Document:

EX-10.18

 Exhibit 10.18 

ESSENTIAL PROPERTIES REALTY TRUST, INC. 

2018 INCENTIVE PLAN 
 I.
INTRODUCTION 
 1.1 Purposes. The purposes of the Essential Properties Realty Trust, Inc. 2018 Incentive Plan (this
“Plan”) are (i) to align the interests of the Company’s stockholders and the recipients of awards under this Plan by increasing the proprietary interest of such recipients in the Company’s growth and success,
(ii) to advance the interests of the Company by attracting and retaining Non-Employee Directors, officers, other employees and consultants and (iii) to motivate such persons to act in the long-term best interests of the Company and its stockholders. 
 1.2 Certain Definitions. 

“Agreement” shall mean the written or electronic agreement evidencing an award hereunder between the
Company and the recipient of such award. 
 “Board” shall mean the Board of Directors of the Company.

 “Certificate of Designation” shall mean a certificate of designation establishing the powers,
preferences, economic rights and conditions to vesting of a series of LTIP Units. 
 “Change in
Control” shall have the meaning set forth in Section 6.8(b). 

“Code” shall mean the Internal Revenue Code of 1986, as amended. 

“Committee” shall mean the Compensation Committee of the Board, or a subcommittee thereof, or such other
committee designated by the Board, in each case, consisting of two or more members of the Board, each of whom is intended to be (i) a “Non-Employee Director” within the meaning of Rule 16b-3 under the Exchange Act and (ii) “independent” within the meaning of the rules of the New York Stock Exchange or, if the Common Stock is not listed on the New York Stock Exchange, within the meaning
of the rules of the principal stock exchange on which the Common Stock is then traded. 
 “Common
Stock” shall mean the common stock, par value $0.01 per share, of the Company, and all rights appurtenant thereto. 

“Company” shall mean Essential Properties Realty Trust, Inc., a corporation organized under the laws of
the State of Maryland, or any successor thereto. 
 “Exchange Act” shall mean the Securities Exchange
Act of 1934, as amended. 
  

 “Fair Market Value” shall mean the closing transaction
price of a share of Common Stock as reported on the New York Stock Exchange on the date as of which such value is being determined or, if the Common Stock is not listed on the New York Stock Exchange, the closing transaction price of a share of
Common Stock on the principal national stock exchange on which the Common Stock is traded on the date as of which such value is being determined or, if there shall be no reported transactions for such date, on the next preceding date for which
transactions were reported; provided, however, that if the Common Stock is not listed on a national stock exchange or if Fair Market Value for any date cannot be so determined, Fair Market Value shall be determined by the Committee by
whatever means or method as the Committee, in the good faith exercise of its discretion, shall at such time deem appropriate and in compliance with Section 409A of the Code. 

“Free-Standing SAR” shall mean an SAR which is not granted in tandem with, or by reference to, an
option, which entitles the holder thereof to receive, upon exercise, shares of Common Stock (which may be Restricted Stock) or, to the extent set forth in the applicable Agreement, cash or a combination thereof, with an aggregate value equal to the
excess of the Fair Market Value of one share of Common Stock on the date of exercise over the base price of such SAR, multiplied by the number of such SARs which are exercised. 

“General Partner” means the general partner of the applicable OP. 

“Incentive Stock Option” shall mean an option to purchase shares of Common Stock that meets the
requirements of Section 422 of the Code, or any successor provision, which is intended by the Committee to constitute an Incentive Stock Option. 

“LTIP Unit” shall mean a long-term incentive plan interest in an OP created under an applicable
Partnership Agreement which, under certain conditions, is convertible into OP Units. 
 “LTIP Unit
Award” shall mean an award of LTIP Units under this Plan. 

“Non-Employee Director” shall mean any director of the Company
who is not an officer or employee of the Company or any Subsidiary. 
 “Nonqualified Stock Option”
shall mean an option to purchase shares of Common Stock which is not an Incentive Stock Option. 

“OP” means an operating partnership of the Company. 

“OP Unit” shall mean a unit of partnership interest in an OP. 

“Other Stock Award” shall mean an award granted pursuant to Section 3.4 of the
Plan. 
 “Partnership Agreement” shall mean the Partnership Agreement from the applicable OP, as same
may be amended or restated from time to time, including any Certificate of Designation establishing the powers, preferences, economic rights and conditions to vesting of a series of LTIP Units. 

  
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 “Performance Award” shall mean a right to receive payment
with respect to an award (including in the form of cash, Common Stock, or a combination of both), contingent upon the attainment of specified Performance Measures within a specified Performance Period. 

“Performance Measures” shall mean the criteria and objectives, established by the Committee, which shall
be satisfied or met (i) as a condition to the grant or exercisability of all or a portion of an option or SAR or (ii) during the applicable Restriction Period or Performance Period as a condition to the vesting of the holder’s
interest, in the case of a Restricted Stock Award, of the shares of Common Stock subject to such award, or, in the case of a Restricted Stock Unit Award, Other Stock Award, Performance Award, or LTIP Unit Award, to the holder’s receipt of the
shares of Common Stock subject to such award or of payment with respect to such award. The Performance Measures shall be those objectives established by the Committee as it deems appropriate, and which may be expressed in terms of (a) earnings
per share, (b) share price, (c) pre-tax profit, (d) net earnings, (e) earnings before interest, taxes, depreciation and amortization, (f) return on equity or assets, (g) revenues,
(h) normalized or other adjusted funds from operations in the aggregate or per share, (i) relative or absolute total stockholder return, (j) diversification, balance sheet or credit metrics or ratings, (k) a growth rate in any of
the foregoing, (l) any combination of the foregoing, or (m) such other goals as the Committee may determine. Performance Measures may be in respect of the performance of the Company and its Subsidiaries (which may be on a consolidated
basis), a Subsidiary, a division or other operating unit of the Company. Performance Measures may be absolute or relative and may be expressed in terms of a progression within a specified range. In establishing a Performance Measure or
determining the achievement of a Performance Measure, the Committee may provide that achievement of the applicable Performance Measures may be amended or adjusted to include or exclude objectively determinable components of any Performance Measure,
including, without limitation, foreign exchange gains and losses, asset writedowns, acquisitions and divestitures, change in fiscal year, unbudgeted capital expenditures, special charges such as restructuring or impairment charges, debt refinancing
costs, extraordinary or noncash items, unusual, infrequently occurring, nonrecurring or one-time events affecting the Company or its financial statements or changes in law or accounting principles. The
Committee shall determine the target levels of performance that must be achieved with respect to each criterion that is identified in a Performance Measure in order for a Performance Measure to be treated as attained in whole or in part. Performance
Measures shall be subject to such other special rules and conditions as the Committee may establish at any time. 

“Performance Period” shall mean any period designated by the Committee during which (i) the
Performance Measures applicable to an award shall be measured and (ii) the conditions to vesting applicable to an award shall remain in effect. 

“REIT” means a real estate investment trust within the meaning of Sections 856 through 860 of the Code.

  
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 “Restricted Stock” shall mean shares of Common Stock which
are subject to a Restriction Period and which may, in addition thereto, be subject to the attainment of specified Performance Measures within a specified Performance Period. 

“Restricted Stock Award” shall mean an award of Restricted Stock under this Plan. 

“Restricted Stock Unit” shall mean a right to receive one share of Common Stock or, in lieu thereof and
to the extent set forth in the applicable Agreement, the Fair Market Value of such share of Common Stock in cash, which shall be contingent upon the expiration of a specified Restriction Period and which may, in addition thereto, be contingent upon
the attainment of specified Performance Measures within a specified Performance Period. 
 “Restricted Stock Unit
Award” shall mean an award of Restricted Stock Units under this Plan. 
 “Restriction
Period” shall mean any period designated by the Committee during which (i) the Common Stock subject to a Restricted Stock Award may not be sold, transferred, assigned, pledged, hypothecated or otherwise encumbered or
disposed of, except as provided in this Plan or the Agreement relating to such award, or (ii) the conditions to vesting applicable to an award shall remain in effect. 

“SAR” shall mean a stock appreciation right which may be a
Free-Standing SAR or a Tandem SAR. 
 “Stock Award” shall mean
a Restricted Stock Award, Restricted Stock Unit Award or Other Stock Award. 
 “Subsidiary” shall mean
any corporation, limited liability company, partnership, joint venture or similar entity in which the Company owns, directly or indirectly, an equity interest possessing more than 50% of the combined voting power of the total outstanding equity
interests of such entity. 
 “Substitute Award” shall mean an award granted under this Plan
upon the assumption of, or in substitution for, outstanding equity awards previously granted by a company or other entity in connection with a corporate transaction, including a merger, combination, consolidation or acquisition of property or stock;
provided, however, that in no event shall the term “Substitute Award” be construed to refer to an award made in connection with the cancellation and repricing of an option or SAR.  

“Tandem SAR” shall mean an SAR which is granted in tandem with, or by reference to, an option (including
a Nonqualified Stock Option granted prior to the date of grant of the SAR), which entitles the holder thereof to receive, upon exercise of such SAR and surrender for cancellation of all or a portion of such option, shares of Common Stock (which may
be Restricted Stock) or, to the extent set forth in the applicable Agreement, cash or a combination thereof, with an aggregate value equal to the excess of the Fair Market Value of one share of Common Stock on the date of exercise over the base
price of such SAR, multiplied by the number of shares of Common Stock subject to such option, or portion thereof, which is surrendered. 

  
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 “Tax Date” shall have the meaning set forth in
Section 6.5. 
 “Ten Percent Holder” shall have the meaning set forth in
Section 2.1(a). 
 1.3 Administration. This Plan shall be administered by the Committee. Any one or a
combination of the following awards may be made under this Plan to eligible persons: (i) options to purchase shares of Common Stock in the form of Incentive Stock Options or Nonqualified Stock Options; (ii) SARs in the form of Tandem SARs
or Free-Standing SARs; (iii) Stock Awards in the form of Restricted Stock, Restricted Stock Units or Other Stock Awards; (iv) Performance Awards; and (v) LTIP Units. The Committee shall, subject
to the terms of this Plan, select eligible persons for participation in this Plan and determine the form, amount and timing of each award to such persons and, if applicable, the number of shares of Common Stock subject to an award, the number of
SARs, the number of Restricted Stock Units, the dollar value subject to a Performance Award, the number of LTIP Units, the purchase price or base price associated with the award, the time and conditions of exercise or settlement of the award and all
other terms and conditions of the award, including, without limitation, the form of the Agreement evidencing the award. The Committee may, in its sole discretion and for any reason at any time, take action such that (i) any or all outstanding
options and SARs shall become exercisable in part or in full, (ii) all or a portion of the Restriction Period applicable to any outstanding awards shall lapse, (iii) all or a portion of the Performance Period applicable to any outstanding
awards shall lapse and (iv) the Performance Measures (if any) applicable to any outstanding awards shall be deemed to be satisfied at the target, maximum or any other level. The Committee shall, subject to the terms of this Plan,
interpret this Plan and the application thereof, establish rules and regulations it deems necessary or desirable for the administration of this Plan and may impose, incidental to the grant of an award, conditions with respect to the award, such as
limiting competitive employment or other activities. All such interpretations, rules, regulations and conditions shall be conclusive and binding on all parties. 

The Committee may delegate some or all of its power and authority hereunder to the Board (or any members thereof) or, subject to applicable
law, to a subcommittee of the Board, a member of the Board, the Chief Executive Officer or other executive officer of the Company as the Committee deems appropriate; provided, however, that the Committee may not delegate its power and
authority to a member of the Board, the Chief Executive Officer or other executive officer of the Company with regard to the selection for participation in this Plan of an officer, director or other person subject to Section 16 of the Exchange
Act or decisions concerning the timing, pricing or amount of an award to such an officer, director or other person. 
 No member of the
Board or Committee, and neither the Chief Executive Officer nor any other executive officer to whom the Committee delegates any of its power and authority hereunder, shall be liable for any act, omission, interpretation, construction or
determination 

  
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made in connection with this Plan in good faith, and the members of the Board and the Committee and the Chief Executive Officer or other executive officer shall be entitled to indemnification and
reimbursement by the Company in respect of any claim, loss, damage or expense (including attorneys’ fees) arising therefrom to the full extent permitted by law (except as otherwise may be provided in the Company’s Certificate of
Incorporation and/or By-laws) and under any directors’ and officers’ liability insurance that may be in effect from time to time. 

1.4 Eligibility. Participants in this Plan shall consist of such officers, other employees,
Non-Employee Directors, and consultants of the Company and its Subsidiaries as the Committee in its sole discretion may select from time to time. The Committee’s selection of a person to participate in
this Plan at any time shall not require the Committee to select such person to participate in this Plan at any other time. Except as otherwise provided for in an Agreement, for purposes of this Plan, references to employment by the Company shall
also mean employment by a Subsidiary, and references to employment shall include service as a Non-Employee Director or consultant. The Committee shall determine, in its sole discretion, the extent to which a
participant shall be considered employed during an approved leave of absence. The aggregate value of cash compensation and the grant date fair value of shares of Common Stock and LTIP Units that may be awarded or granted during any fiscal year of
the Company to any Non-Employee Director shall not exceed $1,000,000. 
 1.5 Shares
Available. Subject to adjustment as provided in Section 6.7 and to all other limits set forth in this Plan, 3,550,000 shares of Common Stock shall initially be available for all awards under this Plan,
other than Substitute Awards. Subject to adjustment as provided in Section 6.7, no more than 3,550,000 shares of Common Stock in the aggregate may be issued under the Plan in connection with Incentive Stock Options.
To the extent the Company grants an award under the Plan, the number of shares of Common Stock that remain available for future grants under the Plan shall be reduced by an amount equal to the number of shares subject to such award. Each share of
Common Stock into which an LTIP Unit Award may become convertible shall be treated as one share of Common Stock for purposes of this Section 1.5. 

To the extent that shares of Common Stock subject to an outstanding award granted under the Plan, other than Substitute Awards, are not issued
or delivered by reason of (i) the expiration, termination, cancellation or forfeiture of such award (excluding shares subject to an option cancelled upon settlement in shares of a related Tandem SAR or shares subject to a Tandem SAR cancelled
upon exercise of a related option) or (ii) the settlement of such award in cash, then such shares of Common Stock shall again be available under this Plan. In addition, shares of Common Stock subject to an award under this Plan shall again be
available for issuance under this Plan if such shares are (x) shares that were subject to an option or stock-settled SAR and were not issued or delivered upon the net settlement or net exercise of such option or SAR or (y) shares delivered
to or withheld by the Company to pay the purchase price or the withholding taxes related to an outstanding award. Notwithstanding anything herein to the contrary, shares repurchased by the Company on the open market with the proceeds of an option
exercise shall not again be available under this Plan. 

  
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 The number of shares of Common Stock available for awards under this Plan shall not be reduced by
(i) the number of shares of Common Stock subject to Substitute Awards or (ii) available shares under a stockholder approved plan of a company or other entity which was a party to a corporate transaction with the Company (as appropriately
adjusted to reflect such corporate transaction) which become subject to awards granted under this Plan (subject to applicable stock exchange requirements). 

Shares of Common Stock to be delivered under this Plan shall be made available from authorized and unissued shares of Common Stock, or
authorized and issued shares of Common Stock reacquired and held as treasury shares or otherwise or a combination thereof. 
 II. STOCK
OPTIONS AND STOCK APPRECIATION RIGHTS 
 2.1 Stock Options. The Committee may, in its discretion, grant options to purchase shares
of Common Stock to such eligible persons as may be selected by the Committee. Each option, or portion thereof, that is not an Incentive Stock Option, shall be a Nonqualified Stock Option. To the extent that the aggregate Fair Market Value
(determined as of the date of grant) of shares of Common Stock with respect to which options designated as Incentive Stock Options are exercisable for the first time by a participant during any calendar year (under this Plan or any other plan of the
Company, or any parent or Subsidiary) exceeds the amount (currently $100,000) established by the Code, such options shall constitute Nonqualified Stock Options. 

Options shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with
the terms of this Plan, as the Committee shall deem advisable: 
 (a) Number of Shares and Purchase Price. The number of shares of
Common Stock subject to an option and the purchase price per share of Common Stock purchasable upon exercise of the option shall be determined by the Committee; provided, however, that the purchase price per share of Common Stock
purchasable upon exercise of an option shall not be less than 100% of the Fair Market Value of a share of Common Stock on the date of grant of such option; provided further, that if an Incentive Stock Option shall be granted to any
person who, at the time such option is granted, owns capital stock possessing more than 10 percent of the total combined voting power of all classes of capital stock of the Company (or of any parent or Subsidiary) (a “Ten Percent
Holder”), the purchase price per share of Common Stock shall not be less than the price (currently 110% of Fair Market Value) required by the Code in order to constitute an Incentive Stock Option. 

Notwithstanding the foregoing, in the case of an option that is a Substitute Award, the purchase price per share of the shares subject to such
option may be less than 100% of the Fair Market Value per share on the date of grant, provided, that the excess of: (a) the aggregate Fair Market Value (as of the date such Substitute Award is granted) of the shares subject to the Substitute
Award, over (b) the aggregate purchase price thereof does not exceed the excess of: (x) the aggregate fair market value (as of the time immediately preceding the transaction giving rise to the Substitute Award, such fair market value to be
determined by the Committee) of the shares of the predecessor company or other entity that were subject to the grant assumed or substituted for by the Company, over (y) the aggregate purchase price of such shares. 

  
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 (b) Option Period and Exercisability. The period during which an option may be exercised
shall be determined by the Committee; provided, however, that no option shall be exercised later than ten years after its date of grant; provided further, that if an Incentive Stock Option shall be granted to a Ten
Percent Holder, such option shall not be exercised later than five years after its date of grant. The Committee may, in its discretion, establish Performance Measures which shall be satisfied or met as a condition to the grant of an option or to the
exercisability of all or a portion of an option. The Committee shall determine whether an option shall become exercisable in cumulative or non-cumulative installments and in part or in full at any time. An
exercisable option, or portion thereof, may be exercised only with respect to whole shares of Common Stock. 
 (c) Method of Exercise.
An option may be exercised (i) by giving written notice to the Company specifying the number of whole shares of Common Stock to be purchased and accompanying such notice with payment therefor in full (or arrangement made for such payment to the
Company’s satisfaction) either (A) in cash, (B) by delivery (either actual delivery or by attestation procedures established by the Company) of shares of Common Stock having a Fair Market Value, determined as of the date of exercise,
equal to the aggregate purchase price payable by reason of such exercise, (C) authorizing the Company to withhold whole shares of Common Stock which would otherwise be delivered having an aggregate Fair Market Value, determined as of the date
of exercise, equal to the amount necessary to satisfy such obligation, (D) in cash by a broker-dealer acceptable to the Company to whom the participant has submitted an irrevocable notice of exercise or (E) a combination of (A), (B) and
(C), in each case to the extent set forth in the Agreement relating to the option, (ii) if applicable, by surrendering to the Company any Tandem SARs which are cancelled by reason of the exercise of the option and (iii) by executing such
documents as the Company may reasonably request. Any fraction of a share of Common Stock which would be required to pay such purchase price shall be disregarded and the remaining amount due shall be paid in cash by the participant. No shares of
Common Stock shall be issued and no certificate representing Common Stock shall be delivered until the full purchase price therefor and any withholding taxes thereon, as described in Section 6.5, have been paid (or
arrangement made for such payment to the Company’s satisfaction). 
 2.2 Stock Appreciation Rights. The Committee may, in its
discretion, grant SARs to such eligible persons as may be selected by the Committee. The Agreement relating to an SAR shall specify whether the SAR is a Tandem SAR or a Free-Standing SAR. 

SARs shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the
terms of this Plan, as the Committee shall deem advisable: 

  
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 (a) Number of SARs and Base Price. The number of SARs subject to an award shall be
determined by the Committee. Any Tandem SAR related to an Incentive Stock Option shall be granted at the same time that such Incentive Stock Option is granted. The base price of a Tandem SAR shall be the purchase price per share of Common Stock of
the related option. The base price of a Free-Standing SAR shall be determined by the Committee; provided, however, that such base price shall not be less than 100% of the Fair Market Value of a share of Common Stock on the date of
grant of such SAR (or, if earlier, the date of grant of the option for which the SAR is exchanged or substituted). 
 Notwithstanding the
foregoing, in the case of an SAR that is a Substitute Award, the base price per share of the shares subject to such SAR may be less than 100% of the Fair Market Value per share on the date of grant, provided, that the excess of: (a) the
aggregate Fair Market Value (as of the date such Substitute Award is granted) of the shares subject to the Substitute Award, over (b) the aggregate base price thereof does not exceed the excess of: (x) the aggregate fair market value (as
of the time immediately preceding the transaction giving rise to the Substitute Award, such fair market value to be determined by the Committee) of the shares of the predecessor company or other entity that were subject to the grant assumed or
substituted for by the Company, over (y) the aggregate base price of such shares. 
 (b) Exercise Period and Exercisability. The
period for the exercise of an SAR shall be determined by the Committee; provided, however, that (i) no Tandem SAR shall be exercised later than the expiration, cancellation, forfeiture or other termination of the related option
and (ii) no Free-Standing SAR shall be exercised later than ten years after its date of grant. The Committee may, in its discretion, establish Performance Measures which shall be satisfied or met as a condition to the grant of an SAR or to the
exercisability of all or a portion of an SAR. The Committee shall determine whether an SAR may be exercised in cumulative or non-cumulative installments and in part or in full at any time. An exercisable SAR,
or portion thereof, may be exercised, in the case of a Tandem SAR, only with respect to whole shares of Common Stock and, in the case of a Free-Standing SAR, only with respect to a whole number of SARs. If an
SAR is exercised for shares of Restricted Stock, a certificate or certificates representing such Restricted Stock shall be issued in accordance with Section 3.2(c), or such shares shall be transferred to the holder in book
entry form with restrictions on the shares duly noted, and the holder of such Restricted Stock shall have such rights of a stockholder of the Company as determined pursuant to Section 3.2(d). Prior to the exercise of a
stock-settled SAR, the holder of such SAR shall have no rights as a stockholder of the Company with respect to the shares of Common Stock subject to such SAR. 

(c) Method of Exercise. A Tandem SAR may be exercised (i) by giving written notice to the Company specifying the number of whole
SARs which are being exercised, (ii) by surrendering to the Company any options which are cancelled by reason of the exercise of the Tandem SAR and (iii) by executing such documents as the Company may reasonably request. A Free-Standing
SAR may be exercised (A) by giving written notice to the Company specifying the whole number of SARs which are being exercised and (B) by executing such documents as the Company may reasonably request. No shares of Common Stock shall be
issued and no certificate representing Common Stock shall be delivered until any withholding taxes thereon, as described in Section 6.5, have been paid (or arrangement made for such payment to the Company’s
satisfaction). 

  
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 2.3 Termination of Employment or Service. All of the terms relating to the exercise,
cancellation or other disposition of an option or SAR (i) upon a termination of employment with or service to the Company of the holder of such option or SAR, as the case may be, whether by reason of disability, retirement, death or any other
reason, or (ii) during a paid or unpaid leave of absence, shall be determined by the Committee and set forth in the applicable award Agreement. 

2.4 No Repricing. The Committee shall not, without the approval of the stockholders of the Company, (i) reduce the purchase
price or base price of any previously granted option or SAR, (ii) cancel any previously granted option or SAR in exchange for another option or SAR with a lower purchase price or base price or (iii) cancel any previously granted option or
SAR in exchange for cash or another award if the purchase price of such option or the base price of such SAR exceeds the Fair Market Value of a share of Common Stock on the date of such cancellation, in each case, other than in connection with a
Change in Control or the adjustment provisions set forth in Section 6.7. 
 2.5 No Dividend Equivalents.
Notwithstanding anything in an Agreement to the contrary, the holder of an option or SAR shall not be entitled to receive dividend equivalents with respect to the number of shares of Common Stock subject to such option or SAR. 

III. STOCK AWARDS 
 3.1
Stock Awards. The Committee may, in its discretion, grant Stock Awards to such eligible persons as may be selected by the Committee. The Agreement relating to a Stock Award shall specify whether the Stock Award is
a Restricted Stock Award, a Restricted Stock Unit Award or, in the case of an Other Stock Award, the type of award being granted. 
 3.2 Terms
of Restricted Stock Awards. Restricted Stock Awards shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of this Plan, as the Committee shall deem
advisable. 
 (a) Number of Shares and Other Terms. The number of shares of Common Stock subject to a Restricted Stock Award and the
Restriction Period, Performance Period (if any) and Performance Measures (if any) applicable to a Restricted Stock Award shall be determined by the Committee. 

(b) Vesting and Forfeiture. The Agreement relating to a Restricted Stock Award shall provide, in the manner determined by the Committee,
in its discretion, and subject to the provisions of this Plan, for the vesting of the shares of Common Stock subject to such award (i) if the holder of such award remains continuously in the employment of the Company during the specified
Restriction Period and (ii) if specified Performance Measures (if any) are satisfied or met during a specified Performance Period, and for the forfeiture of the shares of Common Stock subject to such award (x) if the holder of such award
does not remain continuously in the employment of the Company during the specified Restriction Period or (y) if specified Performance Measures (if any) are not satisfied or met during a specified Performance Period. 

  
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 (c) Stock Issuance. During the Restriction Period, the shares of Restricted Stock shall be
held by a custodian in book entry form with restrictions on such shares duly noted or, alternatively, a certificate or certificates representing a Restricted Stock Award shall be registered in the holder’s name and may bear a legend, in
addition to any legend which may be required pursuant to Section 6.6, indicating that the ownership of the shares of Common Stock represented by such certificate is subject to the restrictions, terms and conditions of this
Plan and the Agreement relating to the Restricted Stock Award. All such certificates shall be deposited with the Company, together with stock powers or other instruments of assignment (including a power of attorney), each endorsed in blank with a
guarantee of signature if deemed necessary or appropriate, which would permit transfer to the Company of all or a portion of the shares of Common Stock subject to the Restricted Stock Award in the event such award is forfeited in whole or in part.
Upon termination of any applicable Restriction Period (and the satisfaction or attainment of applicable Performance Measures), subject to the Company’s right to require payment of any taxes in accordance with
Section 6.5, the restrictions shall be removed from the requisite number of any shares of Common Stock that are held in book entry form, and all certificates evidencing ownership of the requisite number of shares of Common
Stock shall be delivered to the holder of such award. 
 (d) Rights with Respect to Restricted Stock Awards. Unless otherwise set
forth in the Agreement relating to a Restricted Stock Award, and subject to the terms and conditions of a Restricted Stock Award, the holder of such award shall have all rights as a stockholder of the Company, including, but not limited to, voting
rights, the right to receive dividends and the right to participate in any capital adjustment applicable to all holders of Common Stock; provided, however, that (i) a distribution with respect to shares of Common Stock, other than
a regular cash dividend, and (ii) a regular cash dividend with respect to shares of Common Stock that are subject to performance-based vesting conditions, in each case, shall be deposited with the Company and shall be subject to the same
restrictions as the shares of Common Stock with respect to which such distribution was made. 
 3.3 Terms of Restricted Stock Unit
Awards. Restricted Stock Unit Awards shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of this Plan, as the Committee shall deem advisable.

 (a) Number of Shares and Other Terms. The number of shares of Common Stock subject to a Restricted Stock Unit Award, including the
number of shares that are earned upon the attainment of any specified Performance Measures, and the Restriction Period, Performance Period (if any) and Performance Measures (if any) applicable to a Restricted Stock Unit Award shall be determined by
the Committee. 

  
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 (b) Vesting and Forfeiture. The Agreement relating to a Restricted Stock Unit Award shall
provide, in the manner determined by the Committee, in its discretion, and subject to the provisions of this Plan, for the vesting of such Restricted Stock Unit Award (i) if the holder of such award remains continuously in the employment of the
Company during the specified Restriction Period and (ii) if specified Performance Measures (if any) are satisfied or met during a specified Performance Period, and for the forfeiture of the shares of Common Stock subject to such award
(x) if the holder of such award does not remain continuously in the employment of the Company during the specified Restriction Period or (y) if specified Performance Measures (if any) are not satisfied or met during a specified Performance
Period. 
 (c) Settlement of Vested Restricted Stock Unit Awards. The Agreement relating to a Restricted Stock Unit Award shall
specify (i) whether such award may be settled in shares of Common Stock or cash or a combination thereof and (ii) whether the holder thereof shall be entitled to receive, on a current or deferred basis, dividend equivalents, and, if
determined by the Committee, interest on, or the deemed reinvestment of, any deferred dividend equivalents, with respect to the number of shares of Common Stock subject to such award. Any dividend equivalents with respect to Restricted Stock Units
that are subject to performance-based vesting conditions shall be subject to the same restrictions as such Restricted Stock Units. Prior to the settlement of a Restricted Stock Unit Award, the holder of such award shall have no rights as a
stockholder of the Company with respect to the shares of Common Stock subject to such award. 
 3.4 Other Stock Awards. Subject to
the limitations set forth in the Plan, the Committee is authorized to grant other awards that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, shares of Common Stock, including
without limitation shares of Common Stock granted as a bonus and not subject to any vesting conditions, dividend equivalents, deferred stock units, stock purchase rights and shares of Common Stock issued in lieu of obligations of the Company to pay
cash under any compensatory plan or arrangement, subject to such terms as shall be determined by the Committee. The Committee shall determine the terms and conditions of such awards, which may include the right to elective deferral thereof,
subject to such terms and conditions as the Committee may specify in its discretion. Any dividends or dividend equivalents with respect to Other Stock Awards that are subject to performance-based vesting conditions shall be subject to the same
restrictions as the Other Stock Awards. 
 3.5 Termination of Employment or Service. All of the terms relating to the
satisfaction of Performance Measures and the termination of the Restriction Period or Performance Period relating to a Stock Award, or any forfeiture and cancellation of such award (i) upon a termination of employment with or service to the
Company of the holder of such award, whether by reason of disability, retirement, death or any other reason, or (ii) during a paid or unpaid leave of absence, shall be determined by the Committee and set forth in the applicable award Agreement.  

  
 12 

 IV. PERFORMANCE AWARDS 

4.1 Performance Awards. The Committee may, in its discretion, grant Performance Awards to such eligible persons as may be selected by the
Committee. 
 4.2 Terms of Performance Awards. Performance Awards shall be subject to the following terms and conditions and
shall contain such additional terms and conditions, not inconsistent with the terms of this Plan, as the Committee shall deem advisable. 

(a) Value of Performance Awards and Performance Measures. The method of determining the value of the Performance Award and the
Performance Measures and Performance Period applicable to a Performance Award shall be determined by the Committee. 
 (b) Vesting and
Forfeiture. The Agreement relating to a Performance Award shall provide, in the manner determined by the Committee, in its discretion, and subject to the provisions of this Plan, for the vesting of such Performance Award if the specified
Performance Measures are satisfied or met during the specified Performance Period and for the forfeiture of such award if the specified Performance Measures are not satisfied or met during the specified Performance Period. 

(c) Settlement of Vested Performance Awards. The Agreement relating to a Performance Award shall specify whether such award may be
settled in shares of Common Stock (including shares of Restricted Stock) or cash or a combination thereof. If a Performance Award is settled in shares of Restricted Stock, such shares of Restricted Stock shall be issued to the holder in book entry
form or a certificate or certificates representing such Restricted Stock shall be issued in accordance with Section 3.2(c) and the holder of such Restricted Stock shall have such rights as a stockholder of the Company as
determined pursuant to Section 3.2(d). Any dividends or dividend equivalents with respect to a Performance Award shall be subject to the same restrictions as such Performance Award. Prior to the settlement of a Performance
Award in shares of Common Stock, including Restricted Stock, the holder of such award shall have no rights as a stockholder of the Company. 
 4.3
Termination of Employment or Service. All of the terms relating to the satisfaction of Performance Measures and the termination of the Performance Period relating to a Performance Award, or any forfeiture and cancellation of such award
(i) upon a termination of employment with or service to the Company of the holder of such award, whether by reason of disability, retirement, death or any other reason, or (ii) during a paid or unpaid leave of absence, shall be determined
by the Committee and set forth in the applicable award Agreement. 
 V. LTIP UNITS 

5.1 LTIP Units. Subject to the terms and provisions of the Plan, the Committee may grant LTIP Units to participants at any time and
from time to time and upon such terms and conditions as it may determine, including without limitation as an alternative to other awards. Each LTIP Unit under the Plan shall relate to a specified number of OP Units. LTIP Units shall be

  
 13 

 
convertible into OP Units once vested and in accordance with the other terms and conditions set forth in the applicable Partnership Agreement. OP Units into which LTIP Units are converted
shall be exchangeable, in whole or in part, for shares of Common Stock on a one-for-one basis or cash, as selected by the General Partner (or such other form of
consideration equivalent in value thereto as may be determined by the Committee in its sole discretion) at such time and on such terms as may be established by the Committee and in accordance with the applicable Partnership Agreement. 

5.2 Terms of LTIP Unit Awards. LTIP Unit Awards shall be subject to the following terms and conditions and shall contain such
additional terms and conditions, not inconsistent with the terms of this Plan, as the Committee shall deem advisable. 
 (a) Number of
LTIP Units and Other Terms. The number of LTIP Units subject to a LTIP Unit Award, including the number of LTIP Units that are earned upon the attainment of any specified Performance Measures, and the Restriction Period, Performance Period (if
any) and Performance Measures (if any) applicable to a LTIP Unit Award shall be determined by the Committee. 
 (b) Vesting and
Forfeiture. The Agreement relating to an LTIP Unit Award shall provide, in the manner determined by the Committee, in its discretion, and subject to the provisions of this Plan, for the vesting of such LTIP Unit Award if the specified
Performance Measures are satisfied or met during the specified Performance Period and for the forfeiture of such award if the specified Performance Measures are not satisfied or met during the specified Performance Period. A Participant to whom LTIP
Units are awarded shall have no rights as a holder of OP Units until such LTIP Units are converted into OP Units, and shall have no rights as a stockholder with respect to the shares of Common Stock for which such OP Units may be exchanged unless
and until so exchanged and shares are actually delivered to the participant in settlement thereof. The right to distributions with respect to the LTIP Units shall be determined as set forth in the LTIP Unit Award Agreement and the applicable
Partnership Agreement. 
 5.3 Termination of Employment or Service. All of the terms relating to the satisfaction of Performance
Measures and the termination of the Restriction Period or Performance Period relating to an LTIP Unit Award, or any forfeiture and cancellation of such award (i) upon a termination of employment with or service to the Company of the holder of
such award, whether by reason of disability, retirement, death or any other reason, or (ii) during a paid or unpaid leave of absence, shall be determined by the Committee and set forth in the applicable award Agreement. 

VI. GENERAL 
 6.1
Effective Date and Term of Plan. This Plan shall be submitted to the stockholders of the Company for approval and, if approved, shall become effective
as of the date of such stockholder approval. This Plan shall terminate on the tenth anniversary of Board approval of the Plan, unless terminated earlier by the Board. Termination of this Plan shall not affect the terms or conditions of any award
granted prior to termination. Awards hereunder may be made at any time prior to the termination of this Plan, provided that no Incentive Stock Option may be granted later than ten years after the date on which the Plan was approved by the Board.

  
 14 

 6.2 Amendments. The Board may amend this Plan as it shall deem advisable; provided,
however, that no amendment to the Plan shall be effective without the approval of the Company’s stockholders if (i) stockholder approval is required by applicable law, rule or regulation, including any rule of the New York Stock
Exchange or any other stock exchange on which the Common Stock is then traded, (ii) such amendment seeks to modify Section 2.4 hereof or (iii) such amendment seeks to modify the director compensation limits set
forth in Section 1.4 hereof; provided further, that no amendment may materially impair the rights of a holder of an outstanding award without the consent of such holder. 

6.3 Agreement. Each award under this Plan shall be evidenced by an Agreement setting forth the terms and conditions applicable to such
award. No award shall be valid until an Agreement is executed by the Company and, to the extent required by the Company, executed or electronically accepted by the recipient of such award. Upon such execution or acceptance and delivery of the
Agreement to the Company within the time period specified by the Company, such award shall be effective as of the effective date set forth in the Agreement. 

6.4 Non-Transferability. No award shall be transferable other than by will, the laws of descent
and distribution or pursuant to beneficiary designation procedures approved by the Company or, to the extent expressly permitted in the Agreement relating to such award, to the holder’s family members, a trust or entity established by the
holder for estate planning purposes, a charitable organization designated by the holder or pursuant to a domestic relations order, in each case, without consideration. Except to the extent permitted by the foregoing sentence or the Agreement
relating to an award, each award may be exercised or settled during the holder’s lifetime only by the holder or the holder’s legal representative or similar person. Except as permitted by the second preceding sentence, no award may be
sold, transferred, assigned, pledged, hypothecated, encumbered or otherwise disposed of (whether by operation of law or otherwise) or be subject to execution, attachment or similar process. Upon any attempt to so sell, transfer, assign, pledge,
hypothecate, encumber or otherwise dispose of any award, such award and all rights thereunder shall immediately become null and void. 
 6.5 Tax
Withholding. The Company shall have the right to require, prior to the issuance or delivery of any shares of Common Stock or the payment of any cash pursuant to an award made hereunder, payment by the holder of such award of any federal,
state, local or other taxes which may be required to be withheld or paid in connection with such award. An Agreement may provide that (i) the Company shall withhold whole shares of Common Stock which would otherwise be delivered to a holder,
having an aggregate Fair Market Value determined as of the date the obligation to withhold or pay taxes arises in connection with an award (the “Tax Date”), or withhold an amount of cash which would otherwise be payable to a holder,
in the amount necessary to satisfy any such obligation or (ii) the holder may satisfy any such obligation by any of the following means: (A) a cash payment to the Company; (B) delivery (either actual delivery

  
 15 

 
or by attestation procedures established by the Company) to the Company of previously owned whole shares of Common Stock having an aggregate Fair Market Value, determined as of the Tax Date,
equal to the amount necessary to satisfy any such obligation; (C) authorizing the Company to withhold whole shares of Common Stock which would otherwise be delivered having an aggregate Fair Market Value, determined as of the Tax Date, or
withhold an amount of cash which would otherwise be payable to a holder, in either case equal to the amount necessary to satisfy any such obligation; (D) in the case of the exercise of an option, a cash payment by a broker-dealer acceptable to
the Company to whom the participant has submitted an irrevocable notice of exercise or (E) any combination of (A), (B) and (C), in each case to the extent set forth in the Agreement relating to the award. Shares of Common Stock to be delivered
or withheld may not have an aggregate Fair Market Value in excess of the amount determined by applying the minimum statutory withholding rate (or, if permitted by the Company, such other rate as will not cause adverse accounting consequences under
the accounting rules then in effect, and is permitted under applicable IRS withholding rules). Any fraction of a share of Common Stock which would be required to satisfy such an obligation shall be disregarded and the remaining amount due shall be
paid in cash by the holder. 
 6.6 Restrictions on Shares. Each award made hereunder shall be subject to the requirement that if at any
time the Company determines that the listing, registration or qualification of the shares of Common Stock subject to such award upon any securities exchange or under any law, or the consent or approval of any governmental body, or the taking of any
other action is necessary or desirable as a condition of, or in connection with, the delivery of shares thereunder, such shares shall not be delivered unless such listing, registration, qualification, consent, approval or other action shall have
been effected or obtained, free of any conditions not acceptable to the Company. The Company may require that certificates evidencing shares of Common Stock delivered pursuant to any award made hereunder bear a legend indicating that the sale,
transfer or other disposition thereof by the holder is prohibited except in compliance with the Securities Act of 1933, as amended, and the rules and regulations thereunder. 

6.7 Adjustment. In the event of any equity restructuring (within the meaning of Financial Accounting Standards Board Accounting Standards
Codification Topic 718, Compensation—Stock Compensation or any successor or replacement accounting standard) that causes the per share value of shares of Common Stock to change, such as a stock dividend, stock split, spinoff, rights offering or
recapitalization through an extraordinary cash dividend, the number and class of securities available under this Plan, the terms of each outstanding option and SAR (including the number and class of securities subject to each outstanding option or
SAR and the purchase price or base price per share), the terms of each outstanding Stock Award (including the number and class of securities subject thereto), the terms of each outstanding Performance Award (including the number and class of
securities subject thereto, if applicable) and the terms of each outstanding LTIP Unit Award, shall be appropriately adjusted by the Committee, such adjustments to be made in the case of outstanding options and SARs in accordance with
Section 409A of the Code. In the event of any other change in corporate capitalization, including a merger, consolidation, reorganization, or partial or complete liquidation of the Company, such equitable adjustments described in the foregoing
sentence may be made as determined to be appropriate and equitable by the Committee to prevent dilution or enlargement of rights of participants. In either case, the decision of the Committee regarding any such adjustment shall be final, binding and
conclusive. 

  
 16 

 6.8 Change in Control. 

(a) Subject to the terms of the applicable award Agreements, in the event of a “Change in Control,” the Board, as constituted prior
to the Change in Control, may, in its discretion: 
  

	 	(1)	require that (i) some or all outstanding options and SARs shall become exercisable in full or in part, either immediately or upon a subsequent termination of employment, (ii) the Restriction Period applicable
to some or all outstanding awards shall lapse in full or in part, either immediately or upon a subsequent termination of employment, (iii) the Performance Period applicable to some or all outstanding awards shall lapse in full or in part, and
(iv) the Performance Measures applicable to some or all outstanding awards shall be deemed to be satisfied at the target, maximum or any other level; 

  

	 	(2)	require that shares of capital stock of the corporation resulting from or succeeding to the business of the Company pursuant to such Change in Control, or a parent corporation thereof, be substituted for some or all of
the shares of Common Stock subject to an outstanding award, with an appropriate and equitable adjustment to such award as determined by the Board in accordance with Section 6.7; and/or 

 

	 	(3)	 require outstanding awards, in whole or in part, to be surrendered to the Company by the holder, and to be
immediately cancelled by the Company, and to provide for the holder to receive (i) a cash payment in an amount equal to (A) in the case of an option or an SAR, the aggregate number of shares of Common Stock then subject to the portion of
such option or SAR surrendered, whether or not vested or exercisable, multiplied by the excess, if any, of the Fair Market Value of a share of Common Stock as of the date of the Change in Control, over the purchase price or base price per share of
Common Stock subject to such option or SAR, (B) in the case of a Stock Award, LTIP Unit Award or a Performance Award denominated in shares of Common Stock, the number of shares of Common Stock subject to the portion of such award surrendered to
the extent the Performance Measures applicable to such award have been satisfied or are deemed satisfied pursuant to Section 6.8(a)(i), whether or not vested, multiplied by the Fair Market Value of a share of Common Stock
as of the date of the Change in Control, and (C) in the case of an Award denominated in cash, the value of the award then subject to the portion of such award surrendered to the extent the Performance Measures applicable to such award have been
satisfied or are deemed satisfied pursuant 

  
 17 

	 	
to Section 6.8(a)(i); (ii) shares of capital stock of the corporation resulting from or succeeding to the business of the Company pursuant to such Change in Control, or
a parent corporation thereof, having a fair market value not less than the amount determined under clause (i) above; or (iii) a combination of the payment of cash pursuant to clause (i) above and the issuance of shares pursuant to
clause (ii) above. 

 (b) For purposes of this Plan, a “Change in Control” shall be deemed to have
occurred if: 
  

	 	(1)	An acquisition (other than directly from the Company) of any voting securities of the Company (the “Voting Securities”) by any “Person” (having the meaning ascribed to such term in
Section 3(a)(9) of the Exchange Act, and as used in Sections 13(d) and 14(d) thereof, including a “group” as defined in Section 13(d)) immediately after which such Person has beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) (“Beneficial Ownership” and/or “Beneficially Owned”) of 50% or more of the combined voting power of the
Company’s then outstanding Voting Securities; provided, that in determining whether a Change in Control has occurred, Voting Securities which are acquired in a Non-Control Acquisition shall not
constitute an acquisition which would cause a Change in Control. For purposes of the Plan, the term “Non-Control Acquisition” shall mean an acquisition by (i) the Company or any
Subsidiary, (ii) an employee benefit plan (or a trust forming a part thereof) maintained by the Company or any Subsidiary, or (iii) any Person in connection with a Non-Control Transaction (as
hereinafter defined); 

  

	 	(2)	The individuals who, as of the Effective Date, are members of the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, that if the
election, or nomination for election by the Company’s stockholders, of any new director was approved by a vote of at least a majority of the Incumbent Board, such new director shall, for purposes of this clause (2), be considered a member of
the Incumbent Board; and provided, further, that no individual shall be considered a member of the Incumbent Board if such individual initially assumed office as a result of either an actual or threatened election contest (as described
in former Rule 14a-11 promulgated under the Exchange Act) (“Election Contest”) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the
Board (a “Proxy Contest”), including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest; 

  

  
 18 

	 	(3)	Consummation of a merger, consolidation or reorganization involving the Company, unless such transaction is a Non-Control Transaction. For purposes of the Plan, the term
“Non-Control Transaction” shall mean a merger, consolidation or reorganization of the Company in which: (i) the stockholders of the Company, immediately before such merger,
consolidation or reorganization, own, directly or indirectly immediately following such merger, consolidation or reorganization, at least 50% of the combined voting power of the voting securities of the corporation or entity resulting from such
merger, consolidation or reorganization (the “Surviving Company”) over which any Person has Beneficial Ownership in substantially the same proportion as their Beneficial Ownership of the Voting Securities immediately before such
merger, consolidation or reorganization; (ii) the individuals who were members of the Incumbent Board immediately prior to the execution of the agreement providing for such merger, consolidation or reorganization constitute at least a majority
of the members of the board of directors or equivalent body of the Surviving Company; and (iii) no Person (other than the Company, any Subsidiary, any employee benefit plan (or any trust forming a part thereof) maintained by the Company, the
Surviving Company or any Person who, immediately prior to such merger, consolidation or reorganization, had Beneficial Ownership of 50% or more of the then outstanding Voting Securities) has Beneficial Ownership of 50% or more of the combined voting
power of the Surviving Company’s then outstanding voting securities; 

  

	 	(4)	A complete liquidation or dissolution of the Company; or 

  

	 	(5)	The sale or other disposition of all or substantially all of the assets of the Company to any Person (other than a transfer to a Subsidiary). 

Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely because any Person (the “Subject Person”) acquired
Beneficial Ownership of more than the permitted amount of the outstanding Voting Securities as a result of the acquisition of Voting Securities by the Company which, by reducing the number of Voting Securities outstanding, increases the proportional
number of shares Beneficially Owned by the Subject Person; provided, that if a Change in Control would occur (but for the operation of this sentence) as a result of the acquisition of Voting Securities by the Company, and after such share
acquisition by the Company, the Subject Person becomes the Beneficial Owner of any additional Voting Securities which increases the percentage of the then outstanding Voting Securities Beneficially Owned by the Subject Person, then a Change in
Control shall occur. 
 Notwithstanding anything in the Plan to the contrary, with respect to any 409A Award, only to the extent necessary for such 409A
Award to comply with Section 409A of the Code, a Change in Control must constitute a change in the ownership or effective control of the Company, or in the ownership of a substantial portion of the assets of the Company, within the meaning of
Section 409A(a)(2)(A)(v) of the Code. 

  
 19 

 6.9 Deferrals. The Committee may determine that the delivery of shares of Common
Stock or the payment of cash, or a combination thereof, upon the settlement of all or a portion of any award made hereunder shall be deferred, or the Committee may, in its sole discretion, approve deferral elections made by holders of awards.
Deferrals shall be for such periods and upon such terms as the Committee may determine in its sole discretion, subject to the requirements of Section 409A of the Code. 

6.10 No Right of Participation, Employment or Service. Unless otherwise set forth in an
employment agreement, no person shall have any right to participate in this Plan. Neither this Plan nor any award made hereunder shall confer upon any person any right to continued employment by or service with the Company, any Subsidiary or any
affiliate of the Company or affect in any manner the right of the Company, any Subsidiary or any affiliate of the Company to terminate the employment or service of any person at any time without liability hereunder. 

6.11 Rights as Stockholder. No person shall have any right as a stockholder of the Company with respect to any shares of Common Stock or
other equity security of the Company which is subject to an award hereunder unless and until such person becomes a stockholder of record with respect to such shares of Common Stock or equity security. 

6.12 Designation of Beneficiary. To the extent permitted by the Company, a holder of an award may file with the Company a written
designation of one or more persons as such holder’s beneficiary or beneficiaries (both primary and contingent) in the event of the holder’s death or incapacity. To the extent an outstanding option or SAR granted hereunder is exercisable,
such beneficiary or beneficiaries shall be entitled to exercise such option or SAR pursuant to procedures prescribed by the Company. Each beneficiary designation shall become effective only when filed in writing with the Company during the
holder’s lifetime on a form prescribed by the Company. The spouse of a married holder domiciled in a community property jurisdiction shall join in any designation of a beneficiary other than such spouse. The filing with the Company of a new
beneficiary designation shall cancel all previously filed beneficiary designations. If a holder fails to designate a beneficiary, or if all designated beneficiaries of a holder predecease the holder, then each outstanding award held by such holder,
to the extent vested or exercisable, shall be payable to or may be exercised by such holder’s executor, administrator, legal representative or similar person. 

6.13 Awards Subject to Clawback. The awards granted under this Plan and any cash payment or shares of Common Stock delivered
pursuant to such an award are subject to forfeiture, recovery by the Company or other action pursuant to the applicable award Agreement or any clawback or recoupment policy which the Company may adopt from time to time, including without limitation
any such policy which the Company may be required to adopt under the Dodd-Frank Wall Street Reform and Consumer Protection Act and implementing rules and regulations thereunder, or as otherwise required by law. 

6.14 Governing Law. This Plan, each award hereunder and the related Agreement, and all determinations made and actions taken
pursuant thereto, to the extent not otherwise governed by the Code or the laws of the United States, shall be governed by the laws of the State of Maryland and construed in accordance therewith without giving effect to principles of conflicts of
laws. 

  
 20 

 6.15 Foreign Employees. Without amending this Plan, the Committee may grant awards to
eligible persons who are foreign nationals and/or reside outside of the United States on such terms and conditions different from those specified in this Plan as may in the judgment of the Committee be necessary or desirable to foster and promote
achievement of the purposes of this Plan and, in furtherance of such purposes the Committee may make such modifications, amendments, procedures, subplans and the like as may be necessary or advisable to comply with provisions of laws in other
countries or jurisdictions in which the Company or its Subsidiaries operates or has employees. 
 6.16 REIT Status. The Plan
shall be interpreted and construed in a manner consistent with the Company’s status as a REIT. No award shall be granted or awarded, and with respect to any award granted under the Plan, such award shall not vest, be exercisable or settled if,
in the discretion of the Committee, the grant, vesting, exercise or settlement of such award could impair the Company’s status as a REIT of result in a violation of the ownership limitations contained in the Company’s governance documents.

  
 21Exhibit 10.1

 

Execution Version

 

ENHANCED RETURN FUNDING PROGRAM AGREEMENT

 

AND

 

AMENDMENT NO. 1

 

TO THE

 

AMENDED AND RESTATED ADVISORY AGREEMENT

 

THIS ENHANCED RETURN FUNDING PROGRAM AGREEMENT AND AMENDMENT NO. 1 TO THE AMENDED AND RESTATED ADVISORY AGREEMENT (this “ERFP Agreement”) is dated and effective as of June 26, 2018 (the “Effective Date”) by and among ASHFORD HOSPITALITY TRUST, INC., a Maryland corporation (“Ashford Trust” or the “Company”), ASHFORD HOSPITALITY LIMITED PARTNERSHIP, a Delaware limited partnership (the “Operating Partnership”), ASHFORD TRS CORPORATION, a Delaware corporation (“ASHFORD TRS”), ASHFORD INC., a Maryland corporation (“Ashford Inc.”), and ASHFORD HOSPITALITY ADVISORS LLC, a Delaware limited liability company (“Ashford LLC” and, together with Ashford Inc., the “Advisor”), which is the operating company of Ashford Inc.  All capitalized terms appearing herein that are not otherwise defined shall have the meanings ascribed to them in the Amended and Restated Advisory Agreement dated and effective on June 10, 2015 by and among the parties hereto (as amended from time to time (including pursuant to this ERFP Agreement), the “Advisory Agreement”).

 

WHEREAS, Ashford Trust, through its interest in the Operating Partnership, is in the business of investing in the hospitality industry, including the acquiring, developing, owning, asset managing and disposing of hotels (for purposes hereof, unless the context otherwise requires, the term “Company” shall collectively include Ashford Trust and the Operating Partnership);

 

WHEREAS, the parties hereto entered into the Advisory Agreement, pursuant to which the Advisor agreed to perform certain advisory services identified in such agreement, on behalf of, and subject to the supervision of, the board of directors of Ashford Trust (the “Board of Directors”), in exchange for the compensation set forth therein;

 

WHEREAS, the Advisory Agreement provides for certain investments to be made from time to time by Ashford LLC to the Company;

 

WHEREAS, the Advisor, each TRS (as defined below) and the Company desire to (i) provide for and agree upon the terms and conditions with respect to Enhanced Return Investments (as defined below) that may be made by Ashford LLC to a TRS and (ii) amend the Advisory Agreement as set forth herein;

 

WHEREAS, the Advisor, each TRS and the Company intend for this ERFP Agreement to provide a continuing, long-term, mutually beneficial relationship between the parties (including by facilitating a potential increase in the number of hotel assets owned by the Operating

 

 

Partnership and a potential related increase in the aggregate fees payable to Advisor), and agree to act in good faith to renew or extend the term of this ERFP Agreement for so long as it continues to be in the best interest of each of the parties hereto; and

 

WHEREAS, the independent directors of each of the board of directors of Ashford Inc. and the Board of Directors have reviewed this ERFP Agreement and the terms and conditions set forth herein and have deemed this ERFP Agreement and such terms and conditions to be advisable and in the best interests of Ashford Inc. and the Company, respectively.

 

NOW, THEREFORE, in consideration of the mutual covenants set forth in this ERFP Agreement, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound hereby, the parties agree as follows:

 

ARTICLE I. DEFINITIONS

 

“Advisor” shall have the meaning set forth in the preamble.

 

“Advisory Agreement” shall have the meaning set forth in the preamble.

 

“Aggregate ERFP Amount” shall have the meaning set forth in Section 2.01(a).

 

“Applicable Two Year Period” shall have the meaning set forth in Section 2.02(a).

 

“Applicable TRS” shall have the meaning set forth in Section 2.01.

 

“Ashford Inc.” shall have the meaning set forth in the preamble.

 

“Ashford LLC” shall have the meaning set forth in the preamble.

 

“Ashford Services” shall mean Ashford Hospitality Services LLC.

 

“Ashford Trust” shall have the meaning set forth in the preamble.

 

“Board of Directors” shall have the meaning set forth in the recitals.

 

“Cash Threshold” shall have the meaning set forth in Section 2.03.

 

“Commitment Request Date” shall have the meaning set forth in Section 2.01(d).

 

“Company” shall have the meaning set forth in the preamble.

 

“Confirmation Notice” shall have the meaning set forth in Section 2.01(d).

 

“Default Notice” shall have the meaning set forth in Section 2.01(e).

 

“Defaulted Funding Amount” shall have the meaning set forth in Section 2.01(e).

 

2

 

“Disposition Replacement Event” shall have the meaning set forth in Section 2.02(b).

 

“Effective Date” shall have the meaning set forth in the preamble.

 

“Enhanced Return Hotel Asset” shall have the meaning set forth in Section 2.01.

 

“Enhanced Return Investment” shall have the meaning set forth in Section 2.01.

 

“Enhanced Return Investment Size” shall have the meaning set forth in Section 2.01(b).

 

“ERFP Agreement” shall have the meaning set forth in the preamble.

 

“FF&E” shall have the meaning set forth in Section 2.01.

 

“Initial Term” shall have the meaning set forth in Section 3.01.

 

“Operating Partnership” shall have the meaning set forth in the preamble.

 

“Previously Repaid Amounts” shall have the meaning set forth in Section 2.02(a).

 

“Renewal Term” shall have the meaning set forth in Section 3.01.

 

“Repayment” shall have the meaning set forth in Section 2.02(a).

 

“Repayment Event” shall have the meaning set forth in Section 2.02(a).

 

“Required FF&E Acquisition Date” shall have the meaning set forth in Section 2.01(c).

 

“TRS” shall mean (i) Ashford TRS and its subsidiaries or (ii) each of one or more to-be-specified taxable REIT subsidiaries (as defined in Section 856(l) of the Internal Revenue Code of 1986, as amended, as to the Company) of the Operating Partnership and, as to a to-be-specified taxable REIT subsidiary, each of its subsidiaries.

 

“Unrestricted Cash Balance” shall mean the unrestricted cash of Ashford LLC; provided, that any cash or working capital of Ashford Inc. or its other subsidiaries, including without limitation, Ashford Services, shall be included in the calculation of “Unrestricted Cash Balance” if such  funds have been contributed, transferred or loaned from Ashford LLC to Ashford Services or such other subsidiaries for the purpose of avoiding, hindering or delaying Ashford LLC’s obligations under this ERFP Agreement (it being understood that good faith loans or advances to, or investments in, Ashford Services’ or such other subsidiaries’ existing business or new services or other businesses, or the provision of working capital to Ashford Services or such other subsidiaries generally consistent with Ashford Services’ or such other subsidiaries past practices, shall not be deemed to have been made for the purpose of avoiding, hindering or delaying Ashford LLC’s obligations under this ERFP Agreement).

 

3

 

ARTICLE II. ENHANCED RETURN INVESTMENTS

 

Section 2.01                             Terms and Conditions of Enhanced Return Investments.  Subject to the terms and conditions of this ERFP Agreement, Ashford LLC hereby agrees to purchase and lease to TRS certain furniture, fixtures and equipment (“FF&E”) for use at (i) real property assets recommended by Ashford LLC for acquisition by the Operating Partnership or its subsidiaries (each an “Enhanced Return Hotel Asset”) or (ii) other real property assets owned by the Operating Partnership or its subsidiaries (each such FF&E acquisition pursuant to the foregoing clauses (i) and (ii), an “Enhanced Return Investment”), which investments shall be used (x) to facilitate the acquisition of Enhanced Return Hotel Assets by the Operating Partnership or its subsidiaries on the terms set forth herein and (y) by a TRS (any such TRS with respect to any such real property asset, an “Applicable TRS”). Ashford LLC shall grant the Applicable TRS the right to use the FF&E at any such real property asset leased by such Applicable TRS as contemplated by Section 2.06.

 

(a)                                 Aggregate Amount of ERFP Investments.  Subject to the terms and conditions of this ERFP Agreement, Ashford LLC agrees to make Enhanced Return Investments pursuant to this ERFP Agreement in an aggregate amount of fifty million dollars ($50,000,000) or, upon the further written agreement of both Ashford LLC and the Operating Partnership, an aggregate amount of up to one hundred million dollars ($100,000,000) (either of the foregoing, as the case may be, the “Aggregate ERFP Amount”).

 

(b)                                 Size of Each ERFP Investment.  Each Enhanced Return Investment shall be an amount equal to ten percent (10%) of the publicly disclosed purchase price of the applicable Enhanced Return Hotel Asset (excluding any net working capital and transferred FF&E reserves of such Enhanced Return Hotel Asset), on a per transaction basis; provided that, notwithstanding the foregoing, in the event that the acquisition of an Enhanced Return Hotel Asset is proposed to be made at a time at which, immediately prior to the consummation of such acquisition, there exists a Sold ERFP Asset Amount, then the Enhanced Return Investment shall be an amount equal to the product of (i) ten percent (10%) and (ii) the amount by which (A) the publicly disclosed purchase price of such Enhanced Return Hotel Asset (excluding any net working capital and transferred FF&E reserves of such Enhanced Return Hotel Asset) exceeds (B) the Sold ERFP Asset Amount (the amount determined pursuant to this Section 2.01(b), the”Enhanced Return Investment Size”).

 

(c)                                  Investment Form.  Enhanced Return Investments shall be made in the form of the acquisition by Ashford LLC of FF&E from an Applicable TRS or as directed by an Applicable TRS, and shall be funded by Ashford LLC on the date that the Operating Partnership or Applicable TRS reasonably requests such FF&E to be acquired; provided that Ashford Trust shall provide reasonable advance notice to Ashford LLC with respect to the proposed date of any acquisition of such FF&E by Ashford LLC and of the initial allocation of value of the FF&E proposed to be acquired; and provided further that any such acquisition of FF&E shall be made no later than 24 months from the date of acquisition of the applicable Enhanced Return Hotel Asset (and, in the event that FF&E has not been so acquired within such period, Ashford LLC shall have no further obligation to fund the acquisition of FF&E in respect of such Enhanced Return Hotel Asset hereunder) (the date of required acquisition of any FF&E as determined pursuant to this sentence, the “Required FF&E Acquisition Date”).  If any FF&E subject to this Section 2.01 is not initially purchased by Ashford LLC, the Operating Partnership or its subsidiaries or the Applicable

 

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TRS hereby agrees to transfer ownership of any such FF&E to Ashford LLC promptly upon acquisition or identification thereof, and thereafter such FF&E shall be deemed to be FF&E in respect of the applicable Enhanced Return Hotel Asset for all purposes hereunder.  The Applicable TRS and Ashford LLC hereby agree that in the event the Applicable TRS elects to cause Ashford LLC to acquire FF&E for use at any real property asset leased by the Applicable TRS other than the applicable Enhanced Return Hotel Asset, such real property asset (i) shall be leased by the Applicable TRS and (ii) shall not itself be considered an Enhanced Return Hotel Asset solely by virtue of the Applicable TRS having received funding from Ashford LLC attributable to its acquisition of any such FF&E.  For the avoidance of doubt, any FF&E acquired by Ashford LLC with respect to a particular Enhanced Return Hotel Asset must be used by the same Applicable TRS or a TRS that is in the same affiliated group, as defined in Section 1504(a) of the Internal Revenue Code of 1986, as amended, of the Applicable TRS that owns such particular Enhanced Return Hotel Asset.

 

(d)                                 Confirmation Notice.  No later than six weeks prior to the date that the Operating Partnership or its subsidiary reasonably expects to consummate the acquisition of an Enhanced Return Hotel Asset, the Operating Partnership shall notify Ashford LLC in writing (the date of such notice, the “Commitment Request Date”) of its request that Ashford LLC commit to fund the Enhanced Return Investment with respect to such acquisition, and the expected date of the closing of the acquisition of such Enhanced Return Hotel Asset.  Ashford LLC shall notify the Operating Partnership in writing no later than one week after the Commitment Request Date as to whether the conditions to funding set forth in Section 2.03(a) are satisfied as of the date of Ashford LLC’s notice (in the event such written notice confirms the funding conditions are satisfied as of the date of such notice, the “Confirmation Notice”).  During and after such one-week period, the Operating Partnership shall provide Ashford LLC with such additional information with respect to such Enhanced Return Hotel Asset as Ashford LLC may reasonably request.

 

(e)                                  Defaulted Funding.  In the event Ashford LLC delivers a Confirmation Notice and Ashford LLC thereafter fails to fund the acquisition of  FF&E on the Required FF&E Acquisition Date for any reason other than a failure, as of the Required FF&E Acquisition Date, of the conditions to funding described in Section 2.03(a)(i), Section 2.03(a)(ii) or Section 2.03(a)(iii) hereof (such unfunded Enhanced Return Investment, the “Defaulted Funding Amount”), then (i) the Operating Partnership shall promptly notify Ashford LLC in writing of its failure to fund (the “Default Notice”) and (ii)(A) in the event that  the acquisition of the applicable Enhanced Return Hotel Asset has been or is consummated by the Operating Partnership or its subsidiaries notwithstanding such funding failure, Ashford LLC shall pay to the Applicable TRS that leases the applicable Enhanced Return Hotel Asset an amount in cash equal to one hundred and twenty-five percent (125%) of the Defaulted Funding Amount (and Ashford LLC shall acquire the related FF&E as if Ashford LLC has made such Enhanced Return Investment in the amount of the Defaulted Funding Amount) or (B) in the event that the acquisition of the proposed Enhanced Return Hotel Asset is not consummated and the Operating Partnership or its subsidiaries forfeits its non-refundable deposit, Ashford LLC shall pay to the Applicable TRS that would have leased the proposed Enhanced Return Hotel Asset an amount in cash equal to one hundred and twenty-five percent (125%) of the sum of (a) the non-refundable deposit paid by the Operating Partnership or its subsidiaries with respect to such proposed Enhanced Return Hotel Asset and (b) the transaction expenses reasonably incurred and documented by the Operating Partnership and its subsidiaries in connection with such abandoned transaction.  From and after the date that is ninety

 

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(90) days after the date of the Default Notice, the Company shall have the right, in its sole discretion, without additional prior notice to the Advisor, to set off, take and pay over to the Applicable TRS any monies due and payable by the Company to the Advisor pursuant to this ERFP Agreement or the Advisory Agreement to satisfy the payment of all amounts due and payable by the Advisor to the Applicable TRS pursuant to the immediately preceding sentence and shall pay such amounts immediately to the Applicable TRS (provided that, for the avoidance of doubt, such right of setoff shall apply only if Ashford LLC (i) has delivered a Confirmation Notice, (ii) has failed to fund as of the applicable Required FF&E Acquisition Date and (iii) has not notified the Operating Partnership in writing and in good faith that its failure to fund was the result of the failure of the funding conditions set forth in Section 2.03(a)(i), Section 2.03(a)(ii) or Section 2.03(a)(iii)).  The Operating Partnership shall notify the Advisor in writing promptly after any exercise of setoff rights hereunder setting forth in reasonable detail the amounts so set off.  Upon  any such setoff in full of amounts owed by Ashford LLC to the Operating Partnership under Section 2.01(c) and if described in Section 2.01(e)(ii)(A), Ashford LLC shall acquire the related FF&E as if Ashford LLC has made such Enhanced Return Investment in the amount of the Defaulted Funding Amount.  The Applicable TRS’s rights set forth in this Section 2.01(e) shall be the sole and exclusive remedy of the Company or any of its subsidiaries for any losses resulting from any breach of this ERFP Agreement by the Advisor.

 

Section 2.02                             Repayment Events.

 

(a)                                 With respect to any acquisition of FF&E by Ashford LLC pursuant to this ERFP Agreement, if prior to the date that is two years after such acquisition (the “Applicable Two Year Period”), (i) the Company is subject to a Company Change of Control (as defined in the Advisory Agreement) or (ii) the Company or the Advisor terminates the Advisory Agreement and the Company is required to pay the Termination Fee thereunder (each of clauses (i) and (ii), a “Repayment Event”), the Operating Partnership shall pay to Ashford LLC an amount equal to one hundred percent (100%) of any Enhanced Return Investments actually funded by Ashford LLC during such Applicable Two Year Period (less any amount that the Applicable TRS has previously paid to purchase any such FF&E from Ashford LLC, if any (“Previously Repaid Amounts”)) and any amounts paid to or setoff by Applicable TRS pursuant to Section 2.01(e)(ii)(A) (provided that, with respect to amounts paid to or setoff by Applicable TRS pursuant to Section 2.01(e)(ii)(A), the Operating Partnership shall repay 100% of the Defaulted Funding Amount (and not the 125% thereof that was paid to or setoff by Applicable TRS)).  The amount payable by the Operating Partnership pursuant to this Section 2.02(a) is referred to herein as a “Repayment”).

 

(b)                                 If the Operating Partnership or its subsidiaries dispose of or cause to be disposed any Enhanced Return Hotel Asset or other real property with respect to which Ashford LLC owns FF&E, including by way of a foreclosure or deed-in-lieu of foreclosure by a mortgage or mezzanine lender of the Operating Partnership or its subsidiaries (a “Disposition Replacement Event”), Ashford Trust shall promptly identify, and Ashford LLC shall acquire in exchange for such FF&E, FF&E for use at another real property asset leased by the Applicable TRS and with a fair market value equal to the value of such FF&E as established in connection with such disposition.

 

(c)                                  Ashford LLC shall convey, at the time of payment by Operating Partnership under Section 2.02(a) or the time of a disposition under Section 2.02(b), all applicable FF&E to

 

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(i) with respect to Section 2.02(a), the Applicable TRS and (ii) with respect to Section 2.02(b), the particular transferee of such FF&E with respect to any Enhanced Return Hotel Asset or other real property asset, which conveyances by Ashford LLC shall be treated as a sale of such assets by Ashford LLC for income tax purposes.  The payments required under Section 2.02(a) shall be due and payable on the same date as the occurrence of a Company Change of Control or the termination of the Advisory Agreement,  whichever is applicable.

 

Section 2.03                             Suspension of Ashford LLC’s Obligations.

 

(a)                                 Notwithstanding anything to the contrary herein, Ashford LLC shall have no obligation to provide any Enhanced Return Investment in the event that (i) the Company or its subsidiaries has materially breached any provision of the Advisory Agreement or this ERFP Agreement (provided that the Company shall be entitled to cure any such breach prior to the applicable Required FF&E Acquisition Date),  (ii) any event or condition has occurred or is reasonably likely to occur which would give rise to a right of termination in favor of the Advisor under the Advisory Agreement or this ERFP Agreement, (iii) there would exist, immediately after such proposed Enhanced Return Investment,  a Sold ERFP Asset Amount, or (iv) (a) Ashford LLC’s Unrestricted Cash Balance is, after taking into account the cash amount anticipated to be required for the proposed Enhanced Return Investment, less than fifteen million dollars ($15,000,000) (the “Cash Threshold”) as of the last day immediately preceding the date a Confirmation Notice would otherwise be due or (b) Ashford LLC reasonably expects, in light of its then-anticipated contractual funding commitments (including amounts committed pursuant to Section 2.01(d) or otherwise committed hereunder but not yet paid) and cash flows, to have an Unrestricted Cash Balance that is less than the Cash Threshold immediately after the expected date of closing of the purchase of the Enhanced Return Hotel Asset; provided, however, with respect to calculating Unrestricted Cash Balance under subparagraph (iv), Ashford Inc. shall be obligated to include in such calculation amounts available to be drawn down under any credit agreement to which Ashford Inc. or its subsidiary, Ashford Hospitality Holdings LLC, is a party and to arrange to make any such amounts available to Ashford LLC under customary intercompany arrangements, if necessary, in order to meet Ashford LLC’s obligation to provide Enhanced Return Investments; provided, further, that Ashford Inc. and Ashford LLC shall not be so obligated if Ashford Inc. is unable to satisfy the conditions to funding contained in any such credit agreement as of such closing date or if Ashford Hospitality Holdings LLC or Ashford LLC is unable to satisfy the conditions to funding under its intercompany arrangements (it being understood and agreed that the covenants and events of default under such intercompany arrangements currently are, and with respect to any future intercompany agreements will be, substantially similar in all material respects to the covenants and events of default set forth in any such credit agreement to which Ashford Inc. or its subsidiary, Ashford Hospitality Holdings LLC, is a party).  In the event that Ashford LLC determines that it is not required to provide any Enhanced Return Investment as a result of Section 2.03(a)(iv), Ashford LLC shall promptly notify Operating Partnership thereof and, upon request,  shall provide to Operating Partnership reasonable access during reasonable business hours to Ashford LLC’s financial books and records for the purpose of confirming Ashford LLC’s determination that Unrestricted Cash Balance is less than the Cash Threshold as of the relevant time(s) (it being understood, however, that the Company’s offset right set forth in Section 2.01(e) shall apply only in the circumstances set forth in Section 2.01(e)).

 

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(b)                                 The parties hereto agree, in connection with any proposed renewal or extension of this ERFP Agreement, as applicable, or any material change in the Advisor’s business as it exists on the Effective Date, to negotiate in good faith with respect to the amount of the Cash Threshold, based on the growth and future strategic and financial position of Advisor.

 

Section 2.04                             Commencement and Termination of Ashford LLC’s Funding Obligations.

 

(a)                                 Unless otherwise agreed by the parties to this ERFP Agreement, Ashford LLC’s obligation to make Enhanced Return Investments pursuant to this ERFP Agreement shall not commence until the date that Advisor and its affiliates shall have received all lender consents required in connection with this ERFP Agreement.  If all such consents have not been received on or before July 30, 2018, this ERFP Agreement shall be deemed to have been void ab initio.

 

(b)                                 Unless otherwise agreed by the parties to this ERFP Agreement, in the event that the project management transaction contemplated by that certain Combination Agreement dated April 6, 2018, by and among the Advisor, Remington Holdings, L.P. and the other parties thereto is validly terminated in accordance with its terms, then (i) this ERFP Agreement shall be deemed to have been void ab initio, (ii) one hundred percent (100%) of any previously consummated Enhanced Return Investment shall be immediately due and payable by the Operating Partnership to Ashford LLC and (iii) upon receipt by Ashford LLC of the amount payable under the foregoing clause (ii),  any FF&E owned by Ashford LLC relating to such previously consummated Enhanced Return Investment shall be conveyed to the Applicable TRS.

 

Section 2.05                             Excluded Assets.  The following real property assets shall be ineligible to be the subject of an Enhanced Return Investment:  (i) assets owned by any joint venture; (ii) assets with respect to which all or substantially all reasonable and customary asset management or project management fees are not available; and (iii) assets that the Advisor has not recommended be purchased by the Company.

 

Section 2.06                             Use and Pledge of FF&E.  Ashford LLC shall grant the Applicable TRS the right to use the FF&E purchased by Ashford LLC pursuant to a rent-free lease for a period not to exceed 75% of the economic useful life of the FF&E and upon other mutually agreed terms including the filing by Ashford LLC of a precautionary UCC financing statement if deemed applicable in the sole discretion of Ashford LLC, and, upon request, Ashford LLC will, if permitted by the terms and conditions of any applicable debt agreement applicable to Ashford LLC, grant a first priority security interest in such FF&E to any lender who so requests in connection with the financing by the Company of any real property asset to which such FF&E is applicable and the Advisor agrees to take such further action as may reasonably be requested by the Company or applicable lender in connection with any mortgage or other financing with respect to such FF&E and any real property asset to which such FF&E is applicable.  Upon expiration of any such rent-free lease, Ashford LLC shall convey the applicable FF&E to the Applicable TRS in exchange for the fair market value thereof, payable in cash by the Applicable TRS.

 

ARTICLE III. TERM AND TERMINATION

 

Section 3.01                             Term.  Subject to Section 2.04(b), the initial term of this ERFP Agreement shall be two (2) years from the Effective Date (the “Initial Term”), unless earlier terminated

 

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pursuant to the terms of this ERFP Agreement.  At the end of the Initial Term, this ERFP Agreement shall automatically renew for successive one (1) year periods (each such period a “Renewal Term”) unless either the Advisor or the Company provides written notice to the other at least sixty (60) days in advance of the expiration of the Initial Term or Renewal Term, as applicable, that such notifying party intends not to renew the ERFP Agreement.

 

Section 3.02                             Termination.  This ERFP Agreement may be terminated by the Advisor or the Company in the event such party has a right to terminate the Advisory Agreement or by the Advisor in the event that Advisor is entitled to transfer cash of the Company to the Termination Fee Escrow Account under the Advisory Agreement.

 

Section 3.03                             Survival.  The following Sections, including the rights and obligations contained therein, shall survive the termination or non-renewal of this ERFP Agreement and shall continue in full force and effect:  Section 2.01(e) (other than if termination of this ERFP Agreement occurs pursuant to Section 3.02), Section 2.02, Section 2.04(b), the last sentence of Section 2.06, this Section 3.03, Article IV and Article V.  In addition, upon expiration of the Initial Term or a Renewal Term, as the case may be, Ashford LLC shall remain obligated to fund any amounts committed pursuant to Section 2.01(d) prior to such expiration.  For the avoidance of doubt, in the event this ERFP Agreement is deemed to have been void ab initio pursuant to Section 2.04, no provisions of this ERFP Agreement shall survive (other than the obligation to pay amounts required to be paid under Section 2.04 in such event).

 

ARTICLE IV. AMENDMENTS TO THE ADVISORY AGREEMENT

 

Section 4.01                             Section 2.5 of the Advisory Agreement is hereby amended and restated in its entirety as follows:

 

“2.5  Exclusivity.  Ashford Inc. and its subsidiaries shall be the Company’s sole and exclusive provider of asset management, project management and other services offered by Ashford Inc. or any of its subsidiaries, with authority to source, evaluate and monitor the Company’s investment opportunities consistent with the Company’s Investment Guidelines, and to direct the operation and policies of the Company, such as managing the Company’s assets and monitoring the operating performance of the Company’s hotel real estate investments and other assets, including the management and implementation of capital improvement programs, pursue property tax appeals (as appropriate), and providing periodic reports with respect to the Company’s hotel real estate investments and other assets to the Board of Directors, including comparative information with respect to such operating performance and budgeted or projected operating results.”

 

Section 4.02                             Section 4 of the Advisory Agreement is hereby amended and restated in its entirety as follows:

 

“4.  Bank Accounts.

 

(i)                                     The Advisor shall, and hereby is authorized to, and shall have the exclusive right and authority to, establish and maintain subject to any applicable

 

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conditions or limitations of loan documents applicable to the Company, one or more bank, brokerage or similar accounts in the Advisor’s own name for the account of the Company or in the name of the Company and collect and deposit into any account or accounts, and disburse from any such account or accounts, any and all money, securities and other cash equivalents on behalf of the Company, provided, that no funds shall be commingled with the funds of the Advisor.  The Advisor shall from time to time render appropriate accountings of such collections and payments to the Board of Directors and the independent auditors of the Company.

 

(ii)                                  The Advisor shall have the right, in its sole discretion, without prior notice to the Company, to set off, take and apply any monies of the Company on deposit in any bank, brokerage or similar account established and maintained for the Company by the Advisor pursuant to Section 4 or any money on deposit in the Termination Fee Escrow Account established and maintained pursuant to Section 12 of this Agreement to the payment of all amounts becoming due and payable by the Company; provided, that exercise of such set-off right shall not cause the Company’s remaining cash and cash equivalents to be less than the Working Capital Reserve; and provided further that Advisor shall not so set off, take and apply any monies of the Company in excess of the Setoff Limit.  “Setoff Limit” shall mean (i) from the date hereof until the date that Ashford LLC has funded or committed Enhanced Return Investments (as defined in the Enhanced Return Funding Program Agreement and Amendment No. 1 to the Amended and Restated Advisory Agreement dated as of June 26, 2018 by and among the parties thereto (the “ERFP Agreement”)) in an aggregate amount equal to or in excess of ten million dollars ($10,000,000), an amount equal to seventy five million dollars ($75,000,000); (ii) from the date that Ashford LLC has funded or committed Enhanced Return Investments in an aggregate amount equal to or in excess of ten million dollars ($10,000,000) but less than twenty million dollars ($20,000,000), an amount equal to one hundred and fifty million dollars ($150,000,000); (iii) from the date that Ashford LLC has funded or committed Enhanced Return Investments in an aggregate amount equal to or in excess of twenty million dollars ($20,000,000) but less than thirty million dollars ($30,000,000), an amount equal to two hundred twenty five million dollars ($225,000,000);  and (iv) from the date that Ashford LLC has funded or committed Enhanced Return Investments in an aggregate amount equal to or in excess of thirty million dollars ($30,000,000) but less than forty million dollars ($40,000,000), an amount equal to three hundred million dollars ($300,000,000).  From and after the date that Ashford LLC has funded or committed Enhanced Return Investments equal to or in excess of forty million dollars ($40,000,000), the ability of the Advisor to set off, take and apply any monies of the Company shall not be limited.  The exercise of any such set-off right shall not impact the Company’s obligation to pay any obligations that remain due and payable following set-off by Advisor.  For the avoidance of doubt, in determining the amount of Enhanced Return Investments that Ashford LLC has funded or committed as of any time, amounts repaid in respect of previously made Enhanced Return Investments shall not be deducted.  Advisor shall notify the Company in writing promptly after any exercise of setoff rights hereunder setting forth in reasonable detail the amounts so setoff.”

 

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Section 4.03                             Section 5 of the Advisory Agreement is hereby amended to add (i) the clause “Subject to the last two paragraphs of this Section 5,” to the beginning of the first and third paragraphs thereof and (ii) the following new paragraphs at the end of Section 5 as follows:

 

“The Company shall pay the costs and expenses that are reimbursable to the Advisor pursuant to this Agreement on a monthly basis in advance on the first business day of each month in an amount equal to the budgeted monthly reimbursements for the applicable month, which shall be equal to the amount estimated to be payable on account of the costs and expenses that are reimbursable to the Advisor for each month included in each annual expense budget prepared by the Advisor and approved by the Board of Directors (the “Annual Expense Budget”); provided, that if the Advisor and the Company do not agree on an Annual Expense Budget for the applicable fiscal year, the budgeted monthly reimbursements for each month of the existing fiscal year shall be equal to one hundred and ten percent (110%) of the Actual Monthly Reimbursements (as defined below) for the same month in the prior fiscal year.

 

No later than forty-five (45) days following the end of the applicable fiscal quarter, the Advisor shall calculate (and provide the Company with a copy of the calculation) the costs and expenses that were actually reimbursable to the Advisor pursuant to this Agreement for each month (each amount, the “Actual Monthly Reimbursements”) in the fiscal quarter just ended.  The Company shall have ten (10) business days to review and comment upon the calculation provided by the Advisor.  If the aggregate Actual Monthly Reimbursements payable as calculated by the Advisor for the fiscal quarter just ended exceeds the aggregate budgeted monthly reimbursements paid by the Company for the fiscal quarter (the difference being referred to as a “Reimbursement Underpayment”), then the Company shall pay the Advisor the full amount of the Reimbursement Underpayment no later than fifty-five (55) days following the end of the applicable fiscal quarter.  If the aggregate budgeted monthly reimbursements paid by the Company for the fiscal quarter just ended is greater than the aggregate Actual Monthly Reimbursements payable as calculated by the Advisor for the fiscal quarter (the difference being referred to as a “Reimbursement Overpayment”), then the Advisor shall repay the Reimbursement Overpayment to the Company no later than fifty-five (55) days following the end of the applicable fiscal quarter.”

 

Section 4.04                             Section 6.1 of the Advisory Agreement is hereby amended and restated in its entirety as follows:

 

“6.1                         The Company shall, on a monthly basis, pay a fee (the “Base Fee”) in an amount equal to 1/12 of (i) the Base Fee Percentage of the Total Market Capitalization of the Company for the prior month, plus (ii) the Net Asset Fee Adjustment, if any, on the last day of the prior month during which this Agreement was in effect; provided, however in no event shall the Base Fee for any month be less than the Minimum Base Fee.

 

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The Company shall pay the Base Fee or the Minimum Base Fee on the fifth business day of each month based on the calculation set forth above.

 

For purposes of this Agreement, the following terms have the meanings set forth below:

 

“Average VWAP” shall mean, for any period, (i) the sum of the VWAPs for each trading day in such period divided by (ii) the number of trading days in such period.

 

“Base Fee Percentage” shall mean the following per annum percentages, which vary based on the Total Market Capitalization (as adjusted annually for inflation beginning from January 1, 2015) calculation:

 

	
For each quarter in which the
   Total Market Capitalization*
   is:
    	
 
    	
Base Fee Percentage will be:
    
	
 
    	
 
    	
 
    
	
<$6   billion
    	
 
    	
0.70%
    
	
 
    	
 
    	
 
    
	
> $6 billion and
    < $10 billion
    	
 
    	
0.70% on amounts up to $6 billion
    0.60% on amounts exceeding $6 billion
    
	
 
    	
 
    	
 
    
	
> $10 billion
    	
 
    	
0.70% on amounts up to $6 billion
    0.60% on amounts exceeding $6 billion, up to $10 billion
 0.50%   on amounts exceeding $10 billion
    

 

* Total Market Capitalization thresholds are subject to an annual inflation adjustment on each January 1 beginning January 1, 2016, based on increases to CPI.

 

“Enhanced Return Hotel Asset” shall have the meaning set forth in the ERFP Agreement.

 

“Gross Asset Value” shall mean, with respect to any of the Company’s assets as of any date, the undepreciated carrying value of all such assets including all cash and cash equivalents and capitalized leases and any FF&E leased to subsidiaries of the Company to facilitate the purchase of any Enhanced Return Hotel Asset as reflected on the most recent balance sheet and accompanying footnotes of the Company filed with the Securities and Exchange Commission or prepared by the Advisor in accordance with GAAP consistent with its performance of its duties hereunder without giving effect to any impairments plus the publicly disclosed purchase price (excluding any net working capital and transferred FF&E reserves) of any assets acquired after the date of the most recent balance sheet and all capital expenditures made (to the extent not already reflected in the carrying value of the asset) with

 

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respect to an asset since the date of its acquisition for any improvements or for additions thereto, that have a useful life of more than one year and that are required to be capitalized under GAAP.

 

“Minimum Base Fee” for each quarter beginning January 1, 2016 or thereafter will be equal to the greater of:

 

(i)                                     90% of the Base Fee paid for the same month in the prior fiscal year and

 

(ii)                                  1/12th of the G&A Ratio for the most recent completed fiscal quarter multiplied by the Company’s Total Market Capitalization on the last balance sheet date included in the most recent Quarterly Report on Form 10-Q or Annual Report on Form 10-K filed by the Company with the SEC.

 

For purposes of this Agreement, the “G&A Ratio” will be calculated as the simple average of the ratios of total general and administrative expenses, less any non-cash expenses but including any dead deal costs, paid in the applicable quarter by each member of a select peer group set forth in Exhibit A (each, a “Peer Group Member” and collectively, the “Peer Group”), divided by the total market capitalization of such Peer Group Member (calculated in the same manner as the Company’s Total Market Capitalization).  The G&A Ratio for each Peer Group Member will be calculated based on the financial information presented in such Peer Group Member’s Form 10-Q or 10-K periodic filings with the SEC following the end of each quarter.  The Peer Group may be modified from time to time by mutual written agreement of the Advisor and a majority of the Independent Directors, negotiating in good faith.

 

“Net Asset Fee Adjustment” shall be equal to the result of (i) the product of (A) the Sold Non-ERFP Asset Amount, if any,  and (B) 0.70% plus (ii) the product of (A) the Sold ERFP Asset Amount, if any, and (B) 1.07%.

 

“Sold ERFP Asset Amount” shall mean an amount, calculated immediately after the first sale or other disposition (including by way of a foreclosure or deed-in-lieu of foreclosure by a mortgage or mezzanine lender of the Operating Partnership or its subsidiaries) of an Enhanced Return Hotel Asset occurring after the date of the ERFP Agreement (the “First ERFP Sale”) and, thereafter, immediately after each successive purchase or sale or disposition (including any such foreclosure or deed-in-lieu) of an Enhanced Return Hotel Asset (each, a “Successive ERFP Transaction”), equal to (i) immediately after the First ERFP Sale, the publicly disclosed sales or disposition price (excluding any net working capital and transferred FF&E reserves) of such Enhanced Return Hotel Asset and (ii) immediately after each Successive ERFP Transaction, an amount equal to the Sold ERFP Asset Amount in effect immediately prior to the Successive ERFP Transaction plus, in the case that such Successive ERFP Transaction is a sale or disposition of an Enhanced Return Hotel Asset, the publicly disclosed sales or disposition price (excluding any net working capital and transferred FF&E

 

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reserves) of such Enhanced Return Hotel Asset or minus, in the case that such Successive ERFP Transaction is a purchase of an Enhanced Return Hotel Asset, the publicly disclosed purchase price  (excluding any net working capital and transferred FF&E reserves) of such Enhanced Return Hotel Asset; provided that if the foregoing calculation results, at any time of calculation, in a negative number, the calculated amount at such time of calculation shall be deemed to be zero; and provided further that if (x) the Company purchases any real property without any additional Enhanced Return Investment provided by Ashford LLC (a “Replacement Asset” and the publicly disclosed purchase price of such Replacement Asset (excluding any net working capital and transferred FF&E reserves), the “Replacement Asset Purchase Price”), (y) such acquisition would have reduced the Sold ERFP Asset Amount to zero (if such acquisition were of an Enhanced Return Hotel Asset) and (z) such Replacement Asset is subsequently sold or disposed of (including by way of a foreclosure or deed-in-lieu of foreclosure), then the Sold ERFP Asset Amount shall be increased as a result of such sale or disposition by an amount equal to the product of (A) the publicly disclosed sales or disposition price (excluding any net working capital and transferred FF&E reserves) of such Replacement Asset and (B) a fraction, (1) the numerator of which is the Sold ERFP Asset Amount immediately prior to the purchase of the Replacement Asset and (2) the denominator of which is the Replacement Asset Purchase Price.

 

“Sold Non-ERFP Asset Amount” shall mean an amount, calculated immediately after the first sale or other disposition (including by way of a foreclosure or deed -in-lieu of foreclosure by a mortgage or mezzanine lender of the Operating Partnership or its subsidiaries)  of any real property owned by the Company (other than any Enhanced Return Hotel Asset) (a “Non-ERFP Hotel Asset”) occurring after the date of the ERFP Agreement (the “First Non-ERFP Sale”) and, thereafter, immediately after each successive purchase or sale or disposition (including any such foreclosure or deed-in-lieu) of a Non-ERFP Hotel Asset (each, a “Successive Non-ERFP Transaction”), equal to (i) immediately after the First Non-ERFP Sale, the publicly disclosed sales or disposition price (excluding any net working capital and transferred FF&E reserves) of such Non-ERFP Hotel Asset and (ii) immediately after each Successive Non-ERFP Transaction, an amount equal to the Sold Non-ERFP Asset Amount in effect immediately prior to the Successive Non-ERFP Transaction plus, in the case such Successive Non-ERFP Transaction is the sale of a Non-ERFP Hotel Asset, the publicly disclosed sales or disposition price (excluding any net working capital and transferred FF&E reserves) of such Non-ERFP Hotel Asset or minus, in the case such Successive Non-ERFP Transaction is the purchase of an Non-ERFP Hotel Asset, the publicly disclosed purchase price  (excluding any net working capital and transferred FF&E reserves) of such Non-ERFP Hotel Asset; provided that if the foregoing calculation results, at any time of calculation, in a negative number, the calculated amount at such time of calculation shall be deemed to be zero; and provided further that if (x) the Company purchases a Replacement Asset, (y) such acquisition would have reduced the Sold ERFP Asset Amount to zero (if such acquisition were of an Enhanced Return Hotel Asset) and (z) such Replacement Asset is subsequently sold or disposed of (including by way

 

14

 

of a foreclosure or deed-in-lieu of foreclosure), then the Sold Non-ERFP Asset Amount shall be increased as a result of such sale or disposition by an amount equal to the product of (A) the publicly disclosed sales or disposition price (excluding any net working capital and transferred FF&E reserves) of such Replacement Asset and (B) a fraction, (1) the numerator of which is the Replacement Asset Purchase Price less the Sold ERFP Asset Amount immediately prior to the purchase of the Replacement Asset and (2) the denominator of which is the Replacement Asset Purchase Price.

 

“Total Market Capitalization” shall mean, for any period:

 

(a)                                 With respect to the Company to the extent Company Common Stock is listed for trading on a national securities exchange for every day during any period for which the Total Market Capitalization is to be calculated, the amount calculated as:

 

(i)                                     the Average VWAP multiplied by the weighted average number of shares of Company Common Stock outstanding during such applicable period, on a fully-diluted basis (assuming, for these purposes, that all common units in the Operating Partnership (“Common Units”), and long term incentive partnership units in the Operating Partnership to the extent they have achieved economic parity with Common Units have been converted into shares of Company Common Stock and including any shares of Company Common Stock issuable upon conversion of any convertible preferred stock of the Company where the conversion price is less than the Average VWAP), plus

 

(ii)                                  the average, as reflected in the Company’s books and records, for the applicable period of the aggregate principal amount of the Company’s consolidated indebtedness (including, if applicable, the Company’s proportionate share of debt of any entity that is not consolidated and excluding, if applicable, any of the Company’s joint venture partners’ proportionate share of consolidated debt), plus

 

(iii)                               the average, as reflected in the Company’s books and records, for the applicable period of the liquidation value of the Company’s outstanding preferred equity (excluding any convertible preferred stock of the Company where the conversion price is less than the Average VWAP).

 

(b)                                 With respect to the Company, if the Company’s Common Stock is not listed for trading on a national securities exchange (due to any reason, including but not limited to delisting by the New York Stock Exchange or the occurrence of a Company Change of Control) for any day during any period for which the Total Market Capitalization is to be calculated, the greater of:  (i) the weighted average Gross Asset Value of all the Company’s assets on each day during such period; or (ii) the Total Market Capitalization as calculated pursuant to paragraph (a) of this definition on the last day on which Company Common Stock was listed for trading

 

15

 

on a national securities exchange, regardless of whether this day occurred during the applicable period.

 

“VWAP” shall mean the dollar volume-weighted average price for the securities in question on the national securities exchange on which it trades during the period beginning at 9:30:01 a.m., New York City time (or such other time as the national securities exchange on which it trades publicly announces is the official open of trading), and ending at 4:00:00 p.m., New York City time (or such other time as the national securities exchange on which it trades publicly announces is the official close of trading), as reported by Bloomberg, L.P. through its “Volume at Price” function.

 

Section 4.05                             Section 9.3 of the Advisory Agreement is hereby amended by deleting the first sentence therein and replacing it with the following:

 

“At any time the Company desires to engage a third party for the performance of services or delivery of products (other than the services contemplated by this Agreement) and provided that the Company has the right to control the decision on the award of the applicable contract, the Advisor shall have the exclusive right to provide such service or product (assuming that Advisor has obtained any required licensing needed, if any, to provide the service or product) at market rates for the provision of such services (“Market Rates”).”

 

Section 4.06                             Section 12 of the Advisory Agreement is hereby amended as follows:

 

(a)                                 by adding a new clause (e) after existing clause (d) as follows:

 

“(e) Termination Fee Escrow Account.  In the event that Advisor has funded or committed Enhanced Return Investments in an aggregate amount equal to at least forty million dollars ($40,000,000), then the following provisions shall immediately become effective and binding upon the parties (it being understood that, in determining the amount of Enhanced Return Investments that Ashford LLC has funded or committed as of any time, amounts repaid in respect of previously made Enhanced Return Investments shall not be deducted):

 

(1)                                 the Advisor and the Company shall enter an escrow agreement (the “Termination Fee Escrow Agreement”) with the Escrow Agent and a Termination Fee Escrow Account shall be established pursuant to this Section 12(e); and

 

(2)                                 If at any time (A) the Company enters into a letter of intent or definitive agreement that upon consummation would constitute a Company Change of Control; (B) a Change of Control Tender is initiated and the Board of Directors recommends acceptance by the Company’s stockholders; or (C) a Voting Control Event occurs, the Advisor may, and hereby is authorized to, in the name of and on behalf of the Company, transfer cash of the Company maintained in bank, brokerage or similar accounts established by the Advisor for the Company pursuant to Section 4 to the Termination Fee Escrow Account in an amount equal to (i) the Termination Fee plus (ii) the Repayment (as defined in the ERFP Agreement) plus (iii) all accrued fees and any other amounts that would be due and payable by the

 

16

 

Company to the Advisor pursuant to this Agreement if the Termination Payment Time had occurred concurrently with the events described in (A)-(C) above.  The amount required to be deposited into the Termination Fee Escrow Account shall be referred to herein as the “Required Amount.”  Notwithstanding the above, if the amount to be deposited into the Termination Fee Escrow Account would cause the Company’s remaining cash and cash equivalents to be less than the Working Capital Reserve, then the Company may reduce the Required Amount by an amount of cash equal to the difference between the Working Capital Reserve and cash and cash equivalents that would be remaining on the Company’s balance sheet prepared in accordance with GAAP outside of the Termination Fee Escrow Account.  All amounts so deposited shall be retained in escrow pursuant to the terms of the Termination Fee Escrow Agreement.  The Company and the Advisor shall equally share all costs of the Termination Fee Escrow Account including the reasonable fees and expenses of each Escrow Agent.

 

(3)                                 Notwithstanding Section 12(e)(2) above, if, in the case of an event described in Section 12(e)(2)(B)-(C), the Company does not deposit cash equal to the Required Amount into the Termination Fee Escrow Account, then the Company shall deliver to the Escrow Agent for the Termination Fee Escrow Account, the Letter of Credit; provided that in any event the Company shall be required to deposit an amount of cash equal to at least 50% of the Required Amount.  The Advisor shall have the right and power, without any further approval of the Company to cause the Escrow Agent to draw on the Letter of Credit, provided that any draws on the Letter of Credit shall remain in the Termination Fee Escrow Account.

 

(4)                                 If the face amount of the Letter of Credit is not equal to at least the aggregate of the Required Amount less the cash deposited into the Termination Fee Escrow Account, then to secure prompt and complete payment of any deficit, the Company shall pledge and grant to Advisor a continuing first priority security interest in and lien upon the Company’s right, title and interest in, to and in real property, personal property and other assets acceptable to the Advisor owned by the Company, and having a book value of no less than 120% of the deficit (collectively, the “Collateral”).  In addition, the Company shall execute and deliver all further instruments and documents, and take all further action that may be reasonably necessary or reasonably desirable, or that Advisor may reasonably request (including without limitation the filing of any fee and leasehold mortgages), in order to perfect and protect the security interest in the Collateral described above to enable Advisor to exercise and enforce its rights and remedies hereunder with respect to any of the Collateral.  The Company hereby irrevocably authorizes Advisor to file in any filing office in any Uniform Commercial Code jurisdiction any initial financing statements and amendments thereto that provide any information required by part 5 of Article 9 of the Uniform Commercial Code or such other jurisdiction for the sufficiency or filing office acceptance of any, financing statement or amendment relating to the Collateral.  The Company agrees to furnish any such information to Advisor promptly upon Advisor’s request.”

 

17

 

(b)                                 by amending and restating existing clause (e) (which was previously entitled “Termination Obligations”) as a new clause (f) as follows and renumbering the remainder of Section 12 accordingly:

 

“(f) Termination Obligations; Termination Fee Escrow Account.

 

(i)                                     Any amounts due and payable in connection with any termination of this Agreement pursuant to this Section 12 shall become due and payable at the time of termination (each such time, a “Termination Payment Time”).  No termination of this Agreement shall become effective unless and until any and all amounts due and payable in connection with a termination pursuant to this Section 12 have been fully paid.

 

(ii)                                  At the Termination Payment Time, the parties shall have the following obligations:

 

(A)                               The Company shall pay all Base Fees, Incentive Fees and expense reimbursements due and owing through the date of termination, including, without limitation, any unpaid Incentive Fee installments which shall, upon any termination, become immediately earned by Advisor and due from the Company (collectively, “Accrued Fees”).

 

(B)                               In addition to the Accrued Fees, the Company shall:

 

(I)                                   pay Advisor a Termination Fee on or before the termination date of this Agreement upon any termination by the Company pursuant to Section 12(c)(i) (unsatisfactory performance by the Advisor or unfair fees with no resolution within the time period set forth in Section 12(c)(i)) or upon any termination by the Company or the Advisor pursuant to Section 12(d) (following a Company Change of Control); and

 

(II)                              pay Advisor the greater of the Termination Fee or Actual Damages on or before the termination date of this Agreement upon any termination by the Advisor pursuant to Section 12(b)(ii) (uncured default by the Company).

 

(C)                               In addition to the Accrued Fees and the Termination Fee or Actual Damages, if applicable, the Company shall pay to the Advisor the Repayment pursuant to Section 2.02(a) of the ERFP Agreement.

 

(D)                               Immediately upon termination, the Advisor shall promptly (a) pay over all money collected and held for the account of the Company, giving effect to the transfer of amounts deposited in the Termination Fee Escrow Account, provided that the Advisor shall be permitted to deduct any Accrued Fees, Termination Fees and Repayment in lieu of receiving payment for such Accrued Fees, Termination Fees and Repayment pursuant to this Section 12(e); (b) deliver a full accounting of all accounts held by the Advisor in the name of or on behalf of the Company; (c) deliver all property, documents, files, contracts and assets of the Company to

 

18

 

the Company; and (d) cooperate with and assist the Company in executing an orderly transition of the management of the company’s assets to a new advisor.

 

(E)                                At the Termination Payment Time in connection with a termination by the Company or the Advisor pursuant to Section 12(d), the Advisor shall have the right and authority to notify the Escrow Agent for the Termination Fee Escrow Account that the Termination Payment Time has occurred and to cause the Escrow Agent to disburse to the Advisor, by cashier’s check or wire transfer, the cash funds, including any cash generated by drawing on the Letter of Credit either prior to or at the Termination Payment Time, in the Termination Fee Escrow Account at the applicable Termination Payment Time without any action required on the part of the Company.  The Advisor shall also have the right and power, without any further approval of the Company to exercise, by foreclosure or otherwise, any rights in the Collateral, pursuant to the security interest granted to the Advisor therein.  Any cash in the Termination Fee Escrow Account that exceeds the amounts due and payable under this Agreement shall be disbursed by the Escrow Agent to the Company, by cashier’s check or wire transfer.  The Advisor shall retain all rights to pursue collection and payment of any amounts that are not otherwise paid through the exercise of rights under the Termination Fee Escrow Account, the Letter of Credit and against the Collateral.”

 

Section 4.07                             Section 12(g) of the Advisory Agreement (which was previously Section 12(f)) is hereby amended to add the following definitions in the appropriate alphabetical order:

 

“Change of Control Tender” means a tender offer by any “person” or “group” (within the meaning of Section 13(d) of the Exchange Act) pursuant to which such person or group would, if such tender offer were completed, become the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act) directly or indirectly, of securities of the Company representing 35% or more of the shares of voting stock of the Company then outstanding.

 

“Escrow Agent” means the agent under the Termination Fee Escrow Account.

 

“Ownership Limit” has the meaning ascribed to such term in the Company’s charter in effect as of the date of this Agreement.

 

“Letter of Credit” means an irrevocable standby letter of credit issued by a recognized commercial bank having net assets of not less than $500 million to the Escrow Agent, that the Escrow Agent at the request of the Advisor may draw upon, conditioned only upon the presentation of the original letter of credit and a signed statement that the Advisor is entitled to cause the Escrow Agent to draw, in the maximum aggregate amount equal to the difference between (1) the Required Amount; and (2) the amount of cash deposited into the Termination Fee Escrow Account by the Company.

 

“Termination Fee Escrow Account” means the account established by the parties with an Escrow Agent as contemplated by Section 12(e).

 

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“Voting Control Event” means (A) any “person” or “group” (within the meaning of Section 13(d) of the Exchange Act) other than (1) the Company or any of its Subsidiaries, (2) any employee benefit plan of the Company or any of its Subsidiaries, (3) a company owned, directly or indirectly, by stockholders of the Company in substantially the same proportions as the ownership of the Company, or (4) an underwriter temporarily holding securities pursuant to an offering of such securities, becoming the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Company representing 35% or more of the shares of voting stock of the Company then outstanding and the Company fails to enforce the Ownership Limit within five business days of the person or group becoming the beneficial owner or a court of competent jurisdiction enjoins enforcement of the Ownership Limit; or (B) any person or group enters into an agreement which if consummated would result in the person or group becoming the beneficial owner of securities representing 35% or more of the shares of the Company’s voting stock and either:  (1) the Board of Directors waives the Ownership Limit; or (2) a court of competent jurisdiction enjoins enforcement of the Ownership Limit.

 

“Working Capital Reserve” means, as of any date of determination, (i) $20 million plus (ii) an amount equal to (A) 0.04 multiplied by (B) (1) the Company’s Gross Asset Value as of such date of determination less (2) the Company’s Gross Asset Value as of the effective date of the ERFP Agreement.

 

Section 4.08                             Section 14(a) of the Advisory Agreement is hereby amended and restated in its entirety as follows:

 

“(a) Notwithstanding anything in this Agreement, the Advisor shall have the power to delegate all or any part of its rights and powers to manage and control the business and affairs of the Company to such officers, employees, Affiliates (other than to Ashford Hospitality Services LLC (“Ashford Services”) or its subsidiaries), agents and representatives of the Advisor or the Company as it may deem appropriate.  Any authority delegated by the Advisor to any other person shall be subject to the limitations on the rights and powers of the Advisor specifically set forth in this Agreement or the charter of the Company.

 

The Advisor may assign this Agreement to any Affiliate that remains under the control of the Advisor, other than Ashford Services or its subsidiaries, without the consent of the Company.

 

The Advisor may also assign this Agreement or pledge and grant a security interest in such Agreement to any lender of the Advisor without the consent of the Company; provided, however, that in advance of such assignment the Advisor and such lender must enter into definitive documentation, pursuant to which the Company shall be an express third-party beneficiary, providing that (i) in the event the lender is required pursuant to the terms of such loan agreement to provide to the Advisor notice of any default or potential default by the Advisor under such loan agreement, the lender shall simultaneously provide such notice to the

 

20

 

Company, (ii) the Advisor shall promptly notify the Company upon the Advisor’s reasonable belief that it is in default under any such loan agreement, (iii) the Company shall have an explicit right to cure, for the account of the Advisor, all actual or potential defaults of the Advisor within the longer of (A) seven business days of such default and (B) the number of days Advisor has to cure such default pursuant to the underlying loan agreement and (iv) the lender shall not take an action, or fail to take any action, that would result in the Company failing to maintain its status as a REIT under the Internal Revenue Code.

 

Any assignment contrary to this Section 14(a) shall be null and void ab initio.”

 

Section 4.09                             Section 16 of the Advisory Agreement is hereby amended and restated in its entirety as follows:

 

“16.  Company Covenants.

 

(a)                                 In the event that Advisor through Ashford LLC has funded or committed Enhanced Return Investments in an aggregate amount equal to at least forty million dollars ($40,000,000), the following covenants shall immediately become effective and binding upon the Company (it being understood that, in determining the amount of Enhanced Return Investments that Ashford LLC has funded or committed as of any time, amounts repaid in respect of previously made Enhanced Return Investments shall not be deducted):

 

(i)                                     Consolidated Tangible Net Worth.  The Company shall not permit its Consolidated Tangible Net Worth, as of the end of any fiscal quarter, to be less than the sum of (A) one billion dollars ($1,000,000,000) and (B) an amount equal to seventy-five percent (75%) of the net equity proceeds received by the Company by reason of the issuance and sale of equity interests in the Company after the date of this Agreement.

 

(ii)                                  Dividend Payments.  Without the Advisor’s consent, delivered in writing to the Board of Directors, the Company shall not declare or pay (A) any dividend or distribution (whether in cash, securities or other property) with respect to any common shares or common units of the Company, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any common shares or common units of the Company, or on account of any return of capital to the Company’s common stockholders or common unitholders (or the equivalent person thereof) (a “Distribution”), that (x) would exceed the Company’s current quarterly dividend of $0.12 per common share and common unit and (y) on an annualized basis would exceed a dividend rate of 9.9% (or such higher annualized dividend rate, if applicable, equal to the average annualized dividend rate of the Peer Group over the 90 days immediately preceding such Distribution) or  (B) any Distribution for the purpose of avoiding, hindering or delaying the payment by the Company of the Termination Fee hereunder; provided, however, that nothing herein shall prohibit the Company from declaring

 

21

 

or paying any dividend or distribution which, based on the advice of counsel, is necessary for the Company to maintain its REIT status.  For the purposes of this Section 16(a)(ii), a Distribution in securities or other property shall be valued at the fair market value thereof (i.e., the price at which a willing buyer and a willing seller would purchase and sell the securities or other property, neither under any compulsion to buy or sell).

 

(iii)                               Investment Guidelines.  (A) The Company’s Investment Guidelines pursuant to Section 9.2 of this Agreement will be deemed modified, without further action required by the parties hereto, to exclude select service assets, meaning, generally, not full service assets and (B) the Company shall be deemed to have granted to the Advisor, without further action required by the parties hereto, the right to advise and sponsor a select service platform including sourcing select service assets for such platform to the exclusion of the Company (provided that the Company shall not be required to convey to or otherwise include in the Advisor’s select service platform any select service assets owned by the Company).”

 

(b)                                 Definitions.

 

“Consolidated Tangible Net Worth” shall mean, as of any date of determination, the consolidated shareholders’ equity of the Company on that date, as determined in accordance with GAAP, minus the amount of the Company’s consolidated intangible assets under GAAP, plus the amount of the Company’s consolidated accumulated depreciation; provided, however, that there shall be excluded from the calculation of “Consolidated Tangible Net Worth” any effects resulting from the application of FASB ASC No. 715:  Compensation—Retirement Benefits.  Consolidated Tangible Net Worth shall be adjusted to remove any impact from straight line rent leveling adjustments required under GAAP and amortization of intangibles pursuant to State of Financial Accounting Standards number 141.”

 

ARTICLE V. MISCELLANEOUS

 

Section 5.01                             Notices.  Any notices, instructions or other communications required or contemplated by this ERFP Agreement shall be deemed to have been properly given and to be effective upon delivery if delivered in person, sent electronically or upon receipt if sent by courier service.  All such communications to the Company, Operating Partnership or Ashford TRS shall be addressed as follows:

 

Ashford Hospitality Trust, Inc.
 14185 Dallas Parkway, Suite 1100
 Dallas, TX 75254
 Attn:  Chief Executive Officer

 

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With a copy to:

 

Ashford Hospitality Trust, Inc.
 14185 Dallas Parkway, Suite 1100
 Dallas, TX 75254
 Attn:  General Counsel

 

All such communications to the Advisor shall be addressed as follows:

 

Ashford Hospitality Advisors LLC
 14185 Dallas Parkway, Suite 1100
 Dallas, TX 75254
 Attn:  Chief Executive Officer

 

With a copy to:

 

Ashford Hospitality Advisors LLC
 14185 Dallas Parkway, Suite 1100
 Dallas, TX 75254
 Attn:  General Counsel

 

Either party hereto may designate a different address by written notice to the other party delivered in accordance with this Section 5.01.

 

Section 5.02                             Governing Law; Consent to Jurisdiction.  This ERFP Agreement shall be governed by and construed in accordance with the laws of the State of Texas, without regard to the conflict of laws principals thereof.  Each of the parties hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of any Texas state court, or federal court of the United States of America, in each case sitting in Dallas County, Texas, and any appellate court from any thereof, in any action, suit or proceeding arising out of or relating to this ERFP Agreement or for recognition or enforcement of any judgment relating thereto, and each of the parties hereby irrevocably and unconditionally:  (i) agrees not to commence any such action, suit or proceeding except in such courts; (ii) agrees that any claim in respect of any such action, suit or proceeding may be heard and determined in such Texas state court or, to the extent permitted by applicable law, in such federal court; (iii) waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any such action, suit or proceeding in any such Texas state or federal court; and (iv) waives, to the fullest extent permitted by applicable aw, the defense of an inconvenient forum to the maintenance of such action, suit or proceeding in any such Texas state or federal court.

 

Section 5.03                             Entire Agreement; Conflicts.  This ERFP Agreement and the Advisory Agreement reflect the entire understanding of the parties hereto with respect to the subject matter hereof and supersede and replace all agreements between the Company and the Advisor with respect to the subject matter hereof.

 

Section 5.04                             Successors and Assigns.  This ERFP Agreement shall inure to the benefit of and be binding upon the parties to this ERFP Agreement, and no other Person shall acquire or

 

23

 

have any right under, or by virtue of, this ERFP Agreement.  Each of the parties to this ERFP Agreement may, with the written consent of each of the parties hereto, assign this ERFP Agreement to any successor to all or substantially all of its assets, rights and/or obligations.  Each of the parties shall have the right to assign this ERFP Agreement to any Affiliate of such party (other than an Affiliate that is already a party).

 

Section 5.05                             Sophisticated Counsel.  The parties hereto are sophisticated parties and have consulted with their own counsel in connection with the execution of this ERFP Agreement.  Consequently, in the event an ambiguity or question of intent or interpretation arises no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provision of this ERFP Agreement.

 

Section 5.06                             Amendment, Modifications and Waiver.  Articles I, II, III and this Article V of this ERFP Agreement shall not be altered or otherwise amended in any respect, except pursuant to an instrument in writing signed by the parties to this EFRP Agreement.  The waiver by a party of a breach of Articles I, II, III and this Article V of this ERFP Agreement shall not operate or be construed as a waiver of any subsequent breach.  The provisions of the Advisory Agreement with respect to the amendment of the Advisory Agreement shall govern future amendments of the Advisory Agreement (including without limitation the provisions of the Advisory Agreement set forth in Article IV hereof) and shall not be modified by this Section 5.06.

 

Section 5.07                             Counterparts.  This ERFP Agreement may be executed in any number of counterparts, and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument.  A signature to this ERFP Agreement executed and/or transmitted electronically shall have the same authority, effect and enforceability as an original signature.

 

Section 5.08                             Descriptive Headings.  Descriptive headings of the several Sections of this ERFP Agreement are inserted for convenience only and shall not control or affect the meaning or construction of any of the provisions hereof.

 

(REMAINDER OF PAGE LEFT INTENTIONALLY BLANK; SIGNATURES BEGIN ON NEXT PAGE)

 

24

 

IN WITNESS WHEREOF, the undersigned have executed this ERFP Agreement as of the Effective Date.

 

 

	
 
    	
ASHFORD TRUST:
    
	
 
    	
Ashford Hospitality   Trust, Inc.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Douglas A. Kessler
    
	
 
    	
 
    	
Name:
    	
Douglas   A. Kessler
    
	
 
    	
 
    	
Title:
    	
President and Chief   Executive Officer
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
OPERATING PARTNERSHIP:
    
	
 
    	
Ashford Hospitality   Limited Partnership
    
	
 
    	
By:
    	
Ashford OP General   Partner LLC, its general partner
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Douglas A. Kessler
    
	
 
    	
 
    	
Name:
    	
Douglas A. Kessler
    
	
 
    	
 
    	
Title:
    	
President
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
ASHFORD TRS:
    
	
 
    	
Ashford TRS Corporation
    
	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Deric S. Eubanks
    
	
 
    	
 
    	
Name:  
    	
Deric S. Eubanks
    
	
 
    	
 
    	
Title:
    	
President
    

 

[Signature page to the Enhanced Return Funding Program Agreement and

Amendment No. 1 to the Amended and Restated Advisory Agreement]

 

 

	
 
    	
ADVISOR:
    
	
 
    	
Ashford Hospitality   Advisors LLC
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   J. Robison Hays
    
	
 
    	
 
    	
Name:
    	
J. Robison Hays
    
	
 
    	
 
    	
Title:
    	
Co-President and Chief   Strategy Officer
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Ashford Inc.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   J. Robison Hays
    
	
 
    	
 
    	
Name:
    	
J. Robison Hays
    
	
 
    	
 
    	
Title:
    	
Co-President and Chief   Strategy Officer
    

 

[Signature page to the Enhanced Return Funding Program Agreement and

Amendment No. 1 to the Amended and Restated Advisory Agreement]

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