Document:

Exhibit 10.3

 

EXECUTION VERSION

 

AMENDMENT NO. 1 TO THE

AMENDED AND RESTATED TERM LOAN AGREEMENT

 

Dated as of February 11, 2016

 

 

AMENDMENT NO. 1 TO THE AMENDED AND RESTATED
TERM LOAN AGREEMENT (this “Amendment”) among AMERICAN REALTY CAPITAL HOSPITALITY PORTFOLIO SMT, LLC,
a Delaware limited liability company, AMERICAN REALTY CAPITAL HOSPITALITY PORTFOLIO WSC, LLC, a Delaware limited liability company,
AMERICAN REALTY CAPITAL HOSPITALITY PORTFOLIO NBL, LLC, a Delaware limited liability company, ARC HOSPITALITY SMT CY FLGAZ OWNER,
LLC, a Delaware limited liability company, ARC HOSPITALITY SMT SHS FLGAZ OWNER, LLC, a Delaware limited liability company, ARC
HOSPITALITY SMT FTWIN001 OWNER, LLC, a Delaware limited liability company, ARC HOSPITALITY SMT RI FTWIN OWNER, LLC, a Delaware
limited liability company, ARC HOSPITALITY SMT BTRLA001 OWNER, LLC, a Delaware limited liability company, ARC HOSPITALITY SMT FIS
BTRLA OWNER, LLC, a Delaware limited liability company, ARC HOSPITALITY SMT SHS BTRLA OWNER, LLC, a Delaware limited liability
company, ARC HOSPITALITY SMT TPS BTRLA OWNER, LLC, a Delaware limited liability company, ARC HOSPITALITY SMT MDFOR001 OWNER, LLC,
a Delaware limited liability company, ARC HOSPITALITY SMT ELPTX001 OWNER, LP, a Delaware limited partnership, ARC HOSPITALITY NBL
MNTCA001 OWNER, LP, a Delaware limited partnership, ARC HOSPITALITY NBL HYP SCHIL OWNER, LLC, a Delaware limited liability company,
ARC HOSPITALITY NBL HH ATLGA OWNER, LLC, a Delaware limited liability company, and ARC HOSPITALITY NBL CY CBSOH OWNER, LLC, a Delaware
limited liability company (collectively, the “Borrowers”), AMERICAN REALTY CAPITAL HOSPITALITY TRUST,
INC., a Maryland corporation (the “Parent Guarantor”), AMERICAN REALTY CAPITAL HOSPITALITY OPERATING
PARTNERSHIP, L.P., a Delaware limited partnership (the “Operating Partnership”, and, together with the
Parent Guarantor, the “Guarantors”), and DEUTSCHE BANK AG NEW YORK BRANCH (“DBNY”),
as administrative agent (in such capacity, the “Administrative Agent”) for one or more lenders (collectively,
the “Lenders”).

 

PRELIMINARY STATEMENTS:

 

(1)               
The Borrower, the Guarantors, the Administrative Agent, and the Lenders, have entered into an Amended and Restated Term
Loan Agreement dated as of October 15, 2015 (the “Loan Agreement”). Capitalized terms not otherwise defined
in this Amendment have the same meanings as specified in the Loan Agreement.

 

(2)               
The parties to the Loan Agreement have agreed to amend the Loan Agreement on the terms and subject to the conditions hereinafter
set forth.

 

SECTION 1.          
Amendments to Loan Agreement. Upon the occurrence of the Amendment Effective Date (as defined in Section 4 below),
the Loan Agreement will be deemed amended as follows:

 

(a)               
The references to “$450,000,000” in (i) the definition of Loan in Section 1.01 of the Loan Agreement and (ii)
Schedule I to the Loan Agreement, are hereby deleted and replaced with references to “$293,400,000”.

 

(b)               
The Loan Agreement is hereby amended by deleting Schedule II (Assets) in its entirety and replacing it with a new Schedule
II (Assets) in the form of Annex A hereto.

 

     

     

    

 

SECTION 2.          
Other Amendments; Purchase Agreements/Seller Financing Documents. (a) The parties hereto further agree that each
of American Realty Capital Hospitality Portfolio SMT, LLC, American Realty Capital Hospitality Portfolio WSC, LLC, and American
Realty Capital Hospitality Portfolio NBL, LLC, each a Delaware limited liability company and currently a Borrower under the Loan
Agreement, is effective as of the Amendment Effective Date deemed removed as a Borrower under the Loan Agreement and the other
Loan Documents, and shall have no further right to borrow, or any liability or obligation to perform any of the Obligations, under
the Loan Agreement or the other Loan Documents.

 

(b) From and after the Amendment Effective
Date, the Loan Parties shall provide to the Administrative Agent, upon reasonable request, any additional documents, supplements,
modifications or assignments executed by any Loan Party in respect of the purchase agreements or seller financing documents related
to the acquisition and financing (or proposed acquisition and financing) by the applicable Loan Parties of the properties listed
on Annex B hereto.

 

SECTION 3.          
Representations and Warranties. Each Loan Party hereby represents and warrants as follows:

 

(a)               
The representations and warranties contained in each of the Loan Documents (as amended or supplemented to date, including
pursuant to this Amendment) to which it is a party are true and correct in all material respects on and as of the Amendment Effective
Date (defined below), before and after giving effect to this Amendment, as though made on and as of such date (except for any such
representation and warranty that, by its terms, refers to an earlier date, in which case as of such earlier date).

 

(b)               
Such Loan Party has taken all necessary corporate and other organizational action to authorize the execution, delivery and
performance of this Amendment.

 

(c)               
This Amendment has been duly executed and delivered by such Loan Party and constitutes such Loan Party’s legal, valid
and binding obligation, enforceable in accordance with its terms, except as such enforceability may be subject to (i) bankruptcy,
insolvency, reorganization, fraudulent conveyance or transfer, moratorium or similar laws affecting creditors’ rights generally
and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity).

 

(d)               
The execution and delivery of this Amendment does not (i) contravene any provision of the organizational documents of such
Loan Party or its general partner or managing member or (ii) violate any law, rule, regulation, order, writ, judgment, injunction,
decree, determination or award applicable to such Loan Party.

 

(e)               
The Loan Parties are in compliance with the covenants contained in Section 5.04(b) and (c) of the Loan Agreement.

 

(f)                
The Loan Parties have provided to the Administrative Agent copies, certified by the applicable Loan Parties as correct and
complete, of all purchase and sale agreements and seller financing documents (including all modifications and assignments in respect
of any of the same) related to the acquisition and financing (or proposed acquisition and financing) by the applicable Loan Parties
of the properties listed on Annex B hereto.

 

(g)               
The Loan Parties are not aware of any matter that is reasonably expected to occur within the next ninety (90) days that
would reasonably be expected to be a Material Adverse Change.

 

(h)               
No Default or Event of Default has occurred and is continuing, or would result from the entering into of this Amendment
by any Loan Party.

 

    2

     

    

 

SECTION 4.          
Conditions of Effectiveness. This Amendment shall become effective as of the first date (the “Amendment
Effective Date”) on which, and only if, each of the following conditions precedent shall have been satisfied:

 

(a)               
The Administrative Agent shall have received on or before the Amendment Effective Date the following, each dated such day
(unless otherwise specified), in form and substance satisfactory to the Administrative Agent (unless otherwise specified) and in
sufficient copies for each Lender:

 

(i)                
This Amendment duly executed by the Loan Parties and the other parties hereto.

 

(ii)              
Certified copies of the resolutions of the Board of Directors of the Parent Guarantor on its behalf and on behalf of each
Loan Party for which it is the ultimate signatory approving the transactions contemplated by this Amendment and each Loan Document
to which it or such Loan Party is or is to be a party, and of all documents evidencing other necessary corporate action and governmental
and other third party approvals and consents, if any, with respect to the transactions under this Amendment and each Loan Document
to which it or such Loan Party is or is to be a party.

 

(iii)            
A certificate signed by a Responsible Officer of the Borrowers, dated the Amendment Effective Date, stating that as of the
Amendment Effective Date the applicable Loan Parties are in compliance with the covenants contained in Section 5.04(b) and
(c) of the Loan Agreement, together with supporting information in form satisfactory to the Administrative Agent showing the computations
used in determining compliance with such covenants.

 

(iv)             
All governmental and third party consents and approvals necessary in connection with the transactions contemplated by this
Amendment shall have been obtained (without the imposition of any conditions that are not acceptable to the Lenders) and shall
remain in effect, and no law or regulation shall be applicable in the reasonable judgment of the Lenders that restrains, prevents
or imposes materially adverse conditions upon the transactions contemplated by this Amendment.

 

(v)               
Any additional information or documentation reasonably requested by the Administrative Agent or the Lenders.

 

(b)               
The Borrowers shall have paid all accrued fees of the Administrative Agent and the Lenders and all reasonable, out-of-pocket
expenses of the Administrative Agent (including the reasonable fees and expenses of counsel to the Administrative Agent) in connection
with the Loan, this Amendment and the transactions contemplated by the Loan Documents.

 

(c)               
The representations and warranties set forth in each of the Loan Documents and in this Amendment shall be correct in all
material respects (unless qualified as to materiality or Material Adverse Effect, in which case such representations and warranties
shall be correct in all respects) on and as of the Amendment Effective Date, before and after giving effect to this Amendment,
as though made on and as of such date (except for any such representation and warranty that, by its terms, refers to a specific
date other than the Amendment Effective Date, in which case as of such specific date).

 

(d)               
No event shall have occurred and be continuing, or shall result from the effectiveness of this Amendment, that constitutes
a Default.

 

SECTION 5.          
Reference to and Effect on the Loan Documents. (a) On and after the effectiveness of this Amendment, each reference
in the Loan Agreement to “this Agreement”, “hereunder”, “hereof” or words of like import referring
to the Loan Agreement, and each reference in each of the other Loan Documents to “the Loan Agreement”, “thereunder”,
“thereof” or words of like import referring to the Loan Agreement, shall mean and be a reference to the Loan Agreement,
as amended and modified by this Amendment.

 

    3

     

    

 

(b)               
This Amendment shall constitute a Loan Document.

 

(c)               
The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy
of any Lender or the Administrative Agent under any of the Loan Documents, nor constitute a waiver of any provision of any of the
Loan Documents.

 

(d)               
This Amendment shall not extinguish the obligations for the payment of money outstanding under the Loan Agreement. Nothing
herein contained shall be construed as a substitution or novation of the obligations outstanding under the Loan Agreement, which
shall remain in full force and effect, except to any extent modified hereby or as provided in the exhibits hereto. Nothing implied
in this Amendment or in any other document contemplated hereby shall be construed as a release or other discharge of any of the
Loan Parties from the Loan Documents, except as expressly set forth in Section 2 hereof.

 

SECTION 6.          
Ratification. The Loan Agreement (as amended by this Amendment) and each of the other Loan Documents are and shall
continue to be in full force and effect and are hereby in all respects ratified and confirmed. Except as expressly provided in
this Amendment, the execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or
remedy of the Administrative Agent or any Lender or Secured Party under the Loan Agreement or any of the other Loan Documents,
nor constitute a waiver of any provision of the Loan Agreement or any of the other Loan Documents.

 

SECTION 7.          
Costs and Expenses. The Borrowers agree to pay on demand all reasonable out-of-pocket costs and expenses of the Administrative
Agent in connection with the preparation, execution, delivery and administration, modification and amendment of this Amendment,
the other instruments and documents to be delivered hereunder (including, without limitation, the reasonable fees and expenses
of counsel for the Administrative Agent) in accordance with the terms of Section 9.04 of the Loan Agreement.

 

SECTION 8.          
Execution in Counterparts. This Amendment may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together
shall constitute but one and the same agreement. Delivery of an executed counterpart of a signature page to this Amendment by facsimile
or other electronic means shall be as effective as delivery of a manually executed counterpart of this Amendment.

 

SECTION 9.          
Governing Law. This Amendment shall be governed by, and construed in accordance with, the laws of the State of New York.

 

[Balance of page intentionally left blank.]

 

    4

     

    

 

IN WITNESS WHEREOF, the parties hereto have
caused this Amendment to be executed by their respective officers thereunto duly authorized, as of the date first above written.

 

	 	BORROWERS:
	 	 	 
	 	AMERICAN REALTY CAPITAL HOSPITALITY PORTFOLIO SMT, LLC,
	 	a Delaware limited liability company
	 	 	 
	 	By:	/s/ Paul C. Hughes
	 	 	Name: Paul C. Hughes
	 	 	Title: Authorized Signatory
	 	 	 
	 	 	 
	 	AMERICAN REALTY CAPITAL HOSPITALITY PORTFOLIO WSC, LLC,
	 	a Delaware limited liability company
	 	 	 
	 	By:	/s/ Paul C. Hughes
	 	 	Name: Paul C. Hughes
	 	 	Title: Authorized Signatory
	 	 	 
	 	 	 
	 	AMERICAN REALTY CAPITAL HOSPITALITY PORTFOLIO NBL, LLC,
	 	a Delaware limited liability company
	 	 	 
	 	By:	/s/ Paul C. Hughes
	 	 	Name: Paul C. Hughes
	 	 	Title: Authorized Signatory
	 	 	 
	 	 	 
	 	ARC HOSPITALITY SMT CY FLGAZ OWNER, LLC,
	 	a Delaware limited liability company
	 	 	 
	 	By:	/s/ Paul C. Hughes
	 	 	Name: Paul C. Hughes
	 	 	Title: Authorized Signatory

 

    	 	Signature Page to Amendment No. 1 to the 
 Amended and Restated Term Loan Agreement

     

    

 

	 	ARC HOSPITALITY SMT SHS FLGAZ OWNER, LLC,
	 	a Delaware limited liability company
	 	 	 
	 	By:	/s/ Paul C. Hughes
	 	 	Name: Paul C. Hughes
	 	 	Title: Authorized Signatory
	 	 	 
	 	 	 
	 	ARC HOSPITALITY SMT FTWIN001 OWNER, LLC,
	 	a Delaware limited liability company
	 	 	 
	 	By:	/s/ Paul C. Hughes
	 	 	Name: Paul C. Hughes
	 	 	Title: Authorized Signatory
	 	 	 
	 	 	 
	 	ARC HOSPITALITY SMT RI FTWIN OWNER, LLC,
	 	a Delaware limited liability company
	 	 	 
	 	By:	/s/ Paul C. Hughes
	 	 	Name: Paul C. Hughes
	 	 	Title: Authorized Signatory
	 	 	 
	 	 	 
	 	ARC HOSPITALITY SMT BTRLA001 OWNER, LLC,
	 	a Delaware limited liability company
	 	 	 
	 	By:	/s/ Paul C. Hughes
	 	 	Name: Paul C. Hughes
	 	 	Title: Authorized Signatory
	 	 	 
	 	 	 
	 	ARC HOSPITALITY SMT FIS BTRLA OWNER, LLC,
	 	a Delaware limited liability company
	 	 	 
	 	By:	/s/ Paul C. Hughes
	 	 	Name: Paul C. Hughes
	 	 	Title: Authorized Signatory

 

    	 	Signature Page to Amendment No. 1 to the 
 Amended and Restated Term Loan Agreement

     

    

 

	 	ARC HOSPITALITY SMT SHS BTRLA OWNER, LLC,
	 	a Delaware limited liability company
	 	 	 
	 	By:	/s/ Paul C. Hughes
	 	 	Name: Paul C. Hughes
	 	 	Title: Authorized Signatory
	 	 	 
	 	 	 
	 	ARC HOSPITALITY SMT TPS BTRLA OWNER, LLC,
	 	a Delaware limited liability company
	 	 	 
	 	By:	/s/ Paul C. Hughes
	 	 	Name: Paul C. Hughes
	 	 	Title: Authorized Signatory
	 	 	 
	 	 	 
	 	ARC HOSPITALITY SMT MDFOR001 OWNER, LLC,
	 	a Delaware limited liability company
	 	 	 
	 	By:	/s/ Paul C. Hughes
	 	 	Name: Paul C. Hughes
	 	 	Title: Authorized Signatory
	 	 	 
	 	 	 
	 	ARC HOSPITALITY SMT ELPTX001 OWNER, LP,
	 	a Delaware limited partnership
	 	 	 
	 	 	By: ARC Hospitality SMT NTC Owner GP, LLC,
	 	 	a Delaware limited liability company, its general partner
	 	 	 
	 	By:	/s/ Paul C. Hughes
	 	 	Name: Paul C. Hughes
	 	 	Title: Authorized Signatory
	 	 	 
	 	 	 
	 	ARC HOSPITALITY NBL MNTCA001 OWNER, LP,
	 	a Delaware limited partnership
	 	 	 
	 	 	By: ARC Hospitality NBL NTC Owner GP, LLC,
	 	 	a Delaware limited liability company, its general partner
	 	 	 
	 	By:	/s/ Paul C. Hughes
	 	 	Name: Paul C. Hughes
	 	 	Title: Authorized Signatory

 

    	 	Signature Page to Amendment No. 1 to the 
 Amended and Restated Term Loan Agreement

     

    

 

	 	ARC HOSPITALITY NBL HYP SCHIL OWNER, LLC,
	 	a Delaware limited liability company
	 	 	 
	 	By:	/s/ Paul C. Hughes
	 	 	Name: Paul C. Hughes
	 	 	Title: Authorized Signatory
	 	 	 
	 	 	 
	 	ARC HOSPITALITY NBL HH ATLGA OWNER, LLC,
	 	a Delaware limited liability company
	 	 	 
	 	By:	/s/ Paul C. Hughes
	 	 	Name: Paul C. Hughes
	 	 	Title: Authorized Signatory
	 	 	 
	 	 	 
	 	ARC HOSPITALITY NBL CY CBSOH OWNER, LLC,
	 	a Delaware limited liability company
	 	 	 
	 	By:	/s/ Paul C. Hughes
	 	 	Name: Paul C. Hughes
	 	 	Title: Authorized Signatory

 

    	 	Signature Page to Amendment No. 1 to the 
 Amended and Restated Term Loan Agreement

     

    

 

	 	ADMINISTRATIVE AGENT:
	 	DEUTSCHE BANK AG NEW YORK BRANCH
	 	 	 
	 	By:	/s/ James Rolison
	 	 	Name: James Rolison
	 	 	Title: Managing Director
	 	 	 
	 	 	 
	 	By:	/s/ Murray Mackinnon 
	 	 	Name: Murray Mackinnon
	 	 	Title: Vice President

 

    	 	Signature Page to Amendment No. 1 to the 
 Amended and Restated Term Loan Agreement

     

    

 

CONSENT

 

Dated as of February 11, 2016

 

Each of the undersigned,
as a Guarantor under the Amended and Restated Term Loan Agreement dated as of October 15, 2015, among (i) AMERICAN REALTY CAPITAL
HOSPITALITY PORTFOLIO SMT, LLC, a Delaware limited liability company, AMERICAN REALTY CAPITAL HOSPITALITY PORTFOLIO WSC, LLC, a
Delaware limited liability company, AMERICAN REALTY CAPITAL HOSPITALITY PORTFOLIO NBL, LLC, a Delaware limited liability company,
ARC HOSPITALITY SMT CY FLGAZ OWNER, LLC, a Delaware limited liability company, ARC HOSPITALITY SMT SHS FLGAZ OWNER, LLC, a Delaware
limited liability company, ARC HOSPITALITY SMT FTWIN001 OWNER, LLC, a Delaware limited liability company, ARC HOSPITALITY SMT RI
FTWIN OWNER, LLC, a Delaware limited liability company, ARC HOSPITALITY SMT BTRLA001 OWNER, LLC, a Delaware limited liability company,
ARC HOSPITALITY SMT FIS BTRLA OWNER, LLC, a Delaware limited liability company, ARC HOSPITALITY SMT SHS BTRLA OWNER, LLC, a Delaware
limited liability company, ARC HOSPITALITY SMT TPS BTRLA OWNER, LLC, a Delaware limited liability company, ARC HOSPITALITY SMT
MDFOR001 OWNER, LLC, a Delaware limited liability company, ARC HOSPITALITY SMT ELPTX001 OWNER, LP, a Delaware limited partnership,
ARC HOSPITALITY NBL MNTCA001 OWNER, LP, a Delaware limited partnership, ARC HOSPITALITY NBL HYP SCHIL OWNER, LLC, a Delaware limited
liability company, ARC HOSPITALITY NBL HH ATLGA OWNER, LLC, a Delaware limited liability company, and ARC HOSPITALITY NBL CY CBSOH
OWNER, LLC, a Delaware limited liability company, (ii) AMERICAN REALTY CAPITAL HOSPITALITY TRUST, INC., a Maryland corporation
(the “Parent Guarantor”), AMERICAN REALTY CAPITAL HOSPITALITY OPERATING PARTNERSHIP, L.P., a Delaware
limited partnership (the “Operating Partnership”, and, together with the Parent Guarantor, each individually,
a “Guarantor”), and (iii) DEUTSCHE BANK AG NEW YORK BRANCH, as administrative agent for one or more lenders,
and the other parties thereto (the “Loan Agreement”), hereby consents to the Amendment No. 1 to the Loan
Agreement dated as of the date hereof (the “Amendment”), and hereby confirms and agrees that notwithstanding
the effectiveness of the Amendment, the Guaranty contained in the Loan Agreement is and shall continue to be, in full force and
effect and is hereby ratified and confirmed in all respects, except that, on and after the effectiveness of the Amendment, each
reference in the Loan Documents to “Loan Agreement”, “thereunder”, “thereof” or words of like
import shall mean and be a reference to the Loan Agreement, as amended and modified by the Amendment.

 

[Balance of page intentionally left blank.]

 

    	 	Consent Signature Page to Amendment No. 1 to the 
 Amended and Restated Term Loan Agreement

     

    

 

	 	GUARANTORS:
	 	 	 	 
	 	AMERICAN REALTY CAPITAL HOSPITALITY TRUST, INC., 

a Maryland corporation
	 	 	 	 
	 	By:	 	 
	 	 	Name:	 
	 	 	Title:	 
	 	 	 	 
	 	 	 	 
	 	AMERICAN REALTY CAPITAL HOSPITALITY OPERATING PARTNERSHIP, L.P., a Delaware limited partnership
	 	 	 	 
	 	By:	American Realty Capital Hospitality Trust, Inc., 

a Maryland corporation, its general partner
	 	 	 	 
	 	 	By:	 
	 	 	 	Name:
	 	 	 	Title:

 

    	 	Signature Page to Amendment No. 1 to the 
 Amended and Restated Term Loan Agreement

     

    

 

ANNEX A

 

 

SCHEDULE II

 

 

1. Courtyard Flagstaff, 2650 S. Beulah Blvd., Flagstaff, Arizona
86001 (Coconino County)

 

2. Springhill Suites, 2455 S. Beulah Blvd., Flagstaff, Arizona
86001 (Coconino County)

 

3. Hampton Inn, 8219 West Jefferson Blvd., Fort Wayne, Indiana
46804 (Allen County)

 

4. Residence Inn, 7811 West Jefferson Blvd., Fort Wayne, Indiana
46804 (Allen County)

 

5. DoubleTree by Hilton Hotel, 4964 Constitution Avenue, Baton
Rouge, Louisiana 70808 (East Baton

Rouge Parish)

 

6. Fairfield Inn & Suites, 7959 Essen Park Avenue, Baton
Rouge, Louisiana 70809 (East Baton Rouge

Parish)

 

7. Springhill Suites, 7979 Essen Park Avenue, Baton Rouge, Louisiana
70809 (East Baton Rouge Parish)

 

8. TownePlace Suites, 8735 Summa Avenue, Baton Rouge, Louisiana
70809 (East Baton Rouge Parish)

 

9. Hampton Inn, 1122 Morrow Road, Medford, Oregon 97504 (Jackson
County)

 

10. Hampton Inn & Suites, 6635 Gateway Boulevard West, El
Paso, Texas 79925 (El Paso County)

 

11. Fairfield Inn & Suites, 6851 Tower Road, Denver, Colorado
80249 (Denver County)

 

12. Hampton Inn, 1620 Oakridge Drive, Fort Collins, Colorado
80525 (Larimer County)

 

13. Hilton Garden Inn, 2821 East Harmony Road, Fort Collins,
Colorado 80528 (Larimer County)

 

14. Springhill Suites, 18350 East 68th Avenue, Denver, Colorado
80249 (Denver County)

 

15. Fairfield Inn & Suites, 311 North Riverpoint Boulevard,
Spokane, Washington 99202 (Spokane

County)

 

16. Fairfield Inn & Suites, 14595 NE 29th Place, Bellevue,
Washington 98007 (King County)

 

17. Hilton Garden Inn, 1000 Aguajito Road, Monterey, California
93940 (Monterey County)

 

18. Hyatt House Atlanta Cobb Galleria, 3595 Cumberland Boulevard,
Atlanta, Georgia 30339 (Fulton

County)

 

19. Hyatt Place, 1851 McConnor Parkway, Schaumburg, Illinois
60173 (Cook County)

 

20. Courtyard Columbus Downtown, 35 West Spring Street, Columbus,
Ohio 43215 (Adams County)

 

    A-1 

     

    

 

ANNEX B

 

SUMMIT
3 PROPERTIES

 

1. Fairfield Inn & Suites, 6851 Tower Road, Denver, Colorado
80249 (Denver County)

 

2. Hampton Inn, 1620 Oakridge Drive, Fort Collins, Colorado
80525 (Larimer County)

 

3. Hilton Garden Inn, 2821 East Harmony Road, Fort Collins,
Colorado 80528 (Larimer County)

 

4. Springhill Suites, 18350 East 68th Avenue, Denver, Colorado
80249 (Denver County)

 

5. Fairfield Inn & Suites, 311 North Riverpoint Boulevard,
Spokane, Washington 99202 (Spokane County)

 

6. Fairfield Inn & Suites, 14595 NE 29th Place, Bellevue,
Washington 98007 (King County)

 

    B-1Exhibit

EXHIBIT 10.5.11

CBL & ASSOCIATES PROPERTIES, INC.
NAMED EXECUTIVE OFFICER
ANNUAL INCENTIVE COMPENSATION PLAN (AIP)

(Fiscal Year 2016)

OVERVIEW

This Annual Incentive Compensation Plan (“AIP”) is a cash incentive compensation plan adopted and established by the Compensation Committee of the Board of Directors of CBL & Associates Properties, Inc. (the “Company”).  This plan is designed and authorized for execution on an annual basis.  The policies, objectives, purposes and guidelines of this plan are as defined by the Compensation Committee of the Company’s Board of Directors, as designated by the Board from time to time (the “Compensation Committee”).  All awards and bonus payments described herein are entirely variable and at the sole discretion of the Compensation Committee may be evaluated, modified or revoked at any time.

All awards and bonus payments hereunder are not considered standard payment for services and are not guaranteed.  All compensation payable under this AIP will be paid to plan participants in their capacity as employees of CBL & Associates Management, Inc. (the “Management Company”), a wholly owned subsidiary of the Company.

ADMINISTRATION AND ELIGIBILITY

This AIP shall be effective as of the date of its approval by the Compensation Committee of the Company’s Board of Directors (the “Effective Date”).  The AIP shall be administered by the Compensation Committee of the Board as such is presently constituted on the Effective Date and as it shall be constituted after the Effective Date throughout the term of this AIP.  The Compensation Committee shall have sole authority, subject to the terms hereof, to set the terms pursuant to which any discretionary cash incentive compensation is to be paid to any participant under this AIP and to otherwise supervise the administration of this AIP, to interpret the terms and provisions hereof and to otherwise adopt, alter and repeal such administrative rules, guidelines and practices governing the AIP as the Compensation Committee shall, from time to time, deem advisable.

Participation in this AIP is limited to those individuals who are or have been included in the group of “named executive officers” of the Company for the applicable annual performance period, as determined pursuant to Item 402 of Regulation S-K promulgated by the U.S. Securities and Exchange Commission (“SEC”) pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or any applicable successor provision.  Each such individual is hereinafter sometimes referred to as a “Participant” and sometimes as a “Named Executive Officer”.  

OBJECTIVES AND PURPOSE

The objective of this AIP is to incentivize the Company’s Named Executive Officers to produce a high level of operational performance that results in the creation of increased value for the Company’s shareholders.  

The purposes of this AIP are to reward the Company’s Named Executive Officers:

		
	•
	for achieving and exceeding specified levels of Company performance with respect to quantitative metrics selected by the Compensation Committee that it believes are important drivers in the creation of shareholder value; and

		
	•
	for individual performance in relation to qualitative criteria established by the Compensation Committee for each such Named Executive Officer.

AWARD CRITERIA

		
	•
	Awards under this AIP are dependent upon accomplishment of the Company’s goals and objectives and the individual goals and objectives specified by the Compensation Committee.  Payments will be based on performance criteria established for each fiscal year beginning January 1 and ending December 31.

		
	•
	Management may develop recommendations for consideration by the Compensation Committee as to the criteria to be utilized in determining awards to each Participant, but the Compensation Committee shall have the sole and final authority to decide all such matters. 

		
	•
	Overall AIP payments (aggregate) made under this plan require approval of the Compensation Committee.

All compensation paid or payable pursuant to awards made under this AIP for any annual performance period shall be subject to the terms of the executive compensation Clawback Policy established by the Company’s Board of Directors by resolution dated March 24, 2015, as such policy may be hereafter modified or amended. 

PLAN DESIGN

Specific AIP award criteria will be established each year for each Participant based on goals relating to overall Company performance and individual performance, as follows:

		
	•
	The Compensation Committee will set forth annually a target cash bonus award level (the “Target Cash Bonus Award”) for each Participant under the AIP.  

 
		
	•
	Target Cash Bonus Awards shall consist of two parts as set forth below:  Quantitative Bonus Awards and Qualitative Bonus Awards.

		
	•
	“Quantitative Bonus Awards” - the Quantitative Bonus Award component of any Target Cash Bonus Award that may be earned by each Participant will be determined based on 60% of the Target Cash Bonus Award for each Participant other than the Chief Executive Officer (“CEO”) (70% in the case of the CEO), to be determined by the Company’s performance relative to specified objective criteria established by the Compensation Committee as set forth herein.  The actual Quantitative Bonus Award earned by a Participant may range from 0% to 150% of target based on actual performance.

		
	•
	“Qualitative Bonus Awards” - the Qualitative Bonus Award component of any Target Cash Bonus Award to be earned by each Participant will be determined based on 40% of the Target Cash Bonus Award for each Participant other than the CEO (30% in the case of the CEO), to be determined based on the Compensation Committee’s subjective evaluation of such Participant’s performance relative to specified individual criteria established by the Compensation Committee for each such Participant as set forth herein.

2016 Target Cash Bonus Award Levels

The Target Cash Bonus Awards set by the Compensation Committee for each of the Company’s Named Executive Officers based on performance during calendar year 2016 are as follows:

	
				
	

 
Named Executive Officer
	Total
2016 Target
Cash Bonus 
Award
	

2016 
Quantitative 
Bonus Target
	

2016 
Qualitative 
Bonus Target

	Stephen D. Lebovitz, President and  
Chief Executive Officer
	$875,000
	$612,500
	$262,500

	Charles B. Lebovitz, Executive  
Chairman of the Board
	$750,000
	$450,000
	$300,000

	Farzana K. Mitchell – Executive Vice President, Chief Financial Officer and Treasurer
	$300,000
	$180,000
	$120,000

	Augustus N. Stephas, Executive Vice President  
and Chief Operating Officer
	$350,000
	$210,000
	$140,000

	Michael I. Lebovitz, Executive Vice President – Development and Administration
	$300,000
	$180,000
	$120,000

Determination of 2016 Quantitative Bonus Award Pursuant to Objective Performance Criteria

The following two objective performance metrics will be utilized in determining any payout with respect to the Quantitative Bonus Award portion of the Target Cash Bonus Award for each Participant, weighted equally such that each will determine 50% of the Quantitative Bonus Award portion of the Participant’s Target Cash Bonus Award based on these performance measurements: 

		
	•
	Funds From Operations (“FFO”), as adjusted, per diluted share, as reported in the Company’s periodic reports (Forms 10-K and 10-Q) filed with the SEC pursuant to the requirements of the Exchange Act (the “Periodic Reports”); and 

		
	•
	Growth in Same-Center Net Operating Income (“SC NOI Growth”), as reported in the Company’s Periodic Reports.

The Compensation Committee shall have the option, pursuant to its administrative authority over the AIP as set forth herein, to adjust each metric as appropriate to take into account significant unbudgeted transactions and unforeseen events such as acquisitions, dispositions, joint ventures, equity or debt issuances and other capital markets activities, for purposes of determining the portion of any Quantitative Bonus Award payment based on these metrics.

In conjunction with the establishment of the Quantitative Bonus Award criteria for 2016 under this AIP, the Compensation Committee will establish, and communicate in writing to each Participant, specific, quantitative targets designated as the “Threshold,” “Target” and “Maximum” levels with respect to each of FFO and SC NOI Growth for purposes of determining the Participants’ Quantitative Bonus Award payments, as described below.

The Quantitative Bonus Award payment to be made to a Participant with respect to each applicable metric will depend on the Company’s achievement of at least the Threshold level of performance established by the Compensation Committee with respect to that metric.  There will be no Quantitative Bonus Award payable to such Participant for that metric in the event the Company achieves less than the Threshold level for the applicable annual performance period.  The Company’s achievement of the Threshold level for a designated metric will result in a payout of 50% of the proportion of the Quantitative Bonus Award allocated to that metric; the achievement of the Target level for a designated metric will result in a payout of 100% of the proportion of the Quantitative Bonus Award allocated to that metric; and the achievement of the Maximum level for a designated metric will result in a payout of 150% of the proportion of the Quantitative Bonus Award allocated to that metric.  If the calculated percentage is between Threshold and Maximum for an annual performance period, then the earned percentage will be prorated.  The achievement of these levels and allocated payments are illustrated by the following table: 

	
				
	Quantitative Metric
	Weighting
	Range
	Resulting Cash Payout

	FFO per diluted share, as adjusted
	50%
	Threshold
	50%

	Target
	100%

	Maximum
	150%

	SC NOI Growth
	50%
	Threshold
	50%

	Target
	100%

	Maximum
	150%

    

Determination of 2016 Qualitative Bonus Award Pursuant to Subjective Performance Criteria

The Qualitative Bonus Award portion of each Participant’s Target Cash Bonus will be based on the Compensation Committee’s subjective evaluation of the Participant’s performance relative to following individual criteria established for 2016 for each Participant, which the Compensation Committee has determined are also important elements of each Participant’s contribution to the creation of overall shareholder value:

	
			
	Named 
Executive Officer
	2016 Individual Performance Objectives

	Stephen D. Lebovitz
	(1)
	refining, enhancing and executing the Company’s strategic and business plans

	(2)
	effective communications and interactions with the investment community

	(3)
	regular communication and interaction with the Board

	(4)
	maintain and enhance key retailer, financial and other relationships

	(5)
	effective corporate and executive team motivation and management

	Charles B. Lebovitz
	(1)
	effective Board management

	(2)
	maintain and enhance key retailer and other relationships

	(3)
	broad involvement and stewardship of the Company’s strategic objectives and business performance

	(4)
	support the CEO in developing and executing the Company’s strategic and business plans

	Farzana K. Mitchell
	(1)
	successful execution of the Company’s balance sheet strategy including maintaining/improving key credit metrics

	(2)
	effective management and oversight of the Company’s financial services and accounting divisions

	(3)
	maintain and improve key financial and joint venture partner relationships

	(4)
	improve interactions with the investment community through earnings calls, presentations and investor conferences/meetings

	(5)
	general involvement in improving the Company’s overall financial performance, i.e., NOI, FFO, including oversight of miscellaneous areas 

	(6)
	support the CEO in developing and executing the Company’s strategic and business plans

	
			
	Named 
Executive Officer
	2016 Individual Performance Objectives

	Augustus N. Stephas
	(1)
	improvement in overall portfolio operations

	(2)
	effective management of leasing and management functions

	(3)
	successful preparation of Board materials

	(4)
	oversight of billings, collections, legal and other internal operations

	(5)
	expense containment and oversight of general and administrative costs

	(6)
	support the CEO in developing and executing the Company’s strategic and business plans

	Michael I. Lebovitz
	(1)
	successful completion of development and redevelopment projects at approved pro forma returns and on schedule

	(2)
	develop a pipeline of new development and redevelopment projects

	(3)
	effective oversight of the implementation of technology and organizational initiatives 

	(4)
	manage and enhance joint venture development relationships and pursue new joint venture relationships 

	(5)
	effective management and team building for the Development, Human Resources and Information Technology divisions of the Company and closer working relationships with other areas of the Company 

	(6)
	support the CEO in developing and executing the Company’s strategic and business plans

AIP BONUS PAYMENTS

		
	•
	The amount of a Participant’s Target Cash Bonus Award (consisting of the Quantitative Bonus Awards portion and Qualitative Bonus Awards portion and after the determination of the amount of each such portion) that is to be paid to a Participant hereunder is referred to as the “AIP Bonus Payment”.

		
	•
	All AIP Bonus Payments will be made in the year following the completion of the annual performance period to which the AIP Bonus Payment relates.  The actual payment to each Participant will be made as soon as practical after final certification of the underlying performance results and approval of such payment by the Compensation Committee; provided, however, that in no event will any such payment be made later than March 15 of such year.

		
	•
	To be eligible to receive an AIP Bonus Payment, a Participant must have been actively employed by the Management Company during the annual performance period with respect to which the payment relates. 

		
	•
	Any Participant whose employment is terminated prior to the conclusion of the annual performance period with respect to which an applicable AIP Bonus Payment relates will not receive an AIP Bonus Payment, except as stipulated below:

		
	◦
	In the event of such Participant’s death or disability (defined as to the complete and permanent disability of the Participant as defined by the Company’s health insurance plans or as otherwise defined by the Company from time to time) prior to the end of the annual performance period, an otherwise eligible Participant shall receive an AIP Bonus Payment in the amount of such Participant’s full Target Cash Bonus Award, as determined by the Compensation Committee, provided a Target Cash Bonus Award was approved for such Participant for the applicable annual performance period.

		
	◦
	In the event of the termination of such Participant’s employment, other than voluntarily or for Cause (as defined in the Company’s 2012 Stock Incentive Plan), following a Change of Control (as defined in the Company’s 2012 Stock Incentive Plan) prior to end of the annual performance period, an otherwise eligible Participant shall receive an AIP Bonus Payment in the amount of such Participant’s full Target Cash Bonus Award, as determined by the Compensation Committee, provided a Target Cash Bonus Award was approved for such Participant for the applicable annual performance period.

		
	•
	A Named Executive Officer, who becomes such pursuant to applicable SEC rules after the beginning of an applicable annual incentive period, may be considered for a pro-rated participation in this plan in the discretion of the Compensation Committee.

		
	•
	AIP Bonus Payments will be paid-out on a one-time basis as a lump-sum, in cash, as such are considered compensation and reportable income for all tax reporting purposes.

		
	•
	AIP Bonus Payments are included in total annual earnings and will be taken into account under the Company’s other benefit programs in accordance with their terms.

This AIP can be modified or terminated at any time by the Compensation Committee of the Company's Board of Directors; provided, however, that the Compensation Committee may not modify or terminate the AIP or any award under the AIP in such manner so as to impair the rights of any Participant under an award that has been granted without the Participant's consent, except for an amendment made to cause the award to qualify for the exemption provided by Rule 16b-3 promulgated under the Exchange Act.  Neither participation in the AIP at any time nor the grant of an award under the AIP at any time shall be deemed to guarantee or infer the right to participate in the AIP (whether at the same level or at any other level) or to receive the grant of an award under the AIP at any future time.    Furthermore, neither the AIP nor participation hereunder shall be deemed to establish any contract of employment or to guarantee continued employment with the Company for any amount of time.

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