Document:

Exhibit 4.1

 

This Letter Agreement (the “Agreement”) dated February
6, 2017 is entered by and between Bluerock Residential Growth REIT, Inc., a Maryland corporation (the “REIT”), and
Cetera Financial Group, Inc. (“Cetera”) for itself and on behalf of its broker dealer affiliates listed in Appendix
A (“Cetera BDs”).

 

WHEREAS, the Cetera BDs have entered into a Selling Group Agreement
(“SGA”) with Bluerock Capital Markets, LLC, a Massachusetts limited liability company, the Managing Broker-Dealer for
the REIT’s publicly registered offering of Series B Redeemable Preferred Stock, $0.01 par value per share (the “Series
B Preferred Stock”);

 

WHEREAS, in connection with the Cetera BDs entering into the
SGA, the REIT has agreed to provide certain additional protections to the holders of Series B Preferred Stock (“Holders”)
in addition to those provided under the REIT’s charter (“Charter”).

 

NOW, THEREFORE, in consideration
of the premises, and of the representations, warranties, covenants and agreements contained herein, and other good and valuable
consideration the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

		1.	As used in this Agreement, (1) “Senior Stock” means any class or series of capital stock of the REIT, the terms
of which expressly provide that it ranks senior to the Series B Preferred Stock with respect to priority of payment of dividends,
or with respect to any other distributions or liquidation rights upon voluntary or involuntary liquidation, dissolution or winding
up of the affairs of the REIT, (2) “Junior Stock” means all classes or series of the REIT’s common stock and
any other class or series of capital stock of the REIT issued in the future, unless the terms of such stock expressly provide that
it ranks senior to, or on parity with, the Series B Preferred Stock with respect to priority of payment of dividends, or with respect
to any other distributions or liquidation rights upon voluntary or involuntary liquidation, dissolution or winding up of the affairs
of the REIT, (3) “Parity Preferred Stock” means any class or series of capital stock of the REIT, the terms of which
expressly provide that it ranks on parity with the Series B Preferred Stock, including the REIT’s 8.250% Series A Cumulative
Redeemable Preferred Stock, $0.01 par value per share, 7.625% Series C Cumulative Redeemable Preferred Stock, $0.01 par value per
share, and 7.125% Series D Cumulative Preferred Stock, $0.01 par value per share, with respect to priority of payment of dividends,
or with respect to any other distributions or liquidation rights upon voluntary or involuntary liquidation, dissolution or winding
up of the affairs of the REIT, and (4) “Parity Voting Preferred Stock” means shares of Parity Preferred Stock upon
which voting rights have been conferred and are exercisable as provided in Section 4 below.

		2.	So long as any shares of Series B Preferred Stock remain outstanding, the REIT agrees that it will maintain a Dividend Coverage
Ratio (as defined below) of not less than 1.1:1 (the “Coverage Requirement”) as of the end of each calendar quarter.
Within five (5) business days following the date of filing by the REIT of a Form 10-Q or 10-K, as applicable, for such calendar
quarter (each, a “Testing Date”), the REIT shall deliver a written certificate to Cetera (a) certifying and demonstrating
by calculation that the REIT met the Coverage Requirement as of the end of the applicable calendar quarter and (b) certifying that
the REIT is reasonably expected to maintain the Dividend Coverage Ratio for the subsequent calendar quarter based solely on information
known to the Chief Executive Officer, Chief Accounting Officer and Chief Financial Officer (as applicable) of the REIT as of the
Testing Date (each, a “Coverage Certificate”). If the REIT is not able to make both of the certifications set forth
in clauses (a) and (b) of the preceding sentence in a Coverage Certificate, following the Testing Date the REIT will not issue
any additional preferred stock other than Junior Stock, and will not make any voluntary distributions on shares of common stock
or any other class of Junior Stock (other than distributions required to maintain status as a REIT for tax purposes) until and
unless the Coverage Requirement is certified in a subsequent Coverage Certificate.

 

     

     

    

 

For purposes of this Agreement, the “Dividend
Coverage Ratio” shall equal:

 

		(A)	the REIT’s Adjusted Funds from Operations (“AFFO”), calculated in accordance with commonly accepted industry
standards and further adjusted to add back the expense of all preferred dividends, for the two most recent quarters, plus the sum
of:

 

(1) the product of (a)(i) unrestricted cash on the
REIT’s balance sheet as reflected in the Quarterly Filing filed at the Testing Date (the “Current Filing”), minus
(ii) an amount equal to the greater of $5,000,000 or 5.0% of the amount in subclause (i)(provided, if such calculation would cause
the amount to be negative, it shall instead be equal to zero), multiplied by (b) a 5.0% annualized rate of return over such quarterly
period, and

 

(2) the product of (a)(i) unrestricted cash on the
REIT’s balance sheet as reflected in the Quarterly Filing immediately preceding the Current Filing, minus (ii) an amount
equal to the greater of $5,000,000 or 5.0% of the amount in subclause (i)(provided, if such calculation would cause the amount
to be negative, it shall instead be equal to zero), multiplied by (b) a 5.0% annualized rate of return over such quarterly period.

 

over

 

 

		(B)	the amount of preferred dividends required to be distributed to holders of the Series B Preferred Stock, the Parity Preferred
Stock and any Senior Stock for the such quarters without any breach, default or deferral with respect to any such distributions.

 

		3.	So long as any shares of Series B Preferred Stock remain outstanding, the REIT agrees, on behalf of itself and as general partner
of Bluerock Residential Holdings, L.P., a Delaware limited partnership and the REIT’s operating partnership (“OP”),
that none of the REIT, the OP or any controlled subsidiary of the REIT or the OP will not undertake any corporate action that restricts
the REIT’s ability to redeem Series B Preferred Stock with shares of the REIT’s Class A common stock, $0.01 par value
per share.

		4.	So long as any shares of Series B Preferred Stock remain outstanding, in addition to any other vote or consent of stockholders
required by the Charter, the affirmative vote or consent of a majority of the votes cast by holders of outstanding shares of Series
B Preferred Stock and of Parity Voting Preferred Stock (such holders together, the Parity Holders, voting together as a single
class), at a meeting at which a quorum of such Parity Holders is present (a majority of the outstanding shares of Parity Preferred
Stock, present in person or by proxy, shall constitute a quorum), shall be required to authorize, create or issue, or increase
the number of authorized or issued shares of, any class or series of Senior Stock, or to reclassify any authorized shares of capital
stock of the REIT into Senior Stock, or to create, authorize or issue any obligation or security convertible into or evidencing
the right to purchase Senior Stock (the “Parity Preferred Voting Right”).

 

     

     

    

 

	 	 	 

		a.	At any time when the Parity Preferred Voting Right applies, a proper officer of the REIT shall call or cause to be called a
special meeting of the Parity Holders by mailing or causing to be mailed to such Parity Holders a notice of such special meeting
to be held not fewer than ten nor more than 45 days after the date such notice is given. The record date for determining Parity
Holders of the Parity Preferred Stock entitled to notice of and to vote at such special meeting will be the close of business on
the third Business Day preceding the day on which such notice is mailed. Notice of all meetings at which Holders of the Series
B Preferred Stock shall be entitled to vote will be given to such Holders at their addresses as they appear in the REIT’s
transfer records and to Cetera at the address specified herein.

		b.	For the avoidance of doubt, Holders of shares of Series B Preferred Stock shall not be entitled to vote with respect to (i)
any issuance or increase in the total number of authorized shares of REIT common stock or preferred stock, (ii) any issuance or
increase in the number of authorized shares of Series B Preferred Stock or the creation or issuance of any other class or series
of capital stock, or (iii) any increase in the number of authorized shares of any other class or series of capital stock, in each
case referred to in clause (i), (ii) or (iii) above constituting Parity Preferred Stock or Junior Stock, and in the case of the
creation of Parity Preferred Stock that requires such Parity Preferred Stock to vote together with the Series B Preferred Stock
as a single class.

		c.	Except as set forth in this Paragraph 4, Holders of Series B Preferred Stock shall not have any voting rights with respect
to, and the consent of the Holders of Series B Preferred Stock shall not be required for, the taking of any corporate action, regardless
of the effect that such corporate action may have upon the powers, preferences, voting power or other rights or privileges of the
Series B Preferred Stock.

		d.	The foregoing voting provisions of this Paragraph 4, including the Parity Preferred Voting Right, shall not apply if, at or
prior to the time when the act with respect to which such vote would otherwise be required shall be effected, all outstanding shares
of Series B Preferred Stock shall have been redeemed or called for redemption upon proper notice pursuant hereto and, if being
redeemed in cash, sufficient funds in cash shall have been deposited in trust to effect such redemption.

		e.	Each share of Series B Preferred Stock shall be entitled to one vote per $1,000.00 of liquidation preference, and each other
share of Parity Preferred Stock shall be entitled to one vote per $1,000.00 of liquidation preference.

		f.	Except as set forth in this Paragraph 4 with respect to the Parity Preferred Voting Right, Holders of Series B Preferred Stock
shall have no voting rights.

		5.	So long as any shares of Series B Preferred Stock remain outstanding, the REIT agrees that it will not sell an asset if such
sale would cause the REIT to fail to meet the Coverage Requirement, with AFFO for these purposes determined on a reasonable pro
forma basis to adjust for the effect of disposing of the subject property, unless such sale is reasonably necessary for the REIT
to continue to qualify as a real estate investment trust for federal income tax purposes, as determined by a majority of the independent
directors of the REIT’s Board of Directors.

		6.	So long as any shares of Series B Preferred Stock remain outstanding, the REIT agrees to (i) conduct a valuation of its assets
within twelve months of any previous valuation using the services of a third-party valuation firm reasonably acceptable to Cetera,
and will, based on such valuation, publish a per share estimated value for each share of the Series B Preferred Stock in a manner
reasonably designed to comply with applicable requirements under FINRA Rule 2310 and NASD Rule 2340 or any similar rule applicable
to Cetera, and (ii) provide Cetera within 10 business days of each Quarterly Filing with an internal analysis indicating whether
the per share estimated value of Series B Preferred Stock has decreased since the previous valuation based on the use of a third-party
valuation firm.

 

     

     

    

 

	 	 	 

		7.	So long as any shares of Series B Preferred Stock remain outstanding, the REIT agrees not to undertake any corporate action
intended to or that could be reasonably expected to cause the rights of Holders of Series B Preferred Stock under this Agreement
to be terminated or materially adversely affected.

		8.	This Agreement will remain in full force and effect regardless of whether Cetera remains a member of the selling group for
the Series B Preferred Stock, including by termination of the offering of such shares or otherwise.

		9.	In the event Cetera seeks to enforce any provision of this agreement, the REIT shall not assert (1) lack of standing, (2) interference
with business relationships, or (3) any claim dependent at least in part on the fact that Cetera is not a holder of the Series
B Preferred Stock.

		10.	This Agreement shall be governed by the law of the State of Maryland.

 

 

IN WITNESS WHEREOF, the parties have executed
this Agreement on the date first above written.

 

 

	 	COMPANY:
	 	
	 	Bluerock Residential Growth REIT, Inc., 
	 	 
	 	a Maryland corporation
	 	 	 
	 	By:	/s/ Michael L. Konig
	 	 	Michael L. Konig, COO
	 	 	 
	 	 	 
	 	CETERA:
	 	 
	 	CETERA FINANCIAL GROUP, INC.
	 	 
	 	a  Delaware corporation
	 	 	 
	 	By:	/s/ Stanley R. Smiley
	 	 	Stanley R. Smiley, Vice President
	 	 	 
	 	 	 
	 	200 North Sepulveda Boulevard
	 	 
	 	Suite 1200
	 	 
	 	El Segundo, California 90245

 

     

     

    

 

APPENDIX A

 

Cetera Advisors LLC, a Delaware limited liability company

 

Cetera Advisor Networks LLC, a Delaware limited liability company

 

Cetera Financial Specialists LLC, a Delaware limited liability
company

 

Cetera Investment Services LLC, a Delaware limited liability
company

 

First Allied Securities, Inc., a New York C corporation

 

Girard Securities, Inc., a California corporation

 

Summit Brokerage Services, Inc., a Florida corporationsfr-ex101_103.htm

EXHIBIT 10.1

STARWOOD WAYPOINT RESIDENTIAL TRUST
EQUITY PLAN

PERFORMANCE SHARE AWARD AGREEMENT

THIS PERFORMANCE SHARE AWARD AGREEMENT (the “Agreement”), dated as of February [•], 2017 (the “Grant Date”), is made by and between Colony Starwood Homes, a Maryland real estate investment trust (the “Company”), and [•] (the “Grantee”).

WHEREAS, the Company previously adopted the Starwood Waypoint Residential Trust Equity Plan (the “Plan”), pursuant to which the Company may grant to the Grantee restricted share units, the payment of which may be subject to performance vesting and forfeiture conditions (“Performance Shares”);

WHEREAS, the Grantee is a natural person who is providing bona fide services to the Company on the date of this Agreement; and

WHEREAS, the Company desires to grant to the Grantee the number of Performance Shares provided for herein.

NOW, THEREFORE, in consideration of the recitals and the mutual agreements herein contained, the parties hereto agree as follows:

Section 1.Grant of Performance Share Award

(a)Grant of Performance Shares. The Company hereby grants to the Grantee [•] Performance Shares (subject to adjustment in accordance with Section 2(d)) on the terms and conditions set forth in this Agreement and as otherwise provided in the Plan.

(b)Incorporation of Plan. The provisions of the Plan are hereby incorporated herein by reference. Except as otherwise expressly set forth herein, this Agreement shall be construed in accordance with the provisions of the Plan and any capitalized terms not otherwise defined in this Agreement shall have the definitions set forth in the Plan. The Board shall have final authority to interpret and construe the Plan and this Agreement and to make any and all determinations thereunder, and its decision shall be binding and conclusive upon the Grantee and its representatives in respect of any questions arising under the Plan or this Agreement.

Section 2.Terms and Conditions of Award

The grant of Performance Shares provided in Section 1(a) shall be subject to the following terms, conditions and restrictions:

(a)Restrictions. The Performance Shares, and any interest therein, may not be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of, except by will or the laws of descent and distribution, prior to the lapse of restrictions set forth in this Agreement applicable thereto, as set forth in Section 2(d). The Board may in its discretion, cancel all or any portion of any outstanding restrictions prior to the expiration of the periods provided under Section 2(d). 

 

 

The date on which a Performance Share becomes vested and payable shall be referred to herein as the “Vesting Date.”

(b)Form of Payment. Unless otherwise determined by the Committee at the time of payment, each Performance Share granted hereunder shall represent the right to receive one Share immediately following the Vesting Date (if any) with respect to such Performance Share, as provided herein.

(c)Dividend/Distribution Equivalents. Additional Performance Shares shall be credited to the Grantee’s account under this Agreement as of each date (a “Dividend Date”) on which cash or non-cash dividends or distributions are paid with respect to Shares underlying as yet unpaid Performance Shares, provided that the record date with respect to such dividend or distribution occurs during the period beginning on the Grant Date and ending on the Vesting Date of the underlying Performance Shares. The number of additional Performance Shares to be so credited to the Grantee’s account with respect to this Award as of any Dividend Date shall equal the quotient obtained by dividing (i) the product of (A) the number of the Performance Shares credited to such account on the record date for such dividend or distribution and (B) the amount or value of the per share dividend or distribution payable on such Dividend Date, by (ii) the Fair Market Value of a Share as of such Dividend Date.  

(d)Lapse of Restrictions; Forfeiture. 

(i)Performance Vesting – Three-Year Same Store Core NOI Absolute Growth. Except as may otherwise be provided herein, the restrictions on transfer set forth in Section 2(c) shall lapse on March 1, 2020 with respect to a number of Performance Shares equal to the product of (A) one-third of the Performance Shares credited to the Grantee’s account hereunder, and (B) the applicable “NOI Growth Performance Factor,” subject to the Grantee continuing to provide service to the Company as of such Vesting Date. For purposes of this Section 2(d)(ii):

(A)if the aggregate three-year Same Store Core NOI absolute growth of the Company during the period from January 1, 2017 through December 31, 2019 (the “Performance Period”) (the calculation of which shall be subject to approval by the Compensation Committee of the Board) (“NOI Growth”) is less than 9%, the NOI Growth Performance Factor shall be 0%; 

(B)if NOI Growth equals 9%, the NOI Growth Performance Factor shall be 25%; 

(C)if NOI Growth equals 12% (“NOI Growth Target Performance”), the NOI Growth Performance Factor shall be 100%; 

(D)if NOI Growth equals or exceeds 15% (“NOI Growth Maximum Performance”), the NOI Growth Performance Factor shall be 175%; 

(E)if NOI Growth is more than 9% but less than 12%, the NOI Growth Performance Factor shall be determined by straight-line interpolation between 25% and 100%; and 

2

 

 

(F)if NOI Growth is more than 12% but less than 15%, the NOI Growth Performance Factor shall be determined by straight-line interpolation between 100% and 175%.

(ii)Performance Vesting – Three-Year Total Shareholder Return Relative to Index. Except as may otherwise be provided herein, the restrictions on transfer set forth in Section 2(c) shall lapse on March 1, 2020 with respect to a number of Performance Shares equal to the product of (A) one-third of the Performance Shares credited to the Grantee’s account hereunder, and (B) the applicable “Index Shareholder Return Performance Factor,” subject to the Grantee continuing to provide service to the Company as of such Vesting Date. For purposes of this Section 2(d)(iii):

(A)if the total shareholder return of the Company during the Performance Period (the calculation of which shall be subject to approval by the Compensation Committee of the Board) (the “Shareholder Return”) is less than (1) the return of the SNL US REIT Multifamily Index during the Performance Period (the “Index Return”) minus (2) 600 basis points, the Index Shareholder Return Performance Factor shall be 0%; 

(B)if the Shareholder Return equals (1) the Index Return minus (2) 600 basis points, the Index Shareholder Return Performance Factor shall be 25%; 

(C)if the Shareholder Return equals the Index Return (“Index Shareholder Return Target Performance”), the Index Shareholder Return Performance Factor shall be 100%; 

(D)if the Shareholder Return equals or exceeds (1) the Index Return plus (2) 600 basis points (“Index Shareholder Return Maximum Performance”), the Index Shareholder Return Performance Factor shall be 175%; 

(E)if Shareholder Return is more than the Index Return minus 600 basis points but less than Index Return, the Index Shareholder Return Performance Factor shall be determined by straight-line interpolation between 25% and 100%; and 

(F)if Shareholder Return is more than Index Return but less than the Index Return plus 600 basis points, the Index Shareholder Return Performance Factor shall be determined by straight-line interpolation between 100% and 175%.

(iii)Performance Vesting – Three-Year Absolute Total Shareholder Return. Except as may otherwise be provided herein, the restrictions on transfer set forth in Section 2(c) shall lapse on March 1, 2020 with respect to a number of Performance Shares equal to the product of (A) one-third of the Performance Shares credited to the Grantee’s account hereunder, and (B) the applicable “Absolute Shareholder Return Performance Factor,” subject to the Grantee continuing to provide service to the Company as of such Vesting Date. For purposes of this Section 2(d)(iv):

3

 

 

(A)if the Shareholder Return is less than 15%, the Absolute Shareholder Return Performance Factor shall be 0%; 

(B)if Shareholder Return equals 15%, the Absolute Shareholder Return Performance Factor shall be 25%; 

(C)if Shareholder Return equals 24% (the “Absolute Shareholder Return Target Performance”), the Absolute Shareholder Return Performance Factor shall be 100%; 

(D)if Shareholder Return equals or exceeds 33% (“Absolute Shareholder Return Maximum Performance”), the Absolute Shareholder Return Performance Factor shall be 175%; 

(E)if Shareholder Return is more than 15% but less than 24%, the Absolute Shareholder Return Performance Factor shall be determined by straight-line interpolation between 25% and 100%; and 

(F)if Shareholder Return is more than 24% but less than 33%, the Absolute Shareholder Return Performance Factor shall be determined by straight-line interpolation between 100% and 175%.

(iv)Notwithstanding the foregoing, if a Change of Control occurs, then any as yet unvested Performance Shares credited to the Grantee’s account hereunder shall become immediately vested, payable and free of transfer restrictions in accordance with the following: (a) the shares that will vest as a result of the NOI Growth Performance Factor and the Absolute Shareholder Return Performance Factor shall be based upon the Company’s actual performance as of the Change of Control relative to the respective performance levels set forth above, provided, that such performance levels shall be pro rated according to that portion of the Performance Period that will have elapsed as of the Change of Control (for example, if the Change of Control were December 31 of the second year of the Performance Period, the NOI Growth threshold performance would be 6%, the NOI Growth Target Performance would be 8% and the NOI Growth Maximum Performance would be 10%); (b) the shares that will vest as a result of the Index Shareholder Return Performance Factor shall be based upon the Company’s actual performance as of the consummation of the Change of Control relative to the respective performance level set forth above; provided, further, that if such Change of Control occurs prior to the expiration of the first year of the Performance Period, then any as yet unvested performance-vesting Performance Shares credited to the Grantee’s account hereunder shall become immediately vested, payable and free of transfer restrictions at NOI Growth Target Performance, Index Shareholder Return Target Performance and Absolute Shareholder Return Target Performance levels, as applicable.  In each case, in the event of vesting under such conditions, such payment shall be made or deemed made immediately preceding and effective upon the occurrence of such Change of Control.

(v)In addition, if the Grantee’s service is terminated by the Company without Cause or by the Grantee for Good Reason, then any as yet unvested performance-vesting 

4

 

 

Performance Shares credited to the Grantee’s account hereunder shall continue to vest in accordance with the terms hereof from and after the Grantee’s termination and shall become vested, payable and free of transfer restrictions on the Vesting Date.

(vi)Upon termination of the Grantee’s service to the Company by the Company for Cause or by the Grantee for any reason (other than upon a Change of Control and termination for Good Reason as provided above), any as yet unvested Performance Shares credited to the Grantee’s account hereunder shall be immediately forfeited. In addition, any Performance Shares that do not become vested as a result of failure to attain the performance levels set forth above shall thereupon be forfeited. Such Performance Shares forfeited pursuant to this Section 2(d) shall be transferred to, and reacquired by, the Company without payment of any consideration by the Company, and neither the Grantee nor any of the Grantee’s successors or assigns shall thereafter have any further rights or interests in such Performance Shares.  

(vii)For purposes of this Agreement, “Cause” means: (A) any actions or omissions by the Grantee representing a fraud or willful misconduct against the Company or an Affiliate of the Company; (B) commission by the Grantee of any felony; (C) any violation by the Grantee of any material written policy of the Company; (D) any failure by the Grantee to perform or satisfy any of his or her duties or obligations to the Company or any Affiliate of the Company or any grossly negligent or reckless disregard of any such duties or obligations; or (E) any failure by the Grantee to devote his or her full working-time and attention (other than due to physical or mental incapacity or customary and reasonable time off for vacations and holidays) to the performance of his or her duties to the Company and its Affiliates, provided, however, that upon written notice from the Company of a violation of clause (D) or (E), the Grantee shall be given 15 days from the delivery of such notice to cure such violation to the satisfaction of the Company. For purposes of this Agreement, “Disability” means the inability of the Grantee, as determined by the Company, to perform the essential functions of his or her duties to the Company, with or without reasonable accommodation, due to a medically determinable physical or mental illness which has lasted (or can reasonably be expected to last) for a period of six consecutive months.

(viii)For purposes of this Agreement, “Good Reason” means the occurrence of any one or more of the following events without the Grantee’s prior written consent, unless the Company fully corrects the circumstances constituting Good Reason (provided such circumstances are capable of correction) as provided below: (A) a material diminution in the Grantee’s position (including status, offices, titles and reporting requirements), authority, duties or responsibilities; (B) a material reduction of the Grantee’s base salary, as the same may be increased from time to time; (C) a change in the geographic location of offices of the Company in Scottsdale, Arizona by more than 25 miles from its existing location; or (D) the Company’s material breach of this Agreement. Notwithstanding the foregoing, the Grantee will not be deemed to have resigned for Good Reason unless: (A) the Grantee provides the Company with written notice setting forth in reasonable detail the facts and circumstances claimed to constitute Good Reason within 60 days after the date of the occurrence of any event that the Grantee knows or should reasonably have known to constitute Good Reason; (B) the 

5

 

 

Company fails to cure such acts or omissions within 30 days following its receipt of such notice; and (C) the effective date of the Grantee’s termination for Good Reason occurs no later than 60 days after the expiration of the Company’s cure period.

(ix)The Company and the Grantee acknowledge that the vesting of the Performance Shares may be subject to acceleration under certain circumstances in accordance with any employment agreement between the Grantee and the Company or its affiliates from time to time.

(e)Settlement of Performance Shares. Performance Shares which vest as provided under Section 2(d) shall be paid to the Grantee in a lump sum promptly, but in no event later than 30 days, following the Vesting Date.

In the event that Shares are to be issued upon any lapse of restrictions relating to the Performance Shares, the Company shall issue to the Grantee such Shares in book-entry form.

Notwithstanding anything herein to the contrary, no distribution hereunder shall be made to the Grantee during the six (6)-month period following the Grantee’s “separation from service” to the extent that the Company determines that paying such amounts at the time set forth in this Section 2 would be a prohibited distribution under 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 (6)-month period (or such earlier date upon which such amount can be paid under Section 409A without resulting in a prohibited distribution, including as a result of Grantee’s death), the Company shall pay the Grantee the cumulative amounts that would have otherwise been payable to the Grantee during such period. For purposes of Section 409A of the Code, any right to a series of payments pursuant to this Agreement shall be treated as a right to a series of separate payments.

(f)Tax Withholding. The Company shall be entitled to withhold in cash, shares or deduction from other compensation payable to the Grantee any sums required by federal, state or local tax law to be withheld with respect to the grant, vesting, distribution and/or payment of the Award.

In satisfaction of the foregoing requirement, Grantee may, to the extent permitted by Section 409A of the Code, including Treas. Reg. Section 1.409A-3(j)(4)(vi), elect to effect a broker-assisted net settlement transaction with respect to the Shares issuable under the Award, or have the Company withhold Shares otherwise issuable under the Award, having a Fair Market Value equal to the sums required to be withheld. Notwithstanding the foregoing, to the extent that any Federal Insurance Contributions Act tax withholding obligations arise in connection with the Award, the Company shall withhold Shares otherwise issuable under the Award (including through a broker-assisted net settlement transaction) having a Fair Market Value equal to the sums required to be withheld in satisfaction of such withholding obligations and shall, to the extent necessary, accelerate the payment of a portion of the Award sufficient to satisfy (but not in excess of) such tax withholding obligations and any tax withholding obligations associated with any such accelerated payment.

6

 

 

Subject to the following sentence, the number of Shares which shall be so withheld in order to satisfy Grantee’s federal, state and local withholding liabilities with respect to the grant, vesting, distribution and/or payment of the Award shall be limited to the number of Shares which have a Fair Market Value on the date of withholding equal to the aggregate amount of such liabilities based on the minimum statutory withholding rates for federal, state and local tax purposes that are applicable to such supplemental taxable income.

Section 3.Miscellaneous

(a)Notices. Any and all notices, designations, consents, offers, acceptances and any other communications provided for herein shall be given in writing and shall be delivered either personally or by registered or certified mail, postage prepaid, which shall be addressed, in the case of the Company to the General Counsel of the Company at the principal office of the Company and, in the case of the Grantee, at the address most recently on file with the Company.

(b)No Right to Continued Service. Nothing in the Plan or in this Agreement shall confer upon the Grantee any right to continue in the service of the Company.

(c)Bound by Plan. By signing this Agreement, the Grantee acknowledges that the Grantee has received a copy of the Plan and has had an opportunity to review the Plan and has agreed to be bound with respect to all the terms and provisions of the Plan.

(d)Successors. The terms of this Agreement shall be binding upon and inure to the benefit of the Company, its successors and assigns, and of the Grantee and the Grantee’s successors and assigns.

(e)Invalid Provision. The invalidity or unenforceability of any particular provision thereof shall not affect the other provisions hereof, and this Agreement shall be construed in all respects as if such invalid or unenforceable provision had been omitted.

(f)Modifications. No change, modification or waiver of any provision of this Agreement shall be valid unless the same be in writing and signed by the parties hereto.

(g)Entire Agreement. This Agreement and the Plan contain the entire agreement and understanding of the parties hereto with respect to the subject matter contained herein and therein and supersede all prior communications, representations and negotiations in respect thereto.

(h)Governing Law. This Agreement and the rights of the Grantee hereunder shall be construed and determined in accordance with the laws of the State of Maryland.

(i)Headings. The headings of the Sections hereof are provided for convenience only and are not to serve as a basis for interpretation or construction, and shall not constitute a part, of this Agreement.

(j)Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

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IN WITNESS WHEREOF, this Agreement has been executed and delivered by the parties hereto as of the [•] day of February, 2017.

COLONY STARWOOD HOMES

By:
Name:  Frederick C. Tuomi
Title:    Chief Executive Officer

GRANTEE

Name:  [•]

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