Document:

exv10w3w2

 

    EXHIBIT 10.3.2

ASHFORD HOSPITALITY TRUST, INC.

NONQUALIFIED DEFERRED COMPENSATION PLAN

(Effective January 1, 2008)

 

 

TABLE OF CONTENTS

ASHFORD HOSPITALITY TRUST, INC.

NONQUALIFIED DEFERRED COMPENSATION PLAN

	 	 	 	 	 	 	 	 	 
	CONTENTS	 	 	 	 	Page	 
	 
	 	 	 	 	 
	 	 	 	 
	PREAMBLE	 	 
	 	 	1	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE 1	 	DEFINITIONS
	 	 	1	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE 2	 	PARTICIPATION IN THE PLAN
	 	 	4	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE 3	 	DEFERRAL ACCOUNTS
	 	 	5	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE 4	 	INVESTMENT FUNDS
	 	 	8	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE 5	 	DISTRIBUTION OF ACCOUNT
	 	 	9	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE 6	 	NON-ASSIGNABILITY
	 	 	15	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE 7	 	AMENDMENT OR TERMINATION OF THE PLAN
	 	 	15	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE 8	 	PLAN ADMINISTRATION
	 	 	16	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE 9	 	MISCELLANEOUS
	 	 	21	 

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ASHFORD HOSPITALITY TRUST, INC.

NONQUALIFIED DEFERRED COMPENSATION PLAN

(Effective January 1, 2008)

PREAMBLE

Ashford Hospitality Trust, Inc. (the “Company”) has adopted the Ashford Hospitality Trust, Inc.
Nonqualified Deferred Compensation Plan (the “Plan”), effective January 1, 2008, for the benefit of
a select group of management or highly compensated employees of the Company. The purpose of the
Plan is to permit designated executives and key employees of the Company to accumulate additional
retirement income on a tax deferred basis.

This Plan is intended to be a nonqualified deferred compensation plan within the meaning of Section
409A of the Internal Revenue Code of 1986, as amended. The provisions of this Plan shall be
construed consistent with the requirements of Code Section 409A and applicable regulations and
other guidance issued thereunder.

ARTICLE 1

DEFINITIONS

As used in this Plan, the following capitalized words shall have the meanings indicated below,
unless the context clearly requires a different meaning:

	1.1	 	“Account” means the aggregate of a Participant’s Cash Account and Stock Account.
	 
	1.2	 	“Allocation Date” means each business day during the Plan Year.
	 
	1.3	 	“Base Salary” means a Participant’s base salary as shown in the personnel records of
the Company.
	 
	1.4	 	“Beneficiary” means the person or persons designated by a Participant or otherwise
entitled to receive any amount credited to his or her Account that remains
undistributed at the Participant’s death.
	 
	1.5	 	“Bonus” means the annual bonus payable to a Participant as incentive compensation as
determined by the Company, and any other bonus, including long-term incentive bonus,
which the Committee, in its sole discretion, determines is eligible for deferral under
the Plan.

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	1.6	 	“Bonus Deferral Election” means an agreement between a Participant and the Company
under which the Participant agrees to defer all or a portion of his or her Bonus.
	 
	1.7	 	“Cash Account” means the separate bookkeeping account established on behalf of each
Participant to reflect the amounts credited to the Plan on his or her behalf that are
not invested in the Stock Account. Separate sub-accounts shall be maintained in the
Cash Account for deferrals attributable to each Plan Year.
	 
	1.8	 	“Code” means the Internal Revenue Code of 1986, as amended from time to time.
	 
	1.9	 	“Committee” means the committee appointed in accordance with Section 8.1 to
administer the Plan.
	 
	1.10	 	“Common Stock” means common stock of the Company, $.01 par value per share.
	 
	1.11	 	“Company” means Ashford Hospitality Trust, Inc. a Maryland corporation, and any
successor thereto.
	 
	1.12	 	“Disability” means that a Participant: (i) is unable to engage in any substantial
gainful activity by reason of any medically determinable physical or mental impairment
which can be expected to result in death or can be expected to last for a continuous
period of not less than 12 months; or (ii) is, by reason of any medically determinable
physical or mental impairment which can be expected to result in death or can be
expected to last for a continuous period of not less than 12 months, receiving income
replacement benefits for a period of not less than 3 months under an accident and
health plan covering employees of the Company.
	 
	1.13	 	“Eligible Employee” means an employee of the Company who is a member of a select
group of management or highly compensated employees and who is designated by the
Company as eligible for participation in the Plan.
	 
	1.14	 	“Investment Fund” means one or more of the measurement investment funds designated by
the Committee for purposes of crediting or debiting hypothetical investment gains and
losses to the Cash Accounts of Participants.
	 
	1.15	 	“Participant” means any Eligible Employee who satisfies the conditions for
participation in the Plan set forth in Section 2.1.
	 
	1.16	 	“Plan” means the Ashford Hospitality Trust, Inc. Nonqualified Deferred

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     Compensation Plan, as set forth herein and as from time to time amended.

	1.17	 	“Plan Year” means the accounting year of the Plan, which ends on December 31.
	 
	1.18	 	“Retirement” means Separation from Service on or after attainment of age 55. There
is no minimum length of service requirement for purposes of defining retirement
eligibility.
	 
	1.19	 	“RSU Deferral Election” means an election to defer receipt of shares of Common Stock
otherwise payable to the Participant upon the vesting of restricted stock unit awards
under the Stock Incentive Plan. The Committee, in its discretion, shall determine
which restricted stock unit awards, if any, under the Stock Incentive Plan are
eligible for deferral under the Plan.
	 
	1.20	 	“Salary Deferral Election” means an agreement between a Participant and the Company
under which the Participant agrees to defer a portion of his or her Base Salary.
	 
	1.21	 	“Separation from Service” means the termination of a Participant’s employment with
the Company which constitutes a “separation from service” as that term is defined
under Code Section 409A and regulations issued thereunder.
	 
	1.22	 	“Specified Employee” means a Participant who is a key employee (as defined in Code
Section 416(i) without regard to Code Section 416(i)(5)) of the Company. For purpose
of this definition, a Participant is a key employee if the Participant meets the
requirements of Code Section 416(i)(1)(A)(i), (ii) or (iii) (applied in accordance
with the regulations thereunder and disregarding Code Section 416(i)(5)) at any time
during the 12-month period ending on any December 31st. If a Participant
is a key employee as of any December 31st, then that Participant is treated
as a Specified Employee for distributions during the 12-month period beginning on the
April 1st following the relevant December 31st.
	 
	1.23	 	“Stock Account” means the separate bookkeeping account established on behalf of each
Participant to reflect amounts credited to the Plan on his or her behalf with respect
to deferrals of restricted stock unit awards under the Stock Incentive Plan. The
Stock Account shall be maintained in the form of Stock Units and shall be payable
solely in the form of shares of Common Stock from the Stock Incentive Plan. Separate
sub-accounts shall be maintained in the Stock Account for deferrals attributable to
each Plan Year.

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	1.24	 	“Stock Incentive Plan” means the Ashford Hospitality Trust, Inc. Amended and Restated
2003 Stock Incentive Plan, and any successor thereto.
	 
	1.25	 	“Stock Unit” means a unit that entitles the Participant to one share of Common Stock.
	 
	1.26	 	Rules of Construction

	 	(a)	 	Governing law. The construction and operation of this Plan are
governed by the laws of the State of Texas except to the extent pre-empted by
ERISA or other applicable federal law.
	 
	 	(b)	 	Headings. The headings of Articles, Sections and Subsections are for
reference only and are not to be utilized in construing the Plan.
	 
	 	(c)	 	Gender. Unless clearly inappropriate, all pronouns of whatever gender refer
indifferently to persons or objects of any gender.
	 
	 	(d)	 	Singular and plural. Unless clearly inappropriate, singular items also
refer to the plural and vice versa.
	 
	 	(e)	 	Severability. If any provision of this Plan is held illegal or invalid for
any reason, the remaining provisions shall remain in full force and effect and be
construed and enforced in accordance with the purposes of the Plan as if the illegal
or invalid provision did not exist.

ARTICLE 2

PARTICIPATION IN THE PLAN

	2.1	 	Eligibility
	 
	 	 	Participation in the Plan shall be limited to employees of the Company who (i) qualify for
inclusion in a “select group of management or highly compensated employees” within the
meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA and (ii) are designated by the
Company as being eligible to participate in the Plan. If the Company determines that a
Participant no longer qualifies as being a member of a select group of management or highly
compensated employees, the Company shall have the right to suspend the Participant’s
contributions for future Plan Years, except to the extent prohibited by Section 409A of the
Code.

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	2.2	 	Commencement of Participation
	 
	 	 	Eligible Employees may elect to participate in the Plan, in the manner designated by and
acceptable to the Company, prior to the first day of each Plan Year (or in the case of newly
eligible enrollees, within 30 days of first becoming eligible to participate in the Plan).

ARTICLE 3

DEFERRAL ACCOUNTS

	3.1	 	Deferral Elections

	 	(a)	 	Deferral of Base Salary. An Eligible Employee may elect to defer up to
[100%] of his or her Base Salary for a Plan Year by filing a Salary Deferral Election
in accordance with Section 3.2.
	 
	 	(b)	 	Deferral of Bonus. An Eligible Employee may elect to defer up to 100%
of his or her Bonus for a Plan Year by filing a Bonus Deferral Election in accordance
with Section 3.2.
	 
	 	(c)	 	Deferral of Restricted Stock Awards. An Eligible Employee may elect to
defer payment of up to 100% of his or her restricted stock units vesting under the
Stock Incentive Plan by filing an RSU Deferral Election in accordance with Section 3.2.

	3.2	 	Deferral Elections. A Participant’s deferral elections shall be in writing,
and shall be filed with the Committee at such time and in such manner as the Committee
shall provide, subject to the following:

	 	(a)	 	Salary Deferrals. A Salary Deferral Election shall be
made during the election period established by the Committee, which shall end no
later than the last day of the Plan Year preceding the Plan Year in which the
Base Salary would otherwise be payable.
	 
	 	(b)	 	Bonus Deferrals. If the Committee determines that Bonus
eligible for deferral satisfies the requirements of “performance based
compensation” within the meaning of Code Section 409A, then any election to
defer such Bonus must be made no later than the date which is six months prior
to the end of the performance period to which the Bonus relates. If the
Committee

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	 	 	 	determines that any Bonus eligible for deferral under the Plan does not
satisfy the requirements of performance based compensation, then any election
to defer such Bonus must be made no later of the last day of the Company’s
fiscal year preceding the fiscal year which contains the first day of the
performance period to which such Bonus relates. Any deferral of Bonus shall
be made in accordance with the rules and procedures established by the
Committee.

	 	(c)	 	Restricted Stock Unit Deferrals. An RSU Deferral
Election shall be made during the election period established by the Committee,
which shall end no later than 30 days after the date such restricted stock units
are awarded to the Eligible Employee. If the Committee determines that
restricted stock units eligible for deferral satisfy the requirements of
performance based compensation within the meaning of Code Section 409A, then the
election to defer must be made no later than the date which is six months prior
to the end of the performance period with respect to such restricted stock
units.
	 
	 	(b)	 	Deferral elections may be expressed as a percentage or in whole
dollar amounts (or whole shares, with respect to restricted stock units), within
the limits provided under the Plan.
	 
	 	(c)	 	The minimum annual deferral of Base Salary under the Plan shall
be $10,000 and any deferral election that would provide a lesser deferral for a
Plan Year shall be disregarded for such Plan Year. The minimum annual deferral
of Bonus shall be $10,000. An alternative Bonus deferral of no less than 25%
shall be deemed a qualifying Bonus deferral, even if the resulting dollar figure
is less than $10,000.
	 
	 	(d)	 	Notwithstanding the foregoing provisions of this Section 3.2, the
Committee may provide that an employee who first becomes an Eligible Employee
may make a deferral election within 30 days of first becoming an Eligible
Employee, which deferral election shall relate to Base Salary, Bonus and
restricted stock units earned for periods after the date such election is made.

Once made, the Committee may provide that a deferral election shall remain in effect
for subsequent Plan Years unless changed or revoked by the Participant in

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accordance with rules established by the Committee. Any such modification or
revocation shall be effective for the Plan Year following the Plan Year in which it
is made. Participants shall be fully vested in their Plan benefits at all times.

	3.3	 	Account Reflecting Deferred Compensation
	 
	 	 	The Company shall establish and maintain a separate Account for each Participant which shall
reflect the amount of a Participant’s total deferrals made under Section 3.2 and all credits
or charges under Section 3.4, and applicable earnings and losses under Article IV. All
amounts credited or charged to a Participant’s Account hereunder shall be in a manner and
form determined within the sole discretion of the Company.

	3.4	 	Credits or Charges

	 	(a)	 	Balance of Account
	 
	 	 	 	As of each Allocation Date, the amount credited to a Participant’s Account shall be
the amount credited to his or her Account as of the immediately preceding Allocation
Date, plus the Participant’s deferrals since the immediately preceding Allocation
Date, minus any amount that is paid to or on behalf of a Participant pursuant to this
Plan subsequent to the immediately preceding Allocation Date, plus or minus any
hypothetical investment gains or losses determined pursuant to Section 3.4(b) below.
	 
	 	(b)	 	Earnings or Losses
	 
	 	 	 	As of each Allocation Date, a Participant’s Cash Account shall be credited or debited
with earnings, gains or losses approximately equal to the earnings, gains or losses
on the Investment Funds designated by the Participant to be used for purposes of
calculating his or her Cash Account balance.

	3.5	 	Credits to Trust Fund
	 
	 	 	The Company may establish a Trust Fund and make credits to it corresponding to any or all
amounts credited under this Article III with respect to Eligible Employees of the Company
who participate in the Plan. Notwithstanding any other provision of this Plan, any assets
of the Trust Fund shall remain the property of the Company and are subject to the claims of
its creditors in accordance with the terms of the Trust. No Participant (or Beneficiary) has
any priority claim on Trust assets, if any, or any security interest or other right in or to
such assets superior to the rights of general creditors of the Company.

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ARTICLE 4

INVESTMENT FUNDS

	4.1	 	Designation of Preferred Investment Funds By Participants
	 
	 	 	Each Participant may indicate to the Company, in writing, a preference that monies in his or
her Cash Account be invested by the Company in one or more of the Investment Funds selected
by the Committee for use by the Plan. If the monies are invested by the Company in one or
more such Investment Funds, then the value of a Participant’s Cash Account at any time shall
include the current fair market value of the investment in such Investment Funds. A
Participant’s investment election under this Section 4.1 may be changed as of each
Allocation Date in accordance with rules determined by the Committee.
	 
	 	 	Notwithstanding Section 4.1 or any other provision in this Plan or any notice, statement,
summary or other communication provided to a Participant that may be interpreted to the
contrary, the Company shall have sole control and discretion over the investment, management
and use of all amounts credited to a Participant’s Account until such amounts are
distributed pursuant to Article V. The Investment Funds are to be used for measurement
purposes only, and a Participant’s preference of any such Investment Fund, the determination
of credits and debits to his or her Account based on such Investment Funds, the Company’s
actual ownership of such Investment Funds, and any authority granted by the Company to a
Participant to change the investment of the Company’s assets, if any, shall not be
considered or construed in any manner as an actual investment of the Cash Account in any
such Investment Fund or to constitute a funding of this Plan. The Company shall at all
times retain the discretion to invest the monies credited to the Cash Accounts of
Participants in any funds it may choose and shall not have a duty to notify a Participant of
the identity of such funds. In such event, the credits or charges to a Cash Account shall be
determined using earnings, gains or losses equivalent to the hypothetical rate of earnings,
gains or losses which such Account would have experienced had the Cash Account been invested
in the Investment Funds designated by the Participant, based on the Participant’s most
current investment preference in accordance with Section 4.1.
	 
	4.2	 	Stock Account.
	 
	 	 	A Participant’s deferrals of shares of Common Stock payable on the vesting of restricted
stock units shall be credited to the Participant’s Stock Account in the form of Stock Units.
The Participant shall be credited with one Stock Unit for each share of Common Stock
deferred under the Plan. All distributions from the Stock Account shall be made in shares of

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Common Stock, which shall be payable from the share reserve under the Stock Incentive Plan.
No interest or other earnings shall accrue on such Stock Account.

Prior to distribution, Stock Units shall receive dividend equivalents, which shall entitle
the Participant to an amount equal to the dividends the Participant would have received if
each Stock Unit held in the Stock Account on the dividend record date for the Common Stock
were a share of Common Stock held by the Participant. At the time the Participant enters
into an RSU Deferral Election, the Participant shall indicate on such election the manner in
which dividend equivalents with respect to the Stock Units subject to such election shall be
treated. The Participant may elect to (i) receive such dividends as current income (ii)
have the dividends deferred under the Plan, or (iii) have the return on capital portion of
the dividends paid as current income, and the balance deferred under the Plan. If the
Participant elects to have dividends paid as current income, the dividends shall be paid in
cash (or Common Stock or other applicable property for a non-cash dividend) as soon as
administratively practicable after the applicable dividend payment date. If the Participant
elects to have dividends deferred under the Plan, the amount of the dividend shall be
credited to the Participant’s Cash Account as of the dividend payment date and deemed
invested in accordance with the Participant’s investment election then in effect for the
Cash Account (or, if none, in accordance with the default deemed investment election
established by the Committee). If the Participant elects to have dividends deferred under
the Plan, and such dividends are payable in the form of Common Stock, then the Participant
shall be credited with additional Stock Units equal to the number of shares so payable. If
the dividends are deferred under the Plan, the amount attributable to the deferred dividends
shall be paid in the same time and form as the underlying Stock Units to which they relate.

ARTICLE 5

DISTRIBUTION OF ACCOUNT

	5.1	 	Distribution Upon Separation from Service
	 
	 	 	In the event a Participant incurs a Separation from Service for any reason other than death
or Disability, the Participant’s Account shall be paid in a single lump-sum payment as soon
as administratively practicable following such Separation from Service.
	 
	5.2	 	Distribution Upon Retirement

	 	(a)	 	Time of Payment
	 
	 	 	 	In the event a Participant incurs a Separation from Service due to Retirement, the

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	 	 	 	Participant’s Cash Account and Stock Account shall be paid in the form designated by
the Participant in accordance with Section 5.2(b) below.

	 	(b)	 	Form of Payment
	 
	 	 	 	At the time a Participant makes a deferral election, the Participant shall designate
the manner in which the amounts deferred shall be paid upon a Separation from Service
due to Retirement. The optional forms of payment shall include: (i) a single
lump-sum distribution; or (ii) annual installments of up to 15 years. If a
Participant fails to elect a form of retirement distribution for a given Plan Year,
payment shall automatically be made in the form of a lump-sum distribution.
	 
	 	(c)	 	Modification of Form of Payment
	 
	 	 	 	A Participant may elect to modify the form of any benefit payment made in accordance
with this Section 5.2, subject to the following:

	 	(i)	 	the new distribution election must be made at least 12 months in
advance of the originally scheduled distribution date and may not take effect
for at least 12 months after the date the new distribution election is made;
	 
	 	(ii)	 	the new distribution election must require a revised distribution
date of at least five years from the date such payment would otherwise have been
made; and
	 
	 	(iii)	 	the new distribution election shall not accelerate the schedule
of any payment, except as permitted under the regulations under Code Section
409A.
	 
	 	Each subsequent election modification made under this Section 5.2 must comply with
paragraphs (i), (ii) and (iii) above (as if the previously revised distribution date
was the originally scheduled distribution date).

	5.3	 	Distribution Upon Death

	 	(a)	 	Payment of Benefit
	 
	 	 	 	If a Participant dies before commencing the payment of his or her Account, the unpaid
Account balance shall be paid to a Participant’s designated Beneficiary. Payment to
such designated Beneficiary shall begin as soon as administratively practicable after
the Participant’s death. Distribution shall be made to the designated Beneficiary in
accordance with the Participant’s death distribution election (or if the

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	 	 	 	Participant would have been eligible for Retirement at the time of his or her death,
then payment shall be made in the same manner that benefits would have been paid had
the Participant retired from employment).
	 
	 	 	 	At the time of initial enrollment in the Plan, each Participant shall designate the
manner in which his or her Account shall be paid upon death. [Confirm that
Participants will make separate death distribution elections.] The optional forms of
payment shall include: (i) a single lump-sum distribution; or (ii) annual
installments of up to 15 years. If a Participant fails to elect a form of
distribution which shall apply in the event of death, payment shall be automatically
made in the form of a lump-sum distribution. A Participant may elect to modify the
form of any benefit payment made in accordance with this Section 5.3, provided that
the new distribution election must be made at least 12 months in advance of the
distribution date and may not take effect for at least 12 months after the date the
new distribution election is made, in accordance with the requirements of Code
Section 409A.
	 
	 	 	 	If a Participant dies before receiving the total amount of his or her Account, but
after benefit payments have commenced, the Participant’s remaining installments shall
be paid to the Participant’s designated Beneficiary at the same time such payments
would have been made had the Participant survived.

	 	(b)	 	Designation of Beneficiary
	 
	 	 	 	A Participant shall designate a Beneficiary on a form to be supplied by the Company.
The Beneficiary designation may be changed by the Participant at any time, but any
such change shall not be effective until the Beneficiary designation form completed
by the Participant is delivered to and received by the Company. In the event that the
Company receives more than one Beneficiary designation form from the Participant, the
form bearing the most recent date shall be controlling. If the Participant fails to
designate a Beneficiary, or no designated Beneficiary survives the Participant, then
the Participant’s benefits under the Plan shall be made in the following order of
priority: (1) to the Participant’s surviving spouse; (2) if there is no surviving
spouse, to the Participant’s children in equal shares by right of representation (one
share for each surviving child and one share for each child who predeceases the
Participant but has surviving descendants); and (3) to the Participant’s estate.

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	5.4	 	Distribution Upon Disability

	 	(a)	 	Time of Payment
	 
	 	 	 	In the event a Participant terminates employment due to Disability, the Participant’s
Account shall be paid in the form designated by the Participant in accordance with
Section 5.4(b) below.
	 
	 	(b)	 	Form of Payment
	 
	 	 	 	At the time of initial enrollment in the Plan, each Participant shall designate the
manner in which his Account shall be paid upon Disability. The optional forms of
payment shall include: (i) a single lump sum payment; or (ii) annual installments of
up to 15 years. If a Participant fails to elect a Disability form of distribution,
payment shall be automatically made in the form of a lump-sum distribution.
	 
	 	(c)	 	Modification of Form of Payment
	 
	 	 	 	A Participant may elect to modify the form of any benefit payment made in accordance
with this Section 5.4, provided that the new distribution election must be made at
least 12 months in advance of the distribution date and may not take effect for at
least 12 months after the date the new distribution election is made, in accordance
with the requirements of Code Section 409A.

	5.5	 	Distributions Due to Unforeseeable Emergency
	 
	 	 	Prior to Separation from Service, a Participant may receive a distribution of all or a
portion of his or her Account upon demonstrating severe financial hardship due to an
unforeseeable emergency in accordance with Code Section 409A and the regulations and other
guidance issued thereunder.
	 
	 	 	For purposes of this Plan, an “unforeseeable emergency” is an unanticipated emergency that
is caused by events beyond the control of the Participant or Beneficiary and would result in
severe financial hardship if early withdrawal were not permitted.
	 
	 	 	This definition includes, but is not limited to: sudden unexpected illness or accident of
the Participant or of a dependent (as defined in Internal Revenue Code Section 152(a)) of
the Participant, loss of the Participant’s property due to casualty, or other similar
extraordinary and unforeseeable circumstances arising as a result of events beyond the
control of the Participant. Expenses related to sending a Participant’s child to college or
purchasing a

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	 	 	 	home are not unforeseeable emergencies for purposes of this Section 5.5. The Committee
shall determine additional exclusions to the definition of an unforeseeable emergency on a
case by case basis.
	 
	 	 	 	The Committee will determine the existence of severe financial hardship due to an
unforeseeable emergency in a uniform and nondiscriminatory manner. The determination will
be based on the supporting facts, circumstances, and documentation provided by the
Participant. The Plan will permit early distribution only to the extent the hardship cannot
be relieved by insurance, liquidation of other assets (to the extent the liquidation itself
will not cause severe financial hardship), or cessation of deferrals under the Plan.
	 
	 	 	 	Withdrawals from Participants’ Accounts made in accordance with this Section 5.5 will be
limited to the amount reasonably necessary to satisfy the emergency need, plus applicable
taxes.
	 
	 	 	 	In the event that a distribution is made to a Participant in accordance with this Section
5.5, the Participant’s deferrals under the Plan shall be automatically terminated and the
Participant shall not eligible to re-enroll in the Plan until the enrollment period for the
Plan Year that begins at least 12 months after such distribution.

	5.6	 	Distribution Prior to Separation From Service

	 	(a)	 	Time of Payment
	 
	 	 	 	During the annual enrollment for each Plan Year, a Participant may designate a date
that any portion of his or her Base Salary and Bonus deferrals attributable to such
Plan Year shall be paid prior to Separation from Service. Any such distribution date
must be no earlier than January 1 of the second Plan Year following the Plan Year
with respect to which the distribution election is made. By way of example, the
earliest in-service distribution date for amounts attributable to the 2008 Plan Year
would be January 1, 2011. At the time a Participant makes a deferral election with
respect to restricted stock units, the Participant may also designate a date in a
future Plan Year prior to Separation from Service on which all or a portion of the
deferred restricted stock units shall be paid. Such date must be no earlier than
January 1 of the second Plan Year following the Plan Year in which the restricted
stock units are credited to the Participant’s Stock Account under the Plan.

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	 	(b)	 	Form of Payment
	 
	 	 	 	At the time that a deferral election is made under this Section 5.6, a Participant
shall elect whether the in-service distributions will be distributed in the form of:
(i) a single lump-sum distribution; or (ii) a series of installment payments of a
period of time not to exceed five years.
	 
	 	(c)	 	Modification of Time and/or Form of Payment
	 
	 	 	 	Subsequent to the Participant’s initial distribution election with respect to any
Plan Year under this Section 5.6, the Participant may elect to modify, an unlimited
number of times, the time and/or form of the payment of any benefit paid under this
Section 5.6 or may cancel an election under this Section 5.6 in its entirety, subject
to the following:

	 	(i)	 	the new distribution election must be made at least 12 months in
advance of the originally scheduled distribution date and may not take effect
for at least 12 months after the date the new distribution election is made;
	 
	 	(ii)	 	the new distribution date must be at least five Plan Years from
the date such payment would otherwise have been made; and
	 
	 	(iii)	 	the new distribution election shall not, with respect to time or
form of payment, accelerate the schedule of any payment, except as permitted
under the regulations under Code Section 409A.

	 	 	 	Notwithstanding the foregoing provisions of this Section 5.6, if a Participant elects
a distribution at one or more specific future dates under this Section 5.6 but
becomes entitled to a distribution under Section 5.1, 5.2, 5.3 or 5.4 prior to any
such date, distribution shall commence pursuant to Section 5.1, 5.2, 5.3 or 5.4, as
applicable. For purposes of the preceding sentence, installment payments made to a
Participant shall be treated as a single payment. Each subsequent election
modification made under this Section 5.6 must comply with paragraphs (i), (ii) and
(iii) above (as if the previously revised distribution date was the originally
scheduled distribution date).

	5.7	 	Distributions Made To Specified Employees
	 
	 	 	Notwithstanding any provision of this Article V to the contrary, if a Participant is a
Specified Employee at the time the Participant is to receive any distribution due to his or
her Separation from Service, such Participant’s distribution shall be made no earlier than
the first day following the six (6) month anniversary of his or her Separation from Service.

-14-

 

	5.8	 	Distribution of Small Sums
	 
	 	 	Notwithstanding the foregoing provisions of this Article V or any Participant election to
the contrary, if at the time distribution of a Participant’s Account is to commence, the
total value of the Account is less than the limitation then in effect under Code Section
402(g)(1)(B), the Participant’s Account shall be paid in a single lump sum payment.

ARTICLE 6

NON-ASSIGNABILITY

	 	 	 	Neither a Participant nor any Beneficiary of a Participant shall have any right to commute,
sell, assign, pledge, transfer or otherwise convey the right to receive his or her Account
until his Account is actually distributed to the Participant or Beneficiary. The portion of
the Account which has not been distributed shall not be subject to attachment, garnishment
or execution for the payment of any debts, judgments, alimony or separate maintenance and
shall not be transferable by operation of law in the event of bankruptcy or insolvency of a
Participant or a Participant’s Beneficiary. Notwithstanding the foregoing or any other
provision in this Plan to the contrary, the Plan will recognize a qualified domestic
relations order relating to the division of a Participant’s Account and issued in connection
with divorce proceeding.

ARTICLE 7

AMENDMENT OR TERMINATION OF THE PLAN

	7.1	 	Amendment
	 
	 	 	The Company, by action of its Board of Directors or authorized committee, may, at any time
and from time to time, amend, in whole or in part, any of the provisions of this Plan. Any
such amendment is binding upon all Participants and their Beneficiaries, the Committee and
all other parties in interest.
	 
	7.2	 	Termination
	 
	 	 	The Company reserves the right to terminate the Plan at any time by action of its Board of
Directors. Upon the termination of the Plan, Participants’ Account balances shall remain in
the Plan until the Participant becomes eligible for the distribution of benefits as provided
in Article V. Notwithstanding the foregoing, the Board, in its discretion, may elect to
distribute Participants’ Account balances following termination of the Plan, in which case
the entire vested Account balances of all Participants shall be distributed during the
period beginning

-15-

 

12 months after such termination date and ending 24 months after such termination date,
notwithstanding any installment payment elections made by Participants; provided, however,
if the Plan is terminated in connection with a change in control of the Company (within the
meaning of Code Section 409A), then all Account balances shall be distributed within 12
months after such change in control.

	7.3	 	When Amendments Take Effect
	 
	 	 	A resolution amending or terminating the Plan becomes effective as of the date specified
therein.
	 
	7.4	 	Restriction on Retroactive Amendments
	 
	 	 	No amendment may be made that retroactively deprives a Participant of any benefit accrued
before the date of the amendment.

ARTICLE 8

PLAN ADMINISTRATION

	8.1	 	The Administrative Committee
	 
	 	 	The Plan shall be administered by a Committee appointed by the Company’s Board of Directors.
The Company may remove any member of the Committee at any time, with or without cause, and
may fill any vacancy. If a vacancy occurs, the remaining member or members of the Committee
have full authority to act. The Company is responsible for transmitting to any trustee the
names and authorized signatures of the members of the Committee and, as changes take place
in membership, the names and signatures of new members. Any member of the Committee may
resign by delivering his written resignation to the Company, any trustee and the Committee.
Any such resignation becomes effective upon its receipt by the Company or on such other date
as is agreed to by the Company and the resigning member. The Committee may adopt such rules
and appoint such subcommittees as it deems desirable for the conduct of its affairs and the
administration of the Plan.
	 
	8.2	 	Powers of the Committee
	 
	 	 	In carrying out its duties with respect to the general administration of the Plan, the
Committee has, in addition to any other powers conferred by the Plan or by law, the
following powers:

-16-

 

	 	(a)	 	to conclusively determine all questions relating to eligibility to
participate in the Plan;
	 
	 	(b)	 	to compute and certify to any trustee or other appropriate party the amount
and kind of distributions payable to Participants and their Beneficiaries;
	 
	 	(c)	 	to maintain all records necessary for the administration of the Plan that
are not maintained by the Company, record keeper or any trustee;
	 
	 	(d)	 	to conclusively construe and interpret the provisions of the Plan and to
make and publish such rules for the administration of the Plan as are not
inconsistent with the terms thereof;
	 
	 	(e)	 	to establish and modify the method of accounting for the Plan or any Trust;
	 
	 	(f)	 	to employ counsel, accountants and other consultants to aid in exercising
its powers and carrying out its duties hereunder; and
	 
	 	(g)	 	to perform any other acts necessary and proper for the administration of the
Plan, except those that are to be performed by the record keeper or trustee, if any.

	8.3	 	Indemnification

	 	(a)	 	Indemnification of Members of the Committee by the Company
	 
	 	 	 	The Company agrees to indemnify and hold harmless each member of the Committee
against any and all expenses and liabilities arising out of his or her action or
failure to act in such capacity, excepting only expenses and liabilities arising out
of the member’s own willful misconduct or gross negligence. This right of
indemnification is in addition to any other rights to which any member of the
Committee may be entitled.
	 
	 	(b)	 	Liabilities for Which Members of the Committee are Indemnified
	 
	 	 	 	Liabilities and expenses against which a member of the Committee is indemnified
hereunder include, without limitation, the amount of any settlement or judgment,
costs, counsel fees and related charges reasonably incurred in connection with a
claim asserted or a proceeding brought against him or the settlement thereof.

-17-

 

	 	(c)	 	Company’s Right to Settle Claims
	 
	 	 	 	The Company may, at its own expense, settle any claim asserted or proceeding brought
against any member of the Committee when such settlement appears to be in the best
interests of the Company.

	8.4	 	Claims Procedure
	 
	 	 	A Participant or Beneficiary or other person who feels he or she is being denied any benefit
or right provided under the Plan (hereinafter referred to as “Claimant”) may file a written
claim with the Committee or its delegate setting forth the claim. Any such claim shall be
signed by the Claimant and shall be considered filed on the date the claim is received by
the Company or prescribed addressee. The claim must be addressed as prescribed by the
Company. If a Participant shall fail to file a request for review in accordance with the
procedures described herein, such Participant shall have no right to review and shall have
no right to bring action in any court and the denial of the claim shall become final and
binding on all persons for all purposes.

	 	(a)	 	Committee Action
	 
	 	 	 	The Committee or its delegate shall, within 90 days after its receipt of such claim
make its determination. However, in the event that special circumstances require an
extension of time for processing the claim, the Committee or its delegate shall
provide such Claimant with its determination not later than 180 days after receipt of
the Claimant’s claim, but, in such event, the Committee or its delegate shall furnish
the Claimant, within 90 days after its receipt of such claim, notification of the
extension explaining the circumstances requiring such extension and the date that it
is anticipated that its determination will be furnished.
	 
	 	 	 	In the event the claim is denied, the Committee or its delegate shall provide such
Claimant a statement of the Adverse Benefit Determination, as defined in subsection
(d) below. The notice of Adverse Benefit Determination shall contain the following:

	 	(i)	 	the specific reason or reasons for Adverse Benefit Determination;
	 
	 	(ii)	 	a reference to the specific provisions of the Plan upon which the
Adverse Benefit Determination is based;
	 
	 	(iii)	 	a description of any additional material or information that is
necessary for the Claimant to perfect the claim;
	 
	 	(iv)	 	an explanation of why that material or information is necessary;
and

-18-

 

	 	(v)	 	an explanation of the review procedure provided below, including
applicable time limits and a notice of a Claimant’s rights to bring a legal
action under ERISA after an Adverse Benefit Determination on final appeal.

	 	(b)	 	Procedures for Appealing an Adverse Benefit Determination
	 
	 	 	 	Within 60 days after receipt of a notice of an Adverse Benefit Determination as
provided above, if the Claimant disagrees with the Adverse Benefit Determination, the
Claimant, or his or her authorized representative, may request, in writing, that the
Committee or its delegate review the claim and may request to appear before the
Committee or its delegate for such review. If the Claimant does not request a review
of the Adverse Benefit Determination within such 60 day period, the Claimant shall be
barred and estopped from appealing the Committee’s or its delegate’s Adverse Benefit
Determination. The appeal shall be filed with the Committee or prescribed addressee
at the address prescribed by the Company, and it shall be considered filed on the
date it is received by the prescribed addressee.
	 
	 	 	 	The Claimant shall have the rights to:

	 	(i)	 	submit written comments, documents, records and other information
relating to the claim for benefits;
	 
	 	(ii)	 	request, free of charge, reasonable access to, and copies of all
documents, records and other information relevant to the claim for benefits.

	 	(c)	 	Response on Appeal
	 
	 	 	 	Within 60 days after receipt by the Committee or its delegate of a written
application for review of a Claimant’s claim, the Committee or its delegate shall
notify the Claimant of its decision; provided, however, in the event that special
circumstances require an extension of time for processing such application, the
Committee or its delegate shall so notify the Claimant of its decision not later than
120 days after receipt of such application.
	 
	 	 	 	In the event the Committee’s or its delegate’s decision on appeal is adverse to the
Claimant, the Committee or its delegate shall issue a notice of an Adverse Benefit
Determination on Appeal that will contain all of the following information, in a
manner calculated to be understood by the Claimant:

	 	(i)	 	the specific reason(s) for the Adverse Benefit Determination on
Appeal;

-19-

 

	 	(ii)	 	reference to specific plan provisions on which the benefit
determination is based; and
	 
	 	(iii)	 	a statement that the Claimant is entitled to receive, upon
request and free of charge, reasonable access to and copies of all documents,
records and other information relevant to the Claimant’s claim for benefits; and
a statement describing any voluntary appeal procedures offered by the Plan and
the Claimant’s right to obtain the information about such procedures, as well as
a statement of the Claimant’s right to bring an action under ERISA Section
502(a).

	 	(d)	 	Definition
	 
	 	 	 	As used herein, the term “Adverse Benefit Determination” shall mean a determination
that results in the denial, reduction, or termination of, or a failure to provide or
make payment (in whole or in part) for, a benefit.

	8.5	 	Expenses
	 
	 	 	The members of the Committee serve without compensation for services as such. All expenses
of the Committee are paid by the Company.
	 
	8.6	 	Conclusiveness of Action
	 
	 	 	Any action on matters within the discretion of the Committee will be conclusive, final and
binding upon all Participants and upon all persons claiming any rights under the Plan,
including Beneficiaries.

-20-

 

ARTICLE 9

MISCELLANEOUS

	9.1	 	Compliance With Code Section 409A
	 
	 	 	Notwithstanding any provision in this Plan to the contrary, this Plan shall be interpreted
and construed in accordance with Code Section 409A and regulations and other interpretative
guidance issued thereunder, including without limitation any regulations or other guidance
that may be issued after the effective date of this restatement. Notwithstanding any
provision of this Plan to the contrary, the Company may adopt such amendments to the Plan or
adopt other policies and procedures (including amendments, policies and procedures having a
retroactive effect), or take any other actions, that the Company determines is necessary or
appropriate to preserve the intended tax treatment of the benefits provided under the Plan
and/or to comply with Code Section 409A.
	 
	 	 	Notwithstanding any provision of the Plan to the contrary, during the period ending December
31, 2008, the Company may allow Participants to make or change elections under the Plan in a
manner that complies with the transition relief provided under Notice 2007-86.
	 
	9.2	 	Plan Not a Contract of Employment
	 
	 	 	The adoption and maintenance of the Plan does not constitute a contract between the Company
and any Participant or to be a consideration for the employment of any person. Nothing
herein contained gives any Participant the right to be retained in the employ of the Company
or derogates from the right of the Company to discharge any Participant at any time without
regard to the effect of such discharge upon his or her rights as a Participant in the Plan.
	 
	9.3	 	No Rights Under Plan Except as Set Forth Herein
	 
	 	 	Nothing in this Plan, express or implied, is intended, or shall be construed, to confer upon
or give to any person, firm, association, or corporation, other than the parties hereto and
their successors in interest, any right, remedy, or claim under or by reason of this Plan or
any covenant, condition, or stipulation hereof, and all covenants, conditions and
stipulations in this Plan, by or on behalf of any party, are for the sole and exclusive
benefit of the parties hereto.

-21-

 

	9.4	 	Other Benefit Plans
	 
	 	 	Deferred compensation under this Plan shall not be deemed to be compensation for purposes of
determining a Participant’s benefit or credit under any plan of the Company qualified under
Code Section 401(a), or any life insurance plan or disability plan established or maintained
by the Company, except to the extent specifically provided in such other plan.
	 
	9.5	 	Withholding of Taxes
	 
	 	 	The Company shall cause taxes to be withheld from an Account distributed hereunder as
required by law. For each Plan Year in which any deferral is made under Section 3.1, the
Company shall withhold from that portion of the Participant’s compensation that is not being
deferred, in a manner determined by the Company, the Participant’s share of FICA and other
employment taxes on such deferral amount.

[The remainder of this page is intentionally left blank]

-22-

 

IN WITNESS WHEREOF, Ashford Hospitality Trust, Inc. has caused this document to executed by its
duly authorized officer this 31st day of December, 2007, to be effective as of January 1, 2008,

	 	 	 	 	 
	 	ASHFORD HOSPITALITY TRUST, INC.

 	 
	 	By:  	/S/ DAVID A. BROOKS
 	 
	 	 	Title: Chief Legal Officer 	 
	 	 	 	 
	 

-23-exv10w26

 

    EXHIBIT 10.26

INVESTMENT PROGRAM AGREEMENT

BETWEEN

PRUDENTIAL INVESTMENT MANAGEMENT, INC.

AND

ASHFORD HOSPITALITY FINANCE, L.P.

as of January 22, 2008

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	 
	 	 	 	 	 	 	 	 
	ARTICLE I DEFINITIONS	 	 	1	 
	 

	 	Section 1.01.
	 	Definitions
	 	 	1	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE II PURPOSE	 	 	5	 
	 

	 	Section 2.01.
	 	Places of Business
	 	 	5	 
	 

	 	Section 2.02.
	 	Purpose
	 	 	5	 
	 

	 	Section 2.03.
	 	Term
	 	 	5	 
	 

	 	Section 2.04.
	 	No Liability to Ashford, PIM or the PIM Investors
	 	 	6	 
	 

	 	Section 2.05.
	 	Other Business Activities of PIM and the PIM Investors
	 	 	6	 
	 

	 	Section 2.06.
	 	Rights of PIM Investors
	 	 	7	 
	 

	 	Section 2.07.
	 	Other Business Activities of Ashford
	 	 	7	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE III CAPITAL CONTRIBUTIONS	 	 	7	 
	 

	 	Section 3.01.
	 	Capital Commitments
	 	 	7	 
	 

	 	Section 3.02.
	 	Capital Calls
	 	 	8	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE IV MANAGEMENT; INDEMNIFICATION	 	 	8	 
	 

	 	Section 4.01.
	 	Management
	 	 	8	 
	 

	 	Section 4.02.
	 	No Assignment
	 	 	8	 
	 

	 	Section 4.03.
	 	Program Representatives
	 	 	9	 
	 

	 	Section 4.04.
	 	Removal of Program Representatives
	 	 	9	 
	 

	 	Section 4.05.
	 	Program Reimbursable Expenses
	 	 	9	 
	 

	 	Section 4.06.
	 	Program Acts
	 	 	9	 
	 

	 	Section 4.07.
	 	Compensation
	 	 	9	 
	 

	 	Section 4.08.
	 	Presentation of Opportunities
	 	 	9	 
	 

	 	Section 4.09.
	 	Indemnification
	 	 	12	 
	 

	 	Section 4.10.
	 	Non-Competition/Exclusivity
	 	 	13	 
	 

	 	Section 4.11.
	 	Management Fee; Workout and Restructuring Fee
	 	 	13	 
	 

	 	Section 4.12.
	 	Sourcing Fees
	 	 	13	 
	 

	 	Section 4.13.
	 	Potential Ashford Spinoff
	 	 	13	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE V INTENTIONALLY OMITTED	 	 	14	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE VI COVENANTS	 	 	14	 
	 

	 	Section 6.01.
	 	Confidentiality
	 	 	14	 
	 

	 	Section 6.02.
	 	Compliance with Law
	 	 	15	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE VII REPRESENTATIONS AND WARRANTIES OF PIM AND ASHFORD	 	 	16	 
	 

	 	Section 7.01.
	 	Representations
	 	 	16	 

-i-

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	 
	 	 	 	 	 	 	 	 
	ARTICLE VIII DISSOLUTION AND TERMINATION	 	 	16	 
	 

	 	Section 8.01.
	 	Termination
	 	 	16	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE IX MISCELLANEOUS	 	 	17	 
	 

	 	Section 9.01.
	 	Specific Performance; Other Rights
	 	 	17	 
	 

	 	Section 9.02.
	 	Notices
	 	 	17	 
	 

	 	Section 9.03.
	 	Prior Agreements; Construction; Entire Agreement
	 	 	18	 
	 

	 	Section 9.04.
	 	No Waiver
	 	 	19	 
	 

	 	Section 9.05.
	 	Amendments
	 	 	19	 
	 

	 	Section 9.06.
	 	Severability
	 	 	19	 
	 

	 	Section 9.07.
	 	Counterparts
	 	 	19	 
	 

	 	Section 9.08.
	 	Applicable Law; Jurisdiction
	 	 	19	 
	 

	 	Section 9.09.
	 	Waiver Of Jury Trial
	 	 	19	 
	 

	 	Section 9.10.
	 	Arbitration
	 	 	19	 
	 

	 	Section 9.11.
	 	No Rights of Third Parties
	 	 	20	 
	 

	 	Section 9.12.
	 	Further Assurances
	 	 	20	 
	 

	 	Section 9.13.
	 	Survival
	 	 	20	 
	 

	 	Section 9.14.
	 	Headings
	 	 	20	 
	 

	 	Section 9.15.
	 	No Broker
	 	 	20	 
	 

	 	Section 9.16.
	 	Currency
	 	 	20	 
	 

	 	Section 9.17.
	 	Attorneys’ Fees
	 	 	20	 
	 

	 	Section 9.18.
	 	REOC Compliance
	 	 	20	 

	 	 	 
	Exhibits	 	 
	 
	 	 
	Exhibit A
	 	Form of Subsidiary Agreement
	 
	 	 
	Exhibit B
	 	Form of Master Venture Agreement
	 
	 	 
	Exhibit C
	 	Investment Criteria
	 
	 	 
	Exhibit D
	 	Preliminary Package Materials
	 
	 	 
	Exhibit E
	 	Form of Preliminary Approval Notice
	 
	 	 
	Exhibit F
	 	Full Package Materials
	 
	 	 
	Exhibit G
	 	Form of Approval Notice
	 
	 	 
	Exhibit H
	 	Qualifying Investments For Purposes of Section 8.01
	 
	 	 
	Exhibit I
	 	Form of Loan Servicing Agreement

-ii-

 

INVESTMENT PROGRAM AGREEMENT

     This INVESTMENT PROGRAM AGREEMENT (the “Agreement”), is made and entered into to be
effective for all purposes as of January 22, 2008, by and between Prudential Investment Management,
Inc., a Delaware corporation (together with its successors and assigns, collectively,
“PIM”) and Ashford Hospitality Finance LP, a Delaware limited partnership
(“Ashford”). All capitalized terms used in this Agreement which are not otherwise defined
have the meanings set forth in Article I.

WITNESSETH:

     WHEREAS, Ashford is presently acquiring, owning, managing, operating, financing, mortgaging,
encumbering, exchanging, selling, repairing, disposing or otherwise dealing with Qualifying
Investments (as such term is defined in Article I hereof);

     WHEREAS, Ashford and PIM have agreed to establish an exclusive investment program (the
“Program”) between one (1) or more investors advised by PREI (as hereinafter defined) or
PIM (each, a “PIM Investor” and collectively the “PIM Investors”) and Ashford.
Under the Program, the PIM Investors will provide in the aggregate up to $300,000,000 in capital to
acquire Investments (as such term is defined in Article I hereof), and Ashford will provide in the
aggregate up to $100,000,000 in capital to acquire such Investments, as more particularly provided
in this Agreement;

     WHEREAS, each PIM Investor and Ashford will form a master joint venture between such PIM
Investor and Ashford (the “Master Venture”), which in turn will form separate limited
liability companies (each, a “Subsidiary”) to acquire Investments; and

     WHEREAS, this Agreement is being entered into by PIM and Ashford to govern the affairs of the
Program; and

     WHEREAS, PIM will perform its obligations under this Agreement through Prudential Real Estate
Investors (“PREI”).

     NOW, THEREFORE, in consideration of the premises and the mutual promises and covenants
contained in this Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

ARTICLE I

DEFINITIONS

     Section 1.01. Definitions. As used in this Agreement, the following terms shall have the
following meanings:

 

 

     “Accepted Loan Servicing Practices” for each Master Venture Agreement and applicable
Investment, shall have the meaning set forth in such Master Venture Agreement.

     “Acquisition Opportunity” shall have the meaning set forth in Section 4.08(a)
hereof.

     “Active” shall mean, with respect to an Acquisition Opportunity, Qualifying Investment
or Pipeline Transaction, that the PIM Program Representative has not eliminated the Acquisition
Opportunity, Qualifying Investment or Pipeline Transaction from consideration.

     “Affiliate” shall mean, when used with reference to a specified Person, (i) any Person
that directly or indirectly, through one or more intermediaries, Controls or is Controlled by or is
under common Control with the specified Person; (ii) any Person who, from time to time, is a spouse
or immediate relative of a specified Person; or (iii) any Person who, directly or indirectly, is
the beneficial owner of ten percent (10%) or more of any class of equity securities or other
ownership interests of the specified Person, or of which the specified Person is directly or
indirectly the owner of ten percent (10%) or more of any class of equity securities or other
ownership interests.

     “Agreement” shall mean this Investment Program Agreement as originally executed and as
amended, supplemented or restated from time to time.

     “Ashford Capital Commitment” shall have the meaning set forth in Section
3.01(c) hereof.

     “Assets” shall mean the assets and property, whether tangible or intangible and
whether real, personal, or mixed, at any time owned by or held, directly or indirectly, by or for
the benefit of one or more of the Subsidiaries, including any Investments, and all right, title,
and interest, if any, held and owned, directly or indirectly, by a Master Venture, but excluding
any and all rights to the name “Ashford,” and all variations thereof and all associated goodwill,
which shall be deemed the exclusive property of Ashford.

     “Business Day” shall mean each day other than a Saturday, Sunday or any other day on
which banking institutions in the State of New York are authorized or obligated by law or executive
order to be closed.

     “Capital Call”, for a Master Venture Agreement, shall have the meaning set forth in
such Master Venture Agreement.

     “Capital Call Notice”, for a Master Venture Agreement, shall have the meaning set
forth in such Master Venture Agreement.

     “Capital Commitments” shall have the meaning set forth in Section 3.01(c)
hereof.

     “Change in Control” shall mean such time as there is (a) the acquisition of ownership,
directly or indirectly, beneficially or of record, by any Person or group (within the meaning of
the Securities Exchange Act of 1934 and the rules of the Securities and Exchange Commission
thereunder as in effect on the date hereof), of equity interests representing more than 50% of the

2

 

aggregate ordinary voting power represented by the issued and outstanding equity interests of
Ashford; or (b) occupation of a majority of the seats (other than vacant seats) on the board
of directors of Ashford by Persons who were not directors as of the date of this Agreement, other
than Persons either (i) nominated by the board of directors of Ashford as constituted as of the
date of this Agreement or (ii) appointed by directors so nominated.

     “Code” shall mean the Internal Revenue Code of 1986, as amended (or any corresponding
provision of succeeding law).

     “Control” (including the terms “Controlling,” “Controlled by” and
“under common Control with”) shall mean the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.

     “Duty Breach” shall mean a breach of any material obligation under this Agreement
(including, but not limited to, Sections 4.09, 4.11, or 4.12), any Subsidiary
Agreement or any Master Venture Agreement, which remains uncured for a period of at least thirty
(30) days after receipt of notice of such breach, provided, that if such breach can be cured but is
not reasonably capable of being cured within such thirty (30)-day period, such longer period of
time as is necessary to cure such breach but in no event in excess of a total of seventy-five (75)
days. A failure to make a capital contribution shall not be considered a Duty Breach.

     “Funding Date”, for a Master Venture Agreement, shall have the meaning set forth in
such Master Venture Agreement.

     “including” shall mean “including, without limitation,”.

     “Initial Term” shall have the meaning set forth in Section 2.03 hereof.

     “Investment” shall mean, as applicable, the Closing of a Qualifying Investment by a
Master Venture or a Subsidiary during the term of this Agreement and the Qualifying Investment
thereby acquired.

     “Investment Criteria” has the meaning ascribed to it in Exhibit C hereof.

     “Investment Documents” shall mean the documents evidencing, securing and governing
Investments in form and substance approved by PIM.

     “IRS” shall mean the United States Internal Revenue Service.

     “Loan Servicing Agreement” shall mean, with respect to a Master Venture Agreement,
that certain Loan Servicing Agreement substantially in the form attached to this Agreement as
Exhibit I entered into between the applicable Master Venture and Ashford, as it may be
amended from time to time, and applicable to the Investments held directly or indirectly by such
Master Venture.

3

 

     “Major Uncured Breach”, for a Master Venture Agreement, shall mean (i) a Duty Breach,
or (ii) a Change in Control of Ashford.

     “Master Venture” shall have the meaning set forth in the recitals hereof.

     “Master Venture Agreement” means each Limited Liability Company Agreement,
substantially in the form of Exhibit B to this Agreement, by and between each PIM Investor
and Ashford as each of the foregoing may be amended from time to time.

     “Master Venture Expenses”, for a Master Venture, shall mean the reasonable,
out-of-pocket third party costs of operating such Master Venture as described in the applicable
Master Venture Agreement and referred to therein as the “Company Expenses”.

     “Person” shall mean any individual, partnership, corporation, limited liability
company, joint venture, association, trust, unincorporated organization or other governmental or
legal entity.

     “PIM Capital Commitment” shall have the meaning set forth in Section 3.01(a)
hereof.

     “PIM Investors” shall mean entities advised by, or otherwise affiliated with, PIM that
have been selected by PIM to acquire Investments directly or indirectly through one or more Master
Ventures.

     “Pipeline Transactions” shall have the meaning set forth in Section 4.08(g)
hereof.

     “Preliminary Approval” shall have the meaning set forth in Section 4.08(c)
hereof.

     “Preliminary Package” shall have the meaning set forth in Section 4.08(b)
hereof.

     “Prime Rate” shall mean the rate of interest published from time to time by The Wall
Street Journal, as the “prime rate.”

     “Program” shall have the meaning set forth in the recitals hereof.

     “Program Counsel” shall mean one or more attorneys (exclusive of internal counsel) or
law firms engaged from time to time by the Program Representatives.

     “Program Representative” shall mean one (1) representative for each of Ashford and PIM
who will review Qualifying Investments, as more particularly provided in Article 4.

     “Program Reimbursable Expenses” shall mean, without duplication, Master Venture
Expenses and the reasonable, out-of-pocket third party costs and expenses of Ashford and PIM
associated with identifying, underwriting, performing due diligence on and negotiating and closing
Qualifying Investments, including costs of travel for PIM and Ashford representatives and such
third parties, in each case for Qualifying Investments that have received Preliminary Approval and
to the extent not otherwise reimbursed to Ashford or PIM, as the case may be, including by a
borrower under a Qualifying
Investment; provided, however, that if a Qualifying

4

 

Investment shall
not be acquired by a Master Venture or a Subsidiary following Preliminary Approval of such
Qualifying Investment, “Program Reimbursable Expenses” for such Qualifying Investment shall include
only such expenses incurred from and after such time as PIM has granted its Preliminary Approval of
the applicable Qualifying Investment.

     “Proprietary Information” shall have the meaning set forth in Section 6.01(a)
hereof.

     “Qualifying Investment” shall have the meaning set forth in Section 4.08(a)
hereof.

     “Sourcing Fee”, under a Master Venture Agreement, shall have the meaning set forth in
such Master Venture Agreement.

     “Subsidiary” shall have the meaning set forth in the recitals hereof.

     “Subsidiary Agreement” shall mean the limited liability company agreement of a
particular Subsidiary, substantially in the form of Exhibit A to this Agreement, subject to
such changes as will not adversely affect the economic terms of such form but as may be necessary
or desirable for any one (1) or more Investors to address tax or other legal issues applicable to
any of them.

     “Term” shall have the meaning set forth in Section 2.03 hereof.

     “Unfunded Capital Commitment”, for a Master Venture, shall have the meaning set forth
in the applicable Master Venture Agreement.

ARTICLE II

PURPOSE

     Section 2.01. Places of Business. Ashford may locate its place or places of business at
any place or places as Ashford may from time to time determine and identify to PIM. Ashford’s
initial principal place of business shall be at 14185 Dallas Parkway, Suite 1100, Dallas, Texas
75254.

     Section 2.02. Purpose. The principal purposes of the Program shall be to identify
Qualifying Investments for the Master Ventures or their Subsidiaries to acquire, own, manage,
operate, finance, mortgage, encumber, exchange, sell, repair, dispose or otherwise deal with. The
business and purpose of the Program shall be limited to its principal purposes, unless the Program
Representatives otherwise determine by their unanimous vote.

     Section 2.03. Term. The term of this Agreement (the “Term”) commenced on the date
hereof and shall continue until the winding up of each Master Venture and/or Subsidiary and its
Investments, but in no event beyond the twentieth (20th) anniversary of the date hereof,
unless this Agreement is terminated sooner in accordance with the provisions of this Agreement.
The initial investment period under this Agreement will be two (2) years (the “Initial
Term”), unless this Agreement is terminated sooner in accordance with the provisions of this
Agreement.

5

 

     Section 2.04. No Liability to Ashford, PIM or the PIM Investors.

          (a) Except as otherwise required by law or the provisions of this Agreement or any Master
Venture Agreement or Subsidiary Agreement, none of Ashford, PIM, any PIM Investor or any Affiliate
of any of the foregoing or any Program Representative, nor any of the Program’s current or former
Affiliates, officers or agents, if any, shall be liable to the Program, any Master Venture or
Subsidiary or to each other for any debts, liabilities or obligations of the Program, whether
arising in contract, tort or otherwise, or for any action taken, or omitted to be taken, in good
faith and in a manner reasonably believed to be in, or not opposed to, the best interest of the
Program and, with respect to any criminal action or proceeding, for any action taken, or omitted to
be taken, with no reasonable cause to believe that the conduct was unlawful, in each case except to
the extent of the applicable party’s adjudicated fraud, gross negligence, willful misconduct,
criminal conduct (unless there was no reasonable cause to believe the criminal action taken or
omitted was unlawful) or to the extent such action taken or omitted to be taken constitutes a
material breach of any provision of this Agreement or other contract between such party and the
Program. Except as expressly set forth herein, none of Ashford, PIM, any PIM Investor or any
Affiliate of any of the foregoing shall have to make any contributions or deliver any letters of
credit, guaranties or other tangible property to any Subsidiary or Master Venture. Nothing in this
Agreement shall be construed to make Ashford or any PIM Investor liable for any losses or debts of
the Program, except to the extent of losses of their respective capital contributions to a
Subsidiary or the Master Venture pursuant to the terms of the applicable Subsidiary Agreement or
Master Venture Agreement.

          (b) No Affiliate or member of any of Ashford, PIM or any PIM Investor shall have personal
liability for the obligations of such person hereunder or otherwise, except as provided herein or
under applicable law or in a written agreement (including this Agreement, any Subsidiary Agreement
or any Master Venture Agreement), the parties to which include such Affiliate.

          (c) Nothing in this Agreement, and, without limiting the generality of the foregoing, in this
Section 2.04, expressed or implied, is intended or shall be construed to give to any
creditor of the Program, any Subsidiary or Master Venture or to any creditor of Ashford, PIM or any
PIM Investor or any creditor of any other Person whatsoever, other than Ashford, PIM and the
Program, any legal or equitable right, remedy or claim under or in respect of this Agreement or any
covenant, condition or provisions herein contained, and such provisions are and shall be held to be
for the sole and exclusive benefit of Ashford, PIM, any PIM Investor and the Program.

     Section 2.05. Other Business Activities of PIM and the PIM Investors. Subject to the
provisions of this Agreement, any Subsidiary Agreement or any Master Venture Agreement, including
the provisions of Section 6.01 hereof, PIM and the PIM Investors and their Affiliates may
have other business interests and may engage in other business ventures of any nature or
description whatsoever, whether presently existing or hereafter created, including, the
acquisition, development, ownership, administration, servicing, leasing, management, operation,
franchising, syndication, financing, refinancing and/or sale of real estate or real estate-related
investments and may compete, directly or indirectly, with the business of the Program. None of

6

 

PIM, the PIM Investors or their Affiliates shall incur any liability to the Program, Ashford, PIM
or any other PIM Investor as a result of the pursuit by such PIM Investor or its Affiliates of such
other business interests and ventures and competitive activity, and neither the Program nor
Ashford, PIM or any other PIM Investor shall have any right to participate in such other business
interests or ventures or to receive or share in any income derived therefrom.

     Section 2.06. Rights of PIM Investors. Ashford hereby acknowledges that each PIM Investor
that executes a Master Venture Agreement with Ashford is a third party beneficiary of all covenants
and obligations of Ashford and its Affiliates to the Program and PIM under this Agreement.

     Section 2.07. Other Business Activities of Ashford. Subject to the provisions of this
Agreement, any Subsidiary Agreement or any Master Venture Agreement, including the provisions of
Section 4.10 hereof, Ashford and its Affiliates may have other business interests and may
engage in other business ventures of any nature or description whatsoever, whether presently
existing or hereafter created, including, the development, ownership, leasing, management,
operation, franchising, syndication, financing, refinancing and/or sale of real estate any of which
may compete, directly or indirectly, with the business of the Program or any Subsidiary or any
member thereof. Neither Ashford nor its Affiliates shall incur any liability to the Program, PIM,
any PIM Investor, any Master Venture, any Subsidiary or any of its members or their Affiliates as a
result of the pursuit by Ashford or any of its Affiliates of such other real estate, business
interests or ventures, except as provided herein or in any Master Venture Agreement or Subsidiary
Agreement, and neither the Program, PIM, any PIM Investor, any Master Venture, any Subsidiary nor
any of its members nor their Affiliates shall have any right to participate in such other real
estate holdings, business interests or ventures or to receive or share in any income derived
therefrom except as provided herein or in any Master Venture Agreement or Subsidiary Agreement.

ARTICLE III

CAPITAL CONTRIBUTIONS

     Section 3.01. Capital Commitments.

          (a) During the Initial Term, PIM shall identify one or more PIM Investors to provide an
aggregate of up to $300 million (as outstanding, the “PIM Capital Commitment”) to acquire
Investments through various Subsidiaries. Each PIM Investor will contribute capital to its Master
Venture and/or applicable Subsidiary in accordance with its Master Venture Agreement and/or the
Subsidiary Agreement of the applicable Subsidiary.

          (b) In lieu of identifying a PIM Investor to fund a Capital Call, PIM, at its sole discretion,
may choose to utilize one or more credit facilities available to it to fund a Capital Call;
provided, however, that the use of such credit facilities shall not require or result in any
security interest, lien or other encumbrance upon the interests of PIM or any PIM Investor in any

7

 

Master Venture or Subsidiary. In the instance that PIM shall utilize a credit facility to fund an
Investment, such monies shall reduce PIM’s Unfunded Capital Commitment.

          (c) Ashford shall provide an aggregate of up to $100 million (the “Ashford Capital
Commitment” and together with the PIM Capital Commitment, the “Capital Commitments”) to
acquire Investments through various Subsidiaries. Ashford will contribute capital to the
applicable Master Venture and/or applicable Subsidiary in accordance with the applicable Master
Venture Agreement and/or the Subsidiary Agreement of the applicable Subsidiary.

          (d) PIM and Ashford shall contribute the capital required for each Investment on a
seventy-five percent (75%), twenty-five percent (25%) basis, respectively, as more particularly
provided in each Master Venture Agreement. Each PIM Investor’s equity shall be in a senior
position, while Ashford’s equity shall be in a first-loss position with respect to each individual
Investment, as more particularly provided in each Master Venture Agreement.

     Section 3.02. Capital Calls.

          (a) The Program Representatives shall make all capital calls on behalf of each Master Venture
and Subsidiary in accordance with the terms of the applicable Subsidiary Agreement and Master
Venture Agreement, each in the form attached hereto as Exhibits A and B respectively.

          (b) None of PIM or the PIM Investors shall be obligated to fund amounts requested by a Capital
Call (x) unless all actions of Ashford and its servicing agents permitted hereunder are materially
consistent with Accepted Loan Servicing Practices at the time of such Capital Call or (y) if, prior
to the Funding Date with respect to such Capital Call Notice, no Major Uncured Breach is in effect
with respect to the applicable Master Venture. Ashford shall not be obligated to fund amounts
requested by a Capital Call if, prior to the Funding Date with respect to such Capital Call Notice,
any Duty Breach by PIM or any PIM Investor is in effect.

ARTICLE IV

MANAGEMENT; INDEMNIFICATION

     Section 4.01. Management. Subject to the other terms of this Agreement and each Master
Venture Agreement, the business and affairs of the Program and of each Master Venture shall be
managed solely and exclusively by the Program Representatives.

     Section 4.02. No Assignment. No party hereto shall have the right, directly or indirectly,
by operation of law or otherwise, to assign, sell, pledge, mortgage, encumber or otherwise transfer
all or any portion of its right, title or interest under this Agreement, except to an entity under
common Control with such party and upon prior written notice to the other party. Any assignment,
sale, pledge, mortgage, encumbrance or other transfer prohibited hereunder shall be null and void.

8

 

     Section 4.03. Program Representatives. Each of PIM and Ashford shall appoint one (1)
person to serve as its Program Representative. PIM initially designates Jim Walker as its Program
Representative, and Ashford initially designates David Brooks as its Program Representative. No
action requiring the consent of both parties hereto or by the Program Representatives shall be
taken under this Agreement without the unanimous consent of the Program Representatives.

     Section 4.04. Removal of Program Representatives. PIM may remove its Program
Representative at any time and designate a replacement therefore upon delivery of written notice to
Ashford. Ashford may remove its Program Representative at any time and designate a replacement
therefore upon delivery of written notice to PIM.

     Section 4.05. Program Reimbursable Expenses. Ashford shall fund or bear all Program
Reimbursable Expenses. PIM shall reimburse Ashford for its pro rata share (based on the relative
Capital Commitments funded by PIM and Ashford) of all Program Reimbursable Expenses. Ashford shall
not be entitled to reimbursement for any other costs or expenses, including any general,
administrative or overhead expenses.

     Section 4.06. Program Acts. When the taking of Program action has been authorized pursuant
to Section 4.01, or as otherwise provided in this Agreement, any duly appointed agent of
the Program may execute any contract or other agreement or document consistent with such authorized
action, in the name and on behalf of the Program.

     Section 4.07. Compensation.

          (a) The Program Representatives shall serve in their capacities without compensation.

          (b) Each of PIM and Ashford shall bear their own costs and expenses associated with
negotiating and entering into this Agreement and each Master Venture Agreement.

          (c) All third party payments made to PIM, a PIM Investor, Ashford or any of their Affiliates
in connection with the business of the Program (exclusive of the fees expressly provided herein and
in Master Venture Agreements) shall be deemed to belong to the Program and shall be paid over by
the receiving party to the Program or applicable Master Venture.

     Section 4.08. Presentation of Opportunities.

          (a) During the Initial Term, the Program shall identify, investigate and analyze opportunities
for the Master Ventures or the Subsidiaries to acquire, own, finance, encumber, dispose of or
and/or otherwise deal with proposed, targeted investments meeting the Investment Criteria (as
reasonably determined by the Ashford Program Representative in good faith), including mezzanine
debt that is secured by a mortgage or a pledge of the ownership interests in the borrowing property
owner and other commercial loan investments (each, an “Acquisition Opportunity”). Each (i)
Acquisition Opportunity that meets the Investment Criteria (as agreed by the PIM Program
Representative in good faith) and (ii) other opportunity that fails

9

 

to meet the Investment Criteria
but for which the Investment Criteria shall have been waived by the PIM Program Representative,
shall be considered a “Qualifying Investment.” Ashford shall be responsible, on behalf of
the Program, for the identification, investigation and analysis of Acquisition Opportunities and
shall present all Acquisition Opportunities to the Program Representatives in accordance with the
terms of this Agreement. All Acquisition Opportunities and Qualifying Investments shall be for the
benefit of, and shall constitute proprietary information of, the Program, so long as they are
Active. Ashford shall comply in all material respects with all applicable laws in connection with
the identification of Acquisition Opportunities and Qualifying Investments and/or the closing of
Investments, including licensing laws.

          (b) Ashford shall present each Acquisition Opportunity to PIM by delivering to PIM all of the
materials set forth on Exhibit D hereto (collectively, a “Preliminary Package”).
Any Acquisition Opportunity that is generated on behalf of the Program by Ashford, or presented to
Ashford or any of its Affiliates, shall be presented by Ashford to the Program Representatives.
Any costs incurred by Ashford in identifying or underwriting, or that are otherwise associated
with, an Acquisition Opportunity, shall remain the sole cost and expense of Ashford and shall not
be considered a Program Reimbursable Expense, unless the applicable Preliminary Package is approved
by the PIM Program Representative as provided in Section 4.08(c).

          (c) The PIM Program Representative shall have five (5) Business Days after receipt by of a
Preliminary Package to determine if PIM wishes to proceed to full underwriting of the applicable
proposed Acquisition Opportunity (such a determination to proceed, “Preliminary Approval”).
If the PIM Program Representative grants Preliminary Approval, the PIM Program Representative
shall deliver to Ashford the Preliminary Approval Notice in the form of Exhibit E hereto,
which shall constitute the agreement of the PIM Program Representative that the proposed
Acquisition Opportunity meets the Investment Criteria or that any failure of the Acquisition
Opportunity to satisfy the Investment Criteria is waived. If the PIM Program Representative elects
not to grant Preliminary Approval or fails to notify Ashford
of its response within such five (5) Business Day period, then the PIM Program Representative
shall be deemed to have declined to proceed to full underwriting of the applicable proposed
Acquisition Opportunity, and Ashford shall have the right to proceed with the proposed Acquisition
Opportunity on its own. The PIM Program Representative shall provide Ashford with the reasons for
its affirmative rejection of any proposed Acquisition Opportunity.

          (d) Following delivery of the Preliminary Approval Notice, Ashford shall as promptly as
reasonably practicable deliver to the PIM Program Representative all of the materials set forth on
Exhibit F hereto (collectively, a “Full Package”). The PIM Program Representative
shall review each Full Package within ten (10) Business Days following receipt thereof. If the PIM
Program Representative elects not to seek or fails to obtain PIM Investment Committee approval of
the applicable proposed Qualifying Investment, or fails to notify Ashford of its response, within
such ten (10) Business Day period, then the PIM Program Representative shall be deemed to have
declined to proceed with respect to the applicable proposed Qualifying Investment, and Ashford
shall have the right to proceed with the proposed Qualifying Investment on its own.
Notwithstanding the foregoing, including the time periods set forth herein, PIM shall

10

 

use
commercially reasonable efforts to cause the PIM Program Representative and the PIM Investment
Committee to act as promptly as practicable in order to comply with time constraints that may be
applicable to specific Acquisition Opportunities. If the PIM Investment Committee approves the
making of an Investment, the PIM Program Representative shall deliver an approval notice in the
form of Exhibit G hereto (the “Approval Notice”) within such ten (10) Business Day
period. Any approval evidenced by an Approval Notice shall be subject to completion by PIM of
satisfactory due diligence and finalization of Investment Documents; provided, however, that
Investment Documents that are substantially in the same form as those previously approved by the
PIM Program Representative shall not require any further approval, except to the extent of any
substantive and material differences from the previously approved forms, but shall be provided to
the PIM Program Representative for confirmation of same no fewer than two (2) business days prior
to acquisition of the applicable Qualifying Investment. Ashford shall cooperate with PIM and
assist PIM in the completion of all due diligence desired by PIM and shall keep PIM informed as to
the status of negotiation and finalization of proposed Investment Documents. Without limiting the
foregoing, Ashford shall provide the PIM Program Representative first and final drafts of the
Investment Documents promptly following their circulation. If all such due diligence is reasonably
satisfactory to PIM and PIM approves the final Investment Documents, then PIM shall so notify
Ashford and shall authorize Ashford, acting on behalf of the Program, to cause the applicable
Qualifying Investment to be acquired by a Master Venture or a Subsidiary on terms consistent with
the PIM Investment Committee’s approval.

          (e) In the event that the PIM Investment Committee does not approve or is deemed not to
approve a proposed Qualifying Investment, then the Preliminary Package, Full Package and the
proposed Qualifying Investment presented therein shall be deemed rejected by the PIM Program
Representative and shall cease to be Active and Ashford shall have the right to proceed with the
proposed Qualifying Investment on its own behalf.

          (f) Intentionally omitted.

          (g) Ashford, on behalf of the Program, will deliver to PIM, periodically, a written report of
potential Acquisition Opportunities in process (the “Pipeline Transactions”). Upon PIM’s
request, Ashford will provide PIM with oral updates as to the identity and status of Pipeline
Transactions. PIM may elect to review any transaction on such report for the purpose of deciding
whether or not to eliminate such transaction from further consideration. Any such transaction that
PIM eliminates from further consideration because it does not fit within the Investment Criteria
shall not qualify as or be deemed a rejected transaction pursuant to Sections 8.01(c).

          (h) When a Qualifying Investment is approved for acquisition by the PIM Investment Committee,
PIM shall promptly (i) select (A) an existing Master Venture or (B) a new PIM Investor to form a
new Master Venture to consummate the Qualifying Investment and (ii) prepare to provide capital to
the Master Venture, all as more particularly provided in the applicable Master Venture Agreement
and Subsidiary Agreement. When a Qualifying Investment is ready for consummation, Ashford, on
behalf of the Program, shall notify PIM and PIM shall promptly cause the applicable PIM Investor
and Master Venture to (i) form a

11

 

Subsidiary to consummate the Qualifying Investment and (ii)
provide capital to such Subsidiary, all as more particularly provided in the applicable Master
Venture Agreement and Subsidiary Agreement. Such Master Venture or Subsidiary shall also assume
the obligation to reimburse Ashford for all Program Reimbursable Expenses that constitute Master
Venture Expenses in accordance with the terms of the applicable Master Venture Agreement or
Subsidiary Agreement.

          (i) Ashford shall perform its obligations under this Agreement in accordance with Accepted
Loan Servicing Practices.

          (j) Notwithstanding anything contained in this Section 4.08 to the contrary, if
Ashford shall determine, in its sole discretion, that the timing for any specific Acquisition
Opportunity is such that Ashford cannot submit the Acquisition Opportunity to PIM in accordance
with the terms hereof, Ashford shall be entitled to act upon such Acquisition Opportunity on its
own behalf; provided, however, that as soon as practicable following the acquisition of such
Acquisition Opportunity, Ashford shall present such Acquisition Opportunity to PIM on the same
terms as those terms upon with such Acquisition Opportunity was acquired by Ashford (subject to
reimbursement for any “Administration Costs” as defined in any applicable Master Venture
Agreement). In such event, all the other terms of this Section 4.08 shall apply as if such
investment were an Acquisition Opportunity hereunder.

     Section 4.09. Indemnification

          (a) Indemnification of Ashford. PIM, to the fullest extent permitted by applicable
law, shall indemnify, defend and hold Ashford and its Affiliates and their officers, directors,
members and employees harmless from and against any and all losses, claims, damages, expenses,
actions, judgments, suits (including, reasonable attorneys’ fees and disbursements and other
expenses incurred in connection with any amount paid in defense of and/or settlement of any action,
suit or proceeding or any claim asserted or threatened), liabilities, and judgments arising out of,
relating to, or caused by, PIM’s or any PIM Investor’s failure to perform any duty or obligation
arising hereunder, under a Master Venture Agreement
or under any Subsidiary Agreement or for any material misrepresentation or any material breach
of the representations, warranties or covenants hereunder, except to the extent such losses,
claims, damages, expenses, liabilities and judgments are caused by reason of bad faith, willful
misconduct, fraud, gross negligence, acting outside authority hereunder or a Major Uncured Breach
by Ashford (or its Affiliates) or failure by Ashford to materially perform its obligations under
Section 4.08 hereof.

          (b) Indemnification of PIM. Ashford, to the fullest extent permitted by applicable
law, shall indemnify, defend and hold PIM and its Affiliates and their officers, directors, members
and employees harmless from and against any and all losses, claims, damages, expenses, actions,
judgments, suits (including, reasonable attorneys’ fees and disbursements and other expenses
incurred in connection with any amount paid in defense of and/or settlement of any action, suit or
proceeding or any claim asserted or threatened), liabilities, and judgments arising out of,
relating to, or caused by, Ashford’s failure to perform any duty or obligation arising hereunder or
for any material misrepresentation or any material

12

 

breach of the representations, warranties or
covenants hereunder, except to the extent such losses, claims, damages, expenses, liabilities and
judgments are caused by reason of bad faith, willful misconduct, fraud, gross negligence, acting
outside authority hereunder or Major Uncured Breach by PIM (or its Affiliates) or failure by PIM
(or its Affiliates) to materially perform its obligations under Section 4.08 hereof.

          (c) Notwithstanding anything to the contrary set forth in this Agreement, Ashford and PIM each
waive (and PIM shall cause each PIM Investor to waive) any and all rights to allege or claim any
punitive, special, speculative and/or consequential damages.

     Section 4.10. Non-Competition/Exclusivity.

As a material inducement for PIM to enter into this Agreement and for the PIM Investors to enter
into the Master Venture Agreement and allow the Subsidiaries to be formed, Ashford covenants and
agrees with PIM and each PIM Investor during the Initial Term and prior to (i) the full funding of
the Ashford Capital Commitment to one or more Master Ventures or Subsidiaries or (ii) termination
of the Program pursuant to Section 8 hereof, that Ashford will not, other than through the
Program, a Master Venture or any Subsidiary, acquire, negotiate, own, administer, service, sell,
dispose of, or otherwise deal, directly or indirectly, with, any Acquisition Opportunities or
Qualifying Investments, in each case so long as they are Active, during the term of this Agreement;
provided, however, that nothing herein shall prevent Ashford from continuing to own, administer,
service, sell, finance, refinance, restructure, dispose of, or otherwise deal, directly or
indirectly, with, any investments or assets (i) owned by Ashford as of the date of this Agreement,
or (ii) acquired by Ashford in compliance with the terms of this Agreement after the date hereof.

     Section 4.11. Management Fee; Workout and Restructuring Fee. Ashford or any of its Affiliates shall be entitled to receive with respect to each Investment, a
Management Fee or a Workout Fee, each as defined in, and payable in accordance with, the provisions
of the applicable Loan Servicing Agreement.

     Section 4.12. Sourcing Fees. Ashford or any of its Affiliates in connection with the
sourcing of an Investment shall be entitled to receive for its own account the Sourcing Fee (as
defined in and in accordance with the provisions of the Master Venture Agreement) for such
Investment.

     Section 4.13. Potential Ashford Spinoff. If, during the term of this Agreement, Ashford
wishes to assign, sell or otherwise transfer, directly or indirectly, its interests in Investments
or other Assets through a public offering, private placement or similar combination transaction
(each, a “Spinoff”), Ashford shall deliver written notice of its intent to PIM. Such
notice shall include a statement of the complete terms and conditions of the proposed Spinoff.
PIM, acting on behalf of each PIM Investor, shall have the right, by written notice delivered to
Ashford within ten (10) days after receipt of the terms of the Spinoff and such additional
information as is reasonably requested by PIM in connection therewith, to participate in such
Spinoff by assigning, selling or otherwise transferring, directly or indirectly, all or any portion
of its interests in Investments, other Assets, the Master Ventures and/or the Subsidiaries on the

13

 

same terms and conditions on which Ashford participates. Alternatively, PIM, acting on behalf of
each PIM Investor, shall have the right, by written notice delivered to Ashford within ten (10)
days following receipt of the written notice referenced above in this Section and such additional
information as is reasonably requested by PIM in connection therewith, to elect to cause Ashford to
acquire all or any portion of its interests in the applicable Master Ventures and Subsidiaries for
an amount equal to the aggregate unreturned PIM Capital Commitment funded with respect to such
Investments, other Assets, Master Ventures and/or the Subsidiaries, plus all accrued, unpaid return
therein due under the applicable Master Venture Agreements. Any such acquisitions shall be
consummated pursuant to documents and instruments reasonably satisfactory to PIM and Ashford. If
PIM elects to participate in a Spinoff, and believes in good faith that the Spinoff could
materially decrease the value of the PIM Investors’ interests in any Investments, other Assets,
Master Venture and/or Subsidiary due to terms and conditions with respect to fees or any promote
payable to Ashford or any of its Affiliates in connection with the Spinoff or thereafter, or due to
the terms of any override in connection with the Spinoff or thereafter, then PIM may provide
written notice to Ashford within fifteen (15) days after the expiration of the ten (10) day period
referenced above, that it desires an appraiser to determine the decrease in value of such interests
that could result from such Spinoff. Within ten (10) days after the receipt of such request,
Ashford and PIM shall jointly agree on an appraiser to determine the amount, if any, of such
perceived decrease in value. If the appraiser shall determine that there would be a decrease in
value, Ashford shall pay to each applicable PIM Investor an amount equal to such decrease at
closing of the Spinoff as a condition to its authority to consummate such Spinoff. Any decisions
made by PIM under this Section 4.13 shall be binding on all PIM Investors and shall be
applied collectively to all Master Ventures and their underlying Subsidiaries.

ARTICLE V

INTENTIONALLY OMITTED

ARTICLE VI

COVENANTS

     Section 6.01. Confidentiality.

          (a) General. It is expected that PIM and Ashford will disclose to each other during
the term of this Agreement certain information which is confidential or proprietary and which may
include technology, products, trade secrets, processes, programs, technical know-how, customers,
distributors, costs, pricing, business operations and other business information, including the
Pipeline Transactions (“Proprietary Information”). All Proprietary Information owned
solely by one party, any Master Venture or any Subsidiary and disclosed to any other party shall
remain solely the property of the disclosing party, and its confidentiality shall be maintained and
protected by the party to whom the information was disclosed with the same degree of care used to
protect its own Proprietary Information of a similar nature; provided, however, that (i)
Acquisition Opportunities and Qualifying Investments that are Active shall be

14

 

deemed the property
of the Master Ventures or Subsidiaries as determined by PIM in its sole discretion unless this
Agreement has been terminated, (ii) Acquisition Opportunities and Qualifying Investments that are
no longer Active shall be deemed the property of Ashford, and (iii) client lists, financial and
analytical models, processes and procedures utilized or developed by Ashford in connection with the
business of the Program, any Master Venture or any Subsidiary shall be deemed the property of
Ashford, but only to the extent they are different than the client lists, models, processes and
procedures currently used by Affiliates of PIM. No Proprietary Information owned solely by one
party or by the Master Ventures or the Subsidiaries shall be used by the other party except in
furtherance of the terms and provisions of this Agreement. Except to the extent permitted under
this Agreement or as required by law or court order, the parties shall in all circumstances
exercise reasonable care not to allow to be published or disclosed the other party’s or the
Subsidiaries’ or Master Ventures’ Proprietary Information to any third party. Each party shall
advise its employees to whom the other party’s or the Subsidiaries’ or Master Ventures’ Proprietary
Information is disclosed of these obligations of confidentiality.

          (b) The parties agree that the following information shall not constitute Proprietary
Information under this Agreement:

          (i) information available from public sources at any time before or after it is
disclosed to a party hereto by the other party hereto;

          (ii) information obtained from a third party who obtained such information,
directly or indirectly, from a party other than a party to this Agreement; and

          (iii) information independently developed by the party against whom enforcement
of this provision is sought without the use of information provided by the party
seeking such enforcement.

          (c) Notwithstanding any provision of this Agreement to the contrary, any person (and each
employee, representative, or other agent of such person) may disclose to any and all other persons,
without limitation of any kind, (i) the tax treatment and tax structure of any transaction
contemplated or consummated pursuant to this Agreement, (ii) all materials of any kind (including
any opinions or other tax analysis) that are provided to such person relating to the tax treatment
and tax structure of any such transaction and (iii) any information required to be disclosed or
obtained by law or court order.

     Section 6.02. Compliance with Law. Ashford agrees to comply with all laws
applicable to it, including any and all state, federal and local licensing and anti-discrimination
laws, and to inform PIM as to how to cause each Master Venture or Subsidiary to comply with all
applicable licensing laws. Upon the request of the Program Representatives from time to time,
Ashford shall deliver to PIM evidence, which may include legal opinions from one (1) or more
counsel, reasonably satisfactory to PIM of its and each Master Venture’s or Subsidiary’s compliance
with all applicable licensing and similar laws.

15

 

ARTICLE VII

REPRESENTATIONS AND WARRANTIES OF PIM AND ASHFORD

     Section 7.01. Representations. PIM represents and warrants and covenants with Ashford and
Ashford represents and warrants to and covenants with PIM as follows:

          (a) Organization. It is duly organized, validly existing and in good standing under
the laws of its jurisdiction of formation with all requisite power and authority to enter into this
Agreement, to perform its obligations hereunder and to conduct the business of the Program and the
Subsidiaries.

          (b) Enforceability. This Agreement constitutes the legal, valid and binding
obligation of such party enforceable in accordance with its terms.

          (c) Consents and Authority. No consents or approvals are required from any
governmental authority or other Person for it to enter into this Agreement. All action on the part
of such party necessary for the authorization, execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby by such party, have been duly taken.

          (d) No Conflict. The execution and delivery of this Agreement by it and the
consummation of the transactions contemplated hereby by it do not conflict with or contravene the
provisions of its organizational documents or any agreement or instrument by which it or its
properties or assets are bound or any law, rule, regulation, order or decree to which it or its
properties or assets are subject.

          (e) Advisors. It has been afforded the opportunity to seek and rely upon the advice
of its own attorney, accountant or other professional advisor in connection with the execution of
this Agreement.

ARTICLE VIII

DISSOLUTION AND TERMINATION

     Section 8.01. Termination. This Agreement may be terminated by PIM or Ashford, in their
sole and absolute discretion, with respect to new Acquisition Opportunities upon the occurrence of
any of the following:

          (a) the expiration of the Initial Term as provided in Section 2.03, unless and to the
extent that the Initial Term is extended by mutual agreement of all the parties to this Agreement;

          (b) the unanimous election by PIM and Ashford to terminate the Program;

          (c) PIM does not elect to cause a PIM Investor to acquire, or votes to reject (or is deemed to
have rejected pursuant to Section 4.08(d)) the funding of three (3) or more

16

 

Acquisition
Opportunities or Qualifying Investments within any period of twelve (12) consecutive months, as
more particularly provided in Section 4.08, for a reason other than that a proposed
Acquisition Opportunity does not satisfy the requirements for becoming a Qualifying Investment
pursuant to Section 4.08(a); provided, however, that, the rejection of any one (1) or more
of the Qualifying Investments listed on Exhibit H hereto shall not constitute a rejection
for purposes of this item (c) above;

          (d) at any time on not less than ninety (90) days prior written notice to the other party; or

          (e) upon a Change in Control of Ashford.

Any termination under this Section shall be effective as of the date specified in the written
notice delivered by the terminating party to the other party.

ARTICLE IX

MISCELLANEOUS

     Section 9.01. Specific Performance; Other Rights. The parties recognize that various of
the rights granted under this Agreement are unique and, accordingly, the parties shall, in addition
to such other remedies as may be available to them at law or in equity, have the right to enforce
their rights under this Agreement by actions for injunctive relief and specific performance.

     Section 9.02. Notices. All notices or other communications required or permitted to be
given hereunder shall be in writing and shall be delivered by hand or sent, postage prepaid, by
registered, certified or express mail or reputable overnight courier service or by telecopier and
shall be deemed given when so delivered by hand or, if mailed, three days after mailing (one
business day in the case of express mail or overnight courier service), addressed as follows:

If to Ashford:

c/o Ashford Hospitality Trust

14185 Dallas Parkway

Suite 1100

Dallas, Texas 75254

Attention:  Douglas A. Kessler

Telephone: 972-490-9600

Facsimile:   972-980-2705

with simultaneous copies (which shall not constitute notice) to:

c/o Ashford Hospitality Trust

14185 Dallas Parkway

Suite 1100

17

 

Dallas, Texas 75254

Attention:  David A. Brooks

Telephone: 972-490-9600

Facsimile:   972-980-2705

and

Akin Gump Strauss Hauer & Feld LLP

1700 Pacific Avenue

Suite 4100

Dallas, TX 75201-4675

Attention:   Robert W. Dockery, Esq.

Telephone: (214) 969-4316

Facsimile:   (214) 969-4343

If to PIM:

c/o Prudential Investment Management, Inc.

8 Campus Drive

Parsippany, NJ 07054

Attention: Jim Walker

Telephone: (973) 683-1690

Facsimile:   (973) 683-1752

And

c/o PREI Law Department

8 Campus Drive

Parsippany, NJ 07054

Attention: Joan N. Hayden, Esq.

Telephone: (973) 683-1772

Facsimile:   (973) 683-1788

with a simultaneous copy (which shall not constitute notice) to:

Goodwin Procter LLP

Exchange Place

Boston, MA 02109

Attention: Minta E. Kay, Esq.

Telephone: (617) 570-1877

Facsimile:   (617) 523-1231

or to such other address, individual or electronic communication number as may be designated by
notice given by any party to the others.

     Section 9.03. Prior Agreements; Construction; Entire Agreement. This Agreement, including
the Exhibits and other documents referred to herein (which form a part hereof),

18

 

constitutes the
entire agreement of the parties with respect to the subject matter hereof, and supersedes all prior
agreements and understandings between them as to such subject matter and all such prior agreements
and understandings are merged herein and shall not survive the execution and delivery hereof. In
the event of any conflict between the provisions of this Agreement and those of any Master Ventures
Agreement, the provisions of the applicable Master Venture Agreement shall control.

     Section 9.04. No Waiver. The waiver of any breach of any term or condition of this
Agreement shall not operate as a waiver of any other breach of such term or condition or of any
other term or condition, nor shall any failure to enforce any provision hereof operate as a waiver
of such provision or of any other provision hereof.

     Section 9.05. Amendments. This Agreement may not be amended, altered or modified except
(i) upon the unanimous approval of the Program Representatives and (ii) by instrument in writing
and signed by each of PIM and Ashford.

     Section 9.06. Severability. If any provision of this Agreement shall be held or deemed by
a final order of a competent authority to be invalid, inoperative or unenforceable, such
circumstance shall not have the effect of rendering any other provision or provisions herein
contained invalid, inoperative or unenforceable, but this Agreement shall be construed as if such
invalid, inoperative or unenforceable provision had never been contained herein so as to give full
force and effect to the remaining such terms and provisions.

     Section 9.07. Counterparts. This Agreement may be executed in one or more counterparts,
all of which shall be considered one and the same agreement, and shall become effective when one or
more such counterparts have been signed by each of the parties and delivered to each of the other
parties.

     Section 9.08. Applicable Law; Jurisdiction. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York. The parties consent to the
exclusive jurisdiction of the United States District Court for the District of New York in
connection with any civil action concerning any controversy, dispute or claim arising out of or
relating to this Agreement, or any other agreement contemplated by, or otherwise with respect to,
this Agreement or the breach hereof, unless such
court would not have subject matter jurisdiction thereof, in which event the parties consent to the
jurisdiction of the state courts of the State of New York. The parties hereby waive and agree not
to assert in any litigation concerning this Agreement the doctrine of forum non-conveniens.

     Section 9.09. Waiver Of Jury Trial. THE PARTIES HERETO HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT
AND FOR ANY COUNTERCLAIM THEREIN.

     Section 9.10. Arbitration. Any unresolved dispute, question, disagreement, controversy or
claim arising from or relating to this Agreement or breach thereof that is to be settled by
arbitration shall be settled by arbitration in New York, New York, administered by the

19

 

American
Arbitration Association in accordance with its Commercial Arbitration Rules including the Emergency
Interim Relief Procedures, and judgment on the award rendered by the arbitrators may be entered in
any court having jurisdiction thereof. Except as may be required by law, neither a party nor an
arbitrator may disclose the existence, content or results of any arbitration hereunder without the
prior written consent of all parties.

     Section 9.11. No Rights of Third Parties. Except for the rights of the Persons referenced
in Sections 2.06 and 4.10 hereof, (i) this Agreement is made solely and
specifically between and for the benefit of the parties hereto and their respective members,
successors and assigns subject to the express provisions hereof relating to successors and assigns,
and (ii) no other Person whatsoever shall have any rights, interest, or claims hereunder or be
entitled to any benefits under or on account of this Agreement as a third party beneficiary or
otherwise.

     Section 9.12. Further Assurances. In connection with this Agreement, as well as all
transactions contemplated by this Agreement, PIM and Ashford agree to execute and deliver such
additional documents and instruments and to perform such additional acts as may be necessary or
appropriate to effectuate, carry out and perform all of the terms, provisions and conditions of
this Agreement, and all such transactions contemplated hereby.

     Section 9.13. Survival. The covenants contained in this Agreement which, by their terms,
require performance after the expiration or termination of this Agreement shall be enforceable
notwithstanding the expiration or other termination of this Agreement. 

     Section 9.14. Headings. Headings are included solely for convenience of reference and if
there is any conflict between headings and the text of this Agreement, the text shall control.

     Section 9.15. No Broker. Each of PIM and Ashford represent and warrant that it has not
dealt with any broker in connection with this Agreement and agrees to indemnify, defend and hold
harmless each other party hereto and its Affiliates from all claims or damages as a result of this
representation and warranty being false.

     Section 9.16. Currency. Any exchange of funds between PIM and Ashford shall be made in
United States dollars, including, any reimbursement or fees payable to PIM or Ashford. In
addition, all calculations pursuant to this Agreement and any Master Venture Agreement shall be
based on United States dollars.

     Section 9.17. Attorneys’ Fees. Should any litigation be commenced between the parties
hereto or their representatives, or should any party institute any proceeding in a bankruptcy or
similar court which has jurisdiction over any other party hereto or any or all of his or its
property or assets concerning any provision of this Agreement or the rights and duties of any
Person in relation thereto, the party or parties prevailing in such may be granted, a reasonable
sum as and for his or its or their attorneys’ fees and court and other costs in such matter, which
amount shall be determined by the judicial referee, a court in such litigation or in a separate
action brought for that purpose.

     Section 9.18. REOC Compliance. Ashford acknowledges that the ownership interest of PIM
Investor in each Master Venture and, indirectly, each Subsidiary is intended to qualify as

20

 

a real
estate investment for purposes of qualification by the owner of such interest as a “real estate
operating company” (“REOC”) within the meaning of U.S. Department of Labor Regulations
published at 29 C.F.R. Section 2510.3-101 (the “Plan Assets Regulation”), but only to the
extent the underlying Assets constitute an investment in real estate that is managed or developed
(within the meaning of the Plan Assets Regulation). With respect to such Assets, Ashford agrees
that it will, at all times, exercise its rights and authority under this Agreement in a manner that
is consistent with the foregoing intentions. Ashford shall not enter into any agreement delegating
to any person management rights with respect to any Investment other than agreements (i) that are
terminable by the Master Venture and/or Subsidiary on not more than one month’s notice without
penalty or cause and (ii) pursuant to which the Master Venture and/or Subsidiary maintains
substantial oversight and approval rights with respect to the delegated management functions. Any
such agreement must provide that it is fully subject to all, and in no way limits or abrogates any,
of PIM’s approval and other rights with respect to the Investment. Ashford and PIM hereby
acknowledge and agree that all rights of PIM in respect of the Master Venture Agreement, Subsidiary
and the Investment shall be exercised and enforced solely by PRISA III REIT Operating LP. Nothing
in the foregoing shall be deemed to limit the rights of the PIM Program Representative hereunder or
under the Master Venture Agreement. In the event the Investment is owned by an entity that is
owned, directly or indirectly, by the Master Venture or a Subsidiary, PIM shall have the same
rights with respect to the Investment as it would have hereunder were the Investment owned directly
by the Master Venture or the Subsidiary, and Ashford shall take
such actions, and/or cause any such entity to take such actions, as are necessary to achieve the
foregoing result.

[Remainder of page intentionally left blank.]

21

 

     IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of the date
first above written.

	 	 	 	 	 
	 	PRUDENTIAL INVESTMENT MANAGEMENT, INC., a Delaware
corporation

 	 
	 	By:  	/S/ JAMES P. WALKER
 	 
	 	 	Name:  	James P. Walker 	 
	 	 	Title:  	Vice President 	 
	 

	 	 	 	 	 
	 	ASHFORD HOSPITALITY FINANCE LP, a Delaware limited
partnership

 	 
	 	  	 	 
	 	By:  	Ashford Hospitality Finance General Partner 	 
	 	 	LLC, a Delaware limited liability company,
its general partner 	 
	 
	 	 	 
	 	By:  	                                                     /S/ DAVID BROOKS
 	 
	 	 	Name:  	David Brooks 	 
	 	 	Title:  	Vice President 	 

Signature Page to Investment Program Agreement

 

 

	 	 	 	 	 

EXHIBIT A

Form of Subsidiary Agreement

See attached

 

 

EXHIBIT B

Form of Master Venture Agreement

See attached

 

 

EXHIBIT C

Investment Criteria

	•	 	Target Returns: Overall Venture unlevered returns of 9% — 13+% yield on Venture equity with the
variance depending upon the relative risk/reward profile of the investment.
	 
	•	 	Investment Period: Each Venture will have an investment period of two years from closing of the
Venture.
	 
	•	 	Collateral: Participations in first mortgages, second mortgages, stock secured loans,
guarantees, preferred equity, or pledge of equity interests in Borrower’s collateral or other
collateral acceptable to the Members.
	 
	•	 	Collateral Asset Class: Single hotel assets, hotel portfolios, and preferred positions in hotel
entities. Full-service (branded and independent) hotels and resorts in upper-upscale to luxury
segments along with branded select service hotels in upscale and mid-scale segments. Extended stay
and economy assets may be considered if they constitute a minority position in a portfolio.
	 
	•	 	Location: Hotels located in the U.S.
	 
	•	 	Investment Size: Maximum single asset investment of $50 million (with typical range of $10 — $25
million) and up to $75 million for diversified portfolio.
	 
	•	 	Capital Stack Positioning: Typically a position in the capital structure within the 60% — 85%
LTV range based upon cost in the case of a new acquisition and Sponsor/Investor underwriting in the
case of assets already owned. Additional collateral support may allow for higher LTV positions.
	 
	•	 	Loan Maturity: Generally three to five years (including extensions) for floating rate loans,
whereas three to ten years for fixed rate. In select cases, maturities may be shorter,
particularly if loans are acquired, rather than originated. Floating rates will typically have at
least twelve month lockouts and fixed rates will be structured with either defeasance or yield
maintenance.
	 
	•	 	Debt Service Coverage: Assets will be at least 1.0x TTM coverage unless adequate collateral
support (reserves, guarantees, etc.) is provided.
	 
	•	 	REIT Compliance: Investments will comply with the REIT Compliance requirements in the
organizational documents of the Master Joint Ventures and Subsidiaries, unless otherwise approved
by Investor in its sole and absolute discretion.

 

 

EXHIBIT D

Preliminary Package Materials

     The following materials, as applicable for the specific Acquisition Opportunity, shall
constitute the Preliminary Package for such Acquisition Opportunity:

     1. an executive summary providing an overview of the Acquisition Opportunity and sources
and uses of funds;

     2. a description of the borrower or counterparty, including relevant experience;

     3. a description of the property or other collateral underlying the Acquisition
Opportunity;

     4. a summary of borrower’s strategy for the property, including capital plan;

     5. a summary of the key terms of the mezzanine loan or other debt investment;

     6. a summary of the key terms of any senior financing;

     7. an initial cash flow proforma with key assumptions and internal rate of return
calculation;

     8. a debt service analysis;

     9. an executive summary of any applicable hotel management agreement;

     10. a summary of all other material information relevant to the Acquisition Opportunity
(including any Ashford interest in a competing property);

     11. a description of transaction/investment structure and Ashford’s analysis of REIT
compliance and related REIT issues with respect to the structure and property; and

     12. a statement of Program Reimbursable Expenses incurred through the date of submission
of the Preliminary Package.

 

 

EXHIBIT E

Form of Preliminary Approval Notice

PRUDENTIAL INVESTMENT MANAGEMENT, INC.

[Date]

Ashford Hospitality Finance LP

c/o Ashford Hospitality Trust

14185 Dallas Parkway

Suite 1100

Dallas, Texas 75254

Attn: Douglass A. Kessler

     Re: Preliminary Approval Notice

Gentlemen:

     Reference is made to that certain Investment Program Agreement (the “Agreement”) dated
as of January 17, 2008 by and between Ashford Hospitality Finance LP (“Ashford”) and
Prudential Investment Management, Inc. (“PIM”). Capitalized terms used without definition
herein shall have the meanings set forth for such terms in the Agreement.

     PIM hereby acknowledges receipt of the Preliminary Package for the Acquisition Opportunity
more specifically described on Schedule I attached hereto. The undersigned, as the PIM
Program Representative, hereby delivers to Ashford this Preliminary Approval Notice with respect to
such Acquisition Opportunity. By its delivery hereof, the PIM Program Representative hereby
acknowledges that such Acquisition Opportunity meets the Investment Criteria or that any
non-compliance with the Investment Criteria is waived, and that in either event, such Acquisition
Opportunity is hereby deemed to be a Qualifying Investment. The PIM Program Representative hereby
requests that Ashford provide it with the Full Package with respect to such Qualifying Investment
for further consideration by the PIM Program Representative in accordance with the terms of the
Agreement.

	 	 	 	 	 
	 	Sincerely,

 	 
	 	 	 
	 	PIM Program Representative 	 

 

 

	 	 	 	 	 

EXHIBIT F

Full Package Materials

     The following materials, as applicable for the specific Qualifying Investment, shall
constitute the Full Package for such Qualifying Investment:

     1. an updated version of all items included in the Preliminary Package;

     2. historical operating information including 3 years of cash flow analysis and cap ex
history

     3. a fully developed 5 year pro forma with key assumptions and internal rate of return
calculation;

     4. a full market analysis with relevant STAR or comparable competitive report;

     5. a MAI appraisal;

     6. hotel management and licensing agreements;

     7. proposed terms of intercreditor agreement, any co-lender agreement, servicing agreement
or equivalent of any of the foregoing;

     8. financial statements for the borrower and any guarantors;

     9. survey and title information, to the extent available;

     10. third party environmental and property condition reports, to the extent available; and

     11. all other information relevant to the Qualifying Investment.

 

 

EXHIBIT G

Form of Approval Notice

PRUDENTIAL INVESTMENT MANAGEMENT, INC.

[Date]

Ashford Hospitality Finance LP

c/o Ashford Hospitality Trust

14185 Dallas Parkway

Suite 1100

Dallas, Texas 75254

Attn: Douglass A. Kessler

     Re: Approval Notice

Gentlemen:

     Reference is made to that certain Investment Program Agreement (the “Agreement”) dated
as of January 17, 2008 by and between Ashford Hospitality Finance LP (“Ashford”) and
Prudential Investment Management, Inc. (“PIM”). Capitalized terms used without definition
herein shall have the meanings set forth for such terms in the Agreement.

     PIM hereby acknowledges receipt of the Full Package for the Qualifying Investment more
specifically described on Schedule I attached hereto. The undersigned, as the PIM Program
Representative, hereby delivers to Ashford this Approval Notice with respect to such Qualifying
Investment.

	 	 	 	 	 
	 	Sincerely,

 	 
	 	 	 
	 	PIM Program Representative 	 

 

 

	 	 	 	 	 

EXHIBIT H

Qualifying Investments For Purposes of Section 8.01

Sofitel Portfolio

Peaks Telluride

Larkspur Landing Portfolio

Equity Inns Portfolio

Hotel La Jolla

Ritz-Carlton Key Biscayne

Tharaldson Portfolio

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