Document:

sho_ex4-5

		

			Exhibit 4.5

		

		
			DESCRIPTION OF THE REGISTRANT’S SECURITIES
		

		
			REGISTERED PURSUANT TO SECTION 12 OF THE SECURITIES
		

		
			EXCHANGE ACT OF 1934
		

		
			The following is a brief description of the securities of Sunstone Hotel Investors, Inc. registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended, or the Exchange Act. This description of the terms of our securities does not purport to be complete and is subject to and qualified in its entirety by reference to the applicable provisions of Maryland General Corporation Law, or MGCL, and the full text of our charter and bylaws, copies of which have been filed as exhibits to this Annual Report on Form 10-K. As used in this “Description of Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934,” references to “our company,” “we,” “our” or “us” refer solely to Sunstone Hotel Investors, Inc. and not to any of its subsidiaries, unless otherwise expressly stated or the context otherwise requires. 
		

		
			COMMON STOCK
		

		
			Our charter provides that we are authorized to issue 500,000,000 shares of common stock, $0.01 par value per share.  Our board of directors, with the approval of a majority of the entire board and without any action by our stockholders, may amend our charter to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or series that we have authority to issue.
		

		
			The following summary description of our common stock is based on the provisions of our charter, bylaws and the applicable provisions of the Maryland General Corporation Law, or MGCL.  This information may not be complete in all respects and is qualified in its entirety by reference to the provisions of our charter, bylaws and the MGCL.
		

		
			As of February 13, 2020, there were 225,115,704 shares of our common stock issued and outstanding.  Our common stock is listed on the New York Stock Exchange, or NYSE, under the symbol “SHO.”
		

		
			Distributions.  Subject to provisions of law and the preferential rights of any other class or series of stock and the restrictions on transfer of stock as provided in our charter, the holders of our common stock are entitled to receive distributions when, as and if authorized by our board of directors and declared by us out of assets legally available therefor.  We will pay those distributions either in cash or otherwise in the amounts and on the date or dates designated by our board of directors.
		

		
			Liquidation Preference.  Upon the occurrence of any liquidation, dissolution or winding up of our affairs, whether voluntary or involuntary, and subject to the liquidation preferences of any outstanding class or series of stock, the holders of our common stock are entitled to receive their proportionate share of all assets available for distribution.
		

		
			Voting Rights.  Subject to the restrictions on transfer of stock in our charter and the separate voting rights of any other class or series of stock, holders of our common stock are entitled to one vote for each share of our common stock held on every matter submitted to a vote of stockholders.  Except as otherwise required by the terms of any outstanding class or series of stock, the holders of our common stock have sole voting power.  Holders of our common stock 

		 

		

			 

		

		

			 

		

do not have cumulative voting rights in the election of directors, which means that the holders entitled to cast a majority of the votes entitled to be cast in the election of directors may elect all of the directors and the holders of the remaining shares of our common stock are not able to elect any directors.
		

		
			No Other Rights.  Holders of shares of our common stock have no conversion, sinking fund, redemption, exchange or appraisal rights and have no preemptive rights to subscribe for any of our securities.
		

		
			Transfer Agent.  The transfer agent and registrar for our common stock is American Stock Transfer & Trust Company, LLC.
		

		
			Restrictions on Ownership and Transfer.  To assist us, among other purposes, in qualifying as a real estate investment trust, or REIT, our charter contains certain restrictions as to ownership and transfer of our stock.  For a summary of these restrictions, see “Restrictions on Ownership and Transfer” below.
		

		
			PREFERRED STOCK
		

		
			Series E Cumulative Redeemable Preferred Stock
		

		
			As of February 13, 2020, there were 4,600,000 shares of our 6.950% Series E Cumulative Redeemable Preferred Stock, par value $0.01 per share, or our series E preferred, authorized, issued and outstanding.
		

		
			Rank.  The series E preferred ranks, with respect to dividend rights and rights upon voluntary or involuntary liquidation, dissolution or winding-up of our affairs, senior to all classes or series of our common stock and to any other class or series of our capital stock expressly designated as ranking junior to the series E preferred, on parity with any class of our capital stock expressly designated as ranking on parity with the series E preferred, including our 6.450% Series F Cumulative Redeemable Preferred Stock, $0.01 par value per share, which we refer to as series F preferred, and junior to any other class or series of our capital stock expressly designated as ranking senior to the series E preferred.  Any future authorization or issuance of a class or series of our capital stock expressly designated as ranking senior to the series E preferred would require the affirmative vote of the holders of at least two-thirds of the outstanding shares of series E preferred and all other shares of any class or series ranking on parity with the series E preferred that are entitled to similar voting rights (voting together as a single class).
		

		
			Dividends.  Subject to the preferential rights of any security senior to the series E preferred as to dividends, the holders of series E preferred are entitled to receive, when, as and if authorized by our board of directors and declared by us out of funds legally available for the payment of dividends, cumulative cash dividends at the rate of 6.950% per annum of the $25.00 liquidation preference per share of the series E preferred (equivalent to an annual rate of $1.7375 per share of the series E preferred).  Dividends will be payable quarterly in arrears on the 15th day of each January, April, July and October of each year (or if not a business day, on the next succeeding business day).  Dividends payable on the series E preferred for any partial period will be computed on the basis of a 360-day year consisting of twelve 30-day months.  Accrued but 

		 

		

			 

		

		

			 

		

unpaid dividends on the series E preferred will accumulate as of the dividend payment date on which they first became payable.  Dividends on the series E preferred will accrue whether or not:
		

			
	
			
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			we have earnings;

			
	
			
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			there are funds legally available for the payment of those dividends; or

			
	
			
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			those dividends are authorized or declared.

		
			Except as described in the next paragraph, unless full cumulative dividends on the series E preferred for all past dividend periods shall have been, or contemporaneously are, declared and paid in cash or declared and a sum sufficient for the payment thereof in cash is set aside for payment, we will not:
		

			
	
			
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			declare or pay or set aside for payment of dividends, and we will not declare or make any distribution of cash or other property, directly or indirectly, on or with respect to any shares of our common stock or series F preferred, or any other class or series of stock ranking as to dividends on parity with or junior to the series E preferred for any period; or

			
	
			
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			redeem, purchase or otherwise acquire for any consideration, or make any other distribution of cash or other property, directly or indirectly, on or with respect to, or pay or make available any monies for a sinking fund for the redemption of, any common stock or series F preferred, or any other class or series of stock ranking, with respect to dividends and upon liquidation, on parity with or junior to our series E preferred.

		
			The foregoing sentence, however, will not prohibit:
		

			
	
			
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			dividends payable solely in capital stock ranking junior to the series E preferred;

			
	
			
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			the conversion into or exchange for other shares of any class or series of capital stock ranking junior to the series E preferred; and

			
	
			
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			our purchase of shares of series E preferred, preferred stock ranking on parity with the series E preferred as to payment of dividends or capital stock or equity securities ranking junior to the series E preferred pursuant to our charter to the extent necessary to preserve our status as a REIT.

		
			Liquidation Preference.  Upon any voluntary or involuntary liquidation, dissolution or winding-up of our affairs, and before any distribution or payment shall be made to holders of our common stock or any other class or series of our stock ranking, as to rights upon any voluntary or involuntary liquidation, dissolution or winding-up of our affairs, junior to the series E preferred, the holders of shares of series E preferred are entitled to be paid out of our assets legally available for distribution to our stockholders, after payment or provision for our debts and other liabilities, a liquidation preference of $25.00 per share of series E preferred, plus an amount equal to any accrued and unpaid dividends (whether or not earned or declared) up to, but not including, the date of payment.  The rights of holders of series E preferred to receive their liquidation preference will be subject to the proportionate rights of any other class or series of our capital stock ranking senior or on parity with the series E preferred as to liquidation, including our series F preferred.  After payment of the full amount of the liquidating distributions to which they are entitled, the holders of series E preferred will have no right or claim to any of 

		 

		

			 

		

		

			 

		

our remaining assets.  Our consolidation, conversion or merger with or into any other corporation, trust or other entity, or the voluntary sale, lease, transfer or conveyance of all or substantially all of our property or business, will not be deemed to constitute a liquidation, dissolution or winding-up of our affairs.
		

		
			Optional Redemption.  We may not redeem the series E preferred prior to March 11, 2021, except as described below under “—Special Optional Redemption” and “Restrictions on Ownership and Transfer.”  On and after March 11, 2021, we may, at our option, upon not less than 30 nor more than 60 days’ written notice, redeem the series E preferred, in whole or in part, at any time or from time to time, for cash at a redemption price of $25.00 per share, plus all accrued and unpaid dividends (whether or not declared) up to, but not including, the date fixed for redemption, without interest, to the extent we have funds legally available for that purpose. Unless full cumulative dividends on all outstanding shares of series E preferred shall have been or contemporaneously are authorized, declared and paid in cash or declared and a sufficient sum set aside for payment of all past dividend periods and the then-current dividend period, no shares of series E preferred shall be redeemed unless all outstanding shares of series E preferred are simultaneously redeemed.  All shares of the series E preferred that we redeem or repurchase will be retired and restored to the status of authorized but unissued shares of preferred stock, without designation as to series or class.
		

		
			If we redeem fewer than all of the outstanding shares of series E preferred, the notice of redemption mailed to each stockholder will also specify the number of shares of series E preferred that we will redeem from each shareholder.  In this case, we will determine the number of outstanding shares of series E preferred to be redeemed on a pro rata basis or by lot.
		

		
			If (i) we have given a notice of redemption, (ii) have set aside sufficient funds for the redemption in trust for the benefit of the holders of the series E preferred called for redemption and (iii) irrevocable instructions have been given to pay the redemption price and all accrued and unpaid dividends, then from and after the redemption date, those series E preferred will be treated as no longer being outstanding, no further dividends will accrue and all other rights of the holders of those series E preferred will terminate, except the right to receive the redemption price plus any accrued and unpaid dividends payable upon such redemption, without interest.  The holders of those series E preferred will retain their right to receive the redemption price for their shares and any accrued and unpaid dividends payable upon such redemption, without interest.
		

		
			The holders of series E preferred at the close of business on a dividend record date will be entitled to receive the dividend payable with respect to the series E preferred on the corresponding payment date notwithstanding the redemption of the series E preferred between such record date and the corresponding payment date.  Except as provided above, we will make no payment or allowance for unpaid dividends, whether or not in arrears, on series E preferred to be redeemed.
		

		
			Special Optional Redemption.  Upon the occurrence of a Change of Control, we may, at our option, redeem the series E preferred, in whole or in part and within 120 days after the first date on which such Change of Control occurred, by paying $25.00 per share, plus any accrued and unpaid dividends to, but not including, the date of redemption.  If, prior to the Change of Control Conversion Date, we have provided or provide notice of redemption with respect to the 

		 

		

			 

		

		

			 

		

series E preferred (whether pursuant to our optional redemption right or our special optional redemption right), you will not have the conversion right described below under “—Conversion Rights.”
		

		
			If we redeem fewer than all of the outstanding shares of series E preferred, the notice of redemption mailed to each stockholder will also specify the number of shares of series E preferred that we will redeem from each shareholder.  In this case, we will determine the number of outstanding shares of series E preferred to be redeemed on a pro rata basis or by lot.
		

		
			If (i) we have given a notice of redemption, (ii) have set aside sufficient funds for the redemption in trust for the benefit of the holders of the series E preferred called for redemption and (iii) irrevocable instructions have been given to pay the redemption price and all accrued and unpaid dividends, then from and after the redemption date, those series E preferred will be treated as no longer being outstanding, no further dividends will accrue and all other rights of the holders of those series E preferred will terminate, except the right to receive the redemption price plus any accrued and unpaid dividends payable upon such redemption, without interest.  The holders of those series E preferred will retain their right to receive the redemption price for their shares and any accrued and unpaid dividends payable upon such redemption, without interest.
		

		
			The holders of series E preferred at the close of business on a dividend record date will be entitled to receive the dividend payable with respect to the series E preferred on the corresponding payment date notwithstanding the redemption of the series E preferred between such record date and the corresponding payment date.  Except as provided above, we will make no payment or allowance for unpaid dividends, whether or not in arrears, on series E preferred to be redeemed.
		

		
			A “Change of Control” is when, after the original issuance of the series E preferred, the following have occurred and are continuing:
		

			
	
			
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			the acquisition by any person, including any syndicate or group deemed to be a “person” under Section 13(d)(3) of the Exchange Act of beneficial ownership, directly or indirectly, through a purchase, merger or other acquisition transaction or series of purchases, mergers or other acquisition transactions of shares of our company entitling that person to exercise more than 50% of the total voting power of all shares of our company entitled to vote generally in elections of directors (except that such person will be deemed to have beneficial ownership of all securities that such person has the right to acquire, whether such right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition); and

			
	
			
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			following the closing of any transaction referred to in the bullet above, neither we nor the acquiring or surviving entity has a class of common securities (or ADRs representing such securities) listed on the NYSE, the NYSE MKT LLC or NASDAQ, or listed or quoted on an exchange or quotation system that is a successor to the NYSE, NYSE MKT LLC or NASDAQ.

		
			Conversion Rights.  Upon the occurrence of a Change of Control, each holder of series E preferred will have the right, unless, prior to the Change of Control Conversion Date, we have provided or provide notice of our election to redeem the series E preferred as described under 

		 

		

			 

		

		

			 

		

“—Optional Redemption” or “—Special Optional Redemption,” to convert some or all of the shares of series E preferred held by such holder (the “Change of Control Conversion Right”) on the Change of Control Conversion Date into a number of shares of common stock per series E preferred (the “Common Share Conversion Consideration”) equal to the lesser of:
		

			
	
			
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			the quotient obtained by dividing (i) the sum of the $25.00 liquidation preference per share of series E preferred to be converted plus the amount of any accrued and unpaid dividends to, but not including, the Change of Control Conversion Date (unless the Change of Control Conversion Date is after a record date for a series E preferred dividend payment and prior to the corresponding series E preferred dividend payment date, in which case no additional amount for such accrued and unpaid dividend will be included in this sum) by (ii) the Common Share Price (such quotient, the “Conversion Rate”); and

			
	
			
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			3.6792, or the Share Cap.

		
			The Share Cap is subject to pro rata adjustments for any share splits (including those effected pursuant to a common stock dividend), subdivisions or combinations (in each case, a “Share Split”) with respect to shares of our common stock as follows: the adjusted Share Cap as the result of a Share Split will be the number of shares of our common stock that is equivalent to the product of (i) the Share Cap in effect immediately prior to such Share Split multiplied by (ii) a fraction, the numerator of which is the number of shares of our common stock outstanding after giving effect to such Share Split and the denominator of which is the number of shares of our common stock outstanding immediately prior to such Share Split.
		

		
			For the avoidance of doubt, subject to the immediately succeeding sentence, the aggregate number of shares of our common stock (or equivalent Alternative Conversion Consideration (as defined below), as applicable) issuable in connection with the exercise of the Change of Control Conversion Right will not exceed 16,924,320 shares of common stock (the “Exchange Cap”).  The Exchange Cap is subject to pro rata adjustments for any Share Splits on the same basis as the corresponding adjustment to the Share Cap.
		

		
			In the case of a Change of Control pursuant to which shares of our common stock will be converted into cash, securities or other property or assets (including any combination thereof) (the “Alternative Form Consideration”), a holder of shares of series E preferred will receive upon conversion of such series E preferred the kind and amount of Alternative Form Consideration which such holder would have owned or been entitled to receive upon the Change of Control had such holder held a number of shares of our common stock equal to the Common Share Conversion Consideration immediately prior to the effective time of the Change of Control (the “Alternative Conversion Consideration,” and the Common Share Conversion Consideration or the Alternative Conversion Consideration, as may be applicable to a Change of Control, is referred to as the “Conversion Consideration”).
		

		
			If the holders of shares of our common stock have the opportunity to elect the form of consideration to be received in the Change of Control, the consideration that the holders of the series E preferred will receive will be the form of consideration elected by the holders of the shares of common stock who participate in the determination (based on the weighted average of elections) and will be subject to any limitations to which all holders of shares of common stock 

		 

		

			 

		

		

			 

		

are subject, including, without limitation, pro rata reductions applicable to any portion of the consideration payable in the Change of Control.
		

		
			Series E preferred as to which the Change of Control Conversion Right has been properly exercised and for which the conversion notice has not been properly withdrawn will be converted into the applicable Conversion Consideration in accordance with the Change of Control Conversion Right on the Change of Control Conversion Date, unless prior to the Change of Control Conversion Date we have provided or provide notice of our election to redeem such shares of series E preferred, whether pursuant to our optional redemption right or our special optional redemption right.  If we elect to redeem shares of series E preferred that would otherwise be converted into the applicable Conversion Consideration on a Change of Control Conversion Date, such shares of series E preferred will not be so converted and the holders of such shares will be entitled to receive on the applicable redemption date $25.00 per share, plus any accrued and unpaid dividend thereon to, but not including, the redemption date.
		

		
			In connection with the exercise of any Change of Control Conversion Right, we will comply with all U.S. federal and state securities laws and stock exchange rules in connection with any conversion of shares of series E preferred into shares of common stock.  Notwithstanding any other provision of our series E preferred, no holder of our series E preferred will be entitled to convert such series E preferred for shares of our common stock to the extent that receipt of such shares of common stock would cause such holder (or any other person) to exceed the share ownership limits contained in our charter, including the articles supplementary setting forth the terms of the series E preferred.  See “Restrictions on Ownership and Transfer.”
		

		
			The “Change of Control Conversion Date” will be a business day that is no less than 20 days nor more than 35 days after the date on which we provide the notice described above to the holders of series E preferred.
		

		
			The “Common Share Price” will be (i) if the consideration to be received in the Change of Control by holders of shares of our common stock is solely cash, the amount of cash consideration per share of common stock, and (ii) if the consideration to be received in the Change of Control by holders of shares of our common stock is other than solely cash, the average of the closing price per share of common stock on the 10 consecutive trading days immediately preceding, but not including, the effective date of the Change of Control.
		

		
			Except as provided above in connection with a Change of Control, the series E preferred are not convertible into or exchangeable for any other securities or property.
		

		
			No Maturity, Sinking Fund or Mandatory Redemption.  The series E preferred has no maturity date and we are not required to redeem the series E preferred at any time.  Accordingly, the series E preferred will remain outstanding indefinitely, unless we decide, at our option, to exercise our redemption right or under circumstances where the holders of shares of series E preferred have a conversion right, the holders of shares of series E preferred decide to convert them.  The series E preferred is not subject to any sinking fund.
		

		
			Limited Voting Rights.  Holders of the series E preferred generally do not have any voting rights, except as set forth below.
		

		
			

		 

		

			 

		

		

			 

		

		

		
			If dividends on the series E preferred are in arrears for six or more quarterly periods, whether or not consecutive, holders of the shares of series E preferred (voting together as a single class with all other classes or series of parity preferred stock upon which like voting rights have been conferred and are exercisable) will be entitled to vote at a special meeting or at our next annual meeting of stockholders and each subsequent annual meeting of stockholders, for the election of two additional directors to serve on our board of directors (which we refer to as a preferred stock director), until all unpaid dividends and the dividend for the then current period with respect to the series E preferred and any other class or series of parity preferred stock have been fully paid or declared and a sum sufficient for the payment thereof set aside for payment.  In such a case, the number of directors serving on the board of directors will be increased by two members.  The preferred stock directors will be elected by a plurality of the votes cast in the election to serve until our next annual meeting and until their successors are duly elected and qualified or until such directors’ right to hold the office terminates pursuant to the Termination Event (as defined below), whichever occurs earlier.
		

		
			If and when all accumulated dividends and the dividend for the current dividend period on the series E preferred and for all classes and series of preferred stock ranking on parity with series E preferred and upon which similar voting rights have been conferred and are exercisable shall have been paid in full or a sum sufficient for such payment is irrevocably deposited in trust for payment, the holders of the series E preferred shall be immediately divested of the voting rights set forth above (subject to revesting in the event of each and every preferred dividend default) and the term and office of such preferred stock directors so elected will terminate immediately and the entire board of directors will be reduced accordingly (the “Termination Event”).
		

		
			In addition, so long as any shares of series E preferred remain outstanding, we will not, without the consent or the affirmative vote of the holders of at least two-thirds of the outstanding shares of series E preferred and each other class or series of preferred stock ranking on parity with the series E preferred with respect to the payment of dividends or the distribution of assets upon our liquidation, dissolution or winding-up upon which similar voting rights have been conferred, voting as a single class, given in person or by proxy, either in writing or at a meeting:
		

			
	
			
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			authorize, create or issue, or increase the authorized or issued amount of, any class or series of stock ranking senior to such series E preferred with respect to payment of dividends, or the distribution of assets upon the liquidation, dissolution or winding-up of our affairs, or reclassify any of our authorized stock into any such stock, or create, authorize or issue any obligation or security convertible into or evidencing the right to purchase any such stock; or

			
	
			
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			amend, alter or repeal the provisions of our charter or the terms of the series E preferred, whether by merger, consolidation, transfer or conveyance of all or substantially all of its assets or otherwise, so as to materially and adversely affect any right, preference, privilege or voting power of the series E preferred;

		
			except that with respect to the occurrence of any of the events described in the second bullet point immediately above, so long as the series E preferred remains outstanding with the terms of the series E preferred materially unchanged or the holders of shares of series E preferred receive stock of the successor with substantially identical rights, taking into account that, upon the 

		 

		

			 

		

		

			 

		

occurrence of an event described in the second bullet point above, we may not be the surviving entity, the occurrence of such event will not be deemed to materially and adversely affect the rights, preferences, privileges or voting power of holders of series E preferred, and in such case such holders shall not have any voting rights with respect to the events described in the second bullet point immediately above.
		

		
			Furthermore, if the holders of the series E preferred receive the greater of the full trading price of the series E preferred on the date of an event described in the second bullet point immediately above or the $25.00 liquidation preference per share of series E preferred pursuant to the occurrence of any of the events described in the second bullet point immediately above, then such holders shall not have any voting rights with respect to the events described in the second bullet point immediately above.  If any event described in the second bullet point above would materially and adversely affect the rights, preferences, privileges or voting powers of the series E preferred disproportionately relative to other classes or series of preferred stock ranking on parity with the series E preferred with respect to the payment of dividends and the distribution of assets upon our liquidation, dissolution or winding up, the affirmative vote of the holders of at least two-thirds of the outstanding shares of the series E preferred voting separately as a class, will also be required.
		

		
			Series F Cumulative Redeemable Preferred Stock
		

		
			As of February 13, 2020, there were 3,000,000 shares of our 6.450% Series F Cumulative Redeemable Preferred Stock, par value $0.01 per share, or our series F preferred, authorized, issued and outstanding.
		

		
			Rank.  The series F preferred ranks, with respect to dividend rights and rights upon voluntary or involuntary liquidation, dissolution or winding-up of our affairs, senior to all classes or series of our common stock and to any other class or series of our capital stock expressly designated as ranking junior to the series F preferred, on parity with any class of our capital stock expressly designated as ranking on parity with the series F preferred, including our series E preferred, and junior to any other class or series of our capital stock expressly designated as ranking senior to the series F preferred.  Any future authorization or issuance of a class or series of our capital stock expressly designated as ranking senior to the series F preferred would require the affirmative vote of the holders of at least two-thirds of the outstanding shares of series F preferred and all other shares of any class or series ranking on parity with the series F preferred that are entitled to similar voting rights (voting together as a single class).
		

		
			Dividends.  Subject to the preferential rights of any security senior to the series F preferred as to dividends, the holders of series F preferred are entitled to receive, when, as and if authorized by our board of directors and declared by us out of funds legally available for the payment of dividends, cumulative cash dividends at the rate of 6.450% per annum of the $25.00 liquidation preference per share of the series F preferred (equivalent to an annual rate of $1.6125 per share of the series F preferred).  Dividends will be payable quarterly in arrears on the 15th day of each January, April, July and October of each year (or if not a business day, on the next succeeding business day).  Dividends payable on the series F preferred for any partial or longer period will be computed on the basis of a 360-day year consisting of twelve 30-day months.  Accrued but unpaid dividends on the series F preferred will accumulate as of the dividend 

		 

		

			 

		

		

			 

		

payment date on which they first became payable.  Dividends on the series F preferred will accrue whether or not:
		

			
	
			
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			we have earnings;

			
	
			
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			there are funds legally available for the payment of those dividends; or

			
	
			
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			those dividends are authorized or declared.

		
			Except as described in the next paragraph, unless full cumulative dividends on the series F preferred for all past dividend periods shall have been, or contemporaneously are, declared and paid in cash or declared and a sum sufficient for the payment thereof in cash is set aside for payment, we will not:
		

			
	
			
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			declare or pay or set aside for payment of dividends, and we will not declare or make any distribution of cash or other property, directly or indirectly, on or with respect to any shares of our common stock or series E preferred, or any other class or series of stock ranking as to dividends on parity with or junior to the series F preferred for any period; or

			
	
			
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			redeem, purchase or otherwise acquire for any consideration, or make any other distribution of cash or other property, directly or indirectly, on or with respect to, or pay or make available any monies for a sinking fund for the redemption of, any common stock or series E preferred, or any other class or series of stock ranking, with respect to dividends and upon liquidation, on parity with or junior to our series F preferred.

		
			The foregoing sentence, however, will not prohibit:
		

			
	
			
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			dividends payable solely in capital stock ranking junior to the series F preferred;

			
	
			
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			the conversion into or exchange for other shares of any class or series of capital stock ranking junior to the series F preferred; and

			
	
			
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			our purchase of shares of series F preferred, preferred stock ranking on parity with the series F preferred as to payment of dividends or capital stock or equity securities ranking junior to the series F preferred pursuant to our charter to the extent necessary to preserve our status as a REIT.

		
			Liquidation Preference.  Upon any voluntary or involuntary liquidation, dissolution or winding-up of our affairs, and before any distribution or payment shall be made to holders of our common stock or any other class or series of our stock ranking, as to rights upon any voluntary or involuntary liquidation, dissolution or winding-up of our affairs, junior to the series F preferred, the holders of shares of series F preferred are entitled to be paid out of our assets legally available for distribution to our stockholders, after payment or provision for our debts and other liabilities, a liquidation preference of $25.00 per share of series F preferred, plus an amount equal to any accrued and unpaid dividends (whether or not earned or declared) up to, but not including, the date of payment.  The rights of holders of series F preferred to receive their liquidation preference will be subject to the proportionate rights of any other class or series of our capital stock ranking senior or on parity with the series F preferred as to liquidation, including our series E preferred.  After payment of the full amount of the liquidating distributions to which they are entitled, the holders of series F preferred will have no right or 

		 

		

			 

		

		

			 

		

claim to any of our remaining assets.  Our consolidation, conversion or merger with or into any other corporation, trust or other entity, or the voluntary sale, lease, transfer or conveyance of all or substantially all of our property or business, will not be deemed to constitute a liquidation, dissolution or winding-up of our affairs.
		

		
			Optional Redemption.  We may not redeem the series F preferred prior to May 17, 2021, except as described below under “—Special Optional Redemption” and “Restrictions on Ownership and Transfer.”  On and after May 17, 2021, we may, at our option, upon not less than 30 nor more than 60 days’ written notice, redeem the series F preferred, in whole or in part, at any time or from time to time, for cash at a redemption price of $25.00 per share, plus all accrued and unpaid dividends (whether or not declared) up to, but not including, the date fixed for redemption, without interest, to the extent we have funds legally available for that purpose.  Unless full cumulative dividends on all outstanding shares of series F preferred shall have been or contemporaneously are authorized, declared and paid in cash or declared and a sufficient sum set aside for payment of all past dividend periods and the then-current dividend period, no shares of series F preferred shall be redeemed unless all outstanding shares of series F preferred are simultaneously redeemed.  All shares of the series F preferred that we redeem or repurchase will be retired and restored to the status of authorized but unissued shares of preferred stock, without designation as to series or class.
		

		
			If we redeem fewer than all of the outstanding shares of series F preferred, the notice of redemption mailed to each stockholder will also specify the number of shares of series F preferred that we will redeem from each shareholder.  In this case, we will determine the number of outstanding shares of series F preferred to be redeemed on a pro rata basis or by lot.
		

		
			If (i) we have given a notice of redemption, (ii) have set aside sufficient funds for the redemption in trust for the benefit of the holders of the series F preferred called for redemption and (iii) irrevocable instructions have been given to pay the redemption price and all accrued and unpaid dividends, then from and after the redemption date, those series F preferred will be treated as no longer being outstanding, no further dividends will accrue and all other rights of the holders of those series F preferred will terminate, except the right to receive the redemption price plus any accrued and unpaid dividends payable upon such redemption, without interest.  The holders of those series F preferred will retain their right to receive the redemption price for their shares and any accrued and unpaid dividends payable upon such redemption, without interest.
		

		
			The holders of series F preferred at the close of business on a dividend record date will be entitled to receive the dividend payable with respect to the series F preferred on the corresponding payment date notwithstanding the redemption of the series F preferred between such record date and the corresponding payment date.  Except as provided above, we will make no payment or allowance for unpaid dividends, whether or not in arrears, on series F preferred to be redeemed.
		

		
			Special Optional Redemption.  Upon the occurrence of a Change of Control, we may, at our option, redeem the series F preferred, in whole or in part and within 120 days after the first date on which such Change of Control occurred, by paying $25.00 per share, plus any accrued and unpaid dividends to, but not including, the date of redemption.  If, prior to the Change of Control Conversion Date, we have provided or provide notice of redemption with respect to the 

		 

		

			 

		

		

			 

		

series F preferred (whether pursuant to our optional redemption right or our special optional redemption right), you will not have the conversion right described below under “—Conversion Rights.”
		

		
			If we redeem fewer than all of the outstanding shares of series F preferred, the notice of redemption mailed to each stockholder will also specify the number of shares of series F preferred that we will redeem from each shareholder.  In this case, we will determine the number of outstanding shares of series F preferred to be redeemed on a pro rata basis or by lot.
		

		
			If (i) we have given a notice of redemption, (ii) have set aside sufficient funds for the redemption in trust for the benefit of the holders of the series F preferred called for redemption and (iii) irrevocable instructions have been given to pay the redemption price and all accrued and unpaid dividends, then from and after the redemption date, those series F preferred will be treated as no longer being outstanding, no further dividends will accrue and all other rights of the holders of those series F preferred will terminate, except the right to receive the redemption price plus any accrued and unpaid dividends payable upon such redemption, without interest.  The holders of those series F preferred will retain their right to receive the redemption price for their shares and any accrued and unpaid dividends payable upon such redemption, without interest.
		

		
			The holders of series F preferred at the close of business on a dividend record date will be entitled to receive the dividend payable with respect to the series F preferred on the corresponding payment date notwithstanding the redemption of the series F preferred between such record date and the corresponding payment date.  Except as provided above, we will make no payment or allowance for unpaid dividends, whether or not in arrears, on series F preferred to be redeemed.
		

		
			A “Change of Control” is when, after the original issuance of the series F preferred, the following have occurred and are continuing:
		

			
	
			
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			the acquisition by any person, including any syndicate or group deemed to be a “person” under Section 13(d)(3) of the Exchange Act of beneficial ownership, directly or indirectly, through a purchase, merger or other acquisition transaction or series of purchases, mergers or other acquisition transactions of shares of our company entitling that person to exercise more than 50% of the total voting power of all shares of our company entitled to vote generally in elections of directors (except that such person will be deemed to have beneficial ownership of all securities that such person has the right to acquire, whether such right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition); and

			
	
			
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			following the closing of any transaction referred to in the bullet above, neither we nor the acquiring or surviving entity has a class of common securities (or ADRs representing such securities) listed on the NYSE, the NYSE MKT LLC or NASDAQ, or listed or quoted on an exchange or quotation system that is a successor to the NYSE, NYSE MKT LLC or NASDAQ.

		
			Conversion Rights.  Upon the occurrence of a Change of Control, each holder of series F preferred will have the right, unless, prior to the Change of Control Conversion Date, we have provided or provide notice of our election to redeem the series F preferred as described under 

		 

		

			 

		

		

			 

		

“—Optional Redemption” or “—Special Optional Redemption,” to convert some or all of the shares of series F preferred held by such holder (the “Change of Control Conversion Right”) on the Change of Control Conversion Date into a number of shares of common stock per series F preferred (the “Common Share Conversion Consideration”) equal to the lesser of:
		

			
	
			
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			the quotient obtained by dividing (i) the sum of the $25.00 liquidation preference per share of series F preferred to be converted plus the amount of any accrued and unpaid dividends to, but not including, the Change of Control Conversion Date (unless the Change of Control Conversion Date is after a record date for a series F preferred dividend payment and prior to the corresponding series F preferred dividend payment date, in which case no additional amount for such accrued and unpaid dividend will be included in this sum) by (ii) the Common Share Price (such quotient, the “Conversion Rate”); and

			
	
			
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			3.879, or the Share Cap.

		
			The Share Cap is subject to pro rata adjustments for any share splits (including those effected pursuant to a common stock dividend), subdivisions or combinations (in each case, a “Share Split”) with respect to shares of our common stock as follows: the adjusted Share Cap as the result of a Share Split will be the number of shares of our common stock that is equivalent to the product of (i) the Share Cap in effect immediately prior to such Share Split multiplied by (ii) a fraction, the numerator of which is the number of shares of our common stock outstanding after giving effect to such Share Split and the denominator of which is the number of shares of our common stock outstanding immediately prior to such Share Split.
		

		
			For the avoidance of doubt, subject to the immediately succeeding sentence, the aggregate number of shares of our common stock (or equivalent Alternative Conversion Consideration (as defined below), as applicable) issuable in connection with the exercise of the Change of Control Conversion Right will not exceed 11,637,000 shares of common stock (the “Exchange Cap”).  The Exchange Cap is subject to pro rata adjustments for any Share Splits on the same basis as the corresponding adjustment to the Share Cap.
		

		
			In the case of a Change of Control pursuant to which shares of our common stock will be converted into cash, securities or other property or assets (including any combination thereof) (the “Alternative Form Consideration”), a holder of shares of series F preferred will receive upon conversion of such series F preferred the kind and amount of Alternative Form Consideration which such holder would have owned or been entitled to receive upon the Change of Control had such holder held a number of shares of our common stock equal to the Common Share Conversion Consideration immediately prior to the effective time of the Change of Control (the “Alternative Conversion Consideration,” and the Common Share Conversion Consideration or the Alternative Conversion Consideration, as may be applicable to a Change of Control, is referred to as the “Conversion Consideration”).
		

		
			If the holders of shares of our common stock have the opportunity to elect the form of consideration to be received in the Change of Control, the consideration that the holders of the series F preferred will receive will be the form of consideration elected by the holders of the shares of common stock who participate in the determination (based on the weighted average of elections) and will be subject to any limitations to which all holders of shares of common stock 

		 

		

			 

		

		

			 

		

are subject, including, without limitation, pro rata reductions applicable to any portion of the consideration payable in the Change of Control.
		

		
			Series F preferred as to which the Change of Control Conversion Right has been properly exercised and for which the conversion notice has not been properly withdrawn will be converted into the applicable Conversion Consideration in accordance with the Change of Control Conversion Right on the Change of Control Conversion Date, unless prior to the Change of Control Conversion Date we have provided or provide notice of our election to redeem such shares of series F preferred, whether pursuant to our optional redemption right or our special optional redemption right.  If we elect to redeem shares of series F preferred that would otherwise be converted into the applicable Conversion Consideration on a Change of Control Conversion Date, such shares of series F preferred will not be so converted and the holders of such shares will be entitled to receive on the applicable redemption date $25.00 per share, plus any accrued and unpaid dividend thereon to, but not including, the redemption date.
		

		
			In connection with the exercise of any Change of Control Conversion Right, we will comply with all U.S. federal and state securities laws and stock exchange rules in connection with any conversion of shares of series F preferred into shares of common stock.  Notwithstanding any other provision of our series F preferred, no holder of our series F preferred will be entitled to convert such series F preferred for shares of our common stock to the extent that receipt of such shares of common stock would cause such holder (or any other person) to exceed the share ownership limits contained in our charter, including the articles supplementary setting forth the terms of the series F preferred.  See “Restrictions on Ownership and Transfer.”
		

		
			The “Change of Control Conversion Date” will be a business day that is no less than 20 days nor more than 35 days after the date on which we provide the notice described above to the holders of series F preferred.
		

		
			The “Common Share Price” will be (i) if the consideration to be received in the Change of Control by holders of shares of our common stock is solely cash, the amount of cash consideration per share of common stock, and (ii) if the consideration to be received in the Change of Control by holders of shares of our common stock is other than solely cash, the average of the closing price per share of common stock on the 10 consecutive trading days immediately preceding, but not including, the effective date of the Change of Control.
		

		
			Except as provided above in connection with a Change of Control, the series F preferred are not convertible into or exchangeable for any other securities or property.
		

		
			No Maturity, Sinking Fund or Mandatory Redemption.  The series F preferred has no maturity date and we are not required to redeem the series F preferred at any time.  Accordingly, the series F preferred will remain outstanding indefinitely, unless we decide, at our option, to exercise our redemption right or under circumstances where the holders of shares of series F preferred have a conversion right, the holders of shares of series F preferred decide to convert them.  The series F preferred is not subject to any sinking fund.
		

		
			Limited Voting Rights.  Holders of the series F preferred generally do not have any voting rights, except as set forth below.
		

		
			

		 

		

			 

		

		

			 

		

		

		
			If dividends on the series F preferred are in arrears for six or more quarterly periods, whether or not consecutive, holders of the shares of series F preferred (voting together as a single class with all other classes or series of parity preferred stock upon which like voting rights have been conferred and are exercisable) will be entitled to vote at a special meeting or at our next annual meeting of stockholders and each subsequent annual meeting of stockholders, for the election of two additional directors to serve on our board of directors (which we refer to as a preferred stock director), until all unpaid dividends and the dividend for the then current period with respect to the series F preferred and any other class or series of parity preferred stock have been fully paid or declared and a sum sufficient for the payment thereof set aside for payment.  In such a case, the number of directors serving on the board of directors will be increased by two members.  The preferred stock directors will be elected by a plurality of the votes cast in the election to serve until our next annual meeting and until their successors are duly elected and qualified or until such directors’ right to hold the office terminates pursuant to the Termination Event (as defined below), whichever occurs earlier.
		

		
			If and when all accumulated dividends and the dividend for the current dividend period on the series F preferred and for all classes and series of preferred stock ranking on parity with series F preferred and upon which similar voting rights have been conferred and are exercisable shall have been paid in full or a sum sufficient for such payment is irrevocably deposited in trust for payment, the holders of the series F preferred shall be immediately divested of the voting rights set forth above (subject to revesting in the event of each and every preferred dividend default) and the term and office of such preferred stock directors so elected will terminate immediately and the entire board of directors will be reduced accordingly (the “Termination Event”).
		

		
			In addition, so long as any shares of series F preferred remain outstanding, we will not, without the consent or the affirmative vote of the holders of at least two-thirds of the outstanding shares of series F preferred and each other class or series of preferred stock ranking on parity with the series F preferred with respect to the payment of dividends or the distribution of assets upon our liquidation, dissolution or winding-up upon which similar voting rights have been conferred, voting as a single class, given in person or by proxy, either in writing or at a meeting:
		

			
	
			
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			authorize, create or issue, or increase the authorized or issued amount of, any class or series of stock ranking senior to such series F preferred with respect to payment of dividends, or the distribution of assets upon the liquidation, dissolution or winding-up of our affairs, or reclassify any of our authorized stock into any such stock, or create, authorize or issue any obligation or security convertible into or evidencing the right to purchase any such stock; or

			
	
			
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			amend, alter or repeal the provisions of our charter or the terms of the series F preferred, whether by merger, consolidation, transfer or conveyance of all or substantially all of its assets or otherwise, so as to materially and adversely affect any right, preference, privilege or voting power of the series F preferred;

		
			except that with respect to the occurrence of any of the events described in the second bullet point immediately above, so long as the series F preferred remains outstanding with the terms of the series F preferred materially unchanged or the holders of shares of series F preferred receive stock of the successor with substantially identical rights, taking into account that, upon the 

		 

		

			 

		

		

			 

		

occurrence of an event described in the second bullet point above, we may not be the surviving entity, the occurrence of such event will not be deemed to materially and adversely affect the rights, preferences, privileges or voting power of holders of series F preferred, and in such case such holders shall not have any voting rights with respect to the events described in the second bullet point immediately above.
		

		
			Furthermore, if the holders of the series F preferred receive the greater of the full trading price of the series F preferred on the date of an event described in the second bullet point immediately above or the $25.00 liquidation preference per share of series F preferred pursuant to the occurrence of any of the events described in the second bullet point immediately above, then such holders shall not have any voting rights with respect to the events described in the second bullet point immediately above.  If any event described in the second bullet point above would materially and adversely affect the rights, preferences, privileges or voting powers of the series F preferred disproportionately relative to other classes or series of preferred stock ranking on parity with the series F preferred with respect to the payment of dividends and the distribution of assets upon our liquidation, dissolution or winding up, the affirmative vote of the holders of at least two-thirds of the outstanding shares of the series F preferred voting separately as a class, will also be required.
		

		
			RESTRICTIONS ON OWNERSHIP AND TRANSFER
		

		
			To qualify as a REIT under Sections 856 through 859 of the Internal Revenue Code of 1986, as amended, or the Code, we must meet certain requirements concerning the ownership of our outstanding shares of equity stock.  Specifically, not more than 50% in value of our outstanding shares of capital stock may be owned, directly or indirectly, by five or fewer individuals (as defined in the Code to include certain entities such as private foundations) at any time during the last half of a taxable year.  Additionally, shares of our stock must be beneficially owned by 100 or more persons during at least 335 days of a taxable year of 12 months or during a proportionate part of a shorter taxable year.
		

		
			Our charter contains restrictions on the ownership and transfer of our stock that are intended, among other purposes, to assist us in complying with these requirements and continuing to qualify as a REIT.  The relevant sections of our charter provide that, subject to the exceptions described below, no person or entity may actually or beneficially own, or be deemed to own by virtue of the applicable constructive ownership provisions of the Code, more than 9.8% (in value or in number of shares, whichever is more restrictive) of the outstanding shares of our common stock, 9.8% (in value or number of shares, whichever is more restrictive) of the outstanding shares of series E preferred, 9.8% (in value or number of shares, whichever is more restrictive) of the outstanding shares of series F Preferred or 9.8% in value of the aggregate of the outstanding shares of all classes and series of our stock.  We refer to each of these restrictions as an “ownership limit” and collectively as the “ownership limits.”  A person or entity that would have acquired actual, beneficial or constructive ownership of our stock but for the application of the ownership limits or any of the other restrictions on ownership and transfer of our stock discussed below is referred to as a “prohibited owner.”
		

		
			The constructive ownership rules under the Code are complex and may cause stock owned actually or constructively by a group of related individuals and/or entities to be owned 

		 

		

			 

		

		

			 

		

constructively by one individual or entity.  As a result, the acquisition of less than 9.8% of our capital stock (or the acquisition of an interest in an entity that owns, actually or constructively, our capital stock) by an individual or entity, could, nevertheless cause that individual or entity, or another individual or entity, to own constructively in excess of 9.8% of our outstanding capital stock and thereby violate the applicable ownership limit.
		

		
			Our board of directors, in its sole and absolute discretion, prospectively or retroactively, may exempt a person from any or all of the ownership limits if our board of directors determines that:
		

			
	
			
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			such waiver will not result in us being “closely held” within the meaning of Section 856(h) of the Code (without regard to whether the ownership interest is held during the last half of a taxable year), or otherwise failing to qualify as a REIT; and

			
	
			
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			subject to certain exceptions, the person does not and will not own, actually or constructively, an interest in a tenant of ours (or a tenant of any entity owned in whole or in part by us) that would cause us to own, actually or constructively, more than a 9.9% interest (as set forth in Section 856(d)(2)(B) of the Code) in such tenant.

		
			As a condition of the exception, our board of directors may require an opinion of counsel or IRS ruling, in either case in form and substance satisfactory to our board of directors, in its sole and absolute discretion, in order to determine or ensure our status as a REIT and such representations and undertakings as are reasonably necessary to make the determinations above.  Our board of directors may impose such conditions or restrictions as it deems appropriate in connection with such an exception.
		

		
			In connection with a waiver of an ownership limit or at any other time, subject to the Closely Held Limitation (as defined herein), our board of directors may, in its sole and absolute discretion, increase or decrease any or all of the ownership limits for one or more persons, except that a decreased ownership limit will not be effective for any person whose actual, beneficial or constructive ownership of our stock exceeds the decreased ownership limit at the time of the decrease until the person’s actual, beneficial or constructive ownership of our stock equals or falls below the decreased ownership limit, although any further acquisition of our stock will violate the decreased ownership limit.  Our board of directors may not increase or decrease any ownership limit if, among other limitations, the new ownership limit would allow five or fewer persons to actually or beneficially own more than 49.9% in value of our outstanding stock.
		

		
			Our charter further prohibits:
		

			
	
			
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			any person from actually, beneficially or constructively owning shares of our stock that could result in us being “closely held” under Section 856(h) of the Code (without regard to whether the ownership interest is held during the last half of a taxable year) or otherwise cause us to fail to qualify as a REIT (including, but not limited to, actual, beneficial or constructive ownership of shares of our stock that could result in us owning (actually or constructively) an interest in a tenant that is described in Section 856(d)(2) (B) of the Code if the income we derive from such tenant, taking into account our other income that would not qualify under the gross income requirements of Section 856(c) of the Code, would cause us to fail to satisfy any of 

		 

		

			 

		

		

			 

		

	the gross income requirements imposed on REITs or that would result in us owning more than a 35% interest in any person which manages properties we own) (collectively, the “Closely Held Limitation”); and

			
	
			
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			any person from transferring shares of our stock if such transfer would result in shares of our stock being beneficially owned by fewer than 100 persons (determined without reference to any rules of attribution).

		
			Any person who acquires or attempts or intends to acquire actual, beneficial or constructive ownership of shares of our stock that will or may violate the ownership limits or any of the other restrictions on ownership and transfer of our stock described above must give written notice immediately to us or, in the case of a proposed or attempted transaction, provide us at least 15 days’ prior written notice, and provide us with such other information as we may request in order to determine the effect of such transfer on our status as a REIT.
		

		
			The ownership limits and other restrictions on ownership and transfer of our stock described above will not apply if our board of directors determines that it is no longer in our best interests to attempt to qualify, or to continue to qualify, as a REIT or that compliance is no longer required in order for us to qualify as a REIT.
		

		
			Pursuant to our charter, if any purported transfer of our stock or any other event would otherwise result in any person violating the ownership limits or such other limit established by our board of directors, or could result in us being “closely held” within the meaning of Section 856(h) of the Code (without regard to whether the ownership interest is held during the last half of a taxable year) or otherwise failing to qualify as a REIT, then that number of shares causing the violation (rounded up to the nearest whole share) will be automatically transferred to, and held by, a trust for the exclusive benefit of one or more charitable organizations selected by us.  The automatic transfer will be effective as of the close of business on the business day prior to the date of the violative transfer or other event that results in the transfer to the trust.  Shares of stock held by the trustee will be issued and outstanding shares of our stock.  The prohibited owner will have no rights in the shares held by the trustee.  The prohibited owner will not benefit economically from ownership of any shares of our stock held in trust by the trustee, will have no rights to dividends or other distributions and will not possess any rights to vote or other rights attributable to the shares held in the trust.  Any dividend or other distribution paid to the prohibited owner prior to our discovery that the shares had been automatically transferred to a trust as described above must be repaid to the trustee upon demand.  If the transfer to the trust as described above is not automatically effective, for any reason, to prevent violation of the applicable restriction on ownership and transfer of our stock, then that transfer of the number of shares that otherwise would cause any person to violate the above restrictions will be void.  If any transfer of our stock would result in shares of our stock being beneficially owned by fewer than 100 persons (determined without reference to any rules of attribution), then any such purported transfer will be void and of no force or effect and the intended transferee will acquire no rights in the shares.
		

		
			Shares of our stock transferred to the trustee are deemed offered for sale to us, or our designee, at a price per share equal to the lesser of (1) the price per share in the transaction that resulted in the transfer of the shares to the trust (or, in the event of a gift or devise, the market price (as defined in our charter) on the day of the transfer or other event that resulted in the 

		 

		

			 

		

		

			 

		

transfer of such shares to the trust) and (2) the market price on the date we accept, or our designee accepts, such offer.  We may reduce the amount payable to the prohibited owner by the amount of dividends and distributions paid to the prohibited owner and owed by the prohibited owner to the trustee and pay the amount of such reduction to the trustee for the benefit of the charitable beneficiary.  We have the right to accept such offer until the trustee has sold the shares of our stock held in the trust.  Upon a sale to us, the interest of the charitable beneficiary in the shares sold terminates and the trustee must distribute the net proceeds of the sale to the prohibited owner and any dividends or other distributions held by the trustee with respect to such stock will be paid to the charitable beneficiary.
		

		
			If we do not buy the shares, the trustee must, within 20 days of receiving notice from us of the transfer of shares to the trust, sell the shares to a person or persons designated by the trustee who could own the shares without violating the ownership limits or other restrictions on ownership and transfer of our stock.  Upon such sale, the trustee must distribute to the prohibited owner an amount equal to the lesser of (1) the price paid by the prohibited owner for the shares (or, if the prohibited owner did not give value (or, in the case of the series E preferred or series F preferred, purchase the shares at market price) in connection with the transfer or other event that resulted in the transfer to the trust (e.g., a gift, devise or other such transaction), the market price on the day of the transfer or other event that resulted in the transfer of such shares to the trust) and (2) the sales proceeds (net of commissions and other expenses of sale) received by the trustee for the shares.  The trustee may reduce the amount payable to the prohibited owner by the amount of dividends and other distributions paid to the prohibited owner and owed by the prohibited owner to the trustee.  Any net sales proceeds in excess of the amount payable to the prohibited owner will be immediately paid to the charitable beneficiary, together with any dividends or other distributions thereon.  In addition, if prior to discovery by us that shares of our stock have been transferred to the trustee, such shares of stock are sold by a prohibited owner, then such shares shall be deemed to have been sold on behalf of the trust and, to the extent that the prohibited owner received an amount for or in respect of such shares that exceeds the amount that such prohibited owner was entitled to receive, such excess amount shall be paid to the trustee upon demand.
		

		
			The trustee will be designated by us and will be unaffiliated with us and with any prohibited owner.  Prior to the sale of any shares by the trust, the trustee will receive, in trust for the charitable beneficiary, all dividends and other distributions paid by us with respect to such shares, and may exercise all voting rights with respect to such shares for the exclusive benefit of the charitable beneficiary.
		

		
			Subject to Maryland law, effective as of the date that the shares have been transferred to the trust, the trustee may, at the trustee’s sole discretion:
		

			
	
			
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			rescind as void any vote cast by a prohibited owner prior to our discovery that the shares have been transferred to the trust; and

			
	
			
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			recast the vote in accordance with the desires of the trustee acting for the benefit of the beneficiary of the trust.

		
			However, if we have already taken irreversible corporate action, then the trustee may not rescind and recast the vote.
		

		
			

		 

		

			 

		

		

			 

		

		

		
			If our board of directors or a committee thereof determines in good faith that a proposed transfer or other event has taken place that violates the restrictions on ownership and transfer of our stock set forth in our charter, our board of directors or such committee may take such action as it deems advisable in its sole discretion to refuse to give effect to or to prevent such transfer, including, but not limited to, causing us to redeem shares of stock, refusing to give effect to the transfer on our books or instituting proceedings to enjoin the transfer.
		

		
			Every owner of 5% or more (or such lower percentage as required by the Code or the Treasury Regulations promulgated thereunder) of the outstanding shares of our stock, within 30 days after the end of each taxable year, must give written notice to us stating the name and address of such owner, the number of shares of each class and series of our stock that the owner beneficially owns and a description of the manner in which the shares are held.  Each such owner also must provide us with any additional information that we request in order to determine the effect, if any, of the person’s actual or beneficial ownership on our status as a REIT and to ensure compliance with the ownership limits.  In addition, any person that is an actual owner, beneficial owner or constructive owner of shares of our stock and any person (including the stockholder of record) who is holding shares of our stock for an actual owner, beneficial owner or constructive owner must, on request by us, disclose to us such information as we may request in good faith in order to determine our status as a REIT and comply with requirements of any taxing authority or governmental authority or to determine such compliance.
		

		
			Any certificates representing shares of our stock will bear a legend referring to the restrictions on ownership and transfer of our stock described above.  If we issue depositary shares at a future time, those depositary shares will be subject to the same ownership limitations and transfer restrictions with respect to the underlying preferred stock, and will also count toward the overall ownership limitations to the extent of the underlying preferred stock.
		

		
			These restrictions on ownership and transfer could delay, defer or prevent a transaction or a change of control of our company that might involve a premium price for our common stock that our stockholders believe to be in their best interest.sho_ex10-12

		

			 

		

		
			Exhibit 10.12
		

		
			THIRD AMENDED AND RESTATED EMPLOYMENT AGREEMENT
		

		
			THIS THIRD AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”), dated as of November 1, 2019 (the “Effective Date”), is entered into by and among Sunstone Hotel Investors, Inc., a Maryland corporation (“Sunstone”), Sunstone Hotel Partnership, LLC, a Delaware limited liability company (the “Operating Partnership,” and together with Sunstone, the “Company”), and John Arabia (the “Executive”).
		

		
			WHEREAS, the Company and the Executive are parties to that certain Second Amended and Restated Employment Agreement, dated March 28, 2019 (the “Prior Agreement”);
		

		
			WHEREAS, the Company and the Executive desire to terminate the Prior Agreement;
		

		
			WHEREAS, the Company desires to enter into a new agreement embodying the terms of Executive’s continued employment with the Company; and
		

		
			WHEREAS, the Executive desires to continue employment with the Company, subject to the terms and conditions of this Agreement.
		

		
			NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
		

		
			1.          Employment Period. Subject to the provisions for earlier termination hereinafter provided, the Executive’s employment hereunder shall be for a term (the “Employment Period”) commencing on March 28, 2019 and ending on March 31, 2020 (the “Initial End Date”); provided,  however, that the Employment Period shall automatically renew for successive one-year periods on each anniversary of the Initial End Date (such extension, the “Renewal Period”), unless either party provides the other party with written notice in accordance with Section 12(c) below of intent not to renew the Employment Period on terms and conditions at least as favorable as the terms and conditions herein (a “Non-Renewal”) at least 30 days prior to the end of the then-current Employment Period.  For the avoidance of doubt, and subject to Sections 4(c) and 4(d) below, the expiration of the Employment Period, and/or the termination of the Executive’s employment in connection with such expiration, shall not constitute a termination of employment by the Company without Cause or by the Executive for Good Reason (each as defined below).
		

		
			2.          Terms of Employment.
		

		
			(a)         Position and Duties.
		

		
			(i)          During the Employment Period, the Executive shall serve as President and Chief Executive Officer of Sunstone and the Operating Partnership and shall perform such employment duties as are usual and customary for such positions and such other duties as the Company shall from time to time reasonably assign to the Executive. The Executive shall report directly to the Board of Directors of the Company (the “Board”).
		

		
			(ii)         During the Employment Period, and excluding any periods of vacation and sick leave to which the Executive is entitled, the Executive agrees to devote substantially all of his business time, energy, skill and best efforts to the performance of his duties hereunder in a manner that will faithfully and diligently further the business and interests of the Company. Notwithstanding the foregoing, during the Employment Period it shall not be a violation of this Agreement for the Executive to (A) serve on corporate, civic or charitable boards or committees consistent with the Company’s conflicts of interests policies and corporate governance guidelines in effect from time to time, or (B) manage his personal investments, so long as such activities do
		

		
			 
		

		
			
		

		
			

		 

		

			1

		

		

			 

		

		

		
			not materially interfere with the performance of the Executive’s responsibilities as an executive officer of the Company.
		

		
			(iii)       The Executive agrees that he will not take personal advantage of any business opportunity that arises during his employment by the Company and which may be of benefit to the Company; provided,  however, that the Executive may take advantage of any such opportunities to the extent the Executive satisfies all conditions precedent to doing so, as required by the Company’s Code of Business Conduct and Ethics.
		

		
			(b)         Compensation.
		

		
			(i)          Base Salary. During the Employment Period, the Executive shall receive a base salary (the “Base Salary”) of $810,000 per annum, which amount reflects the Executive’s 2019 Base Salary and may be increased by the Compensation Committee, as provided below. The Base Salary shall be paid in installments at such intervals as the Company pays executive salaries generally, but not less often than monthly. During the Employment Period, the Base Salary shall be reviewed at least annually for possible increase in the Company’s sole discretion, as determined by the compensation committee (the “Compensation Committee”) of the Board. The term “Base Salary” as utilized in this Agreement shall refer to Base Salary as so adjusted. Any increase in Base Salary shall not serve to limit or reduce any other obligation to the Executive under this Agreement.
		

		
			(ii)         Annual Bonus. In addition to the Base Salary, the Executive shall be eligible to earn, for each calendar year ending during the Employment Period, an annual cash performance bonus (an “Annual Bonus”) under the Company’s bonus plan or plans applicable to senior executives. The amount of any Annual Bonus and the performance goals applicable to such Annual Bonus for the relevant year shall be determined by the Compensation Committee in accordance with the terms and conditions of said bonus plan as in effect from time to time with the following targets: (1) threshold equal to 100% of Base Salary; (2) target equal to 187.5% of Base Salary (the “Target Annual Bonus”); and (3) high (maximum) equal to 275% of Base Salary; provided, however, no minimum Annual Bonus is guaranteed and any Annual Bonus may equal zero in any given year. The Annual Bonus payable, if any, in respect of any calendar year performance period shall be paid no later than the March 15 immediately following such calendar year performance period.
		

		
			(iii)       Equity Awards. During the Employment Period, the Executive shall be eligible to earn equity awards under the Company’s long-term incentive plan, subject to vesting and other conditions determined by the Compensation Committee, in its sole discretion. The form, amount and terms of equity awards, if any, shall be determined by the Compensation Committee in accordance with the terms and conditions of plans as in effect from time to time with the following targets (based on the achievement of applicable Company and/or individual performance goals, as determined by the Compensation Committee in its sole discretion): (1) threshold equal to 150% of Base Salary; (2) target equal to 300% of Base Salary; and (3) high (maximum) equal to 425% of Base Salary; provided,  however, no minimum equity award is guaranteed and any award may equal zero in any given year.  The Executive acknowledges and agrees that the “single trigger” accelerated vesting provision contained in this Section 2(b)(iii) of the Prior Agreement was superseded by this Agreement, such that such accelerated vesting provision shall not apply, including with respect to any Company equity awards outstanding as of the Effective Date.
		

		
			(iv)        Incentive, Savings and Retirement Plans. During the Employment Period, the Executive shall be eligible to participate in all other incentive plans, practices, policies and
		

		
			 
		

		
			
		

		
			

		 

		

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			programs, and all savings and retirement plans, policies and programs, in each case that are applicable generally to senior executives of the Company.
		

		
			(v)         Welfare Benefit Plans. During the Employment Period, the Executive and the Executive’s eligible family members shall be eligible to participate in the welfare benefit plans, practices, policies and programs (including, if applicable, medical, dental, vision, disability, employee life, group life and accidental death insurance plans and programs) maintained by the Company for its senior executives.
		

		
			(vi)        Business Expenses. During the Employment Period, the Executive shall be entitled to receive prompt reimbursement for all reasonable business expenses incurred by the Executive in accordance with the policies, practices and procedures of the Company provided to senior executives of the Company.
		

		
			(vii)       Fringe Benefits. During the Employment Period, the Executive shall be entitled to such fringe benefits and perquisites as are provided by the Company to its senior executives from time to time, in accordance with the policies, practices and procedures of the Company.
		

		
			(viii)     Vacation. During the Employment Period, the Executive shall be entitled to paid vacation in accordance with the plans, policies, programs and practices of the Company applicable to its senior executives, but in no event shall the Executive accrue less than four weeks of vacation per calendar year (pro-rated for any partial year of service); provided,  however, that the Executive shall not accrue any vacation time in excess of 1.5 times the Executive’s applicable annual vacation accrual (the “Accrual Limit”), and shall cease accruing vacation time if the Executive’s accrued vacation reaches the Accrual Limit until such time as the Executive’s accrued vacation time drops below the Accrual Limit.
		

		
			3.          Termination of Employment.
		

		
			(a)         Death or Disability. The Executive’s employment shall terminate upon the Executive’s death or Disability during the Employment Period. For purposes of this Agreement, “Disability” means the Executive’s inability by reason of permanent physical or mental illness to fulfill his obligations hereunder for 120 consecutive days or on a total of 180 days in any 12 month period which, in the reasonable opinion of an independent physician selected by the Company or its insurers and reasonably acceptable to the Executive or the Executive’s legal representative, renders the Executive unable to perform the essential functions of his job, even after reasonable accommodations are made by the Company. The Company is not, however, required to make unreasonable accommodations for the Executive or accommodations that would create an undue hardship on the Company. For purposes of clarity, this provision is not intended to, and does not, alter or affect any and all rights the Executive has to avail himself of leaves of absence in accordance with Company policies applicable to senior executives or his rights under applicable disability and leave of absences laws, including, without limitation, the Americans with Disabilities Act, the Family and Medical Leave Act, the California Fair Employment and Housing Act, and the California Family Rights Act.
		

		
			(b)         Cause. The Company may terminate the Executive’s employment during the Employment Period for Cause or without Cause. For purposes of this Agreement, “Cause” shall mean the occurrence of one or more of the following events:
		

		
			(i)          The Executive’s continued and willful failure to perform or gross negligence in performing his duties owed to the Company, which is not cured within 15 days following a written notice being delivered to the Executive, which notice specifies such failure or negligence;
		

		
			 
		

		
			
		

		
			

		 

		

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			(ii)         The Executive’s willful commission of an act of fraud or material dishonesty in the performance of his duties, the nature of which, and the support for which, shall be provided to the Executive in writing;
		

		
			(iii)       The indictment of the Executive, conviction of the Executive, or entry by the Executive of a guilty or no contest plea to any felony or any other felony or misdemeanor involving moral turpitude;
		

		
			(iv)        Any material breach by the Executive of his fiduciary duty or duty of loyalty to the Company; or
		

		
			(v)         The Executive’s material breach of any of the provisions of this Agreement, or any other written agreement between the Executive and the Company, which is not cured within 15 days following written notice thereof from the Company.
		

		
			(c)         Good Reason. The Executive’s employment may be terminated by the Executive for Good Reason or by the Executive without Good Reason. For purposes of this Agreement, “Good Reason” shall mean the occurrence of any one or more of the following events without the Executive’s prior written consent:
		

		
			(i)          A material reduction in the Executive’s title, duties, authority, responsibilities, reporting relationships, including, without limitation, the Company ceasing to be a public company or ceasing to be traded on the New York Stock Exchange (or similar exchange) following a Change in Control, or the assignment to the Executive of any duties materially inconsistent with the Executive’s position, title, authority, duties or responsibilities;
		

		
			(ii)         During the Employment Period, a reduction by the Company of the Executive’s annual Base Salary (as in effect or as may be increased from time to time) by greater than three percent (3%);
		

		
			(iii)       In connection with a renewal of this Agreement at the end of the Employment Period, a reduction of the Executive’s annual Base Salary by greater than three percent (3%) of the Executive’s annual Base Salary in effect on the last day of the prior fiscal year;
		

		
			(iv)        The relocation of the Company’s headquarters to a location more than 35 miles from the Company’s current headquarters in Irvine, California; and
		

		
			(v)         The Company’s material breach of its obligations under this Agreement.
		

		
			For purposes of this Agreement, a termination of employment by the Executive shall not be deemed to be for Good Reason unless (A) the Executive gives the Company written notice describing the event or events which are the basis for such termination within 90 days after the event or events occur, (B) such grounds for termination (if susceptible to correction) are not corrected by the Company within 30 days after the Company’s receipt of such notice, and (C) the Executive terminates his employment no later than 45 days after the Executive provides notice to the Company in accordance with clause (A) of this paragraph.
		

		
			(d)         Notice of Termination. Any termination other than due to death shall be communicated by Notice of Termination to the other parties hereto given in accordance with Section 12(c) below. For purposes of this Agreement, a “Notice of Termination” means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s
		

		
			 
		

		
			
		

		
			

		 

		

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			employment under the provision so indicated, and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such notice, specifies the termination date (which date shall be not more than 30 days after the giving of such notice or, in the case of a termination by the Executive for Good Reason more than 45 days after the date on which the Executive provides written notice in accordance with Section 3(c) above). The failure by the Executive or the Company to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any right of the Executive or the Company, respectively, hereunder or preclude the Executive or the Company, respectively, from asserting such fact or circumstance in enforcing the Executive’s or the Company’s rights hereunder.
		

		
			(e)         Date of Termination. “Date of Termination” means (i) if the Executive’s employment is terminated by the Company other than due to the Executive’s death or Disability, the date of receipt of the Notice of Termination or any later date specified therein (which date shall not be more than 30 days after the giving of such notice), as the case may be, (ii) if the Executive’s employment is terminated by the Executive other than due to the Executive’s death or Disability, the Date of Termination shall be the 30th day after the date on which the Executive notifies the Company of such termination (or, in the case of a termination by the Executive for Good Reason on the 45th day after the date on which the Executive provides written notice in accordance with Section 3(c) above), unless otherwise agreed by the Company and the Executive, and (iii) if the Executive’s employment is terminated by reason of death or Disability, the Date of Termination shall be the date the death or Disability of the Executive is determined as described in Section 3(a) above, as the case may be.
		

		
			4.          Obligations of the Company Upon Termination.
		

		
			(a)         Without Cause or for Good Reason. If, during the Employment Period, the Company shall terminate the Executive’s employment without Cause or the Executive shall terminate his employment for Good Reason:
		

		
			(i)          The Executive shall be paid the Executive’s earned but unpaid Base Salary, accrued but unpaid vacation pay through the Date of Termination, any vested amounts due to the Executive under any plan, program or policy of the Company, to the extent not previously paid (if any) (together, the “Accrued Obligations”).
		

		
			(ii)         In addition, the Executive shall be paid or shall receive:
		

		
			(A)        An amount (the “Severance Amount”) equal to the sum of:
		

		
			(1)        Three times the sum of (i) the Base Salary in effect on the Date of Termination (but in no event less than the highest Base Salary paid to the Executive during the Employment Period) and (ii) the greater of (x) the Target Annual Bonus and (y) the actual Annual Bonus paid to the Executive in respect of the last full calendar year immediately preceding the Date of Termination,
		

		
			(2)        Any Annual Bonus required to be paid to the Executive pursuant to Section 2(b)(ii) above for any fiscal year of the Company that ends on or before the Date of Termination, to the extent not previously paid (if any), and
		

		
			(3)        A pro rata portion of the Annual Bonus for the partial fiscal year in which the Date of Termination occurs, determined by
		

		
			 
		

		
			
		

		
			

		 

		

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			multiplying the Target Annual Bonus (or such higher amount in the sole discretion of the Compensation Committee) by a fraction, the numerator of which is the number of days elapsed in the calendar year during which the Date of Termination occurs through the Date of Termination and the denominator of which is 365;
		

		
			(B)        The portion of any then-outstanding restricted stock and other equity awards granted to the Executive under any of the Company’s equity incentive plans (or awards substituted therefor covering the securities of a successor company) which would have become vested and, as applicable, exercisable during the 12 month period immediately following the Executive’s Date of Termination had the Executive remained continuously employed by the Company during such period shall become immediately vested and, as applicable, exercisable; provided, however, that if the termination occurs on or within 12 months following a Change in Control, then any such equity awards shall vest and become exercisable in full (the “Vesting Acceleration”).  The accelerated portion of such equity awards shall remain outstanding and eligible to vest following the Date of Termination and shall actually vest and become exercisable (if applicable) and non-forfeitable upon the effectiveness of the Release (as defined below).  The portion of any outstanding restricted stock and other equity awards that does not become vested and, as applicable, exercisable in accordance with this Section 4(a)(ii)(B) (whether because such portion would not have vested during the 12 month period immediately following the Executive’s Date of Termination or because the Executive does not timely execute and not revoke the Release) shall automatically be cancelled and forfeited, and the Executive shall have no further interest therein.
		

		
			(C)        During the period commencing on the Date of Termination and ending on the earlier to occur of (i) the 18 month anniversary of the Date of Termination and (ii) the date on which the Executive becomes eligible for coverage under the group health plan of a subsequent employer (of which eligibility the Executive hereby agrees to give prompt notice to the Company), subject to the Executive’s valid election to continue healthcare coverage under Section 4980B of the Internal Revenue Code and the regulations thereunder (together, the “Code”), the Company shall continue to provide, at the Company’s expense, the Executive and the Executive’s eligible dependants with coverage under its group health plans at the same levels as would have applied if the Executive’s employment had not been terminated based on the Executive’s elections in effect on the Date of Termination (the “COBRA Coverage”), provided,  however, that (x) if any plan pursuant to which such benefits are provided is not, or ceases prior to the expiration of the period of continuation coverage to be, exempt from the application of Section 409A under Treasury Regulation Section 1.409A-1(a)(5), or (y) the Company is otherwise unable to continue to cover the Executive under its group health plans without incurring penalties (including without limitation, pursuant to Section 2716 of the Public Health Service Act or the Patient Protection and Affordable Care Act), then, in either case, an amount equal to 150% of each remaining Company subsidy shall thereafter be paid to the Executive in substantially equal monthly installments over the continuation coverage period (or the remaining portion thereof).
		

		
			The Accrued Obligations shall be paid when due under applicable law and, subject to Section 12(e) below, the Severance Amount shall be paid on the 60th day after the Date of Termination (or, if not a business day, on the first business day following such 60th day).
		

		
			 
		

		
			
		

		
			

		 

		

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			(iii)       Notwithstanding anything herein to the contrary, it shall be a condition to the Executive’s right to receive any of the Severance Amount, the Vesting Acceleration and/or the COBRA Coverage that the Executive timely execute and deliver to the Company within 21 days (or 45 days, if required by applicable law) and not revoke a release of claims (if any revocation period is required by applicable law) in substantially the form attached hereto as Exhibit A (the “Release”).
		

		
			(b)         Death or Disability. If the Executive’s employment is terminated by reason of the Executive’s death or Disability during the Employment Period:
		

		
			(i)          The Accrued Obligations shall be paid to the Executive’s estate or beneficiaries or to the Executive, as applicable, within 30 days after the Date of Termination;
		

		
			(ii)         In addition to, and irrespective of, the amount earned during the applicable calendar year, 100% of the Executive’s annual Base Salary, as in effect on the Date of Termination, shall be paid to the Executive’s estate or beneficiaries or to the Executive, as applicable, within 30 days after the Date of Termination;
		

		
			(iii)       A pro rata portion of the Annual Bonus for the partial fiscal year in which the Date of Termination occurs, determined by multiplying the Executive’s Target Annual Bonus under the applicable Company bonus program (or such higher amount in the sole discretion of the Compensation Committee) by a fraction, the numerator of which is the number of days elapsed in the calendar year during which the Date of Termination occurs through the Date of Termination and the denominator of which is 365, shall be paid to the Executive’s estate or beneficiaries or to the Executive, as applicable, within 30 days after the Date of Termination;
		

		
			(iv)        Any Annual Bonus required to be paid to the Executive pursuant to Section 2(b)(ii) above for any fiscal year of the Company that ends on or before the Date of Termination shall be paid to the Executive’s estate or beneficiaries or to the Executive, as applicable, to the extent not previously paid (if any), within 30 days after the Date of Termination;
		

		
			(v)         All outstanding restricted stock and other equity awards granted to the Executive under any of the Company’s equity incentive plans (or awards substituted therefor covering the securities of a successor company) that vest based solely on the passage of time and Executive’s continued employment or service with the Company shall immediately become vested in full; and
		

		
			(vi)        During the 18 month period following the Date of Termination, subject to the Executive’s valid election to continue healthcare coverage under Section 4980B of the Code, the Company shall continue to provide the Executive and the Executive’s eligible dependants with COBRA Coverage, provided,  however, that (x) if any plan pursuant to which such benefits are provided is not, or ceases prior to the expiration of the period of continuation coverage to be, exempt from the application of Section 409A under Treasury Regulation Section 1.409A-1(a)(5), or (y) the Company is otherwise unable to continue to cover the Executive under its group health plans without incurring penalties (including without limitation, pursuant to Section 2716 of the Public Health Service Act or the Patient Protection and Affordable Care Act), then, in either case, an amount equal to 150% of each remaining Company subsidy shall thereafter be paid to the Executive in substantially equal monthly installments over the continuation coverage period (or the remaining portion thereof).
		

		
			(c)         Company Non-Renewal On or Following a Change in Control.  If, on or within 12 months following a Change in Control, the Executive’s employment is terminated (by the Company or by the
		

		
			 
		

		
			
		

		
			

		 

		

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			Executive) by reason of a Non-Renewal of the Employment Period by the Company and the Executive is willing and able, at the time of such Non-Renewal, to continue performing services on terms and conditions at least as favorable as the terms and conditions set forth herein during the Renewal Period:
		

		
			(i)          The Accrued Obligations shall be paid to the Executive when due under applicable law; and
		

		
			(ii)         Subject to Section 12(e) below and the Executive’s timely execution and non-revocation of a Release in accordance with Section 4(a) above, the Executive shall be entitled to all of the payments and benefits set forth in Section 4(a)(ii) above (including full accelerated vesting of any then-outstanding Company equity awards).
		

		
			(d)         Company Non-Renewal Other than On or Following a Change in Control.  If, other than on or during the 12 month period following a Change in Control, the Executive’s employment is terminated (by the Company or by the Executive) by reason of a Non-Renewal of the Employment Period by the Company and the Executive is willing and able, at the time of such Non-Renewal, to continue performing services on terms and conditions at least as favorable as the terms and conditions set forth herein during the Renewal Period:
		

		
			(i)          The Accrued Obligations shall be paid to the Executive when due under applicable law; and
		

		
			(ii)         Subject to Section 12(e) below and the Executive’s timely execution and non-revocation of a Release in accordance with Section 4(a) above, the Executive shall be entitled to an amount equal to 50% of the sum of (i) the Base Salary in effect on the Date of Termination (but in no event less than the highest Base Salary paid to the Executive during the Employment Period) and (ii) the Target Annual Bonus, payable on the 60th day after the Date of Termination (or, if not a business day, on the first business day following such 60th day).
		

		
			(e)         Other Terminations. If the Executive’s employment with the Company terminates by the Company for Cause or by the Executive without Good Reason (other than by reason of a Non-Renewal of the Employment Period as described in Section 4(c) or Section 4(d) above), the Company shall pay to the Executive the Accrued Obligations when due under applicable law and shall have no further obligations to the Executive under this Agreement.
		

		
			5.          Change in Control.  For purposes of this Agreement. “Change in Control” shall mean the occurrence of any of the following events:
		

		
			(a)         Any transaction or event resulting in the beneficial ownership of voting securities, directly or indirectly, by any “person” or “group” (as those terms are defined in Sections 3(a)(9),  13(d), and 14(d) of the Securities Exchange Act of 1934 (“Exchange Act”) and the rules thereunder) having “beneficial ownership” (as determined pursuant to Rule 13d-3 under the Exchange Act) of securities entitled to vote generally in the election of directors (“voting securities”) of Sunstone that represent greater than 50% of the combined voting power of Sunstone’s then outstanding voting securities (unless the Executive has beneficial ownership of at least 50% of such voting securities), other than any transaction or event resulting in the beneficial ownership of securities:
		

		
			(i)          By a trustee or other fiduciary holding securities under any employee benefit plan (or related trust) sponsored or maintained by Sunstone or any person controlled by Sunstone or by any employee benefit plan (or related trust) sponsored or maintained by Sunstone or any person controlled by Sunstone, or
		

		
			 
		

		
			
		

		
			

		 

		

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			(ii)         By Sunstone or a corporation owned, directly or indirectly, by the stockholders of Sunstone in substantially the same proportions as their ownership of the stock of Sunstone, or
		

		
			(iii)       Pursuant to a transaction described in clause (c) below that would not be a Change in Control under clause (c);
		

		
			(b)         Individuals who, as of the Effective Date, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided,  however, that any individual becoming a director subsequent to the date hereof whose election by Sunstone’s stockholders, or nomination for election by the Board, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an election contest with respect to the election or removal of directors or other solicitation of proxies or consents by or on behalf of a person other than the Board;
		

		
			(c)         The consummation by Sunstone (whether directly involving Sunstone or indirectly involving Sunstone through one or more intermediaries) of (x) a merger, consolidation, reorganization, or business combination or (y) a sale or other disposition of all or substantially all of Sunstone’s assets or (z) the acquisition of assets or stock of another entity, in each case, other than a transaction:
		

		
			(i)          which results in Sunstone’s voting securities outstanding immediately before the transaction continuing to represent (either by remaining outstanding or by being converted into voting securities of Sunstone or the person that, as a result of the transaction, controls, directly or indirectly, Sunstone or owns, directly or indirectly, all or substantially all of Sunstone’s assets or otherwise succeeds to the business of Sunstone (Sunstone or such person, the “Successor Entity”)) directly or indirectly, greater than 50% of the combined voting power of the Successor Entity’s outstanding voting securities immediately after the transaction, and
		

		
			(ii)         after which no person or group beneficially owns voting securities representing greater than 50% of the combined voting power of the Successor Entity; provided,  however, that no person or group shall be treated for purposes of this clause (ii) as beneficially owning greater than 50% of the combined voting power of the Successor Entity solely as a result of the voting power held in Sunstone prior to the consummation of the transaction; or
		

		
			(d)         The approval by Sunstone’s stockholders of a liquidation or dissolution of Sunstone.
		

		
			For purposes of clause (a) above, the calculation of voting power shall be made as if the date of the acquisition were a record date for a vote of Sunstone’s stockholders, and for purposes of clause (c) above, the calculation of voting power shall be made as if the date of the consummation of the transaction were a record date for a vote of Sunstone’s stockholders.
		

		
			Notwithstanding the foregoing, if a Change in Control constitutes a payment event with respect to any payment (or any portion of an payment) that provides for the deferral of compensation that is subject to Section 409A (as defined below), to the extent required to avoid the imposition of additional taxes under Section 409A, the transaction or event described in subsection (a), (b), (c) or (d) with respect to such payment (or portion thereof) shall only constitute a Change in Control for purposes of the payment timing of such payment if such transaction also constitutes a “change in control event” (within the meaning of Section 409A).
		

		
			6.          Excess Parachute Payments, Limitation on Payments.
		

		
			 
		

		
			
		

		
			

		 

		

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			(a)  Best Pay Cap.  Notwithstanding any other provision of this Agreement, in the event that any payment or benefit received or to be received by the Executive (including any payment or benefit received in connection with a termination of the Executive’s employment, whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement) (all such payments and benefits, including the payments and benefits under Section 4 hereof, being hereinafter referred to as the “Total Payments”) would be subject (in whole or part) to the excise tax imposed under Section 4999 of the Code (the “Excise Tax”) then, if elected by the Executive, after taking into account any reduction in the Total Payments provided by reason of Section 280G of the Code in such other plan, arrangement or agreement, any cash payments shall first be reduced, and any noncash payments shall thereafter be reduced, to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax but only if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state and local income taxes on such reduced Total Payments and after taking into account the phase out of itemized deductions and personal exemptions attributable to such reduced Total Payments) is greater than or equal to (ii) the net amount of such Total Payments without such reduction (but after subtracting the net amount of federal, state and local income taxes on such Total Payments and the amount of Excise Tax to which the Executive would be subject in respect of such unreduced Total Payments and after taking into account the phase out of itemized deductions and personal exemptions attributable to such unreduced Total Payments).
		

		
			(b)  Certain Exclusions.  For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise Tax, (i) no portion of the Total Payments the receipt or enjoyment of which the Executive shall have waived at such time and in such manner as not to constitute a “payment” within the meaning of Section 280G(b) of the Code shall be taken into account; (ii) no portion of the Total Payments shall be taken into account which, in the written opinion of an independent, nationally recognized accounting firm (the “Independent Advisors”) selected by the Company, does not constitute a “parachute payment” within the meaning of Section 280G(b)(2) of the Code (including by reason of Section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments shall be taken into account which, in the opinion of the Independent Advisors, constitutes reasonable compensation for services actually rendered, within the meaning of Section 280G(b)(4)(B) of the Code, in excess of the “base amount” (as defined in Section 280G(b)(3) of the Code) allocable to such reasonable compensation; and (iii) the value of any non-cash benefit or any deferred payment or benefit included in the Total Payments shall be determined by the Independent Advisors in accordance with the principles of Sections 280G(d)(3) and (4) of the Code.
		

		
			7.          Restrictive Covenants.
		

		
			(a)         While employed by the Company (whether pursuant to this Agreement or otherwise) and for a period of 12 months following the Executive’s termination of employment for any reason, the Executive shall not directly or indirectly solicit, induce, or encourage any employee or consultant of any member of the Company and its parents, subsidiaries and affiliates to terminate their employment or other relationship with the Company and its parents, subsidiaries and affiliates or to cease to render services to any member of the Company and its parents, subsidiaries and affiliates and the Executive shall not initiate discussion with any such person for any such purpose or authorize or knowingly cooperate with the taking of any such actions by any other individual or entity.
		

		
			(b)         During his employment with the Company (whether pursuant to this Agreement or otherwise) and thereafter, the Executive shall not use any trade secret of the Company or its parents, subsidiaries or affiliates to solicit, induce, or encourage any customer, client, vendor, or other party doing business with any member of the Company and its parents, subsidiaries and affiliates to terminate its relationship therewith or transfer its business from any member of the Company and its parents, subsidiaries and affiliates and the Executive shall not initiate discussion with any such person for any such purpose or authorize or knowingly cooperate with the taking of any such actions by any other individual or entity.
		

		
			 
		

		
			
		

		
			

		 

		

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			(c)         The Executive agrees not to disparage the Company, and the Executive agrees not to disparage any parent, subsidiary or affiliate of the Company and/or any officers, directors, employees, shareholders and/or agents of the Company or any parent, subsidiary or affiliate of the Company, in any manner intended or reasonably likely to be harmful to them, their business, business reputation or personal reputation.  Notwithstanding the foregoing, nothing in this Agreement shall preclude the Executive from making truthful statements or disclosures that are required by applicable law, regulation or legal process, or from filing a charge with, reporting possible violations to, or participating or cooperating with the Securities and Exchange Commission or any other federal, state or local regulatory body or law enforcement agency, including in relation to any whistleblower, anti-discrimination, or anti-retaliation provisions of federal, state or local law or regulation.
		

		
			(d)         In recognition of the facts that irreparable injury will result to the Company in the event of a breach by the Executive of his obligations under Sections 7(a), (b) and (c) hereof, that monetary damages for such breach would not be readily calculable, and that the Company would not have an adequate remedy at law therefor, the Executive acknowledges, consents and agrees that in the event of such breach, or the threat thereof, the Company shall be entitled, in addition to any other legal remedies and damages available, to specific performance thereof and to temporary and permanent injunctive relief (without the necessity of posting a bond) to restrain the violation or threatened violation of such obligations by the Executive.
		

		
			8.          Full Settlement. The Company’s obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against the Executive or others. In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement and, except as expressly provided, such amounts shall not be reduced whether or not the Executive obtains other employment.
		

		
			9.          Successors.
		

		
			(a)         This Agreement is personal to the Executive and without the prior written consent of the Company shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive’s legal representatives.
		

		
			(b)         This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns.
		

		
			(c)         The Company will require any successor (whether direct or indirect, by purchase merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise, including without limitation, a Change in Control.
		

		
			10.        Payment of Financial Obligations. The payment or provision to the Executive by the Company of any remuneration, benefits or other financial obligations pursuant to this Agreement shall be allocated to the Operating Partnership, Sunstone, Sunstone Hotel TRS Lessee, Inc. and, if applicable, any of their respective subsidiaries and/or affiliates in accordance with any employee sharing and expense allocation agreement, by and between Sunstone and the Operating Partnership, as in effect from time to time.
		

		
			 
		

		
			
		

		
			

		 

		

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			11.        Ancillary Agreements. The Company and the Executive previously executed the Indemnification Agreement attached hereto as Exhibit B (the “Indemnification Agreement”).  The Executive hereby acknowledges that the Executive previously has entered into an arrangement with the Company containing confidentiality and other protective covenants (the “Confidentiality Policy”) and that the Executive shall continue to be bound by the terms and conditions of the Confidentiality Policy.
		

		
			12.        Miscellaneous.
		

		
			(a)         Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California, without reference to principles of conflict of laws. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives.
		

		
			(b)         Arbitration. To the fullest extent allowed by law, any controversy, claim or dispute between the Executive and the Company (and or any of its owners, directors, officers, employees, affiliates, or agents) relating to or arising out of the Executive’s employment or the cessation of that employment will be submitted to final and binding arbitration in the county in which the Executive worked for determination by one arbitrator with hotel industry experience in accordance with the American Arbitration Association’s (“AAA”) National Rules for the Resolution of Employment Disputes, as the exclusive remedy for such controversy, claim or dispute. In any such arbitration, the parties may conduct discovery in accordance with the applicable rules of the arbitration forum, except that the arbitrator shall have the authority to order and permit discovery as the arbitrator may deem necessary and appropriate in accordance with applicable state or federal discovery statutes. The arbitrator shall issue a reasoned, written decision, and shall have full authority to award all remedies which would be available in court. The parties shall share the filing fees required for the arbitration, provided that the Executive shall not be required to pay an amount in excess of the lesser of the filing fees required by a federal or state court with jurisdiction. The Company shall pay the arbitrator’s fees and any AAA administrative expenses. Any judgment upon the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. Possible disputes covered by the above include (but are not limited to) unpaid wages, breach of contract, torts, violation of public policy, discrimination, harassment, or any other employment-related claims under laws including but not limited to, Title VII of the Civil Rights Act of 1964, the Americans With Disabilities Act, the Age Discrimination in Employment Act, the California Fair Employment and Housing Act, the California Labor Code, and any other statutes or laws relating to an employee’s relationship with his her employer, regardless of whether such dispute is initiated by the Executive or the Company. Thus, this bilateral arbitration agreement applies to any and all claims that the Company may have against the Executive, including but not limited to, claims for misappropriation of Company property, disclosure of proprietary information or trade secrets, interference with contract, trade libel, gross negligence, or any other claim for alleged wrongful conduct or breach of the duty of loyalty by the Executive. However, notwithstanding anything to the contrary contained herein, the Company and the Executive shall have their respective rights to seek and obtain injunctive relief with respect to any controversy, claim or dispute to the extent permitted by law. Claims for workers’ compensation benefits and unemployment insurance (or any other claims where mandatory arbitration is prohibited by law) are not covered by this arbitration agreement, and such claims may be presented by either the Executive or the Company to the appropriate court or government agency. BY AGREEING TO THIS BINDING ARBITRATION PROVISION, BOTH THE EXECUTIVE AND THE COMPANY GIVE UP ALL RIGHTS TO TRIAL BY JURY. THE EXECUTIVE AND THE COMPANY WAIVE ANY CONSTITUTIONAL OR OTHER RIGHT TO BRING CLAIMS COVERED BY THIS AGREEMENT OTHER THAN IN THEIR INDIVIDUAL CAPACITIES.  EXCEPT AS MAY BE PROHIBITED BY LAW, THIS WAIVER INCLUDES THE ABILITY TO ASSERT CLAIMS AS A PLAINTIFF OR CLASS MEMBER IN ANY PURPORTED CLASS OR REPRESENTATIVE PROCEEDING.  This arbitration agreement is to be construed as broadly as is permissible under applicable law.
		

		
			 
		

		
			
		

		
			

		 

		

			12

		

		

			 

		

		

		
			(c)         Notices. All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:
		

		
			If to the Executive: at the Executive’s most recent address on the records of the Company.
		

		
			If to Sunstone or the Operating Partnership:
		

		
			Sunstone Hotel Investors, Inc.
200 Spectrum Center Drive, 21st Floor
		

		
			Irvine, California 92618
Attn: Corporate Secretary
		

		
			with a copy to:
		

		
			Latham & Watkins
355 South Grand Ave., Suite 100
Los Angeles, California 90071-1560
Attn: Steven Stokdyk, Esq.
		

		
			or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee.
		

		
			(d)         Sarbanes-Oxley Act of 2002. Notwithstanding anything herein to the contrary, if the Company determines, in its good faith judgment, that any transfer or deemed transfer of funds hereunder is likely to be construed as a personal loan prohibited by Section 13(k) of the Exchange Act and the rules and regulations promulgated thereunder, then such transfer or deemed transfer shall not be made to the extent necessary or appropriate so as not to violate the Exchange Act and the rules and regulations promulgated thereunder.
		

		
			(e)         Section 409A.
		

		
			(i)          The parties agree that this Agreement is intended to comply with the requirements of Section 409A of the Code and the regulations promulgated thereunder (“Section 409A”) or an exemption from Section 409A.
		

		
			(ii)         For purposes of this Agreement, each amount to be paid or benefit to be provided hereunder (including any right to a series of installment payments) shall be construed as a separate identified payment or a right to a series of separate payments for purposes of Section 409A.
		

		
			(iii)       With respect to any reimbursement of expenses of, or any provision of in-kind benefits to, the Executive, as specified under this Agreement, such reimbursement of expenses or provision of in-kind benefits shall be subject to the following conditions: (i) the expenses eligible for reimbursement or the amount of in-kind benefits provided in one taxable year shall not affect the expenses eligible for reimbursement or the amount of in-kind benefits provided in any other taxable year, except for any medical reimbursement arrangement providing for the reimbursement of expenses referred to in Section 105(b) of the Code; (ii) the reimbursement of an eligible expense shall be made no later than the end of the year after the year in which such expense was incurred;
		

		
			 
		

		
			
		

		
			

		 

		

			13

		

		

			 

		

		

		
			and (iii) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit.
		

		
			(iv)        A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits that constitute “nonqualified deferred compensation” under Section 409A upon or following a termination of employment unless such termination is also a “separation from service” within the meaning of Code Section 409A and, for purposes of any such provision of this Agreement, references to a “termination,” “termination of employment” or like terms shall mean “separation from service”.
		

		
			(v)         Notwithstanding anything to the contrary in this Agreement, no compensation or benefits payable in connection with a “separation from service” (within the meaning of Section 409A) shall be paid to the Executive during the six-month period following his “separation from service” to the extent that the Company determines that the Executive is a “specified employee” at the time of such “separation from service” and that paying such amounts at the time or times indicated in this Agreement would be a prohibited distribution under Internal Revenue Code Section 409A(a)(2)(b)(i). If the payment of any such amounts is delayed as a result of the previous sentence, then on the first business day following the end of such six-month period (or such earlier date upon which such amount can be paid under Section 409A without being subject to such additional taxes, including as a result of the Executive’s death), the Company shall pay to the Executive a lump-sum amount equal to the cumulative amount that would have otherwise been payable to the Executive during such six-month period, without interest thereon.
		

		
			(f)         Severability. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement. If any provision or term hereof is deemed to have exceeded applicable legal authority or shall be in conflict with applicable legal limitations, such provision shall be reformed and rewritten as necessary to achieve consistency with such applicable law.
		

		
			(g)         Withholding. The Company may withhold from any amounts payable under this Agreement such federal, state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation.
		

		
			(h)         No Waiver. The Executive’s or the Company’s failure to insist upon strict compliance with any provision of this Agreement or the failure to assert any right the Executive or the Company may have hereunder shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.
		

		
			(i)          Employment-At-Will. The Executive acknowledges that his employment with the Company is “at-will” for all purposes and, subject to the termination and severance obligations contained in Sections 3 and 4 above, the Executive hereby agrees that the Company may dismiss him and terminate his employment with the Company at any time, with or without Cause. Inclusion under any benefit plan or compensation arrangement will not give the Executive any right or claim to any benefit hereunder except to the extent such right has become fixed under the express terms of this Agreement.
		

		
			(j)          Entire Agreement. As of the Effective Date, this Agreement, together with the Indemnification Agreement and the Confidentiality Agreement, constitutes the final, complete and exclusive agreement between the Executive and the Company with respect to the subject matter hereof and replaces and supersedes any and all other agreements, offers or promises, whether oral or written, made to the Executive by the Company, including, without limitation, the Prior Agreement.
		

		
			 
		

		
			
		

		
			

		 

		

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			(k)         Survival.  Section 4 (Obligations of the Company Upon Termination), Section 7 (Restrictive Covenants) and Section 12(b) (Arbitration), as well as the Indemnification Agreement and Confidentiality Policy, shall survive termination or expiration of this Agreement and shall continue in effect.
		

		
			(l)          Representations and Warranties. The Executive represents and warrants to the Company that (i) this Agreement is valid and binding upon and enforceable against him in accordance with its terms, (ii) the Executive is not bound by or subject to any contractual or other obligation that would be violated by his execution or performance of this Agreement, including, but not limited to, any non-competition agreement presently in effect, and (iii) the Executive is not subject to any pending or, to the Executive’s knowledge, threatened claim, action, judgment, order, or investigation that could adversely affect his ability to perform his obligations under this Agreement or the business reputation of the Company. The Executive has not entered into, and agrees that he will not enter into, any agreement either written or oral in conflict herewith.
		

		
			(m)        Consultation with Counsel. The Executive acknowledges that he has had a full and complete opportunity to consult with counsel and other advisors of his own choosing concerning the terms, enforceability and implications of this Agreement, and that the Company has not made any representations or warranties to the Executive concerning the terms, enforceability or implications of this Agreement other than as reflected in this Agreement.
		

		
			(n)         Counterparts. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original but which together shall constitute one and the same instrument.
		

		
			[signatures follow on next page]
		

		
			 
		

		
			 
		

		
			

		 

		

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			IN WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand and, pursuant to the authorization from the Board, the Company has caused these presents to be executed in its name on its behalf, all as of the day and year first above written.
		

			
					
						EXECUTIVE

					
					
						    

					
					
						SUNSTONE HOTEL INVESTORS, INC.

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						a Maryland corporation

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						/S/ John V. Arabia

					
					
						 

					
					
						By

					
					
						/S/ Bryan A. Giglia

				
	
					
						John Arabia

					
					
						 

					
					
						 

					
					
						Name:

					
					
						Bryan A. Giglia

				
	
					
						 

					
					
						 

					
					
						 

					
					
						Its

					
					
						Executive Vice President – Chief

				
	
					
						 

					
					
						 

					
					
						 

					
					
						Financial Officer

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						SUNSTONE HOTEL PARTNERSHIP, LLC

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						a Maryland corporation

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						By

					
					
						Sunstone Hotel Investors, Inc.

				
	
					
						 

					
					
						 

					
					
						 

					
					
						Its Managing Member

				
	
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

					
					
						By:

					
					
						/S/ Bryan A. Giglia

				
	
					
						 

					
					
						 

					
					
						 

					
					
						Name:

					
					
						Bryan A. Giglia

				
	
					
						 

					
					
						 

					
					
						 

					
					
						Its

					
					
						Executive Vice

				
	
					
						 

					
					
						 

					
					
						 

					
					
						President – Chief Financial Officer

				

		
			 
		

		
			 
		

		
			 
		

		
			

		 

		

			S-1

		

		

			 

		

		

		
			EXHIBIT A
		

		
			GENERAL RELEASE
		

		
			For a valuable consideration, the receipt and adequacy of which are hereby acknowledged, the undersigned does hereby release and forever discharge the “Releasees” hereunder, consisting of Sunstone Hotel Investors, Inc., a Maryland corporation, Sunstone Operating Partnership, LLC, a Delaware limited liability company and each of their partners, subsidiaries, associates, affiliates, successors, heirs, assigns, agents, directors, officers, employees, representatives, lawyers, insurers, and all persons acting by, through, under or in concert with them, or any of them, of and from any and all manner of action or actions, cause or causes of action, in law or in equity, suits, debts, liens, contracts, agreements, promises, liability, claims, demands, damages, losses, costs, attorneys’ fees or expenses, of any nature whatsoever, known or unknown, fixed or contingent (hereinafter called “Claims”), which the undersigned now has or may have against the Releasees, or any of them, by reason of any matter, cause, or thing whatsoever from the beginning of time to the date hereof. The Claims released herein include, without limiting the generality of the foregoing, any Claims in any way arising out of, based upon, or related to the employment or termination of employment of the undersigned by the Releasees, or any of them; any alleged breach of any express or implied contract of employment, any alleged torts or other alleged legal restrictions on Releasee’s right to terminate the employment of the undersigned; and any alleged violation of any federal, state or local statute or ordinance including, without limitation, Title VII of the Civil Rights Act of 1964, the Age Discrimination In Employment Act, the Americans With Disabilities Act, and the California Fair Employment and Housing Act.  Notwithstanding the foregoing, this general release (the “Release”) shall not operate to release any rights or claims of the undersigned (i) to payments or benefits under Section 4(a), 4(c) or 4(d) of that certain Third Amended and Restated Employment Agreement, dated as of _________, between Sunstone Hotel Investors, Inc., Sunstone Operating Partnership, LLC and the undersigned (the “Employment Agreement”), whichever is applicable to the payments and benefits provided in exchange for this Release, (ii) with respect to Section 2(b)(vi) of the Employment Agreement, (iii) to accrued or vested benefits the undersigned may have, if any, as of the date hereof under any applicable plan, policy, practice, program, contract or agreement with the Company, (iv) to any Claims, including claims for indemnification and/or advancement of expenses arising under any indemnification agreement between the undersigned and the Company or under the bylaws, certificate of incorporation of other similar governing document of the Company, (v) to any Claims which cannot be waived by an employee under applicable law or (vi) with respect to the undersigned’s right to communicate directly with, cooperate with, or provide information to, any federal, state or local government regulator.
		

		
			THE UNDERSIGNED ACKNOWLEDGES THAT HE HAS BEEN ADVISED BY LEGAL COUNSEL AND IS FAMILIAR WITH THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 1542, WHICH PROVIDES AS FOLLOWS:
		

		
			“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.”
		

		
			THE UNDERSIGNED, BEING AWARE OF SAID CODE SECTION, HEREBY EXPRESSLY WAIVES ANY RIGHTS HE MAY HAVE THEREUNDER, AS WELL AS UNDER ANY OTHER STATUTES OR COMMON LAW PRINCIPLES OF SIMILAR EFFECT.
		

		
			[IN ACCORDANCE WITH THE OLDER WORKERS BENEFIT PROTECTION ACT OF 1990, THE UNDERSIGNED IS HEREBY ADVISED AS FOLLOWS:
		

		
			 
		

		
			
		

		
			

		 

		

			A-1

		

		

			 

		

		

		
			(A)        HE HAS THE RIGHT TO CONSULT WITH AN ATTORNEY BEFORE SIGNING THIS RELEASE;
		

		
			(B)        HE HAS TWENTY-ONE (21) DAYS TO CONSIDER THIS RELEASE BEFORE SIGNING IT: AND
		

		
			(C)        HE HAS SEVEN (7) DAYS AFTER SIGNING THIS RELEASE TO REVOKE THIS RELEASE, AND THIS RELEASE WILL BECOME EFFECTIVE UPON THE EXPIRATION OF THAT REVOCATION PERIOD.]1
		

		
			The undersigned represents and warrants that there has been no assignment or other transfer of any interest in any Claim which he may have against Releasees, or any of them, and the undersigned agrees to indemnify and hold Releasees, and each of them, harmless from any liability, Claims, demands, damages, costs, expenses and attorneys’ fees incurred by Releasees, or any of them, as the result of any such assignment or transfer or any rights or Claims under any such assignment or transfer. It is the intention of the parties that this indemnity does not require payment as a condition precedent to recovery by the Releasees against the undersigned under this indemnity.
		

		
			The undersigned agrees that if he hereafter commences any suit arising out of, based upon, or relating to any of the Claims released hereunder or in any manner asserts against Releasees, or any of them, any of the Claims released hereunder, then the undersigned agrees to pay to Releasees, and each of them, in addition to any other damages caused to Releasees thereby, all attorneys’ fees incurred by Releasees in defending or otherwise responding to said suit or Claim.
		

		
			The undersigned further understands and agrees that neither the payment of any sum of money nor the execution of this Release shall constitute or be construed as an admission of any liability whatsoever by the Releasees, or any of them, who have consistently taken the position that they have no liability whatsoever to the undersigned.
		

		
			IN WITNESS WHEREOF, the undersigned has executed this Release this ___ day of _____, 20__.
		

			
					
						 

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						John Arabia

				

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		

		
			1  NTD:  Include only if the executive is 40 or older at time release is signed.
		

		
			 
		

		
			 
		

		
			

		 

		

			A-2

		

		

			 

		

		

		
			EXHIBIT B
		

		
			[INDEMNIFICATION AGREEMENT]
		

		
			(attached)
		

		
			 
		

		
			 
		

		 

		

			B-1

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