AHT-I Ashford Hospitality Trust Inc

 

Exhibit 1.1

 

ASHFORD SECURITIES LLC

 

FORM OF DEALER MANAGER AGREEMENT

 

__________ __, 20__

 

Ashford Securities LLC

14185 Dallas Parkway, Suite 780

Dallas, Texas 75254

 

RE:

Ashford Hospitality Trust, Inc.

 

Ladies and Gentlemen:

 

Ashford Hospitality Trust, Inc. (the “Company”) is a Maryland corporation that qualified to be taxed as a real estate investment trust (a “REIT”) for federal income tax purposes beginning with the taxable year ended December 31, 2003. The Company proposes to offer up to 12,000,000 shares (the “Primary Offering”) of the Company’s Series L Redeemable Preferred Stock, par value $0.01 per share (“Series L Preferred Stock”) or Series M Redeemable Preferred Stock, par value $0.01 per share (“Series M Preferred Stock” and together with the Series L Preferred Stock, the “Shares”) in the primary offering. Each Share will be sold at a public offering price of $25.00 per Share. The offering also covers up to 4,000,000 shares of Series L Preferred Stock or Series M Preferred Stock pursuant to a dividend reinvestment plan (the “DRP” and together with the Primary Offering, the “Offering”) at $25.00 per share. The Company has reserved the right to reallocate the shares of Series L Preferred Stock or Series M Preferred Stock between the primary offering and the DRP.

 

Upon the terms and subject to the conditions contained in this Dealer Manager Agreement (this “Agreement”), the Company hereby appoints Ashford Securities LLC, a Delaware limited liability company (the “Dealer Manager”), to act as the exclusive dealer manager for the Offering, and the Dealer Manager desires to accept such engagement.

 

1.

Representations And Warranties Of The Company. The Company hereby represents, warrants and agrees, as of the date of this Agreement and on each Effective Date (as defined below) as follows:

 

(a)

Registration Statement and Prospectus. In connection with the Offering, the Company has prepared and filed with the Securities and Exchange Commission (the “Commission”) a registration statement (File No. 333-[XX]) on Form S-11 for the registration of the Shares under the Securities Act of 1933, as amended (the “Securities Act”), and the rules and regulations of the Commission promulgated thereunder (the “Securities Act Rules and Regulations”); and one or more amendments to such registration statement have been or may be so prepared and filed. The registration statement on Form S-11 and the prospectus contained therein, as finally amended at the date the registration statement is declared effective by the Commission (the “Effective Date”) are respectively hereinafter referred to as the “Registration Statement” and the “Prospectus”, except that:

 

(i)

if the Company files a post-effective amendment to such registration statement, then the term “Registration Statement” shall, from and after the declaration of the effectiveness of such post-effective amendment by the Commission, refer to such registration statement as amended by such post-effective amendment, and the term “Prospectus” shall refer to the amended prospectus then on file with the Commission; and

 

(ii)

if the prospectus filed by the Company pursuant to either Rule 424(b) or 424(c) of the Securities Act Rules and Regulations shall differ from the prospectus on file at the time the Registration Statement or the most recent post-effective amendment thereto, if any, shall have become effective, then the term “Prospectus” shall refer to such prospectus filed pursuant to either Rule 424(b) or 424(c), as the case may be, from and after the date on which it shall have been filed. The term “preliminary Prospectus” as used herein shall mean a preliminary prospectus related to the Shares as contemplated by Rule 430 or Rule 430A of the Securities Act Rules and Regulations included at any time as part of the Registration Statement. As used herein, the terms “Registration Statement”, “preliminary Prospectus” and “Prospectus” shall include the documents, if any, incorporated by reference therein.

 

 

As used herein, the term “Effective Date” also shall refer to the effective date of each post-effective amendment to the Registration Statement, unless the context otherwise requires.

 

(b)

Compliance With the Securities Act. As of each Effective Date or filing date, as applicable:

 

(i)

the Registration Statement, the Prospectus and any amendments or supplements thereto have complied, and will comply, in all material respects with the Securities Act, the Securities Act Rules and Regulations, the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the rules and regulations promulgated thereunder (the “Exchange Act Rules and Regulations”);

 

(ii)

the Registration Statement does not, and any amendment thereto will not, in each case as of the applicable Effective Date, include any untrue statement of material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading and the Prospectus does not, and any amendment or supplement thereto will not, as of the applicable filing date, include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they are made, not misleading; provided, however, that the foregoing provisions of this Section 1(b) will not extend to any statements contained in or omitted from the Registration Statement or the Prospectus that are based upon written information furnished to the Company by the Dealer Manager expressly for use in the “Plan of Distribution” section of Registration Statement or Prospectus; and

 

(iii)

the documents incorporated or deemed to be incorporated by reference in the Prospectus, at the time they are hereafter filed with the Commission, will comply in all material respects with the requirements of the Exchange Act and the Exchange Act Rules and Regulations, and, when read together with the other information in the Prospectus, at the time the Registration Statement became effective and as of the applicable Effective Date of each post-effective amendment to the Registration Statement, did not and will not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.

 

(c)

Securities Matters. There has not been:

 

(i)

any request by the Commission for any further amendment to the Registration Statement or the Prospectus or for any additional information;

 

(ii)

any issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the institution or, to the Company’s knowledge, threat of any proceeding for that purpose; or

 

 

(iii)

any notification with respect to the suspension of the qualification of the Shares for sale in any jurisdiction or any initiation or, to the Company’s knowledge, threat of any proceeding for such purpose.

 

The Company is in compliance in all material respects with all federal and state securities laws, rules and regulations applicable to it and its activities with respect to the Offering and the sale of the Shares.

 

(d)

Corporate Status and Good Standing. The Company is a corporation duly organized and validly existing under the laws of the State of Maryland and is in good standing with the State of Maryland, with all requisite power and authority to enter into this Agreement and to carry out its obligations hereunder.

 

(e)

Authorization of Agreement. This Agreement is duly and validly authorized, executed and delivered by or on behalf of the Company and constitutes a valid and binding agreement of the Company enforceable in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws of the United States, any state or any political subdivision thereof which affect creditors’ rights generally or by equitable principles relating to the availability of remedies or except to the extent that the enforceability of the indemnity and contribution provisions contained in this Agreement may be limited under applicable securities laws.

 

(f)

Absence of Conflict or Default. The execution and delivery of this Agreement and the performance of this Agreement, the consummation of the transactions contemplated herein and the fulfillment of the terms hereof, do not and will not conflict with, or result in a breach of any of the terms and provisions of, or constitute a default under:

 

(i)

the Company’s or any of its subsidiaries’ charter, bylaws, or other organizational documents, as the case may be;

 

(ii)

any indenture, mortgage, deed of trust, voting trust agreement, note, lease or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries or any of their properties is bound except, for purposes of this clause (ii) only, for such conflicts, breaches or defaults that do not result in and could not reasonably be expected to result in, individually or in the aggregate, a Company MAE (as defined below in this Section 1(f)); or

 

(iii)

any statute, rule or regulation or order of any court or other governmental agency or body having jurisdiction over the Company, any of its subsidiaries or any of their properties, except for such conflicts, breaches or defaults that do not result in and would not reasonably be expected to result in, individually or in the aggregate, a Company MAE (as defined in this Section 1(f)).

 

No consent, approval, authorization or order of any court or other governmental agency or body has been or is required for the performance of this Agreement or for the consummation by the Company of any of the transactions contemplated hereby (except as have been obtained under the Securities Act, the Exchange Act, or as may be required under the Financial Industry Regulatory Authority, Inc. (“FINRA”) or state securities or applicable blue sky laws in connection with the offer and sale of the Shares or under the laws of states in which the Company may own real properties in connection with its qualification to transact business in such states or as may be required by subsequent events which may occur). Neither the Company nor any of its subsidiaries is in violation of its charter, bylaws or other organizational documents, as the case may be, that would reasonably be expected to result in a Company MAE.

 

 

As used in this Agreement, “Company MAE” means any event, circumstance, occurrence, fact, condition, change or effect, individually or in the aggregate, that is, or could reasonably be expected to be, materially adverse to (A) the condition, financial or otherwise, earnings, business affairs or business prospects of the Company and its subsidiaries considered as one enterprise, or (B) the ability of the Company to perform its obligations under this Agreement or the validity or enforceability of this Agreement or the Shares. As used in this Agreement, “business prospects” excludes any development resulting from any event, circumstance, development, change or effect (1) in general economic or business conditions, (2) in financial or securities markets generally, or (3) generally affecting the business or industry in which the Company operates.

 

(g)

Actions or Proceedings. As of the initial Effective Date, except as disclosed in the Company’s filings with the Commission, there are no actions, suits or proceedings against, or investigations of, the Company or its subsidiaries pending or, to the knowledge of the Company, threatened, before any court, arbitrator, administrative agency or other tribunal:

 

(i)

asserting the invalidity of this Agreement;

 

(ii)

seeking to prevent the issuance of the Shares or the consummation of any of the transactions contemplated by this Agreement;

 

(iii)

that would reasonably be expected to materially and adversely affect the performance by the Company of its obligations under or the validity or enforceability of, this Agreement or the Shares;

 

(iv)

that would reasonably be expected to result in a Company MAE; or

 

(v)

seeking to affect adversely the federal income tax attributes of the Shares except as described in the Prospectus.

 

The Company promptly will give notice to the Dealer Manager of the occurrence of any action, suit, proceeding or investigation of the type referred to above arising or occurring on or after the initial Effective Date.

 

(h)

Escrow Agreement. The Company will enter into an escrow agreement (the “Escrow Agreement”) with the Dealer Manager and UMB Bank, N.A. (the “Escrow Agent”), substantially in the form included as an exhibit to the Registration Statement.

 

(i)

Sales Literature. Any supplemental sales literature or advertisement (including, without limitation any “broker-dealer use only” or institutional material), regardless of how labeled or described, used in addition to the Prospectus in connection with the Offering which previously has been, or hereafter is, furnished or approved by the Company (collectively, “Approved Sales Literature”), shall, to the extent required, be filed with and approved by the appropriate securities agencies and bodies, provided that the Dealer Manager will make all FINRA filings, to the extent required. Any and all Approved Sales Literature, when used in connection with the Prospectus, did not or will not at the time provided for use include any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

 

(j)

Authorization of Shares. The Shares have been duly authorized and, when issued and sold as contemplated by the Prospectus and upon payment therefor as provided in this Agreement and the Prospectus, will be validly issued, fully paid and nonassessable and will conform in all material aspects to the description thereof contained in the Prospectus.

 

 

(k)

Taxes. Any taxes, fees and other governmental charges in connection with the execution and delivery of this Agreement or the execution, delivery and sale of the Shares have been or will be paid when due.

 

(l)

Investment Company. The Company is not, and neither the offer or sale of the Shares nor any of the activities of the Company will cause the Company to be, an “investment company” or under the control of an “investment company” as such terms are defined in the Investment Company Act of 1940, as amended.

 

(m)

Tax Returns. The Company has filed or will file all material federal, state and foreign income tax returns required to be filed by or on behalf of the Company on or before the due dates therefor (taking into account all extensions of time to file) and has paid or provided for the payment of all such material taxes, except those being contested in good faith, indicated by such tax returns and all assessments received by the Company to the extent that such taxes or assessments have become due.

 

(n)

REIT Qualifications. The Company made a timely election to be subject to tax as a REIT pursuant to Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code”) beginning with its taxable year ended December 31, 2003. The Company has been organized and operated in conformity with the requirements for qualification and taxation as a REIT. The Company’s current and proposed method of operation as described in the Registration Statement and the Prospectus will enable it to continue to meet the requirements for qualification and taxation as a REIT under the Code.

 

(o)

Independent Registered Public Accounting Firm. The accountants who have certified certain financial statements appearing in the Prospectus are an independent registered public accounting firm within the meaning of the Securities Act and the Securities Act Rules and Regulations. Such accountants have not been engaged by the Company to perform any “prohibited activities” (as defined in Section 10A of the Exchange Act).

 

The Company and its subsidiaries each maintains a system of internal accounting and other controls sufficient to provide reasonable assurances regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles as applied in the United States (“GAAP”), including, without limitation:

 

(i)

policies and procedures that:

 

(A)

pertain to the maintenance of records that in reasonable detail accurately and fairly reflect in all material respects the transactions and dispositions of the assets of the Company or its subsidiaries;

 

(B)

provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Company or its subsidiaries are being made only in accordance with general or specific authorizations of the Company’s management and directors or the Advisor; and

 

(C)

provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s or its subsidiaries’ assets that could have a material adverse effect on the Company’s financial statements; and

 

 

(ii)

policies and procedures that provide reasonable assurances that:

 

(A)

transactions are executed only in accordance with general or specific authorizations of the Company’s management or directors or the Advisor;

 

(B)

transactions are recorded as necessary to permit preparation of the Company’s financial statements in conformity with GAAP and to maintain accountability for assets;

 

(C)

access to assets is permitted only in accordance with general or specific authorization of the Company’s management or directors or the Advisor; and

 

(D)

the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

 

Except as described in the Registration Statement, and the Company’s filings with the Commission, since the end of the Company’s most recent audited fiscal year, there has been (1) no material weakness in the Company’s internal control over financial reporting (whether or not remediated), and (2) no change in the Company’s internal control over financial reporting that has materially adversely affected, or is reasonably likely to materially adversely affect, the Company’s internal control over financial reporting.

 

(p)

Preparation of the Financial Statements. The financial statements filed with the Commission as a part of the Registration Statement and included in the Prospectus present fairly the consolidated financial position of the Company and its subsidiaries as of and at the dates indicated and the results of their operations and cash flows for the periods specified. Such financial statements have been prepared in conformity with GAAP applied on a consistent basis throughout the periods involved, except as may be expressly stated in the related notes thereto. No other financial statements or supporting schedules are required to be included in the Registration Statement or any applicable Prospectus.

 

(q)

Material Adverse Change. Since the respective dates as of which information is given in the Registration Statement and the Prospectus, except as may otherwise be stated therein or contemplated thereby, or in the Company’s filings with the Commission, there has not occurred a Company MAE, whether or not arising in the ordinary course of business.

 

(r)

Government Permits. The Company and its subsidiaries possess such certificates, authorities or permits issued by the appropriate state, federal or foreign regulatory agencies or bodies necessary to conduct the business now operated by them, other than those the failure to possess or own would not have, individually or in the aggregate, a Company MAE. Neither the Company nor any of its subsidiaries has received any notice of proceedings relating to the revocation or modification of any such certificate, authority or permit which, individually or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would result in a Company MAE.

 

(s)

Advisor; Advisory Agreement.

 

(i)

Ashford Hospitality Advisors LLC (the “Advisor”) is a limited liability company duly formed and validly existing under the laws of the State of Delaware.

 

(ii)

The Advisory Agreement has been duly and validly authorized, executed and delivered by or on behalf of the Advisor and the Company and constitutes a valid and binding agreement of the Advisor and the Company enforceable in accordance with its terms (except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws of the United States, any state or any political subdivision thereof which affect creditors’ rights generally or by equitable principles relating to the availability of remedies or except to the extent that the enforceability of the indemnity and contribution provisions contained in this Agreement may be limited under applicable securities laws).

 

 

(iii)

The execution and delivery of the Advisory Agreement did not, and the performance thereunder by the Advisor do not and will not conflict with, or result in a breach of any of the terms and provisions of, or constitute a default under:

 

(A)

the Advisor’s or any of its subsidiaries’ charter or by-laws, or other organizational documents, as applicable;

 

(B)

any indenture, mortgage, stockholders agreement, note, lease or other material agreement or instrument to which the Advisor or any of its subsidiaries is a party or by which the Advisor or any of its subsidiaries or any of their properties is bound except, for purposes of this clause (B) only, for such conflicts, breaches or defaults that could not reasonably be expected to have or result in, individually or in the aggregate, a material adverse effect on the financial condition, business affairs, properties, results of operations or business prospects of the Advisor, or a Company MAE; or

 

(C)

any statute, rule or regulation or order of any court or other governmental agency or body having jurisdiction over the Advisor or any of its subsidiaries or any of their respective properties.

 

No consent, approval, authorization or order of any court or other governmental agency or body has been obtained nor is required for the performance of the Advisory Agreement by the Advisor. The Advisor is not in violation of its limited liability company agreement or other organizational documents, as applicable.

 

(iv)

Except as described in the Registration Statement, or in the Advisor’s filings with the Commission, there is no action, suit, proceeding, inquiry or investigation before or brought by any court or governmental agency or body, domestic or foreign, now pending, or, to the knowledge of the Advisor, threatened against or affecting the Advisor.

 

(v)

The Advisor possesses such certificates, authorities or permits issued by the appropriate state, federal or foreign regulatory agencies or bodies necessary to conduct the business now operated by it, other than those which the failure to possess or own would not reasonably be expected to have or result in, individually or in the aggregate, (A) a material adverse effect on the financial condition, business affairs, properties, results of operations or business prospects of the Advisor, (B) a Company MAE, or (C) a material adverse effect on the performance of the services under the Advisory Agreement by the Advisor, and the Advisor has not received any notice of proceedings relating to the revocation or modification of any such certificate, authority or permit.

 

(t)

Properties. Except as otherwise disclosed in the Prospectus and except as would not result in, individually or in the aggregate, a Company MAE:

 

(i)

all properties and assets described in the Prospectus are owned with good and marketable title by the Company and its subsidiaries; and

 

 

(ii)

all liens, charges, encumbrances, claims or restrictions on or affecting any of the properties and assets of any of the Company or its subsidiaries which are required to be disclosed in the Prospectus are disclosed therein.

 

(u)

Hazardous Materials. The Company does not have any knowledge of:

 

(i)

the unlawful presence of any hazardous substances, hazardous materials, toxic substances or waste materials (collectively, “Hazardous Materials”) on any of the properties owned by it or its subsidiaries or subject to mortgage loans owned by the Company or any of its subsidiaries; or

 

(ii)

any unlawful spills, releases, discharges or disposal of Hazardous Materials that have occurred or are presently occurring off such properties as a result of any construction on or operation and use of such properties, which presence or occurrence in the case of clauses (i) and (ii) would result in, individually or in the aggregate, a Company MAE.

 

In connection with the properties owned by the Company and its subsidiaries or subject to mortgage loans owned by the Company or any of its subsidiaries, the Company has no knowledge of any material failure to comply with all applicable local, state and federal environmental laws, regulations, ordinances and administrative and judicial orders relating to the generation, recycling, reuse, sale, storage, handling, transport and disposal of any Hazardous Materials.

 

2.

Representations and Warranties of the Dealer Manager. The Dealer Manager represents and warrants to the Company as of the date of this Agreement and on each Effective Date that:

 

(a)

Organization Status. The Dealer Manager is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware, with all requisite power and authority to enter into this Agreement and to carry out its obligations hereunder.

 

(b)

Authorization of Agreement. This Agreement has been duly authorized, executed and delivered by the Dealer Manager, and assuming due authorization, execution and delivery of this Agreement by the Company, will constitute a valid and legally binding agreement of the Dealer Manager enforceable against the Dealer Manager in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency or similar laws affecting the enforcement of creditors' rights generally or by equitable principles relating to enforceability and except that rights to indemnity and contribution hereunder may be limited by applicable law and public policy.

 

(c)

Absence of Conflict or Default. The execution and delivery of this Agreement, the consummation of the transactions herein contemplated and compliance with the terms of this Agreement by the Dealer Manager will not conflict with or constitute a default under:

 

(i)

its organizational documents;

 

(ii)

any indenture, mortgage, deed of trust or lease to which the Dealer Manager is a party or by which it may be bound, or to which any of the property or assets of the Dealer Manager is subject; or

 

(iii)

any statute, rule, regulation, writ, injunction or decree of any government, governmental instrumentality or court, domestic or foreign, having jurisdiction over the Dealer Manager or its assets, properties or operations, except in the case of clause (ii) or (iii) for such conflicts or defaults that would not individually or in the aggregate have a material adverse effect on the condition (financial or otherwise), business, properties or results of operations of the Dealer Manager.

 

 

(d)

Broker-Dealer Registration; FINRA Membership. The Dealer Manager is, and during the term of this Agreement will be, duly registered as a broker-dealer pursuant to the provisions of the Exchange Act, a member in good standing of FINRA, and a broker or dealer duly registered as such in those states where the Dealer Manager is required to be registered in order to carry out the Offering as contemplated by this Agreement. Moreover, the Dealer Manager’s employees and representatives have all required licenses and registrations to act under this Agreement. There is no provision in the Dealer Manager’s FINRA membership agreement that would restrict the ability of the Dealer Manager to carry out the Offering as contemplated by this Agreement.

 

The information in the “Plan of Distribution” section of the Prospectus insofar as it relates to the Dealer Manager, furnished to the Company by the Dealer Manager in writing specifically for use in the Registration Statement, any preliminary Prospectus or the Prospectus, does not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading

 

3.

Offering and Sale of the Shares. Upon the terms and subject to the conditions set forth in this Agreement, the Company hereby appoints the Dealer Manager as its agent and exclusive distributor to solicit and to retain the Participating Broker-Dealers (as defined in Section 3(a)) to solicit subscriptions for the Shares at the subscription price to be paid in cash. Upon the terms and subject to the conditions set forth in this Agreement, the Dealer Manager hereby accepts such agency and exclusive distributorship and agrees to use its reasonable best efforts to sell or cause to be sold the Shares in such quantities and to such persons in accordance with such terms as are set forth in this Agreement, the Prospectus and the Registration Statement.

 

The Dealer Manager shall do so during the period commencing on the initial Effective Date and ending on the earliest to occur of the following: (1) __________ __, 2027 (which is the third anniversary of the Company’s registration statement); (2) the acceptance by the Company of subscriptions for the amount offered in the Primary Offering for which this section includes any DRP shares reallocated to the Primary Offering; (3) the termination of the Offering by the Company, which the Company shall have the right to terminate in its sole and absolute discretion at any time; (4) the termination of the effectiveness of the Registration Statement; and (5) the liquidation or dissolution of the Company; provided, that the Agreement shall otherwise continue in effect until terminated pursuant to Section 9 herein.

 

The number of Shares, if any, to be reserved for sale by each Participating Broker-Dealer may be determined by mutual agreement, from time to time, by the Dealer Manager and the Company. In the absence of such determination, the Company shall, subject to the provisions of Section 3(c), accept subscriptions based upon a first-come, first accepted reservation or other similar method. Under no circumstances will the Dealer Manager be obligated to underwrite or purchase any Shares for its own account and, in soliciting purchases of Shares, the Dealer Manager shall act solely as the Company’s agent and not as an underwriter or principal.

 

(a)

Participating Broker-Dealers. The Shares offered and sold through the Dealer Manager under this Agreement shall be offered and sold only by the Dealer Manager and other securities dealers the Dealer Manager may retain (collectively the “Participating Broker-Dealers”); provided, however, that:

 

(i)

the Dealer Manager reasonably believes that all Participating Broker-Dealers are registered with the Commission, members of FINRA and are duly licensed or registered by the regulatory authorities in the jurisdictions in which they will offer and sell Shares; and

 

 

(ii)

all such engagements are evidenced by written agreements, the terms and conditions of which substantially conform to the form of Participating Broker-Dealer Agreement substantially in the form of Exhibit A hereto (the “Participating Broker-Dealer Agreement”), whereby the Participating Broker-Dealer will select whether it will offer and sell shares of the Series L Preferred Stock, Series M Preferred Stock, or both.

 

Shares may also be distributed through registered investment advisors pursuant to written agreements upon terms mutually agreed upon by the parties.

 

(b)

Subscription Documents. Each person desiring to purchase Shares through the Dealer Manager, or any other Participating Broker-Dealer, will be required to complete and execute the subscription documents described in the Prospectus.

 

(c)

Completed Sale. The Company will sell Shares using two closing services provided by the Depository Trust Company (“DTC”). The first service is DTC closing (“DTC Settlement”), and the second service is Direct Registration Service (“DRS Settlement”). A sale of a Share shall be deemed by the Company to be completed if and only if (i) the Company has received payment of the full purchase price of each purchased Share, from an investor who satisfies the minimum purchase requirements set forth in the Registration Statement as determined by the Participating Broker-Dealer, or the Dealer Manager, as applicable, in accordance with the provisions of this Agreement, (ii) the Company has accepted such subscription, and, if using DRS Settlement, a properly completed and executed Subscription Agreement, and (iii) such investor has been admitted as a stockholder of the Company. In addition, no sale of Shares shall be completed until after the date on which the subscriber receives a copy of the Prospectus. The Dealer Manager hereby acknowledges and agrees that the Company, in its sole and absolute discretion, may accept or reject any subscription, in whole or in part, for any reason whatsoever or no reason, and no commission or Dealer Manager Fee will be paid to the Dealer Manager with respect to that portion of any subscription which is rejected. As used in this Agreement, “business day” means any day other than a Saturday, Sunday or a day on which banking institutions in the State of Texas are authorized or obligated by law or executive order to close. Further, the Company has the sole right, which it may delegate to the Dealer Manager, to determine and change without notice to the Dealer Manager or Participating Broker-Dealer: (i) the number and timing of closings, including the ability to change the number and timing of closings after communicating the anticipated closing to the Participating Broker-Dealer; (ii) to limit the total amount of Series L Preferred Stock and/or Series M Preferred Stock sold by all Participating Broker-Dealers per closing; (iii) to limit the amount of Series L Preferred Stock and/or Series M Preferred Stock sold by the Participating Broker-Dealer per closing; and (iv) to limit the total number of shares of Series L Preferred Stock and/or Series M Preferred Stock sold by the Participating Broker-Dealer.

 

In connection with DRS Settlement, when a Participating Broker-Dealer’s internal supervisory procedures are conducted at the site at which the Subscription Agreement and check were initially received by the Participating Broker-Dealer from the subscriber, the Participating Broker-Dealer shall transmit the properly completed Subscription Agreement and check to the Escrow Agent by the end of the next business day following receipt of the check and Subscription Agreement. When, pursuant to the Participating Broker-Dealer’s internal supervisory procedures, the Participating Broker-Dealer’s final internal supervisory procedures are conducted at a different location (the “Final Review Office”), the Participating Broker-Dealer shall transmit the check and properly completed Subscription Agreement to the Final Review Office by the end of the next business day following the Participating Broker-Dealer’s receipt of the Subscription Agreement and check. The Final Review Office will, by the end of the next business day following its receipt of the Subscription Agreement and check, forward both the Subscription Agreement and check to the Escrow Agent.

 

 

If any Subscription Agreement solicited by the Participating Broker-Dealer is rejected by the Dealer Manager or the Company, then the Subscription Agreement and check will be returned to the rejected subscriber within 10 business days from the date of rejection.

 

Those persons who purchase Shares using DRS Settlement will be instructed by the Dealer Manager or the Participating Broker-Dealer to make their checks payable as provided in the Prospectus and subscription agreement for the Offering of the Shares of the Company. The Dealer Manager and any Participating Broker-Dealer receiving a check that does not conform to the instructions in the Prospectus and subscription agreement shall promptly return such check directly to such subscriber. Checks received by the Dealer Manager or Participating Broker-Dealer which conform to the instructions in the Prospectus and subscription agreement shall be transmitted for deposit pursuant to one of the methods described in this Section 3.

 

(d)

Dealer-Manager Compensation.

 

(i)

Subject to the special circumstances described in or otherwise provided in the “Plan of Distribution” section of the Prospectus or this Section 3(d), the Company agrees to pay the Dealer Manager selling commissions in the amount of seven percent (7.0%) of the gross offering proceeds from the Series L Preferred Stock offered in the Primary Offering. No selling commissions will be paid for sales of Series M Preferred Stock. The Company may pay reduced selling commissions or may eliminate commissions on certain sales, including the reduction or elimination of selling commissions in accordance with, and on the terms set forth in, the Prospectus. The Dealer Manager will re-allow all the selling commissions, subject to federal and state securities laws, to the Participating Broker-Dealer who sold the Shares as described more fully in the Participating Broker-Dealer Agreement. No selling commissions will be paid for sales of Shares pursuant to the DRP.

 

(ii)

Subject to the special circumstances described in or otherwise provided in the “Plan of Distribution” section of the Prospectus or this Section 3(d), as compensation for acting as the dealer manager, the Company will pay the Dealer Manager, a dealer manager fee in the amount of three percent (3.0%) of the gross offering price from the Shares offered in the Primary Offering (the “Dealer Manager Fee”).

 

The Dealer Manager may retain or re-allow a portion of the Dealer Manager Fee, subject to federal and state securities laws, to the Participating Broker-Dealer who sold the Shares, as described more fully in the Participating Broker-Dealer Agreement. No Dealer Manager Fee will be paid in connection with Shares sold pursuant to the DRP.

 

(iii)

All selling commissions and Dealer Manager fees payable to the Dealer Manager will be paid at least within ten (10) business days after the investor subscribing for the Share is admitted as a shareholder of the Company, in an amount equal to the sales commissions payable with respect to such Shares. The Dealer Manager acknowledges that no commissions, payments or amount will be paid to the Dealer Manager unless and until the gross proceeds of the Shares sold are disbursed to the Company in accordance with the terms of the Escrow Agreement as described in Section 1(h).

 

(iv)

In no event shall the total aggregate underwriting compensation payable to the Dealer Manager, any Participating Broker-Dealers participating in the Offering, including, but not limited to, selling commissions, and the Dealer Manager Fee exceed ten percent (10.0%) of gross offering proceeds from the Primary Offering in the aggregate.

 

 

(v)

Notwithstanding anything to the contrary contained herein, if the Company pays any selling commission to the Dealer Manager for sale by a Participating Broker-Dealer of one or more Shares and the subscription is rescinded as to one or more of the Shares covered by such subscription, then the Company shall decrease the next payment of selling commissions or other compensation otherwise payable to the Dealer Manager by the Company under this Agreement by an amount equal to the commission rate established in this Section 3(d), multiplied by the number of Shares as to which the subscription is rescinded. If no payment of selling commissions or other compensation is due to the Dealer Manager after such withdrawal occurs, then the Dealer Manager shall pay the amount specified in the preceding sentence to the Company within a reasonable period of time not to exceed thirty (30) days following receipt of notice by the Dealer Manager from the Company stating the amount owed as a result of rescinded subscriptions.

 

(e)

Reasonable Bona Fide Due Diligence Expenses. The Company will authorize a collection of available information, as reasonably agreed to by the Company, regarding the Offering, which collection the Company may amend and supplement from time to time, to be delivered to the Dealer Manager and to the Participating Broker-Dealers (or their agents performing due diligence) in connection with their due diligence review of the Offering. In the event the Dealer Manager or a Participating Broker-Dealer (or its agent performing due diligence) requests additional information or otherwise wishes to conduct additional due diligence regarding the Offering, the Company and the Dealer Manager will reasonably cooperate with such Participating Broker-Dealer to accommodate such request; provided, however, any additionally provided information will be subject to the terms of a confidentiality agreement executed by the Dealer Manager and the Participating Broker-Dealer to the extent such additionally provided information is material non-public information as determined by the Company in its sole discretion.

 

In addition to any payments to the Dealer Manager pursuant to Section 3(d), the Company or the Advisor shall reimburse the Dealer Manager or any Participating Broker-Dealer for reasonable bona fide due diligence expenses incurred by the Dealer Manager or any Participating Broker-Dealer to the extent permitted pursuant to FINRA rules, provided, however, that no due diligence expenses shall be reimbursed by the Company pursuant to this Section 3(e) which would cause the aggregate of all of the Company’s expenses described in Section 3(g) and compensation paid pursuant to Section 3(d) to exceed 15% of the gross proceeds from the sale of the Shares (the “15% cap”). Also, the Company shall only reimburse the Dealer Manager or any Participating Broker-Dealer for such approved bona fide due diligence expenses to the extent such expenses have actually been incurred and are supported by detailed and itemized invoice(s) provided to the Company.

 

(f)

Certain Advances to Dealer Manager. The parties hereto acknowledge that prior to the initial Effective Date, the Company may have paid to the Dealer Manager advances of monies against out-of-pocket accountable expenses actually anticipated to be incurred by the Dealer Manager in connection with the Offering (other than reasonable bona fide due diligence expenses). Such advances, if any, shall be credited against the amount of the Dealer Manager Fee payable pursuant to Section 3(d) that is retained by the Dealer Manager and not re-allowed until the full amount of such advances is offset. Such advances are not intended to be in addition to the compensation set forth in Section 3(d), and any and all monies advanced that are not utilized for out-of-pocket accountable expenses actually incurred by the Dealer Manager in connection with the Offering (other than reasonable bona fide due diligence expenses) shall be reimbursed by the Dealer Manager to the Company.

 

 

(g)

Company Expenses. Subject to the limitations described above, the Company agrees to pay all costs and expenses incident to the Offering, whether or not the transactions contemplated hereunder are consummated or this Agreement is terminated, including expenses, fees and taxes in connection with:

 

(i)

the registration fee, the preparation and filing of the Registration Statement (including without limitation financial statements, exhibits, schedules and consents), the Prospectus, and any amendments or supplements thereto, and the printing and furnishing of copies of each thereof to the Dealer Manager and to Participating Broker-Dealers (including costs of mailing and shipment);

 

(ii)

the preparation, issuance and delivery of certificates, if any, for the Shares, including any stock or other transfer taxes or duties payable upon the sale of the Shares;

 

(iii)

all fees and expenses of the Company’s legal counsel, independent public or certified public accountants and other advisors;

 

(iv)

the determination of the Shares eligibility for sale or an exemption under state law and the printing and furnishing of copies of blue sky surveys if any;

 

(v)

the filing fees in connection with filing for review by FINRA, if required, of all necessary documents and information relating to the Offering and the Shares;

 

(vi)

the fees and expenses of any transfer agent or registrar for the Shares and miscellaneous expenses referred to in the Registration Statement;

 

(vii)

all costs and expenses incident to the travel and accommodation of the Advisor acting on behalf of the Company, in making road show presentations and presentations to Participating Broker-Dealers and other broker-dealers and financial advisors with respect to the offering of the Shares; and

 

(viii)

the performance of the Company’s other obligations hereunder.

 

Notwithstanding the foregoing:

 

(i)

the Company shall not directly pay, or reimburse the Advisor for, the costs and expenses described in this Section 3(g) if the payment or reimbursement of such expenses would cause the aggregate of the Company’s “organization and offering expenses” as defined by FINRA Rule 2310 (including the Company expenses paid or reimbursed pursuant to this Section 3(g), all items of underwriting compensation including Dealer Manager expenses described in Section 3(d) and due diligence expenses described in Section 3(e)) to exceed the 15% cap; and

 

(ii)

the Advisor shall pay all of the organization and offering expenses included in FINRA Rule 2310(b)(4)(C)(i) (the “issuer expenses”) that exceed the 15% cap.

 

4.

Conditions to the Dealer Manager’s Obligations. The Dealer Manager’s obligations hereunder shall be subject to the following terms and conditions:

 

(a)

The representations and warranties on the part of the Company contained in this Agreement hereof shall be true and correct in all material respects and the Company shall have complied with its covenants, agreements and obligations contained in this Agreement in all material respects;

 

(b)

The Registration Statement shall have become effective and no stop order suspending the effectiveness of the Registration Statement shall have been issued by the Commission and, to the best knowledge of the Company, no proceedings for that purpose shall have been instituted, threatened or contemplated by the Commission; and any request by the Commission for additional information (to be included in the Registration Statement or Prospectus or otherwise) shall have been complied with to the reasonable satisfaction of the Dealer Manager.

 

 

(c)

The Registration Statement and the Prospectus, and any amendment or any supplement thereto, shall not contain any untrue statement of material fact, or omit to state a material fact that is required to be stated therein or is necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

 

5.

Covenants of the Company. The Company covenants and agrees with the Dealer Manager as follows:

 

(a)

Registration Statement. The Company will use its best efforts to cause the Registration Statement and any subsequent amendments thereto to become effective as promptly as possible and will furnish a copy of any proposed amendment or supplement of the Registration Statement or the Prospectus to the Dealer Manager. The Company will comply in all material respects with all federal and state securities laws, rules and regulations which are required to be complied with in order to permit the continuance of offers and sales of the Shares in accordance with the provisions hereof and of the Prospectus.

 

(b)

Commission Orders. If the Commission shall issue any stop order or any other order preventing or suspending the use of the Prospectus, or shall institute any proceedings for that purpose, then the Company will promptly notify the Dealer Manager and use its best efforts to prevent the issuance of any such order and, if any such order is issued, to use its best efforts to obtain the removal thereof as promptly as possible.

 

(c)

Blue Sky Qualifications. The Company will use its best efforts to qualify the Shares for offering and sale under the securities or blue sky laws of such jurisdictions as the Dealer Manager and the Company shall mutually agree upon and to make such applications, file such documents and furnish such information as may be reasonably required for that purpose. The Company will, at the Dealer Manager’s request, furnish the Dealer Manager with a copy of such papers filed by the Company in connection with any such qualification. The Company will promptly advise the Dealer Manager of the issuance by such securities administrators of any stop order preventing or suspending the use of the Prospectus or of the institution of any proceedings for that purpose, and will use its best efforts to prevent the issuance of any such order and if any such order is issued, to use its best efforts to obtain the removal thereof as promptly as possible.

 

(d)

Amendments and Supplements. If, at any time when a Prospectus relating to the Shares is required to be delivered under the Securities Act, any event shall have occurred to the knowledge of the Company, or the Company receives notice from the Dealer Manager that it believes such an event has occurred, as a result of which the Prospectus or any Approved Sales Literature as then amended or supplemented would include any untrue statement of a material fact, or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, or if it is necessary at any time to amend the Registration Statement or supplement the Prospectus relating to the Shares to comply with the Securities Act, then the Company will promptly notify the Dealer Manager thereof (unless the information shall have been received from the Dealer Manager) and will prepare and file with the Commission an amendment or supplement which will correct such statement or effect such compliance to the extent required, and shall make available to the Dealer Manager thereof sufficient copies for its own use and/or distribution to the Participating Broker-Dealers.

 

 

(e)

Requests from Commission. The Company will promptly advise the Dealer Manager of any request made by the Commission or a state securities administrator for amending the Registration Statement, supplementing the Prospectus or for additional information.

 

(f)

Copies of Registration Statement. The Company will furnish the Dealer Manager with one signed copy of the Registration Statement, including its exhibits, and such additional copies of the Registration Statement, without exhibits, and the Prospectus and all amendments and supplements thereto, which are finally approved by the Commission, as the Dealer Manager may reasonably request for sale of the Shares.

 

(g)

Qualification to Transact Business. The Company will take all steps necessary to ensure that at all times the Company will validly exist as a Maryland corporation and will be qualified to do business in all jurisdictions in which the conduct of its business requires such qualification and where such qualification is required under local law.

 

(h)

Authority to Perform Agreements. The Company undertakes to obtain all consents, approvals, authorizations or orders of any court or governmental agency or body which are required for the Company’s performance of this Agreement, each in the form included as exhibits to the Registration Statement for the consummation of the transactions contemplated hereby and thereby, respectively, or the conducting by the Company of the business described in the Prospectus.

 

(i)

Sales Literature. The Company will furnish to the Dealer Manager as promptly as shall be practicable upon request any Approved Sales Literature (provided that the use of said material has been first approved for use to the extent required by all appropriate regulatory agencies). Any supplemental sales literature or advertisement, regardless of how labeled or described, used in addition to the Prospectus in connection with the Offering which is furnished or approved by the Company (including, without limitation, Approved Sales Literature) shall, to the extent required, be filed with and, to the extent required, approved by the appropriate securities agencies and bodies, provided that the Dealer Manager will make all FINRA filings, to the extent required. The Company will not (and will instruct its affiliates not to): show or give to any investor or prospective investor or reproduce any material or writing that is marked “broker-dealer use only,” institutional or otherwise bears a legend denoting that it is not to be used in connection with the sale of Shares to members of the public; or show or give to any investor or prospective investor in a particular jurisdiction any material or writing if such material bears a legend denoting that it is not to be used in connection with the sale of Shares to members of the public in such jurisdiction.

 

(j)

Use of Proceeds. The Company will apply the proceeds from the sale of the Shares as set forth in the Prospectus.

 

(k)

Customer Information. The Dealer Manager and the Company shall, when applicable:

 

(i)

abide by and comply with (A) the privacy standards and requirements of the Gramm-Leach-Bliley Act of 1999 (the “GLB Act”) and applicable regulations promulgated thereunder, (B) the privacy standards and requirements of any other applicable federal or state law, including but not limited to, the Fair Credit Reporting Act (“FCRA”), and (C) its own internal privacy policies and procedures, each as may be amended from time to time;

 

(ii)

refrain from the use or disclosure of nonpublic personal information (as defined under the GLB Act) of all customers who have opted out of such disclosures except as necessary to service the customers or as otherwise necessary or required by applicable law;

 

 

(iii)

except as expressly permitted under the FCRA, the Dealer Manager and the Company shall not disclose any information that would be considered a “consumer report” under the FCRA; and

 

(iv)

determine which customers have opted out of the disclosure of nonpublic personal information by periodically reviewing and, if necessary, retrieving an aggregated list of such customers from the Participating Broker-Dealers (the “List”) to identify customers that have exercised their opt-out rights. If either party uses or discloses nonpublic personal information of any customer for purposes other than servicing the customer, or as otherwise required by applicable law, that party will consult the List to determine whether the affected customer has exercised his or her opt-out rights. Each party understands that it is prohibited from using or disclosing any nonpublic personal information of any customer that is identified on the List as having opted out of such disclosures.

 

(l)

Dealer Manager’s Review of Proposed Amendments and Supplements. Prior to amending or supplementing the Registration Statement, any preliminary prospectus or the Prospectus (including any amendment or supplement through incorporation of any report filed under the Exchange Act), the Company shall furnish to the Dealer Manager for review, a reasonable amount of time prior to the proposed time of filing or use thereof, a copy of each such proposed amendment or supplement, and the Company shall not file or use any such proposed amendment or supplement without the Dealer Manager’s consent, which consent shall not be unreasonably withheld or delayed.

 

(m)

Certain Payments. Without the prior consent of the Dealer Manager, none of the Company, the Advisor or any of their respective affiliates will make any payment (cash or non-cash) to any associated Person or registered representative of the Dealer Manager.

 

6.

Covenants of the Dealer Manager. The Dealer Manager covenants and agrees with the Company as follows:

 

(a)

Compliance With Laws. With respect to the Dealer Manager’s participation and the participation by each Participating Broker-Dealer in the offer and sale of the Shares (including, without limitation, any resales and transfers of Shares), the Dealer Manager agrees, and each Participating Broker-Dealer in its Participating Broker-Dealer Agreement will agree, to comply in all material respects with all applicable requirements of the Securities Act, the Securities Act Rules and Regulations, the Exchange Act, the Exchange Act Rules and Regulations and all other federal regulations applicable to the Offering including Regulation Best Interest, the sale of Shares and with all applicable state securities or blue sky laws, and the Rules of FINRA applicable to the Offering, from time to time in effect, specifically including, but not in any way limited to, FINRA Rules 2040 (Payments to Unregistered Persons), 2111 (Suitability), 2231 (Customer Account Statements), 2310 (Direct Participation Programs), 5130 (Restrictions on the Purchase and Sale of Initial Equity Public Offerings), and 5141 (Sale of Securities in a Fixed Price Offering) therein. The Dealer Manager will not offer the Shares for sale in any jurisdiction unless and until it has been advised that the Shares are either registered in accordance with, or exempt from, the securities and other laws applicable thereto.

 

In addition, the Dealer Manager shall, in accordance with applicable law or as prescribed by any state securities administrator, provide, or require in the Participating Broker-Dealer Agreement that the Participating Broker-Dealer shall provide, to any prospective investor copies of any prescribed document which is part of the Registration Statement and any supplements thereto during the course of the Offering and prior to the sale. The Company may provide the Dealer Manager with certain Approved Sales Literature to be used by the Dealer Manager and the Participating Broker-Dealers in connection with the solicitation of purchasers of the Shares. The Dealer Manager agrees not to deliver the Approved Sales Literature to any person prior to the initial Effective Date. If the Dealer Manager elects to use such Approved Sales Literature after the initial Effective Date, then the Dealer Manager agrees that such material shall not be used by it in connection with the solicitation of purchasers of the Shares and that it will direct Participating Broker-Dealers not to make such use unless accompanied or preceded by the Prospectus, as then currently in effect, and as it may be amended or supplemented in the future.

 

 

The Dealer Manager agrees that it will not use any Approved Sales Literature other than those provided to the Dealer Manager by the Company for use in the Offering. The use of any other sales material is expressly prohibited. The Dealer Manager will not, and each Participating Broker-Dealer in its Participating Broker-Dealer Agreement shall agree not to: show or give to any investor or prospective investor or reproduce any material or writing that is marked “broker-dealer use only,” institutional or otherwise bears a legend denoting that it is not to be used in connection with the sale of Shares to members of the public; or show or give to any investor or prospective investor in a particular jurisdiction any material or writing if such material bears a legend denoting that it is not to be used in connection with the sale of Shares to members of the public in such jurisdiction.

 

(b)

No Additional Information. In offering the Shares for sale, the Dealer Manager shall not, and each Participating Broker-Dealer shall agree not to, give or provide any information or make any representation other than those contained in the Prospectus or the Approved Sales Literature.

 

(c)

Sales of Shares. The Dealer Manager shall, and each Participating Broker-Dealer shall agree to, solicit purchases of the Shares only in the jurisdictions in which the Dealer Manager and such Participating Broker-Dealer are legally qualified to so act and in which the Dealer Manager and each Participating Broker-Dealer have been advised by the Company or counsel to the Company that such solicitations can be made.

 

(d)

Subscription Agreement. The Dealer Manager will comply in all material respects with the subscription procedures and “Plan of Distribution” set forth in the Prospectus. Subscriptions using DRS Settlement will be submitted by the Dealer Manager and each Participating Broker-Dealer to the Company only on the subscription agreement, a form of which is included as an exhibit to the Registration Statement. The Dealer Manager understands and acknowledges, and each Participating Broker-Dealer shall acknowledge if using DRS Settlement, that the Subscription Agreement must be executed and initialed by the subscriber as provided for by the Subscription Agreement.

 

(e)

Suitability. The Dealer Manager will offer Shares, and in its agreement with each Participating Broker-Dealer will require that the Participating Broker-Dealer offer Shares, only to persons that it has reasonable grounds to believe meet the financial qualifications set forth in the Prospectus or in any suitability letter or memorandum sent to it by the Company and will only make offers to persons in the states in which it is advised in writing by the Company that the Shares are qualified for sale or that such qualification is not required. In offering Shares, the Dealer Manager will comply, and in its agreements with the Participating Broker-Dealers, the Dealer Manager will require that the Participating Broker-Dealers comply, with the provisions of all applicable rules and regulations relating to suitability of investors, including applicable FINRA Rules.

 

 

The Dealer Manager agrees that in recommending the purchase of the Shares in the Primary Offering to an investor, the Dealer Manager and each person associated with the Dealer Manager that makes such recommendation shall have, and each Participating Broker-Dealer in its Participating Broker-Dealer Agreement shall agree with respect to investors to whom it makes a recommendation that it shall have, reasonable grounds to believe, on the basis of information obtained from the investor concerning the investor’s investment objectives, other investments, financial situation and needs, and any other information known by the Dealer Manager, the person associated with the Dealer Manager or the Participating Broker-Dealer that:

 

(i)

the investor is or will be in a financial position appropriate to enable the investor to realize to a significant extent the benefits described in the Prospectus, including the tax benefits where they are a significant aspect of the Company;

 

(ii)

the investor has a fair market net worth sufficient to sustain the risks inherent in the program, including loss of investment and lack of liquidity; and

 

(iii)

an investment in the Shares offered in the Primary Offering is otherwise suitable for the investor.

 

The Dealer Manager agrees as to investors to whom it makes a recommendation with respect to the purchase of the Shares in the Primary Offering (and each Participating Broker-Dealer in its Participating Broker-Dealer Agreement shall agree, with respect to investors to whom it makes such recommendations) it will rely on relevant information provided by the investor, including information as to the investor’s age, investment objectives, investment experience, investment time horizon, income, net worth, financial situation and needs, tax status, other investments, liquidity needs, risk tolerance and other pertinent information. The Dealer Manager agrees as to investors to whom it makes a recommendation with respect to the purchase of the Shares in the Offering (and each Participating Broker-Dealer in its Participating Broker-Dealer Agreement shall agree, with respect to Investors to whom it makes such recommendations) to maintain in the files of the Dealer Manager (or the Participating Broker-Dealer, as applicable) documents disclosing the basis upon which the determination of suitability was reached as to each investor.

 

In making the determinations as to financial qualifications and as to suitability, the Dealer Manager and Participating Broker-Dealers may rely on (A) representations from investment advisers who are not affiliated with a Participating Broker-Dealer, and banks acting as trustees or fiduciaries, and (B) information it has obtained from a prospective investor, including such information as the investment objectives, other investments, financial situation and needs of the person or any other information known by the Dealer Manager (or Participating Broker-Dealer, as applicable), after due inquiry. Notwithstanding the foregoing, the Dealer Manager shall not, and each Participating Broker-Dealer shall agree not to, execute any transaction in the Company in a discretionary account without prior written approval of the transaction by the customer.

 

(f)

Participating Broker-Dealer Agreements. All engagements of the Participating Broker-Dealers will be evidenced by a Participating Broker-Dealer Agreement.

 

(g)

Electronic Delivery and Electronic Signatures. If the Dealer Manager uses electronic delivery to distribute the Prospectus to any person or allows the use of electronic signatures, it will comply with all applicable requirements of the Commission, the Blue Sky laws and/or FINRA and any other laws or regulations related to the electronic delivery of documents and the use of electronic signatures.

 

(h)

AML Compliance. The Dealer Manager represents to the Company that it has established and implemented an anti-money laundering compliance program (“AML Program”) in accordance with Section 352 of the USA PATRIOT Act of 2001 (the “PATRIOT Act”) and FINRA Rule 3310, that complies with applicable anti-money laundering laws and regulations, including, but not limited to, the customer identification program requirements of Section 326 of the PATRIOT Act, and the suspicious activity reporting requirements of Section 356 of the PATRIOT Act, and the laws, regulations and Executive Orders administered by the Office of Foreign Assets Control (“OFAC”) of the U.S. Department of Treasury (collectively, “AML/OFAC Laws”). The Dealer Manager hereby covenants to remain in compliance with the AML/OFAC Laws and shall, upon request by the Company, provide a certification to the Company that, as of the date of such certification, its AML Program is compliant with the AML/OFAC Laws.

 

 

(i)

Customer Information. The Dealer Manager will use its best efforts to provide the Company with any and all subscriber information that the Company requests in order for the Company to satisfy its obligations under the AML/OFAC Laws and comply with the requirements under Section 6(h) above.

 

(j)

Recordkeeping. The Dealer Manager will comply, and will require each Participating Broker-Dealer to comply, with the record keeping requirements of the Exchange Act, including, but not limited to, Rules 17a-3 and 17a-4 promulgated under the Exchange Act, and shall maintain, for at least six years or for a period of time not less than that required in order to comply with all applicable federal, state and other regulatory requirements, whichever is later, such records with respect to each investor who purchases Shares, information used to determine that the investor meets the suitability standards imposed on the offer and sale of the Shares, the amount of Shares sold, and a representation of the investor that the investor is investing for the investor’s own account or, in lieu of such representation, information indicating that the investor for whose account the investment was made met the suitability standards.

 

(k)

Suspension or Termination of Offering. The Dealer Manager agrees, and will require that each of the Participating Broker-Dealers agree, to suspend or terminate the offering and sale of the Shares upon request of the Company at any time and to resume the offering and sale of the Shares upon subsequent request of the Company.

 

7.

Indemnification.

 

(a)

Indemnified Parties Defined. For the purposes of this Agreement, an “Indemnified Party” shall mean a person or entity entitled to indemnification under this Section 7, as well as such person’s or entity’s officers, directors, employees, members, partners, affiliates, agents and representatives, and each person, if any, who controls such person or entity within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act.

 

(b)

Indemnification of the Dealer Manager and Participating Broker-Dealers. The Company will indemnify, defend and hold harmless the Dealer Manager and the Participating Broker-Dealers, and their respective Indemnified Parties, from and against any losses, claims, expenses (including reasonable legal and other expenses incurred in investigating and defending such claims or liabilities), damages or liabilities, joint or several, to which any such Participating Broker-Dealers or the Dealer Manager, or their respective Indemnified Parties, may become subject under the Securities Act, the Securities Act Rules and Regulations, the Exchange Act, the Exchange Act Rules and Regulations or otherwise, insofar as such losses, claims, expenses, damages or liabilities (or actions in respect thereof) arise out of or are based upon:

 

(i)

in whole or in part, any material inaccuracy in a representation or warranty contained herein by the Company, any material breach of a covenant contained herein by the Company, or any material failure by the Company to perform its obligations hereunder or to comply with state or federal securities laws applicable to the Offering;

 

(ii)

any untrue statement or alleged untrue statement of a material fact contained (A) in any Registration Statement or any post-effective amendment thereto or in the Prospectus or any amendment or supplement to the Prospectus, (B) in any Approved Sales Literature or (C) in any blue sky application or other document executed by the Company or on its behalf specifically for the purpose of qualifying any or all of the Shares for sale under the securities laws of any jurisdiction or based upon written information furnished by the Company under the securities laws thereof (any such application, document or information being hereinafter called a “Blue Sky Application”); or

 

 

(iii)

the omission or alleged omission to state a material fact required to be stated in the Registration Statement or any post-effective amendment thereof or the omission or alleged omission to state a material fact required to be stated in the Prospectus or any amendment or supplement to the prospectus to make the statements therein, in light of the circumstances under which they were made, not misleading.

 

The Company will reimburse each Participating Broker-Dealer or the Dealer Manager, and their respective Indemnified Parties, for any reasonable legal or other expenses incurred by such Participating Broker-Dealer or the Dealer Manager, and their respective Indemnified Parties, in connection with investigating or defending such loss, claim, expense, damage, liability or action; provided, however, that the Company will not be liable in any such case to the extent that any such loss, claim, expense, damage or liability arises out of, or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in reliance upon and in conformity with written information furnished to the Company by the Dealer Manager expressly for use in the “Plan of Distribution” section of Registration Statement or any post-effective amendment thereof or the Prospectus or any such amendment thereof or supplement thereto. This indemnity agreement will be in addition to any liability which the Company may otherwise have.

 

(c)

Dealer Manager Indemnification of the Company and the Advisor. The Dealer Manager will indemnify, defend and hold harmless the Company and the Advisor and each of its Indemnified Parties and each person who has signed the Registration Statement, from and against any losses, claims, expenses (including the reasonable legal and other expenses incurred in investigating and defending any such claims or liabilities), damages or liabilities to which any of the aforesaid parties may become subject under the Securities Act, the Securities Act Rules and Regulations, the Exchange Act, the Exchange Act Rules and Regulations or otherwise, insofar as such losses, claims, expenses, damages (or actions in respect thereof) arise out of or are based upon:

 

(i)

in whole or in part, any material inaccuracy in a representation or warranty contained herein by the Dealer Manager or any material breach of a covenant contained herein by the Dealer Manager;

 

(ii)

any untrue statement or any alleged untrue statement of a material fact contained (A) in any Registration Statement or any post-effective amendment thereto or in the Prospectus or any amendment or supplement to the Prospectus, (B) in any Approved Sales Literature, or (C) any Blue Sky Application;

 

(iii)

the omission or alleged omission to state a material fact required to be stated in the Registration Statement, or any post-effective amendment thereof, or the omission or alleged omission to state a material fact required to be stated in the Prospectus or any amendment or supplement to the Prospectus to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, however, that in each case described in clauses (ii) and (iii) to the extent, but only to the extent, that such untrue statement or omission was made in reliance upon and in conformity with written information furnished to the Company by the Dealer Manager expressly for use in the Registration Statement or any such post-effective amendments thereof or the Prospectus or any such amendment thereof or supplement thereto;

 

 

(iv)

any use of sales literature, including “broker-dealer use only” materials, by the Dealer Manager that is not Approved Sales Literature; or

 

(v)

any untrue statement made by the Dealer Manager or omission by the Dealer Manager to state a fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading in connection with the Offering provided, however, this clause (v) shall not apply to any statements or omissions made in conformity with the Registration Statement, the Prospectus, any Approved Sales Literature or any other materials or information furnished by or on behalf of the Company.

 

The Dealer Manager will reimburse the aforesaid parties for any reasonable legal or other expenses incurred in connection with investigation or defense of such loss, claim, expense, damage, liability or action. This indemnity agreement will be in addition to any liability which the Dealer Manager may otherwise have.

 

(d)

Advisor Indemnification of the Dealer Manager and the Participating Broker-Dealer. The Advisor will indemnify, defend and hold harmless the Dealer Manager and the Participating Broker-Dealers, and their respective Indemnified Parties, from and against any losses, claims, expenses (including reasonable legal and other expenses incurred in investigating and defending such claims or liabilities), damages or liabilities, joint or several, to which any such Participating Broker-Dealers or the Dealer Manager, or their respective Indemnified Parties, may become subject under the Securities Act, the Securities Act Rules and Regulations, the Exchange Act, the Exchange Act Rules and Regulations or otherwise, insofar as such losses, claims, expenses, damages or liabilities (or actions in respect thereof) arise out of or are based upon, in whole or in part, any material inaccuracy in a representation or warranty contained in Section 1(s) by the Advisor.

 

The Advisor will reimburse the aforesaid parties for any reasonable legal or other expenses incurred in connection with investigation or defense of such loss, claim, expense, damage, liability or action. This indemnity agreement will be in addition to any liability which the Advisor may otherwise have.

 

(e)

Participating Broker-Dealer Indemnification of the Company. By virtue of entering into the Participating Broker-Dealer Agreement, each Participating Broker-Dealer severally will agree to indemnify, defend and hold harmless the Company, the Advisor, the Dealer Manager, each of their respective Indemnified Parties, and each person who signs the Registration Statement, from and against any losses, claims, expenses, damages or liabilities to which the Company, the Dealer Manager, or any of their respective Indemnified Parties, or any person who signed the Registration Statement, may become subject, under the Securities Act or otherwise, as more fully described in the Participating Broker-Dealer Agreement.

 

(f)

Action Against Parties; Notification. Promptly after receipt by any Indemnified Party under this Section 7 of notice of the commencement of any action, such Indemnified Party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 7, promptly notify the indemnifying party of the commencement thereof; provided, however, that the failure to give such notice shall not relieve the indemnifying party of its obligations hereunder except to the extent it shall have been actually prejudiced by such failure.

 

In case any such action is brought against any Indemnified Party, and it notifies an indemnifying party of the commencement thereof, the indemnifying party will be entitled, to the extent it may wish, jointly with any other indemnifying party similarly notified, to participate in the defense thereof, with separate counsel. Such participation shall not relieve such indemnifying party of the obligation to reimburse the Indemnified Party for reasonable legal and other expenses incurred by such Indemnified Party in defending itself, except for such expenses incurred after the indemnifying party has deposited funds sufficient to effect the settlement, with prejudice, of, and unconditional release of all liabilities from, the claim in respect of which indemnity is sought. Any such indemnifying party shall not be liable to any such Indemnified Party on account of any settlement of any claim or action effected without the consent of such indemnifying party, such consent not to be unreasonably withheld or delayed.

 

 

(g)

Reimbursement of Fees and Expenses. An indemnifying party under this Section 7 of this Agreement shall be obligated to reimburse an Indemnified Party for reasonable legal and other expenses as follows:

 

(i)

In the case of the Company indemnifying the Dealer Manager, the advancement of funds to the Dealer Manager for legal expenses and other costs incurred as a result of any legal action for which indemnification is being sought shall be permissible only if all of the following conditions are satisfied: (A) the legal action relates to acts or omissions with respect to the performance of duties or services on behalf of the Company; (B) the legal action is initiated by a third party who is not a Shareholder of the Company or the legal action is initiated by a Shareholder of the Company acting in his or her capacity as such and a court of competent jurisdiction specifically approves such advancement; and (C) the Dealer Manager undertakes to repay the advanced funds to the Company, together with the applicable legal rate of interest thereon, in cases in which the Dealer Manager is found not to be entitled to indemnification.

 

(ii)

In any case of indemnification other than that described in Section 7(g)(i) above, the indemnifying party shall pay all legal fees and expenses reasonably incurred by the Indemnified Party in the defense of such claims or actions; provided, however, that the indemnifying party shall not be obligated to pay legal expenses and fees to more than one law firm in connection with the defense of similar claims arising out of the same alleged acts or omissions giving rise to such claims notwithstanding that such actions or claims are alleged or brought by one or more parties against more than one Indemnified Party. If such claims or actions are alleged or brought against more than one Indemnified Party, then the indemnifying party shall only be obliged to reimburse the expenses and fees of the one law firm (in addition to local counsel) that has been participating by a majority of the indemnified parties against which such action is finally brought; and if a majority of such indemnified parties is unable to agree on which law firm for which expenses or fees will be reimbursable by the indemnifying party, then payment shall be made to the first law firm of record representing an Indemnified Party against the action or claim. Such law firm shall be paid only to the extent of services performed by such law firm and no reimbursement shall be payable to such law firm on account of legal services performed by another law firm.

 

8.

Contribution.

 

(a)

If Indemnification is Unavailable. If the indemnification provided for in Section 7 is for any reason unavailable to or insufficient to hold harmless an Indemnified Party in respect of any losses, liabilities, claims, damages or expenses referred to therein, then each indemnifying party shall contribute to the aggregate amount of such losses, liabilities, claims, damages and expenses incurred by such Indemnified Party, as incurred:

 

(i)

in such proportion as is appropriate to reflect the relative benefits received by the Company, the Advisor, the Dealer Manager and the Participating Broker-Dealer, respectively, from the proceeds received in the Primary Offering pursuant to this Agreement and the relevant Participating Broker-Dealer Agreement; or

 

 

(ii)

if the allocation provided by clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company, the Advisor, the Dealer Manager and the Participating Broker-Dealer, respectively, in connection with the statements or omissions which resulted in such losses, liabilities, claims, damages or expenses, as well as any other relevant equitable considerations.

 

(b)

Relative Benefits. The relative benefits received by the Company, the Advisor, the Dealer Manager and the Participating Broker-Dealer, respectively, in connection with the proceeds received in the Primary Offering pursuant to this Agreement and the relevant Participating Broker-Dealer Agreement shall be deemed to be in the same respective proportion as the total net proceeds from the Primary Offering pursuant to this Agreement and the relevant Participating Broker-Dealer Agreement (before deducting expenses), received by the Company, and the total selling commissions and dealer manager fees received by the Dealer Manager and the Participating Broker-Dealer, respectively, in each case as set forth on the cover of the Prospectus bear to the aggregate offering price of the Shares sold in the Primary Offering as set forth on such cover.

 

(c)

Relative Fault. The relative fault of the Company, the Advisor, the Dealer Manager and the Participating Broker-Dealer, respectively, shall be determined by reference to, among other things, whether any such untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact related to information supplied by the Company, by the Dealer Manager or by the Participating Broker-Dealer, respectively, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.

 

(d)

Pro Rata is Unreasonable. The Company, the Advisor, the Dealer Manager and the Participating Broker-Dealer (by virtue of entering into the Participating Broker-Dealer Agreement) agree that it would not be just and equitable if contribution pursuant to this Section 8 were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable contributions referred to above in this Section 8. The aggregate amount of losses, liabilities, claims, damages and expenses incurred by an Indemnified Party and referred to above in this Section 8 shall be deemed to include any legal or other expenses reasonably incurred by such Indemnified Party in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue statement or omission or alleged omission.

 

(e)

Limits. Notwithstanding the provisions of this Section 8de, the Dealer Manager and the Participating Broker-Dealer shall not be required to contribute any amount by which the total price at which the Shares sold in the Primary Offering to the public by them exceeds the amount of any damages which the Dealer Manager and the Participating Broker-Dealer have otherwise been required to pay by reason of any untrue or alleged untrue statement or omission or alleged omission.

 

(f)

Fraudulent Misrepresentation. No party guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any party who was not guilty of such fraudulent misrepresentation.

 

(g)

Benefits of Contribution. For the purposes of this Section 8, the Dealer Manager’s officers, directors, employees, members, partners, agents and representatives, and each person, if any, who controls the Dealer Manager within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act shall have the same rights to contribution of the Dealer Manager, and each officers, directors, employees, members, partners, agents and representatives of the Company, each officer of the Company who signed the Registration Statement and each person, if any, who controls the Company, within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act shall have the same rights to contribution of the Company. The Participating Broker-Dealers’ respective obligations to contribute pursuant to this Section 8 are several in proportion to the number of Shares sold by each Participating Broker-Dealer in the Primary Offering and not joint.

 

 

9.

Termination of this Agreement.

 

(a)

Term; Expiration. This Agreement shall become effective on the initial Effective Date and the obligations of the parties hereunder shall not commence until the initial Effective Date. This Agreement may be terminated by either party upon 60 calendar days’ written notice to the other party. This Agreement shall automatically expire on the termination date of the Offering as described in the Prospectus.

 

(b)

Delivery of Records Upon Expiration or Early Termination. Upon the expiration or early termination of this Agreement for any reason, the Dealer Manager shall:

 

(i)

promptly forward any and all funds, if any, in its possession which were received from investors for the sale of Shares for deposit;

 

(ii)

to the extent not previously provided to the Company a list of all investors who have subscribed for or purchased Shares and all broker-dealers with whom the Dealer Manager has entered into a Participating Broker-Dealer Agreement;

 

(iii)

notify Participating Broker-Dealers of such termination; and

 

(iv)

promptly deliver to the Company copies of any sales literature designed for use specifically for the Offering that it is then in the process of preparing. Upon expiration or earlier termination of this Agreement, the Company shall pay to the Dealer Manager all compensation to which the Dealer Manager is or becomes entitled under Section 3(d) at such time as such compensation becomes payable.

 

10.

Miscellaneous

 

(a)

Survival. The following provisions of the Agreement shall survive the expiration or earlier termination of this Agreement: Section 3(d) (Dealer-Manager Compensation); Section 3(e) (Reasonable Bona Fide Due Diligence Expenses); Section 6(h) (AML Compliance); Section 7 (Indemnification); Section 8 (Contribution); Section 9 (Termination of this Agreement) and this Section 10 (Miscellaneous). Notwithstanding anything else that may be to the contrary herein, the expiration or earlier termination of this Agreement shall not relieve a party for liability for any breach occurring prior to such expiration or earlier termination. In no event shall the Dealer Manager be entitled to payment of any compensation in connection with the Offering that is not completed according to this Agreement; provided, however, that the reimbursement of out-of-pocket accountable expenses actually incurred by the Dealer Manager or person associated with the Dealer Manager shall not be presumed to be unfair or unreasonable and shall be payable under normal circumstances.

 

 

(b)

Notices. All notices or other communications required or permitted hereunder, except as herein otherwise specifically provided, shall be in writing and shall be deemed given or delivered:

 

(i)

when delivered personally or by commercial messenger;

 

(ii)

one business day following deposit with a recognized overnight courier service, provided such deposit occurs prior to the deadline imposed by such service for overnight delivery; or

 

(iii)

when transmitted, if sent by facsimile copy, provided confirmation of receipt is received by sender and such notice is sent by an additional method provided hereunder; in each case above provided such communication is addressed to the intended recipient thereof as set forth below:

 

If to the Company:

 

Ashford Hospitality Trust, Inc.

14185 Dallas Parkway. Suite 1200

Dallas, Texas 75254

 

with a copy to:

 

Robert H. Bergdolt, Esq.
DLA Piper LLP (US)
4141 Parklake Avenue, Suite 300
Raleigh, North Carolina 27612-2350

 

If to the Advisor:

 

Ashford Hospitality Advisors LLC

14185 Dallas Parkway, Suite 1100

Dallas, Texas 75254

 

with a copy to:

 

Jim Plohg
14185 Dallas Parkway. Suite 1100
Dallas, Texas 75254

 

If to the Dealer Manager:

 

Ashford Securities LLC

14185 Dallas Parkway, Suite 780

Dallas, Texas 75254

 

with a copy to:

 

James J. Linhardt

Kunzman & Bollinger, Inc.

5100 N. Brookline Avenue, Suite 600

Oklahoma City, Oklahoma 73112

 

Any party may change its address specified above by giving each party notice of such change in accordance with this Section 10(b).

 

 

(c)

Successors and Assigns. No party shall assign (voluntarily, by operation of law or otherwise) this Agreement or any right, interest or benefit under this Agreement without the prior written consent of each other party. Subject to the foregoing, this Agreement shall be fully binding upon, inure to the benefit of, and be enforceable by, the parties hereto and their respective successors and assigns.

 

(d)

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

 

(e)

Applicable Law. This Agreement and any disputes relative to the interpretation or enforcement hereto shall be governed by and construed under the internal laws, as opposed to the conflicts of laws provisions, of the State of Texas.

 

(f)

Waiver. EACH OF THE PARTIES HERETO WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) RELATED TO OR ARISING OUT OF THIS AGREEMENT. The parties hereto each hereby irrevocably submits to the exclusive jurisdiction of the courts of the State of Texas and the Federal courts of the United States of America located in Dallas, Texas, in respect of the interpretation and enforcement of the terms of this Agreement, and in respect of the transactions contemplated hereby, and each hereby waives, and agrees not to assert, as a defense in any action, suit or proceeding for the interpretation or enforcement hereof, that it is not subject thereto or that such action, suit or proceeding may not be brought or is not maintainable in said courts or that the venue thereof may not be appropriate or that this Agreement may not be enforced in or by such courts, and the parties hereto each hereby irrevocably agrees that all claims with respect to such action or proceeding shall be heard and determined in such a Texas State or Federal court.

 

(g)

Attorneys’ Fees. If a dispute arises concerning the performance, meaning or interpretation of any provision of this Agreement or any document executed in connection with this Agreement, then the prevailing party in such dispute shall be awarded any and all costs and expenses incurred by the prevailing party in enforcing, defending or establishing its rights hereunder or thereunder, including, without limitation, court costs and attorneys and expert witness fees. In addition to the foregoing award of costs and fees, the prevailing party also shall be entitled to recover its attorneys’ fees incurred in any post-judgment proceedings to collect or enforce any judgment.

 

(h)

No Partnership. Nothing in this Agreement shall be construed or interpreted to constitute the Dealer Manager or the Participating Broker-Dealer as being in association with or in partnership with the Company or one another, and instead, this Agreement only shall constitute the Participating Broker-Dealer as a broker authorized by the Company to sell and to manage the sale by others of the Shares according to the terms set forth in the Registration Statement, the Prospectus or this Agreement. Nothing herein contained shall render the Dealer Manager or the Company liable for the obligations of any of the Participating Broker-Dealers or one another.

 

(i)

Third Party Beneficiaries. Except for the persons and entities referred to in Section 7 (Indemnification) and Section 8 (Contribution), there shall be no third party beneficiaries of this Agreement, and no provision of this Agreement is intended to be for the benefit of any person or entity not a party to this Agreement, and no third party shall be deemed to be a beneficiary of any provision of this Agreement. Except for the persons and entities referred to in Section 7 and Section 8, no third party shall by virtue of any provision of this Agreement have a right of action or an enforceable remedy against any party to this Agreement. Each of the persons and entities referred to in Section 7 and Section 8 shall be a third-party beneficiary of this Agreement.

 

 

(j)

Entire Agreement. This Agreement contains the entire agreement and understanding among the parties hereto with respect to the subject matter hereof, and supersedes all prior and contemporaneous agreements, understandings, inducements and conditions, express or implied, oral or written, of any nature whatsoever with respect to the subject matter hereof. The express terms hereof control and supersede any course of performance and/or usage of the trade inconsistent with any of the terms hereof. This Agreement may not be modified or amended other than by an agreement in writing.

 

(k)

Nonwaiver. The failure of any party to insist upon or enforce strict performance by any other party of any provision of this Agreement or to exercise any right under this Agreement shall not be construed as a waiver or relinquishment to any extent of such party’s right to assert or rely upon any such provision or right in that or any other instance; rather, such provision or right shall be and remain in full force and effect.

 

(l)

Access to Information. The Company may authorize the Company’s transfer agent to provide information to the Dealer Manager and each Participating Broker-Dealer regarding recordholder information about the clients of such Participating Broker-Dealer who have invested with the Company on an on-going basis for so long as such Participating Broker-Dealer has a relationship with such clients. The Dealer Manager shall require in the Participating Broker-Dealer Agreement that Participating Broker-Dealers not disclose any password for a restricted website or portion of website provided to such Participating Broker-Dealer in connection with the Offering and not disclose to any person, other than an officer, director, employee or agent of such Participating Broker-Dealers, any material downloaded from such a restricted website or portion of a restricted website.

 

(m)

Counterparts. This Agreement may be executed (including by facsimile transmission) with counterpart signature pages or in counterpart copies, each of which shall be deemed an original but all of which together shall constitute one and the same instrument comprising this Agreement.

 

(n)

Absence of Fiduciary Relationships. The parties acknowledge and agree that:

 

(i)

the Dealer Manager’s responsibility to the Company is solely contractual in nature; and

 

(ii)

the Dealer Manager does not owe the Company, any of its affiliates or any other person or entity any fiduciary (or other similar) duty as a result of this Agreement or any of the transactions contemplated hereby.

 

If the foregoing is in accordance with your understanding of our agreement, kindly sign and return it to us, whereupon this instrument will become a binding agreement between you and the Company in accordance with its terms.

 

[Signatures on following page]

 

 

IN WITNESS WHEREOF, the parties hereto have each duly executed this Dealer Manager Agreement as of the day and year set forth above.

 

	THE COMPANY:
	ASHFORD HOSPITALITY TRUST, INC.
	By:
		Name:
		Title:
	THE ADVISOR:
	ASHFORD HOSPITALITY ADVISORS LLC
	By:
		Name:
		Title:

 

Accepted as of the date first above written:

 

	THE DEALER MANAGER:
	ASHFORD SECURITIES llc
	By:
		Name:
		Title:

 

[Signature Page to Dealer Manager Agreement]

 

 

EXHIBIT A

 

FORM OF PARTICIPATING BROKER-DEALER AGREEMENT

 

 

 

Exhibit 1.2

 

FORM OF PARTICIPATING BROKER-DEALER AGREEMENT

 

WITH ASHFORD SECURITIES LLC

 

To:

 

RE:

ASHFORD HOSPITALITY TRUST, INC.

 

Ladies and Gentlemen:

 

Ashford Securities LLC (the “Dealer Manager”) entered into a dealer manager agreement, dated as of ___________ __, 20__ (the “Dealer Manager Agreement”), with Ashford Hospitality Trust, Inc, a Maryland corporation (the “Company”), under which the Dealer Manager agreed to use its best efforts to solicit subscriptions in connection with the public offering for up to 12,000,000 shares of the Company’s Series L Redeemable Preferred Stock, par value $0.01 per share (“Series L Preferred Stock”) or Series M Redeemable Preferred Stock, par value $0.01 per share (“Series M Preferred Stock” and together with the Series L Preferred Stock, the “Shares”) in the primary offering (the “Primary Offering”) and up to 4,000,000 shares of Series L Preferred Stock or Series M Preferred Stock pursuant to a dividend reinvestment plan (the “DRP” and together with the Primary Offering, the “Offering”). Each Share will be sold at a public offering price of $25.00 per Share. The Company has reserved the right to reallocate the shares of Series L Preferred Stock or Series M Preferred Stock between the Primary Offering and the DRP. The Offering will commence on the initial Effective Date (as defined below). Unless otherwise defined herein, capitalized terms used herein shall have the respective meanings therefor as in the Dealer Manager Agreement.

 

In connection with the performance of the Dealer Manager’s obligations under Section 3 of the Dealer Manager Agreement, the Dealer Manager is authorized to retain the services of securities broker-dealers (the “Participating Broker-Dealers”) who are members of the Financial Industry Regulatory Authority, Inc. (“FINRA”) to solicit subscriptions for Shares in connection with the Offering. You are hereby invited to become a Participating Broker-Dealer and, as such, to use your reasonable best efforts to solicit subscribers for Shares, in accordance with the following terms and conditions of this Participating Broker-Dealer Agreement (this “Agreement”). The Company will sell Shares using two closing services provided by the Depository Trust Company (“DTC”). The first service is DTC closing (“DTC Settlement”), and the second service is Direct Registration Service (“DRS Settlement”).

 

1.

Registration Statement.

 

(a)

Registration Statement and Prospectus. A registration statement on Form S-11 (File No. 333-[XX]), including a preliminary prospectus, has been prepared by the Company and was initially filed with the Securities and Exchange Commission (the “Commission”) on December [13], 2024, in accordance with the applicable requirements of the Securities Act of 1933, as amended (the “Securities Act”), and the applicable rules and regulations of the Commission promulgated thereunder (the “Securities Act Rules and Regulations”) for the registration of the Shares. The Company has prepared and filed such amendments thereto and such amended prospectus as may have been required to the date hereof, and will file such additional amendments and supplements thereto as may hereafter be required. The registration statement on Form S-11 and the prospectus contained therein, as finally amended at the date the registration statement is declared effective by the Commission (the “Effective Date”) are respectively hereinafter referred to as the “Registration Statement” and the “Prospectus,” except that:

 

(i)

if the Company files a post-effective amendment to such registration statement, then the term “Registration Statement” shall, from and after the declaration of the effectiveness of such post-effective amendment by the Commission, refer to such registration statement as amended by such post-effective amendment, and the term “Prospectus” shall refer to the amended prospectus then on file with the Commission; and

 

 

(ii)

if the prospectus filed by the Company pursuant to either Rule 424(b) or 424(c) of the Securities Act Rules and Regulations shall differ from the prospectus on file at the time the Registration Statement or the most recent post-effective amendment thereto, if any, shall have become effective, then the term “Prospectus” shall refer to such prospectus filed pursuant to either Rule 424(b) or 424(c), as the case may be, from and after the date on which it shall have been filed. The term “preliminary Prospectus” as used herein shall mean a preliminary prospectus related to the Shares as contemplated by Rule 430 or Rule 430A of the Securities Act Rules and Regulations included at any time as part of the Registration Statement.

 

As used herein, the terms “Registration Statement”, “preliminary Prospectus” and “Prospectus” shall include the documents, if any, incorporated by reference therein. As used herein, the term “Effective Date” also shall refer to the effective date of each post-effective amendment to the Registration Statement, unless the context otherwise requires.

 

2.

Compliance with Applicable Rules and Regulations; License and Association Membership.

 

Upon the date of this Agreement, the undersigned securities dealer will become one of the “Participating Broker-Dealers” referred to in the Dealer Manager Agreement and is referred to herein as “Participating Broker-Dealer.” Participating Broker-Dealer agrees that solicitation and other activities by it hereunder shall comply with, and shall be undertaken only in accordance with, the terms of the Dealer Manager Agreement, the terms of this Agreement, the Securities Act, the Securities Act Rules and Regulations, the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the applicable rules and regulations promulgated thereunder (the “Exchange Act Rules and Regulations”), all applicable state and blue sky laws, Regulation Best Interest, the FINRA Rules applicable to the Offering from time to time in effect, specifically including, but not in any way limited to, FINRA Rules 2040 (Payments to Unregistered Persons), 2111 (Suitability), 2231 (Customer Account Statements), 2310 (Direct Participation Programs), 5130 (Restrictions on the Purchase and Sale of Initial Equity Public Offerings), and 5141 (Sale of Securities in a Fixed Price Offering), and all other applicable federal and state laws and regulations promulgated thereunder.

 

Participating Broker-Dealer’s acceptance of this Agreement constitutes a representation to the Company and to the Dealer Manager that Participating Broker-Dealer is a properly registered or licensed broker-dealer, duly authorized to sell Shares under federal and state securities laws and regulations in all states where it offers or sells Shares, and that it is a member in good standing of FINRA. Participating Broker-Dealer represents and warrants that it is currently licensed as a broker-dealer in the jurisdictions identified by it in this Agreement and that its independent contractors and registered representatives have the appropriate licenses to offer and sell the Shares in such jurisdictions.

 

This Agreement shall automatically terminate with no further action by either party if Participating Broker-Dealer ceases to be a member in good standing of FINRA or with the securities commission of the state in which Participating Broker-Dealer’s principal office is located. Participating Broker-Dealer agrees to notify the Dealer Manager immediately if Participating Broker-Dealer ceases to be a member in good standing of FINRA or with the securities commission of any state in which Participating Broker-Dealer is currently registered or licensed.

 

3.

Limitation of Offer; Investor Suitability; Benefit Plan Investors.

 

(a)

Participating Broker-Dealer will not offer Shares and will not permit any of its registered representatives to offer Shares in any jurisdiction unless both Participating Broker-Dealer and such registered representative are duly licensed to transact securities business in such jurisdiction. In offering Shares, Participating Broker-Dealer shall comply with the provisions of the FINRA Rules. Participating Broker-Dealer will not offer the Shares for sale in any jurisdiction unless and until it has been advised that the Shares are either registered in accordance with, or exempt from, the securities and other laws applicable thereto. In addition, Participating Broker-Dealer will not and will not permit any of its registered representatives to offer or sell Shares outside of the United States.

 

 

(b)

In offering the sale of Shares to any person, Participating Broker-Dealer will have reasonable grounds to believe (based on such information obtained from the investor concerning the investor’s age, investment objectives, other investments, financial situation, needs or any other information known by Participating Broker-Dealer after due inquiry) that:

 

(i)

such person is or will be in a financial position appropriate to enable such person to realize to a significant extent the benefits described in the Prospectus, including the tax benefits where they are a significant aspect of the Company;

 

(ii)

the investor has a fair market net worth sufficient to sustain the risks inherent in the program, including loss of investment and lack of liquidity;

 

(iii)

an investment in the Shares is otherwise suitable for such person.

 

Participating Broker-Dealer further will use its best efforts to determine the suitability and appropriateness of an investment in the Shares of each proposed investor solicited by a person associated with Participating Broker-Dealer by reviewing documents and records disclosing the basis upon which the determination as to suitability was reached as to each proposed investor, whether such documents and records relate to accounts which have been closed, accounts which are currently maintained or accounts hereinafter established. Participating Broker-Dealer shall maintain, for at least six years or for a period of time not less than that required in order to comply with all applicable federal, state and other regulatory requirements, whichever is later, such records used to determine that the investor meets the suitability standards imposed on the offer and sale of Shares with respect to each investor who purchases Shares. In making this determination, the Participating Broker-Dealer will rely on relevant information provided by the investor, including information as to the investor’s age, investment objectives, investment experience, investment time horizon, income, net worth, financial situation and needs, tax status, other investments, liquidity needs, risk tolerance and other pertinent information. Further, the Participating Broker-Dealer will obtain a representation from the investor that the investor is investing for the investor’s own account or, in lieu of such representation, information indicating that the investor for whose account the investment was made met the suitability standards.

 

The Participating Dealer agrees as to retail customers (as defined in Regulation Best Interest) to whom it makes a recommendation with respect to the purchase of the Shares in the Primary Offering it will abide by and comply with the applicable requirements of Regulation Best Interest, as adopted by the Commission on June 5, 2019, and the accompanying rules and forms, including but not limited to, the requirement that broker-dealers provide a Form CRS to its retail customers and the new record-making and recordkeeping requirements.

 

For Shares a Participating Broker-Dealer has sold using DRS Settlement, Participating Broker-Dealer shall maintain all Subscription Agreements (as defined below) for at least six years or for a period of time not less than that required in order to comply with all applicable federal and other regulatory requirements. Participating Broker-Dealer may satisfy its obligation by contractually requiring Subscription Agreements to be maintained by the investment advisers or banks it engages. Participating Broker-Dealer further agrees to comply with the record keeping requirements of the Exchange Act, including, but not limited to, Rules 17a-3 and 17a-4 promulgated under the Exchange Act.

 

Participating Broker-Dealer agrees to make Subscription Agreements and other documents and records, including, but not limited to, those documents and records evidencing its suitability determination, available to the Dealer Manager and the Company upon request, and representatives of the Commission and FINRA upon Participating Broker-Dealer’s receipt of an appropriate document subpoena or other appropriate request for documents from any such agency.

 

 

(c)

Series M Preferred Stock may be purchased by Participating Broker-Dealers for their own account, their retirement plans, their registered representatives and their family members, individual retirement accounts (“IRAs”) and the qualified plans of their registered representatives. Such persons will be expected to hold their Series M Preferred Stock purchased as stockholders for investment and not with a view towards distribution.

 

(d)

Without the prior written approval from the Company or the Dealer Manager, Participating Broker-Dealer will not tender any Subscription Agreement or submit any order for any class of Shares on behalf of any Benefit Plan Investor (as defined in 29 C.F.R. § 2510.3-101(f)(2), or any successor regulation thereto) until such date that the Company or the Dealer Manager make a public announcement or provide notice hereunder that such class of Shares is owned by 100 or more persons independent of the Company.

 

4.

Delivery of Prospectus and Approved Sales Literature.

 

(a)

Delivery of Prospectus and Approved Sales Literature. Participating Broker-Dealer will:

 

(i)

deliver a Prospectus, as then supplemented or amended, to each person who subscribes for Shares prior to the tender of such person’s subscription agreement (the “Subscription Agreement”), if using DRS Settlement, or prior to submitting orders, if using DTC Settlement;

 

(ii)

promptly comply with the written request of any person for a copy of the Prospectus, as then supplemented or amended, during the period between the initial Effective Date and the termination of the Offering;

 

(iii)

deliver to any person, in accordance with applicable law or as prescribed by any state securities administrator, a copy of any prescribed document included within or incorporated by reference in the Registration Statement and any supplements thereto during the course of the Offering;

 

(iv)

not use any sales materials in connection with the solicitation of purchasers of the Shares except Approved Sales Literature;

 

(v)

to the extent the Company provides Approved Sales Literature, not use such materials unless accompanied or preceded by the Prospectus, as then currently in effect, and as may be amended or supplemented in the future; and

 

(vi)

not give or provide any information or make any representation or warranty other than information or representations contained in the Prospectus or the Approved Sales Literature. Participating Broker-Dealer will not publish, circulate or otherwise use any other advertisement or solicitation material in connection with the Offering without the Dealer Manager’s express prior written approval. As used in this Agreement, “Approved Sales Literature” has the meaning set forth in the Dealer Manager Agreement, but excludes material or writing marked “broker-dealer use only” or otherwise bearing a legend denoting that it is not to be used in connection with the offer or sale of Shares.

 

(b)

Agency is Not Created. Nothing contained in this Agreement shall be deemed or construed to make Participating Broker-Dealer an employee, agent, representative or partner of the Dealer Manager or the Company, and Participating Broker-Dealer is not authorized to act for the Dealer Manager or the Company.

 

 

(c)

Documents Must Be Accompanied or Preceded by a Prospectus. Participating Broker-Dealer will not send or provide amendments or supplements to the Prospectus or any Approved Sales Literature to any investor unless it has previously sent or provided a Prospectus and all amendments and supplements thereto to that investor or has simultaneously sent or provided a Prospectus and all amendments and supplements thereto with such Prospectus amendment or supplement or Approved Sales Literature.

 

(d)

Broker-Dealer Use Only Material. Participating Broker-Dealer will not show to or provide any investor or reproduce any material or writing which is supplied to it by the Dealer Manager and marked “broker-dealer use only,” institutional communication, or otherwise bearing a legend denoting that it is not to be used in connection with the offer or sale of Shares to members of the public.

 

(e)

Copies of Prospectuses and Approved Sales Literature. The Dealer Manager will supply Participating Broker-Dealer with reasonable quantities of the Prospectus (including any supplements thereto), as well as any Approved Sales Literature, for delivery to investors.

 

(f)

Prospectus Delivery Requirement. Participating Broker-Dealer shall furnish a copy of any revised preliminary Prospectus to each person to whom it has furnished a copy of any previous preliminary Prospectus, and further agrees that it will mail or otherwise deliver all preliminary and final Prospectuses required for compliance with the provisions of Rule 15c2-8 under the Exchange Act.

 

(g)

Electronic Delivery and Electronic Signatures.

 

(i)

If Participating Broker-Dealer has adopted or adopts a process by which persons may authorize certain account-related transactions and/or requests, in whole or in part, by “Electronic Signature” (as such term is defined by the Electronic Signatures in Global and National Commerce Act, 15 U.S.C. 7001 et seq., the Uniform Electronic Transactions Act, as promulgated by the Uniform Conference of Commissioners on Uniform State Law in July 1999 and as adopted by the relevant jurisdiction(s) where Participating Broker-Dealer is licensed, and applicable rules, regulations and/or guidance relating to the use of electronic signatures issued by the SEC and FINRA (collectively, “Electronic Signature Law”)), to the extent the Company allows the use of Electronic Signature, in whole or in part, Participating Broker-Dealer represents that:

 

(A)

each Electronic Signature will be genuine;

 

(B)

each Electronic Signature will represent the signature of the person required to sign the Subscription Agreement or other form to which such Electronic Signature is affixed;

 

(C)

Participating Broker-Dealer will comply with all applicable the terms of the Electronic Signature Law; and

 

(D)

Participating Broker-Dealer agrees to the Electronic Signature Use Indemnity Agreement attached as Exhibit A hereto.

 

(ii)

If Participating Broker-Dealer intends to use electronic delivery to distribute the Prospectus or other documents related to the Fund to any Person, Participating Broker-Dealer will comply with all applicable rules, regulations and/or guidance relating to the electronic delivery of documents issued by the SEC and FINRA, and any other applicable laws or regulations related to the electronic delivery of offering documents including, as appropriate, Electronic Signature Law. Participating Broker-Dealer shall obtain and document its receipt of the informed consent to receive documents electronically of persons, which documentation shall be maintained by Participating Broker-Dealer and made available to the Company and/or the Dealer Manager upon request.

 

 

(h)

Reliance by Participating Broker-Dealer. Participating Broker-Dealer agrees that it will rely upon no statement whatsoever, written or oral, other than the statements in the final Prospectus (as amended or supplemented from time to time) or in Approved Sales Literature. Participating Broker-Dealer is not authorized by the Dealer Manager nor the Company to give any information or to make any representation not contained in the final Prospectus (as amended or supplemented from time to time) or in Approved Sales Literature in connection with the sale of the Shares.

 

5.

Submission of Orders; Right to Reject Orders.

 

(a)

With respect to Participating Broker-Dealer’s participation in any resales or transfers of the Shares, Participating Broker-Dealer agrees to comply with any applicable requirements set forth in Section 2.

 

(b)

If using DRS Settlement:

 

(i)

payments for Shares shall be made by wire transfer to the Escrow Agent (as defined below) or checks payable to “UMB Bank, N.A., Escrow Agent for Ashford Hospitality Trust, Inc.” Participating Broker-Dealer shall forward original checks for the purchase of Shares together with an original Subscription Agreement, completed, executed and initialed where indicated by the subscriber as provided for in the Subscription Agreement, to UMB Bank, N.A. (the “Escrow Agent”) at the address provided in the Subscription Agreement; and

 

(ii)

when Participating Broker-Dealer’s internal supervisory procedures are conducted at the site at which the Subscription Agreement and check for the purchase of Shares were initially received by Participating Broker-Dealer from the subscriber, Participating Broker-Dealer shall transmit the Subscription Agreement and check for the purchase of Shares to the Escrow Agent by the end of the next business day following receipt of the check and Subscription Agreement. When, pursuant to Participating Broker-Dealer’s internal supervisory procedures, Participating Broker-Dealer’s final internal supervisory procedures are conducted at a different location (the “Final Review Office”), Participating Broker-Dealer shall transmit the check for the purchase of Shares and Subscription Agreement to the Final Review Office by the end of the next business day following Participating Broker-Dealer’s receipt of the Subscription Agreement and check for the purchase of Shares. The Final Review Office will, by the end of the next business day following its receipt of the Subscription Agreement and check for the purchase of Shares, forward both the Subscription Agreement and check for the purchase of Shares to the Escrow Agent. If any Subscription Agreement solicited by Participating Broker-Dealer is rejected by the Company, then the Subscription Agreement and check will be returned to the rejected subscriber within ten business days from the date of rejection. As used in this Agreement, “business day” means any day other than a Saturday, Sunday or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close.

 

(c)

If using DTC Settlement, the Participating Broker-Dealer will coordinate for payment in connection with their electronically placed orders.

 

(d)

All subscriptions and orders, whether initial or additional, are subject to acceptance by and shall become effective upon confirmation by the Company, which reserves the right to reject any subscription or order in its sole discretion for any or no reason. Further, the Company has the sole right to:

 

 

(i)

determine and change the number and timing of closings, including the right to change the number and timing of closings after communicating the anticipated closing timing to the Participating Broker-Dealer;

 

(ii)

to limit the total amount of Series L Preferred Stock and/or Series M Preferred Stock sold by all Participating Broker-Dealers per closing;

 

(iii)

to limit the total amount of Series L Preferred Stock and/or Series M Preferred Stock sold by any one Participating Broker-Dealer per closing; and

 

(iv)

to limit the total number of shares of Series L Preferred Stock and/or Series M Preferred Stock sold by the Participating Broker-Dealer.

 

Subscriptions and orders not accompanied by the required instrument of payment for Shares may be rejected. Issuance and delivery of a Share will be made only after a sale of a Share is deemed by the Company to be completed in accordance with Section 3(c) of the Dealer Manager Agreement. If a subscription or order is rejected, cancelled or rescinded for any reason, then Participating Broker-Dealer will return to the Dealer Manager any selling commissions or Dealer Manager Fees theretofore paid with respect to such order, and, if Participating Broker-Dealer fails to so return any such selling commissions or Dealer Manager Fees, the Dealer Manager shall have the right to offset amounts owned against future commissions or Dealer Manager Fees due and otherwise payable to Participating Broker-Dealer (it being understood and agreed that such right to offset shall not be in limitation of any other rights or remedies that the Dealer Manager may have in connection with such failure).

 

6.

Participating Broker-Dealer Compensation.

 

(a)

Selling Commissions. Subject to the terms and conditions set forth herein and in the Dealer Manager Agreement and, subject to the special circumstances and discounts described in the “Plan of Distribution” section of the Prospectus, the Dealer Manager shall pay to Participating Broker-Dealer a selling commission as set forth in Schedule I to this Agreement. No selling commissions will be paid for sales of Series M Preferred Stock or DRP Shares.

 

For purposes of this Section 6(a), Shares are “sold” for DRS Settlement only if an executed Subscription Agreement is accepted by the Company and the Company has thereafter distributed the selling commission to the Dealer Manager in connection with such transaction pursuant to the Dealer Manager Agreement. For purposes of this Section 6(a), Shares are “sold” for DTC Settlement only when electronically submitted orders are confirmed by the Dealer Manager.

 

The Participating Broker-Dealer may choose to offer and sell Series L Preferred Stock, Series M Preferred Stock, or both and will indicate their selections by completing Schedule I to this Agreement.

 

(b)

Dealer Manager’s Authority to Issue Confirmation. Notwithstanding the foregoing, it is understood and agreed that no commission shall be payable with respect to particular Shares if the Dealer Manager or the Company rejects a proposed subscriber’s Subscription Agreement. Accordingly, Participating Broker-Dealer shall have no authority to issue a confirmation (pursuant to Exchange Act Rule 10b-10) to any subscriber; such authority residing solely in the Dealer Manager, as the Dealer Manager and processing broker-dealer.

 

(c)

Reallowance of Dealer Manager Fee. The Dealer Manager may, in its sole discretion, re-allow all or a portion of the Dealer Manager Fee received by it to Participating Broker-Dealer as a marketing fee as set forth in Schedule I to this Agreement, in exchange for marketing support services:

 

 

(i)

the volume of sales estimated to be made by the Participating Broker-Dealer;

 

(ii)

the Participating Broker-Dealer’s agreement to provide one or more of the following services:

 

(A)

providing internal marketing support personnel and marketing communications vehicles to assist the Dealer Manager in the promotion of the Company;

 

(B)

responding to investors’ inquiries concerning monthly statements, valuations, distribution rates, tax information, annual reports, redemption rights and procedures, the Company’s financial status, and the markets in which the Company has invested;

 

(C)

assisting investors with redemptions; or

 

(D)

providing other services requested by investors from time to time and maintaining the technology necessary to adequately service investors.

 

Subject to the immediately succeeding paragraph, the Dealer Manager may, in its sole discretion, request the Company to reimburse, to Participating Broker-Dealer for reasonable accountable bona fide due diligence expenses, provided such expenses have actually been incurred, are supported by detailed and itemized invoices provided to the Company and the Dealer Manager, and the Company or the Dealer Manager had theretofore given its prior written approval of incurrence of such expenses.

 

(d)

Marketing Expenses. Certain marketing expenses such as Participating Broker-Dealer conferences may be advanced to Participating Broker-Dealer and later deducted from the portion of the Dealer Manager Fee re-allowed to that Participating Broker-Dealer. Participating Broker-Dealer will repay any such advance to the extent not expended on marketing expenses. Any such advance shall be deducted from the maximum amount of the Dealer Manager Fee that may otherwise be re-allowable to Participating Broker-Dealer.

 

Notwithstanding anything herein to the contrary, Participating Broker-Dealer will not be entitled to receive any Dealer Manager Fee which would cause the aggregate amount of selling commissions, dealer manager fees and other forms of underwriting compensation (as defined in accordance with FINRA Rule 2310(b)(4)(B)(ii)) received by the Dealer Manager, all Participating Broker-Dealers and others to exceed 10.0% of the gross offering proceeds raised from the sale of Shares in the Primary Offering (“FINRA’s 10% Cap”).

 

(e)

Limitations on Dealer Manager’s Liability for Commissions. The Company will not be liable or responsible to any Participating Broker-Dealer for the payment of any selling commissions or any reallowance of fees to Participating Broker-Dealer, it being the sole and exclusive responsibility of the Dealer Manager for the payment of selling commissions or any reallowance to Participating Broker-Dealer.

 

Participating Broker-Dealer hereby waives any and all rights to receive payments of commissions, or any other fees or reallowance payable to the Participating Broker-Dealer, if any, until the Dealer Manager is in receipt of the selling commissions or other fees or reallowance. Participating Broker-Dealer acknowledges and agrees that the Dealer Manager’s liability for commissions or other fees or reallowances payable to Participating Broker-Dealer is limited solely to commissions received and the portion of the Dealer Manager fee which represents the Marketing Fee received by the Dealer Manager from the Company in connection with Participating Broker-Dealer’s sale of Shares.

 

 

7.

Reserved Shares. The number of Shares, if any, to be reserved for sale by each Participating Broker-Dealer may be decided by the mutual agreement, from time to time, of the Dealer Manager and the Company. The Dealer Manager reserves the right to notify the Participating Broker-Dealer by United States mail or by other means of the number of Shares reserved for sale by the Participating Broker-Dealer, if any. Such Shares will be reserved for sale by the Participating Broker-Dealer until the time specified in the Dealer Manager’s notification to the Participating Broker-Dealer. Sales of any reserved Shares after the time specified in the notification to Participating Broker-Dealer or any requests for additional Shares will be subject to rejection in whole or in part.

 

8.

Dealer Manager’s Authority. Subject to the Dealer Manager Agreement, the Dealer Manager shall have full authority to take such action as it may deem advisable with respect to all matters pertaining to the Offering or arising thereunder. The Dealer Manager shall not be under any liability to Participating Broker-Dealer, except:

 

(a)

for its own lack of good faith; and

 

(b)

for obligations expressly assumed by the Dealer Manager hereunder.

 

9.

Indemnification.

 

(a)

Incorporation of Indemnification Obligations Under the Dealer Manager Agreement. Under the Dealer Manager Agreement, the Company has agreed to indemnify Participating Broker-Dealer and the Dealer Manager and each of their respective Indemnified Parties, in certain instances and against certain liabilities, including liabilities under the Securities Act in certain circumstances. Under the Dealer Manager Agreement, Ashford Hospitality Advisors LLC (the “Advisor”) has agreed to indemnify Participating Broker-Dealer and the Dealer Manager and each of their respective Indemnified Parties solely with respect to any material inaccuracy in a representation or warranty contained in Section 1(s) of the Dealer Manager Agreement by the Advisor.

 

Additionally, Participating Broker-Dealer hereby agrees to indemnify the Company and each of its Indemnified Parties as provided in the Dealer Manager Agreement and to indemnify the Dealer Manager to the extent and in the manner that Participating Broker-Dealer agrees to indemnify the Company in the Dealer Manager Agreement.

 

(b)

Participating Broker-Dealer’s Hold Harmless Obligation. In furtherance of, and not in limitation of the foregoing, Participating Broker-Dealer will indemnify, defend and hold harmless the Dealer Manager, the Advisor and the Company, and their officers, directors, employees, members, partners, affiliates, agents and representatives, and each person, if any, who controls such entity within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, and each person who has signed the Registration Statement (“Indemnified Parties”), from and against any losses, claims, damages or liabilities to which any of the Indemnified Parties may become subject, under the Securities Act or the Exchange Act, or otherwise, insofar as such losses, claims and expenses (including the reasonable legal and other expenses incurred in investigating and defending any such claims or liabilities), damages or liabilities (or actions in respect thereof) arise out of or are based upon:

 

(i)

in whole or in part, any material inaccuracy in the representations or warranties contained in this Agreement or any material breach of a covenant contained herein by Participating Broker-Dealer;

 

(ii)

any untrue statement or any alleged untrue statement of a material fact contained in any Registration Statement or any post-effective amendment thereto or in the Prospectus or any amendment or supplement to the Prospectus; or in any Approved Sales Literature;

 

(iii)

the omission or alleged omission to state a material fact required to be stated in the Registration Statement or any post-effective amendment thereof or the omission or alleged omission to state a material fact required to be stated in the Prospectus or any amendment or supplement to the Prospectus to make the statements therein, in light of the circumstances under which they were made, not misleading, provided, however, that in each case described in clauses (ii) and (iii) to the extent, but only to the extent, that such untrue statement or omission was made in reliance upon and in conformity with written information furnished to the Company or the Dealer Manager by Participating Broker-Dealer specifically for use with reference to Participating Broker-Dealer in the preparation of the Registration Statement or any such post-effective amendments thereof or the Prospectus or any such amendment thereof or supplement thereto;

 

(iv)

any use of sales literature, including “broker dealer use only” or institutional materials, by Participating Broker-Dealer that is not Approved Sales Literature;

 

(v)

any untrue statement made by Participating Broker-Dealer or Participating Broker-Dealer’s representatives or agents or omission by Participating Broker-Dealer or Participating Broker-Dealer’s representatives or agents to state a fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading in connection with the offer and sale of the Shares in each case, other than statements or omissions made in conformity with the Registration Statement, Prospectus, Approved Sales Literature or any other materials or information furnished by or on behalf of the Company; or

 

(vi)

any failure by Participating Broker-Dealer to comply with applicable laws governing money laundry abatement and anti-terrorist financing efforts in connection with the Offering, including applicable FINRA Rules, Exchange Act Rules and Regulations and the USA PATRIOT Act of 2001 (the “PATRIOT Act”).

 

Participating Broker-Dealer will reimburse the aforesaid parties for any reasonable legal or other expenses incurred in connection with investigation or defense of such loss, claim, damage, liability or action. This indemnity agreement will be in addition to any liability which Participating Broker-Dealer may otherwise have.

 

(c)

Notice of Claim. Promptly after receipt by any indemnified party under this Section 9 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 9, promptly notify the indemnifying party of the commencement thereof; provided, however, the failure to give such notice shall not relieve the indemnifying party of its obligations hereunder except to the extent it shall have been prejudiced by such failure.

 

In case any such action is brought against any indemnified party, and it notifies an indemnifying party of the commencement thereof, the indemnifying party will be entitled, to the extent it may wish, jointly with any other indemnifying party similarly notified, to participate in the defense thereof, with separate counsel. Such participation shall not relieve such indemnifying party of the obligation to reimburse the indemnified party for reasonable legal and other expenses incurred by such indemnified party in defending itself, except for such expenses incurred after the indemnifying party has deposited funds sufficient to effect the settlement, with prejudice, of, and unconditional release of all liabilities from, the claim in respect of which indemnity is sought. Any such indemnifying party shall not be liable to any such indemnified party on account of any settlement of any claim or action effected without the consent of such indemnifying party, such consent not to be unreasonably withheld or delayed.

 

(d)

Reimbursement. An indemnifying party under Section 9 of this Agreement shall be obligated to reimburse an indemnified party for reasonable legal and other expenses as follows: the indemnifying party shall pay all legal fees and expenses reasonably incurred by the indemnified party in the defense of such claims or actions; provided, however, that the indemnifying party shall not be obligated to pay legal expenses and fees to more than one law firm in connection with the defense of similar claims arising out of the same alleged acts or omissions giving rise to such claims notwithstanding that such actions or claims are alleged or brought by one or more parties against more than one indemnified party.

 

 

If such claims or actions are alleged or brought against more than one indemnified party, then the indemnifying party shall only be obliged to reimburse the expenses and fees of the one law firm (in addition to local counsel) that has been participating by a majority of the indemnified parties against which such action is finally brought; and in the event a majority of such indemnified parties is unable to agree on which law firm for which expenses or fees will be reimbursable by the indemnifying party, then payment shall be made to the first law firm of record representing an indemnified party against the action or claim. Such law firm shall be paid only to the extent of services performed by such law firm and no reimbursement shall be payable to such law firm on account of legal services performed by another law firm.

 

10.

Contribution. If the indemnification provided for in Section 9 hereof is for any reason unavailable to or insufficient to hold harmless an indemnified party in respect of any losses, liabilities, claims, damages or expenses referred to therein, the contributions provisions set forth in Section 8 of the Dealer Manager Agreement shall be applicable.

 

11.

Company as Party to Agreement. Each of the Company and the Advisor shall be a third party beneficiary of Participating Broker-Dealer’s representations, warranties, covenants and agreements contained in Sections 9 and 10. No provision of Section 9 or Section 10 may be amended or waived without the prior written consent of the Company and the Advisor. The Company shall have all enforcement rights in law and in equity with respect to those portions of this Agreement as to which it is third party beneficiary.

 

12.

Privacy Laws; Compliance.

 

(a)

Participating Broker-Dealer agrees to:

 

(i)

abide by and comply with (A) the privacy standards and requirements of the Gramm-Leach-Bliley Act of 1999 (the “GLB Act”); (B) the privacy standards and requirements of any other applicable federal or state law; and (C) Participating Broker-Dealer’s own internal privacy policies and procedures, each as may be amended from time to time;

 

(ii)

refrain from the use or disclosure of nonpublic personal information (as defined under the GLB Act) of all customers, except as necessary to service the customers or as otherwise necessary or required by applicable law; and

 

(iii)

determine which customers have opted out of the disclosure of nonpublic personal information by periodically reviewing and, if necessary, retrieving an aggregated list of such customers (the “List”) as provided by each to identify customers that have exercised their opt-out rights.

 

If either party uses or discloses nonpublic personal information of any customer for purposes other than servicing the customer, or as otherwise required by applicable law, that party will consult the List to determine whether the affected customer has exercised his or her opt-out rights. Each party understands that it is prohibited from using or disclosing any nonpublic personal information of any customer that is identified on the List as having opted out of such disclosures.

 

 

13.

Anti-Money Laundering Compliance Programs.

 

Participating Broker-Dealer’s acceptance of this Dealer Agreement constitutes a representation to the Company and the Dealer Manager that Participating Broker-Dealer has established and implemented an anti-money laundering compliance program (“AML Program”) in accordance with applicable law, including applicable FINRA Rules, U.S. Securities and Exchange Commission (the “SEC”) Rules (the “Commission Rules”) and the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act (USA PATRIOT Act) of 2001, as amended by the USA Patriot Improvement and Reauthorization Act of 2005 (the “USA PATRIOT Act”), specifically including, but not limited to, Section 352 of the International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001 (the “Money Laundering Abatement Act,” and together with the USA PATRIOT Act, the “AML Rules”), reasonably expected to detect and cause the reporting of suspicious transactions in connection with the sale of the Shares. In addition, Participating Broker-Dealer represents that it has established and implemented a program for compliance with Executive Order 13224 and all regulations and programs administered by the U.S. Department of the Treasury's Office of Foreign Assets Control (“OFAC Program”) and will continue to maintain its OFAC Program during the term of this Agreement. Upon request by the Dealer Manager at any time, Participating Broker-Dealer hereby agrees to (i) furnish a written copy of its AML Program and OFAC Program to the Dealer Manager for review, and (ii) furnish a copy of the findings and any remedial actions taken in connection with Participating Broker-Dealer’s most recent independent testing of its AML Program and/or its OFAC Program.

 

The parties acknowledge that for the purposes of FINRA Rules, the investors who purchase Offered Shares through Participating Broker-Dealer are “customers” of Participating Broker-Dealer and not the Dealer Manager. Nonetheless, to the extent that the Dealer Manager deems it prudent, Participating Broker-Dealer shall cooperate with the Dealer Manager’s reasonable requests for information, records and data related to the Company’s stockholders introduced to, and serviced by, Participating Broker-Dealer (the “Customers”). Notwithstanding the foregoing, Participating Broker-Dealer shall not be required to provide to the Dealer Manager any documentation that, in Participating Broker-Dealer’s reasonable judgment, would cause Participating Broker-Dealer to lose the benefit of attorney-client privilege or other privilege which it may be entitled to assert relating to the discoverability of documents in any civil or criminal proceedings. Participating Broker-Dealer hereby represents that it is currently in compliance with all AML Rules and all OFAC requirements, specifically including, but not limited to, the Customer Identification Program requirements under Section 326 of the USA PATRIOT Act. Selected Dealer hereby agrees, upon request by the Participating Broker-Dealer to:

 

(a)

provide an annual certification to Dealer Manager that, as of the date of such certification:

 

(i)

its AML Program and its OFAC Program are consistent with the AML Rules and OFAC requirements;

 

(ii)

it has continued to implement its AML Program and its OFAC Program, and

 

(iii)

it is currently in compliance with all AML Rules and OFAC requirements, specifically including, but not limited to, the Customer Identification Program requirements under Section 326 of the USA PATRIOT Act; and

 

(b)

perform and carry out, on behalf of both the Dealer Manager and the Company, the Customer Identification Program requirements in accordance with Section 326 of the USA PATRIOT Act and applicable SEC and Treasury Department Rules thereunder.

 

14.

Confidentiality. Each party to this Agreement agrees to maintain all information received from the other party pursuant to this Agreement in confidence, and each party to this Agreement agrees not to use any such information for any purpose, or disclose any such information to any person or entity, except as permitted by this Agreement or applicable laws, rules and regulations. This Section 14 shall survive the termination or expiration of this Agreement.

 

 

15.

Non-Solicitation. Subject to this Section 15, the Dealer Manager agrees that it will not (and the Dealer Manager will use reasonable good faith efforts to ensure that its employees and representatives do not) solicit business from any of Participating Broker-Dealer’s contacts or customers or knowingly recruit any of Participating Broker-Dealer’s independent registered representatives. Notwithstanding the foregoing, the Dealer Manager may solicit Participating Broker-Dealer’s contacts, customers or independent registered representatives but only to the extent that the Dealer Manager can demonstrate a relationship with such contacts, customers or independent registered representatives that was not derived through the efforts of Participating Broker-Dealer’s representatives who are engaged in selling efforts directly in connection with the Offering. This Section 15 shall survive the termination or expiration of this Agreement.

 

16.

Miscellaneous.

 

(a)

Ratification of Dealer Manager Agreement. Participating Broker-Dealer hereby authorizes and ratifies the execution and delivery of the Dealer Manager Agreement by the Dealer Manager as Dealer Manager for itself and on behalf of all Participating Broker-Dealers (including Participating Broker-Dealer party hereto) and authorizes the Dealer Manager to agree to any variation of its terms or provisions and to execute and deliver any amendment, modification or supplement thereto. Participating Broker-Dealer hereby agrees to be bound by all provisions of the Dealer Manager Agreement relating to Participating Broker-Dealers. Participating Broker-Dealer also authorizes the Dealer Manager to exercise, in the Dealer Manager’s discretion, all the authority or discretion now or hereafter vested in the Dealer Manager by the provisions of the Dealer Manager Agreement and to take all such actions as the Dealer Manager may believe desirable in order to carry out the provisions of the Dealer Manager Agreement and of this Agreement.

 

(b)

Termination. This Agreement, except for the provisions of Sections 8 (Dealer Manager’s Authority), 9 (Indemnification), 10 (Contribution), 11 (Company as Party to Agreement), 12 (Privacy Laws; Compliance), 14 (Confidentiality), 15 (Non-Solicitation) and this Section 16 (Miscellaneous), may be terminated at any time by either party hereto by five days’ prior written notice to the other party and, in all events, this Agreement shall terminate on the termination date of the Dealer Manager Agreement, except for the provisions of Sections 8, 9, 10, 11, 12, 14, 15 and this Section 16.

 

(c)

Communications. Any communications from Participating Broker-Dealer should be in writing addressed to the Dealer Manager at:

 

Ashford Securities LLC

14185 Dallas Parkway. Suite 780

Dallas, Texas 75254

 

with a copy to:

 

Kunzman & Bollinger, Inc.

5100 N. Brookline Avenue, Suite 600

Oklahoma City, Oklahoma 73112

Attention: James J. Linhardt

 

Any notice from the Dealer Manager to Participating Broker-Dealer shall be deemed to have been duly given if mailed, communicated by electronic delivery or facsimile or delivered by overnight courier to Participating Broker-Dealer at Participating Broker-Dealer’s address shown below.

 

(d)

No Partnership. Nothing herein contained shall constitute the Dealer Manager, Participating Broker-Dealer, the other Participating Broker-Dealers or any of them as an association, partnership, limited liability company, unincorporated business or other separate entity.

 

 

(e)

Notice of Registration Statement Effectiveness. If this Agreement is executed before the initial Effective Date, then the Dealer Manager will notify Participating Broker-Dealer in writing when the initial Effective Date has occurred. Participating Broker-Dealer agrees that Participating Broker-Dealer will not make any offers to sell the Shares or solicit purchasers for the Shares until Participating Broker-Dealer has received such written notice of the initial Effective Date from the Dealer Manager or the Company. This Agreement shall be effective for all sales by Participating Broker-Dealer on and after the initial Effective Date.

 

(f)

Transfer Agent. The Company may authorize its transfer agent to provide information to the Dealer Manager and Participating Broker-Dealer regarding record holder information about the clients of Participating Broker-Dealer who have invested with the Company on an on-going basis for so long as Participating Broker-Dealer has a relationship with such client. Participating Broker-Dealer shall not disclose any password for a restricted website or portion of a website provided to Participating Broker-Dealer in connection with the Offering and shall not disclose to any person, other than an officer, director, employee or agent of Participating Broker-Dealer, any material downloaded from such restricted website or portion of a restricted website.

 

(g)

Assignment. Participating Broker-Dealer shall have no right to assign this Agreement or any of its rights hereunder or to delegate any of its obligations. Any purported assignment or delegation by Participating Broker-Dealer shall be null and void. The Dealer Manager shall have the right to assign any or all of its rights and obligations under this Agreement by written notice, and Participating Broker-Dealer shall be deemed to have consented to such assignment by execution hereof. Dealer Manager shall provide written notice of any such assignment to Participating Broker-Dealer.

 

(h)

Amendment. This Agreement may be amended from time to time by consent of the parties hereto. Participating Broker-Dealer’s consent will be deemed to have been given to an amendment to this Agreement, and such amendment will be effective, five business days following written notice to Participating Broker-Dealer of such amendment if it does not notify the Dealer Manager in writing prior to the close of business on such fifth business day that Participating Broker-Dealer does not consent to such amendment. Notwithstanding the foregoing, Participating Broker-Dealer agrees that (i) it shall consent to any amendment, supplement or modification of the terms of this Agreement requested by FINRA, and (ii) any amendment, supplement or modification of the terms of this Agreement will be effective immediately and Participating Broker-Dealer’s consent will be deemed to have been given to any such amendment, supplement or modification by its sale of Shares or otherwise receiving and retaining an economic benefit for participating in the Offering as a Participating Broker-Dealer.

 

(i)

Counterparts. This Agreement may be executed (including by email transmission) with counterpart signature pages or in counterpart copies, each of which shall be deemed an original but all of which together shall constitute one and the same instrument comprising this Agreement.

 

(j)

Invalidity. The invalidity or unenforceability of any provision of this Agreement shall not affect the other provisions hereof, and this Agreement shall be construed in all respects as if such invalid or unenforceable provision were omitted.

 

(k)

Strict Performance. The failure of any party to insist upon or enforce strict performance by any other party of any provision of this Agreement or to exercise any right under this Agreement shall not be construed as a waiver or relinquishment to any extent of such party’s right to assert or rely upon any such provision or right in that or any other instance; rather, such provision or right shall be and remain in full force and effect.

 

(l)

Applicable Law. This Agreement and any disputes relative to the interpretation or enforcement hereto shall be governed by and construed under the internal laws, as opposed to the conflicts of laws provisions, of the State of Texas.

 

 

(m)

Waiver. EACH OF THE PARTIES HERETO WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) RELATED TO OR ARISING OUT OF THIS AGREEMENT. The parties hereto each hereby irrevocably submits to the exclusive jurisdiction of the courts of the State of Texas and the Federal courts of the United States of America located in Dallas, Texas, in respect of the interpretation and enforcement of the terms of this Agreement, and in respect of the transactions contemplated hereby, and each hereby waives, and agrees not to assert, as a defense in any action, suit or proceeding for the interpretation or enforcement hereof, that it is not subject thereto or that such action, suit or proceeding may not be brought or is not maintainable in said courts or that the venue thereof may not be appropriate or that this Agreement may not be enforced in or by such courts, and the parties hereto each hereby irrevocably agrees that all claims with respect to such action or proceeding shall be heard and determined in such a Texas State or Federal court.

 

(n)

Attorneys’ Fees. If a dispute arises concerning the performance, meaning or interpretation of any provision of this Agreement or any document executed in connection with this Agreement, then the prevailing party in such dispute shall be awarded any and all costs and expenses incurred by the prevailing party in enforcing, defending or establishing its rights hereunder or thereunder, including, without limitation, court costs and attorneys and expert witness fees. In addition to the foregoing award of costs and fees, the prevailing party also shall be entitled to recover its attorneys’ fees incurred in any post-judgment proceedings to collect or enforce any judgment.

 

[Signatures on following page]

 

 

If the foregoing is in accordance with Participating Broker-Dealer’s understanding and agreement, please sign and return the attached duplicate of this Agreement. Participating Broker-Dealer’s indicated acceptance thereof shall constitute a binding agreement between Participating Broker-Dealer and the Dealer Manager.

 

	DEALER MANAGER:
	ASHFORD SECURITIES LLC
	By:
	Name:
	Title:

 

The undersigned dealer confirms its agreement to act as a Participating Broker-Dealer pursuant to all the terms and conditions of the above Participating Broker-Dealer Agreement and the attached Dealer Manager Agreement. The undersigned dealer hereby represents that it will comply with the applicable requirements of the Securities Act and the Exchange Act and the published rules and regulations of the Commission thereunder, and applicable blue sky or other state securities laws. The undersigned dealer represents and warrants that the undersigned dealer is duly registered as a broker-dealer under the provisions of the Exchange Act and the Exchange Act Rules and Regulations or is exempt from such registration. The undersigned dealer confirms that it and each salesperson acting on its behalf are members in good standing of FINRA and duly licensed by each regulatory authority in each jurisdiction in which the undersigned dealer or such salesperson will offer and sell Shares, or are exempt from registration with such authorities. The undersigned dealer hereby represents that it will comply with the Rules of FINRA and all rules and regulations promulgated by FINRA. We hereby represent that the jurisdictions identified below represent a true and correct list of all jurisdictions in which we are registered or licensed as a broker or dealer and are fully authorized to sell securities, and we agree to advise you of any change in such list during the term of this Agreement.

 

1.

Identity of Participating Broker-Dealer:

 

Full Legal Name:
(to be completed by Participating Broker-Dealer)
Type of Entity:
(to be completed by Participating Broker-Dealer)
Organized in the State of:
(to be completed by Participating Broker-Dealer)
Tax Identification Number:
(to be completed by Participating Broker-Dealer)
FINRA/CRD Number:
(to be completed by Participating Broker-Dealer)

 

Registered or Licensed to Sell in:

 

¨ All U.S. States and Territories 

¨ The following U.S. States and Territories:

 

(to be completed by Participating Broker-Dealer)

 

 

2.            Any notice under this Agreement will be deemed given pursuant to Section 16 hereof when delivered to the Participating Broker-Dealer as follows:

 

Company Name:
Attention to:
	(Name)
	(Title)
Street Address:
City, State and Zip Code:
Telephone No.:	(           )
Facsimile No.:	(          )
E-mail Address:

 

ACCEPTED AND AGREED AS OF THE DATE BELOW

 

Participating Broker-Dealer

 

(Print Name of Participating Broker-Dealer)

 

By:
	Name:
	Title:
	Date:

 

Kindly have funds representing commissions forwarded as follows (if different than above): (Please type or print)

 

Name of Firm:
Address:
	Street
	City
	State and Zip Code
	(Area Code) Telephone No.
Attention:

 

¨ ACH             o Wire           o Check

 

If Participating Broker-Dealer requests payment by ACH or Wire, Participating Broker-Dealer hereby authorizes the Dealer Manager or its agent to deposit commissions, marketing fees, and other payments due to it pursuant to this Participating Broker-Dealer Agreement to its bank account specified below. This authority will remain in force until Participating Broker-Dealer notifies the Dealer Manager in writing to cancel it. In the event that the Dealer Manager deposits funds erroneously into Participating Broker-Dealer’s account, the Dealer Manager is authorized to debit the account with no prior notice to Participating Broker-Dealer for an amount not to exceed the amount of the erroneous deposit.

 

 

Bank Name:
Bank Address:
Bank Routing Number:
Account Number:

 

 

SCHEDULE I

 

TO

 

PARTICIPATING BROKER-DEALER AGREEMENT WITH 

ASHFORD SECURITIES LLC

 

The following reflects the Preferred Stock the Participating Broker-Dealer agrees to sell as set forth herein and in the Participating Broker-Dealer Agreement. The terms of the Series L Preferred Stock and Series M Preferred Stock as set forth below are subject to and in no way modify the terms discussed in the Participating Broker-Dealer Agreement and the Prospectus. This Schedule I is effective as of the date of the Participating Broker-Dealer Agreement and may be modified at any time by written agreement of the Parties. Terms not defined herein shall have the meaning set forth in the Participating Broker-Dealer Agreement.

 

Check each applicable box below:

 

o

Check this box if electing to sell Series L Preferred Stock.

 

Subject to any terms set forth in the Participating Broker-Dealer Agreement and the Prospectus, if the Participating Broker-Dealer elects to sell Series L Preferred Stock, it will qualify to receive a selling commission of __% of the gross proceeds from the Shares of Series L Preferred Stock sold by it and accepted and confirmed by the Company.

 

Additionally, the Dealer Manager agrees to re-allow __% of the gross proceeds from the Shares of Series L Preferred Stock out of Dealer Manager Fee received by it to Participating Broker-Dealer as a marketing fee.

 

o

Check this box if electing to sell Series M Preferred Stock.

 

Subject to any terms set forth in the Participating Broker-Dealer Agreement and the Prospectus, if the Participating Broker-Dealer elects to sell Series M Preferred Stock, it will receive no selling commissions for the sale of Series M Preferred Stock. Additionally, the Dealer Manager agrees to re-allow __% of the gross proceeds from the Shares of Series M Preferred Stock out of Dealer Manager Fee received by it to Participating Broker-Dealer as a marketing fee.

 

To be Completed by Ashford Securities: In connection with the purchase of Shares by clients of the Participating Broker-Dealer and subject to the terms of this Agreement and the Prospectus, by the below signature, the Dealer Manager represents, warrants, and agrees that it will receive a Dealer Manager Fee equal to __% of the gross proceeds from the sale of the Shares to the Participating Broker-Dealer’s clients. To the extent this Dealer Manager Fee is less than the 3% Dealer Manager Fee described in the Prospectus, the purchase price per Share for the clients of the Participating Broker-Dealer will be correspondingly reduced.

 

IN WITNESS WHEREOF, the parties have executed this Schedule I on the date and year shown above.

 

PARTICIPATING BROKER-DEALER:		DEALER MANAGER:
		ASHFORD SECURITIES LLC
(Name of Participating Broker-Dealer)

 

By:			By:
	Name:			Name:
	Title:			Title:
	Date:			Date:

 

 

EXHIBIT A

 

ELECTRONIC SIGNATURE USE INDEMNITY AGREEMENT

 

Participating Broker-Dealer has adopted a process by which clients may authorize certain account-related transactions or requests, in whole or in part, evidenced by Electronic Signature (as such term is defined in Section 4(g) hereof). In consideration of the Company allowing Participating Broker-Dealer and its clients to execute certain account-related transactions and/or requests, in whole or in part, by Electronic Signature, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Participating Broker-Dealer does hereby, for itself and its successors and permitted assigns, covenant and agree to indemnify and hold harmless the Company, the Advisor, the Dealer Manager, each of their affiliates and each of their and their affiliates’ officers, directors, trustees, agents and employees, in whatever capacity they may act, from and against any and all claims (whether groundless or otherwise), losses, liabilities, damages and expenses, including, but not limited to, costs, disbursements and reasonable counsel fees (whether incurred in connection with such claims, losses, liabilities, damages and expenses or in connection with the enforcement of any rights hereunder), arising out of or in connection with Participating Broker-Dealer’s representations or covenants set forth in Section 4(g) hereof or the representations described below.

 

Participating Broker-Dealer represents that it will comply with all applicable terms of Electronic Signature Law as outlined in Section 4(g) of the Participating Broker-Dealer Agreement. Participating Broker-Dealer represents that the Company may accept any Electronic Signature without any responsibility to verify or authenticate that it is the signature of Participating Broker-Dealer’s client given with such client’s prior authorization and consent. Participating Broker-Dealer represents that the Company may act in accordance with the instructions authorized by Electronic Signature without any responsibility to verify that Participating Broker-Dealer’s client intended to give the Electronic Signature for the purpose of authorizing the instruction, transaction or request and that Participating Broker-Dealer’s client received all disclosures required by applicable Electronic Signature Law. Participating Broker-Dealer agrees to provide a copy of each Electronic Signature and further evidence supporting any Electronic Signature upon request by the Company.

 

 

 

Exhibit 4.10

 

ASHFORD HOSPITALITY TRUST, INC.

 

ARTICLES SUPPLEMENTARY ESTABLISHING AND FIXING THE RIGHTS AND PREFERENCES OF A SERIES OF PREFERRED STOCK

 

January [__], 2025

 

Ashford Hospitality Trust, Inc., a Maryland corporation (the “Corporation”), having its principal office in Baltimore City, Maryland and its corporate office in Dallas, Texas certifies to the State Department of Assessments and Taxation of Maryland (the “Department”) that:

 

FIRST:  Under a power contained in Section 2-208 of the Maryland General Corporation Law (the “MGCL”) and Article V of the Corporation’s Articles of Amendment and Restatement (as the same may be amended or supplemented, the “Charter”), the Board of Directors of the Corporation (the “Board”) [and a duly authorized committee therefore] on January [__], 2025 [and XX, 2025, respectively,] classified and designated an aggregate of 16,000,000 shares of the unissued and undesignated shares of preferred stock, par value $0.01 per share, of the Corporation (“Preferred Stock”) and provided for their issuance in a combined total of up to 16,000,000 shares of (1) Series L Redeemable Preferred Stock, par value $0.01 per share, of the Corporation (“Series L Preferred Stock”), with the preferences, rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications and terms and conditions of redemption set forth herein, and (2) Series M Redeemable Preferred Stock, par value $0.01 per share, of the Corporation (“Series M Preferred Stock”), with the preferences, rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications and terms and conditions of redemption set forth in the articles supplementary filed by the Corporation with the Department on January [__], 2025, as from time to time determined by the Board or a duly authorized committee thereof. Capitalized terms used and not otherwise defined herein have the meanings set forth in the Charter.

 

(1)            Designation and Number.

 

(a)            A series of Preferred Stock of the Corporation designated the “Series L Redeemable Preferred Stock” is hereby established. The par value of the Series L Preferred Stock is $0.01 per share.

 

(b)            The total number of authorized shares of Series L Preferred Stock and Series M Preferred Stock shall be 16,000,000 in the aggregate. Prior to the issuance of any Series L Preferred Stock or Series M Preferred Stock, the Board or an authorized committee thereof shall determine whether such shares shall be issued as Series L Preferred Stock or Series M Preferred Stock, and such determination shall be recorded in the records of the Corporation.

 

(2)            Rank. The Series L Preferred Stock will rank, with respect to the payment of dividends and rights upon liquidation, dissolution or winding up of the affairs of the Corporation: (i) prior or senior to any class or series of common stock, par value $0.01 per share, of the Corporation (“Common Stock”) and any other class or series of equity securities, if the holders of Series L Preferred Stock are entitled to the receipt of dividends or of amounts distributable upon liquidation, dissolution or winding up in preference or priority to the holders of shares of such class or series (“Junior Stock”); (ii) on a parity with each other and the 8.45% Series D Cumulative Preferred Stock, par value $0.01 per share (“Series D Preferred Stock”), the 7.375% Series F Cumulative Preferred Stock, par value $0.01 per share (“Series F Preferred Stock”), the 7.375% Series G Cumulative Preferred Stock, par value $0.01 per share (“Series G Preferred Stock”), the 7.50% Series H Cumulative Preferred Stock, par value $0.01 per share (“Series H Preferred Stock”), the 7.50% Series I Cumulative Preferred Stock, par value $0.01 per share (“Series I Preferred Stock”), the Series J Redeemable Preferred Stock, par value $0.01 per share (“Series J Preferred Stock”), the Series K Redeemable Preferred Stock, par value $0.01 per share (“Series K Preferred Stock”), the Series M Preferred Stock, and any other class or series of the equity securities of the Corporation issued in the future if, pursuant to the specific terms of such class or series of equity securities, the holders of such class or series of equity securities and the holders of the Series L Preferred Stock are entitled to the receipt of dividends and of amounts distributable upon liquidation, dissolution or winding up in proportion to their respective amounts of accrued and unpaid dividends per share or liquidation preferences, without preference or priority one over the other (“Parity Stock”); (iii) junior to any class or series of equity securities of the Corporation if, pursuant to the specific terms of such class or series, the holders of such class or series are entitled to the receipt of dividends or amounts distributable upon liquidation, dissolution or winding up in preference or priority to the holders of the Series L Preferred Stock (“Senior Stock”); and (iv) junior to all of the existing and future indebtedness of the Corporation. The term “equity securities” does not include convertible debt securities, which, unless otherwise provided, will rank senior to the Series L Preferred Stock prior to conversion.

 

 

(3)            Dividends.

 

(a)            Holders of Series L Preferred Stock will be entitled to receive, when and as authorized by the Board and declared by the Corporation, out of funds legally available for payment, cumulative cash dividends at an annual rate equal to [XX]% per annum of the stated value of $25.00 per share (the “Stated Value”) (equivalent to an annual dividend rate of $[XX] per share). Dividends shall be payable monthly on the 15th day of each month (or, if such payment date is not a Business Day (as defined in Article VI of the Charter), the next succeeding Business Day), with the same force and effect as if paid on such dividend payment date, and no interest or additional dividends or other sums shall accrue on the amount so payable from such dividend payment date to such next succeeding Business Day. Dividends shall be payable in arrears to holders of record as they appear on the records of the Corporation at the close of business on the last Business Day of each month immediately preceding the applicable dividend payment date. Dividends payable on the Series L Preferred Stock for any dividend period (including any dividend period during which any shares of Series L Preferred Stock shall be redeemed) shall be computed on the basis of twelve 30-day months and a 360-day year. Holders of Series L Preferred Stock will not be entitled to receive any dividends in excess of full cumulative dividends on the Series L Preferred Stock at the dividend rate specified in this paragraph. No interest will be paid in respect of any dividend payment or payments on the Series L Preferred Stock that may be in arrears.

 

(b)            Dividends payable on each share of Series L Preferred Stock will be cumulative from (and including) the first day of the dividend period during which such share of Series L Preferred Stock is originally issued, whether or not in any dividend period or periods (x) such dividends shall be declared, (y) there shall be funds legally available for the payment of such dividends or (z) any agreement prohibits payment of such dividends. Each subsequent dividend shall accrue and be cumulative from (and including) the end of the most recent dividend period for which a dividend has been paid on each such share of Series L Preferred Stock. As used herein, “dividend period” shall mean the respective periods commencing on, and including, the first day of each month of each year and ending on, and including, the day preceding the first day of the next succeeding dividend period (other than the dividend period during which any shares of Series L Preferred Stock shall be redeemed or otherwise acquired by the Corporation, which shall end on, and include, the day preceding the redemption or acquisition date with respect to the shares of Series L Preferred Stock being redeemed or acquired).

 

 

(c)            When dividends are not paid in full upon the Series L Preferred Stock or any other class or series of Parity Stock, or a sum sufficient for such payment is not set apart, all dividends declared upon the Series L Preferred Stock and any other class or series of Parity Stock shall be declared ratably in proportion to the respective amounts of dividends accumulated, accrued and unpaid on the Series L Preferred Stock and accumulated, accrued and unpaid on such Parity Stock. Except as set forth in the preceding sentence, unless dividends on the Series L Preferred Stock equal to the full amount of accumulated, accrued and unpaid dividends have been or contemporaneously are declared and paid, or declared and a sum sufficient for the payment thereof set apart for such payment for all past dividend periods, no dividends (other than dividends paid in Junior Stock or options, warrants or rights to subscribe for or purchase such Junior Stock) shall be declared or paid or set aside for payment with respect to any class or series of Parity Stock. Unless dividends on the Series L Preferred Stock equal to the full amount of accumulated, accrued and unpaid dividends have been or contemporaneously are declared and paid, or declared and a sum sufficient for the payment thereof set apart for such payment for all past dividend periods, no dividends (other than dividends or distributions paid in Junior Stock or options, warrants or rights to subscribe for or purchase such Junior Stock) shall be declared or paid or set apart for payment with respect to any Junior Stock, nor shall any Junior Stock or Parity Stock be redeemed, purchased or otherwise acquired (except for purposes of an employee benefit plan) for any consideration, or any monies be paid to or made available for a sinking fund for the redemption of any Junior Stock or Parity Stock (except by conversion or exchange for Junior Stock, or options, warrants or rights to subscribe for or purchase Junior Stock), nor shall any other cash or property be paid or distributed to or for the benefit of holders of Junior Stock or Parity Stock. Notwithstanding the foregoing, the Corporation shall not be prohibited from (i) declaring or paying or setting apart for payment any dividend or distribution on any Junior Stock or Parity Stock or (ii) redeeming, purchasing or otherwise acquiring any Junior Stock or Parity Stock, in each case, if such declaration, payment, redemption, purchase or other acquisition is necessary to maintain the Corporation’s qualification as a real estate investment trust (“REIT”) for federal income tax purposes.

 

(d)            No dividends on Series L Preferred Stock shall be authorized by the Board or declared or paid or set apart for payment at such time as the terms and provisions of any agreement, including any agreement relating to the Corporation’s indebtedness, prohibits such authorization, declaration, payment or setting apart for payment or provides that such authorization, declaration, payment or setting apart for payment would constitute a breach thereof or a default thereunder, or if such authorization, declaration, payment or setting apart for payment shall be restricted or prohibited by law.

 

(e)            If, for any taxable year, the Corporation elects to designate as “capital gain dividends” (as defined in Section 857 of the Internal Revenue Code of 1986, as amended (the “Code”)) any portion of the dividends (as determined for federal income tax purposes) paid or made available for the year to holders of all classes of capital stock, then the portion of the capital gains amount that shall be allocable to the holders of Series L Preferred Stock shall be the amount that the total dividends (as determined for federal income tax purposes) paid or made available to the holders of the Series L Preferred Stock for the year bears to the total dividends (as determined for federal income tax purposes) paid or made available for the year to holders of all classes of capital stock.

 

(f)             In determining for purposes of Section 2-311 of the MGCL or otherwise under the MGCL whether a distribution (other than upon voluntary or involuntary liquidation, dissolution or winding up of the Corporation), by dividend, redemption or otherwise, is permitted, amounts that would be needed, if the Corporation were to be dissolved at the time of the distribution, to satisfy the liquidation preference of any series of Preferred Stock with preferential rights on dissolution senior to the Series L Preferred Stock (as discussed in Section 4 below) will not be added to the Corporation’s total liabilities.

 

(4)            Liquidation Preference.

 

(a)            Upon any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation, before any distribution or payment shall be made to or set apart for the holders of any Junior Stock, the holders of Series L Preferred Stock shall be entitled to receive, out of the Corporation’s assets legally available for distribution its stockholders, after payment or provision for the Corporation’s debts and other liabilities, a liquidation preference equal to the Stated Value per share, plus an amount equal to all accumulated, accrued and unpaid dividends (whether or not authorized or declared) to, but not including, the date of final distribution to such holders, but such holders shall not be entitled to any further payment. If upon any liquidation, dissolution or winding up of the Corporation, its assets, or proceeds thereof, distributable among the holders of Series L Preferred Stock shall be insufficient to pay in full the above described preferential amount and liquidating payments on any other shares of any class or series of Parity Stock, then such assets, or the proceeds thereof, shall be distributed among the holders of Series L Preferred Stock and any such other Parity Stock ratably in the same proportion as the respective amounts that would be payable on such Series L Preferred Stock and any such other Parity Stock if all amounts payable thereon were paid in full.

 

 

(b)            Upon any liquidation, dissolution or winding up of the affairs of the Corporation, after payment of the full amount of the liquidating distributions have been made to the holders of Series L Preferred Stock and any Parity Stock, any other series or class or classes of Junior Stock shall be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the Series L Preferred Stock shall have no right or claim to any of the remaining assets of the Corporation.

 

(c)            Written notice of any such liquidation, dissolution or winding up of the affairs of the Corporation, stating the payment date or dates when, and the place or places where, the amounts distributable in such circumstances shall be payable, shall be given by first class mail, postage pre-paid, not less than 30 or more than 60 days prior to the payment date stated therein, to each record holder of the Series L Preferred Stock at the respective addresses of such holders as the same shall appear on the stock transfer records of the Corporation.

 

(d)            None of a consolidation or merger of the Corporation with or into any other corporation, trust or other entity, a consolidation or merger of any other corporation, trust or other entity with or into the Corporation, a statutory stock exchange by the Corporation or a sale, lease, transfer or conveyance of any or all of the Corporation’s assets or business shall be deemed to constitute a liquidation, dissolution or winding up of the affairs of the Corporation.

 

(e)            The liquidation preference of the outstanding shares of Series L Preferred Stock will not be added to the liabilities of the Corporation for the purpose of determining whether under the MGCL a distribution may be made to stockholders of the Corporation whose preferential rights upon dissolution of the Corporation are junior to those of holders of Series L Preferred Stock.

 

(5)            Redemption by Holders.

 

(a)            Redemption Right.

 

(i)            Subject to the provisions of Section 5(d) below, each holder of shares of Series L Preferred Stock shall have the right, at such holder’s option, to require the Corporation to redeem any or all of such holder’s shares of Series L Preferred Stock at a redemption price per share of Series L Preferred Stock (the “Holder Redemption Price”) equal to the Stated Value, less the Redemption Fee (as defined below), plus an amount equal to all accrued but unpaid dividends (whether or not authorized or declared) to, but not including, the date fixed for redemption (the “Holder Redemption Date”). The Redemption Fee shall be an amount equal to (i) [XX]% of the Stated Value beginning on the date of original issuance of each share of Series L Preferred Stock (the “Original Issue Date”) to be redeemed; (ii) [XX]% of the Stated Value beginning on the second anniversary from the Original Issue Date of the shares of Series L Preferred Stock to be redeemed; (iii) [XX]% of the Stated Value beginning on the third anniversary from the Original Issue Date of the shares of Series L Preferred Stock to be redeemed; (iv) [XX]% of the Stated Value beginning on the fourth anniversary from the Original Issue Date of the shares of Series L Preferred Stock to be redeemed; and (v) [XX]% of the Stated Value beginning on the fifth anniversary from the Original Issue Date of the shares of Series L Preferred Stock to be redeemed (the “Redemption Fee”). For purposes of this Section 5(a) only, the Original Issue Date shall mean the earliest date that any shares of Series L Preferred Stock were issued to any investor during the calendar quarter in which the shares to be redeemed were issued. For purposes of this Section 5(a), where the shares of Series L Preferred Stock to be redeemed were acquired by the holder thereof pursuant to the Corporation’s dividend reinvestment plan (the “Series L DRIP”) for shares of Series L Preferred Stock (such shares, the “Series L DRIP Shares”), the Original Issue Date of such Series L DRIP Shares shall be deemed to be the same as the Original Issue Date of the underlying shares of Series L Preferred Stock pursuant to which such Series L DRIP Shares are directly or indirectly attributable (such shares, the “Underlying Series L Shares”), and such Series L DRIP Shares shall be subject to the same Redemption Fee to which such Underlying Series L Shares would be subject if submitted for redemption.

 

 

(ii)            Subject to the following sentence, for so long as the Common Stock is listed on a national securities exchange, the Corporation has the right, in its sole discretion, to pay the Holder Redemption Price in cash or in equal value of shares of Common Stock or any combination thereof, calculated based on the closing price per share of Common Stock for the single trading day prior to the Holder Redemption Date. Pursuant to these Articles Supplementary, the Board may, without stockholder approval, permanently revoke the Corporation’s right to pay the redemption price (or a portion thereof) in Common Stock and require the Corporation to pay the redemption price solely in cash.

 

(b)

Redemption Following Death or Disability of a Holder.

 

(i)            Subject to the provisions of Section 5(d) below, the Corporation shall redeem shares of Series L Preferred Stock held by a natural person upon his or her death or upon suffering a qualifying disability at the Holder Redemption Price (including an amount equal to all accrued but unpaid dividends (whether or not authorized or declared) to, but not including, the Holder Redemption Date); provided, no Redemption Fee shall apply to any such redemption pursuant to this Section 5(b).

 

(ii)            In order to redeem shares of Series L Preferred Stock upon the death or qualifying disability of a stockholder pursuant to Section 5(b)(i) above, the following conditions must be met:

 

A.            the deceased or disabled holder must be the sole holder of the shares of Series L Preferred Stock to be redeemed, or the beneficiary of a trust or an individual retirement account or other retirement or profit-sharing plan that is a holder or, in the case of shares owned by spouses who are joint registered holders (or holders by tenants in the entirety), the deceased or disabled may be one of the joint holders;

 

B.            in the case of the disability of a holder:

 

i.

such disability must meet the requirements of Section 72(m)(7) of the Code (i.e., the individual must be unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or to be of a long continued and indefinite duration);

 

ii.

such determination of disability must be made by the U.S. governmental agency responsible for reviewing the disability retirement benefits that the holder could be eligible to receive;

 

 

iii.

the condition causing the disability shall have occurred after the date that the holder became a holder of Series L Preferred Stock; and

 

iv.

the condition causing the disability shall have occurred before the holder reached full retirement age, which is the age at which such worker can claim full Social Security retired-worker benefits;

 

C.            the redemption request must be received by the Corporation within 12 months after the death or disability of the holder; and

 

D.            in the case of the death of a holder, the redemption request must be made by a recipient of the shares of Series L Preferred Stock through bequest or inheritance or, in the case of the death of a beneficiary of a trust, by the trustee of the trust or, in the case of shares owned by spouses who are joint registered holders (or holders by tenants in the entirety), the request may be made by the surviving spouse.

 

(iii)           Subject to the following sentence, for so long as the Common Stock is listed on a national securities exchange, the Corporation has the right, in its sole discretion, to pay the Holder Redemption Price in cash or in equal value of shares of Common Stock or any combination thereof, based on the closing price per share of Common Stock for the single trading day prior to the Holder Redemption Date. Pursuant to these Articles Supplementary, the Board may, without stockholder approval, permanently revoke the Corporation’s right to pay the redemption price (or a portion thereof) in Common Stock and require the Corporation to pay the redemption price solely in cash.

 

(c)

Procedures for Redemption.

 

(i)            Redemption of the Series L Preferred Stock shall be made at the option of the holder thereof, upon:

 

A.            delivery to the Corporation and the Corporation’s transfer agent, in its capacity as redemption and paying agent (the “Redemption and Paying Agent”) by such holder of a duly completed notice (the “Holder Redemption Notice”) in compliance with the required procedures, including those of the Corporation’s transfer agent and of The Depository Trust Company (“DTC”) for tendering interests in global certificates (the “Stated Transfer Procedures”), and specifying the number of shares of Series L Preferred Stock to be redeemed that are held by such holder as of the date of such Holder Redemption Notice; and

 

B.            transfer of the Series L Preferred Stock in compliance with the Stated Transfer Procedures, such transfer being a condition to receipt by the holder of the Holder Redemption Price therefor.

 

(ii)            The Holder Redemption Date shall be a date selected by the Corporation that is no later than 45 days after the Holder Redemption Notice is received by the Corporation.

 

 

(iii)            Prior to 11:00 a.m. (local time in the City of New York) on the Holder Redemption Date, the Corporation must deposit with the Redemption and Paying Agent in trust sufficient funds or shares of Common Stock or any combination thereof (in immediately available funds or shares of Common Stock or any combination thereof if deposited on such Business Day) to pay the Holder Redemption Price of all the shares of Series L Preferred Stock that are to be redeemed in cash or in equal value of shares of Common Stock or any combination thereof as of the Holder Redemption Date. If the Redemption and Paying Agent holds funds or shares of Common Stock sufficient to pay the Holder Redemption Price of the Series L Preferred Stock for which a Holder Redemption Notice has been tendered, then as of such Holder Redemption Date, (i) such shares of Series L Preferred Stock shall cease to be outstanding and dividends shall cease to accrue thereon (whether or not transfer of such shares of Series L Preferred Stock is made) and (ii) all other rights of the holders in respect thereof shall terminate (other than the right to receive the Holder Redemption Price, in cash or in shares of Common Stock or any combination thereof, upon transfer of such shares of Series L Preferred Stock). To the extent that the aggregate amount of cash or shares of Common Stock of any combination thereof deposited by the Corporation to satisfy the Holder Redemption Price exceeds the aggregate Holder Redemption Price of the shares of Series L Preferred Stock that the Corporation has elected to redeem in cash or shares of Common Stock or any combination thereof as of the Holder Redemption Date, then, following the Holder Redemption Date, the Redemption and Paying Agent must promptly return any such excess to the Corporation.

 

(d)

Limitations on Holder Redemption.

 

(i)            Notwithstanding any provision of this Section 5, the Corporation’s obligation to redeem shares of the Series L Preferred Stock and the Series M Preferred Stock at the option of the holders pursuant to Section 5(a) hereof and Section 5(a) of the articles supplementary setting forth the rights, preferences and limitations of the Series M Preferred Stock, respectively, shall be subject to the following aggregate redemption limits:

 

A.            no more than 2.0% of the aggregate number of outstanding shares of Series L Preferred Stock and Series M Preferred Stock shall be redeemed per calendar month;

 

B.            no more than 5.0% of the aggregate number of outstanding shares of Series L Preferred Stock and Series M Preferred Stock shall be redeemed per fiscal quarter; and

 

C.            no more than 20.0% of the aggregate number of outstanding shares of Series L Preferred Stock and Series M Preferred Stock shall be redeemed per fiscal year.

 

(ii)            Redemptions at the option of the Corporation pursuant to Section 6 below shall not count towards the limits set forth in this Section 5(d)(i). Redemptions at the option of the holder following the death or disability of a holder pursuant to Section 5(b) above shall count towards the limits set forth in this Section 5(d)(i), but shall not be subject to such limits.

 

(iii)           If, after applying the redemption limits set forth in this Section 5(d)(i), a holder would own less than one share of Series L Preferred Stock, all of such holder’s shares of Series L Preferred Stock shall be redeemed. Otherwise, all redemption amounts shall be rounded down such that after giving effect to any redemption, no holder is left owning a fractional share. If, after applying the redemption limits in set forth in this Section 5(d)(i), the number of shares of Series L Preferred Stock to be redeemed is less than the number of shares of Series L Preferred Stock submitted for redemption by a holder, the excess shares of Series L Preferred Stock will remain subject to redemption in future periods until the earlier of (i) all shares of Series L Preferred Stock submitted by such holder for redemption have been redeemed, or (ii) such holder delivers to us a written notice of withdrawal stating the number of withdrawn shares of Series L Preferred Stock and the number of shares of Series L Preferred Stock, if any, which remain subject to redemption.

 

 

(iv)          Notwithstanding any provision of this Section 5, the Corporation’s obligation to redeem any shares of Series L Preferred Stock in cash may be limited to the extent that the Corporation does not have sufficient funds available, taking into account such reserves and other considerations as the Board may determine in its sole discretion, to fund any such cash redemption. Further, no redemptions of shares of Series L Preferred Stock shall be made by the Corporation if such redemption shall be restricted or prohibited by law.

 

(v)           Notwithstanding anything to the contrary contained herein, unless full cumulative dividends on all shares of Series L Preferred Stock shall have been or contemporaneously are authorized, declared and paid or authorized, declared and a sum sufficient for the payment thereof set apart for payment for all past dividend periods and the then current dividend period, no shares of Series L Preferred Stock shall be redeemed unless all outstanding shares of Series L Preferred Stock are simultaneously redeemed; provided, however, that the foregoing shall not prevent the purchase or acquisition of shares of Series L Preferred Stock pursuant to a purchase or exchange offer made on the same terms to holders of all outstanding shares of Series L Preferred Stock. In addition, unless full cumulative dividends on all outstanding shares of Series L Preferred Stock have been or contemporaneously are authorized, declared and paid or authorized, declared and a sum sufficient for the payment thereof set apart for payment for all past dividend periods and the then current dividend period, the Corporation shall not purchase or otherwise acquire directly or indirectly for any consideration, nor shall any monies be paid to or made available for a sinking fund for the redemption of, any shares of Series L Preferred Stock or any other class or series of Junior Stock or Parity Stock (except by conversion into or exchange for shares of any class or series of Junior Stock).

 

(vi)          The foregoing provisions of this Section 5(d) shall not prevent any other action by the Corporation pursuant to the Charter or otherwise in order to ensure that the Corporation remains qualified as a REIT for federal income tax purposes.

 

(e)            Redemption Price. If the Holder Redemption Date falls after a dividend record date and on or prior to the corresponding dividend payment date, each holder of Series L Preferred Stock at the close of business on the dividend record date will be entitled to receive the dividend payable on such shares of Series L Preferred Stock on the corresponding payment date notwithstanding the redemption of such shares of Series L Preferred Stock between such record date and the corresponding payment date and each holder or Series L Preferred Stock that surrenders such shares on such Holder Redemption Date will be entitled to the dividends accruing after the end of the applicable dividend period up to, but excluding, the Holder Redemption Date.

 

(6)

Redemption by the Corporation.

 

(a)

Redemption Right.

 

(i)            The Series L Preferred Stock shall not be subject to any sinking fund or mandatory redemption. Except with respect to the special optional redemption set forth in Section 6(b) below and to preserve the status of the Corporation as a REIT for federal income tax purposes, shares of Series L Preferred Stock are not redeemable by the Corporation prior to the second anniversary from the Original Issue Date of the shares of Series L Preferred Stock to be redeemed.

 

(ii)            Beginning on the second anniversary of each Original Issue Date of shares of Series L Preferred Stock, such shares of Series L Preferred Stock shall be redeemable by the Corporation, at the Corporation’s option, upon giving notice not less than 30 days nor more than 60 days in advance of the date fixed for redemption, in whole or in part, at any time or from time to time (the “Corporation Redemption Right”), at a redemption price per share of Series L Preferred Stock equal to the Stated Value, plus an amount equal to all accrued but unpaid dividends (whether or not authorized or declared) to, but not including, the date fixed for redemption (the “Corporation Redemption Price”).

 

 

(iii)           Subject to the following sentence, for so long as the Common Stock is listed on a national securities exchange, if the Corporation elects to redeem any shares of Series L Preferred Stock, the Corporation has the right, in its sole discretion, to pay the Corporation Redemption Price in cash or in equal value of shares of Common Stock or any combination thereof, calculated based on the closing price per share of Common Stock for the single trading day prior to the date fixed for redemption. Pursuant to these Articles Supplementary, the Board may, without stockholder approval, permanently revoke the Corporation’s right to pay the redemption price (or a portion thereof) in Common Stock and require the Corporation to pay the redemption price solely in cash.

 

(iv)           For purposes of this Section 6(a) only, the Original Issue Date shall mean the earliest date that any shares of Series L Preferred Stock were issued to any investor during the calendar quarter in which the shares to be redeemed were issued. For purposes of this Section 6(a), where the shares of Series L Preferred Stock to be redeemed are Series L DRIP Shares, the Original Issue Date of such Series L DRIP Shares shall be deemed to be the same as the Underlying Series L Shares, and such Series L DRIP Shares shall be subject to optional redemption by the Corporation hereunder on the same date and terms as the Underlying Series L Shares.

 

(v)           The Series L Preferred Stock shall be subject to the provisions of Article VI of the Charter pursuant to which Series L Preferred Stock owned by a stockholder in excess of the Ownership Limit (as defined in the Charter) shall automatically be transferred to a Charitable Trust (as defined in the Charter) for the exclusive benefit of a Charitable Beneficiary (as defined in the Charter), as provided in Article VI of the Charter.

 

(vi)          Any date fixed for redemption pursuant to this Section 6 is referred to herein as a “Redemption Date.”

 

(b)            Special Optional Redemption Right.

 

(i)            Upon the occurrence of a Change of Control (as defined below), the Corporation, at its option and upon giving notice not less than 30 nor more than 60 days in advance of the Redemption Date, may redeem the Series L Preferred Stock, in whole or in part, within 120 days after the first date on which such Change of Control occurred (the “Special Optional Redemption Right”), in cash at the Corporation Redemption Price (including an amount equal to all accrued but unpaid dividends (whether or not authorized or declared) to, but not including, the Redemption Date).

 

(ii)            A “Change of Control” is when, after the original issuance of the Series L Preferred Stock, the following have occurred and are continuing:

 

A.            the acquisition by any person, including any syndicate or group deemed to be a “person” under Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, of beneficial ownership, directly or indirectly, through a purchase, merger or other acquisition transaction or series of purchases, mergers or other acquisition transactions of shares of the Corporation entitling that person to exercise more than 50% of the total voting power of all shares of the Corporation entitled to vote generally in elections of directors (except that such person will be deemed to have beneficial ownership of all securities that such person has the right to acquire, whether such right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition); and

 

 

B.            following the closing of any transaction referred to in Section 6(b)(ii)(A) above, neither the Corporation nor the acquiring or surviving entity has a class of common securities (or American Depository Receipts representing such securities) listed on the New York Stock Exchange (“NYSE”), the NYSE American LLC (the “NYSE American”), or The Nasdaq Stock Market LLC (“Nasdaq”) or listed or quoted on an exchange or quotation system that is a successor to the NYSE, the NYSE American or Nasdaq.

 

(c)

Procedures for Redemption.

 

(i)            Notice of redemption of the Series L Preferred Stock, whether pursuant to the Corporation Redemption Right in Section 6(a) or the Special Optional Redemption Right in Section 6(b) above, shall be mailed to each holder of record of the shares to be redeemed by first class mail, postage prepaid at such holder’s address as the same appears on the stock records of the Corporation, no fewer than 30 days nor more than 60 days before the Redemption Date. Any notice that was mailed as described above shall be conclusively presumed to have been duly given on the date mailed whether or not the holder receives the notice. In addition to any information required by law, each notice shall state: (i) the redemption date; (ii) the redemption price; (iii) the number of shares of Series L Preferred Stock to be redeemed; and (iv) if the notice of redemption is mailed pursuant to the Special Optional Redemption Right, (A) that the Series L Preferred Stock is being redeemed pursuant to the Special Optional Redemption Right in connection with the occurrence of a Change of Control and a brief description of the transaction or transactions constituting such Change of Control, and (B) that dividends on the Series L Preferred Stock to be redeemed will cease to accrue on the Redemption Date. If the Corporation redeems fewer than all of outstanding shares of the Series L Preferred Stock, the notice mailed to such holder shall also specify the number of shares of Series L Preferred Stock held by such holder to be redeemed. Any such redemption may be made conditional on such factors as may be determined by the Board and as set forth in the notice of redemption.

 

(ii)            On or after the Redemption Date, each holder of shares of Series L Preferred Stock to be redeemed shall present and surrender the certificates representing his shares of Series L Preferred Stock to the Corporation at the place designated in the notice of redemption and thereupon the Corporation Redemption Price of such shares shall be paid to or on the order of the person whose name appears on such certificate representing shares of Series L Preferred Stock as the owner thereof and each surrendered certificate shall be canceled. If fewer than all the shares represented by any such certificate representing shares of Series L Preferred Stock are to be redeemed, a new certificate shall be issued representing the unredeemed shares.

 

(iii)          If notice of redemption has been mailed in accordance with Section 6(c)(i) above and if the funds or shares of Common Stock or any combination thereof necessary for such redemption have been set aside by the Corporation in trust for the benefit of the holders of the Series L Preferred Stock so called for redemption, then from and after the Redemption Date (unless the Corporation defaults in payment of the Corporation Redemption Price), all dividends on the shares of Series L Preferred Stock called for redemption in such notice shall cease to accumulate and all rights of the holders thereof, except the right to receive the Corporation Redemption Price (including all accumulated and unpaid dividends up to, but not including, the Redemption Date), shall cease and terminate and such shares shall not thereafter be transferred (except with the consent of the Corporation) on the Corporation’s books, and such shares shall not be deemed to be outstanding for any purpose whatsoever. At its election, the Corporation, prior to a Redemption Date, may irrevocably deposit the Corporation Redemption Price (including accumulated and unpaid dividends) of the Series L Preferred Stock so called for redemption in trust for the holders thereof with a bank or trust company, in which case the redemption notice to holders of the shares of Series L Preferred Stock to be redeemed shall (i) state the date of such deposit, (ii) specify the office of such bank or trust company as the place of payment of the Corporation Redemption Price and (iii) require such holders to surrender the certificates representing such shares at such place on or about the date fixed in such redemption notice (which may not be later than the Redemption Date) against payment of the Corporation Redemption Price (including all accumulated and unpaid dividends to, but not including, the Redemption Date). Any interest or other earnings earned on the Corporation Redemption Price (including accumulated and unpaid dividends) deposited with a bank or trust company shall be paid to the Corporation. Any monies so deposited which remain unclaimed by the holders of Series L Preferred Stock at the end of two years after the Redemption Date shall be returned by such bank or trust company to the Corporation.

 

 

(d)

Limitations on Redemption.

 

(i)            If fewer than all of the outstanding shares of Series L Preferred Stock issued on such Original Issue Date are to be redeemed pursuant to the Corporation Redemption Right, the number of shares to be redeemed shall be determined by the Board and the shares to be redeemed will be selected by the Board pro rata (as nearly as practicable without creating fractional shares) from the holders of record of such shares in proportion to the number of such shares held by such holders, by lot or in such manner as the Board may determine. If such redemption is to be by lot and, as a result of such redemption, any holder of shares of Series L Preferred Stock would Beneficially Own or Constructively Own, in excess of the Ownership Limit because such holder’s shares of Series L Preferred Stock were not redeemed, or were only redeemed in part, then, except as otherwise provided in the Charter, the Corporation will redeem the requisite number of shares of Series L Preferred Stock from such holder such that he will not hold in excess of the Ownership Limit subsequent to such redemption.

 

(ii)           Notwithstanding anything to the contrary contained herein, unless full cumulative dividends on all shares of Series L Preferred Stock shall have been or contemporaneously are authorized, declared and paid or authorized, declared and a sum sufficient for the payment thereof set apart for payment for all past dividend periods and the then current dividend period, no shares of Series L Preferred Stock shall be redeemed unless all outstanding shares of Series L Preferred Stock are simultaneously redeemed; provided, however, that the foregoing shall not prevent the purchase or acquisition of shares of Series L Preferred Stock pursuant to a purchase or exchange offer made on the same terms to holders of all outstanding shares of Series L Preferred Stock. In addition, unless full cumulative dividends on all outstanding shares of Series L Preferred Stock have been or contemporaneously are authorized, declared and paid or authorized, declared and a sum sufficient for the payment thereof set apart for payment for all past dividend periods and the then current dividend period, the Corporation shall not purchase or otherwise acquire directly or indirectly for any consideration, nor shall any monies be paid to or made available for a sinking fund for the redemption of, any shares of Series L Preferred Stock or any other class or series of Junior Stock or Parity Stock (except by conversion into or exchange for shares of any class or series of Junior Stock).

 

(iii)          The foregoing provisions of this Section 6(d) shall not prevent any other action by the Corporation pursuant to the Charter or otherwise in order to ensure that the Corporation remains qualified as a REIT for federal income tax purposes.

 

(e)            Redemption Price. If a Redemption Date falls after a dividend record date and on or prior to the corresponding dividend payment date, each holder of Series L Preferred Stock at the close of business on the dividend record date will be entitled to receive the dividend payable on such shares of Series L Preferred Stock on the corresponding payment date notwithstanding the redemption of such shares of Series L Preferred Stock between such record date and the corresponding payment date and each holder or Series L Preferred Stock that surrenders such shares on such Redemption Date will be entitled to the dividends accruing after the end of the applicable dividend period up to, but excluding, the Redemption Date. Except as otherwise provided in this Section 6, the Corporation will make no payment or allowance for unpaid dividends, whether or not in arrears, on Series L Preferred Stock for which a notice of redemption has been given.

 

 

(7)

Voting Rights.

 

(a)            Holders of the Series L Preferred Stock shall not have any voting rights, except as described below.

 

(b)            If and whenever dividends on any shares of Series L Preferred Stock shall be in arrears for 18 or more monthly periods, whether or not such quarterly periods are consecutive (a “Preferred Dividend Default”), the number of directors then constituting the Board shall be increased by two and the holders of such shares of Series L Preferred Stock (voting together as a single class with all other classes or series of capital stock ranking on a parity with the Series L Preferred Stock as to the payment of dividends and the distribution of assets upon any voluntary or involuntary liquidation, dissolution or winding up of the Corporation upon which like voting rights have been conferred and are exercisable (“Parity Preferred Stock”)) shall be entitled to vote for the election of the additional directors of the Corporation (the “Preferred Stock Directors”) who shall each be elected for one-year terms. Such election shall be held at a special meeting called by an officer of the Corporation at the request of the holders of record of at least 10% of the outstanding shares of Series L Preferred Stock or the holders of shares of any other class or series of Parity Preferred Stock so in arrears, unless such request is received less than 90 days before the date fixed for the next annual or special meeting of stockholders, in which case the vote for such two directors will be held at the earlier of the next annual or special meeting of the stockholders, and at each subsequent annual meeting until all dividends accumulated on such shares of Series L Preferred Stock for the past dividend periods and the dividend for the then current dividend period shall have been fully paid. In such cases, the entire Board automatically shall be increased by two directors.

 

(c)            The procedures in this Section 7(b) for the calling of meetings and the election of directors will, to the extent permitted by law, supersede anything inconsistent contained in the Charter or Bylaws of the Corporation and, without limitation to the foregoing, the Bylaws of the Corporation will not be applicable to the election of directors by holders of Series L Preferred Stock pursuant to this Section 7. Notwithstanding the Bylaws of the Corporation, the number of directors constituting the entire Board will be automatically increased to include the directors to be elected pursuant to this Section 7(b).

 

(d)            If and when all accumulated dividends and the dividend for the current dividend period on the Series L Preferred Stock shall have been paid in full, the holders of shares of Series L Preferred Stock shall be divested of the voting rights set forth in Section 7(b) herein (subject to revesting in the event of each and every Preferred Dividend Default) and, if all accumulated dividends and the dividend for the current dividend period have been paid in full on all other classes or series of Parity Preferred Stock, the term of office of each Preferred Stock Director so elected shall terminate and the number of directors constituting the Board shall be reduced accordingly. So long as a Preferred Dividend Default shall continue, any vacancy in the office of a Preferred Stock Director may be filled by written consent of the Preferred Stock Director remaining in office, or if there is no such remaining director, by vote of holders of a majority of the outstanding shares of Series L Preferred Stock and any other such series of Parity Preferred Stock voting as a single class. Any Preferred Stock Director may be removed at any time with or without cause by the vote of, and shall not be removed otherwise than by the vote of, the holders of record of a majority of the outstanding shares of Series L Preferred Stock and any other series of Parity Preferred Stock voting as a single class. The Preferred Stock Directors shall each be entitled to one vote per director on any matter presented to the Board.

 

 

(e)            The affirmative vote or consent of at least 66 2/3% of the votes entitled to be cast by the holders of the outstanding shares of Series L Preferred Stock and the holders of all other classes or series of Preferred Stock entitled to vote on such matters, voting as a single class, in addition to any other vote required by the Charter or Maryland law, will be required to: (i) authorize the creation of, the increase in the authorized amount of, or the issuance of any shares of any class of Senior Stock or any security convertible into shares of any class of Senior Stock or (ii) amend, alter or repeal any provision of, or add any provision to, the Charter, including these Articles Supplementary , whether by merger, consolidation or other business combination (in any such case, an “Event”) or otherwise if such action would materially adversely affect the voting powers, rights or preferences of the holders of the Series L Preferred Stock. Neither (i) an amendment of the Charter to authorize, create, or increase the authorized amount of Junior Stock or any shares of any class of Parity Stock, including additional Series L Preferred Stock, nor (ii) an Event, so long as the Series L Preferred Stock remains outstanding with the terms thereof materially unchanged, taking into account that upon the occurrence of such Event the Corporation may not be the surviving entity, shall be deemed to materially adversely affect the voting powers, rights or preferences of the holders of Series L Preferred Stock. Such vote of the holders of Series L Preferred Stock as described in this Section 7(e) shall not be required if provision is made to redeem all Series L Preferred Stock at or prior to the time such amendment, alteration or repeal is to take effect, or when the issuance of any such shares or convertible securities is to be made, as the case may be.

 

(f)             For the avoidance of doubt, if any amendment, alteration, repeal, merger or consolidation described above in clause (ii) of the first sentence of Section 7(e) would adversely affect one or more but not all classes or series of Preferred Stock of the Corporation, then only the classes or series of Preferred Stock of the Corporation adversely affected and entitled to vote on such matter shall vote as a class in lieu of all other classes or series of Preferred Stock of the Corporation. In addition, so long as any shares of Series L Preferred Stock remain outstanding, the holders of the outstanding shares of Series L Preferred Stock also will have the exclusive right to vote on any amendment, alteration or repeal of the provisions of the Charter, including these Articles Supplementary establishing the Series L Preferred Stock, that would alter only the contract rights, as expressly set forth in the Charter, of the Series L Preferred Stock, and the holders of any other classes or series of the capital stock of the Corporation will not be entitled to vote on such an amendment, alteration or repeal. The vote required for such an amendment, alteration or repeal is the affirmative vote or consent of the holders of a majority of the outstanding Series L Preferred Stock.

 

(g)            On any matter on which the holders of Series L Preferred Stock are entitled to vote (as expressly provided herein or as may be required by law), including any action by written consent, each share of Series L Preferred Stock shall have one vote per share, except that when shares of any other series of Preferred Stock shall have the right to vote with the Series L Preferred Stock as a single class on any matter, then the Series L Preferred Stock and such other class or series shall have with respect to such matters one vote per $25.00 of stated liquidation preference.

 

(h)            The foregoing voting provisions shall not apply if, at or prior to the time when the act with respect to which such vote would otherwise be required shall be effected, all outstanding shares of Series L Preferred Stock shall have been redeemed or called for redemption upon proper notice and sufficient funds or shares of Common Stock or any combination thereof have been deposited in trust to effect such redemption.

 

 

(8)            Conversion Right. Subject to the redemption provisions set forth in Section 5 and Section 6, the shares of Series L Preferred Stock are not convertible into or exchangeable for any other securities or property of the Corporation.

 

(9)            Status of Shares Redeemed, Reacquired or Converted. All shares of Series L Preferred Stock which shall have been issued pursuant to these Articles Supplementary and thereafter reacquired by the Corporation in any manner, including without limitation redemption, repurchase, exchange or conversion, shall be restored to the status of authorized but unissued Preferred Stock, without designation as to class or series, and subject to further classification and reclassification pursuant to the Charter.

 

(10)          Restrictions on Transfer, Acquisition and Redemption of Shares. The Series L Preferred Stock is governed by and issued subject to all of the limitations, terms and conditions of the Corporation’s Charter, including but not limited to the terms and conditions (including exceptions and exemptions) of Article VI of the Charter; provided, however, that the terms and conditions (including exceptions and exemptions) of Article VI of the Charter shall also be applied to the Series L Preferred Stock separately and without regard to any other series or class. The foregoing sentence shall not be construed to limit the applicability of any other term or provision of the Charter to the Series L Preferred Stock. In addition to the legend contemplated by Article VI, Section 2.9 of the Charter, each certificate for Series L Preferred Stock shall bear substantially the following legend:

 

“The Corporation will furnish to any stockholder on request and without charge a full statement of the designations and any preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends, qualifications and terms and conditions of redemption of the stock of each class which the Corporation is authorized to issue, to the extent they have been set, and of the authority of the Board of Directors to set the relative rights and preferences of a subsequent series of a preferred or special class of stock. Such request may be made to the Secretary of the Corporation or to its transfer agent.”

 

SECOND:  The Series L Preferred Stock has been classified and designated by the Board under the authority contained in the Charter.

 

THIRD:  These Articles Supplementary have been approved by the Board in the manner and by the vote required by law.

 

FOURTH:  These Articles Supplementary shall be effective at the time the Department accepts these Articles Supplementary for record.

 

FIFTH:  The undersigned President of the Corporation acknowledges these Articles Supplementary to be the act of the Corporation and, as to all matters or facts required to be verified under oath, the undersigned President acknowledges that to the best of his knowledge, information and belief, these matters and facts are true in all material respects and that this statement is made under the penalties for perjury.

 

[Remainder of page intentionally left blank]

 

 

IN WITNESS WHEREOF, the Corporation has caused these Articles Supplementary to be executed in its name and on its behalf by its President and attested to by its Secretary as of the date first written above.

 

	ASHFORD HOSPITALITY TRUST, INC.
	By:
		Name: Stephen Zsigray
		Title: Chief Executive Officer and President
	ATTEST:
	By:
		Name: Alex Rose
		Title: Executive Vice President, General Counsel and Secretary

 

[Signature page to Series L Preferred Stock Articles Supplementary]

 

 

 

Exhibit 4.11

 

ASHFORD HOSPITALITY TRUST, INC.

 

ARTICLES SUPPLEMENTARY ESTABLISHING AND FIXING THE RIGHTS AND PREFERENCES OF A SERIES OF PREFERRED STOCK

 

January [__], 2025

 

Ashford Hospitality Trust, Inc., a Maryland corporation (the “Corporation”), having its principal office in Baltimore City, Maryland and its corporate office in Dallas, Texas certifies to the State Department of Assessments and Taxation of Maryland (the “Department”) that:

 

FIRST:   Under a power contained in Section 2-208 of the Maryland General Corporation Law (the “MGCL”) and Article V of the Corporation’s Articles of Amendment and Restatement (as the same may be amended or supplemented, the “Charter”), the Board of Directors of the Corporation (the “Board”) [and a duly authorized committee therefore] on January [__], 2025 [and XX, 2025, respectively,] classified and designated an aggregate of 16,000,000 shares of the unissued and undesignated shares of preferred stock, par value $0.01 per share, of the Corporation (“Preferred Stock”) and provided for their issuance in a combined total of up to 16,000,000 shares of (1) Series L Redeemable Preferred Stock, par value $0.01 per share, of the Corporation (“Series L Preferred Stock”), with the preferences, rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications and terms and conditions of redemption set forth in the articles supplementary filed by the Corporation with the Department on January [__], 2025, as from time to time determined by the Board or a duly authorized committee thereof, and (2) Series M Redeemable Preferred Stock, par value $0.01 per share, of the Corporation (“Series M Preferred Stock”), with the preferences, rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications and terms and conditions of redemption set forth herein. Capitalized terms used and not otherwise defined herein have the meanings set forth in the Charter.

 

(1)                Designation and Number.

 

(a)                A series of Preferred Stock of the Corporation designated the “Series M Redeemable Preferred Stock” is hereby established. The par value of the Series M Preferred Stock is $0.01 per share.

 

(b)                The total number of authorized shares of Series L Preferred Stock and Series M Preferred Stock shall be 16,000,000 in the aggregate. Prior to the issuance of any Series L Preferred Stock or Series M Preferred Stock, the Board or an authorized committee thereof shall determine whether such shares shall be issued as Series L Preferred Stock or Series M Preferred Stock, and such determination shall be recorded in the records of the Corporation.

 

(2)                Rank. The Series M Preferred Stock will rank, with respect to the payment of dividends and rights upon liquidation, dissolution or winding up of the affairs of the Corporation: (i) prior or senior to any class or series of common stock, par value $0.01 per share, of the Corporation (“Common Stock”) and any other class or series of equity securities, if the holders of Series M Preferred Stock are entitled to the receipt of dividends or of amounts distributable upon liquidation, dissolution or winding up in preference or priority to the holders of shares of such class or series (“Junior Stock”); (ii) on a parity with each other and the 8.45% Series D Cumulative Preferred Stock, par value $0.01 per share (“Series D Preferred Stock”), the 7.375% Series F Cumulative Preferred Stock, par value $0.01 per share (“Series F Preferred Stock”), the 7.375% Series G Cumulative Preferred Stock, par value $0.01 per share (“Series G Preferred Stock”), the 7.50% Series H Cumulative Preferred Stock, par value $0.01 per share (“Series H Preferred Stock”), the 7.50% Series I Cumulative Preferred Stock, par value $0.01 per share (“Series I Preferred Stock”), the Series J Redeemable Preferred Stock, par value $0.01 per share (“Series J Preferred Stock”), the Series K Redeemable Preferred Stock, par value $0.01 per share (“Series K Preferred Stock”), the Series L Preferred Stock, and any other class or series of the equity securities of the Corporation issued in the future if, pursuant to the specific terms of such class or series of equity securities, the holders of such class or series of equity securities and the holders of the Series M Preferred Stock are entitled to the receipt of dividends and of amounts distributable upon liquidation, dissolution or winding up in proportion to their respective amounts of accrued and unpaid dividends per share or liquidation preferences, without preference or priority one over the other (“Parity Stock”); (iii) junior to any class or series of equity securities of the Corporation if, pursuant to the specific terms of such class or series, the holders of such class or series are entitled to the receipt of dividends or amounts distributable upon liquidation, dissolution or winding up in preference or priority to the holders of the Series M Preferred Stock (“Senior Stock”); and (iv) junior to all of the existing and future indebtedness of the Corporation. The term “equity securities” does not include convertible debt securities, which, unless otherwise provided, will rank senior to the Series M Preferred Stock prior to conversion.

 

 

(3)                Dividends.

 

(a)                Holders of Series M Preferred Stock will be entitled to receive, when and as authorized by the Board and declared by the Corporation, out of funds legally available for payment, cumulative cash dividends at an initial annual rate equal to [XX]% per annum of the stated value of $25.00 per share (the “Stated Value”) (equivalent to an annual dividend rate of $[XX] per share). Beginning one year from the date of original issuance of each share of Series M Preferred Stock (the “Original Issue Date”), and on each one year anniversary thereafter for such share of Series M Preferred Stock, the dividend rate shall increase by 0.10% per annum for such share of Series M Preferred Stock; provided, however, that the dividend rate for any share of Series M Preferred Stock shall not exceed [XX]y% per annum of the Stated Value. For purposes of this Section 3(a) only, the Original Issue Date of the shares of Series M Preferred Stock shall mean the earliest date that any shares of Series M Preferred Stock were issued to any investor during the calendar quarter in which the shares were issued. Dividends shall be payable monthly on the 15th day of each month (or, if such payment date is not a Business Day (as defined in Article VI of the Charter), the next succeeding Business Day), with the same force and effect as if paid on such dividend payment date, and no interest or additional dividends or other sums shall accrue on the amount so payable from such dividend payment date to such next succeeding Business Day. Dividends shall be payable in arrears to holders of record as they appear on the records of the Corporation at the close of business on the last Business Day of each month immediately preceding the applicable dividend payment date. Dividends payable on the Series M Preferred Stock for any dividend period (including any dividend period during which any shares of Series M Preferred Stock shall be redeemed) shall be computed on the basis of twelve 30-day months and a 360-day year. Holders of Series M Preferred Stock will not be entitled to receive any dividends in excess of full cumulative dividends on the Series M Preferred Stock at the dividend rate specified in this paragraph. No interest will be paid in respect of any dividend payment or payments on the Series M Preferred Stock that may be in arrears.

 

(b)                Dividends payable on each share of Series M Preferred Stock will be cumulative from (and including) the first day of the dividend period during which such share of Series M Preferred Stock is originally issued, whether or not in any dividend period or periods (x) such dividends shall be declared, (y) there shall be funds legally available for the payment of such dividends or (z) any agreement prohibits payment of such dividends. Each subsequent dividend shall accrue and be cumulative from (and including) the end of the most recent dividend period for which a dividend has been paid on each such share of Series M Preferred Stock. As used herein, “dividend period” shall mean the respective periods commencing on, and including, the first day of each month of each year and ending on, and including, the day preceding the first day of the next succeeding dividend period (other than the dividend period during which any shares of Series M Preferred Stock shall be redeemed or otherwise acquired by the Corporation, which shall end on, and include, the day preceding the redemption or acquisition date with respect to the shares of Series M Preferred Stock being redeemed or acquired).

 

 

(c)                When dividends are not paid in full upon the Series M Preferred Stock or any other class or series of Parity Stock, or a sum sufficient for such payment is not set apart, all dividends declared upon the Series M Preferred Stock and any other class or series of Parity Stock shall be declared ratably in proportion to the respective amounts of dividends accumulated, accrued and unpaid on the Series M Preferred Stock and accumulated, accrued and unpaid on such Parity Stock. Except as set forth in the preceding sentence, unless dividends on the Series M Preferred Stock equal to the full amount of accumulated, accrued and unpaid dividends have been or contemporaneously are declared and paid, or declared and a sum sufficient for the payment thereof set apart for such payment for all past dividend periods, no dividends (other than dividends paid in Junior Stock or options, warrants or rights to subscribe for or purchase such Junior Stock) shall be declared or paid or set aside for payment with respect to any class or series of Parity Stock. Unless dividends on the Series M Preferred Stock equal to the full amount of accumulated, accrued and unpaid dividends have been or contemporaneously are declared and paid, or declared and a sum sufficient for the payment thereof set apart for such payment for all past dividend periods, no dividends (other than dividends or distributions paid in Junior Stock or options, warrants or rights to subscribe for or purchase such Junior Stock) shall be declared or paid or set apart for payment with respect to any Junior Stock, nor shall any Junior Stock or Parity Stock be redeemed, purchased or otherwise acquired (except for purposes of an employee benefit plan) for any consideration, or any monies be paid to or made available for a sinking fund for the redemption of any Junior Stock or Parity Stock (except by conversion or exchange for Junior Stock, or options, warrants or rights to subscribe for or purchase Junior Stock), nor shall any other cash or property be paid or distributed to or for the benefit of holders of Junior Stock or Parity Stock. Notwithstanding the foregoing, the Corporation shall not be prohibited from (i) declaring or paying or setting apart for payment any dividend or distribution on any Junior Stock or Parity Stock or (ii) redeeming, purchasing or otherwise acquiring any Junior Stock or Parity Stock, in each case, if such declaration, payment, redemption, purchase or other acquisition is necessary to maintain the Corporation’s qualification as a real estate investment trust (“REIT”) for federal income tax purposes.

 

(d)                No dividends on Series M Preferred Stock shall be authorized by the Board or declared or paid or set apart for payment at such time as the terms and provisions of any agreement, including any agreement relating to the Corporation’s indebtedness, prohibits such authorization, declaration, payment or setting apart for payment or provides that such authorization, declaration, payment or setting apart for payment would constitute a breach thereof or a default thereunder, or if such authorization, declaration, payment or setting apart for payment shall be restricted or prohibited by law.

 

(e)                If, for any taxable year, the Corporation elects to designate as “capital gain dividends” (as defined in Section 857 of the Internal Revenue Code of 1986, as amended (the “Code”)) any portion of the dividends (as determined for federal income tax purposes) paid or made available for the year to holders of all classes of capital stock, then the portion of the capital gains amount that shall be allocable to the holders of Series M Preferred Stock shall be the amount that the total dividends (as determined for federal income tax purposes) paid or made available to the holders of the Series M Preferred Stock for the year bears to the total dividends (as determined for federal income tax purposes) paid or made available for the year to holders of all classes of capital stock.

 

(f)                 In determining for purposes of Section 2-311 of the MGCL or otherwise under the MGCL whether a distribution (other than upon voluntary or involuntary liquidation, dissolution or winding up of the Corporation), by dividend, redemption or otherwise, is permitted, amounts that would be needed, if the Corporation were to be dissolved at the time of the distribution, to satisfy the liquidation preference of any series of Preferred Stock with preferential rights on dissolution senior to the Series M Preferred Stock (as discussed in Section 4 below) will not be added to the Corporation’s total liabilities.

 

 

(4)                Liquidation Preference.

 

(a)                Upon any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation, before any distribution or payment shall be made to or set apart for the holders of any Junior Stock, the holders of Series M Preferred Stock shall be entitled to receive, out of the Corporation’s assets legally available for distribution its stockholders, after payment or provision for the Corporation’s debts and other liabilities, a liquidation preference equal to the Stated Value per share, plus an amount equal to all accumulated, accrued and unpaid dividends (whether or not authorized or declared) to, but not including, the date of final distribution to such holders, but such holders shall not be entitled to any further payment. If upon any liquidation, dissolution or winding up of the Corporation, its assets, or proceeds thereof, distributable among the holders of Series M Preferred Stock shall be insufficient to pay in full the above described preferential amount and liquidating payments on any other shares of any class or series of Parity Stock, then such assets, or the proceeds thereof, shall be distributed among the holders of Series M Preferred Stock and any such other Parity Stock ratably in the same proportion as the respective amounts that would be payable on such Series M Preferred Stock and any such other Parity Stock if all amounts payable thereon were paid in full.

 

(b)                Upon any liquidation, dissolution or winding up of the affairs of the Corporation, after payment of the full amount of the liquidating distributions have been made to the holders of Series M Preferred Stock and any Parity Stock, any other series or class or classes of Junior Stock shall be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the Series M Preferred Stock shall have no right or claim to any of the remaining assets of the Corporation.

 

(c)                Written notice of any such liquidation, dissolution or winding up of the affairs of the Corporation, stating the payment date or dates when, and the place or places where, the amounts distributable in such circumstances shall be payable, shall be given by first class mail, postage pre-paid, not less than 30 or more than 60 days prior to the payment date stated therein, to each record holder of the Series M Preferred Stock at the respective addresses of such holders as the same shall appear on the stock transfer records of the Corporation.

 

(d)                None of a consolidation or merger of the Corporation with or into any other corporation, trust or other entity, a consolidation or merger of any other corporation, trust or other entity with or into the Corporation, a statutory stock exchange by the Corporation or a sale, lease, transfer or conveyance of any or all of the Corporation’s assets or business shall be deemed to constitute a liquidation, dissolution or winding up of the affairs of the Corporation.

 

(e)                The liquidation preference of the outstanding shares of Series M Preferred Stock will not be added to the liabilities of the Corporation for the purpose of determining whether under the MGCL a distribution may be made to stockholders of the Corporation whose preferential rights upon dissolution of the Corporation are junior to those of holders of Series M Preferred Stock.

 

 

(5)                Redemption by Holders.

 

(a)           Redemption Right.

 

(i)                 Subject to the provisions of Section 5(d) below, each holder of shares of Series M Preferred Stock shall have the right, at such holder’s option, to require the Corporation to redeem any or all of such holder’s shares of Series M Preferred Stock at a redemption price per share of Series M Preferred Stock (the “Holder Redemption Price”) equal to the Stated Value, less the Redemption Fee (as defined below), plus an amount equal to all accrued but unpaid dividends (whether or not authorized or declared) to, but not including, the date fixed for redemption (the “Holder Redemption Date”). The Redemption Fee shall be an amount equal to (i) [XX]% of the Stated Value beginning on the Original Issue Date of the shares of Series M Preferred Stock to be redeemed; and (ii) [XX]% of the Stated Value beginning on the first anniversary from the Original Issue Date of the shares of Series M Preferred Stock to be redeemed (the “Redemption Fee”). For purposes of this Section 5(a) only, the Original Issue Date shall mean the earliest date that any shares of Series M Preferred Stock were issued to any investor during the calendar quarter in which the shares to be redeemed were issued. For purposes of this Section 5(a), where the shares of Series M Preferred Stock to be redeemed were acquired by the holder thereof pursuant to the Corporation’s dividend reinvestment plan (the “Series M DRIP”) for shares of Series M Preferred Stock (such shares, the “Series M DRIP Shares”), the Original Issue Date of such Series M DRIP Shares shall be deemed to be the same as the Original Issue Date of the underlying shares of Series M Preferred Stock pursuant to which such Series M DRIP Shares are directly or indirectly attributable (such shares, the “Underlying Series M Shares”), and such Series M DRIP Shares shall be subject to the same Redemption Fee to which such Underlying Series M Shares would be subject if submitted for redemption.

 

(ii)               Subject to the following sentence, for so long as the Common Stock is listed on a national securities exchange, the Corporation has the right, in its sole discretion, to pay the Holder Redemption Price in cash or in equal value of shares of Common Stock or any combination thereof, calculated based on the closing price per share of Common Stock for the single trading day prior to the Holder Redemption Date. Pursuant to these Articles Supplementary, the Board may, without stockholder approval, permanently revoke the Corporation’s right to pay the redemption price (or a portion thereof) in Common Stock and require the Corporation to pay the redemption price solely in cash.

 

(b)           Redemption Following Death or Disability of a Holder.

 

(i)            Subject to the provisions of Section 5(d) below, the Corporation shall redeem shares of Series M Preferred Stock held by a natural person upon his or her death or upon suffering a qualifying disability at the Holder Redemption Price (including an amount equal to all accrued but unpaid dividends (whether or not authorized or declared) to, but not including, the Holder Redemption Date); provided, no Redemption Fee shall apply to any such redemption pursuant to this Section 5(b). 

 

(ii)           In order to redeem shares of Series M Preferred Stock upon the death or qualifying disability of a stockholder pursuant to Section 5(b)(i) above, the following conditions must be met:

 

A.            the deceased or disabled holder must be the sole holder of the shares of Series M Preferred Stock to be redeemed, or the beneficiary of a trust or an individual retirement account or other retirement or profit-sharing plan that is a holder or, in the case of shares owned by spouses who are joint registered holders (or holders by tenants in the entirety), the deceased or disabled may be one of the joint holders;

 

B.             in the case of the disability of a holder:

 

i.

such disability must meet the requirements of Section 72(m)(7) of the Code (i.e., the individual must be unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or to be of a long continued and indefinite duration);

 

 

ii.

such determination of disability must be made by the U.S. governmental agency responsible for reviewing the disability retirement benefits that the holder could be eligible to receive;

 

iii.

the condition causing the disability shall have occurred after the date that the holder became a holder of Series M Preferred Stock; and

 

iv.

the condition causing the disability shall have occurred before the holder reached full retirement age, which is the age at which such worker can claim full Social Security retired-worker benefits;

 

C.             the redemption request must be received by the Corporation within 12 months after the death or disability of the holder; and

 

D.            in the case of the death of a holder, the redemption request must be made by a recipient of the shares of Series M Preferred Stock through bequest or inheritance or, in the case of the death of a beneficiary of a trust, by the trustee of the trust or, in the case of shares owned by spouses who are joint registered holders (or holders by tenants in the entirety), the request may be made by the surviving spouse.

 

(iii)             Subject to the following sentence, for so long as the Common Stock is listed on a national securities exchange, the Corporation has the right, in its sole discretion, to pay the Holder Redemption Price in cash or in equal value of shares of Common Stock or any combination thereof, based on the closing price per share of Common Stock for the single trading day prior to the Holder Redemption Date. Pursuant to these Articles Supplementary, the Board may, without stockholder approval, permanently revoke the Corporation’s right to pay the redemption price (or a portion thereof) in Common Stock and require the Corporation to pay the redemption price solely in cash.

 

(c)           Procedures for Redemption.

 

(i)            Redemption of the Series M Preferred Stock shall be made at the option of the holder thereof, upon:

 

A.            delivery to the Corporation and the Corporation’s transfer agent, in its capacity as redemption and paying agent (the “Redemption and Paying Agent”) by such holder of a duly completed notice (the “Holder Redemption Notice”) in compliance with the required procedures, including those of the Corporation’s transfer agent and of The Depository Trust Company (“DTC”) for tendering interests in global certificates (the “Stated Transfer Procedures”), and specifying the number of shares of Series M Preferred Stock to be redeemed that are held by such holder as of the date of such Holder Redemption Notice; and

 

B.             transfer of the Series M Preferred Stock in compliance with the Stated Transfer Procedures, such transfer being a condition to receipt by the holder of the Holder Redemption Price therefor.

 

 

(ii)           The Holder Redemption Date shall be a date selected by the Corporation that is no later than 45 days after the Holder Redemption Notice is received by the Corporation.

 

(iii)          Prior to 11:00 a.m. (local time in the City of New York) on the Holder Redemption Date, the Corporation must deposit with the Redemption and Paying Agent in trust sufficient funds or shares of Common Stock or any combination thereof (in immediately available funds or shares of Common Stock or any combination thereof if deposited on such Business Day) to pay the Holder Redemption Price of all the shares of Series M Preferred Stock that are to be redeemed in cash or in equal value of shares of Common Stock or any combination thereof as of the Holder Redemption Date. If the Redemption and Paying Agent holds funds or shares of Common Stock sufficient to pay the Holder Redemption Price of the Series M Preferred Stock for which a Holder Redemption Notice has been tendered, then as of such Holder Redemption Date, (i) such shares of Series M Preferred Stock shall cease to be outstanding and dividends shall cease to accrue thereon (whether or not transfer of such shares of Series M Preferred Stock is made) and (ii) all other rights of the holders in respect thereof shall terminate (other than the right to receive the Holder Redemption Price, in cash or in shares of Common Stock or any combination thereof, upon transfer of such shares of Series M Preferred Stock). To the extent that the aggregate amount of cash or shares of Common Stock of any combination thereof deposited by the Corporation to satisfy the Holder Redemption Price exceeds the aggregate Holder Redemption Price of the shares of Series M Preferred Stock that the Corporation has elected to redeem in cash or shares of Common Stock or any combination thereof as of the Holder Redemption Date, then, following the Holder Redemption Date, the Redemption and Paying Agent must promptly return any such excess to the Corporation.

 

(d)           Limitations on Holder Redemption.

 

(i)            Notwithstanding any provision of this Section 5, the Corporation’s obligation to redeem shares of the Series L Preferred Stock and the Series M Preferred Stock at the option of the holders pursuant to Section 5(a) hereof and Section 5(a) of the articles supplementary setting forth the rights, preferences and limitations of the Series M Preferred Stock, respectively, shall be subject to the following aggregate redemption limits:

 

A.                 no more than 2.0% of the aggregate number of outstanding shares of Series L Preferred Stock and Series M Preferred Stock shall be redeemed per calendar month;

 

B.                  no more than 5.0% of the aggregate number of outstanding shares of Series L Preferred Stock and Series M Preferred Stock shall be redeemed per fiscal quarter; and

 

C.                  no more than 20.0% of the aggregate number of outstanding shares of Series L Preferred Stock and Series M Preferred Stock shall be redeemed per fiscal year.

 

(ii)           Redemptions at the option of the Corporation pursuant to Section 6 below shall not count towards the limits set forth in this Section 5(d)(i). Redemptions at the option of the holder following the death or disability of a holder pursuant to Section 5(b) above shall count towards the limits set forth in this Section 5(d)(i), but shall not be subject to such limits.

 

(iii)          If, after applying the redemption limits set forth in this Section 5(d)(i), a holder would own less than one share of Series M Preferred Stock, all of such holder’s shares of Series M Preferred Stock shall be redeemed. Otherwise, all redemption amounts shall be rounded down such that after giving effect to any redemption, no holder is left owning a fractional share. If, after applying the redemption limits in set forth in this Section 5(d)(i), the number of shares of Series M Preferred Stock to be redeemed is less than the number of shares of Series M Preferred Stock submitted for redemption by a holder, the excess shares of Series M Preferred Stock will remain subject to redemption in future periods until the earlier of (i) all shares of Series M Preferred Stock submitted by such holder for redemption have been redeemed, or (ii) such holder delivers to us a written notice of withdrawal stating the number of withdrawn shares of Series M Preferred Stock and the number of shares of Series M Preferred Stock, if any, which remain subject to redemption.

 

 

(iv)          Notwithstanding any provision of this Section 5, the Corporation’s obligation to redeem any shares of Series M Preferred Stock in cash may be limited to the extent that the Corporation does not have sufficient funds available, taking into account such reserves and other considerations as the Board may determine in its sole discretion, to fund any such cash redemption. Further, no redemptions of shares of Series M Preferred Stock shall be made by the Corporation if such redemption shall be restricted or prohibited by law. 

 

(v)           Notwithstanding anything to the contrary contained herein, unless full cumulative dividends on all shares of Series M Preferred Stock shall have been or contemporaneously are authorized, declared and paid or authorized, declared and a sum sufficient for the payment thereof set apart for payment for all past dividend periods and the then current dividend period, no shares of Series M Preferred Stock shall be redeemed unless all outstanding shares of Series M Preferred Stock are simultaneously redeemed; provided, however, that the foregoing shall not prevent the purchase or acquisition of shares of Series M Preferred Stock pursuant to a purchase or exchange offer made on the same terms to holders of all outstanding shares of Series M Preferred Stock. In addition, unless full cumulative dividends on all outstanding shares of Series M Preferred Stock have been or contemporaneously are authorized, declared and paid or authorized, declared and a sum sufficient for the payment thereof set apart for payment for all past dividend periods and the then current dividend period, the Corporation shall not purchase or otherwise acquire directly or indirectly for any consideration, nor shall any monies be paid to or made available for a sinking fund for the redemption of, any shares of Series M Preferred Stock or any other class or series of Junior Stock or Parity Stock (except by conversion into or exchange for shares of any class or series of Junior Stock).

 

(vi)          The foregoing provisions of this Section 5(d) shall not prevent any other action by the Corporation pursuant to the Charter or otherwise in order to ensure that the Corporation remains qualified as a REIT for federal income tax purposes.

 

(e)            Redemption Price. If the Holder Redemption Date falls after a dividend record date and on or prior to the corresponding dividend payment date, each holder of Series M Preferred Stock at the close of business on the dividend record date will be entitled to receive the dividend payable on such shares of Series M Preferred Stock on the corresponding payment date notwithstanding the redemption of such shares of Series M Preferred Stock between such record date and the corresponding payment date and each holder or Series M Preferred Stock that surrenders such shares on such Holder Redemption Date will be entitled to the dividends accruing after the end of the applicable dividend period up to, but excluding, the Holder Redemption Date.

 

(6)                Redemption by the Corporation.

 

(a)           Redemption Right.

 

(i)            The Series M Preferred Stock shall not be subject to any sinking fund or mandatory redemption. Except with respect to the special optional redemption set forth in Section 6(b) below and to preserve the status of the Corporation as a REIT for federal income tax purposes, shares of Series M Preferred Stock are not redeemable by the Corporation prior to the second anniversary from the Original Issue Date of the shares of Series M Preferred Stock to be redeemed.

 

 

(ii)           Beginning on the second anniversary of each Original Issue Date of shares of Series M Preferred Stock, such shares of Series M Preferred Stock shall be redeemable by the Corporation, at the Corporation’s option, upon giving notice not less than 30 days nor more than 60 days in advance of the date fixed for redemption, in whole or in part, at any time or from time to time (the “Corporation Redemption Right”), at a redemption price per share of Series M Preferred Stock equal to the Stated Value, plus an amount equal to all accrued but unpaid dividends (whether or not authorized or declared) to, but not including, the date fixed for redemption (the “Corporation Redemption Price”).

 

(iii)          Subject to the following sentence, for so long as the Common Stock is listed on a national securities exchange, if the Corporation elects to redeem any shares of Series M Preferred Stock, the Corporation has the right, in its sole discretion, to pay the Corporation Redemption Price in cash or in equal value of shares of Common Stock or any combination thereof, calculated based on the closing price per share of Common Stock for the single trading day prior to the date fixed for redemption. Pursuant to these Articles Supplementary, the Board may, without stockholder approval, permanently revoke the Corporation’s right to pay the redemption price (or a portion thereof) in Common Stock and require the Corporation to pay the redemption price solely in cash.

 

(iv)          For purposes of this Section 6(a) only, the Original Issue Date shall mean the earliest date that any shares of Series M Preferred Stock were issued to any investor during the calendar quarter in which the shares to be redeemed were issued. For purposes of this Section 6(a), where the shares of Series M Preferred Stock to be redeemed are Series M DRIP Shares, the Original Issue Date of such Series M DRIP Shares shall be deemed to be the same as the Underlying Series M Shares, and such Series M DRIP Shares shall be subject to optional redemption by the Corporation hereunder on the same date and terms as the Underlying Series M Shares.

 

(v)           The Series M Preferred Stock shall be subject to the provisions of Article VI of the Charter pursuant to which Series M Preferred Stock owned by a stockholder in excess of the Ownership Limit (as defined in the Charter) shall automatically be transferred to a Charitable Trust (as defined in the Charter) for the exclusive benefit of a Charitable Beneficiary (as defined in the Charter), as provided in Article VI of the Charter.

 

(vi)          Any date fixed for redemption pursuant to this Section 6 is referred to herein as a “Redemption Date.”

 

(b)           Special Optional Redemption Right.

 

(i)            Upon the occurrence of a Change of Control (as defined below), the Corporation, at its option and upon giving notice not less than 30 nor more than 60 days in advance of the Redemption Date, may redeem the Series M Preferred Stock, in whole or in part, within 120 days after the first date on which such Change of Control occurred (the “Special Optional Redemption Right”), in cash at the Corporation Redemption Price (including an amount equal to all accrued but unpaid dividends (whether or not authorized or declared) to, but not including, the Redemption Date).

 

(ii)           A “Change of Control” is when, after the original issuance of the Series M Preferred Stock, the following have occurred and are continuing:

 

A.                 the acquisition by any person, including any syndicate or group deemed to be a “person” under Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, of beneficial ownership, directly or indirectly, through a purchase, merger or other acquisition transaction or series of purchases, mergers or other acquisition transactions of shares of the Corporation entitling that person to exercise more than 50% of the total voting power of all shares of the Corporation entitled to vote generally in elections of directors (except that such person will be deemed to have beneficial ownership of all securities that such person has the right to acquire, whether such right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition); and

 

 

B.                  following the closing of any transaction referred to in Section 6(b)(ii)(A) above, neither the Corporation nor the acquiring or surviving entity has a class of common securities (or American Depository Receipts representing such securities) listed on the New York Stock Exchange (“NYSE”), the NYSE American LLC (the “NYSE American”), or The Nasdaq Stock Market LLC (“Nasdaq”) or listed or quoted on an exchange or quotation system that is a successor to the NYSE, the NYSE American or Nasdaq.

 

(c)            Procedures for Redemption.

 

(i)            Notice of redemption of the Series M Preferred Stock, whether pursuant to the Corporation Redemption Right in Section 6(a) or the Special Optional Redemption Right in Section 6(b) above, shall be mailed to each holder of record of the shares to be redeemed by first class mail, postage prepaid at such holder’s address as the same appears on the stock records of the Corporation, no fewer than 30 days nor more than 60 days before the Redemption Date. Any notice that was mailed as described above shall be conclusively presumed to have been duly given on the date mailed whether or not the holder receives the notice. In addition to any information required by law, each notice shall state: (i) the redemption date; (ii) the redemption price; (iii) the number of shares of Series M Preferred Stock to be redeemed; and (iv) if the notice of redemption is mailed pursuant to the Special Optional Redemption Right, (A) that the Series M Preferred Stock is being redeemed pursuant to the Special Optional Redemption Right in connection with the occurrence of a Change of Control and a brief description of the transaction or transactions constituting such Change of Control, and (B) that dividends on the Series M Preferred Stock to be redeemed will cease to accrue on the Redemption Date. If the Corporation redeems fewer than all of outstanding shares of the Series M Preferred Stock, the notice mailed to such holder shall also specify the number of shares of Series M Preferred Stock held by such holder to be redeemed. Any such redemption may be made conditional on such factors as may be determined by the Board and as set forth in the notice of redemption.

 

(ii)           On or after the Redemption Date, each holder of shares of Series M Preferred Stock to be redeemed shall present and surrender the certificates representing his shares of Series M Preferred Stock to the Corporation at the place designated in the notice of redemption and thereupon the Corporation Redemption Price of such shares shall be paid to or on the order of the person whose name appears on such certificate representing shares of Series M Preferred Stock as the owner thereof and each surrendered certificate shall be canceled. If fewer than all the shares represented by any such certificate representing shares of Series M Preferred Stock are to be redeemed, a new certificate shall be issued representing the unredeemed shares.

 

(iii)          If notice of redemption has been mailed in accordance with Section 6(c)(i) above and if the funds or shares of Common Stock or any combination thereof necessary for such redemption have been set aside by the Corporation in trust for the benefit of the holders of the Series M Preferred Stock so called for redemption, then from and after the Redemption Date (unless the Corporation defaults in payment of the Corporation Redemption Price), all dividends on the shares of Series M Preferred Stock called for redemption in such notice shall cease to accumulate and all rights of the holders thereof, except the right to receive the Corporation Redemption Price (including all accumulated and unpaid dividends up to, but not including, the Redemption Date), shall cease and terminate and such shares shall not thereafter be transferred (except with the consent of the Corporation) on the Corporation’s books, and such shares shall not be deemed to be outstanding for any purpose whatsoever. At its election, the Corporation, prior to a Redemption Date, may irrevocably deposit the Corporation Redemption Price (including accumulated and unpaid dividends) of the Series M Preferred Stock so called for redemption in trust for the holders thereof with a bank or trust company, in which case the redemption notice to holders of the shares of Series M Preferred Stock to be redeemed shall (i) state the date of such deposit, (ii) specify the office of such bank or trust company as the place of payment of the Corporation Redemption Price and (iii) require such holders to surrender the certificates representing such shares at such place on or about the date fixed in such redemption notice (which may not be later than the Redemption Date) against payment of the Corporation Redemption Price (including all accumulated and unpaid dividends to, but not including, the Redemption Date). Any interest or other earnings earned on the Corporation Redemption Price (including accumulated and unpaid dividends) deposited with a bank or trust company shall be paid to the Corporation. Any monies so deposited which remain unclaimed by the holders of Series M Preferred Stock at the end of two years after the Redemption Date shall be returned by such bank or trust company to the Corporation.

 

 

(d)           Limitations on Redemption.

 

(i)            If fewer than all of the outstanding shares of Series M Preferred Stock issued on such Original Issue Date are to be redeemed pursuant to the Corporation Redemption Right, the number of shares to be redeemed shall be determined by the Board and the shares to be redeemed will be selected by the Board pro rata (as nearly as practicable without creating fractional shares) from the holders of record of such shares in proportion to the number of such shares held by such holders, by lot or in such manner as the Board may determine. If such redemption is to be by lot and, as a result of such redemption, any holder of shares of Series M Preferred Stock would Beneficially Own or Constructively Own, in excess of the Ownership Limit because such holder’s shares of Series M Preferred Stock were not redeemed, or were only redeemed in part, then, except as otherwise provided in the Charter, the Corporation will redeem the requisite number of shares of Series M Preferred Stock from such holder such that he will not hold in excess of the Ownership Limit subsequent to such redemption.

 

(ii)           Notwithstanding anything to the contrary contained herein, unless full cumulative dividends on all shares of Series M Preferred Stock shall have been or contemporaneously are authorized, declared and paid or authorized, declared and a sum sufficient for the payment thereof set apart for payment for all past dividend periods and the then current dividend period, no shares of Series M Preferred Stock shall be redeemed unless all outstanding shares of Series M Preferred Stock are simultaneously redeemed; provided, however, that the foregoing shall not prevent the purchase or acquisition of shares of Series M Preferred Stock pursuant to a purchase or exchange offer made on the same terms to holders of all outstanding shares of Series M Preferred Stock. In addition, unless full cumulative dividends on all outstanding shares of Series M Preferred Stock have been or contemporaneously are authorized, declared and paid or authorized, declared and a sum sufficient for the payment thereof set apart for payment for all past dividend periods and the then current dividend period, the Corporation shall not purchase or otherwise acquire directly or indirectly for any consideration, nor shall any monies be paid to or made available for a sinking fund for the redemption of, any shares of Series M Preferred Stock or any other class or series of Junior Stock or Parity Stock (except by conversion into or exchange for shares of any class or series of Junior Stock).

 

(iii)          The foregoing provisions of this Section 6(d) shall not prevent any other action by the Corporation pursuant to the Charter or otherwise in order to ensure that the Corporation remains qualified as a REIT for federal income tax purposes.

 

 

(e)           Redemption Price. If a Redemption Date falls after a dividend record date and on or prior to the corresponding dividend payment date, each holder of Series M Preferred Stock at the close of business on the dividend record date will be entitled to receive the dividend payable on such shares of Series M Preferred Stock on the corresponding payment date notwithstanding the redemption of such shares of Series M Preferred Stock between such record date and the corresponding payment date and each holder or Series M Preferred Stock that surrenders such shares on such Redemption Date will be entitled to the dividends accruing after the end of the applicable dividend period up to, but excluding, the Redemption Date. Except as otherwise provided in this Section 6, the Corporation will make no payment or allowance for unpaid dividends, whether or not in arrears, on Series M Preferred Stock for which a notice of redemption has been given.

 

(7)                 Voting Rights.

 

(a)                Holders of the Series M Preferred Stock shall not have any voting rights, except as described below.

 

(b)                If and whenever dividends on any shares of Series M Preferred Stock shall be in arrears for 18 or more monthly periods, whether or not such quarterly periods are consecutive (a “Preferred Dividend Default”), the number of directors then constituting the Board shall be increased by two and the holders of such shares of Series M Preferred Stock (voting together as a single class with all other classes or series of capital stock ranking on a parity with the Series M Preferred Stock as to the payment of dividends and the distribution of assets upon any voluntary or involuntary liquidation, dissolution or winding up of the Corporation upon which like voting rights have been conferred and are exercisable (“Parity Preferred Stock”)) shall be entitled to vote for the election of the additional directors of the Corporation (the “Preferred Stock Directors”) who shall each be elected for one-year terms. Such election shall be held at a special meeting called by an officer of the Corporation at the request of the holders of record of at least 10% of the outstanding shares of Series M Preferred Stock or the holders of shares of any other class or series of Parity Preferred Stock so in arrears, unless such request is received less than 90 days before the date fixed for the next annual or special meeting of stockholders, in which case the vote for such two directors will be held at the earlier of the next annual or special meeting of the stockholders, and at each subsequent annual meeting until all dividends accumulated on such shares of Series M Preferred Stock for the past dividend periods and the dividend for the then current dividend period shall have been fully paid. In such cases, the entire Board automatically shall be increased by two directors.

 

(c)                The procedures in this Section 7(b) for the calling of meetings and the election of directors will, to the extent permitted by law, supersede anything inconsistent contained in the Charter or Bylaws of the Corporation and, without limitation to the foregoing, the Bylaws of the Corporation will not be applicable to the election of directors by holders of Series M Preferred Stock pursuant to this Section 7. Notwithstanding the Bylaws of the Corporation, the number of directors constituting the entire Board will be automatically increased to include the directors to be elected pursuant to this Section 7(b).

 

(d)                If and when all accumulated dividends and the dividend for the current dividend period on the Series M Preferred Stock shall have been paid in full, the holders of shares of Series M Preferred Stock shall be divested of the voting rights set forth in Section 7(b) herein (subject to revesting in the event of each and every Preferred Dividend Default) and, if all accumulated dividends and the dividend for the current dividend period have been paid in full on all other classes or series of Parity Preferred Stock, the term of office of each Preferred Stock Director so elected shall terminate and the number of directors constituting the Board shall be reduced accordingly. So long as a Preferred Dividend Default shall continue, any vacancy in the office of a Preferred Stock Director may be filled by written consent of the Preferred Stock Director remaining in office, or if there is no such remaining director, by vote of holders of a majority of the outstanding shares of Series M Preferred Stock and any other such series of Parity Preferred Stock voting as a single class. Any Preferred Stock Director may be removed at any time with or without cause by the vote of, and shall not be removed otherwise than by the vote of, the holders of record of a majority of the outstanding shares of Series M Preferred Stock and any other series of Parity Preferred Stock voting as a single class. The Preferred Stock Directors shall each be entitled to one vote per director on any matter presented to the Board.

 

 

(e)                The affirmative vote or consent of at least 66 2/3% of the votes entitled to be cast by the holders of the outstanding shares of Series M Preferred Stock and the holders of all other classes or series of Preferred Stock entitled to vote on such matters, voting as a single class, in addition to any other vote required by the Charter or Maryland law, will be required to: (i) authorize the creation of, the increase in the authorized amount of, or the issuance of any shares of any class of Senior Stock or any security convertible into shares of any class of Senior Stock or (ii) amend, alter or repeal any provision of, or add any provision to, the Charter, including these Articles Supplementary , whether by merger, consolidation or other business combination (in any such case, an “Event”) or otherwise if such action would materially adversely affect the voting powers, rights or preferences of the holders of the Series M Preferred Stock. Neither (i) an amendment of the Charter to authorize, create, or increase the authorized amount of Junior Stock or any shares of any class of Parity Stock, including additional Series M Preferred Stock, nor (ii) an Event, so long as the Series M Preferred Stock remains outstanding with the terms thereof materially unchanged, taking into account that upon the occurrence of such Event the Corporation may not be the surviving entity, shall be deemed to materially adversely affect the voting powers, rights or preferences of the holders of Series M Preferred Stock. Such vote of the holders of Series M Preferred Stock as described in this Section 7(e) shall not be required if provision is made to redeem all Series M Preferred Stock at or prior to the time such amendment, alteration or repeal is to take effect, or when the issuance of any such shares or convertible securities is to be made, as the case may be.

 

(f)                 For the avoidance of doubt, if any amendment, alteration, repeal, merger or consolidation described above in clause (ii) of the first sentence of Section 7(e) would adversely affect one or more but not all classes or series of Preferred Stock of the Corporation, then only the classes or series of Preferred Stock of the Corporation adversely affected and entitled to vote on such matter shall vote as a class in lieu of all other classes or series of Preferred Stock of the Corporation. In addition, so long as any shares of Series M Preferred Stock remain outstanding, the holders of the outstanding shares of Series M Preferred Stock also will have the exclusive right to vote on any amendment, alteration or repeal of the provisions of the Charter, including these Articles Supplementary establishing the Series M Preferred Stock, that would alter only the contract rights, as expressly set forth in the Charter, of the Series M Preferred Stock, and the holders of any other classes or series of the capital stock of the Corporation will not be entitled to vote on such an amendment, alteration or repeal. The vote required for such an amendment, alteration or repeal is the affirmative vote or consent of the holders of a majority of the outstanding Series M Preferred Stock.

 

(g)                On any matter on which the holders of Series M Preferred Stock are entitled to vote (as expressly provided herein or as may be required by law), including any action by written consent, each share of Series M Preferred Stock shall have one vote per share, except that when shares of any other series of Preferred Stock shall have the right to vote with the Series M Preferred Stock as a single class on any matter, then the Series M Preferred Stock and such other class or series shall have with respect to such matters one vote per $25.00 of stated liquidation preference.

 

 

(h)                The foregoing voting provisions shall not apply if, at or prior to the time when the act with respect to which such vote would otherwise be required shall be effected, all outstanding shares of Series M Preferred Stock shall have been redeemed or called for redemption upon proper notice and sufficient funds or shares of Common Stock or any combination thereof have been deposited in trust to effect such redemption.

 

(8)                Conversion Right. Subject to the redemption provisions set forth in Section 5 and Section 6, the shares of Series M Preferred Stock are not convertible into or exchangeable for any other securities or property of the Corporation.

 

(9)                Status of Shares Redeemed, Reacquired or Converted. All shares of Series M Preferred Stock which shall have been issued pursuant to these Articles Supplementary and thereafter reacquired by the Corporation in any manner, including without limitation redemption, repurchase, exchange or conversion, shall be restored to the status of authorized but unissued Preferred Stock, without designation as to class or series, and subject to further classification and reclassification pursuant to the Charter.

 

(10)            Restrictions on Transfer, Acquisition and Redemption of Shares. The Series M Preferred Stock is governed by and issued subject to all of the limitations, terms and conditions of the Corporation’s Charter, including but not limited to the terms and conditions (including exceptions and exemptions) of Article VI of the Charter; provided, however, that the terms and conditions (including exceptions and exemptions) of Article VI of the Charter shall also be applied to the Series M Preferred Stock separately and without regard to any other series or class. The foregoing sentence shall not be construed to limit the applicability of any other term or provision of the Charter to the Series M Preferred Stock. In addition to the legend contemplated by Article VI, Section 2.9 of the Charter, each certificate for Series M Preferred Stock shall bear substantially the following legend:

 

“The Corporation will furnish to any stockholder on request and without charge a full statement of the designations and any preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends, qualifications and terms and conditions of redemption of the stock of each class which the Corporation is authorized to issue, to the extent they have been set, and of the authority of the Board of Directors to set the relative rights and preferences of a subsequent series of a preferred or special class of stock. Such request may be made to the Secretary of the Corporation or to its transfer agent.”

 

SECOND:  The Series M Preferred Stock has been classified and designated by the Board under the authority contained in the Charter.

 

THIRD:  These Articles Supplementary have been approved by the Board in the manner and by the vote required by law.

 

FOURTH:  These Articles Supplementary shall be effective at the time the Department accepts these Articles Supplementary for record.

 

FIFTH:  The undersigned President of the Corporation acknowledges these Articles Supplementary to be the act of the Corporation and, as to all matters or facts required to be verified under oath, the undersigned President acknowledges that to the best of his knowledge, information and belief, these matters and facts are true in all material respects and that this statement is made under the penalties for perjury.

 

[Remainder of page intentionally left blank]

 

 

IN WITNESS WHEREOF, the Corporation has caused these Articles Supplementary to be executed in its name and on its behalf by its President and attested to by its Secretary as of the date first written above.

 

 

	ASHFORD HOSPITALITY TRUST, INC.
	By:
		Name: Stephen Zsigray
		Title: Chief Executive Officer and President
	ATTEST:
	By:
		Name: Alex Rose
		Title: Executive Vice President, General Counsel and Secretary

 

[Signature page to Series M Preferred Stock Articles Supplementary]

 

 

 

 

 

Exhibit 10.1.14

 

AMENDMENT NO. 13
TO
SEVENTH AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
ASHFORD HOSPITALITY LIMITED PARTNERSHIP

February [__], 2025

 

This Amendment No. 13 to the Seventh Amended and Restated Agreement of Limited Partnership of Ashford Hospitality Limited Partnership (this “Amendment”) is made as of February [__], 2025, by Ashford OP General Partner LLC, a Delaware limited liability company, as general partner (the “General Partner”) of Ashford Hospitality Limited Partnership, a Delaware limited partnership (the “Partnership”), pursuant to the authority granted to the General Partner in Section 11.1(b) of the Seventh Amended and Restated Agreement of Limited Partnership of Ashford Hospitality Limited Partnership, dated April 14, 2016, as amended by Amendment No. 1 thereto dated as of July 13, 2016, Amendment No. 2 thereto dated October 18, 2016, Amendment No. 3 thereto dated as of August 25, 2017, Amendment No. 4 thereto dated as of November 17, 2017, Amendment No. 5 thereto dated as of December 13, 2017, Amendment No. 6 thereto dated as of February 26, 2019, Amendment No. 7 thereto dated as of July 15, 2020, Amendment No. 8 thereto dated as of December 9, 2020, Amendment No. 9 thereto dated as of July 16, 2021, Amendment No. 10 thereto dated as of April 28, 2022, Amendment No. 11 thereto dated as of September 14, 2022 and Amendment No. 12 thereto dated as of October 25, 2024 (the “Partnership Agreement”), for the purpose of issuing additional Partnership Units in the form of Preferred Partnership Units. Capitalized terms used and not defined herein shall have the meanings set forth in the Partnership Agreement.

 

WHEREAS, the Board of Directors (the “Board”) of Ashford Hospitality Trust, Inc. (the “Company”) adopted resolutions on January [__], 2025 classifying and designating an aggregate of 16,000,000 shares of Preferred Stock (as defined in the Articles of Amendment and Restatement of the Company (as amended and supplemented to date and as may be amended and supplemented from time to time (the “Charter”))) as shares of the Series L Preferred Stock (as defined below) and Series M Preferred Stock (as defined below);

 

WHEREAS, the Board filed Articles Supplementary to the Charter with the State Department of Assessments and Taxation of Maryland on January [__], 2025, (i) establishing the Series L Preferred Stock with such preferences, rights, powers, restrictions, limitations as to distributions, qualifications and terms and conditions of redemption as described in the Series L Articles Supplementary (as defined below), and (ii) establishing the Series M Preferred Stock, with such preferences, rights, powers, restrictions, limitations as to distributions, qualifications and terms and conditions of redemption as described in the Series M Articles Supplementary (as defined below);

 

WHEREAS, Section 11.1(b) of the Partnership Agreement permits the General Partner to amend the Partnership Agreement without the approval of any other Partner if such amendment is to create, issue or reflect the creation or issuance of additional Partnership Interests;

 

 

WHEREAS, the General Partner has determined that, in connection with the issuance of the Series L Preferred Stock and the Series M Preferred Stock, it is necessary and desirable to amend the Partnership Agreement to create additional Partnership Units in the form of Preferred Partnership Units having designations, preferences and other rights which are substantially the same as the economic rights of the Series L Preferred Stock and the Series M Preferred Stock; and

 

WHEREAS, the General Partner desires to so amend the Partnership Agreement as of the date first set forth above.

 

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, the General Partner hereby amends the Partnership Agreement as follows:

 

1.                Article I is amended to add the following defined terms in their respective alphabetical order within Article I:

 

“Series L Articles Supplementary” shall mean the Articles Supplementary Establishing and Fixing the Rights and Preferences of a Series of Preferred Stock, designating the rights and preferences of the Series L Redeemable Preferred Stock, filed as part of the Company’s Charter with the State Department of Assessments and Taxation of Maryland, on January [__], 2025.

 

"Series L Preferred Partnership Interests" shall mean a partnership interest in the Partnership evidenced by the Series L Preferred Partnership Units, having a preference in payment of distributions or on liquidation as set forth in Exhibit Z to this Agreement.

 

"Series L Preferred Partnership Units" shall mean the series of Preferred Partnership Units established pursuant to this Agreement, representing a fractional, undivided share of the Series L Preferred Partnership Interests of all Partners issued under this Agreement.

 

"Series L Preferred Stock" shall mean the Series L Redeemable Preferred Stock of the Company, with such preferences, rights, voting powers, restrictions, limitations as to distributions, qualifications and terms and conditions of redemption as described in the Series L Articles Supplementary.

 

“Series M Articles Supplementary” shall mean the Articles Supplementary Establishing and Fixing the Rights and Preferences of a Series of Preferred Stock, designating the rights and preferences of the Series M Redeemable Preferred Stock, filed as part of the Company’s Charter with the State Department of Assessments and Taxation of Maryland, on January [__], 2025.

 

"Series M Preferred Partnership Interests" shall mean a partnership interest in the Partnership evidenced by the Series M Preferred Partnership Units, having a preference in payment of distributions or on liquidation as set forth in Exhibit AA to this Agreement.

 

"Series M Preferred Partnership Units" shall mean the series of Preferred Partnership Units established pursuant to this Agreement, representing a fractional, undivided share of the Series M Preferred Partnership Interests of all Partners issued under this Agreement.

 

 

"Series M Preferred Stock" shall mean the Series M Redeemable Preferred Stock of the Company, with such preferences, rights, voting powers, restrictions, limitations as to distributions, qualifications and terms and conditions of redemption as described in the Series M Articles Supplementary.

 

2.                  In accordance with Section 4.3 of the Partnership Agreement, set forth in Exhibit Z hereto are the terms and conditions of the Series L Preferred Partnership Units which are hereby established and issued to Ashford OP Limited Partner, LLC in consideration of its contribution to the Partnership of the proceeds from the issuance and sale of the Series L Preferred Stock by the Company. The Partnership Agreement is hereby amended to incorporate such Exhibit Z as Exhibit Z thereto and to replace Exhibit A thereto with a revised Exhibit A to reflect the issuance of the Series L Preferred Partnership Units.

 

3.                  In accordance with Section 4.3 of the Partnership Agreement, set forth in Exhibit AA hereto are the terms and conditions of the Series M Preferred Partnership Units which are hereby established and issued to Ashford OP Limited Partner, LLC in consideration of its contribution to the Partnership of the proceeds from the issuance and sale of the Series M Preferred Stock by the Company. The Partnership Agreement is hereby amended to incorporate such Exhibit AA as Exhibit AA thereto and to replace Exhibit A thereto with a revised Exhibit A to reflect the issuance of the Series M Preferred Partnership Units.

 

4.                  Except as modified herein, all terms and conditions of the Partnership Agreement shall remain in full force and effect, which terms and conditions the General Partner hereby ratifies and confirms.

 

5.                  This Amendment shall be construed and enforced in accordance with and governed by the laws of the State of Delaware, without regard to conflicts of law.

 

6.                  If any provision of this Amendment is or becomes invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not be affected thereby.

 

(The remainder of this page intentionally left blank.)

 

 

IN WITNESS WHEREOF, the undersigned has executed this Amendment as of the date first set forth above.

 

	Ashford OP General Partner LLC,
	a Delaware limited liability company, as General Partner of Ashford Hospitality Limited Partnership
	By:
	Name:	Alex Rose
	Title:	Executive Vice President

 

 

EXHIBIT Z

 

DESIGNATION OF TERMS AND CONDITIONS OF SERIES L
PREFERRED PARTNERSHIP UNITS

 

(a)          Designation and Number. A series of Preferred Partnership Units, designated as Series L Preferred Partnership Units, is hereby established. The number of authorized Series L Preferred Partnership Units shall be 16,000,000.

 

(b)          Rank. The Series L Preferred Partnership Units, with respect to rights to distributions and payments to Partners and the distribution of assets upon the liquidation, dissolution or winding up of the Partnership, rank (a) prior or senior to the Common Partnership Units and all Partnership Units issued by the Partnership (“Junior Units”) the terms of which specifically provide that such Partnership Units rank junior to the Series L Preferred Partnership Units; (b) on a parity with the Series D Preferred Partnership Units, Series F Preferred Partnership Units, Series G Preferred Partnership Units, Series H Preferred Partnership Units, Series I Preferred Units, Series J Preferred Partnership Units, Series K Preferred Partnership Units, Series M Preferred Partnership Units and all other Partnership Units issued in the future by the Partnership (“Parity Units”) the terms of which specifically provide that such Partnership Units rank on a parity with the Series L Preferred Partnership Units; (c) junior to all Partnership Units issued by the Partnership the terms of which specifically provide that such Partnership Units rank senior to the Series L Preferred Partnership Units; and (d) junior to all of the Partnership’s existing and future indebtedness.

 

(c)          Distributions.

 

(i)          Pursuant to Section 8.1 of the Partnership Agreement but subject to the rights of holders of any Preferred Partnership Units ranking senior to the Series L Preferred Partnership Units as to the payment of distributions, Ashford Hospitality Limited Partnership, in its capacity as the holder of the then outstanding Series L Preferred Partnership Units, shall be entitled to receive, when and as authorized by the General Partner, from the Cash Flow, cumulative monthly preferential cash distributions in an amount per Series L Preferred Partnership Unit equal to [XX]% per annum of the stated value of $25.00 per Series L Preferred Partnership Unit (the “Stated Value”) (equivalent to an annual distribution rate of $[XX] per Series L Preferred Partnership Unit). Distributions shall be payable monthly on the 15^th day of each month (or, if such payment date is not a Business Day, the next succeeding Business Day, with the same force and effect as if paid on such distribution payment date, and no interest or additional distributions or other sums shall accrue on the amount so payable from such distribution payment date to such next succeeding Business Day). Distributions of Preferred Return shall be payable in arrears to holders of record as they appear on the records of the Partnership at the close of business on the last Business Day of each month immediately preceding the applicable distribution payment date, which dates shall be the Partnership Record Dates for the Series L Preferred Partnership Units. Any distribution of Preferred Return payable on the Series L Preferred Partnership Units for any distribution period (as defined below) will be computed on the basis of twelve 30-day months and a 360-day year. Except for distributions in liquidation or redemption as provided in Sections D and E, respectively, holders of Series L Preferred Partnership Units will not be entitled to receive any distributions in excess of full cumulative Preferred Returns accrued on the Series L Preferred Partnership Units at the distribution rate specified in this paragraph. No interest will be paid in respect of any distribution payment or payments on the Series L Preferred Partnership Units that may be in arrears.

 

 

(ii)          Distributions of Preferred Return on each Series L Preferred Partnership Unit shall be cumulative from (and including) the first day of the distribution period during which such Series L Preferred Partnership Unit was originally issued, whether or not in any distribution period or periods (x) such distributions shall be authorized by the General Partner, (y) there shall be funds legally available for the payment of such distributions or (z) any agreement prohibits the Partnership’s payment of such distributions. As used herein, “distribution period” shall mean the respective periods commencing on, and including, the first day of each month of each year and ending on, and including, the day preceding the first day of the next succeeding distribution period (other than the distribution period during which any Series L Preferred Partnership Units shall be redeemed or otherwise acquired by the Partnership, which shall end on, and include, the day preceding the redemption or acquisition date with respect to the Series L Preferred Partnership Units being redeemed or acquired).

 

(iii)          When distributions of Preferred Return are not paid in full upon the Series L Preferred Partnership Units or any other series of Parity Units, or a sum sufficient for such payment is not set apart, all distributions of Preferred Return authorized by the General Partner upon the Series L Preferred Partnership Units and any other series of Parity Units shall be authorized by the General Partner ratably in proportion to the respective amounts of such distributions accumulated, accrued and unpaid on the Series L Preferred Partnership Units and accumulated, accrued and unpaid on such Parity Units. Except as set forth in the preceding sentence, unless distributions on the Series L Preferred Partnership Units equal to the full amount of accumulated, accrued and unpaid distributions of Preferred Return have been or contemporaneously are authorized by the General Partner and paid, or authorized by the General Partner and a sum sufficient for the payment thereof set apart for such payment for all past distribution periods, no distributions (other than distributions paid in Junior Units or options, warrants or rights to subscribe for or purchase Junior Units) shall be authorized by the General Partner or paid or set aside for payment by the Partnership with respect to any class or series of Parity Units. Unless distributions of Preferred Return on the Series L Preferred Partnership Units equal to the full amount of accumulated, accrued and unpaid distributions have been or contemporaneously are authorized by the General Partner and paid, or authorized by the General Partner and a sum sufficient for the payment thereof set apart for such payment for all past distribution periods, no distributions (other than distributions paid in Junior Units or options, warrants or rights to subscribe for or purchase Junior Units) shall be authorized by the General Partner or paid or set apart for payment by the Partnership with respect to any Junior Units, nor shall any Junior Units or Parity Units be redeemed, purchased or otherwise acquired for any consideration, or any monies be paid to or made available for a sinking fund for the redemption of any Junior Units or Parity Units (except by conversion or exchange for Junior Units, or options, warrants or rights to subscribe for or purchase Junior Units), nor shall any other cash or property be paid or distributed to or for the benefit of holders of Junior Units or Parity Units. Notwithstanding the foregoing, the General Partner shall not be prohibited from (i) authorizing or paying or setting apart for payment any Preferred Return or distribution on any Junior Units or Parity Units or (ii) redeeming, purchasing or otherwise acquiring any Junior Units or Parity Units, in each case, if such authorization, payment, redemption, purchase or other acquisition is necessary to maintain the Company’s qualification as a REIT.

 

 

(iv)         No distribution of Preferred Return on the Series L Preferred Partnership Units shall be authorized by the General Partner or paid or set apart for payment at such time as the terms and provisions of any agreement of the Partnership, including any agreement of the Partnership relating to the Partnership’s indebtedness, prohibits such authorization, payment or setting apart for payment or provides that such authorization, payment or setting apart for payment would constitute a breach thereof, or a default thereunder, or if such authorization, payment or setting apart for payment shall be restricted or prohibited by law.

 

(v)          In determining whether a distribution (other than upon voluntary or involuntary liquidation, dissolution or winding up of the Partnership) of Preferred Return or in redemption or otherwise, is permitted, amounts that would be needed, if the Partnership were to be dissolved at the time of the distribution, to satisfy the liquidation preference of the Series L Preferred Partnership Units (as provided in Section D below) will not be added to the Partnership’s total liabilities.

 

(d)          Liquidation Preference.

 

(i)          Upon any voluntary or involuntary liquidation, dissolution or winding up of the Partnership, before any distribution or payment shall be made to or set apart for the holders of any Junior Units, Ashford OP Limited Partner LLC, in its capacity as holder of the Series L Preferred Partnership Units, shall be entitled to receive a liquidation preference distribution equal to the Stated Value per Series L Preferred Partnership Unit, plus an amount equal to all accumulated, accrued and unpaid Preferred Return to, but not including, the date of final distribution, but Ashford OP Limited Partner LLC shall not be entitled to any further payment with respect thereto. If upon any liquidation, dissolution or winding up of the Partnership, its assets, or proceeds thereof, distributable among Ashford OP Limited Partner LLC, in its capacity as the holder of the Series L Preferred Partnership Units, shall be insufficient to pay in full the above described preferential distribution and liquidating distributions on any other series of Parity Units, then such assets, or the proceeds thereof, shall be distributed among Ashford OP Limited Partner LLC, in its capacity as the holder of the Series L Preferred Partnership Units, and the holders of any such other Parity Units ratably in the same proportion as the respective amounts that would be payable on such Series L Preferred Partnership Units and any such other Parity Units if all amounts payable thereon were paid in full.

 

(ii)          Upon any liquidation, dissolution or winding up of the affairs of the Partnership, after payment of the full amount of liquidating distributions have been made to Ashford OP Limited Partner LLC, in its capacity as the holder of the Series L Preferred Partnership Units, holders of the Series L Preferred Partnership Units shall have no right or claim to any of the remaining assets of the Partnership.

 

 

(iii)          None of a consolidation or merger of the Partnership with or into any other corporation, trust or other entity, a consolidation or merger of any other corporation, trust or other entity with or into the Partnership, a statutory unit exchange by the Partnership or a sale, lease, transfer or conveyance of any or all of the Partnership’s assets or business shall be deemed to constitute a liquidation, dissolution or winding up of the affairs of the Partnership.

 

(e)           Redemption. In connection with the cash redemption by the Company of any shares of Series L Preferred Stock in accordance with the provisions of the Series L Articles Supplementary, the Partnership shall provide cash to Ashford OP Limited Partner LLC for such purpose which shall be equal to the applicable redemption price (as set forth in the Series L Articles Supplementary), plus all distributions of Preferred Return accumulated and unpaid to, but not including, the applicable redemption date (as set forth in the Series L Articles Supplementary), and one Series L Preferred Partnership Unit shall be concurrently redeemed with respect to each share of Series L Preferred Stock so redeemed by the Company. In connection with the redemption by the Company of any shares of Series L Preferred Stock for shares of REIT Common Shares in accordance with the provisions of the Series L Articles Supplementary, the Partnership shall convert Series L Preferred Partnership Units into Common Partnership Units and issue such Common Partnership Units to Ashford OP Limited Partner LLC. The number of Common Partnership Units into which the Series L Preferred Partnership Units are convertible shall be equal to the number of REIT Common Shares into which the Series L Preferred Stock is then being redeemed, as set forth in the Series L Articles Supplementary. From and after the applicable redemption date, the Series L Preferred Partnership Units so redeemed shall no longer be outstanding and all rights hereunder, to distributions or otherwise, with respect to such Series L Preferred Partnership Units shall cease.

 

(f)          Voting Rights. Except as required by applicable law, the holder of the Series L Preferred Partnership Units, as such, shall have no voting rights.

 

(g)          Restriction on Ownership. The Series L Preferred Partnership Units shall be owned and held solely by Ashford OP Limited Partner LLC.

 

(h)          Allocations. Allocations of the Partnership’s items of income, gain, loss and deduction allocable with respect to Series L Preferred Partnership Units shall be allocated pro rata among holders of Series L Preferred Partnership Units in accordance with Article V of the Partnership Agreement.

 

 

 

EXHIBIT AA

 

DESIGNATION OF TERMS AND CONDITIONS OF SERIES M
PREFERRED PARTNERSHIP UNITS

 

(a)          Designation and Number. A series of Preferred Partnership Units, designated as Series M Preferred Partnership Units, is hereby established. The number of authorized Series M Preferred Partnership Units shall be 16,000,000.

 

(b)          Rank. The Series M Preferred Partnership Units, with respect to rights to distributions and payments to Partners and the distribution of assets upon the liquidation, dissolution or winding up of the Partnership, rank (a) prior or senior to the Common Partnership Units and all Partnership Units issued by the Partnership (“Junior Units”) the terms of which specifically provide that such Partnership Units rank junior to the Series M Preferred Partnership Units; (b) on a parity with the Series D Preferred Partnership Units, Series F Preferred Partnership Units, Series G Preferred Partnership Units, Series H Preferred Partnership Units, Series I Preferred Units, Series J Preferred Partnership Units, Series K Preferred Partnership Units, Series L Preferred Partnership Units and all other Partnership Units issued in the future by the Partnership (“Parity Units”) the terms of which specifically provide that such Partnership Units rank on a parity with the Series M Preferred Partnership Units; (c) junior to all Partnership Units issued by the Partnership the terms of which specifically provide that such Partnership Units rank senior to the Series M Preferred Partnership Units; and (d) junior to all of the Partnership’s existing and future indebtedness.

 

(c)          Distributions.

 

(i)          Pursuant to Section 8.1 of the Partnership Agreement but subject to the rights of holders of any Preferred Partnership Units ranking senior to the Series M Preferred Partnership Units as to the payment of distributions, Ashford OP Limited Partner LLC, in its capacity as the holder of the then outstanding Series M Preferred Partnership Units, shall be entitled to receive, when and as authorized by the General Partner, from the Cash Flow, cumulative monthly preferential cash distributions in an amount per Series M Preferred Partnership Unit equal to [XX]% per annum of the stated value of $25.00 per Series M Preferred Partnership Unit (the “Stated Value”) (equivalent to an annual distribution rate of $[XX] per Series M Preferred Partnership Unit). Beginning one year from the date of original issuance of each Series M Preferred Partnership Unit, and on each one year anniversary thereafter for such Series M Preferred Partnership Unit, the dividend rate shall increase by 0.10% per annum for such Series M Preferred Partnership Unit; provided, however, that the dividend rate for any Series M Preferred Partnership Unit shall not exceed [XX]% per annum of the Stated Value. For purposes of this section (c)(i) only, the “date of the original issuance” of the Series M Preferred Partnership Unit shall mean the earliest date that any Series M Preferred Partnership Unit was issued during the calendar quarter in which the Series M Preferred Partnership Unit was issued. Distributions shall be payable monthly on the 15^th day of each month (or, if such payment date is not a Business Day, the next succeeding Business Day, with the same force and effect as if paid on such distribution payment date, and no interest or additional distributions or other sums shall accrue on the amount so payable from such distribution payment date to such next succeeding Business Day). Distributions of Preferred Return shall be payable in arrears to holders of record as they appear on the records of the Partnership at the close of business on the last Business Day of each month immediately preceding the applicable distribution payment date, which dates shall be the Partnership Record Dates for the Series M Preferred Partnership Units. Any distribution of Preferred Return payable on the Series M Preferred Partnership Units for any distribution period (as defined below) will be computed on the basis of twelve 30-day months and a 360-day year. Except for distributions in liquidation or redemption as provided in Sections D and E, respectively, holders of Series M Preferred Partnership Units will not be entitled to receive any distributions in excess of full cumulative Preferred Returns accrued on the Series M Preferred Partnership Units at the distribution rate specified in this paragraph. No interest will be paid in respect of any distribution payment or payments on the Series M Preferred Partnership Units that may be in arrears.

 

 

(ii)          Distributions of Preferred Return on each Series M Preferred Partnership Unit shall be cumulative from (and including) the first day of the distribution period during which such Series M Preferred Partnership Unit was originally issued, whether or not in any distribution period or periods (x) such distributions shall be authorized by the General Partner, (y) there shall be funds legally available for the payment of such distributions or (z) any agreement prohibits the Partnership’s payment of such distributions. As used herein, “distribution period” shall mean the respective periods commencing on, and including, the first day of each month of each year and ending on, and including, the day preceding the first day of the next succeeding distribution period (other than the distribution period during which any Series M Preferred Partnership Units shall be redeemed or otherwise acquired by the Partnership, which shall end on, and include, the day preceding the redemption or acquisition date with respect to the Series M Preferred Partnership Units being redeemed or acquired).

 

(iii)          When distributions of Preferred Return are not paid in full upon the Series M Preferred Partnership Units or any other series of Parity Units, or a sum sufficient for such payment is not set apart, all distributions of Preferred Return authorized by the General Partner upon the Series M Preferred Partnership Units and any other series of Parity Units shall be authorized by the General Partner ratably in proportion to the respective amounts of such distributions accumulated, accrued and unpaid on the Series M Preferred Partnership Units and accumulated, accrued and unpaid on such Parity Units. Except as set forth in the preceding sentence, unless distributions on the Series M Preferred Partnership Units equal to the full amount of accumulated, accrued and unpaid distributions of Preferred Return have been or contemporaneously are authorized by the General Partner and paid, or authorized by the General Partner and a sum sufficient for the payment thereof set apart for such payment for all past distribution periods, no distributions (other than distributions paid in Junior Units or options, warrants or rights to subscribe for or purchase Junior Units) shall be authorized by the General Partner or paid or set aside for payment by the Partnership with respect to any class or series of Parity Units. Unless distributions of Preferred Return on the Series M Preferred Partnership Units equal to the full amount of accumulated, accrued and unpaid distributions have been or contemporaneously are authorized by the General Partner and paid, or authorized by the General Partner and a sum sufficient for the payment thereof set apart for such payment for all past distribution periods, no distributions (other than distributions paid in Junior Units or options, warrants or rights to subscribe for or purchase Junior Units) shall be authorized by the General Partner or paid or set apart for payment by the Partnership with respect to any Junior Units, nor shall any Junior Units or Parity Units be redeemed, purchased or otherwise acquired for any consideration, or any monies be paid to or made available for a sinking fund for the redemption of any Junior Units or Parity Units (except by conversion or exchange for Junior Units, or options, warrants or rights to subscribe for or purchase Junior Units), nor shall any other cash or property be paid or distributed to or for the benefit of holders of Junior Units or Parity Units. Notwithstanding the foregoing, the General Partner shall not be prohibited from (i) authorizing or paying or setting apart for payment any Preferred Return or distribution on any Junior Units or Parity Units or (ii) redeeming, purchasing or otherwise acquiring any Junior Units or Parity Units, in each case, if such authorization, payment, redemption, purchase or other acquisition is necessary to maintain the Company’s qualification as a REIT.

 

 

(iv)         No distribution of Preferred Return on the Series M Preferred Partnership Units shall be authorized by the General Partner or paid or set apart for payment at such time as the terms and provisions of any agreement of the Partnership, including any agreement of the Partnership relating to the Partnership’s indebtedness, prohibits such authorization, payment or setting apart for payment or provides that such authorization, payment or setting apart for payment would constitute a breach thereof, or a default thereunder, or if such authorization, payment or setting apart for payment shall be restricted or prohibited by law.

 

(v)          In determining whether a distribution (other than upon voluntary or involuntary liquidation, dissolution or winding up of the Partnership) of Preferred Return or in redemption or otherwise, is permitted, amounts that would be needed, if the Partnership were to be dissolved at the time of the distribution, to satisfy the liquidation preference of the Series M Preferred Partnership Units (as provided in Section D below) will not be added to the Partnership’s total liabilities.

 

(d)          Liquidation Preference.

 

(i)          Upon any voluntary or involuntary liquidation, dissolution or winding up of the Partnership, before any distribution or payment shall be made to or set apart for the holders of any Junior Units, Ashford OP Limited Partner LLC, in its capacity as holder of the Series M Preferred Partnership Units, shall be entitled to receive a liquidation preference distribution equal to the Stated Value per Series M Preferred Partnership Unit, plus an amount equal to all accumulated, accrued and unpaid Preferred Return to, but not including, the date of final distribution, but Ashford OP Limited Partner LLC shall not be entitled to any further payment with respect thereto. If upon any liquidation, dissolution or winding up of the Partnership, its assets, or proceeds thereof, distributable among Ashford OP Limited Partner LLC, in its capacity as the holder of the Series M Preferred Partnership Units, shall be insufficient to pay in full the above described preferential distribution and liquidating distributions on any other series of Parity Units, then such assets, or the proceeds thereof, shall be distributed among Ashford OP Limited Partner LLC, in its capacity as the holder of the Series M Preferred Partnership Units, and the holders of any such other Parity Units ratably in the same proportion as the respective amounts that would be payable on such Series M Preferred Partnership Units and any such other Parity Units if all amounts payable thereon were paid in full.

 

 

(ii)          Upon any liquidation, dissolution or winding up of the affairs of the Partnership, after payment of the full amount of liquidating distributions have been made to Ashford OP Limited Partner LLC, in its capacity as the holder of the Series M Preferred Partnership Units, holders of the Series M Preferred Partnership Units shall have no right or claim to any of the remaining assets of the Partnership.

 

(iii)          None of a consolidation or merger of the Partnership with or into any other corporation, trust or other entity, a consolidation or merger of any other corporation, trust or other entity with or into the Partnership, a statutory unit exchange by the Partnership or a sale, lease, transfer or conveyance of any or all of the Partnership’s assets or business shall be deemed to constitute a liquidation, dissolution or winding up of the affairs of the Partnership.

 

(e)           Redemption. In connection with the cash redemption by the Company of any shares of Series M Preferred Stock in accordance with the provisions of the Series M Articles Supplementary, the Partnership shall provide cash to Ashford OP Limited Partner LLC for such purpose which shall be equal to the applicable redemption price (as set forth in the Series M Articles Supplementary), plus all distributions of Preferred Return accumulated and unpaid to, but not including, the applicable redemption date (as set forth in the Series M Articles Supplementary), and one Series M Preferred Partnership Unit shall be concurrently redeemed with respect to each share of Series M Preferred Stock so redeemed by the Company. In connection with the redemption by the Company of any shares of Series M Preferred Stock for shares of REIT Common Shares in accordance with the provisions of the Series M Articles Supplementary, the Partnership shall convert Series M Preferred Partnership Units into Common Partnership Units and issue such Common Partnership Units to Ashford OP Limited Partner LLC. The number of Common Partnership Units into which the Series M Preferred Partnership Units are convertible shall be equal to the number of REIT Common Shares into which the Series M Preferred Stock is then being redeemed, as set forth in the Series M Articles Supplementary. From and after the applicable redemption date, the Series M Preferred Partnership Units so redeemed shall no longer be outstanding and all rights hereunder, to distributions or otherwise, with respect to such Series M Preferred Partnership Units shall cease.

 

(f)           Voting Rights. Except as required by applicable law, the holder of the Series M Preferred Partnership Units, as such, shall have no voting rights.

 

(g)          Restriction on Ownership. The Series M Preferred Partnership Units shall be owned and held solely by Ashford OP Limited Partner LLC.

 

(h)           Allocations. Allocations of the Partnership’s items of income, gain, loss and deduction allocable with respect to Series M Preferred Partnership Units shall be allocated pro rata among holders of Series M Preferred Partnership Units in accordance with Article V of the Partnership Agreement.

 

 

Exhibit 10.49

 

AMENDMENT TO

 

AMENDMENT NO. 3 TO CREDIT AGREEMENT

 

This AMENDMENT TO AMENDMENT NO. 3 TO CREDIT AGREEMENT (this “Amendment”) is entered into as of November 5, 2024, among ASHFORD HOSPITALITY LIMITED PARTNERSHIP (the “Borrower”), ASHFORD HOSPITALITY TRUST, INC. (the “Parent”), the guarantors party hereto (the “Guarantors”), the Lenders party hereto (the “Lenders”) and OAKTREE FUND ADMINISTRATION, LLC, as administrative agent (in such capacity, together with its successors and assigns in such capacity, the “Administrative Agent”).

 

RECITALS:

 

A.            The Borrower, the Parent, the Administrative Agent and the Lenders are parties to that certain Credit Agreement, dated as of January 15, 2021 (as amended by that certain Amendment No. 1 to Credit Agreement, dated as of October 12, 2021, as amended by that certain Amendment No. 2 to Credit Agreement, dated as of June 21, 2023, as amended by that certain Amendment No. 3 to Credit Agreement, dated as of March 11, 2024 (“Amendment No. 3”), and as may be further amended, restated, amended and restated, supplemented or otherwise modified from time to time through the date hereof, the “Credit Agreement”). Capitalized terms used in this Amendment but not defined have the meaning provided in the Credit Agreement.

 

B.            The Borrower, the Parent, the Guarantors, the Administrative Agent and the Lenders have agreed to amend certain provisions set forth in Amendment No. 3, as more fully set forth herein.

 

AGREEMENT:

 

In consideration of the premises and mutual covenants herein and for other valuable consideration, the Borrower, the Parent, the Guarantors, the Administrative Agent, and the Lenders party hereto agree as follows:

 

Section 1.         Cash Exit Fee. If the Outstanding Amount on November 15, 2024, is less than or equal to Fifty Million and No/100 Dollars ($50,000,000), then Section 2.12(d) of Amendment No. 3 shall be amended and restated in its entirety as follows:

 

“(d)  If the Cash Exit Fee is required to be paid under Section 2.08(b)(i) of the Credit Agreement as a result of a repayment in full of the Loans that occurs on or prior to December 15, 2024, so long as the Cash Exit Fee (and any Cash Exit Fee Loan made pursuant to the foregoing paragraph (c)) is also paid in full on or prior to December 15, 2024, the reference to “15%” in Section 2.08(b)(ii)(A) of the Credit Agreement shall be deemed to be specify “12.5%” for purposes of calculating the amount of such Cash Exit Fee.”

 

Section 2.         Miscellaneous.

 

2.1            Amendment No. 3 Unaffected. Except as herein otherwise specifically provided, all provisions of Amendment No. 3 (as modified hereby) shall remain in full force and effect and be unaffected hereby.

 

2.2            Counterparts. This Amendment may be executed in any number of counterparts, by different parties hereto in separate counterparts and by facsimile signature or other electronic transmissions, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute but one and the same agreement.

 

 

2.3            Governing Law; Consent to Jurisdiction. The provisions of Sections 11.14 and 11.15 of the Credit Agreement shall be set forth herein mutatis mutandis.

 

2.4            Costs and Expenses. The out-of-pocket expenses incurred by the Administrative Agent or any Lender in connection with the preparation, negotiation, execution, delivery and administration of this Amendment shall be paid by the Borrower in accordance with Section 11.04(a) of the Credit Agreement.

 

2.5            Ratification. The terms and provisions set forth in this Amendment shall modify and supersede all inconsistent terms and provisions of the Credit Agreement and shall not be deemed to be a consent to the modification or waiver of any other term or condition of the Credit Agreement. Except as expressly modified and superseded by this Amendment, the terms and provisions of the Credit Agreement and the other Loan Documents are hereby ratified and confirmed and shall continue in full force and effect on a continuous basis after giving effect to this Amendment. Each of the Loan Parties hereby ratifies and reaffirms (a) the Obligations under and as defined in the Credit Agreement and all of the covenants, duties, indebtedness and liabilities under the Credit Agreement (as modified hereby) and the other Loan Documents to which it is a party, (b) the Liens and security interests created in favor of the Administrative Agent and/or Lenders pursuant to each Collateral Document, which Liens and security interests shall continue in full force and effect during the term of the Credit Agreement, and shall continue to secure the Obligations, in each case, on and subject to the terms and conditio1ns set forth in the Credit Agreement (as modified hereby) and the other Loan Documents, and nothing herein shall be construed to deem any such Obligations paid, or to release or terminate any Lien or security interest given to secure any such Obligations or any guarantee thereof, (c) the guarantee of the Obligations pursuant to the Guaranty and (d) each of such other Loan Documents executed and delivered by or on its behalf in connection with the Credit Agreement or this Amendment. Each Loan Party confirms that, assuming all UCC financing statements naming the Administrative Agent, as secured party, and a Loan Party, as debtor, filed in connection with the Credit Agreement have not been terminated or amended, such UCC financing statements remain effective and authorized by the Loan Parties to continue perfection of the security interests in the Collateral. This Amendment constitutes the entire agreement of the parties hereto, and supersedes all prior understandings and agreements, among the parties hereto relating to the subject matter hereof.

 

2.6            No Novation. This Amendment represents in part a renewal of, and not in satisfaction of or a novation of, the Obligations under the Credit Agreement. Each of the Loan Parties expressly acknowledges and agrees that (i) there has not been, and this Amendment does not constitute or establish, a novation with respect to the Credit Agreement or any of the other Loan Documents, or a mutual departure from the strict terms, provisions and conditions thereof, other than with respect to the amendments set forth in Section 2 above, and (ii) nothing in this Amendment shall affect or limit any right of the Administrative Agent or any Lender to demand payment of liabilities owing from the Loan Parties, or to demand strict performance of the terms, provisions and conditions of, the Credit Agreement (as modified hereby) and the other Loan Documents, as applicable, to exercise any and all rights, powers, and remedies under the Credit Agreement or the other Loan Documents or at law or in equity, or to do any and all of the foregoing, immediately at any time after the occurrence of an Event of Default under the Credit Agreement (as modified hereby) or an Event of Default under and as defined in any of the other Loan Documents.

 

 

2.7            Release. By signing below, each Loan Party hereby releases, remises, acquits and forever discharges the Administrative Agent, the Lenders and their respective employees, agents, representatives, consultants, attorneys, officers, directors, partners, fiduciaries, predecessors, successors and assigns, subsidiary corporations, parent corporations and related corporate divisions (collectively, the “Released Parties”), from any and all actions, causes of action, judgments, executions, suits, debts, claims, demands, liabilities, obligations, damages and expenses of any and every character, known or unknown, direct or indirect, at law or in equity, of whatever nature or kind, whether heretofore or hereafter arising, for or because of any manner of things done, omitted or suffered to be done by any of the Released Parties prior to and including the date of execution hereof, and in any way directly or indirectly arising out of any or in any way connected to this Amendment or any other Loan Document (collectively, the “Released Matters”).  Each Loan Party hereby acknowledges that the agreements in this paragraph are intended to be in full satisfaction of all or any alleged injuries or damages arising in connection with the Released Matters.  Each Loan Party hereby represents and warrants to the Administrative Agent and each Lender that it has not purported to transfer, assign or otherwise convey any right, title or interest of such Loan Party in any Released Matter to any other Person and that the foregoing constitutes a full and complete release of all Released Matters.

 

[Signature pages follow.]

 

 

IN WITNESS WHEREOF, this Amendment has been duly executed and delivered as of the date first above written.

 

	ASHFORD HOSPITALITY TRUST, INC.
	By:	/s/ Stephen Zsigray
	Name:	Stephen Zsigray
	Title:	Chief Executive Officer

 

	ASHFORD OP GENERAL PARTNER LLC ASHFORD OP LIMITED PARTNER LLC
	By:	/s/ Stephen Zsigray
	Name:	Stephen Zsigray
	Title:	President and Chief Executive Officer

 

 

	ASHFORD HOSPITALITY LIMITED PARTNERSHIP
	By: Ashford OP General Partner LLC, its general partner
	By:	/s/ Alex Rose
	Name:	Alex Rose
	Title:	Executive Vice President, General Counsel and Secretary

 

[Signature Page to Amendment]

 

 

ASHFORD A-3 MEZZ LLC ASHFORD AA SENIOR MEZZ LLC ASHFORD C-1 LLC ASHFORD C-2 LLC ASHFORD CHAMBERS GP LLC ASHFORD CREDIT HOLDING LLC ASHFORD D-3 MEZZ LLC ASHFORD FIVE JUNIOR HOLDER LLC ASHFORD FIVE JUNIOR MEZZ LLC ASHFORD FIVE SENIOR MEZZ LLC ASHFORD G-3 MEZZ LLC ASHFORD IHC LLC ASHFORD JUNIOR A LLC ASHFORD JUNIOR B LLC ASHFORD JUNIOR Ml LLC ASHFORD JUNIOR M2 LLC ASHFORD LE PAVILLON SENIOR MEZZ LLC ASHFORD POOL C2 JUNIOR HOLDER LLC ASHFORD POOL C2 JUNIOR MEZZ LLC ASHFORD POOL C2 SENIOR MEZZ LLC ASHFORD SENIOR M1 LLC ASHFORD SENIOR M2 LLC ASHFORD TEN JUNIOR MEZZ LLC ASHFORD TEN SENIOR MEZZ LLC ASHFORD WQ HOTEL GP LLC HH MEZZ BORROWER A-4 LLC HH MEZZ BORROWER G-4 LLC HH SWAP C LLC HH SWAP C-1 LLC HH SWAP F LLC HH SWAP F-1 LLC PIM HIGHLAND HOLDING LLC RFS SPE 2000 LLC

 

	By:	/s/ Alex Rose
	Name:	Alex Rose
	Title:	Vice President and Secretary

 

[Signature Page to Amendment]

 

 

ASHFORD TRS AA SENIOR MEZZ LLC ASHFORD TRS ASHTON HOLDER LLC ASHFORD TRS C-I LLC ASHFORD TRS C-2 LLC ASHFORD TRS CHAMBERS LLC ASHFORD TRS FIVE JUNIOR HOLDER I LLC ASHFORD TRS FIVE JUNIOR HOLDER II LLC ASHFORD TRS FIVE JUNIOR HOLDER III LLC ASHFORD TRS FIVE JUNIOR HOLDER IV LLC ASHFORD TRS FIVE JUNIOR HOLDER V LLC ASHFORD TRS FIVE JUNIOR MEZZ I LLC ASHFORD TRS FIVE JUNIOR MEZZ II LLC ASHFORD TRS FIVE JUNIOR MEZZ III LLC ASHFORD TRS FIVE JUNIOR MEZZ IV LLC ASHFORD TRS FIVE JUNIOR MEZZ V LLC ASHFORD TRS FIVE SENIOR MEZZ I LLC ASHFORD TRS FIVE SENIOR MEZZ II LLC ASHFORD TRS FIVE SENIOR MEZZ III LLC ASHFORD TRS FIVE SENIOR MEZZ IV LLC ASHFORD TRS FIVE SENIOR MEZZ V LLC ASHFORD TRS JUNIOR A LLC ASHFORD TRS JUNIOR B LLC ASHFORD TRS JUNIOR MI LLC ASHFORD TRS JUNIOR M2 LLC ASHFORD TRS LE PA VILLON SENIOR MEZZ LLC ASHFORD TRS POOL C2 JUNIOR HOLDER LLC ASHFORD TRS POOL C2 JUNIOR MEZZ LLC ASHFORD TRS POOL C2 SENIOR MEZZ LLC ASHFORD TRS POOL C3 JUNIOR HOLDER LLC ASHFORD TRS POOL C3 JUNIOR MEZZ LLC ASHFORD TRS POOL C3 SENIOR MEZZ LLC ASHFORD TRS SENIOR M1 LLC ASHFORD TRS SENIOR M2 LLC ASHFORD TRS TEN JUNIOR MEZZ LLC ASHFORD TRS TEN SENIOR MEZZ LLC ASHFORD TRS WQ LLC HH MEZZ BORROWER D-2 LLC HH MEZZ BORROWER D-4 LLC AH TENANT CORPORATION ASHFORD TRS CORPORATION ASHFORD TRS VI CORPORATION CRYSTAL CITY TENANT CORP. LEE VISTA TENANT CORP. SANTA CLARA TENANT CORP.

 

	By:	/s/ Deric S. Eubanks
	Name:	Deric S. Eubanks
	Title:	President and Secretary

 

[Signature Page to Amendment]

 

 

	ASHFORD CHAMBERS LP
	By: ASHFORD CHAMBERS GP LLC,
	its general partner
	By:	/s/ Alex Rose
	Name:	Alex Rose
	Title:	Vice President and Secretary

 

	ASHFORD WQ HOTEL LP
	By: ASHFORD WQ HOTEL GP LLC,
	its general partner
	By:	/s/ Alex Rose
	Name:	Alex Rose
	Title:	Vice President and Secretary

 

	ASHFORD WQ LICENSEE LLC
	By: ASHFORD TRS CORPORATION,
	its sole member
	By:	/s/ Deric S. Eubanks
	Name:	Deric S. Eubanks
	Title:	President

 

[Signature Page to Amendment]

 

 

	OPPS AHT HOLDINGS, LLC
	By: Oaktree Fund GP, LLC, its Manager
	By: Oaktree Fund GP I, L.P., its Managing Member
	By:	/s/ Jordan Mikes
	Name:	Jordan Mikes
	Title:	Authorized Signatory

 

	By:	/s/ Manish Desai
	Name:	Manish Desai
	Title:	Authorized Signatory

 

[Signature Page to Amendment]

 

 

	ROF8 AHT PT, LLC
	By:	/s/ Taejo Kim
	Name:	Taejo Kim
	Title:	Authorized Signatory

 

	By:	/s/ Cary Kleinman
	Name:	Cary Kleinman
	Title:	Authorized Signatory

  

[Signature Page to Amendment]

 

 

	OAKTREE PHOENIX INVESTMENT FUND AIF (DELAWARE), L.P.
	By: Oaktree Fund AIF Series, L.P. – Series U, its General Partner
	By: Oaktree Fund GP AIF, LLC, its General Partner
	By: Oaktree Fund GP III, L.P., its Managing Member
	By:	/s/ Jordan Mikes
	Name:	Jordan Mikes
	Title:	Authorized Signatory

 

	By:	/s/ Steven Tesoriere
	Name:	Steven Tesoriere
	Title:	Authorized Signatory

 

[Signature Page to Amendment]

 

 

	OAKTREE FUND ADMINISTRATION, LLC, as Administrative Agent
	By: Oaktree Capital Management, L.P., its Managing Member
	By:	/s/ Henry Orren
	Name:	Henry Orren
	Title:	Vice President

 

	By:	/s/ Brian Price
	Name:	Brian Price
	Title:	Senior Vice President

 

[Signature Page to Amendment]

 

 

 

Exhibit 10.70

 

EXECUTION VERSION

 

AGREEMENT OF PURCHASE AND SALE

 

by and between

 

275 TREMONT OWNER, LLC
a Delaware limited liability company

 

(“Purchaser”)

 

and

 

HH FP PORTFOLIO LLC
a Delaware limited liability company

 

(“Seller”)

 

Courtyard Boston Downtown, 275 Tremont Street, Boston, MA 02116

 

 

TABLE OF CONTENTS

 

Page

 

ARTICLE I. DEFINITIONS		1
1.1.	Definitions	1
ARTICLE II. PURCHASE AND SALE; DEPOSIT; PAYMENT OF PURCHASE PRICE; STUDY PERIOD		6
2.1.	Purchase and Sale	6
2.2.	Payment of Purchase Price	6
2.3.	Deposit	7
2.4.	Study Period	7
ARTICLE III. SELLER’S REPRESENTATIONS AND WARRANTIES		9
3.1.	Organization and Power	9
3.2.	Authorization and Execution	10
3.3.	Non-contravention	10
3.4.	Compliance with Existing Laws	10
3.5.	Management Agreement/Operating Agreements	10
3.6.	Condemnation Proceedings; Roadways	10
3.7.	Actions or Proceedings	10
3.8.	Occupancy Agreements	11
3.9.	Seller Is Not a “Foreign Person”	11
3.10.	Bankruptcy	11
3.11.	Terrorism	11
3.12.	LIMITATION ON SELLER’S REPRESENTATIONS AND WARRANTIES	12
ARTICLE IV. PURCHASER’S REPRESENTATIONS AND WARRANTIES		14
4.1.	Organization and Power	14
4.2.	Authorization and Execution	14
4.3.	Non-contravention	15
4.4.	Litigation	15
4.5.	Patriot Act	15
4.6.	Terrorism	15
ARTICLE V. CONDITIONS PRECEDENT		16
5.1.	As to Purchaser’s Obligations	16
5.2.	As to Seller’s Obligations	16
ARTICLE VI. COVENANTS OF SELLER AND PURCHASER		17
6.1.	Operating Agreements/Occupancy Agreements/Leased Property Agreements	17
6.2.	Warranties and Guaranties	17
6.3.	Insurance	17
6.4.	Operation of Property Prior to Closing	18
6.5.	New Employees	18
6.6.	Termination of Hotel Employees; WARN Act	18

 

 

6.7.	Employee Claims	19
6.8.	Exclusivity	19
ARTICLE VII. CLOSING		19
7.1.	Closing	19
7.2.	Seller’s Deliveries	20
7.3.	Purchaser’s Deliveries	20
7.4.	Mutual Deliveries	21
7.5.	Closing Costs	21
7.6.	Revenue and Expense Allocations	21
7.7.	Safe Deposit Boxes	22
7.8.	Inventory of Baggage	22
7.9.	Acquisition and Payment for Inventory	22
7.10.	Assumption	22
ARTICLE VIII. GENERAL PROVISIONS		23
8.1.	Fire or Other Casualty	23
8.2.	Condemnation	24
8.3.	Broker	25
8.4.	Bulk Sale	25
8.5.	Confidentiality	25
8.6.	Liquor Licenses	27
8.7.	Management Agreement	28
ARTICLE IX. DEFAULT; TERMINATION RIGHTS		29
9.1.	Default by Seller/Failure of Conditions Precedent	29
9.2.	Default by Purchaser/Failure of Conditions Precedent	30
9.3.	Costs and Attorneys’ Fees	31
9.4.	Limitation of Liability	31
ARTICLE X. MISCELLANEOUS PROVISIONS		31
10.1.	Completeness; Modification	31
10.2.	Assignments	31
10.3.	Successors and Assigns	31
10.4.	Days	32
10.5.	Governing Law	32
10.6.	Counterparts	32
10.7.	Severability	32
10.8.	Costs	32
10.9.	Notices	32
10.10.	Escrow Agent	33
10.11.	Incorporation by Reference	34
10.12.	Survival	34
10.13.	Further Assurances	34
10.14.	No Partnership	35
10.15.	Time of Essence	35
10.16.	Signatory Exculpation	35

 

 

10.17.	Rules of Construction	35
10.18.	No Recording	35
10.19.	Facsimile or Electronic Signatures	35
10.20.	Effective Date	35
10.21.	Survival	35

 

 

AGREEMENT OF PURCHASE AND SALE

 

THIS AGREEMENT OF PURCHASE AND SALE (this “Agreement”) is made as of the Effective Date, by and between 275 Tremont Owner, LLC, a Delaware limited liability company (“Purchaser”), and HH FP Portfolio LLC, a Delaware limited liability company (“Seller”).

 

R E C I T A T I O N S:

 

A.           Seller is the owner of those certain parcels of real property more particularly described on Exhibit A attached hereto and made a part hereof, and the improvements situated thereon operated by Seller as the Courtyard Boston Downtown (the “Hotel”), situate, lying and being in Boston, Massachusetts.

 

B.            Purchaser is desirous of purchasing such hotel property from Seller and Seller is desirous of selling such hotel property to Purchaser, for the purchase price and upon the terms and conditions hereinafter set forth.

 

NOW, THEREFORE, in consideration of the mutual covenants, promises and undertakings of the parties hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties, it is agreed:

 

ARTICLE I.
DEFINITIONS

 

1.1.          Definitions. The following terms shall have the indicated meanings:

 

“Advance Bookings” shall mean reservations and agreements made or entered into by Seller, Operating Lessee or Manager in the ordinary course of business prior to Closing and assumed by Purchaser for hotel rooms or meeting rooms to be utilized after Closing, or for catering services or other hotel services to be provided after Closing at or by the Hotel.

 

“Affiliate” of a Person shall mean (i) any other Person that is directly or indirectly (through one or more intermediaries) controlled by, under common control with, or controlling such Person, or (ii) any other Person in which such Person has a direct or indirect equity interest constituting at least a majority interest of the total equity of such other Person. For purposes of this definition, “control” shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of any Person or the power to veto major policy decisions of any Person, whether through the ownership of voting securities, by contract or otherwise.

 

“Applicable Laws” shall mean any applicable building, zoning, subdivision, environmental, health, safety or other governmental laws, statutes, ordinances, resolutions, rules, codes, regulations, orders or determinations of any Governmental Authority affecting the Property or the ownership, operation, use, maintenance or condition thereof.

 

“Approval Standard” shall have the meaning ascribed to such term in Section 6.1 hereof.

 

 

“Assignment and Assumption Agreement” shall mean an assignment and assumption agreement in substantially the form attached hereto as Exhibit E whereby Seller and Operating Lessee assign and Purchaser assumes all of its or their respective right, title and interest in and to the Operating Agreements and the Leased Property Agreements that have not been terminated prior to Closing in accordance herewith.

 

“Assignment of Occupancy Agreements” shall mean an assignment agreement in substantially the form attached hereto as Exhibit F whereby Seller and/or Operating Lessee assigns and Purchaser assumes all of its or their respective right, title and interest in and to the Occupancy Agreements.

 

“Authorizations” shall mean all licenses, permits and approvals required by any governmental or quasi-governmental agency, body, department, commission, board, bureau, instrumentality or office, or otherwise appropriate with respect to the construction, ownership, operation, leasing, maintenance, or use of the Property or any part thereof.

 

“Bill of Sale” shall mean a bill of sale in substantially the form attached hereto as Exhibit D whereby Seller and/or Operating Lessee conveys its or their respective right, title and interest in and to the Personal Property (other than Leased Property) to Purchaser, together with any Warranties and Guaranties related thereto.

 

“Broker” shall mean Jones Lang LaSalle.

 

“Capital Expenditure Reserve Account” means the capital expenditure reserve account maintained with Manager pursuant to the Management Agreement.

 

“Closing” shall mean the consummation of the purchase and sale of the Property pursuant to this Agreement and shall be deemed to occur on the Closing Date.

 

“Closing Date” shall mean January 9, 2025.

 

“Closing Documents” shall mean the documents defined as such in Section 7.1 hereof.

 

“Closing Obligations” shall have the meaning ascribed thereto in Section 9.1.

 

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

 

“Data Site” shall mean the virtual data room established and maintained by the Seller and/or Broker located at https://app.box.com/folder/288489810096?s=96fm43dwai6hil9ucbjlkrezy0syb10n

 

“Deed” shall mean a quitclaim deed in substantially the form attached hereto as Exhibit C conveying title to the Real Property from Seller to Purchaser.

 

“Deposit” shall mean all amounts deposited from time to time with Escrow Agent by Purchaser pursuant to and as defined in Section 2.3 hereof, plus all interest or other earnings that may accrue thereon.

 

 

“Effective Date” (or other similar phrases such as “date of this Agreement” or “date hereof”) shall have the definition ascribed to such term in Section 10.20 hereof.

 

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended (ERISA).

 

“Escrow Agent” shall mean Kensington Vanguard National Title, 5949 Sherry Lane, Suite 111, Dallas, Texas 75225, Attn: Trey Lentz; Email: TLentz@kvnational.com; Phone: (214) 273-2514.

 

“FIRPTA Certificate” shall mean the affidavit of Seller under Section 1445 of the Internal Revenue Code, as amended, in substantially the form attached hereto as Exhibit G.

 

“Governmental Authority” shall mean any federal, state, county, municipal or other government or any governmental or quasi-governmental agency, department, commission, board, bureau, office or instrumentality, foreign or domestic, or any of them.

 

“Hotel” shall have the definition ascribed to such term in the Recitations.

 

“Hotel Employees” shall mean all employees of the Manager or any Affiliate thereof employed at the Property. All Hotel Employees are employees of the Manager or an Affiliate thereof.

 

“Improvements” shall mean the Hotel and all other buildings, improvements, and other items of real estate located on the Land.

 

“Inspection Agreement” shall mean that certain Access Agreement dated October 1, 2024, executed by and between Purchaser and Seller.

 

“Insurance Policies” shall mean all policies of insurance maintained by or on behalf of Seller pertaining to the Property, its operation, or any part thereof.

 

“Intangible Personal Property” shall mean, to the extent assignable, Seller’s and/or Operating Lessee’s right, title and interest in and to all intangible personal property owned or possessed by Seller or Operating Lessee and used in connection with the ownership or operation of the Property, including, without limitation, (1) Authorizations, (2) utility and development rights and privileges, general intangibles, business records, plans and specifications pertaining to the Real Property and the Personal Property, (3) any unpaid award for taking by condemnation or any damage to the Land by reason of a change of grade or location of or access to any street or highway, and (4) Advance Bookings.

 

“Inventory” shall mean all inventories of food and beverage (to the extent permitted by Applicable Laws, alcoholic and non-alcoholic) in opened or unopened cases whether in use or held in reserve storage for future use, all china, glassware, silverware, kitchen and bar small goods, guest supplies, operating supplies, printing, stationary and uniforms, whether in use or held in reserve storage for future use in connection with the operation of a hotel and all in-use or reserve stock of linens, towels, paper goods, soaps, cleaning supplies and the like with respect to the Hotel.

 

 

“Land” shall mean those certain parcels of real estate lying and being in Suffolk County, Massachusetts, and more particularly described on Exhibit A hereof, together with all of Seller’s rights, titles, benefits, easements, privileges, remainders, tenements, hereditaments, interests, reversions and appurtenances thereunto belonging or in any way appertaining, and all of the estate, right, title, interest, claim or demand whatsoever of Seller therein, in and to adjacent strips and gores, if any, between the Land and abutting properties, and in and to adjacent streets, highways, roads, alleys or rights-of-way, and the beds thereof (except to the extent, if any, that such strips or gores or such streets, highways, roads, alleys or rights-of-way abut or provide access to or benefit other properties owned by Seller), either at law or in equity, in possession or expectancy, now or hereafter acquired.

 

“Leased Property” shall mean all leased items of Tangible Personal Property, including, items subject to any capital lease, operating lease, financing lease, or any similar agreement.

 

“Leased Property Agreements” shall mean the lease agreements pertaining to the Leased Property set forth on Schedule 2 hereto.

 

“Management Agreement” shall mean the management agreement between Operating Lessee and Manager for the Management or operation of the Hotel.

 

“Manager” shall mean Courtyard Management Corporation.

 

“Monetary Encumbrance Release” shall have the meaning ascribed to such term in Section 2.4(e) hereof.

 

“Monetary Title Encumbrances” shall mean any title encumbrances affecting the Hotel which are comprised of delinquent taxes or mortgages, deeds of trust, security agreements, or other similar liens or charges in a fixed sum (or capable of computation as a fixed sum) securing indebtedness or obligations which were created or expressly assumed by Seller (but not including liens against the Property in the nature of those arising from judgments or pending litigation or construction, mechanics, materialman’s or other liens or charges which are in dispute, or liens which were not created or expressly assumed by Seller or liens for Leased Property).

 

“Non-Breach Inaccuracy” shall mean a breach or inaccuracy of a representation or warranty contained in Article III of this Agreement of which Seller gives Purchaser written notice prior to Closing or Purchaser otherwise obtains actual knowledge prior to Closing which does not constitute a breach or inaccuracy of any such representation or warranty made as of the Effective Date but would constitute a breach or inaccuracy of such representation or warranty if made as of the Closing Date (such as, for example, because Seller did not have knowledge, as such term is defined in Article III, of such matters as of the Effective Date).

 

“Occupancy Agreements” shall mean all leases, concession or occupancy agreements in effect with respect to the Real Property and/or Hotel under which any tenants (other than Hotel guests and Operating Lessee) or concessionaires occupy space upon the Real Property which are set forth on Schedule 3 hereto.

 

“Operating Agreements” shall mean all service, supply, maintenance, construction, capital improvement and other similar contracts in effect with respect to the Property (other than the Occupancy Agreements, Leased Property Agreements, and the Management Agreement) related to construction, operation, or maintenance of the Property which are set forth on Schedule 4 hereto.

 

 

“Operating Lease” shall mean that certain lease agreement between Seller and Operating Lessee with respect to the Property.

 

“Operating Lessee” shall mean HHC TRS FP Portfolio LLC, a Delaware limited liability company.

 

“Owner’s Title Policy” shall mean an owner’s policy of title insurance issued to Purchaser by the Title Company, pursuant to which the Title Company insures Purchaser’s ownership of fee simple title to the Real Property, subject only to Permitted Title Exceptions. The Owner’s Title Policy shall insure Purchaser in the amount of the Purchase Price and shall be in the form customarily used for like transactions in the state where the Land is located.

 

“Person” shall mean an individual, a partnership, a limited liability company, a corporation, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, or a Governmental Authority.

 

“Permitted Title Exceptions” shall mean those exceptions to title to the Real Property that are satisfactory or deemed satisfactory to Purchaser as determined pursuant to Section 2.4(e) hereof.

 

“Personal Property” shall mean collectively the Tangible Personal Property and the Intangible Personal Property.

 

“Property” shall mean collectively the Real Property, Personal Property, and the Capital Expenditure Reserve Account.

 

“Purchase Price” shall mean One Hundred Twenty Three Million and No/100 Dollars ($123,000,000.00) payable in the manner described in Section 2.2 hereof.

 

“Purchaser Parties” shall have the meaning ascribed to such term in Section 2.4(a) hereof.

 

“Purchaser’s Objections” shall mean the objections defined as such in Section 2.4(e) hereof.

 

“Real Property” shall mean the Land and the Improvements with respect to the Hotel.

 

“Rooms Ledger” shall mean the final night’s room revenue for the Hotel (revenue from rooms occupied as of 6:00 a.m. on the Closing Date, exclusive of food, beverage, telephone and similar charges charged or incurred as of such time which shall be shared equally by Purchaser and Seller), including any sales taxes, room taxes or other taxes thereon.

 

“Seller’s Response” shall have the meaning ascribed thereto in Section 2.4(e).

 

“Seller’s Response Period” shall have the meaning ascribed thereto in Section 2.4(e).

 

 

“Seller’s Title Policy” shall mean the title policy defined as such in Section 2.4(b) hereof.

 

“Study Period” shall mean the period commencing on the date of the Inspection Agreement, and continuing through 5:00 p.m. on November 27, 2024. Except as expressly noted herein to the contrary, time periods herein referred to shall mean the time periods as in effect, from time to time, at Dallas, Texas.

 

“Submission Matters” shall have the definition ascribed to such term in Section 2.4(b) hereof.

 

“Survey” shall mean the survey defined as such in Section 2.4(b) hereof.

 

“Tangible Personal Property” shall mean the items of tangible personal property including, but not limited to, all furniture, fixtures, equipment, machinery, telephone systems, computer hardware and software (to the extent assignable), security systems, Inventory and other tangible personal property of every kind and nature (which does not include cash-on-hand and petty cash funds) located at the Hotel and owned or leased by Seller or Operating Lessee, including, without limitation, Seller’s or Operating Lessee’s interest as lessee with respect to any such leased Tangible Personal Property.

 

“Title Commitment” shall mean the title commitment and exception documents defined as such in Section 2.4(e) hereof.

 

“Title Company” shall mean Kensington Vanguard National Title or other title insurance underwriter selected by Seller and reasonably acceptable to Purchaser.

 

“WARN Act” shall have the meaning ascribed thereto in Section 6.6.

 

“Warranties and Guaranties” shall mean any subsisting and assignable warranties and guaranties relating to the Improvements or the Tangible Personal Property or any part thereof.

 

ARTICLE II.
PURCHASE AND SALE; DEPOSIT; PAYMENT OF
PURCHASE PRICE; STUDY PERIOD

 

2.1.          Purchase and Sale. Seller agrees to sell and Purchaser agrees to purchase the Property for the Purchase Price and in accordance with and subject to the other terms and conditions set forth herein.

 

2.2.          Payment of Purchase Price. The Purchase Price shall be paid to Seller in the following manner:

 

(a)            Purchaser shall receive a credit against the Purchase Price in an amount equal to the amount of the Deposit.

 

(b)            Purchaser shall pay the balance of the Purchase Price, as adjusted in the manner specified in Article VII and as set forth below, to Seller (or other party designated by Seller) at Closing by making a wire transfer of immediately available federal funds to the account of Seller (or other party designated by Seller). Such wire transfer shall be sent by Purchaser to the Escrow Agent for the account of Seller no later than 10:00 AM, Dallas, Texas time on the Closing Date.

 

 

2.3.          Deposit. On or prior to December 3, 2024, Purchaser shall deliver to Escrow Agent a wire transfer or cashier’s or certified check in the sum of Two Million and No/100 Dollars ($2,000,000.00) (the “Deposit”). If Purchaser fails to timely deposit the Deposit with Escrow Agent, Seller shall be entitled, as Seller’s sole and exclusive remedy, to terminate this Agreement by written notice to Purchaser at any time before the Deposit is delivered to Escrow Agent, in which event neither party shall have any obligations hereunder, except those which expressly survive a termination of this Agreement. The Deposit shall be invested by Escrow Agent in a commercial bank or banks acceptable to Seller and Purchaser at money market rates, or in such other investments as shall be approved in writing by Seller and Purchaser. The Deposit shall be held and disbursed by Escrow Agent in strict accordance with the terms and provisions of this Agreement. All accrued interest or other earnings on the Deposit shall become part of the Deposit. The Deposit shall be either (a) applied at the Closing against the Purchase Price, (b) returned to Purchaser pursuant hereto, or (c) paid to Seller pursuant hereto.

 

2.4.          Study Period.

 

(a)            Purchaser and its agents, contractors, auditors, engineers, attorneys, employees, consultants, other representatives and potential lessees, partners, and lenders (collectively, “Purchaser Parties”) shall have the right, until the Closing or earlier termination of this Agreement, to enter upon the Real Property upon not less than two (2) business days prior notice to Seller, and to perform, at Purchaser’s expense, such economic, surveying, engineering, topographic, environmental, marketing and other tests, studies and investigations as Purchaser may deem appropriate. Purchaser has had an opportunity to review the condition of the Property, and finds it satisfactory as of the Effective Date. Accordingly, the Deposit is non-refundable except as otherwise expressly provided herein. Purchaser Parties shall have no discussions, correspondence, or other contact with any Hotel Employees unless coordinated in advance with Seller.

 

(b)            Purchaser acknowledges its receipt of the due diligence materials set forth on the Data Site as of the Effective Date. Seller shall, promptly upon request by Purchaser, make available to Purchaser on the Data Site, such additional due diligence materials which are in Seller’s possession or control relating to the Property and the operation thereof which are reasonably requested by Purchaser from time to time, but Purchaser shall have no recourse in the event of Seller’s failure to so-make-available. All documents and materials provided by Seller to Purchaser pursuant to this Agreement (including, without limitation, any and all documents and materials set forth on the Data Site), together with any copies or reproductions of such documents or materials, or any summaries, abstracts, compilations or other analyses made by or for Purchaser based on the information in such documents or materials, are referred to collectively herein as the “Submission Materials”. Except as expressly set forth in Article III, Purchaser acknowledges and agrees that the Submission Matters are provided without warranty or representation whatsoever.

 

 

(c)            If for any reason whatsoever Purchaser does not purchase the Property, Purchaser shall promptly (i) deliver to Seller or destroy all copies of all the Submission Matters and any other materials delivered to Purchaser or Purchaser Parties, and (ii) deliver to Seller all third-party reports prepared by or for Purchaser or Purchaser Parties with respect to the Property; provided, however, that Purchaser shall not be obligated to deliver to Seller any materials of a proprietary nature (such as, for the purposes of example only, any financial forecasts or market repositioning plans) prepared for Purchaser or Purchaser Parties in connection with the Property, and Seller acknowledges that any such materials delivered to Seller pursuant to the provisions of clause (ii) shall be without warranty or representation whatsoever other than that such materials have been fully paid for and may be delivered to Seller. The provisions of this Section 2.4(c) shall survive the termination of this Agreement.

 

(d)            Purchaser shall indemnify, hold harmless and defend Seller, Operating Lessee and Manager, and each of their subsidiaries, affiliate and parent companies, the respective successors and assigns of each of them, and the officers, directors, partners, members, shareholders, employees and agents of each of the foregoing, from and against any loss, damage, liability or claim for personal injury or property damage and any other loss, damage, liability, claim or lien to the extent arising from the acts at or upon the Real Property by Purchaser or Purchaser Parties or any agents, contractors or employees of any of them, INCLUDING ANY SUCH LOSS, DAMAGE OR CLAIM TO WHICH THE NEGLIGENCE OF SELLER, OPERATING LESSEE AND/OR MANAGER MAY HAVE CONTRIBUTED, but excluding any such loss, damage or claim to the extent caused by the gross negligence or reckless or willful misconduct of Seller, Operating Lessee and/or Manager or its respective agents, contractors, auditors, engineers, attorneys, employees, consultants and other representatives. Purchaser understands and agrees that any on-site inspections of the Property shall occur at reasonable times agreed upon by Seller and Purchaser after not less than two (2) business days prior written notice to Seller and shall be conducted so as not to interfere unreasonably with the operation of the Property and the use of the Property by the tenants and the guests of the Hotel. Seller, Operating Lessee and/or Manager shall have the right to have a representative present during any such inspections. If Purchaser desires to do any invasive testing at the Property, Purchaser shall do so only after notifying Seller and obtaining Seller’s prior written consent thereto, which consent shall not be unreasonably withheld or delayed and may be subject to reasonable terms and conditions as may be proposed by Seller. Purchaser shall not permit any liens to attach to the Property by reason of such inspections. Purchaser shall (i) restore the Property, at its own expense, to substantially the same condition which existed prior to any inspections or other activities of Purchaser thereon; and (ii) be responsible for and pay any and all liens by contractors, subcontractors, materialmen, or laborers performing the inspections or any other work for Purchaser or Purchaser Parties on or related to the Property. All contractors and others performing any tests and studies on the Property shall first present to Seller reasonably satisfactory evidence that such party is adequately insured in order to reasonably protect Seller, Operating Lessee and Manager from any loss, liability, or damage arising out of the performance of such tests or studies. Purchaser shall not solicit for employment any Hotel Employees except for employment at the Hotel in accordance with Section 6.5 if the transaction is consummated. The provisions of this Section 2.4(d) shall survive any termination of this Agreement and a closing of the transaction contemplated hereby.

 

 

(e)            Seller has ordered from the Title Company for delivery to Purchaser and Seller, a title insurance commitment issued by the Title Company covering the Real Property, binding the Title Company to issue the Owner’s Title Policy together with legible copies (to the extent such legible copies are available) of all documents identified in such title insurance commitment as exceptions to title (collectively, the “Title Commitment”), with respect to the state of title to the Property, and Purchaser has approved of the same; provided, if any matters shown on the Survey or identified in the Title Commitment consist of Monetary Title Encumbrances, then, to that extent, notwithstanding anything herein to the contrary, Seller shall be obligated to either (i) pay and discharge, (ii) bond against in a manner legally sufficient to cause to be released, or (iii) indemnify or escrow money with or otherwise cause the Title Company to insure over, such Monetary Title Encumbrances (individually and collectively, a “Monetary Encumbrance Release”). For such purposes, Seller may use all or a portion of the Purchase Price to effectuate a Monetary Encumbrance Release with respect to any such Monetary Title Encumbrances at the Closing. Other than as specifically required in this Agreement, Seller shall not be obligated to incur any expenses or incur any liability to cure any Purchaser’s Objections. Except as otherwise provided herein, Seller shall not, after the date of this Agreement, voluntarily subject the Real Property to any liens, encumbrances, covenants, conditions, restrictions, easements or other title matters or seek any zoning changes without Purchaser’s prior written consent, which consent shall not be unreasonably withheld or delayed. All title matters revealed by the Title Commitment and Survey (or any update obtained by Purchaser), other than Monetary Title Encumbrances which will be covered by a Monetary Encumbrance Release at Closing, shall all be deemed Permitted Title Exceptions.

 

(f)             Prior to the expiration of the Study Period, Purchaser shall use diligent efforts, with Seller’s commercially reasonable assistance, to obtain (i) the written consent of the Manager, if required, to an assignment of the Management Agreement on terms reasonably acceptable to Purchaser, and (ii) an estoppel certificate (or agreed upon form of estoppel certificate) from Manager reasonably acceptable to Purchaser.

 

(g)            Prior to Closing, Seller shall provide commercially reasonable assistance to Purchaser to obtain estoppel certificates from any tenants under Occupancy Agreements requested by Purchaser pursuant to forms provided to Seller by Purchaser.

 

ARTICLE III.
SELLER’S REPRESENTATIONS AND WARRANTIES

 

To induce Purchaser to enter into this Agreement and to purchase the Property, and to pay the Purchase Price therefor, Seller, to its knowledge and except for and subject to information contained in the Submission Matters, hereby makes the following representations and warranties:

 

3.1.          Organization and Power. Seller is duly organized, validly existing and in good standing under the laws of Delaware and has all requisite power and authority to enter into and perform its obligations hereunder and under any document or instrument required to be executed and delivered on behalf of Seller hereunder.

 

 

3.2.          Authorization and Execution. This Agreement has been duly authorized by all necessary action on the part of Seller, has been duly executed and delivered by Seller, constitutes the valid and binding agreement of Seller and is enforceable in accordance with its terms. The person executing this Agreement on behalf of Seller has the authority to do so.

 

3.3.          Non-contravention. Subject to any consent to the assignment of any particular Operating Agreement, Occupancy Agreement or Leased Property Agreement required by the terms thereof or by applicable law and to the payment in full at the Closing of any Monetary Title Encumbrances, the execution and delivery of, and the performance by Seller of its obligations under, this Agreement does not and will not contravene, or constitute a default under, any provision of applicable law or regulation, Seller’s organizational documents or any agreement, judgment, injunction, order, decree or other instrument binding upon Seller or to which the Property is subject, or result in the creation of any lien or other encumbrance on any asset of Seller. Seller warrants and represents that it has received from the Manager a waiver of its ROFO rights set forth in Section 10.02(B) of the Management Agreement.

 

3.4.          Compliance with Existing Laws. Seller has not received from any Governmental Authority written notice within the past three (3) years of any violation of any provision of Applicable Laws, including, but not limited to, those of environmental agencies and the Massachusetts Historical Commission, with respect to the ownership, operation, use, maintenance or condition of the Property which violation has not been remedied.

 

3.5.          Management Agreement/Operating Agreements. There are no management, service, supply, or maintenance contracts in effect with respect to the Property other than the Management Agreement, Operating Agreements or Leased Property Agreements made available to Purchaser as Submission Matters, or those disclosed in the Title Commitment. All parties to material Operating Agreements or Leased Property Agreements have performed all of their obligations thereunder in all material respects, and are not in default thereunder in any material respect. For purposes of this Agreement, an Operating Agreement or Leased Property Agreement shall be deemed “material” only if it is material to the business or results of operations of the Property taken as a whole.

 

3.6.          Condemnation Proceedings; Roadways. Seller has received no written notice of any condemnation or eminent domain proceeding pending against the Property or any part thereof.

 

3.7.          Actions or Proceedings. Seller has not received any written notice of any suit or proceeding in any court, before any arbitrator, or before or by any Governmental Authority which (a) in any manner raises any question affecting the validity or enforceability of this Agreement or any other agreement or instrument to which Seller is a party or by which it is bound and that is or is to be used in connection with, or is contemplated by, this Agreement, (b) would materially and adversely affect the business, results of operations or operation of the Property as presently conducted, or (c) would create a lien on the Property, any part thereof or any interest therein which would not be discharged at Closing.

 

 

3.8.          Occupancy Agreements. There are no leases, concessions or occupancy agreements in effect with respect to the Real Property other than the Occupancy Agreements made available to Purchaser as Submission Matters. All parties to material Occupancy Agreements have performed all of their obligations thereunder in all material respects, and are not in default thereunder in any material respect. For purposes of this Agreement, an Occupancy Agreement shall be deemed “material” only if it is material to the business or results of operations of the Property taken as a whole.

 

3.9.          Seller Is Not a “Foreign Person”. Seller is not a “foreign person” within the meaning of Section 1445 of the Internal Revenue Code, as amended (i.e., Seller is not a foreign corporation, foreign partnership, foreign trust, foreign estate or foreign person as those terms are defined in the Internal Revenue Code and regulations promulgated thereunder).

 

3.10.        Bankruptcy. Seller has not (i) made a general assignment for the benefit of creditors, (ii) filed any voluntary petition in bankruptcy or suffered the filing of any involuntary petition by Seller’s creditors that remains pending, (iii) suffered the appointment of a receiver to take possession of all, or substantially all, of Seller’s assets that remains pending, (iv) suffered the attachment or other judicial seizure of all, or substantially all of Seller’s assets that remains pending, (v) admitted in writing its inability to pay its debts as they come due or (vi) made an offer of settlement, extension or composition to its creditors generally.

 

3.11.        Terrorism. None of Seller or its Affiliates is in violation of any laws relating to terrorism, money laundering or the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Action of 2001, Public Law 107-56 and Executive Order No. 13224 (Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism) (the “Executive Order”) (collectively, the “Anti-Money Laundering and Anti- Terrorism Laws”). For purposes of this Section 3.11, any interest in Seller or its Affiliates held via public shares is not included in this representation.

 

3.11.1       None of Seller or its Affiliates, is acting, directly or indirectly, on behalf of terrorists, terrorist organizations or narcotics traffickers, including those persons or entities that appear on the Annex to the Executive Order, or are included on any relevant lists maintained by the Office of Foreign Assets Control of U.S. Department of Treasury, U.S. Department of State, or other U.S. government agencies, all as may be amended from time to time.

 

3.11.2       None of Seller or its Affiliates (i) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any person included in the lists set forth in the preceding paragraph; (ii) deals in, or otherwise engages in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order; or (iii) engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Money Laundering and Anti- Terrorism Laws.

 

 

Each of the representations and warranties contained in this Article III and its various subparagraphs are intended for the benefit of Purchaser and may be waived in whole or in part, by Purchaser. Subject to the limitations contained in Section 10.12 hereof, all rights and remedies arising in connection with the untruth or inaccuracy of any such representations and warranties shall survive the Closing of the transaction contemplated hereby as provided in Section 10.12.

 

The term “to Seller’s knowledge” or similar phrase as used in this Article III, shall mean the then actual current conscious knowledge of the designated asset manager of Seller for the Property, without any duty of investigation or inquiry other than the inquiry of the general manager of the Hotel. Such designated asset manager and general manager shall have no personal liability for such representations.

 

3.12.        LIMITATION ON SELLER’S REPRESENTATIONS AND WARRANTIES. PURCHASER ACKNOWLEDGES AND AGREES THAT, OTHER THAN A REPRESENTATION OR WARRANTY EXPRESSLY SET FORTH IN THIS AGREEMENT (A BREACH OF WHICH PURCHASER MAY MAINTAIN AN ACTION IN ACCORDANCE WITH AND SUBJECT TO ARTICLE IX AND SECTION 10.12 OF THIS AGREEMENT) OR AS EXPRESSLY SET FORTH IN A CLOSING DOCUMENT, THE PROPERTY IS SOLD “AS IS” “WHERE IS” AND “WITH ALL FAULTS” AND NEITHER SELLER, NOR ANY AGENT OR REPRESENTATIVE OF SELLER, HAS MADE, NOR IS SELLER LIABLE FOR OR BOUND IN ANY MANNER BY ANY EXPRESS OR IMPLIED WARRANTIES, GUARANTEES, PROMISES, STATEMENTS, INDUCEMENTS, REPRESENTATIONS OR INFORMATION PERTAINING TO THE PROPERTY OR ANY PART THEREOF, THE PHYSICAL CONDITION, ENVIRONMENTAL CONDITION, INCOME, EXPENSES OR OPERATION THEREOF, THE USES WHICH CAN BE MADE OF THE SAME OR ANY OTHER MATTER OR THING WITH RESPECT THERETO, INCLUDING ANY EXISTING OR PROSPECTIVE LEASES. WITHOUT LIMITING THE FOREGOING, PURCHASER ACKNOWLEDGES AND AGREES THAT, OTHER THAN A REPRESENTATION OR WARRANTY EXPRESSLY SET FORTH IN THIS AGREEMENT (A BREACH OF WHICH PURCHASER MAY MAINTAIN AN ACTION IN ACCORDANCE WITH AND SUBJECT TO ARTICLE IX AND SECTION 10.12 OF THIS AGREEMENT) OR AS EXPRESSLY SET FORTH IN A CLOSING DOCUMENT, SELLER IS NOT LIABLE FOR OR BOUND BY (AND PURCHASER HAS NOT RELIED UPON) ANY ORAL OR WRITTEN STATEMENTS, REPRESENTATIONS, OR FINANCIAL STATEMENTS PERTAINING TO THE OPERATION OF THE PROPERTY, OR ANY OTHER INFORMATION RESPECTING THE PROPERTY FURNISHED BY SELLER OR ANY EMPLOYEE, AGENT, CONSULTANT OR OTHER PERSON REPRESENTING OR PURPORTEDLY REPRESENTING SELLER. PURCHASER FURTHER ACKNOWLEDGES, AGREES, AND REPRESENTS THAT, OTHER THAN A REPRESENTATION OR WARRANTY SET FORTH IN THIS AGREEMENT (A BREACH OF WHICH PURCHASER MAY MAINTAIN AN ACTION IN ACCORDANCE WITH AND SUBJECT TO ARTICLE IX AND SECTION 10.12 OF THIS AGREEMENT) OR AS EXPRESSLY SET FORTH IN A CLOSING DOCUMENT, IT SHALL BE PURCHASING THE PROPERTY IN AN “AS IS” “WHERE IS” AND “WITH ALL FAULTS” CONDITION AT THE DATE OF CLOSING WITH RESPECT TO THE STRUCTURAL AND MECHANICAL ELEMENTS OF THE PROPERTY, THE PHYSICAL AND ENVIRONMENTAL CONDITION OF THE PROPERTY, THE FIRE-LIFE SAFETY SYSTEMS AND THE FURNITURE, FIXTURES AND EQUIPMENT LOCATED THEREON OR ATTACHED THERETO, ALL OF WHICH PURCHASER AND ITS CONSULTANTS SHALL HAVE INSPECTED AND EITHER APPROVED OR WAIVED OBJECTION TO ON OR PRIOR TO THE EXPIRATION OF THE STUDY PERIOD AND/OR THE CLOSING AND PURCHASER HEREBY RELEASES SELLER, OPERATING LESSEE AND THEIR AFFILIATES FROM ANY AND ALL OBLIGATIONS, LIABILITIES, CLAIMS, DEMANDS, SUITS, CAUSES OF ACTION, DAMAGES, JUDGMENTS, COSTS AND EXPENSES RELATING TO ANY OF THE FOREGOING. PURCHASER ALSO REPRESENTS THAT, AS OF THE CLOSING DATE, IT SHALL HAVE INDEPENDENTLY INVESTIGATED, ANALYZED AND APPRAISED TO ITS SATISFACTION THE VALUE AND THE PROFITABILITY OF THE PROPERTY. PURCHASER ACKNOWLEDGES THAT, TO THE EXTENT REQUIRED TO BE OPERATIVE, THE DISCLAIMERS OF WARRANTIES CONTAINED IN THIS SECTION ARE “CONSPICUOUS” DISCLAIMERS FOR PURPOSES OF ANY APPLICABLE LAW, RULE, REGULATION OR ORDER. THE PROVISIONS OF THIS SECTION 3.12 SHALL SURVIVE THE CLOSING.

 

 

Purchaser recognizes that the Hotel and Personal Property are not new and that there exists a possibility that the Property is not in compliance with the requirements which would be imposed on a newly constructed hotel by presently effective federal, state and local building, plumbing, electrical, fire, health, disability, environmental and life safety laws, codes, ordinances, rules, orders and/or regulations (collectively, the “building codes”). The Hotel and other improvements on the Land may contain substances or materials no longer permitted to be used in newly constructed buildings including, without limitation, asbestos or other insulation materials, lead or other paints, wiring, electrical, or plumbing materials and may not contain other materials or equipment required to be installed in a newly constructed building. Purchaser shall have the opportunity to review the results of such investigations and inspections of the Property as Purchaser deemed necessary with respect to all such matters. Subject to Purchaser’s rights to terminate pursuant to Section 2.4 and Purchaser’s rights set forth in this Agreement, Purchaser agrees to accept and shall purchase the Property in an “AS-IS, WHERE IS” condition and at Closing to accept the risk of noncompliance of the Property with all such building codes. Except with respect to those representations and warranties expressly set forth in this Agreement, Purchaser waives any right to excuse or delay performance of its obligations under this Agreement or to assert any claim against Seller (before or after Closing) arising out of any failure of the Property to comply with any such building codes. Purchaser acknowledges and agrees that Seller has endeavored to provide copies to Purchaser all of the Operating Agreements, Occupancy Agreements, Leased Property Agreements, the Authorizations and the Warranties and Guaranties (the “Property Agreements”) and that Seller has provided copies of all Property Agreements that have been provided to the Seller by the Manager. Purchaser further acknowledges that Seller is relying on Manager to provide copies of the Property Agreements. Purchaser acknowledges that Purchaser is assuming all Property Agreements whether or not copies of which have been provided to Purchaser, and except with respect to those representations and warranties expressly set forth in this Agreement (a breach of which Purchaser may maintain an action in accordance with and subject to Article IX and Section 10.12 of this Agreement), Purchaser hereby waives any claims Purchaser may have for the fact that a particular Property Agreement may not have been provided to Purchaser for its review.

 

Seller shall use commercially reasonable efforts to work with the Purchaser prior to the Closing to correct or update any missing and/or incomplete information contained on the title to the Property at the Suffolk County Registry of Deeds with respect to the existing tenants in the Property for which Notices of Lease have been filed.

 

 

Except with respect to those representations and warranties expressly set forth in this Agreement (a breach of which Purchaser may maintain an action in accordance with and subject to Article IX and Section 10.12 of this Agreement), it is specifically understood and agreed by Seller and Purchaser that Seller does not make, and shall not be deemed to have made, any representation, warranty or covenant with respect to (i) any Environmental Laws that may affect any of the Property or (ii) the presence or absence of any Hazardous or Toxic Substances in, on, above, under or about any of the Property. Purchaser, for itself and its successors in interest, hereby releases Seller and its Affiliates from, and waives all claims and liability against Seller and its Affiliates for or attributable to, any structural, physical and/or environmental condition at the Property, including without limitation the presence, discovery or removal of any Hazardous Substances or Toxic Substances in, at, about or under such Property, or connected with or arising out of any and all claims or causes of action based upon any Environmental Laws, including, without limitation, CERCLA (Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended by SARA Superfund Amendment and Reauthorization Act of 1986 and as may be further amended from time to time) or any related claims or causes of action or any other federal or state based statutory or regulatory or other causes of action for environmental contamination at, in or under any Property. As used in this Section 3.12, (A) the term “Environmental Laws” means all federal, State and local laws, codes, ordinances, rules, orders and regulations now or hereafter in effect relating to pollution or the protection of the environment, including without limitation, all laws, codes, ordinances, rules, orders and regulations governing the generation, use, collection, treatment, storage, transportation, recovery, removal, discharge, spill or disposal of any or all Hazardous or Toxic Substances, and (B) the term “Hazardous Substances” or “Toxic Substances” means materials and substances defined as “hazardous substances”, “hazardous wastes”, “toxic substances” or “toxic wastes” in (I) the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. Sections 9601-9675, as amended by the Superfund Amendments and Reauthorization Act of 1988, and any further amendments thereto and rules, orders and regulations thereunder; (II) the Resource Conservation and Recovery Act of 1976, 42 U.S.C. Sections 6901-6992, as amended by the Hazardous and Solid Waste Amendments of 1984, and any further amendments thereto and rules, orders and regulations thereunder; or (III) any other Environmental Laws.

 

ARTICLE IV.
PURCHASER’S REPRESENTATIONS AND WARRANTIES

 

To induce Seller to enter into this Agreement and to sell the Property, Purchaser hereby makes the following representations and warranties:

 

4.1.         Organization and Power. Purchaser is duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite power and authority to enter into and perform its obligations under this Agreement and any document or instrument required to be executed and delivered on behalf of Purchaser hereunder.

 

4.2.          Authorization and Execution. This Agreement has been duly authorized by all necessary action on the part of Purchaser, has been duly executed and delivered by Purchaser, constitutes the valid and binding agreement of Purchaser and is enforceable in accordance with its terms. The person executing this Agreement on behalf of Purchaser has the authority to do so.

 

 

4.3.          Non-contravention. The execution and delivery of this Agreement and the performance by Purchaser of its obligations hereunder do not and will not contravene, or constitute a default under, any provisions of applicable law or regulation, Purchaser’s organizational documents, or any agreement, judgment, injunction, order, decree or other instrument binding upon Purchaser or result in the creation of any lien or other encumbrance on any asset of Purchaser.

 

4.4.          Litigation. There is no action, suit or proceeding, pending or known to be threatened, against or affecting Purchaser in any court or before any arbitrator or before any Governmental Authority which (a) in any manner raises any question affecting the validity or enforceability of this Agreement or any other agreement or instrument to which Purchaser is a party or by which it is bound and that is to be used in connection with, or is contemplated by, this Agreement, (b) would materially and adversely affect the business, financial position or results of operations of Purchaser, or (c) would materially and adversely affect the ability of Purchaser to perform its obligations hereunder, or under any document to be delivered pursuant hereto.

 

4.5.          Patriot Act. Purchaser is not acting, directly or indirectly, for or on behalf of any person, group, entity or nation named by the United States Treasury Department as a Specifically Designated National and Blocked person, or for or on behalf of any person, group, entity or nation designated in Presidential Executive Order 13224 as a person who commits, threatens to commit, or supports terrorism; and it is not engaged in this transaction directly or indirectly on behalf of, or facilitating this transaction directly or indirectly on behalf of, any such person, group, entity or nation.

 

4.6.          Terrorism. None of Purchaser or, to Purchaser’s actual knowledge, its Affiliates, is in violation of any Anti-Money Laundering and Anti-Terrorism Laws.

 

4.6.1         None of Purchaser or, to Purchaser’s actual knowledge, its Affiliates, is acting, directly or indirectly, on behalf of terrorists, terrorist organizations or narcotics traffickers, including those persons or entities that appear on the Annex to the Executive Order, or are included on any relevant lists maintained by the Office of Foreign Assets Control of U.S. Department of Treasury, U.S. Department of State, or other U.S. government agencies, all as may be amended from time to time.

 

4.6.2         None of Purchaser or, to Purchaser’s actual knowledge, its Affiliates or, without inquiry, any of its brokers or other agents, in any capacity in connection with the purchase of the Property (i) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any person included in the lists set forth in the preceding paragraph; (ii) deals in, or otherwise engages in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order; or (iii) engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Money Laundering and Anti-Terrorism Laws.

 

The term “to Purchaser’s knowledge” or similar phrase as used in this Article IV, shall mean the then actual current conscious knowledge of Joshua Bird without further investigation or inquiry.

 

 

ARTICLE V.
CONDITIONS PRECEDENT

 

5.1.          As to Purchaser’s Obligations. Purchaser shall have the remedies and Closing obligations set forth in Section 9.1 hereof, which section contains the sole and exclusive remedies and Closing obligations of Purchaser, if any of the following conditions are not satisfied or waived by Purchaser on or before the Closing Date (unless the failure to satisfy such condition is caused by the default of Purchaser or its Affiliates under this Agreement, or is otherwise within the reasonable control of Purchaser):

 

(a)            Seller’s Deliveries. Seller shall have delivered to or for the benefit of Purchaser, on or before the Closing Date, all of the documents required of Seller pursuant to Sections 7.2 and 7.4 hereof.

 

(b)            Representations, Warranties and Covenants; Obligations of Seller. All of Seller’s representations and warranties made in this Agreement shall be true and correct in all material respects as of the date hereof and as of the Closing Date as if then made (except for untruths or inaccuracies of which Purchaser obtains knowledge prior to the expiration of the Study Period); and Seller shall have performed in all material respects all of its covenants and other obligations under this Agreement.

 

(c)            Operating Lease. The Operating Lease between Seller and Operating Lessee shall be terminated without cost or expense to Purchaser and evidence of such termination shall be provided to the Purchaser.

 

Each of the conditions contained in this Section are intended for the benefit of Purchaser and may be waived in whole or in part, in writing, by Purchaser or automatically if Purchaser proceeds to Closing.

 

5.2.          As to Seller’s Obligations. Seller shall have the remedies and Closing obligations set forth in Section 9.2 hereof, which section contains the sole and exclusive remedies and Closing obligations of Seller, if any of the following conditions are not satisfied or waived by Seller on or before the Closing Date (unless the failure to satisfy such condition is caused by the default of Seller or its Affiliates under this Agreement, or is otherwise within the reasonable control of Seller):

 

(a)            Purchaser’s Deliveries. Purchaser shall have delivered to or for the benefit of Seller, on or before the Closing Date, all of the documents and payments required of Purchaser pursuant to Sections 7.3 and 7.4 hereof.

 

(b)            Representations, Warranties and Covenants; Obligations of Purchaser. All of Purchaser’s representations and warranties made in this Agreement shall be true and correct in all material respects as of the date hereof and as of the date of Closing as if then made and Purchaser shall have performed in all material respects all of its covenants and other obligations under this Agreement.

 

 

(c)            Management Agreement. At Purchaser’s expense (including, without limitation, any application, transfer, termination or other fees chargeable), Purchaser shall have assumed all obligations of Seller and Operating Lessee, and any of their Affiliates, as applicable, under the Management Agreement and Seller, Operating Lessee, and all of their Affiliates shall have been released from all duties, liabilities and obligations under the Management Agreement and any guarantee thereof. Purchaser covenants that it will take such actions as may be required to satisfy the foregoing condition in conjunction with the cooperation of the Seller.

 

Each of the conditions contained in this Section are intended for the benefit of Seller and may be waived in whole or in part, in writing, by Seller or automatically if Seller proceeds to Closing.

 

ARTICLE VI.
COVENANTS OF SELLER AND PURCHASER

 

6.1.          Operating Agreements/Occupancy Agreements/Leased Property Agreements. From and after the expiration of the Study Period, and subject to the terms of the Management Agreement, Seller and Operating Lessee shall not enter into any new Operating Agreements, Occupancy Agreements or Leased Property Agreements or any modifications to any such agreements except as required by the terms thereof, unless (a) any such agreement or modification will not bind Purchaser or the Property after the date of Closing or is subject to termination on not more than sixty thirty (30)’ notice without penalty, or (b) Seller has obtained Purchaser’s prior written consent to such agreement or modification, which consent shall not be unreasonably withheld or delayed and shall be deemed given if, within five (5) business days following Purchaser’s receipt of Seller’s or Operating Lessee’s request, Purchaser fails to provide Seller with a reasonably detailed written description of the reason Purchaser withholds its consent and, if applicable, a statement of those changes, which, if made, would cause Purchaser to grant its consent (the “Approval Standard”). Seller, at no cost to Seller, shall take reasonable efforts to assist Purchaser in obtaining any required consents to the assignment to Purchaser of the Operating Agreements or Leased Property Agreements; provided, however, Purchaser shall pay all fees, charges and expenses relating to such consents. Seller may cancel any Operating Agreement, Occupancy Agreement or Leased Property Agreement at any time prior to the Closing with the prior written consent of Purchaser, which consent shall be subject to the Approval Standard; provided, however, if Seller elects to cancel any such agreement, Seller shall pay any termination fee associated with such termination, and shall give Purchaser notice of such termination.

 

6.2.         Warranties and Guaranties. Seller and Operating Lessee shall not before or after Closing release or modify any Warranties and Guaranties, if any, except with the prior written consent of Purchaser, which consent shall be subject to the Approval Standard.

 

6.3.          Insurance. Seller or Operating Lessee shall pay all premiums on, and shall not cancel or voluntarily allow to expire, any of Seller’s or Operating Lessee’s Insurance Policies unless such policy is replaced, without any lapse of coverage, by another policy or policies providing coverage at least as extensive as the policy or policies being replaced.

 

 

6.4.           Operation of Property Prior to Closing. Seller covenants and agrees with Purchaser that, to the extent it is legally entitled to do so, between the date of this Agreement and the date of Closing and subject to the terms of the Management Agreement:

 

(a)            Subject to the restrictions contained herein, as well as seasonal differences and events or conditions beyond Seller’s and Operating Lessee’s reasonable control, Seller shall cause Operating Lessee to operate the Property in substantially the same manner in which it operated the Property prior to the execution of this Agreement including taking all reasonable actions necessary to maintain and/or renew all material licenses and permits required to operate the Property; provided, however, nothing in this Agreement shall be construed to require Seller or Operating Lessee to comply with Licensor’s property improvement plan or product improvement plan (final or proposed) or to make any capital repairs or improvements.

 

(b)            Seller shall pay and cause Operating Lessee to pay (subject to legal rights of appeal and protest) prior to delinquency all ad valorem, occupancy and sales taxes due and payable with respect to the Property or the operation of the Hotel.

 

(c)            Subject to seasonal differences, market conditions and events or conditions beyond Seller’s and Operating Lessee’s reasonable control, Seller shall cause Operating Lessee to continue to take guest room reservations and to book functions and meetings and otherwise to promote the business of the Property in generally the same manner as it did prior to the execution of this Agreement; and all advance room bookings and reservations and all meetings and function bookings shall be booked at rates, prices and charges charged by Seller’s Operating Lessee for such purposes in the ordinary course of business consistent with past practices. Seller acknowledges that the Purchase Price includes the transfer of Advance Bookings and any payments and/or deposits made pursuant to such Advance Bookings.

 

(d)            Seller shall promptly advise Purchaser of any litigation, arbitration or administrative hearing concerning the Property of which Seller obtains actual knowledge.

 

(e)            Seller shall refrain and cause Operating Lessee to refrain from removing or causing or permitting to be removed any material part or portion of the Real Property or the Tangible Personal Property owned by Seller or Operating Lessee other than in the normal course of business without the prior written consent of Purchaser, which consent shall be subject to the Approval Standard, unless the same is no longer needed or useful or the same is replaced, prior to Closing, with similar items of at least equal suitability, quality and value, free and clear of any liens or security interests.

 

6.5.         New Employees. Beginning one (1) week prior to the Closing Date, Seller shall cause Operating Lessee to provide to Purchaser, at no cost or expense to Purchaser, a meeting room suitable for Purchaser to conduct interviews and evaluate employment applications of those parties who may seek employment at the Property following Closing and Seller shall cause Operating Lessee to reasonably cooperate with Purchaser’s efforts to conduct such interviews.

 

6.6.         No Termination of Hotel Employees; WARN Act. On the Closing Date the employment of all Hotel Employees shall continue with the Manager or an Affiliate of the Manager as the Management Agreement with the Manger will remain in effect as of the acquisition of the Property by the Buyer and no employees shall be terminated with respect to the transaction contemplated under this Agreement. Thus, no application of the Worker Adjustment and Retraining Notification Act (“WARN Act”) is implicated. The provisions of this Section 6.6 shall survive the Closing.

 

 

6.7.          Employee Claims. Purchaser shall hold harmless, indemnify and defend Seller, Operating Lessee and Manager and their Affiliates from and against any and all claims, causes of action, proceedings, judgments, damages, penalties, liabilities, costs and expenses (including reasonable attorneys’ fees and disbursements) incurred by Seller, Operating Lessee or Manager or any Affiliate thereof with respect to claims, causes of action, judgments, damages, penalties and liabilities asserted by Hotel Employees to the extent arising out of or related to any act, failure to act, any transaction or any facts or circumstances (i) occurring on or after the Closing Date, or (ii) undertaken or caused by Purchaser in connection with Closing, including, without limitation (A) the termination of such Hotel Employees; (B) any and all liability under the WARN Act, including, without limitation, any and all liability caused by the failure of Purchaser to rehire a sufficient number of Hotel Employees or the termination of such employees as provided in Section 6.6; (C) the failure of Purchaser to comply with the provisions of any collective bargaining agreement; (D) any claim arising under the Family and Medical Leave Act or other state leave of absence statute made by someone on a statutorily-approved leave of absence at the time of Closing; (E) any alleged discrimination, breach of contract or other wrongful termination (under federal statutes, state statutes or common law); (F) any alleged right to workers’ compensation benefits, unemployment compensation or statutory or contractual severance, including claims for any withdrawal liability or unfunded liability incurred because of participation in any pension plan covered by the Multiemployer Pension Plan Amendments Act of 1980 or other multiemployer pension plan or similar fund; and (G) all costs and expenses associated with salary, wages, bonuses, profit sharing, pension, health and welfare benefits, employee severance payments and other compensation and fringe benefits that are earned but unpaid as of the Closing Date and which are assumed by Purchaser at the Closing and sick leave and vacation pay accrued or earned all of which shall be assumed by Purchaser as provided in Section 7.6 hereof. The provisions of this Section 6.7 shall survive the Closing.

 

6.8.          Exclusivity. Notwithstanding anything contained in this Agreement to the contrary, from and after the Effective Date and continuing so long as this Agreement is in effect, Seller shall cease marketing the Property for sale, and shall not negotiate offers or enter into back-up contracts for the sale of the Property.

 

ARTICLE VII.
CLOSING

 

7.1.          Closing. The Closing shall occur on the Closing Date. As more particularly described below, at the Closing the parties hereto will (i) execute or cause to be executed, or instruct the Escrow Agent to release, all of the documents required to be delivered in connection with the transactions contemplated hereby (the “Closing Documents”), (ii) deliver or cause to be delivered the same to Escrow Agent, and (iii) take or cause to be taken all other action required to be taken in respect of the transactions contemplated hereby. The Closing will occur through escrow at the Title Company, or at such other place as Purchaser and Seller may mutually agree. At the Closing, Purchaser shall deliver the balance of the Purchase Price to Escrow Agent as provided herein. As provided herein, the parties hereto will agree upon adjustments and prorations to certain items which cannot be exactly determined at the Closing and will make the appropriate adjustments with respect thereto. Possession of the Property shall be delivered to Purchaser at the Closing, subject to Permitted Title Exceptions and the rights of tenants, licensees and concessionaires under the Occupancy Agreements and guests in possession.

 

 

7.2.          Seller’s Deliveries. At the Closing, Seller shall deliver or shall cause Operating Lessee or Manager to deliver, as applicable, to Escrow Agent all of the following instruments, each of which shall have been duly executed and, where applicable, acknowledged and/or sworn, on behalf of Seller and/or Operating Lessee, as applicable, and shall be dated to be effective as of the Closing Date:

 

(a)            The Deed.

 

(b)            The Bill of Sale.

 

(c)            The Assignment and Assumption Agreement.

 

(d)            The Assignment of Occupancy Agreements.

 

(e)            The FIRPTA Certificate.

 

(f)             Evidence of termination of the Operating Lease

 

(g)            Any other document or instrument specifically required by this Agreement to be delivered by Seller on or before the Closing Date.

 

(h)            An Assignment and Assumption of Management Agreement to Purchaser on Manager’s standard form, unless otherwise agreed to during the Study Period (the “Assignment and Assumption of Management Agreement”).

 

7.3.          Purchaser’s Deliveries. At or prior to the Closing, Purchaser shall deliver or cause to be delivered to Escrow Agent the following, duly executed and, where applicable, acknowledged and/or sworn on behalf of Purchaser, and dated as of the Closing Date:

 

(a)            The Assignment and Assumption Agreement.

 

(b)            The Assignment of Occupancy Agreements.

 

(c)            The Assignment and Assumption of Management Agreement.

 

(d)            Any other documents or instruments specifically required by this Agreement to be delivered by Purchaser on or before the Closing Date.

 

(e)            At the Closing, Purchaser shall deliver to Escrow Agent the portion of the Purchase Price described in Section 2.2 hereof.

 

 

7.4.          Mutual Deliveries. At the Closing, Purchaser and Seller (or Operating Lessee, as applicable) shall mutually execute and deliver or cause to be delivered:

 

(a)            A closing statement reflecting the Purchase Price and the adjustments and prorations required hereunder and the allocation of income and expenses required hereby.

 

(b)            Subject to the provisions of Section 8.6 hereof, such other documents, instruments and undertakings as may be required by the liquor authorities of the State where the Property is located, or of any county or municipality or governmental entity having jurisdiction with respect to the transfer or issue of liquor licenses or alcoholic beverage licenses or permits for the Hotel, to the extent not theretofore executed and delivered.

 

(c)            Such other and further documents, papers and instruments as may be reasonably required by the parties hereto or their respective counsel or the Title Company which are not inconsistent with this Agreement or the other Closing Documents.

 

To the extent the delivery of any of the items in Sections 7.2, 7.3 or 7.4 of this Agreement are conditions precedent to the obligation of a party pursuant to Sections 5.1 or 5.2 of this Agreement, and the condition relating to any such item is not satisfied as of Closing, but the party for whose benefit such unsatisfied condition is made elects, nonetheless, to proceed to Closing, the delivery of the item applicable to the unsatisfied condition shall not be required pursuant to the provisions of Section 7.2, 7.3 or 7.4 of this Agreement.

 

7.5.          Closing Costs. Except as is explicitly provided in this Agreement, each party hereto shall pay its own legal fees and expenses. All filing fees for the Deed and the transfer, recording, sales or other similar taxes and surtaxes due with respect to the transfer of title, as well as the cost for title insurance, endorsements and surveys, and any other costs specified on Schedule 1 attached hereto, shall all be paid in accordance with allocations set forth in Schedule 1. To the extent releases or corrective instruments are required to be delivered by Seller pursuant to the terms of this Agreement, Seller shall pay for the costs associated with the releases of any deeds of trust, mortgages and other Monetary Title Encumbrances encumbering the Property and for any costs associated with any corrective instruments. All other costs (except any costs incurred by either party for its own account) which are necessary to carry out the transactions contemplated hereunder shall be allocated between Purchaser and Seller in accordance with local custom in the jurisdiction in which the Hotel is located. The provisions of this Section 7.5 shall survive the Closing and any termination of this Agreement.

 

7.6.          Revenue and Expense Allocations. All revenues and expenses with respect to the Property, and applicable to the period of time before and after Closing, determined in accordance with sound accounting principles consistently applied, shall be allocated between Seller (or Operating Lessee) and Purchaser as provided herein. Pursuant to such allocation, Seller (and Operating Lessee) shall be entitled to all revenue and shall be responsible for all expenses for the period of time up to but not including the date of Closing, and Purchaser shall be entitled to all revenue and shall be responsible for all expenses for the period of time from, after and including the date of Closing. Seller shall receive a credit to the Purchase Price in an amount equal to the balance in the Capital Expenditure Reserve Account on the Closing Date less Two Million Five Hundred Eighty-Thousand and No/100 Dollars ($2,580,000). Except for the Capital Expenditure Reserve Account, the parties agree that all other prorations shall be accomplished in full (including prorations for real and personal property ad valorem taxes) by Purchaser providing Seller a credit on the Closing Statement in an amount equal to the portion of the “working capital” under the Management Agreement assumed by Purchaser and prorating any rental income or expenses under Occupancy Agreements (to the extent not included in Manager’s monthly remittance). In addition, if the Closing does not occur on the first day of a month, the monthly remittance from Manager for the month in which the Closing occurs shall be prorated based on the monthly remittance anticipated to be received by Seller under the most recent budget provided by Manager, with Seller receiving a credit based on the number of days in such month occurring prior to Closing, and with the Parties re-prorating such monthly remittance once actually received by Purchaser. The provisions of this Section 7.6 shall survive Closing.

 

 

7.7.          Safe Deposit Boxes. On the Closing Date, Seller shall cause Operating Lessee to cause Manager to make available to Purchaser at the Hotel all receipts and agreements in Manager’s possession relating to all safe deposit boxes in use at the Hotel, other than safes or lockboxes, if any, located inside individual guest rooms in the Hotel. From and after the Closing, Seller, Operating Lessee and Manager shall be relieved of any and all responsibility in connection with each said box, and Purchaser shall indemnify Seller, Operating Lessee, Manager and any Affiliate thereof and hold them harmless from and against any claim, liability, cost or expense (including reasonable attorneys’ fees) incurred by them with respect thereto. Seller shall indemnify and hold Purchaser harmless from any other liability, claim, cost or expense (including reasonable attorney’s fees) with respect to such safety deposit box arising prior to the Closing Date. The provisions of this Section 7.7 shall survive the Closing.

 

7.8.          Inventory of Baggage. The representatives of Seller, Operating Lessee and/or Manager, and of Purchaser shall prepare an inventory of baggage at the Hotel as of 12:00 noon on the Closing Date (which inventory of baggage shall be binding on all parties thereto) of (i) all luggage, valises and trunks checked or left in the care of the Hotel by guests then or formerly in the Hotel, (ii) parcels, laundry, valet packages and other property of guests checked or left in the care of the Hotel by guests then or formerly in the Hotel (excluding, however, property in Hotel safe deposit boxes), (iii) all luggage or other property of guests retained by Seller as security for any unpaid accounts receivable, and (iv) all items contained in the Hotel lost and found. Purchaser shall be responsible from and after the Closing Date for all baggage and other items listed in such inventory of baggage, and Purchaser shall indemnify and hold Seller, Operating Lessee, Manager and any Affiliate thereof harmless from and against any claim, liability, cost or expense (including reasonable attorneys’ fees) incurred by them with respect thereto. Seller hereby agrees to hold Purchaser harmless from any other liability or claims with respect to such inventory of baggage arising prior to the Closing Date. The provisions of this Section 7.8 shall survive the Closing.

 

7.9.          Acquisition and Payment for Inventory. Seller agrees to sell to Purchaser and Purchaser agrees to purchase from Seller the Inventory. Purchaser shall pay for same at cost on the Closing Date. The parties hereto shall jointly take inventories of all Inventory as near as practical to the Closing Date, and all adjustments and payments due thereon shall be made at Closing.

 

7.10.        Assumption. At Closing, Purchaser shall assume all (i) obligations which Purchaser expressly assumes under this Agreement, (ii) Advance Bookings, (iii) liabilities for which Purchaser receives a credit to the Purchase Price on the closing statement or pursuant to any post-closing adjustments, and (iv) obligations under Permitted Title Exceptions which accrue to the period from and after the Closing Date, or which accrue to the period prior to the Closing Date and for which Purchaser receives a credit to the Purchase Price on the closing statement or pursuant to any post-closing adjustments. The provisions of this Section 7.10 shall survive the Closing.

 

 

7.11.        BERDO Filings. Purchaser and Seller acknowledge that Seller made a series of filings under the Building Emissions Reduction and Disclosure Ordinance in place with respect to the property that may have been submitted following the applicable deadlines (the “Previously Due BERDO Filings”). Seller shall be responsible for any fines levied by the applicable agencies or authorities with Previously Due BERDO Filings. The provisions of this Section 7.11 shall survive the Closing.

 

ARTICLE VIII.
GENERAL PROVISIONS

 

8.1.          Fire or Other Casualty. Seller agrees to give Purchaser prompt notice of any fire or other casualty to the Property occurring between the Effective Date and the Closing Date of which Seller has knowledge. If, prior to Closing, the Property is damaged by fire or other casualty which is fully insured (without regard to deductibles) and would cost not more than Five Hundred Thousand Dollars ($500,000) and require less than 180 days to repair, then neither party shall have the right to terminate its obligations under this Agreement to purchase or sell the Property by reason thereof and the Closing shall take place without abatement of the Purchase Price, but Seller shall assign to Purchaser at the Closing all of Seller’s interest in any insurance proceeds (except use and occupancy insurance, rent loss and business interruption insurance, and any similar insurance for the period preceding the Closing Date) that may be payable to Seller on account of any such fire or other casualty, to the extent such proceeds have not been previously expended or are otherwise required to reimburse Seller for actual expenditures of restoration, plus Seller shall credit the amount of any deductibles under any policies related to such proceeds to the Purchase Price. If any such damage due to fire or other casualty is insured and would cost in excess of Five Hundred Thousand Dollars ($500,000) or require more than 180 days to repair, then Purchaser may terminate its obligations under this Agreement to purchase the Property by written notice given to Seller within ten (10) days after Seller has given Purchaser the notice of damage or casualty referred to in this Section 8.1, or on the Closing Date, whichever is earlier, in which case the Deposit shall be promptly returned to Purchaser and the parties hereto shall be released of all further obligations hereunder with respect to the Property except those which expressly survive a termination of this Agreement. Should Purchaser elect to proceed to Closing notwithstanding the amount of the insured loss or the time required for repairs, the Closing shall take place without abatement of the Purchase Price and at Closing Seller shall assign to Purchaser the insurance proceeds and grant to Purchaser a credit against the Purchase Price equal to the amount of the applicable deductible. If, prior to Closing, any Property is damaged by fire or other casualty which is uninsured and would cost more than Five Hundred Thousand Dollars ($500,000) to repair, then Purchaser may terminate its obligations under this Agreement to purchase the Property by written notice given to the Seller within ten (10) days after Seller has given Purchaser the notice of damage or casualty or on the Closing Date, whichever is earlier, in which case the Deposit shall be promptly returned to Purchaser and the parties hereto shall be released of all further obligations hereunder, except those which expressly survive a termination of this Agreement. Notwithstanding the preceding sentence, if the estimated amount to repair such uninsured casualty is not more than Five Hundred Thousand Dollars ($500,000) but more than One Hundred Thousand Dollars ($100,000), Seller, at its option, may elect to provide Purchaser with a credit to the Purchase Price at Closing for the estimated amount to repair such casualty, in which event Purchaser shall proceed to Closing and the Purchase Price shall be reduced by the estimated amount to repair such casualty. If Purchaser does not elect to terminate its obligations under this Agreement with respect to an uninsured casualty as aforesaid, or if any uninsured fire or casualty would cost not more than One Hundred Thousand Dollars ($100,000) to repair, then the Closing shall take place as provided herein, and the Purchase Price shall be reduced by the estimated amount to repair such casualty, not to exceed One Hundred Thousand Dollars ($100,000).

 

 

8.2.          Condemnation. After the Effective Date, Seller agrees to give Purchaser prompt notice of any notice it receives of any taking or threat of taking by condemnation of any part of or rights appurtenant to the Real Property. If such taking will materially interfere with the operation or use of the Hotel which constitutes a part of such Real Property, the Purchaser may terminate its obligations under this Agreement to purchase the Property by written notice to Seller within ten (10) days after Seller has given Purchaser the notice of taking referred to in this Section 8.2, or on the Closing Date, whichever is earlier. For purposes of this Section 8.2, a taking will materially interfere with the operation or use of the Hotel if it leaves remaining a balance of the Real Property in a condition which may not reasonably be anticipated to be economically operated for the purposes and in the manner in which the Real Property was operated prior to such taking. If Purchaser exercises its option to terminate its obligations to purchase the Property pursuant to this Section 8.2, the Deposit shall be promptly returned to Purchaser and the parties hereto shall be released from all further obligations hereunder with respect to the Property, except those which expressly survive a termination of this Agreement. If Purchaser does not so elect to terminate its obligations to purchase the Property, then the Closing shall take place as provided herein, and Seller shall assign to Purchaser at the Closing all of Seller’s interest in any condemnation award or payments in lieu of condemnation which may be payable to Seller on account of any such condemnation or threat thereof and, at Closing, Seller shall credit to the amount of the Purchase Price payable by Purchaser the amount, if any, of condemnation proceeds or payments in lieu of condemnation received by Seller between the Effective Date and Closing less (i) any amounts reasonably expended by Seller or Operating Lessee or Manager in collecting such sums, (ii) any amounts reasonably used by Seller or Operating Lessee or Manager to repair the Property as a result of such condemnation, and (iii) any amounts which are reasonably allocated to lost earnings or other damages or losses (other than unrepaired property damages) reasonably allocated or attributed to the period of time prior to Closing. If, prior to the Closing, there shall occur a taking by condemnation of any part of or rights appurtenant to the Property that does not materially interfere with the operation or use of the Hotel which constitutes a part of the Property, Purchaser shall not have the right to terminate its obligations to purchase the Property under this Agreement by reason thereof and the Closing shall take place without abatement of the Purchase Price, but Seller shall assign to Purchaser at the Closing all of Seller’s interest in any condemnation award or payments in lieu of condemnation which may be payable to Seller on account of any such condemnation or threat thereof and, at Closing, Seller shall credit to the amount of the Purchase Price payable by Purchaser the amount, if any, of condemnation proceeds or payments in lieu of condemnation received by Seller between the Effective Date and Closing less (i) any amounts reasonably expended by Seller or Operating Lessee or Manager in collecting such sums, (ii) any amounts reasonably used by Seller or Operating Lessee or Manager to repair the Property as a result of such condemnation, and (iii) any amounts which are reasonably allocated to lost earnings or other damages or losses (other than unrepaired property damages) reasonably allocated or attributed to the period of time prior to Closing. Provided Purchaser has not exercised its right to terminate this Agreement pursuant to this Section 8.2, Seller shall notify Purchaser in advance regarding any proceeding or negotiation with respect to the condemnation and Purchaser shall have a reasonable right, at its own cost and expense, to appear and participate in any such proceeding or negotiation. For purposes of Sections 8.1 and 8.2 of this Agreement, estimates of costs and time required for restoration or repair shall be made by an architect or engineer, as appropriate, designated by Seller and reasonably acceptable to Purchaser.

 

 

8.3.          Broker. The parties acknowledge that Broker has been the procuring cause of this Agreement. It shall be the obligation of Seller to pay Broker its commission, when, as and if, and only if, the transaction contemplated hereby actually closes, in accordance with a separate agreement between the Broker and Seller. There is no other real estate broker involved in this transaction. Purchaser warrants and represents to Seller that Purchaser has not dealt with any other real estate broker in connection with this transaction, nor has Purchaser been introduced to the Property or to Seller by any other real estate broker, and Purchaser shall indemnify Seller and hold Seller harmless from and against any claims, suits, demands or liabilities of any kind or nature whatsoever arising on account of the claim of any other person, firm or corporation to a real estate brokerage commission or a finder’s fee as a result of having dealt with Purchaser, or as a result of having introduced Purchaser to Seller or to the Property. In like manner, Seller warrants and represents to Purchaser that Seller has not dealt with any other real estate broker in connection with this transaction, nor has Seller been introduced to Purchaser by any other real estate broker, and Seller shall indemnify Purchaser and save and hold Purchaser harmless from and against any claims, suits, demands or liabilities of any kind or nature whatsoever arising on account of the claim of any person, firm or corporation to a real estate brokerage commission or a finder’s fee as a result of having dealt with Seller in connection with this transaction. The provisions of this Section 8.3 shall survive the Closing and any termination of this Agreement.

 

8.4.          Bulk Sale. Seller and Purchaser acknowledge that they do not intend to comply with and have agreed to waive the provisions of any statutory bulk sale or similar requirements, if applicable, to the transaction to be effected by this Agreement.

 

8.5.          Confidentiality. Except as hereinafter provided, Purchaser and Seller and their Affiliates shall keep the terms, conditions and provisions of this Agreement and all documents or information disclosed to or made available to or discovered by each party in connection with this Agreement (including, without limitation, the Submission Matters) confidential and such information shall be used solely for the purpose of evaluating or effecting the transactions contemplated by this Agreement, and neither Purchaser nor Seller shall make any public announcements hereof unless and until the Closing occurs unless the other first reasonably approves of same in writing, nor shall either disclose unless and until the Closing occurs the terms, conditions and provisions of this Agreement or such other documents or information, except to persons who, in the reasonable business judgment of Seller or Purchaser, as applicable, “need to know” for the purpose of evaluating or effecting the transactions contemplated by this Agreement, and who are instructed to keep such information confidential, such as their respective officers, directors, employees, attorneys, accountants, engineers, surveyors, consultants, financiers, partners, investors, potential lessees and bankers and such other third parties whose assistance is required in connection with the consummation of this transaction (collectively, “Representatives”); provided, however, that information or documents shall not be subject to the provisions of this Section 8.5 if, not otherwise in violation of this Section 8.5, such information or documents, (i) were or become(s) generally available to the public, or (ii) were or become(s) available to Purchaser or its Affiliates on a non-confidential basis from a source other than Seller or its Affiliates or Manager. Upon full execution of this Agreement and if the Closing occurs, the parties may either make a joint press release, or each party may make an individual press release. Notwithstanding the foregoing, it is acknowledged that Seller is, or is an affiliate of, a REIT, and the REIT has and will seek to sell shares to the general public; consequently, Seller shall have the absolute and unbridled right to disclose any information regarding the transaction required by law or as determined to be necessary or appropriate by Seller or Seller’s attorneys to satisfy disclosure and reporting obligations of Seller or its Affiliates. Notwithstanding the foregoing, on or at any time following the expiration of the Study Period, either party may make a press release or file with the United States Securities Exchange Commission information regarding the Transaction. Seller and Purchaser and their Representatives are cautioned that United States securities laws restrict the purchase and sale of securities by anyone who possesses non-public information about the issue of such securities. Accordingly, neither Purchaser nor any of its Affiliates nor its Representatives may buy or sell any of the securities of the Seller or any of its Affiliates so long as any of them is in possession of any material non-public information about the Seller or any of its Affiliates, including information contained in or derived from confidential information. The terms of this Section 8.5 shall supersede any prior confidentiality agreements executed by Seller, Purchaser, or any of their respective Affiliates, parents, or subsidiaries, to the extent such confidentiality agreements relate or refer, directly or indirectly, to the transactions contemplated by this Agreement. The provisions of this Section 8.5 relating to press releases shall survive the Closing and all the provisions of this Section 8.5 shall survive a termination of this Agreement for a period of two (2) years after such termination; provided, however, that any liabilities or obligations of either Seller, Purchaser or any of their respective Affiliates, parents, or subsidiaries that may have accrued or arisen under any confidentiality agreements prior to the Effective Date shall survive such confidentiality agreements being superseded hereby.

 

 

If either Seller or Purchaser or any of their Affiliates or any of their Representatives is required by any subpoena, interrogatories, request for production, or other legal process or by any Applicable Laws to disclose any confidential information, Seller or Purchaser, as applicable, will give the other party prompt written notice of the requirement and will cooperate with the other party so that the other party, at its expense, may seek an appropriate protective order. In the absence of a protective order, the party required to disclose, including any Representatives, may disclose only such confidential information as may be necessary to avoid any penalty, sanction, or other material adverse consequence, and the party required to disclose will use reasonable efforts to secure confidential treatment of any confidential information so disclosed.

 

Seller and Purchaser stipulate that the breach of the provisions of this Section 7.5 by the other party or its respective Affiliates or Representatives may cause irreparable harm to the non- breaching party for which damages may not constitute an adequate remedy. Accordingly, the parties agree that any attempted, threatened, or actual breach of the provisions of this Section 7.5 by one party or its Affiliates or Representatives may be enjoined by an appropriate court order or judgment. The parties waive any requirement for the posting of a bond or other security as a condition to such court order or judgment. Injunctive relief will not be the sole remedy of the non- breaching party for a breach of the provisions of this Section 8.5, and all legal and equitable remedies will continue to be available to the non-breaching party. If the non-breaching party is the prevailing party in any litigation relating to the breach of the provisions of this Section 8.5 by the other party or its Affiliates or Representatives, the non-breaching party will be entitled to recover (in addition to any damages or other relief granted) its reasonable legal fees and other expenses in connection with such litigation.

 

 

Notwithstanding anything to the contrary set forth herein or in any other agreement to which the parties hereto are parties or by which they are bound, any and all obligations of confidentiality contained herein and therein (the “Confidentiality Obligations”), as they relate to the transactions and events contemplated by this Agreement (collectively, the “Transaction”), shall not apply to the “structure or tax aspects” (as that phrase is used in Section 1.6011-4T(b)(3) [or any successor provision] of the Treasury Regulations [the “Confidentiality Regulation”] promulgated under Section 6011 of the Internal Revenue Code of 1986, as amended) of the Transaction; provided, however, that the Confidentiality Obligations nevertheless shall apply at a given time to any and all items of information not required to be freely disclosable at such time in order for the Transaction not to be treated as “offered under conditions of confidentiality” within the meaning of the Confidentiality Regulation.

 

8.6.          Liquor Licenses. To the extent permitted by law, Seller or Operating Lessee shall transfer or cause to be transferred to Purchaser or its designee all alcoholic beverage licenses which are in their respective names and which are necessary to operate the restaurant, bars and lounges presently located within the Hotel (and, notwithstanding anything to the contrary herein or elsewhere, to the extent that applicable laws prohibit the transfer of any portion of Inventory connected with the same, then Purchaser or its designee shall still be required to purchase the Inventory, but the transfer of Inventory shall be appropriately limited or reduced as necessary to comply with such applicable laws without otherwise delaying Closing or reducing the Purchase Price, and such matters shall in no event constitute any breach or default by Seller or any failure of a condition hereunder). Seller (and Operating Lessee and their Affiliates) and Purchaser shall cooperate each with the other, and each shall execute or cause to be executed such transfer forms, license applications and other documents as may be necessary to effect such transfers and/or to permit Purchaser to obtain new alcoholic beverage licenses. If permitted under the laws of the jurisdiction in which the Hotel is located, such parties shall execute or cause to be executed and file all necessary transfer forms, applications and papers with the appropriate alcoholic beverage authorities prior to Closing, to the end that the transfer of the existing licenses (and/or such related Inventory) or Purchaser’s obtaining new licenses shall take effect, if possible, on the Closing Date, simultaneously with Closing. If not so permitted, then the parties agree each with the other that they will promptly execute or cause to be executed all transfer forms, applications and other documents required by the liquor authorities in order to effect such transfer or issuance of new licenses at the earliest date in time possible consistent with the laws of the State where the Property is located, in order that all existing alcoholic beverage licenses (and/or such related Inventory) may be transferred or new alcoholic beverage licenses issued to Purchaser or its designee at the earliest possible time. If upon Closing the existing liquor license has not been transferred to Purchaser or Purchaser’s nominee or, despite commercially reasonable good faith efforts by Purchaser, a new liquor license has not been issued to Purchaser or Purchaser’s nominee, then, subject to Applicable Laws, Seller shall (not to include by Seller the expenditure of any money or guaranty of any obligation) cause the holder of the existing liquor license (the “Existing Permittee”) to enter into an interim liquor agreement (an “Interim Liquor Agreement”) or any other such license agreements, management agreements and/or other interim agreements, with Purchaser or Purchaser’s designee as may be reasonably necessary for the continuation of the sale and consumption of alcoholic beverages at the Hotel after the Closing and before such time as an Affiliate or designee of Purchaser (the “New Permittee”) obtains permits (the “New Liquor Permits”) relating to the sale and on-premises consumption of liquor and other alcoholic beverages to replace the existing liquor license; provided, however, that (i) Purchaser shall indemnify, defend and hold Seller and Existing Permittee harmless from any liability, damages, costs, expenses or claims encountered in connection with such operations during said period of time, and Purchaser shall procure and pay for dram shop liability insurance (in amounts and with deductibles as previously maintained by Seller) naming Purchaser and Seller and Existing Permittee as insureds thereunder, and (ii) the obligation of Seller to cooperate and keep open the liquor facilities of the Hotel shall terminate one hundred eighty (180) days after the Closing Date, or earlier, if Purchaser obtains the New Liquor Permits at an earlier date. At such time after Closing as the New Liquor Permits are obtained, Existing Permittee or Seller, as applicable, will convey, at no additional costs, all alcoholic beverages to New Permittee by a conveyance document in form reasonably acceptable to Seller and Purchaser and in accordance with the requirements of the Applicable Laws. Seller and Purchaser shall use good faith efforts to agree on the form of the Interim Liquor Agreement during the Study Period. This Section 8.6 shall survive the Closing. To the extent permissible in accordance with the Management Agreement, the Seller shall require the Manager to take all steps reasonably necessary to renew the Liquor License for 2025.

 

 

8.7.          Management Agreement. Within five (5) business days after the Effective Date, Purchaser shall provide to Seller all of the information Seller needs of Purchaser which Seller is required to provide to Manager pursuant to the Management Agreement relating to the proposed sale of the Property, which Seller shall promptly submit to Manager. At Closing Purchaser shall, without liability or expense to Seller, assume the obligations of Seller and Operating Lessee, and any of their Affiliates, as applicable, under the Management Agreement, or any guarantee thereof. Purchaser agrees to indemnify, and hold Seller and Operating Lessee, and their Affiliates harmless from and against any and all claims, costs, penalties, damages, losses, liabilities and expenses (including reasonable attorney fees) that may at any time be incurred by Seller or Operating Lessee, or any of their Affiliates arising out of, by reason of, or in connection with any obligation of, or default by, Purchaser under the Management Agreement which occurs, accrues or arises on or after the Closing Date. Seller agrees to indemnify, and hold Purchaser and its Affiliates harmless from and against any and all claims, costs, penalties, damages, losses, liabilities and expenses (including reasonable attorneys’ fees) that may at any time be incurred by Purchaser or its Affiliates arising out of, by reason of, or in connection with any obligation of or default by Seller under the Management Agreement which occurs, accrues or arises prior to the Closing Date. The obligations of Purchaser and Seller contained in this Section 8.7 shall survive Closing.

 

 

ARTICLE IX.
DEFAULT; TERMINATION RIGHTS

 

9.1.          Default by Seller/Failure of Conditions Precedent. If any condition set forth herein for the benefit of Purchaser cannot or will not be satisfied prior to Closing (unless the failure to satisfy such condition is caused by the default of Purchaser or its Affiliates under this Agreement, or is otherwise within the reasonable control of Purchaser or its Affiliates), and, if curable, if Seller fails to cure any such matter or satisfy such condition within ten (10) business days after written notice thereof from Purchaser (or such other time period as may be explicitly provided for herein), (which ten (10) business day or other such time periods shall, if necessary, automatically extend the Closing Date to the expiration date of such ten (10) business day or other such time period), or upon the occurrence of any other event that would entitle Purchaser to terminate this Agreement and its obligations hereunder, unless otherwise provided for in this Agreement, Purchaser, as its sole and exclusive remedy shall elect either (a) to terminate this Agreement, in which event (i) the Deposit shall be promptly returned to Purchaser, (ii) in the event such failure is due to the willful and intentional default of Seller, Seller shall reimburse Purchaser the sum of up to $100,000.00 for its actual third-party diligence costs incurred, and Purchaser shall retain its right to enforce the indemnities and other provisions of this Agreement which expressly survive a termination of this Agreement, and (iii) all other rights and obligations of Seller and Purchaser hereunder (except those set forth herein which expressly survive a termination of this Agreement) shall terminate immediately; or (b) to waive such matter or condition and proceed to Closing with no reduction in the Purchase Price. Notwithstanding the preceding sentence, if, at the Closing, Seller fails to comply in any material respect with any of its obligations contained in Section 7.2 or 7.4 (the “Closing Obligations”), and if all conditions precedent to Seller’s obligations hereunder have been waived or satisfied, Purchaser shall have, in addition to Purchaser’s remedies contained in the preceding sentence, the option to waive all other actions, rights, or claims for damages for the failure to perform such Closing Obligations (other than costs and expenses incurred in enforcing this Agreement and its right to enforce the indemnities and other provisions of this Agreement which expressly survive a termination of this Agreement or Closing), and to bring an equitable action to enforce the Closing Obligations; provided, (i) Purchaser shall provide written notice of Purchaser’s intention to enforce the Closing Obligations by specific performance and Seller shall not have cured performance of the Closing Obligations within ten (10) business days following delivery of such notice, and (ii) Purchaser’s suit for specific performance shall be filed against Seller in a court having jurisdiction in the county and state in which the Property is located, on or before sixty (60) days following the Closing Date, failing which, Purchaser shall be barred from enforcing this Agreement by specific performance and shall be deemed to have elected to terminate this Agreement as provided herein. In the event Purchaser files a suit to enforce the Closing Obligations by specific performance, Purchaser shall accept whatever title Seller has to the Property subject to all liens, encumbrances or other matters (other than Monetary Title Encumbrances) affecting title to the Property (all of which shall be deemed Permitted Title Exceptions) with no reduction in the Purchase Price, and in no event shall Seller be obligated to cure or remove or bond against any title defects, liens, encumbrances or other matters affecting title (other than Monetary Title Encumbrances).

 

 

9.2.          Default by Purchaser/Failure of Conditions Precedent. If any condition set forth herein for the benefit of Seller (other than a default by Purchaser) cannot or will not be satisfied prior to Closing, and if Purchaser fails to satisfy that condition within ten (10) business days after notice thereof from Seller, unless otherwise provided for in this Agreement, Seller, as its sole and exclusive remedy, shall elect either (a) to terminate this Agreement in which event the Deposit shall be promptly returned to Purchaser and the parties hereto shall be released from all further obligations hereunder except those which expressly survive a termination of this Agreement, or (b) to waive its right to terminate, and instead, to proceed to Closing. If Purchaser defaults in performing any of its obligations under this Agreement, and Purchaser fails to cure any such default within the earlier of (i) the Closing, or (ii) ten (10) business days after notice thereof from Seller, then Seller’s sole remedy for such default shall be to terminate this Agreement and receive the Deposit and to retain its right to enforce the indemnities and other provisions of this Agreement which expressly survive a termination of this Agreement; provided, however, that Purchaser shall not be entitled to any notice and right to cure in the event it wrongfully fails to proceed to Closing as required by this Agreement. Seller and Purchaser agree that, in the event of such a default, the damages that Seller would sustain as a result thereof would be difficult if not impossible to ascertain. Therefore, Seller and Purchaser agree that, Seller shall receive the Deposit and retain the right to enforce the indemnities and other provisions of this Agreement which expressly survive a termination of this Agreement, as full and complete liquidated damages and as Seller’s sole remedy. The provisions of this Section 9.2 shall survive the termination of this Agreement.

 

 

 

9.3.          Costs and Attorneys’ Fees. In the event of any litigation or dispute between the parties arising out of or in any way connected with this Agreement, resulting in any litigation, then the prevailing party in such litigation shall be entitled to recover its costs of prosecuting and/or defending same, including, without limitation, reasonable attorneys’ fees at trial and all appellate levels. The provisions of this Section 9.3 shall survive the Closing or any termination of this Agreement.

 

9.4.          Limitation of Liability. Except in connection with a breach of Section 8.5 for which the parties may be liable for consequential damages, the liability of each party hereto resulting from the breach or default by such party shall be limited to direct actual damages incurred by the injured party and each party hereto hereby waives its rights to recover from the other party consequential, punitive, exemplary, and speculative damages. The provisions of this Section 9.4 shall survive the termination of this Agreement. The provisions of this Section 9.4 shall not limit or affect the rights of Seller to receive the Deposit as liquidated damages as and when provided in this Agreement.

 

ARTICLE X.
MISCELLANEOUS PROVISIONS

 

10.1.        Completeness; Modification. This Agreement constitutes the entire agreement between the parties hereto with respect to the transactions contemplated hereby and supersedes all prior discussions, understandings, agreements and negotiations between the parties hereto. This Agreement may be modified only by a written instrument duly executed by the parties hereto.

 

10.2.        Assignments. Other than to an Affiliate of Purchaser, Purchaser may not assign its rights hereunder without the prior consent of Seller; however, any such assignment (including one to Purchaser’s Affiliate) shall not relieve Purchaser of its obligations under this Agreement. To be effective hereunder, any assignment by Purchaser hereunder, even one to an Affiliate of Purchaser, must be accompanied by a fully executed and effective assignment and assumption agreement provided to Seller no later than ten (10) days prior to the Closing Date. Notwithstanding any assignment of this Agreement, Purchaser shall not be released from its obligations hereunder, and the assignment and assumption agreement in connection therewith shall include a statement that all representations and warranties of Purchaser in Article IV of this Agreement are true of such assignee taking assignment of this Agreement as of the date of such assignment and will be true as of the Closing.

 

10.3.        Successors and Assigns. This Agreement shall bind and inure to the benefit of the parties hereto and their permitted respective successors and assigns.

 

 

10.4.        Days. If any action is required to be performed, or if any notice, consent or other communication is given, on a day that is a Saturday or Sunday or a legal holiday in the jurisdiction in which the action is required to be performed or in which is located the intended recipient of such notice, consent or other communication, such performance shall be deemed to be required, and such notice, consent or other communication shall be deemed to be given, on the first business day following such Saturday, Sunday or legal holiday. Unless otherwise specified herein, all references herein to a “day” or “days” shall refer to calendar days and not business days.

 

10.5.        Governing Law. This Agreement and all documents referred to herein shall be governed by and construed and interpreted in accordance with the laws of the Commonwealth of Massachusetts without regard to its principles of conflicts of law. This paragraph shall survive the closing or consummation of the conveyance contemplated by this Agreement, and any termination of this Agreement.

 

10.6.        Counterparts. To facilitate execution, this Agreement may be executed in as many counterparts as may be required. It shall not be necessary that the signature on behalf of both parties hereto appear on each counterpart hereof. All counterparts hereof shall collectively constitute a single agreement. Telecopied signatures shall have the same valid and binding effect as original signatures.

 

10.7.        Severability. If any term, covenant or condition of this Agreement, or the application thereof to any person or circumstance, shall to any extent be invalid or unenforceable, the remainder of this Agreement, or the application of such term, covenant or condition to other persons or circumstances, shall not be affected thereby, and each term, covenant or condition of this Agreement shall be valid and enforceable to the fullest extent permitted by law.

 

10.8.        Costs. Regardless of whether Closing occurs hereunder, and except as otherwise expressly provided herein, each party hereto shall be responsible for its own costs in connection with this Agreement and the transactions contemplated hereby, including, without limitation, fees of attorneys, engineers and accountants.

 

10.9.        Notices. All notices, requests, demands and other communications hereunder shall be in writing and shall be delivered (i) by hand, (ii) if sent on a business day during the business hours of 9:00 a.m. until 6:00 p.m. Dallas, Texas time, via email with a copy to follow by reputable overnight courier for next-day delivery, (iii) sent prepaid for next-day delivery by Federal Express (or a comparable overnight delivery service) or (iv) sent by the United States mail, certified, postage prepaid, return receipt requested, at the addresses and with such copies as designated below. Any notice, request, demand or other communication delivered or sent in the manner aforesaid may be given by the party required to give such notice, etc., or its attorney, and shall be deemed given or made (as the case may be) when actually delivered to or refused by the intended recipient.

 

	If to Seller:	HH FP Portfolio LLC
		14185 Dallas Parkway, Suite 1200
		Dallas, Texas 75254
		Attn: Christopher Peckham
		Email: cpeckham@ashfordinc.com

 

 

and:

Jackson Walker LLP 2323 Ross Avenue, Suite 600 Dallas, Texas 75201 Attn: Cynthia B. Nelson Email: cbnelson@jw.com

 

	If to Purchaser:	275 Tremont Owner, LLC
		301 n Canon Drive, Suite 328
		Beverly Hills, CA 90210
		Attention:	Joshua Bird, Esquire and
			Leonard Ross
		Email:	jbird@hawkinsway.com
			Lenny.Ross@hawkinsway.com

 

	If to Escrow Agent:	Kensington Vanguard National Title
		5949 Sherry Lane, Suite 111
		Dallas, Texas 75225
		Attn: Trey Lentz
		Phone: (214) 273-2514
		Email: TLentz@kvnational.com

 

or to such other address as the intended recipient may have specified in a notice to the other party. Any party hereto may change its address or designate different or other persons or entities to receive copies by notifying the other party and Escrow Agent in a manner described in this Section.

 

10.10.      Escrow Agent. Escrow Agent referred to in the definition thereof contained in Section 1.1 hereof has agreed to act as such for the convenience of the parties without fee or other charges for such services as Escrow Agent. Escrow Agent shall not be liable: (a) to any of the parties for any act or omission to act except for its own willful misconduct; (b) for any legal effect, insufficiency, or undesirability of any instrument deposited with or delivered by Escrow Agent or exchanged by the parties hereunder, whether or not Escrow Agent prepared such instrument; (c) for any loss or impairment of funds that have been deposited in escrow while those funds are in the course of collection, or while those funds are on deposit in a financial institution, if such loss or impairment results from the failure, insolvency or suspension of a financial institution; (d) for the expiration of any time limit or other consequence of delay, unless a properly executed written instruction, accepted by Escrow Agent, has instructed Escrow Agent to comply with said time limit; (e) for the default, error, action or omission of either party to the escrow. Escrow Agent, in its capacity as escrow agent, shall be entitled to rely on any document or paper received by it, believed by such Escrow Agent, in good faith, to be bona fide and genuine. In the event of any dispute as to the disposition of the Deposit or any other monies held in escrow, or of any documents held in escrow, Escrow Agent may continue to hold the Deposit pursuant to the terms hereof, or if Escrow Agent so elects, interplead the matter at the joint and several cost of Purchaser and Seller by filing an interpleader action in a court of general jurisdiction in the county or circuit where the Real Property is located (to the jurisdiction of which both parties do hereby consent), and pay into the registry of the court the Deposit, or deposit any such documents with respect to which there is a dispute in the Registry of such court, whereupon such Escrow Agent shall be relieved and released from any further liability as Escrow Agent hereunder. Escrow Agent shall not be liable for Escrow Agent’s compliance with any legal process, subpoena, writ, order, judgment and decree of any court, whether issued with or without jurisdiction, and whether or not subsequently vacated, modified, set aside or reversed. Purchaser and Seller agree to jointly and severally indemnify, defend and hold harmless the Escrow Agent from and against any loss, cost, damage, expense and attorney’s fee (collectively called “Expenses”) in connection with or in any way arising out of the escrow arrangement, other than expenses resulting from the Escrow Agent’s own gross negligence or willful misconduct.

 

 

10.11.      Incorporation by Reference. All of the exhibits and schedules attached hereto are by this reference incorporated herein and made a part hereof.

 

10.12.      Survival. Except to the extent (i) that Seller gives Purchaser written notice prior to Closing of the untruth or inaccuracy of any representation or warranty contained herein, (ii) Purchaser otherwise obtains actual knowledge prior to Closing of the untruth or inaccuracy of any representation or warranty contained herein, or (iii) of a Non-Breach Inaccuracy, and Purchaser nevertheless elects to close this transaction, the representations and warranties made herein shall survive the Closing through but not beyond the Limitation Date (as hereinafter defined) after which such representations and warranties shall merge into the Closing Documents, provided that the aforesaid limitation shall not apply to the prosecution of any claim made and action commenced in accordance with clauses (a) and (b) below on or prior to the Limitation Date. Subject to the foregoing limitations, the representations, warranties, indemnities and agreements of Seller set forth in this Agreement and the Closing Documents shall survive for six (6) months after the Closing (the “Limitation Date”). Seller and Purchaser hereby agree that, notwithstanding any provision of this Agreement or any provision of law to the contrary, any action which may be brought for the untruth or inaccuracy of any representation or warranty by Seller or any indemnity or other obligation of Seller in this Agreement or in any of the Closing Documents (a “Claim”) shall be forever barred unless, no later than the Limitation Date Purchaser (a) delivers to Seller a written notice of the Claim setting forth the basis for such Claim, and (b) files a complaint or petition against Seller alleging such Claim in an appropriate Federal district or state court and serves the same upon Seller, in which case the Limitation Date, as to such breach, shall be extended pending resolution of such complaint or petition. Notwithstanding anything to the contrary contained in this Agreement, any Claim that Purchaser may have at any time against Seller will not be valid or effective, and Seller shall have no liability with respect thereto, unless all valid Claims exceed Twenty-five Thousand Dollars ($25,000) in the aggregate. Seller’s liability for damages resulting from valid Claims shall in no event exceed three percent (3%) of the Purchase Price in the aggregate.

 

10.13.      Further Assurances. Seller and Purchaser each covenant and agree to sign, execute and deliver, or cause to be signed, executed and delivered, and to do or make, or cause to be done or made, upon the written request of the other party, any and all agreements, instruments, papers, deeds, acts or things, supplemental, confirmatory or otherwise, as may be reasonably required by either party hereto for the purpose of or in connection with consummating the transactions described herein provided that compliance with the provision of this Section 10.13 shall not increase the liability of the complying party.

 

 

10.14.      No Partnership. This Agreement does not and shall not be construed to create a partnership, joint venture or any other relationship between the parties hereto except the relationship of seller and purchaser specifically established hereby.

 

10.15.      Time of Essence. Time is of the essence with respect to every provision hereof.

 

10.16.      Signatory Exculpation. The signatory(ies) for Purchaser and Seller is/are executing this Agreement in his/their capacity as representative of such party and not individually and, therefore, shall have no personal or individual liability of any kind in connection with this Agreement and the transactions contemplated by it.

 

10.17.      Rules of Construction. The following rules shall apply to the construction and interpretation of this Agreement, unless otherwise indicated by the context:

 

10.17.1           Singular words shall connote the plural number as well as the singular and vice versa, and the masculine shall include the feminine and the neuter.

 

10.17.2           All references herein to particular articles, sections, subsections, clauses or exhibits are references to articles, sections, subsections, clauses or exhibits of this Agreement.

 

10.17.3           The table of contents and headings contained herein are solely for convenience of reference and shall not constitute a part of this Agreement nor shall they affect its meaning, construction or effect.

 

10.17.4           Each party hereto and its counsel have reviewed and revised (or requested revisions of) this Agreement and have participated in the preparation of this Agreement, and therefore any usual rules of construction requiring that ambiguities are to be resolved against a particular party shall not be applicable in the construction and interpretation of this Agreement or any exhibits hereto.

 

10.18.      No Recording. Neither this Agreement nor any memorandum hereof, or any other instrument intended to give notice hereof (or which actually gives notice hereof) shall be recorded.

 

10.19.      Facsimile or Electronic Signatures. The execution of this Agreement and all notices given hereunder and all amendments hereto, may be effected by facsimile or electronic signatures, all of which shall be treated as originals; provided, however, that the party receiving a document with a facsimile or electronic signature may, by notice to the other, require the prompt delivery of an original signature to evidence and confirm the delivery of the facsimile or electronic signature.

 

10.20.      Effective Date. This Agreement shall be terminable by either Seller or Purchaser prior to the Effective Date. The “Effective Date” shall mean the first date on which the following shall have occurred: (i) Purchaser and Seller shall have executed this Agreement, and (ii) Escrow Agent shall have acknowledged receipt of this Agreement fully executed by Seller and Purchaser.

 

10.21.      Survival. The provisions of this Article X shall survive Closing. Unless otherwise expressly provided in this Agreement and except as expressly provided in Section 10.12 hereof, all of the representations and warranties and covenants of the parties contained in this Agreement shall not survive the Closing and shall merge into the Closing Documents. Upon Closing, any breach or default of any such representations or warranties or covenants that do not expressly survive the Closing, whether known or unknown, shall be deemed waived by the Closing.

 

 

IN WITNESS WHEREOF, Seller and Purchaser have caused this Agreement to be executed in their names by their respective duly authorized representatives.

 

	SELLER:
	HH FP PORTFOLIO LLC,
	a Delaware limited liability company
	By:	/s/ Stephen Zsigray
	Name:	Stephen Zsigray
	Title:	President
	Date:	November 26, 2024

 

	PURCHASER:
	275 TREMONT OWNER, LLC
	a Delaware limited liability company
	By:	/s/ Joshua Bird
	Name:	Joshua Bird
	Title:	Authorized Signatory
	Date:	November 27, 2024

 

	ESCROW AGENT:
	Kensington Vanguard National Title (Escrow Agent hereby acknowledges receipt of a fully executed Agreement from both Seller and Purchaser for purposes of Section 10.20 hereof.)
	By:	/s/ Patrick Jackson
	Name:	Patrick Jackson
	Title:	Vice President
	Date:	November 27, 2024

 

Signature Page

 

 

Exhibits:

 

A – Land

B – Intentionally Omitted

C – Form of Deed

D – Form of Bill of Sale

E – Form of Assignment and Assumption Agreement

F – Form of Assignment of Occupancy Agreements

G – Form of FIRPTA Certificate

 

Schedules;

 

1 – Closing Cost Allocations

 

RECEIPT OF ESCROW AGENT

 

Kensington Vanguard National Title, as Escrow Agent, acknowledges receipt of the sum of $1,000,000 by wire transfer from Purchaser as described in Section 2.3 of the Agreement, said wire transfer to be held pursuant to the terms and provisions of the Agreement.

 

DATED this 3rd day of December 2024.

 

	KENSINGTON VANGUARD NATIONAL TITLE
	By:	/s/ Pat Jackson
	Name:	Pat Jackson
	Title:	Vice President

 

Receipt of Escrow Agent

 

 

EXHIBIT A

 

LAND

 

 

EXHIBIT B

 

INTENTIONALLY OMITTED

 

 

EXHIBIT C

 

FORM OF DEED

 

 

EXHIBIT D

 

BILL OF SALE

 

 

EXHIBIT E

 

ASSIGNMENT AND ASSUMPTION AGREEMENT

 

 

EXHIBIT F

 

FORM OF ASSIGNMENT OF OCCUPANCY AGREEMENTS

 

 

EXHIBIT G

 

FORM OF FIRPTA CERTIFICATE

 

 

SCHEDULE 1

 

CLOSING COST ALLOCATIONS

 

 

SCHEDULE 2

 

LEASED PROPERTY AGREEMENTS

 

 

SCHEDULE 3

 

OCCUPANCY AGREEMENTS

 

 

SCHEDULE 4

 

OPERATING AGREEMENTS

 

 

 

Exhibit 23.4

 

Consent of Independent Registered Public Accounting Firm

 

We hereby consent to the incorporation by reference in the Prospectus constituting a part of this Registration Statement of our reports dated March 14, 2024, relating to the consolidated financial statements and schedule and the effectiveness of internal control over financial reporting of Ashford Hospitality Trust, Inc. (the Company) appearing in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

 

We also consent to the reference to us under the caption “Experts” in the Prospectus.

 

/s/ BDO USA, P.C.

 

Dallas, Texas

 

December 13, 2024

 

 

 

Exhibit 107.1

 

Calculation of Filing Fee Tables

 

Form S-11

(Form Type)

 

ASHFORD HOSPITALITY TRUST, INC.

(Exact name of registrant as specified in its charter)

 

Table 1: Newly Registered and Carry Forward Securities

 

	Security Type	Security Class Title	Fee Calculation or Carry Forward Rule	Amount Registered(2)	Proposed Maximum Offering Price Per Unit	Maximum Aggregate Offering Price(1)	Fee Rate	Amount of Registration Fee
Newly Registered Securities
Fees to Be Paid	Equity	Series L Redeemable Preferred Stock and Series M Redeemable Preferred Stock	457(o)	16,000,000	$25.00	$400,000,000	0.00015310	$61,240
		Common Stock Issuable upon Redemption of Series L Redeemable Preferred Stock and Series M Redeemable Preferred Stock (3)(4)	457(i)	—	—	—	—	—
		Common Stock Issuable upon Redemption of previously issued and outstanding Series J Redeemable Preferred Stock and Series K Redeemable Preferred Stock (5)(6)	457(i)	—	—	—	—	—
Fees Previously Paid	—	—	—	—	—	—	—	—
Carry Forward Securities
Carry Forward Securities	—	—	—	—	—	—	—	—
	Total Offering Amounts					$400,000,000		$61,240
	Total Fees Previously Paid							—
	Total Fee Offsets							—
	Net Fee Due							$61,240

 

(1)

The registrant reserves the right to reallocate the shares of Series L Redeemable Preferred Stock and Series M Redeemable Preferred Stock being offered between the primary offering and the dividend reinvestment plan. Estimated solely for purposes of calculating the registration fee in accordance with Rule 457(o) under the Securities Act of 1933, as amended (the “Securities Act”).

 

 

(2)

The securities registered hereunder include 12,000,000 and 4,000,000 shares of Series L Redeemable Preferred Stock or Series M Redeemable Preferred Stock to be offered under the registrant’s primary offering and dividend reinvestment plan, respectively.

 

(3)

The securities registered hereunder also include shares of common stock that may be issuable upon the redemption of the Series L Redeemable Preferred Stock or Series M Redeemable Preferred Stock offered hereby. The shares of common stock issuable upon redemption of the Series L Redeemable Preferred Stock or Series M Redeemable Preferred Stock will be issued for no additional consideration, and therefore no registration fee is required pursuant to Rule 457(i) of the Securities Act.

 

(4)

Pursuant to Rule 416 of the Securities Act, such number of shares of common stock registered hereby also shall include an indeterminate number of shares of common stock that may be issued in connection with stock splits, stock dividends, recapitalizations or similar events or adjustments in the number of shares issuable as provided in the articles supplementary setting forth the rights, preferences and limitations of the Series L Redeemable Preferred Stock and Series M Redeemable Preferred Stock.

 

(5)

The securities registered hereunder also include shares of common stock that may be issuable upon the redemption of the issued and outstanding Series J Redeemable Preferred Stock and the Series K Redeemable Preferred Stock issued pursuant to Registration statement No. 333- 263323. The shares of common stock issuable upon redemption of the issued and outstanding Series J Redeemable Preferred Stock and Series K Redeemable Preferred Stock will be issued for no additional consideration, and therefore no registration fee is required pursuant to Rule 457(i) of the Securities Act.

 

(6)

Pursuant to Rule 416 of the Securities Act, such number of shares of common stock registered hereby also shall include an indeterminate number of shares of common stock that may be issued in connection with stock splits, stock dividends, recapitalizations or similar events or adjustments in the number of shares issuable as provided in the articles supplementary setting forth the rights, preferences and limitations of the Series J Redeemable Preferred Stock and Series K Redeemable Preferred Stock.

 

 

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