposition of the Registrable Securities owned by such Selling Holder in such
jurisdictions; provided that HT will not be required to (i) qualify to generally
do business in any jurisdiction where it would not otherwise be required to
qualify but for this Section 3.1(d), (ii) subject itself to taxation in any such
jurisdiction or (iii) consent to general service of process in any such
jurisdiction.
(e) HT will as promptly as is practicable notify the Selling
Holders, at any time when a prospectus relating to the sale of the Registrable
Securities is required by law to be delivered in connection with sales by an
Underwriter or dealer, of the occurrence of any event requiring the preparation
of a supplement or amendment to such prospectus so that, as thereafter delivered
to the purchasers of such Registrable Securities, such prospectus will not
contain an untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading and
promptly make available to the Selling Holders and to the Underwriters any such
supplement or amendment. Upon receipt of any notice of the occurrence of any
event of the kind described in the preceding sentence, the Selling Holders will
forthwith
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discontinue the offer and sale of Registrable Securities pursuant to the
registration statement covering such Registrable Securities until receipt by the
Selling Holders and the Underwriters of the copies of such supplemented or
amended prospectus and, if so directed by HT, the Selling Holders shall deliver
to HT all copies, other than permanent file copies then in the possession of the
Selling Holders, of the most recent prospectus covering such Registrable
Securities at the time of receipt of such notice. In the event HT shall give
such notice, HT shall extend the period during which such registration statement
shall be maintained effective as provided in Section 3.1(a) hereof by the number
of days during the period from and including the date of the giving of such
notice to the date when HT shall make available to the Selling Holders such
supplemented or amended prospectus. Furthermore, in the event HT shall give such
notice, HT shall, as promptly as is practical, prepare a supplement or
post-effective amendment to the registration statement or a supplement to the
related prospectus or any document incorporated or deemed to be incorporated
therein by reference, and file any other required document so that, as
thereafter delivered to the purchasers of the Registrable Securities being sold
thereunder, such prospectus will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading.
(f) HT will enter into customary agreements (including an
underwriting agreement in customary form) and take such other actions
(including, without limitation, participation in road shows and investor
conference calls) as are required in order to expedite or facilitate the sale of
such Registrable Securities.
(g) At the request of any Underwriter in connection with an
underwritten offering, HT will furnish (i) an opinion of counsel, addressed to
the Underwriters, covering such customary matters as the managing Underwriter
may reasonably request and (ii) a comfort letter or comfort letters from HT's
independent public accountants covering such customary matters as the managing
Underwriter may reasonably request.
(h) If requested by the managing Underwriter or any Selling
Holder, HT shall promptly incorporate in a prospectus supplement or post
effective amendment such information as the managing Underwriter or any Selling
Holder reasonably requests to be included therein, including without limitation,
with respect to the Registrable Securities being sold by such Selling Holder,
the purchase price being paid therefor by the Underwriters and with respect to
any other terms of the underwritten offering of the Registrable Securities to be
sold in such offering, and promptly make all required filings of such prospectus
supplement or post effective amendment.
(i) HT shall promptly make available for inspection by any Selling
Holder or Underwriter participating in any disposition pursuant to any
registration statement, and any attorney, accountant or other agent or
representative retained by any such Selling Holder or Underwriter (collectively,
the "Inspectors"), all financial and other records, pertinent corporate
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documents and properties of HT (collectively, the "Records"), as shall
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reasonably be necessary to enable them to exercise their due diligence
responsibility, and cause HT's officers, directors and employees to supply all
information requested by any such Inspector in connection with such registration
statement; provided, however, that unless the disclosure of such Records is
necessary to avoid or correct a misstatement or omission in the registration
statement or the release of such Records is ordered pursuant to a subpoena or
other order from a court of competent jurisdiction,
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HT shall not be required to provide any information under this subparagraph (i)
if (A) HT believes, after consultation with counsel for HT, that to do so would
cause HT to forfeit an attorney-client privilege that was applicable to such
information or (B) if HT has requested and been granted from the Commission
confidential treatment of such information contained in any filing with the
Commission or documents provided supplementally or otherwise.
(j) HT shall cause the Class A Common Shares included in any
registration statement to be listed on each securities exchange on which
securities issued by HT are then listed, if the Registrable Securities so
qualify.
(k) HT shall provide a CUSIP number for the Registrable Securities
included in any registration statement not later than the effective date of such
registration statement.
(l) HT shall cooperate with each Selling Holder and each
Underwriter participating in the disposition of such Registrable Securities and
their respective counsel in connection with any filings required to be made with
the National Association of Securities Dealers, Inc.
(m) HT shall participate in any financial roadshow organized for
purposes of publicizing the sale or other disposition of the Registrable
Securities. Such participation shall include, but not be limited to, dispatch
by HT of personnel to assist in each presentation made during the roadshow, and
provision of HT data needed for purposes of the roadshow.
(n) HT shall, during the period when the prospectus is required to
be delivered under the Securities Act, promptly file all documents required to
be filed with the Commission pursuant to Section 13(a) of the Exchange Act.
3.2 Registration Expenses. In connection with any Registration
----------------------
effected hereunder, HT shall pay all expenses incurred in connection with such
registration (the "Registration Expenses"), including without limitation: (i)
----------------------
registration and filing fees with the Commission and the National Association of
Securities Dealers, Inc., (ii) all fees and expenses of compliance with
securities or blue sky laws (including fees and disbursements of counsel in
connection with blue sky qualifications of the Registrable Securities), (iii)
printing expenses, messenger and delivery expenses, (iv) fees and expenses
incurred in connection with the listing or quotation of the Registrable
Securities, (v) fees and expenses of counsel to HT and the fees and expenses of
independent certified public accountants for HT (including fees and expenses
associated with the special audits or the delivery of comfort letters together
with the fees and expenses of one counsel for the Selling Holders), (vi) the
fees and expenses of any additional experts retained by HT in connection with
such registration, (vii) all roadshow costs and expenses not paid by the
Underwriters, and (viii) the fees and expenses of other persons retained by HT,
whether or not any registration statement becomes effective; provided that in no
event shall Registration Expenses include any underwriting discounts or
commissions or transfer taxes or the reasonable fees and expenses of more than
one counsel for the Selling Holders.
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ARTICLE IV
INDEMNIFICATION AND CONTRIBUTION
--------------------------------
4.1 Indemnification By HT. HT agrees to indemnify, and hold harmless
-----------------------
each Selling Holder and their respective officers, directors, partners,
shareholders, members, employees, agents and representatives and each Person (if
any) which controls a Selling Holder within the meaning of either Section 15 of
the Securities Act or Section 20 of the Exchange Act, from and against any and
all losses, claims, damages, liabilities, costs and expenses (including
reasonable attorneys' fees) caused by, arising out of, resulting from or related
to any untrue statement or alleged untrue statement of a material fact contained
or incorporated by reference in any registration statement or prospectus
relating to the Registrable Securities (as amended or supplemented if HT shall
have furnished any amendments or supplements thereto) or any preliminary
prospectus, or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages or
liabilities are caused by or based upon any information furnished in writing to
HT by or on behalf of such Selling Holder expressly for use therein or by such
Selling Holder's failure to deliver a copy of the registration statement or
prospectus or any amendments or supplements thereto after HT has furnished such
Selling Holder with copies of the same; provided, however, that HT shall have no
obligation to indemnify under this sentence to the extent any such losses,
claims, damages or liabilities have been finally and non-appealably determined
by a court of competent jurisdiction to have resulted from such Selling Holder's
willful misconduct or gross negligence. HT also agrees to indemnify any
Underwriter of the Registrable Securities, their officers and directors and each
person who controls such Underwriter on substantially the same basis as that of
the indemnification of the Selling Holders provided in this Section 4.1, except
insofar as such losses, claims, damages or liabilities are caused by or based
upon any information furnished in writing to HT by or on behalf of such
Underwriter expressly for use therein or by such Underwriter's failure to
deliver a copy of the registration statement or prospectus or any amendments or
supplements thereto after HT has furnished the Underwriter with copies of the
same; provided, however, that HT shall have no obligation to indemnify under
this sentence to the extent any such losses, claims, damages or liabilities have
been finally and non-appealably determined by a court to have resulted from any
such Underwriter's willful misconduct or gross negligence. The obligations of
HT under this Section 4.1 shall be in addition to any liability which HT may
otherwise have to any Indemnified Person and the obligations of any Indemnified
Person under this Section 4.1 shall be in addition to any liability which such
Indemnified Person may otherwise have to HT. The remedies provided in this
Section 4.1 are not exclusive and shall not limit any rights or remedies which
may otherwise be available to an indemnified party at law or in equity.
4.2 Indemnification By Selling Holders. Each Selling Holder agrees to
-----------------------------------
indemnify, and hold harmless HT, its officers and directors, and each Person, if
any, which controls HT within the meaning of either Section 15 of the Securities
Act or Section 20 of the Exchange Act, from and against any and all losses,
claims, damages, liabilities, costs and expenses (including reasonable
attorneys' fees) caused by, arising out of, resulting from or related to any
untrue statement or alleged untrue statement of a material fact contained or
incorporated by reference in any registration statement or prospectus relating
to the Registrable Securities (as amended or supplemented if HT shall have
furnished any amendments or supplements thereto) or any
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preliminary prospectus, or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, but only with reference to information
furnished in writing by or on behalf of such Selling Holder expressly for use in
any registration statement or prospectus relating to the Registrable Securities,
or any amendment or supplement thereto or any preliminary prospectus. Each
Selling Holder also agrees to indemnify and hold harmless any Underwriters of
the Registrable Securities, their officers and directors and each person who
controls such Underwriters on substantially the same basis as that of the
indemnification of HT provided in this Section 4.2, but only with reference to
information furnished in writing by or on behalf of such Selling Holder
expressly for use in any registration statement or prospectus relating to the
Registrable Securities, or any amendment or supplement thereto or any
preliminary prospectus. Each such Selling Holder's liability under this Section
4.2 shall be limited to an amount equal to the net proceeds (after deducting the
applicable underwriting discount and expenses associated with such Selling
Holder's Registrable Securities sold thereunder) received by such Selling Holder
from the sale of such Registrable Securities by such Selling Holder. The
obligation of each Selling Holder hereunder shall be several and not joint.
4.3 Conduct Of Indemnification Proceedings. In case any proceeding
-----------------------------------------
(including any investigation by any court, governmental, regulatory or
administrative agency or commission or other governmental authority or
instrumentality, domestic (federal, state or municipal) or foreign governmental
entity) shall be instituted involving any Person in respect of which indemnity
may be sought pursuant to Section 4.1 or Section 4.2, such Person (the
"Indemnified Party") shall promptly notify the Person against whom such
------------------
indemnity may be sought (the "Indemnifying Party") in writing and the
-------------------
Indemnifying Party, upon the request of the Indemnified Party, shall retain
counsel reasonably satisfactory to such Indemnified Party to represent such
Indemnified Party and any others the Indemnifying Party may designate in such
proceeding and shall pay the fees and disbursements of such counsel related to
such proceeding. In any such proceeding, any Indemnified Party shall have the
right to retain its own counsel, but the fees and expenses of such counsel shall
be at the expense of such Indemnified Party unless (i) the Indemnifying Party
and the Indemnified Party shall have mutually agreed to the retention of such
counsel or (ii) the named parties to any such proceeding (including any
impleaded or joined parties) include both the Indemnified Party and the
Indemnifying Party and, in the written opinion of counsel for the Indemnified
Party, representation of both parties by the same counsel would be inappropriate
due to actual or potential differing interests between them. It is understood
that the Indemnifying Party shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the fees and
expenses of more than one separate firm of attorneys (in addition to any local
counsel) at any time for all such Indemnified Parties, and that all such fees
and expenses shall be reimbursed as they are incurred. In the case any such
separate firm for the Indemnified Parties exists, such firm shall be designated
in writing by the Indemnified Parties. The Indemnifying Party shall not be
liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent (not to be unreasonably withheld), or
if a final judgment is entered for the plaintiff, the Indemnifying Party shall
indemnify and hold harmless such Indemnified Parties from and against any loss
or liability (to the extent stated above) by reason of such settlement or
judgment.
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4.4 Contribution.
------------
(a) If the indemnification provided for in this Article IV is, by
operation of law unavailable to an Indemnified Party in respect of any losses,
claims, damages or liabilities in respect of which indemnity is to be provided
hereunder, then each such Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall to the fullest extent permitted by law, contribute to
the amount paid or payable by such Indemnified Party as a result of such losses,
claims, damages or liabilities in such proportion as is appropriate to reflect
the relative fault of such party in connection with the statements or omissions
that resulted in such losses, claims, damages or liabilities, as well as any
other relevant equitable considerations. The relative fault of HT, a Selling
Holder and the Underwriters shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by such party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
(b) HT and each Selling Holder agrees that it would not be just
and equitable if contribution pursuant to this Section 4.4 were determined by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation that does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an Indemnified Party as a result of the losses,
claims, damages or liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such Indemnified Party
in connection with investigating or defending any such action or claim. Each
Selling Holder shall not be required to contribute any amount in excess of the
amount by which the net proceeds of the offering (before deducting expenses)
received by such Selling Holder exceeds the amount of any damages which such
Selling Holder has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation.
ARTICLE V
MISCELLANEOUS
-------------
5.1 Participation In Underwritten Registrations. No Person may
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participate in any underwritten registered offering contemplated hereunder
unless such Person (a) agrees to sell its securities on the basis provided in
any underwriting arrangements approved by the Persons entitled hereunder to
approve such arrangements, (b) completes and executes all (to the extent
reasonable and customary) questionnaires, powers of attorney, custody
arrangements, indemnities, underwriting agreements and other documents
reasonably required under the terms of such underwriting arrangements and this
Agreement and (c) furnishes in writing to HT such information regarding such
Person, the plan of distribution of the Registrable Securities and other
information as HT may from time to time reasonably request or as may legally be
required in connection with such registration; provided, however, that no such
Person shall be required to make any representations or warranties in connection
with any such registration other than
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representations and warranties as to (i) such Person's ownership of his or its
Registrable Securities to be sold or transferred in a manner which is free and
clear of all liens, claims and encumbrances, (ii) such Person's power and
authority to effect such transfer and (iii) such matters pertaining to
compliance with securities laws as may reasonably be requested; provided
further, however, that the obligation of such Person to indemnify pursuant to
any such underwriting agreements shall be several, and not joint and several,
among such Persons selling Registrable Securities, and the liability of each
such Person will be in proportion to, and provided further that such liability
will be limited to, the net amount received by such Person from the sale of such
Person's Registrable Securities pursuant to such registration.
5.2 Rule 144. HT shall file any and all reports required to be filed
---------
by it under the Securities Act and the Exchange Act and shall take such further
action as the Holders may reasonably request to the extent required from time to
time to enable the Holders to sell Registrable Securities without registration
under the Securities Act within the limitation of the exemptions provided by
Rule 144 under the Securities Act, as such Rule may be amended from time to
time, or any similar rule or regulation hereafter adopted by the Commission.
Upon the request of any Holder, HT will deliver to such Holder a written
statement as to whether it has complied with such reporting requirements.
5.3 Market Stand-Off. In connection with the registration of HT's
-----------------
securities (whether or not such Holder is participating in such registration)
upon the reasonable request of HT and the managing Underwriter of any
Underwritten offering of HT's securities, each Holder agrees not to sell, make
any short sale of, loan, grant any option for the purchase of, or otherwise
dispose of, any Registrable Securities (other than those included in the
registration) without prior written consent of HT, or such Underwriters, as the
case may be, for such period of time (not to exceed 180 days from the effective
date of such registration) as HT and the managing Underwriter may reasonably
specify.
5.4 Amendments, Waivers, Etc. This Agreement may not be amended,
--------------------------
waived or otherwise modified or terminated except by an instrument in writing
signed by HT and the Holders of at least two-thirds of the Registrable
Securities then held by all the Holders.
5.5 Counterparts. This Agreement may be executed and delivered
------------
(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.
5.6 Entire Agreement. This Agreement, together with the Securities
-----------------
Purchase Agreement and the 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.
5.7 Articles, Sections. Unless the context indicates otherwise,
-------------------
references to Articles, Sections and paragraphs shall refer to the corresponding
articles, sections and paragraphs in this Agreement.
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5.8 Governing Law; Choice of Forum. This Agreement shall be construed
-------------------------------
in accordance with and governed by, the internal laws of the State of Maryland
(without giving effect to such State's principles of conflicts of laws
principles). Each of the parties hereto hereby irrevocably consents, to the
maximum extent permitted by law, that any action or proceeding relating to this
Agreement or the transactions contemplated hereby shall be brought, at the
option of the party instituting the action or proceeding, in any court of
general jurisdiction in New York County, New York, in the United States District
Court for the Southern District of New York or in any state or federal court
sitting in the area currently comprising the Southern District of New York.
Each of the parties hereto waives any objection that it may have to the conduct
of any action or proceeding in any such court based on improper venue or forum
non conveniens, waives personal service of any and all process upon it, and
consents that all service of process may be made by mail or courier service
directed to it at the address set forth herein and that service so made shall be
deemed to be completed upon the earlier of actual receipt or ten days after the
same shall have been posted or delivered to a nationally recognized courier
service. Nothing contained in this Section 5.8 shall affect the right of any
party hereto to serve legal process in any other manner permitted by law.
5.9 Assignment of Registration Rights. Each Holder of Registrable
------------------------------------
Securities may assign all or any part of its rights under this Agreement to any
person to whom such Holder sells, assigns, transfers, conveys or pledges such
Registrable Securities. In the event that the Holder shall assign its rights
pursuant to this Agreement in connection with the transfer of less than all of
its Registrable Securities, the Holder shall also retain its rights with respect
to its remaining Registrable Securities.
5.10 Parties in Interest.
---------------------
(a) This Agreement shall be binding upon and inure to the benefit
of HT and any successor organization which shall succeed to substantially all of
the business and property of HT, whether by merger, consolidation, acquisition
of all or substantially all of the assets of HT or otherwise, including by
operation of law ("Successor"). HT hereby covenants and agrees that it shall
---------
cause any Successor to adopt and assume this Agreement. If a parent entity of
HT or its Successor becomes the issuer of the Registrable Securities, then HT or
such Successor shall cause such parent entity to adopt and assume this Agreement
to the same extent as if the parent entity were HT or such Successor.
(b) If, after the date hereof and prior to the Commission
declaring the registration statement to be filed pursuant to Section 2.1, 2.2 or
2.3 effective under the Securities Act, HT grants to any Person any registration
rights with respect to any HT securities which contain terms that are more
favorable to such other Person than those provided in this Agreement are to the
Holder, then HT forthwith shall grant (by means of an amendment to this
Agreement or otherwise) identical registration rights to all Holders hereunder.
5.11 Notices. All notices and other communications hereunder shall be
-------
in writing 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):
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(a) If to CHP, to:
CNL Hospitality Properties, Inc.
CNL Center at City Commons
450 South Orange Avenue
Orlando, Florida 32801-3336
Facsimile:
Attn: Brian Strickland
with a copy (which shall not constitute notice hereunder) to:
Greenberg Traurig, LLP
The MetLife Building
200 Park Avenue
New York, New York 10166
Facsimile: 212-801-6400
Attn: Judith Fryer, Esq.
Alan S. Gaynor, Esq.
(b) If to HT or HLP, to:
Hersha Hospitality Trust
148 Sheraton Drive
Box A
New Cumberland, Pennsylvania 17070
Facsimile: 717-974-7383
Attn: Hasu P. Shah
with a copy (which shall not constitute notice) to:
Hunton & Williams
951 East Byrd Street
Richmond, Virginia 23219
Facsimile: 804-788-8218
Attn: Cameron N. Cosby, Esq.
Randall Parks, 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 notices, requests or instructions
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.
5.12 Headings. The headings contained in this Agreement are for
--------
convenience of reference only and are not part of the substance of this
Agreement.
5.13 Specific Enforcement. The parties recognize that in the event HT
---------------------
should refuse to perform under the provisions of this Agreement, monetary
damages alone will not be adequate.
16
Accordingly, CHP 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, HT hereby waive the defense that there is an adequate remedy at
law. In no event shall HT be entitled to seek specific performance with respect
to any of CHP's obligations arising under this Agreement.
17
IN WITNESS WHEREOF, HT and each Holder has caused this Agreement to be
signed by its duly authorized officer as of the date first written above.
CNL HOSPITALITY PARTNERS, L.P.
By: CNL HOSPITALITY GP CORP.,
Its general partner
By: /s/ Tammie A. Quinlan
Name: Tammie A. Quinlan
Title: Senior Vice President
HERSHA HOSPITALITY TRUST
By: /s/ Ashish R. Parikh
Name: Ashish R. Parikh
Title: Chief Financial Officer
(SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT)
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