Document:

Form of 2004 Equity Compensation Plan

 Exhibit 10.18 
  
 CAPITAL LODGING 
  
 2004 EQUITY COMPENSATION PLAN 
  
 The purpose of the Capital Lodging 2004 Equity Compensation Plan (the “Plan”) is to provide (i) designated employees of Capital Lodging (the
“Trust”) and its subsidiaries and affiliates, (ii) certain consultants and advisors who perform services for the Trust or its subsidiaries and affiliates and (iii) non-employee members of the Board of Trustees of the Trust (the
“Board”) with the opportunity to receive grants of share appreciation rights, share awards, performance units and other equity-based awards. The Trust believes that the Plan will encourage the participants to contribute materially to the
growth of the Trust, thereby benefiting the Trust’s shareholders, and will align the economic interests of the participants with those of the shareholders. 
  

1. Administration. 
  
 (a) Committee. The Plan shall be administered by the Compensation Committee of the Trust (the “Committee”), which shall
consist of two or more persons who are “outside directors” as defined under section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), and related Treasury regulations, and “non-employee directors” as
defined under Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). However, the Board may ratify or approve any grants as it deems appropriate, and the Board shall approve and administer all grants made to
non-employee trustees. The Committee may delegate authority to one or more subcommittees, as it deems appropriate. To the extent that the Board or a subcommittee administers the Plan, references in the Plan to the “Committee” shall be
deemed to refer to such Board or such subcommittee. 
  
 (b) Committee Authority. The Committee shall have the sole authority to (i) determine the individuals to whom grants shall be made under the Plan, (ii) determine the type, size and terms of the grants to be made to each such
individual, (iii) determine the time when the grants will be made and the duration of any applicable exercise or restriction period, including the criteria for exercisability and the acceleration of exercisability, (iv) amend the terms of any
previously issued grant, and (v) deal with any other matters arising under the Plan. 
  
 (c) Committee Determinations. The Committee shall have full power and authority to administer and interpret the Plan, to make
factual determinations and to adopt or amend such rules, regulations, agreements and instruments for implementing the Plan and for the conduct of its business as it deems necessary or advisable, in its sole discretion. The Committee’s
interpretations of the Plan and all determinations made by the Committee pursuant to the powers vested in it hereunder shall be conclusive and binding on all persons having any interest in the Plan or in any awards granted hereunder. All powers of
the Committee shall be executed in its sole discretion, in the best interest of the Trust, not as a fiduciary, and in keeping with the objectives of the Plan and need not be uniform as to similarly situated individuals. 

	

  

 2. Grants. 
  
 Awards under the Plan may consist of grants of share appreciation rights as described in Section 6 (“SARs”), share
awards as described in Section 7 (“Share Awards”), performance units as described in Section 8 (“Performance Units”), and other equity-based awards as described in Section 9 (“Equity Awards”) (hereinafter collectively
referred to as “Grants”). All Grants shall be subject to the terms and conditions set forth herein and to such other terms and conditions consistent with this Plan as the Committee deems appropriate and as are specified in writing by the
Committee to the individual in a grant instrument or an amendment to the grant instrument (the “Grant Instrument”). All Grants shall be made conditional upon the grantee’s acknowledgement, in writing or by acceptance of the Grant,
that all decisions and determinations of the Committee shall be final and binding on the grantee, his or her beneficiaries and any other person having or claiming an interest under such Grant. Grants under a particular Section of the Plan need not
be uniform as among the grantees. 
  

	3.	Shares Subject to the Plan. 

  
 (a) Shares Authorized. Subject to adjustment as described below, the aggregate number of common shares of beneficial interest,
$0.001 par value, of the Trust (the “Common Shares”) that may be issued or transferred under the Plan is              Common Shares. The maximum aggregate number of Common
Shares that shall be subject to Grants made under the Plan to any individual during any calendar year shall be              Common Shares, subject to adjustment as described below.
The Common Shares may be authorized but unissued Common Shares or reacquired Common Shares, including Common Shares purchased by the Trust on the open market for purposes of the Plan. If and to the extent SARs granted under the Plan terminate,
expire, or are canceled, forfeited, exchanged or surrendered without having been exercised or if any Share Awards, Performance Units or Equity Awards are forfeited, the Common Shares subject to such Grants shall again be available for purposes of
the Plan. 
  
 (b) Adjustments. If there is
any change in the number or kind of Common Shares outstanding (i) by reason of a share dividend, spinoff, recapitalization, share split, or combination or exchange of shares, (ii) by reason of a merger, reorganization or consolidation, (iii) by
reason of a reclassification or change in par value, or (iv) by reason of any other extraordinary or unusual event affecting the outstanding Common Shares as a class without the Trust’s receipt of consideration, or if the value of outstanding
Common Shares is substantially reduced as a result of a spinoff or the Trust’s payment of an extraordinary dividend or distribution, the maximum number of Common Shares available for Grants, the maximum number of Common Shares that any
individual participating in the Plan may be granted in any year, the number of Common Shares covered by outstanding Grants, the kind of shares issued under the Plan, and the price per Common Share or the applicable market value of such Grants may be
appropriately adjusted by the Committee to reflect any increase or decrease in the number of, or change in the kind or value of, issued Common Shares to preclude, to the extent practicable, the enlargement or dilution of rights and benefits under
such Grants; provided, however, that any fractional Common Shares resulting from such adjustment shall be eliminated. Any adjustments determined by the Committee shall be final, binding and conclusive. 
  

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 4. Eligibility for Participation. 
  
 (a) Eligible Persons. All employees of the Trust and its subsidiaries and affiliates, including, but
not limited to, employees of Capital Lodging, L.P., a Delaware limited partnership in which the Trust is the general partner through its wholly-owned subsidiary Capital Lodging, LLC, (“Employees”), including Employees who are officers or
members of the Board, and members of the Board who are not Employees (“Non-Employee Trustees”) shall be eligible to participate in the Plan. Consultants and advisors who perform services for the Trust or any of its subsidiaries and
affiliates (“Key Advisors”) shall be eligible to participate in the Plan if the Key Advisors render bona fide services to the Trust or its subsidiaries and affiliates, the services are not in connection with the offer and sale of
securities in a capital-raising transaction and the Key Advisors do not directly or indirectly promote or maintain a market for the Trust’s securities. 
  
 (b) Selection of Grantees. The Committee shall select the Employees, Non-Employee Trustees and Key Advisors to receive Grants and
shall determine the number of Common Shares subject to a particular Grant in such manner as the Committee determines. Employees, Key Advisors and Non-Employee Trustees who receive Grants under this Plan shall hereinafter be referred to as
“Grantees.” 
  
 5. Definitions. For purposes of
the following Sections of the Plan: 
  
 (a)
“Disability” shall mean, unless otherwise determined by the Committee, a Grantee’s becoming disabled within the meaning of the Employer’s long-term disability plan applicable to the Grantee, and if the Employer does maintain such
a Plan that covers the Grantee, “Disability” shall mean the Grantee becoming disabled within the meaning set forth in section 22(e)(3) of the Code. 
  

(b) “Employer” shall mean the Trust, Capital Lodging, L.P. and any other subsidiary corporation, partnership or other
affiliated entity of the Trust, as determined by the Committee. 
  
 (c) “Employed by, or provide service to, the Employer” shall mean employment or service as an Employee, Key Advisor or member of the Board (so that, for purposes of exercising SARs and satisfying conditions
with respect to Share Awards, Performance Units and Equity Awards, a Grantee shall not be considered to have terminated employment or service until the Grantee ceases to be an Employee, Key Advisor and member of the Board), unless the Committee
determines otherwise. 
  
 (d) “Fair Market
Value” shall be determined as follows: if the Common Shares are publicly traded, then the Fair Market Value per Common Share shall be determined as follows: (i) if the principal trading market for the Common Shares is a national securities
exchange or the Nasdaq National Market, the last reported sale price thereof on the relevant date or (if there were no trades on that date) the latest preceding date upon which a sale was reported, or (ii) if the Common Shares are not principally
traded on such exchange or market, the mean between the last reported “bid” and “asked” prices of Common Shares on the relevant date, as reported on Nasdaq or, if not so reported, as reported by the National Daily Quotation
Bureau, 
  

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 Inc. or as reported in a customary financial reporting service, as applicable and as the Committee
determines. If the Common Shares are not publicly traded or, if publicly traded, are not subject to reported transactions or “bid” or “asked” quotations as set forth above, the Fair Market Value per Common Share shall be as
determined by the Committee. 
  
 6. Share Appreciation
Rights. 
  
 (a) General Requirements.
The Committee may grant share appreciation rights (“SARs”) to an Employee, Non-Employee Trustee or Key Advisor separately or in tandem with all or a portion any incentive stock option or nonqualified stock option issued under any option
plan maintained by the Trust or an affiliate (collectively referred to as an “Option”). Tandem SARs may be granted either at the time the Option is granted or at any time thereafter while the Option remains outstanding; provided, however,
that, in the case of an incentive stock option, SARs may be granted only at the time of the grant of the incentive stock option. The Committee shall establish the base amount of the SAR at the time the SAR is granted. Unless the Committee determines
otherwise, the base amount of each SAR shall be equal to the per share Exercise Price of the related Option or, if there is no related Option, the Fair Market Value per Common Share as of the date of Grant of the SAR. 
  
 (b) Tandem SARs. In the case of tandem SARs, the
number of SARs granted to a Grantee that shall be exercisable during a specified period shall not exceed the number of Common Shares that the Grantee may purchase upon the exercise of the related Option during such period. Upon the exercise of an
Option, the SARs relating to the Common Shares covered by such Option shall terminate. Upon the exercise of SARs, the related Option shall terminate to the extent of an equal number of shares of Common Shares. 
  
 (c) Exercisability. A SAR shall be exercisable during
the period specified by the Committee in the Grant Instrument and shall be subject to such vesting and other restrictions as may be specified in the Grant Instrument. The Committee may accelerate the exercisability of any or all outstanding SARs at
any time for any reason. SARs may only be exercised while the Grantee is employed by, or providing service to, the Employer. A tandem SAR shall be exercisable only during the period when the Option to which it is related is also exercisable.

  
 (d) Grants to Non-Exempt Employees.
Notwithstanding the foregoing, SARs granted to persons who are non-exempt employees under the Fair Labor Standards Act of 1938, as amended, shall have a base amount not less than 85% of the Fair Market Value per Common Share on the date of grant,
and may not be exercisable for at least six months after the date of grant (except that such SARs may become exercisable, as determined by the Committee, upon the Grantee’s death, Disability or retirement, or upon a Change of Control or other
circumstances permitted by applicable regulations). 
  
 (e) Value of SARs. When a Grantee exercises SARs, the Grantee shall receive in settlement of such SARs an amount equal to the value of the share appreciation for the number of SARs exercised, payable in cash, Common Shares or a
combination thereof. The share appreciation for a SAR is the amount by which the Fair Market Value of the underlying Common Shares on the date of exercise of the SAR exceeds the base amount of the SAR as described in subsection (a). 
  

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 (f) Form of Payment. The Committee shall determine whether the appreciation in a
SAR shall be paid in the form of cash, Common Shares, or a combination of the two, in such proportion as the Committee deems appropriate. For purposes of calculating the number of Common Shares to be received, Common Shares shall be valued at their
Fair Market Value on the date of exercise of the SAR. If Common Shares are to be received upon exercise of an SAR, cash shall be delivered in lieu of any fractional share. 
  
 7. Share Awards. 
  
 The Committee may issue or transfer Common Shares to an Employee, Non-Employee Trustee or Key Advisor under a Share Award, upon such terms as the
Committee deems appropriate. The following provisions are applicable to Share Awards: 
  
 (a) General Requirements. Common Shares issued or transferred pursuant to Share Awards may be issued or transferred for
consideration or for no consideration, and subject to restrictions or no restrictions, as determined by the Committee. The Committee may, but shall not be required to, establish conditions under which restrictions on Share Awards shall lapse over a
period of time or according to such other criteria as the Committee deems appropriate, including, without limitation, restrictions based upon the achievement of specific performance goals. The period of time during which the Share Awards will remain
subject to restrictions will be designated in the Grant Instrument as the “Restriction Period.” 
  
 (b) Number of Shares. The Committee shall determine the number of Common Shares to be issued or transferred pursuant to a Share
Award and the restrictions applicable to such Common Shares. 
  
 (c) Requirement of Employment or Service. If the Grantee ceases to be employed by, or provide service to, the Employer during a period designated in the Grant Instrument as the Restriction Period, or if other
specified conditions are not met, the Share Award shall terminate as to all Common Shares covered by the Grant as to which the restrictions have not lapsed, and those Common Shares must be immediately returned to the Trust. The Committee may,
however, provide for complete or partial exceptions to this requirement as it deems appropriate. 
  
 (d) Restrictions on Transfer and Legend on Stock Certificate. During the Restriction Period, a Grantee may not sell, assign,
transfer, pledge or otherwise dispose of the Common Shares of a Share Award except to a successor under Section 14. Each certificate for a share of a Share Award shall contain a legend giving appropriate notice of the restrictions in the Grant. The
Grantee shall be entitled to have the legend removed from the stock certificate covering the Common Shares subject to restrictions when all restrictions on such Common Shares have lapsed. The Committee may determine that the Trust will not issue
certificates for Share Awards until all restrictions on such Common Shares have lapsed, or that the Trust will retain possession of certificates for shares of Share Awards until all restrictions on such Common Shares have lapsed. 
  
 (e) Right to Vote and to Receive Dividends. Unless
the Committee determines otherwise, during the Restriction Period, the Grantee shall have the right to vote 
  

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 shares of Share Awards and to receive any dividends or other distributions paid on such Common Shares,
subject to any restrictions deemed appropriate by the Committee, including, without limitation, the achievement of specific performance goals. 
  
 (f) Lapse of Restrictions. All restrictions imposed on Share Awards shall lapse upon the expiration of the applicable Restriction
Period and the satisfaction of all conditions imposed by the Committee. The Committee may determine, as to any or all Share Awards, that the restrictions shall lapse without regard to any Restriction Period. 
  
 8. Performance Units. 
  
 (a) General Requirements. The Committee may grant
performance units (“Performance Units”) to an Employee, Non-Employee Trustee or Key Advisor. Each Performance Unit shall represent the right of the Grantee to receive an amount based on the value of the Performance Unit, if performance
goals established by the Committee are met. A Performance Unit shall be based on the Fair Market Value of a share of Common Shares or on such other measurement base as the Committee deems appropriate. The Committee shall determine the number of
Performance Units to be granted and the requirements applicable to such Performance Units. 
  
 (b) Performance Period and Performance Goals. When Performance Units are granted, the Committee shall establish the performance
period during which performance shall be measured (the “Performance Period”), performance goals applicable to the Units (“Performance Goals”) and such other conditions of the Grant as the Committee deems appropriate. Performance
Goals may relate to the financial performance of the Trust or its operating units, the performance of Common Shares, individual performance, or such other criteria as the Committee deems appropriate. 
  
 (c) Payment with Respect to Performance Units. At the
end of each Performance Period, the Committee shall determine to what extent the Performance Goals and other conditions of the Performance Units are met, the value of the Performance Units (if applicable), and the amount, if any, to be paid with
respect to the Performance Units. Payments with respect to Performance Units shall be made in cash, in Common Shares, or in a combination of the two, as determined by the Committee. 
  
 (d) Requirement of Employment or Service. If the Grantee ceases to be employed by, or provide service
to, the Employer during a Performance Period, or if other conditions established by the Committee are not met, the Grantee’s Performance Units shall be forfeited. The Committee may, however, provide for complete or partial exceptions to this
requirement as it deems appropriate. 
  
 9. Equity Awards.
The Committee may grant other types of stock-based awards (including, but not limited to, the grant of unrestricted shares or restricted share units) that are not otherwise specifically authorized under the Plan pursuant to Sections 6, 7 and 8 of
the Plan, to any Employee, Non-Employee Trustee or Key Advisor, in such amounts and subject to such terms and conditions, as the Committee shall in its discretion determine, subject to the provisions of the Plan. Such Equity Awards may entail the
transfer of actual Common Shares, payment in 
  

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 cash or amounts based on the value of the Common Shares. Notwithstanding, anything in the Plan to the
contrary, Equity Awards shall not include options. 
  
 10.
Dividend Equivalents. The Committee may include in a Grant Instrument with respect to any Grant a dividend equivalent right (“Dividend Equivalents”) entitling the Grantee to receive amounts equal to the ordinary dividends that would
be paid, during the time the Grant is outstanding and unexercised and/or unvested, on the Common Shares covered by the Grant as if such shares were then outstanding. The Committee shall determine whether Dividend Equivalents shall be paid currently
or credited to a bookkeeping account as a dollar amount or in the form of units. The Committee shall determine whether Dividend Equivalents shall be paid in cash, in Common Shares or in a combination, whether they shall be conditioned upon the
exercise, vesting or payment of the Grant to which they relate, and such other terms and conditions as the Committee deems appropriate. 
  
 11. Qualified Performance-Based Compensation. 
  
 (a) Designation as Qualified Performance-Based Compensation. The Committee may determine that Performance Units, Share Awards,
Equity Awards or Dividend Equivalents granted to an Employee shall be considered “qualified performance-based compensation” under section 162(m) of the Code. The provisions of this Section 11 shall apply to Grants of Performance Units,
Share Awards, Equity Awards and Dividend Equivalents that are to be considered “qualified performance-based compensation” under section 162(m) of the Code. 
  
 (b) Performance Goals. When Performance Units, Share Awards, Equity Awards or Dividend Equivalents
that are to be considered “qualified performance-based compensation” are granted, the Committee shall establish in writing (i) the objective performance goals that must be met, (ii) the Performance Period during which the performance goals
must be met, (iii) the threshold, target and maximum amounts that may be paid if the performance goals are met, and (iv) any other conditions that the Committee deems appropriate and consistent with the Plan and section 162(m) of the Code. The
performance goals may relate to the Employee’s business unit or the performance of the Trust and its parents and subsidiaries and affiliates as a whole, or any combination of the foregoing. The Committee shall use objectively determinable
performance goals based on one or more of the following criteria: Common Share price, earnings per Common Share, net earnings, operating earnings, return on assets, shareholder return, return on equity, growth in assets, unit volume, sales, market
share, or strategic business criteria consisting of one or more objectives based on meeting specified revenue goals, market penetration goals, geographic business expansion goals, cost targets or goals relating to acquisitions or divestitures.

  
 (c) Establishment of Goals. The
Committee shall establish the performance goals in writing either before the beginning of the Performance Period or during a period ending no later than the earlier of (i) 90 days after the beginning of the Performance Period or (ii) the date on
which 25% of the Performance Period has been completed, or such other date as may be required or permitted under applicable regulations under section 162(m) of the Code. The performance goals shall satisfy the requirements for “qualified
performance-based 
  

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 compensation,” including the requirement that the achievement of the goals be substantially
uncertain at the time they are established and that the goals be established in such a way that a third party with knowledge of the relevant facts could determine whether and to what extent the performance goals have been met. The Committee shall
not have discretion to increase the amount of compensation that is payable upon achievement of the designated performance goals. 
  
 (d) Maximum Payment. If Share Awards, Performance Units, Equity Awards or Dividend Equivalents are measured with respect to the
Fair Market Value of Common Shares, not more than                  Common Shares may be granted to an Employee under the Performance Units, Share Awards or Equity
Awards for any Performance Period. If Performance Units, Equity Awards or Dividend Equivalents are measured with respect to other criteria, the maximum amount that may be paid to an Employee pursuant to Performance Units, Equity Awards or Dividend
Equivalents with respect to a Performance Period is $            . 
  
 (e) Announcement of Grants. The Committee shall certify and announce the results for each Performance Period to all Grantees
immediately following the announcement of the Trust’s financial results for the Performance Period. If and to the extent that the Committee does not certify that the performance goals have been met, the grants of Share Awards, Performance Units
or Equity Awards for the Performance Period shall be forfeited or shall not be made, as applicable. 
  
 (f) Death, Disability or Other Circumstances. The Committee may provide that Performance Units, Equity Awards or Dividend
Equivalents shall be payable or restrictions on Share Awards shall lapse, in whole or in part, in the event of the Grantee’s death or Disability during the Performance Period, or under other circumstances consistent with the Treasury
regulations and rulings under section 162(m) of the Code. 
  
 12.
Deferrals. 
  
 The Committee may permit or require a
Grantee to defer receipt of the payment of cash or the delivery of Common Shares that would otherwise be due to such Grantee in connection with any SAR, the lapse or waiver of restrictions applicable to Share Awards, or the satisfaction of any
requirements or objectives with respect to Performance Units, Equity Awards or Dividend Equivalents. If any such deferral election is permitted or required, the Committee shall, in its sole discretion, establish rules and procedures for such
deferrals. 
  
 13. Withholding of Taxes. 

 
 (a) Required Withholding. All Grants under the
Plan shall be subject to applicable federal (including FICA), state and local tax withholding requirements. The Employer may require that the Grantee or other person receiving or exercising Grants pay to the Employer the amount of any federal, state
or local taxes that the Employer is required to withhold with respect to such Grants, or the Employer may deduct from other wages paid by the Employer the amount of any withholding taxes due with respect to such Grants. 
  
 (b) Election to Withhold Shares. Unless the Committee
determines otherwise, a Grantee may elect to satisfy the Employer’s tax withholding obligation with respect to SARs, 
  

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 Share Awards, Performance Units, Equity Awards or Dividend Equivalents paid in Common Shares by having
shares withheld up to an amount that does not exceed the Grantee’s minimum applicable withholding tax rate for federal (including FICA), state and local tax liabilities. The election must be in a form and manner prescribed by the Committee and
may be subject to the prior approval of the Committee. 
  
 14.
Nontransferability of Grants. 
  
 Only the Grantee may
exercise rights under a Grant during the Grantee’s lifetime and a Grantee may not transfer those rights except (a) by will or by the laws of descent and distribution or (b) if permitted in any specific case by the Committee, pursuant to a
domestic relations order or otherwise as permitted by the Committee. When a Grantee dies, the personal representative or other person entitled to succeed to the rights of the Grantee may exercise such rights. Any such successor must furnish proof
satisfactory to the Trust of his or her right to receive the Grant under the Grantee’s will or under the applicable laws of descent and distribution. 
  
 15. Change of Control of the Trust. 
  
 As used herein, a “Change of Control” shall be deemed to have occurred if: 
  
 (a) Any “person” (as such term is used in sections 13(d) and 14(d) of the Exchange Act) becomes a
“beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Trust representing more than 50% of the voting power of the then outstanding securities of the Trust; provided that a Change
of Control shall not be deemed to occur as a result of a change of ownership resulting from the Trust initial public offering or the death of a shareholder, and a Change of Control shall not be deemed to occur as a result of a transaction in which
the Trust becomes a subsidiary of another real estate investment trust and in which the shareholders of the Trust, immediately prior to the transaction, will beneficially own, immediately after the transaction, shares entitling such shareholders to
more than 50% of all votes to which all shareholders of the parent real estate investment trust would be entitled in the election of trustees (without consideration of the rights of any class of stock to elect trustees by a separate class vote);

  
 (b) The consummation of (i) a merger or
consolidation of the Trust with another real estate investment trust where the shareholders of the Trust, immediately prior to the merger or consolidation, will not beneficially own, immediately after the merger or consolidation, shares entitling
such shareholders to more than 50% of all votes to which all shareholders of the surviving real estate investment trust would be entitled in the election of trustees (without consideration of the rights of any class of stock to elect trustees by a
separate class vote), or where the members of the Board, immediately prior to the merger or consolidation, would not, immediately after the merger or consolidation, constitute a majority of the board of trustees of the surviving real estate
investment trust, (ii) a sale or other disposition of all or substantially all of the assets of the Trust, or (iii) a liquidation or dissolution of the Trust; or 
  
 (c) After the date this Plan is approved by the shareholders of the Trust, trustees are elected such that a
majority of the new members of the Board shall be different than 
  

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 the trustees who were members of the Board immediately prior to the election or nomination unless the
election or nomination for election of each new trustee who was not a trustee was approved by a vote of at least two-thirds of the trustees then still in office who were trustees at the beginning of such period. 
  
 16. Consequences of a Change of Control. 
  
 (a) Assumption of Grants. Upon a Change of Control
where the Trust is not the surviving real estate investment trust (or survives only as a subsidiary of another real estate investment trust), unless the Committee determines otherwise, all outstanding SARs that are not exercised shall be assumed by,
or replaced with comparable rights by, the surviving real estate investment trust (or a parent or subsidiary of the surviving real estate investment trust), and other outstanding Grants shall be converted to similar grants of the surviving real
estate investment trust (or a parent or subsidiary of the surviving real estate investment trust). 
  
 (b) Other Alternatives. Notwithstanding the foregoing, in the event of a Change of Control, the Committee may take any of the
following actions with respect to any or all outstanding Grants: the Committee may (i) determine that outstanding SARs shall accelerate and become exercisable, in whole or in part, upon the Change of Control or upon such other event as the Board
determines, (ii) determine that the restrictions and conditions on outstanding Share Awards shall lapse, in whole or in part, upon the Change of Control or upon such other event as the Board determines, (iii) determine that Grantees holding
Performance Units or Equity Awards shall receive a payment in settlement of such Performance Units or Equity Awards in an amount determined by the Committee, (iv) require that Grantees surrender their outstanding SARs in exchange for a payment by
the Trust, in cash or Common Shares as determined by the Committee, in an amount equal to the amount by which the then Fair Market Value of the Common Shares subject to the Grantee’s unexercised SARs exceeds the base amount of SARs, or (v)
after giving Grantees an opportunity to exercise their outstanding SARs, terminate any or all unexercised SARs at such time as the Committee deems appropriate. Such surrender, termination or settlement shall take place as of the date of the Change
of Control or such other date as the Committee may specify. The Committee shall have no obligation to take any of the foregoing actions, and, in the absence of any such actions, outstanding Grants shall continue in effect according to their terms
(subject to any assumption pursuant to subsection (a)). 
  
 17.
Limitations on Issuance or Transfer of Shares. 
  
 No Common Shares shall be issued or transferred in connection with any Grant hereunder unless and until all legal requirements applicable to the issuance or transfer of such Common Shares have been complied with to the satisfaction of the
Committee. The Committee shall have the right to condition any Grant made to any Grantee hereunder on such Grantee’s undertaking in writing to comply with such restrictions on his or her subsequent disposition of such Common Shares as the
Committee shall deem necessary or advisable, and certificates representing such shares may be legended to reflect any such restrictions. Certificates representing Common Shares issued or transferred under the Plan will be subject to such
stop-transfer orders and other restrictions as may be required by applicable laws, regulations and interpretations, including any requirement that a legend be placed thereon. 
  

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 18. Amendment and Termination of the Plan. 
  
 (a) Amendment. The Board may amend or terminate the
Plan at any time; provided, however, that the Board shall not amend the Plan without shareholder approval if such approval is required in order to comply with the Code or applicable laws, or to comply with applicable stock exchange requirements.

  
 (b) Shareholder Approval for
“Qualified Performance-Based Compensation.” If Performance Units, Share Awards or Equity Awards are granted as “qualified performance-based compensation” under Section 11 above, the Plan must be reapproved by the shareholders
no later than the first shareholders meeting that occurs in the fifth year following the year in which the shareholders previously approved the provisions of Section 11, if required by section 162(m) of the Code or the regulations thereunder.

  
 (c) Termination of Plan. The Plan
shall terminate on the day immediately preceding the tenth anniversary of its effective date, unless the Plan is terminated earlier by the Board or is extended by the Board with the approval of the shareholders. 
  
 (d) Termination and Amendment of Outstanding Grants.
A termination or amendment of the Plan that occurs after a Grant is made shall not materially impair the rights of a Grantee unless the Grantee consents or unless the Committee acts under Section 24(b). The termination of the Plan shall not impair
the power and authority of the Committee with respect to an outstanding Grant. Whether or not the Plan has terminated, an outstanding Grant may be terminated or amended under Section 24(b) or may be amended by agreement of the Trust and the Grantee
consistent with the Plan. 
  
 (e) Governing
Document. The Plan shall be the controlling document. No other statements, representations, explanatory materials or examples, oral or written, may amend the Plan in any manner. The Plan shall be binding upon and enforceable against the Trust
and its successors and assigns. 
  
 19. Funding of the
Plan. 
  
 This Plan shall be unfunded. The Trust shall
not be required to establish any special or separate fund or to make any other segregation of assets to assure the payment of any Grants under this Plan. In no event shall interest be paid or accrued on any Grant, including unpaid installments of
Grants. 
  
 20. Rights of Participants. 

 
 Nothing in this Plan shall entitle any Employee, Key Advisor, Non-Employee
Trustee or other person to any claim or right to be granted a Grant under this Plan. Neither this Plan nor any action taken hereunder shall be construed as giving any individual any rights to be retained by or in the employ or service of the
Employer or any other employment or service rights. 
  

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 21. No Fractional Shares. 
  
 No fractional Common Shares shall be issued or delivered pursuant to the Plan or any Grant. The Committee shall determine
whether cash, other awards or other property shall be issued or paid in lieu of such fractional Common Shares or whether such fractional Common Shares or any rights thereto shall be forfeited or otherwise eliminated. 
  
 22. Headings. 
  
 Section headings are for reference only. In the event of a conflict between a
title and the content of a Section, the content of the Section shall control. 
  
 23. Effective Date of the Plan. 
  
 The Plan shall be effective on                          , 2004. 
  
 24. Miscellaneous. 
  
 (a) Grants in Connection with Corporate Transactions and
Otherwise. Nothing contained in this Plan shall be construed to (i) limit the right of the Committee to make Grants under this Plan in connection with the acquisition, by purchase, lease, merger, consolidation or otherwise, of the business or
assets of any corporation, partnership, firm or association, including Grants to employees thereof who become Employees, or for other proper business purposes, or (ii) limit the right of the Trust to make other awards outside of this Plan. Without
limiting the foregoing, the Committee may make a Grant to an employee of another corporation, partnership, trust or limited liability company who becomes an Employee by reason of a merger, consolidation, acquisition of shares or property,
reorganization or liquidation involving the Trust, the parent or any of their subsidiaries in substitution for an award grant made by such company. The terms and conditions of the substitute grants may vary from the terms and conditions required by
the Plan and from those of the substituted stock incentives. The Committee shall prescribe the provisions of the substitute grants. 
  
 (b) Compliance with Law. The Plan, the exercise of SARs and the obligations of the Trust to issue or transfer Common Shares under
Grants shall be subject to all applicable laws and to approvals by any governmental or regulatory agency as may be required. With respect to persons subject to section 16 of the Exchange Act it is the intent of the Trust that the Plan and all
transactions under the Plan comply with all applicable provisions of Rule 16b-3 or its successors under the Exchange Act. In addition, it is the intent of the Trust that the Plan and applicable Grants under the Plan comply with the applicable
provisions of section 162(m) of the Code. To the extent that any legal requirement of section 16 of the Exchange Act or section 162(m) of the Code as set forth in the Plan ceases to be required under section 16 of the Exchange Act or section 162(m)
of the Code, that Plan provision shall cease to apply. The Committee may revoke any Grant if it is contrary to law or modify a Grant to bring it into compliance with any valid and mandatory government regulation. The Committee may also adopt rules
regarding the withholding of taxes on payments to Grantees. The Committee may, in its sole discretion, agree to limit its authority under this Section. 
  
 (c) Governing Law. The validity, construction, interpretation and effect of the Plan and Grant Instruments issued under the Plan
shall be governed and construed by and determined in accordance with the laws of the State of Maryland, without giving effect to the conflict of laws provisions thereof. 
  

 12Form of 2004 Option Plan

 Exhibit 10.19 
  
 CAPITAL LODGING 
  
 2004 OPTION PLAN 
  
 The purpose of the Capital Lodging 2004 Option Plan (the “Plan”) is to provide (i) designated employees of Capital Lodging (the
“Trust”) and its subsidiaries and affiliates, (ii) certain consultants and advisors who perform services for the Trust or its subsidiaries and affiliates and (iii) non-employee members of the Board of Trustees of the Trust (the
“Board”) with the opportunity to receive grants of incentive stock options and nonqualified stock options. The Trust believes that the Plan will encourage the participants to contribute materially to the growth of the Trust, thereby
benefiting the Trust’s shareholders, and will align the economic interests of the participants with those of the shareholders. 
  
 1. Administration. 
  
 (a) Committee. The Plan shall be administered by the Compensation Committee of the Trust (the “Committee”), which shall
consist of two or more persons who are “outside directors” as defined under section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), and related Treasury regulations, and “non-employee directors” as
defined under Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). However, the Board may ratify or approve any grants as it deems appropriate, and the Board shall approve and administer all grants made to
non-employee trustees. The Committee may delegate authority to one or more subcommittees, as it deems appropriate. To the extent that the Board or a subcommittee administers the Plan, references in the Plan to the “Committee” shall be
deemed to refer to such Board or such subcommittee. 
  
 (b) Committee Authority. The Committee shall have the sole authority to (i) determine the individuals to whom grants shall be made under the Plan, (ii) determine the type, size and terms of the grants to be made to each such
individual, (iii) determine the time when the grants will be made and the duration of any applicable exercise period, including the criteria for exercisability and the acceleration of exercisability, (iv) amend the terms of any previously issued
grant, and (v) deal with any other matters arising under the Plan. 
  
 (c) Committee Determinations. The Committee shall have full power and authority to administer and interpret the Plan, to make factual determinations and to adopt or amend such rules, regulations, agreements and
instruments for implementing the Plan and for the conduct of its business as it deems necessary or advisable, in its sole discretion. The Committee’s interpretations of the Plan and all determinations made by the Committee pursuant to the
powers vested in it hereunder shall be conclusive and binding on all persons having any interest in the Plan or in any awards granted hereunder. All powers of the Committee shall be executed in its sole discretion, in the best interest of the Trust,
not as a fiduciary, and in keeping with the objectives of the Plan and need not be uniform as to similarly situated individuals. 
  

 2. Options. 
  
 Awards under the Plan may consist of grants of incentive stock options (“Incentive Stock Options”) and
nonqualified stock options (“Nonqualified Stock Options”), as described in Section 5 (Incentive Stock Options and Nonqualified Stock Options are hereinafter collectively referred to as “Options”). All Options shall be subject to
the terms and conditions set forth herein and to such other terms and conditions consistent with this Plan as the Committee deems appropriate and as are specified in writing by the Committee to the individual in a grant instrument or an amendment to
the grant instrument (the “Grant Instrument”). All Options shall be made conditional upon the grantee’s acknowledgement, in writing or by acceptance of the Option, that all decisions and determinations of the Committee shall be final
and binding on the grantee, his or her beneficiaries and any other person having or claiming an interest under such Option. Options granted under the Plan need not be uniform as among the grantees. 
  
 3. Shares Subject to the Plan. 
  
 (a) Shares Authorized. Subject to adjustment as
described below, the aggregate number of common shares of beneficial interest, $0.001 par value, of the Trust (the “Common Shares”) that may be issued or transferred under the Plan is
             Common Shares. The maximum aggregate number of Common Shares that shall be subject to Options made under the Plan to any individual during any calendar year shall be
             Common Shares, subject to adjustment as described below. The Common Shares may be authorized but unissued Common Shares or reacquired Common Shares, including Common
Shares purchased by the Trust on the open market for purposes of the Plan. If and to the extent Options granted under the Plan terminate, expire, or are canceled, forfeited, exchanged or surrendered without having been exercised, the Common Shares
subject to such Options shall again be available for purposes of the Plan. 
  
 (b) Adjustments. If there is any change in the number or kind of Common Shares outstanding (i) by reason of a share dividend, spinoff, recapitalization, share split, or combination or exchange of shares, (ii)
by reason of a merger, reorganization or consolidation, (iii) by reason of a reclassification or change in par value, or (iv) by reason of any other extraordinary or unusual event affecting the outstanding Common Shares as a class without the
Trust’s receipt of consideration, or if the value of outstanding Common Shares is substantially reduced as a result of a spinoff or the Trust’s payment of an extraordinary dividend or distribution, the maximum number of Common Shares
available for Options, the maximum number of Common Shares that any individual participating in the Plan may be granted in any year, the number of Common Shares covered by outstanding Options, the kind of shares issued under the Plan, and the price
per Common Share may be appropriately adjusted by the Committee to reflect any increase or decrease in the number of, or change in the kind or value of, issued Common Shares to preclude, to the extent practicable, the enlargement or dilution of
rights and benefits under such Options; provided, however, that any fractional Common Shares resulting from such adjustment shall be eliminated. Any adjustments determined by the Committee shall be final, binding and conclusive. 
  

 2 

 4. Eligibility for Participation. 
  
 (a) Eligible Persons. All employees of the Trust and its subsidiaries and affiliates, including, but
not limited to, employees of Capital Lodging, L.P., a Delaware limited partnership in which the Trust is the general partner through its wholly-owned subsidiary Capital Lodging, LLC, (“Employees”), including Employees who are officers or
members of the Board, and members of the Board who are not Employees (“Non-Employee Trustees”) shall be eligible to participate in the Plan. Consultants and advisors who perform services for the Trust or any of its subsidiaries and
affiliates (“Key Advisors”) shall be eligible to participate in the Plan if the Key Advisors render bona fide services to the Trust or its subsidiaries and affiliates, the services are not in connection with the offer and sale of
securities in a capital-raising transaction and the Key Advisors do not directly or indirectly promote or maintain a market for the Trust’s securities. 
  
 (b) Selection of Grantees. The Committee shall select the Employees, Non-Employee Trustees and Key Advisors to receive Options and
shall determine the number of Common Shares subject to a particular Option in such manner as the Committee determines. Employees, Key Advisors and Non-Employee Trustees who receive Options under this Plan shall hereinafter be referred to as
“Grantees.” 
  
 5. Granting of Options.

  
 (a) Number of Shares. The Committee
shall determine the number of Common Shares that will be subject to each grant of Options to Employees, Non-Employee Trustees and Key Advisors. 
  
 (b) Type of Option and Price. 
  
 (i) The Committee may grant Incentive Stock Options that are intended to qualify as “incentive stock options” within the meaning
of section 422 of the Code or Nonqualified Stock Options that are not intended so to qualify or any combination of Incentive Stock Options and Nonqualified Stock Options, all in accordance with the terms and conditions set forth herein. Incentive
Stock Options may be granted only to employees of the Trust or its subsidiaries (as defined in section 424(f) of the Code). Nonqualified Stock Options may be granted to Employees, Non-Employee Trustees and Key Advisors. 
  
 (ii) The purchase price (the “Exercise Price”) of
Common Shares subject to an Option shall be determined by the Committee and shall be equal to or greater than the Fair Market Value (as defined below) of a share of Common Shares on the date the Option is granted; provided, however, that an
Incentive Stock Option may not be granted to an Employee who, at the time of grant, owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Trust or any parent or subsidiary of the Trust, unless the
Exercise Price per share is not less than 110% of the Fair Market Value of the Common Shares on the date of grant. 
  

 3 

 (iii) If the Common Shares are publicly traded, then the Fair Market Value per Common
Share shall be determined as follows: (x) if the principal trading market for the Common Shares is a national securities exchange or the Nasdaq National Market, the last reported sale price thereof on the relevant date or (if there were no trades on
that date) the latest preceding date upon which a sale was reported, or (y) if the Common Shares are not principally traded on such exchange or market, the mean between the last reported “bid” and “asked” prices of Common Shares
on the relevant date, as reported on Nasdaq or, if not so reported, as reported by the National Daily Quotation Bureau, Inc. or as reported in a customary financial reporting service, as applicable and as the Committee determines. If the Common
Shares are not publicly traded or, if publicly traded, are not subject to reported transactions or “bid” or “asked” quotations as set forth above, the Fair Market Value per Common Share shall be as determined by the Committee.

  
 (c) Option Term. The Committee shall
determine the term of each Option. The term of any Option shall not exceed ten years from the date of grant. However, an Incentive Stock Option that is granted to an Employee who, at the time of grant, owns stock possessing more than 10% of the
total combined voting power of all classes of stock of the Trust, or any parent or subsidiary of the Trust, may not have a term that exceeds five years from the date of grant. 
  
 (d) Exercisability of Options. 
  
 (i) Options shall become exercisable in accordance with such terms and conditions, consistent with the Plan,
as may be determined by the Committee and specified in the Grant Instrument. The Committee may accelerate the exercisability of any or all outstanding Options at any time for any reason. 
  
 (ii) The Committee may provide in a Grant Instrument that the Grantee may elect to exercise part or all of
an Option before it otherwise has become exercisable. Any Common Shares so purchased shall be restricted Common Shares and shall be subject to a repurchase right in favor of the Trust during a specified restriction period, with the repurchase price
equal to the lesser of (A) the Exercise Price or (B) the Fair Market Value of such Common Shares at the time of repurchase, or such other restrictions as the Committee deems appropriate. 
  
 (e) Grants to Non-Exempt Employees. Notwithstanding the foregoing, Options granted to persons who are
non-exempt employees under the Fair Labor Standards Act of 1938, as amended, shall have an Exercise Price not less than 85% of the Fair Market Value of the Common Shares on the date of grant, and may not be exercisable for at least six months after
the date of grant (except that such Options may become exercisable, as determined by the Committee, upon the Grantee’s death, Disability or retirement, or upon a Change of Control or other circumstances permitted by applicable regulations).

  
 (f) Termination of Employment, Disability
or Death. 
  
 (i) Except as provided below,
an Option may only be exercised while the Grantee is employed by, or providing service to, the Employer (as defined 
  

 4 

 below) as an Employee, Key Advisor or member of the Board. In the event that a Grantee ceases to be
employed by, or provide service to, the Employer for any reason other than Disability, death, or termination for Cause (as defined below), any Option which is otherwise exercisable by the Grantee shall terminate unless exercised within 90 days after
the date on which the Grantee ceases to be employed by, or provide service to, the Employer (or within such other period of time as may be specified by the Committee), but in any event no later than the date of expiration of the Option term. Except
as otherwise provided by the Committee, any of the Grantee’s Options that are not otherwise exercisable as of the date on which the Grantee ceases to be employed by, or provide service to, the Employer shall terminate as of such date.

  
 (ii) In the event the Grantee ceases to be
employed by, or provide service to, the Trust on account of a termination for Cause by the Employer, any Option held by the Grantee shall terminate as of the date the Grantee ceases to be employed by, or provide service to, the Employer. In
addition, notwithstanding any other provisions of this Section 5, if the Committee determines that the Grantee has engaged in conduct that constitutes Cause at any time while the Grantee is employed by, or providing service to, the Employer or after
the Grantee’s termination of employment or service, any Option held by the Grantee shall immediately terminate and the Grantee shall automatically forfeit all Common Shares underlying any exercised portion of an Option for which the Trust has
not yet delivered the share certificates, upon refund by the Trust of the Exercise Price paid by the Grantee for such Common Shares. Upon any exercise of an Option, the Trust may withhold delivery of share certificates pending resolution of an
inquiry that could lead to a finding resulting in a forfeiture. 
  
 (iii) In the event the Grantee ceases to be employed by, or provide service to, the Employer because the Grantee is Disabled, any Option which is otherwise exercisable by the Grantee shall terminate unless exercised
within one year after the date on which the Grantee ceases to be employed by, or provide service to, the Employer (or within such other period of time as may be specified by the Committee), but in any event no later than the date of expiration of
the Option term. Except as otherwise provided by the Committee, any of the Grantee’s Options which are not otherwise exercisable as of the date on which the Grantee ceases to be employed by, or provide service to, the Employer shall terminate
as of such date. 
  
 (iv) If the Grantee dies
while employed by, or providing service to, the Employer or within 90 days after the date on which the Grantee ceases to be employed or provide service on account of a termination specified in Section 5(f)(i) above (or within such other period of
time as may be specified by the Committee), any Option that is otherwise exercisable by the Grantee shall terminate unless exercised within one year after the date on which the Grantee ceases to be employed by, or provide service to, the Employer
(or within such other period of time as may be specified by the Committee), but in any event no later than the date of expiration of the Option term. Except as otherwise provided by the Committee, any of the Grantee’s Options that are not
otherwise exercisable as of the date on which the Grantee ceases to be employed by, or provide service to, the Employer shall terminate as of such date. 
  
 (v) For purposes of the Plan: 
  

 5 

 (A) The term “Employer” shall mean the Trust, Capital Lodging, L.P. and any
other subsidiary corporation, partnership or other affiliated entity of the Trust, as determined by the Committee. 
  
 (B) “Employed by, or provide service to, the Employer” shall mean employment or service as an Employee, Key Advisor or member
of the Board (so that, for purposes of exercising Options, a Grantee shall not be considered to have terminated employment or service until the Grantee ceases to be an Employee, Key Advisor and member of the Board), unless the Committee determines
otherwise. 
  
 (C) “Disability” shall
mean, unless otherwise determined by the Committee, a Grantee’s becoming disabled within the meaning of the Employer’s long-term disability plan applicable to the Grantee, and if the Employer does maintain such a Plan that covers the
Grantee, “Disability” shall mean the Grantee becoming disabled within the meaning set forth in section 22(e)(3) of the Code. 
  
 (D) “Cause” shall mean, except to the extent specified otherwise by the Committee, a finding by the Committee that the Grantee
(i) has breached his or her employment or service contract with the Employer, (ii) has engaged in disloyalty to the Trust, including, without limitation, fraud, embezzlement, theft, commission of a felony or proven dishonesty, (iii) has disclosed
trade secrets or confidential information of the Employer to persons not entitled to receive such information, (iv) has breached any written non-competition or non-solicitation agreement between the Grantee and the Employer or (v) has engaged in
such other behavior detrimental to the interests of the Employer as the Committee determines. 
  
 (g) Exercise of Options. A Grantee may exercise an Option that has become exercisable, in whole or in part, by delivering a notice
of exercise to the Trust. The Grantee shall pay the Exercise Price for an Option as specified by the Committee (w) in cash, (x) with the approval of the Committee, by delivering Common Shares owned by the Grantee (including Common Shares acquired in
connection with the exercise of an Option, subject to such restrictions as the Committee deems appropriate) and having a Fair Market Value on the date of exercise equal to the Exercise Price or by attestation (on a form prescribed by the Committee)
to ownership of Common Shares having a Fair Market Value on the date of exercise equal to the Exercise Price, (y) payment through a broker in accordance with procedures permitted by Regulation T of the Federal Reserve Board, or (z) by such other
method as the Committee may approve, to the extent permitted by applicable law. Common Shares used to exercise an Option shall have been held by the Grantee for the requisite period of time to avoid adverse accounting consequences to the Trust with
respect to the Option. The Grantee shall pay the Exercise Price and the amount of any withholding tax due (pursuant to Section 7) as specified by the Committee. 
  
 (h) Limits on Incentive Stock Options. Each Incentive Stock Option shall provide that, if the
aggregate Fair Market Value of the stock on the date of the grant with respect to which Incentive Stock Options are exercisable for the first time by a Grantee during any 
  

 6 

 calendar year, under the Plan or any other stock option plan of the Trust or a parent or subsidiary,
exceeds $100,000, then the Option, as to the excess, shall be treated as a Nonqualified Stock Option. An Incentive Stock Option shall not be granted to any person who is not an Employee of the Trust or a parent (within the meaning of section 424(e)
of the Code) or a subsidiary (within the meaning of section 424(f) of the Code) of the Trust. 
  
 6. Deferrals. 
  
 The
Committee may permit or require a Grantee to defer receipt of the delivery of Common Shares that would otherwise be due to such Grantee in connection with any Option. If any such deferral election is permitted or required, the Committee shall, in
its sole discretion, establish rules and procedures for such deferrals. 
  
 7. Withholding of Taxes. 
  
 (a)
Required Withholding. All Options shall be subject to applicable federal (including FICA), state and local tax withholding requirements. The Employer may require that the Grantee or other person receiving or exercising Options pay to the
Employer the amount of any federal, state or local taxes that the Employer is required to withhold with respect to such Options, or the Employer may deduct from other wages paid by the Employer the amount of any withholding taxes due with respect to
such Options. 
  
 (b) Election to Withhold
Shares. Unless the Committee determines otherwise, a Grantee may elect to satisfy the Employer’s tax withholding obligation with respect to Options by having shares withheld up to an amount that does not exceed the Grantee’s minimum
applicable withholding tax rate for federal (including FICA), state and local tax liabilities. The election must be in a form and manner prescribed by the Committee and may be subject to the prior approval of the Committee. 
  
 8. Transferability of Options. 
  
 (a) Nontransferability of Options. Except as provided
below, only the Grantee may exercise rights under an Option during the Grantee’s lifetime and a Grantee may not transfer those rights except (i) by will or by the laws of descent and distribution or (ii) with respect to Options other than
Incentive Stock Options, if permitted in any specific case by the Committee, pursuant to a domestic relations order or otherwise as permitted by the Committee. When a Grantee dies, the personal representative or other person entitled to succeed to
the rights of the Grantee may exercise such rights. Any such successor must furnish proof satisfactory to the Trust of his or her right to receive the Option under the Grantee’s will or under the applicable laws of descent and distribution.

  
 (b) Transfer of Nonqualified Stock
Options. Notwithstanding the foregoing, the Committee may provide, in a Grant Instrument, that a Grantee may transfer Nonqualified Stock Options to family members, or one or more trusts or other entities for the benefit of or owned by family
members, consistent with the applicable securities laws, according to such terms as the Committee may determine; provided that the Grantee receives no consideration for 
  

 7 

 the transfer of an Option and the transferred Option shall continue to be subject to the same terms and
conditions as were applicable to the Option immediately before the transfer. 
  
 9. Change of Control of the Trust. 
  
 As used herein, a “Change of Control” shall be deemed to have occurred if: 
  
 (a) Any “person” (as such term is used in sections 13(d) and 14(d) of the Exchange Act) becomes a “beneficial owner”
(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Trust representing more than 50% of the voting power of the then outstanding securities of the Trust; provided that a Change of Control shall not be
deemed to occur as a result of a change of ownership resulting from the Trust’s initial public offering or the death of a shareholder, and a Change of Control shall not be deemed to occur as a result of a transaction in which the Trust becomes
a subsidiary of another real estate investment trust and in which the shareholders of the Trust, immediately prior to the transaction, will beneficially own, immediately after the transaction, shares entitling such shareholders to more than 50% of
all votes to which all shareholders of the parent real estate investment trust would be entitled in the election of trustees (without consideration of the rights of any class of stock to elect trustees by a separate class vote); 
  
 (b) The consummation of (i) a merger or consolidation of the
Trust with another real estate investment trust where the shareholders of the Trust, immediately prior to the merger or consolidation, will not beneficially own, immediately after the merger or consolidation, shares entitling such shareholders to
more than 50% of all votes to which all shareholders of the surviving real estate investment trust would be entitled in the election of trustees (without consideration of the rights of any class of stock to elect trustees by a separate class vote),
or where the members of the Board, immediately prior to the merger or consolidation, would not, immediately after the merger or consolidation, constitute a majority of the board of trustees of the surviving real estate investment trust, (ii) a sale
or other disposition of all or substantially all of the assets of the Trust, or (iii) a liquidation or dissolution of the Trust; or 
  
 (c) After the date this Plan is approved by the shareholders of the Trust, trustees are elected such that a majority of the new members of
the Board shall be different than the trustees who were members of the Board immediately prior to the election or nomination, unless the election or nomination for election of each new trustee who was not a trustee was approved by a vote of at least
two-thirds of the trustees then still in office who were trustees at the beginning of such period. 
  
 10. Consequences of a Change of Control. 
  
 (a) Assumption of Options. Upon a Change of Control where the Trust is not the surviving real estate investment trust (or survives
only as a subsidiary of another real estate investment trust), unless the Committee determines otherwise, all outstanding Options that are not exercised shall be assumed by, or replaced with comparable options by, the surviving 
  

 8 

 real estate investment trust (or a parent or subsidiary of the surviving real estate investment trust).

  
 (b) Other Alternatives.
Notwithstanding the foregoing, in the event of a Change of Control, the Committee may take any of the following actions with respect to any or all outstanding Options: the Committee may (i) determine that outstanding Options shall accelerate and
become exercisable, in whole or in part, upon the Change of Control or upon such other event as the Board determines, (ii) require that Grantees surrender their outstanding Options in exchange for a payment by the Trust, in cash or Common Shares as
determined by the Committee, in an amount equal to the amount by which the then Fair Market Value of the Common Shares subject to the Grantee’s unexercised Options exceeds the Exercise Price of the Options or (iii) after giving Grantees an
opportunity to exercise their outstanding Options, terminate any or all unexercised Options at such time as the Committee deems appropriate. Such acceleration, termination or settlement shall take place as of the date of the Change of Control or
such other date as the Committee may specify. The Committee shall have no obligation to take any of the foregoing actions, and, in the absence of any such actions, outstanding Options shall continue in effect according to their terms (subject to any
assumption pursuant to subsection (a)). 
  
 11. Limitations on
Issuance or Transfer of Shares. 
  
 No Common Shares shall be
issued or transferred in connection with any Option hereunder unless and until all legal requirements applicable to the issuance or transfer of such Common Shares have been complied with to the satisfaction of the Committee. The Committee shall have
the right to condition any Option made to any Grantee hereunder on such Grantee’s undertaking in writing to comply with such restrictions on his or her subsequent disposition of such Common Shares as the Committee shall deem necessary or
advisable, and certificates representing such shares may be legended to reflect any such restrictions. Certificates representing Common Shares issued or transferred under the Plan will be subject to such stop-transfer orders and other restrictions
as may be required by applicable laws, regulations and interpretations, including any requirement that a legend be placed thereon. 
  

 9 

 12. Amendment and Termination of the Plan. 
  
 (a) Amendment. The Board may amend or terminate the
Plan at any time; provided, however, that the Board shall not amend the Plan without shareholder approval if such approval is required in order to comply with the Code or applicable laws, or to comply with applicable stock exchange requirements.

  
 (b) Termination of Plan. The Plan
shall terminate on the day immediately preceding the tenth anniversary of its effective date, unless the Plan is terminated earlier by the Board or is extended by the Board with the approval of the shareholders. 
  
 (c) Termination and Amendment of Outstanding Options.
A termination or amendment of the Plan that occurs after a Option is made shall not materially impair the rights of a Grantee unless the Grantee consents or unless the Committee acts under Section 18(b). The termination of the Plan shall not impair
the power and authority of the Committee with respect to an outstanding Option. Whether or not the Plan has terminated, an outstanding Option may be terminated or amended under Section 18(b) or may be amended by agreement of the Trust and the
Grantee consistent with the Plan. 
  
 (d)
Governing Document. The Plan shall be the controlling document. No other statements, representations, explanatory materials or examples, oral or written, may amend the Plan in any manner. The Plan shall be binding upon and enforceable against
the Trust and its successors and assigns. 
  
 13. Funding of
the Plan. 
  
 This Plan shall be unfunded. The Trust shall not
be required to establish any special or separate fund or to make any other segregation of assets to assure the payment of any Options under this Plan. In no event shall interest be paid or accrued on any Option. 
  
 14. Rights of Participants. 
  
 Nothing in this Plan shall entitle any Employee, Key Advisor, Non-Employee
Trustee or other person to any claim or right to be granted a Option under this Plan. Neither this Plan nor any action taken hereunder shall be construed as giving any individual any rights to be retained by or in the employ or service of the
Employer or any other employment or service rights. 
  
 15. No
Fractional Shares. 
  
 No fractional Common Shares shall be
issued or delivered pursuant to the Plan or any Option. The Committee shall determine whether cash, other awards or other property shall be issued or paid in lieu of such fractional Common Shares or whether such fractional Common Shares or any
rights thereto shall be forfeited or otherwise eliminated. 
  

 10 

 16. Headings. 
  
 Section headings are for reference only. In the event of a conflict between a title and the content of a Section, the
content of the Section shall control. 
  
 16. Effective Date of
the Plan. 
  
 The Plan shall be effective on
                                     , 2004.

  
 17. Miscellaneous. 
  
 (a) Options in Connection with Corporate Transactions and
Otherwise. Nothing contained in this Plan shall be construed to (i) limit the right of the Committee to make Options under this Plan in connection with the acquisition, by purchase, lease, merger, consolidation or otherwise, of the business or
assets of any corporation, partnership, firm or association, including Options to employees thereof who become Employees, or for other proper business purposes, or (ii) limit the right of the Trust to grant stock options or make other awards outside
of this Plan. Without limiting the foregoing, the Committee may make a Option to an employee of another corporation, partnership, trust or limited liability company who becomes an Employee by reason of a merger, consolidation, acquisition of shares
or property, reorganization or liquidation involving the Trust, the parent or any of their subsidiaries in substitution for a stock option grant made by such company. The terms and conditions of the substitute grants may vary from the terms and
conditions required by the Plan and from those of the substituted stock incentives. The Committee shall prescribe the provisions of the substitute grants. 
  
 (b) Compliance with Law. The Plan, the exercise of Options and the obligations of the Trust to issue or transfer Common Shares
under Options shall be subject to all applicable laws and to approvals by any governmental or regulatory agency as may be required. With respect to persons subject to section 16 of the Exchange Act it is the intent of the Trust that the Plan and all
transactions under the Plan comply with all applicable provisions of Rule 16b-3 or its successors under the Exchange Act. In addition, it is the intent of the Trust that the Plan and applicable Options under the Plan comply with the applicable
provisions of section 162(m) of the Code, and section 422 of the Code. To the extent that any legal requirement of section 16 of the Exchange Act or section 162(m) or 422 of the Code as set forth in the Plan ceases to be required under section 16 of
the Exchange Act or section 162(m) or 422 of the Code, that Plan provision shall cease to apply. The Committee may revoke any Option if it is contrary to law or modify a Option to bring it into compliance with any valid and mandatory government
regulation. The Committee may also adopt rules regarding the withholding of taxes on payments to Grantees. The Committee may, in its sole discretion, agree to limit its authority under this Section. 
  
 (c) Governing Law. The validity, construction,
interpretation and effect of the Plan and Grant Instruments issued under the Plan shall be governed and construed by and determined in accordance with the laws of the State of Maryland, without giving effect to the conflict of laws provisions
thereof. 
  

 11

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