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”) consisting of 8,400,000 shares of the Company’s Series L Redeemable Preferred Stock, par value $0.01 per share (“Series L Preferred Stock”) and 3,600,000 shares of 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 2,800,000 shares of Series L Preferred Stock and 1,200,000 shares of 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. 333-283802) 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 consisting of 8,400,000 shares of the Company’s Series L Redeemable Preferred Stock, par value $0.01 per share (“Series L Preferred Stock”) and 3,600,000 shares of 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 2,800,000 shares of Series L Preferred Stock and 1,200,000 shares of 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. 333-283802), 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. Thus, for orders settled using DTC Settlement, Participating Broker-Dealer acknowledges that once an order has become effective upon confirmation by the Company, Participating Broker-Dealer may not modify the order after 5:00 PM EST on the date the order is confirmed by the Company, the order will be considered a firm order and Participating Broker-Dealer is expected to settle the trade as follows: (i) if Participating Broker-Dealer has received payment in full from an investor for the investor’s purchase of Shares on or before 5:00 PM EST on the settlement date, such sale of Shares for which the Company has received the consideration applicable thereto as described herein, in the Dealer Manager Agreement, and in the Prospectus, and for which no written notice of failure has been given, will be final, not subject to rescission or reversal; (ii) if Participating Broker-Dealer has not received payment in full from the applicable investor on or before the second business day after the settlement date applicable to purchased Shares, such investor’s order, upon written notice to the Dealer Manager, shall be cancelled, treated as failed trade and any exchange of funds and securities as between the Company and Participating Broker-Dealer in anticipation of settling the purchase in the ordinary course shall be reversed and rescinded; and (iii) after 5:00 PM EST on the second business date after the settlement date, a sale of Shares for which the Company has received the consideration applicable thereto as described herein, in the Dealer Manager Agreement and in the Prospectus, and for which no written notice of failure has been given, will be final, not subject to rescission or reversal, and Participating Broker-Dealer’s receipt of payment from applicable investors shall be at the sole risk of 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 of Shares will be made only after a sale of a Share is deemed by the Company to be completed in accordance with Section 3 of the Dealer Manager Agreement. 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 1.3

 

FORM OF SELECTED INVESTMENT ADVISOR AGREEMENT
WHEN THERE IS A BROKER OF RECORD

 

ASHFORD HOSPITALITY TRUST, INC.

 

THIS SELECTED INVESTMENT ADVISOR AGREEMENT is made and entered into as of the date indicated on Exhibit A attached hereto (this “Agreement”), among Ashford Securities LLC, a Delaware limited liability company (the “Dealer Manager”), Ashford Hospitality Trust, Inc., a Maryland corporation (the “Company”), and the selected investment advisor identified in Exhibit A hereto (the “SIA”).

 

WHEREAS, the Dealer Manager is acting as the dealer manager for a public offering (the “Primary Offering”) of up to 12,000,000 shares, consisting of 8,400,000 shares of the Company’s Series L Redeemable Preferred Stock, par value $0.01 per share (“Series L Preferred Stock”), and 3,600,000 shares of Series M Redeemable Preferred Stock, par value $0.01 per share (“Series M Preferred Stock” and together with the Series L Redeemable Preferred Stock, the “Preferred Stock”). Each share of Preferred Stock will be sold at a public offering price of $25 per share. The offering also covers up to 2,800,000 shares of Series L Preferred Stock and 1,200,000 shares of 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. The Offering will commence on the initial Effective Date (as defined below). The Preferred Stock is being offered to the general public in the Offering pursuant to a Prospectus (as defined below) filed with the Securities and Exchange Commission (the “SEC”); however, only the Series M Preferred Stock may be offered (i.e., recommended) by the SIA to its clients who have engaged the SIA as an investment advisor and who have agreed to pay the SIA a fee for investment advisory services, consistent with the restrictions imposed by the Investment Advisers Act of 1940, as amended (the “Investment Advisers Act”);

 

WHEREAS, the SIA (i) is an entity, as designated in Exhibit A hereto, organized and presently in good standing in the state designated in Exhibit A hereto, (ii) is registered as an investment advisor under the Investment Advisers Act or if not registered under the Investment Advisers Act, then it is registered under the state securities acts in the states where it does business as an investment advisor, and (iii) has made such regulatory filings and obtained such regulatory approvals in each state in which the SIA is required to make such filings or obtain such approvals;

 

WHEREAS, the Company has a currently effective registration statement on Form S-11 (File No. 333-283802), as amended and including a final prospectus and the exhibits hereto, for the registration of the Preferred Stock under the Securities Act of 1933, as amended (the “Securities Act”) (such registration statement, including any post-effective amendments to such registration statement and any related registration statement filed under Rule 415 of the Securities Act being herein referred to as the “Registration Statement”, and any final prospectus or supplement thereto relating to the Registration Statement being herein referred to as the “Prospectus”);

 

WHEREAS, the offer and sale of the Series M Preferred Stock shall be made pursuant to the terms and conditions of (i) the Registration Statement and the Prospectus, and (ii) all applicable federal securities laws and the applicable securities laws of all states in which the Preferred Stock are offered and sold;

 

WHEREAS, the Series M Preferred Stock is generally available for purchase only (1) through fee-based programs that provide access to the Series M Preferred Stock; (2) through participating broker-dealers that have alternative fee arrangements with their clients to provide access to the Series M Preferred Stock; (3) through certain registered investment advisors; (4) through bank trust departments or any other organization or person authorized to act in a fiduciary capacity for its clients or customers or (5) other categories of investors that the Company identifies in an amendment or supplement to the Prospectus. Upon request by the Dealer Manager, the SIA shall provide the Dealer Manager with a copy of its standard form investment advisory agreement, including details regarding custodial arrangements with any broker-dealers who will carry the accounts of the SIA’s clients (the “Broker of Record”).

 

 

WHEREAS, the Company will sell Series M Preferred Stock 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”); and

 

WHEREAS, the SIA is willing and desires to provide its clients with information concerning the Series M Preferred Stock and the procedures for subscribing for the Series M Preferred Stock upon the terms and subject to the conditions contained herein;

 

NOW, THEREFORE, in consideration of the premises and upon the terms and subject to the conditions hereof, it is agreed among the Dealer Manager, the SIA and the Company as follows.

 

1.

Purchase of Series M Preferred Stock.

 

(a)           The SIA hereby covenants, warrants and agrees that, in regard to any purchase of the Series M Preferred Stock by its clients, it will comply with all the terms and conditions of the Registration Statement and the Prospectus, all applicable state and federal laws, including the Securities Act, the Investment Advisers Act and any and all regulations and rules pertaining thereto. Neither the SIA nor any other person shall have any authority to give any information or make any representations or warranties in connection with the Series M Preferred Stock other than the information contained in the Registration Statement and Prospectus.

 

(b)           Clients of the SIA may purchase the Series M Preferred Stock according to all the terms and conditions as are contained in the Registration Statement and the Prospectus, including that the client buys the minimum number of Series M Preferred Stock required by the Prospectus. The SIA covenants, warrants, and agrees that it shall comply with all requirements set forth in the Registration Statement and the Prospectus and shall use and distribute, in connection with the purchase of Series M Preferred Stock by its clients, only the Prospectus and such sales literature supplied to the SIA by the Dealer Manager with the Prospectus. Each of the Company and the Dealer Manager reserves the right to establish such additional procedures as it may deem necessary to ensure compliance with the requirements of the Registration Statement, the Prospectus and applicable laws, and the SIA shall comply with all such additional procedures to the extent that it has received written notice thereof.

 

(c)           If using DRS Settlement:

 

(i)            Clients of the SIA shall complete the subscription agreement which accompanies the Prospectus in connection with the purchase of the Series M Preferred Stock. The SIA will process the subscription agreement and payment according to the SIA’s custodian’s applicable procedures. If any subscription agreement is rejected, the subscription agreement and funds for the purchase of Series M Preferred Stock will be returned to the rejected subscriber within ten (10) 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 Texas are authorized or obligated by law or executive order to close; and

 

(ii)           Payment for the purchase of Series M Preferred Stock shall be made by wire transfer or checks payable to “UMB Bank, N.A., Escrow Agent for Ashford Hospitality Trust, Inc.” All funds for payment of Series M Preferred Stock will be deposited into an escrow account pursuant to the Escrow Agreement (as defined in the Dealer Manager Agreement) within one business day after receipt of such funds and the subscription agreement related thereto.

 

 

(d)           If using DTC Settlement, the soliciting dealer that effects the sale will coordinate for payment in connection with their electronically placed orders.

 

(e)           The Series M Preferred Stock may be purchased by clients of the SIA only where the Series M Preferred Stock may be legally offered and sold and only by such persons in such states in which the SIA has made such regulatory filings and obtained such regulatory approvals applicable to it.

 

(f)            The SIA shall have no obligation under this Agreement to advise its clients to purchase any of the Series M Preferred Stock.

 

(g)           For Series M Preferred Stock sold using DRS Settlement, the SIA shall retain in its files all subscription agreements for a period of time not less than required in order to comply with applicable federal and other regulatory requirements.

 

(h)           The SIA hereby confirms that it is familiar with Securities Act Release No. 4968 and Rule 15c2-8 under the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) relating to the distribution of preliminary and final prospectuses, and covenants, warrants, and agrees that it has complied and will comply therewith.

 

(i)            For Series M Preferred Stock sold using DRS Settlement, a sale of Series M Preferred Stock shall be deemed to be completed only after the Company receives a properly completed subscription agreement for Series M Preferred Stock from the SIA (together with payment of the full purchase price of each purchased Series M Preferred Stock) on behalf of the buyer who satisfies each of the terms and conditions of the Registration Statement and Prospectus, and only after such subscription agreement has been accepted in writing by the Company.

 

(j)            The SIA hereby covenants, warrants, and agrees that clients of the SIA will not be charged any selling commissions in connection with their purchases of Series M Preferred Stock and will purchase the Series M Preferred Stock at a per Series M Preferred Stock purchase price of $25.00 or as otherwise described in the prospectus.

 

(k)           It is understood and agreed that in connection with any completed sale of Series M Preferred Stock in the Primary Offering to clients of the SIA, the Company shall pay the Dealer Manager a fee as set forth in the Prospectus.

 

(l)            The SIA will make the determinations required to be made by it pursuant to subparagraphs (g) above and (m) below based on information it has obtained from each prospective client, including, at a minimum, but not limited to, the prospective client’s age, investment objectives, investment experience, investment time horizon, income, net worth, financial situation and needs, tax status, other investments, liquidity needs, risk tolerance of the prospective client, as well as any other pertinent factors deemed by the SIA to be relevant.

 

 

(m)          In addition to any other obligations of the SIA to determine suitability imposed by state or federal law, the SIA covenants, warrants, and agrees that it will comply fully with the following provisions:

 

(i)            The SIA shall have reasonable grounds to believe, based upon information provided by the client concerning such client’s age, investment objectives, other investments, financial situation and needs, and upon any other information known by the SIA after due inquiry, that (A) each client of the SIA that purchases Series M Preferred Stock is or will be in a financial position appropriate to enable such client to realize to a significant extent the benefits (including tax benefits) of an investment in the Series M Preferred Stock, (B) each client of the SIA that purchases Series M Preferred Stock has a fair market net worth sufficient to sustain the risks inherent in an investment in the Series M Preferred Stock, including potential loss of his entire investment and lack of liquidity, and (C) the Series M Preferred Stock otherwise are or will be a suitable investment for each client of the SIA that purchases Series M Preferred Stock, and the SIA shall maintain files disclosing the basis upon which the determination of suitability was made;

 

(ii)           The SIA shall have reasonable grounds to believe, based upon the information made available to it, that all material facts are adequately and accurately disclosed in the Registration Statement and provide a basis for evaluating the Series M Preferred Stock;

 

(iii)          In making the determination set forth in subparagraph (ii) above, the SIA shall evaluate items of compensation, physical properties, tax aspects, financial stability and experience of the sponsor, conflicts of interest and risk factors, appraisals, as well as any other information deemed pertinent by it;

 

(iv)          The SIA shall inform each prospective nondiscretionary client of all pertinent facts relating to the liquidity and marketability of the Series M Preferred Stock.

 

(n)           The SIA covenants, warrants, and agrees to retain in its files, for a period of at least six years, information which will establish that each purchaser of Series M Preferred Stock falls within the permitted class of investors.

 

(o)           The SIA either (i) shall not purchase Series M Preferred Stock for its own account or (ii) shall hold for investment any Series M Preferred Stock purchased for its own account.

 

(p)           The SIA acknowledges and agrees that the SIA’s clients purchasing the Series M Preferred Stock are relying on recommendations and investment advice provided by the SIA through its representatives and not on any recommendation by Dealer Manager. In connection therewith, Dealer Manager explicitly disclaims any investment advice or recommendations to any clients/prospective investors of the SIA.

 

2.

Compensation to the SIA.

 

The Dealer Manager shall pay no fees, commissions or other compensation to the SIA.

 

3.

Association of the Dealer Manager with Other Advisors and Dealers.

 

(a)           It is expressly understood between the SIA and the Company that the Dealer Manager will offer Series M Preferred Stock for sale to the public pursuant to the Dealer Manager Agreement. Any Series M Preferred Stock offered and sold pursuant to this Agreement will be offered and sold through a registered broker-dealer and a member of FINRA as Broker of Record. The SIA acknowledges and represents that any transaction in the Series M Preferred Stock effected by those investment advisor representatives of the SIA who are not registered representatives of a broker-dealer registered under the Exchange Act shall be effected through SIA’s custodian as Broker of Record. The SIA acknowleges that the Dealer Manger will not act as Broker of Record for any Shares offered and sold pursuant to this Agreement.

 

 

(b)           In the event that the SIA’s representatives are registered representatives of a broker-dealer registered under the Exchange Act and a member of FINRA, such broker-dealer shall act as Broker of Record and the SIA shall cooperate with the Dealer Manager to obtain any required Participating Broker-Dealer Agreement or other such form of agreement as may be required. Further, in the event that the SIA’s custodian is unable to act as Broker of Record and/or the SIA’s representatives are not registered with a broker-dealer, the SIA agrees that it shall (and it shall cause its representatives to) only effect transactions in the Series M Preferred Stock through such broker-dealers which have agreed to act as Broker of Record for the Series M Preferred Stock.

 

(c)           It is expressly understood between the Dealer Manager and the SIA that the Dealer Manager may cooperate with broker-dealers who are registered as broker-dealers with the Financial Industry Regulatory Authority, Inc. (“FINRA”) or with other investment advisors registered under the Investment Advisers Act or, if not registered under the Investment Advisers Act, then the SIA is registered under the state securities acts in the states where it does business as an investment advisor. Such broker-dealers and investment advisors:

 

(i)            may enter into agreements with the Dealer Manager on terms and conditions that may be identical or similar to, or materially different from, this Agreement; and

 

(ii)           shall receive such rates of commission or other fees as are agreed to between the Dealer Manager and the respective broker-dealers and investment advisors and as are in accordance with the terms of the Registration Statement.

 

4.

Conditions of the SIA’s Obligations.

 

The SIA’s obligations hereunder are subject, during the term of this Agreement and the Offering, to:

 

(a)           the performance by the Dealer Manager of its obligations (including compliance by the Dealer Manager with its covenants and agreements set forth in Section 7); and

 

(b)           the conditions that (i) the Registration Statement shall become and remain effective, and (ii) no stop order shall have been issued suspending the effectiveness of the Offering.

 

5.

Conditions to the Dealer Manager’s Obligations.

 

The obligations of the Dealer Manager hereunder are subject, during the term of this Agreement and the Offering, to the conditions that:

 

(a)           at the effective date of the Registration Statement and thereafter during the term of this Agreement while any Series M Preferred Stock remain unsold, the Registration Statement shall remain in full force and effect authorizing the offer and sale of the Series M Preferred Stock;

 

(b)           no stop order suspending the effectiveness of the Offering or other order restraining the offer or sale of the Series M Preferred Stock shall have been issued nor proceedings therefor initiated or threatened by any state regulatory agency or the SEC; and

 

 

(c)           the SIA shall have satisfactorily performed all its obligations hereunder (including Section 6).

 

6.

Representations, Warranties, Covenants and Agreements of the SIA.

 

The SIA covenants, agrees, warrants and represents during the term of this Agreement, as follows:

 

(a)           The SIA is and will continue to be registered as an investment advisor under the Investment Advisers Act or, if not registered under the Investment Advisers Act, then registered under the state securities acts in the states where it does business as an investment advisor, and will make or comply with any regulatory filings and other regulatory requirements applicable to it in each state in which the SIA is required to make such filings or comply with such other requirements.

 

(b)           The SIA shall comply with all applicable federal and state securities laws, including without limitation the disclosure requirements of the Investment Advisers Act and the provisions thereof requiring disclosure of the existence of this Agreement.

 

(c)           The SIA shall maintain the records required by Section 204 of the Investment Advisers Act and Rule 204-2 thereunder, in the form and for the periods required thereby.

 

(d)           The SIA’s acceptance of this Agreement constitutes a representation and warranty to the Company and the Dealer Manager that the SIA has established and implemented an anti-money laundering compliance program (“AML Program”) in accordance with relevant law, including relevant FINRA rules, SEC rules and regulations (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”), that are reasonably expected to detect and cause the reporting of suspicious transactions in connection with the Offering. In addition, the SIA represents and warrants 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 Treasury’s Office of Foreign Assets Control (“OFAC Program”) and will continue to maintain the OFAC Program during the term of this Agreement. Upon request by the Dealer Manager at any time, the SIA 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 the SIA’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 Series M Preferred Stock recommended by the SIA are “customers” of the SIA and not the Dealer Manager. Nonetheless, to the extent that the Dealer Manager deems it prudent, the SIA shall cooperate with the Dealer Manager’s reasonable requests for information, records and data related to the Company’s Series M Preferred Shareholders introduced to, and serviced by, the SIA (the “Customers”).

 

Notwithstanding the foregoing, the SIA shall not be required to provide to the Dealer Manager any documentation that, in the SIA’s reasonable judgment, would cause the SIA to lose the benefit of attorney-client privilege or any other privilege which it may be entitled to assert relating to the discoverability of documents in any civil or criminal proceedings. The SIA hereby represents and warrants that it is currently in compliance with all AML Rules and OFAC requirements, including, but not limited to, the Customer Identification Program requirements under Section 326 of the USA PATRIOT Act. The SIA hereby agrees, upon request by the Dealer Manager to (i) provide an annual certification to the Dealer Manager that, as of the date of such certification (A) its AML Program and its OFAC Program are consistent with the AML Rules and OFAC requirements, (B) it has continued to implement its AML Program and the OFAC Program, and (C) it is currently in compliance with all AML Rules and OFAC requirements, including, but not limited to, the Customer Identification Program requirements under Section 326 of the USA PATRIOT Act; and (ii) 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 relevant SEC and Treasury Department Rules thereunder. In addition, the SIA represents that its custodian and the Broker of Record have an AML Program and an OFAC Program which comply with the requirements set forth in this Section 6(d) and that the SIA’s clients are subject to the requirements contained in such programs.

 

 

(e)           With respect to any purchase of the Series M Preferred Stock by a client of the SIA, such investment will be in conformity with all applicable provisions of the SIA’s investment advisory agreement with such client (including without limitation any and all investment objectives, guidelines and restrictions applicable to the client’s account), and the SIA shall have acted in conformity with the standard of care owed to the client under applicable law and any applicable provisions in the SIA’s investment advisory agreement with the client.

 

(f)            If the SIA 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 the SIA is licensed, and applicable rules, regulations and/or guidance relating to the use of electronic signatures issued by the SEC, FINRA and the North American Securities Administrators Association (“NASAA”) including, as applicable, the NASAA Statement of Policy Regarding Use of Electronic Offering Documents And Electronic Signatures, adopted May 8, 2017, as amended (collectively, “Electronic Signature Law”)), to the extent the Company allows the use of Electronic Signature, in whole or in part, the SIA represents that: (i) each Electronic Signature will be genuine; (ii) 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; (iii) the SIA will comply with all applicable the terms of the Electronic Signature Law; and (iv) the SIA agrees to the Electronic Signature Use Indemnity Agreement attached as Exhibit B hereto.

 

7.

Covenants and Agreements of the Dealer Manager.

 

The Dealer Manager covenants and agrees during the term of this Agreement as follows:

 

(a)           It shall inform the SIA whenever and as soon as it receives or learns of any order issued by the SEC or any other regulatory agency which suspends the effectiveness of the Registration Statement or prevents the use of the Prospectus or which otherwise prevents or suspends the offering or sale of the Series M Preferred Stock, or receives notice of any proceedings regarding any such order.

 

(b)           It shall deliver to the SIA such number of copies of the Registration Statement or the Prospectus, and any supplements and post-effective amendments thereto, as the SIA may reasonably request.

 

8.

Payment of Costs and Expenses.

 

Each party shall pay all costs and expenses incident to the performance of its obligations under this Agreement.

 

 

9.

Indemnification

 

(a)           The SIA agrees to indemnify, defend and hold harmless the Company, the Dealer Manager, their affiliates and their or its officers, directors, trustees, employees and agents, against all losses, claims, demands, liabilities and expenses, joint or several, including reasonable legal and other expenses incurred in defending such claims or liabilities, whether or not resulting in any liability to the Company, the Dealer Manager, their affiliates and their or its officers, directors, trustees, employees or agents, which they or any of them may incur arising out of

 

(i)

the investment advice or the offer or sale (as such term is defined in the Securities Act) by the SIA, or any person acting on its behalf, of any Series M Preferred Stock pursuant to this Agreement, if such loss, claim, demand, liability, or expense arises out of or is based upon an untrue statement or alleged untrue statement of a material fact, or any omission or alleged omission of a material fact, other than a statement, omission, or alleged omission by the SIA which is also, as the case may be, contained in or omitted from the Prospectus or the Registration Statement and which statement or omission was not based on information supplied to the Company or the Dealer Manager by such SIA;

 

(ii)

the breach by the SIA, or any person acting on its behalf, of any of the terms and conditions of this Agreement; or

 

(iii)

the negligence, malpractice or malfeasance of the SIA.

 

This indemnity provision shall survive the termination of this Agreement.

 

(b)           The Company agrees to indemnify, defend and hold harmless the SIA, its officers, directors, employees and agents, against all losses, claims, demands, liabilities and expenses, including reasonable legal and other expenses incurred in defending such claims or liabilities, which they or any of them may incur, including, but not limited to, alleged violations of the Securities Act, but only to the extent that such losses, claims, demands, liabilities and expenses shall arise out of or be based upon:

 

(i)

any untrue statement of a material fact contained in the Registration Statement, at the time it became effective with the SEC or in the Prospectus (as from time to time amended or supplemented); or

 

(ii)

any omission or alleged omission to state therein a material fact required to be stated in the Prospectus or the Registration Statement at the time it became effective or necessary to make such statements, and any part thereof, not misleading; provided, further, that any such untrue statement, omission or alleged omission is not based on information included in any such document which was supplied to the Company or the Dealer Manager, or any officer of the Company or the Dealer Manager by such SIA; provided that in each case that such claims or liabilities did not arise from the SIA’s own negligence, malpractice or malfeasance.

 

This indemnity provision shall survive the termination of this Agreement.

 

(c)           No indemnifying party shall be liable under the indemnity provisions contained in subparagraphs (a) and (b) above unless the party to be indemnified shall have notified such indemnifying party in writing promptly after the summons or other first legal process giving information of the nature of the claim served upon the party to be indemnified, but failure to notify an indemnifying party of any such claim shall not relieve it from any liabilities which it may have to the indemnified party against whom action is brought.

 

 

In the case of any such claim, if the party to be indemnified notified the indemnifying party of the commencement thereof as aforesaid, the indemnifying party shall be entitled to participate at its own expense in the defense of such claim. If it so elects, in accordance with arrangements satisfactory to any other indemnifying party or parties similarly notified, the indemnifying party has the option to assume the entire defense of the claim, with counsel who shall be reasonably satisfactory to such indemnified party and all other indemnified parties who are defendants in such action, unless such indemnified parties reasonably objects to such assumption on the ground that there may be legal defenses available to it which are different from or in addition to those available to such indemnifying party. Any indemnified party shall have the right to employ a separate counsel in any such action and to participate in the defense thereof but the reasonable fees and expenses of such counsel shall be borne by such party unless such party has objected in accordance with the preceding sentence, in which event such fees and expenses shall be borne by the indemnifying parties. Except as set forth in the preceding sentence, if an indemnifying party assumes the defense of such action, the indemnifying party shall not be liable for any fees and expenses of separate counsel for the indemnified parties incurred thereafter in connection with such action.

 

In no event shall the indemnifying parties be liable for the reasonable fees and expenses of more than one counsel for all indemnified parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances.

 

10.

Term of Agreement.

 

This Agreement shall become effective on the date on which this Agreement is executed by all the parties hereto. After this Agreement becomes effective, any party may terminate it at any time for any reason by giving 30 days’ prior notice to the other party; provided, however, that this Agreement shall in any event automatically terminate at the first occurrence of any of the following events:

 

(a)           the Registration Statement for offer and sale of the Series M Preferred Stock shall cease to be effective;

 

(b)           the Offering shall be terminated; or

 

(c)           the SIA’s license or registration to act as an investment advisor shall be revoked or suspended by any federal, self-regulatory or state agency and such revocation or suspension is not cured within ten days from the date of such occurrence.

 

Notwithstanding anything herein to the contrary, this Agreement shall be deemed suspended during any period for which the SIA’s registration under the Investment Advisers Act is revoked or suspended or, if the SIA is not registered under the Investment Advisers Act, then under the state securities acts in the states where it does business as an investment advisor.

 

11.

Notices.

 

All notices, requests, demands, approvals, consents, waivers and other communications required or permitted to be given under this Agreement (each, a “Notice”) shall be in writing and shall be (a) delivered personally, (b) mailed by first-class, registered or certified mail, return receipt requested, postage prepaid, (c) sent by next-day or overnight mail or delivery, or (d) sent by facsimile transmission (provided, however, that the original copy thereof also is sent by one of the other means specified above in this Section 11):

 

If to the Company:

Ashford Hospitality Trust, Inc. 14185 Dallas Parkway, Suite 1100 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 Dealer Manager:

Ashford Securities LLC 14185 Dallas Parkway, Suite 780 Dallas, Texas 75254

 

with a copy to:

 

Kunzman & Bollinger, Inc.
5100 N. Brookline Ave, Suite 600
Oklahoma City, Oklahoma 73112

 

If sent to the SIA:

To the person whose name and address are identified in Exhibit A hereto; or

 

to such other person or address as any party shall specify by Notice in writing to the other parties in accordance with this Section 11. Each Notice shall be deemed effective and given upon actual receipt or refusal of receipt.

 

12.

Successors.

 

This Agreement shall be binding upon and inure to the benefit of the parties hereto, and shall not be assigned by the SIA, whether by contract, operation of law or otherwise.

 

13.           Miscellaneous.

 

(a)           This Agreement shall be construed, without regard to conflicts of law provisions, in accordance with the applicable laws of the State of Texas.

 

(b)           Nothing in this Agreement shall constitute the SIA as in association with or in partnership with the Dealer Manager or the Company.

 

(c)           If any party hereto initiates any legal action arising out of or in connection with this Agreement, the prevailing party shall be entitled to recover from the other party all reasonable attorneys’ fees, expert witness fees and other costs and expenses incurred by the prevailing party in connection therewith. If any party to this Agreement (the “First Party”) becomes involved in a litigation, arbitration or other dispute proceeding (a “Proceeding”) made or brought by any person who is not a party to this Agreement or an affiliate of a party to this Agreement and which arises out of or otherwise involves the acts or omissions of another party to this Agreement (the “Second Party”), and the First Party is dismissed from the Proceeding or otherwise found to have prevailed in the Proceeding, the Second Party shall be responsible for paying any and all costs and expenses (including without limitation reasonable attorneys’ fees) incurred by the First Party in connection with defending itself in the Proceeding, including without limitation costs and expenses of investigation and expert witness fees.

 

 

(d)           The terms of this Agreement may be extended to cover additional offerings of Series M Preferred Stock or other securities of the Company by the execution by the parties hereto of an addendum identifying the Series M Preferred Stock or other securities of the Company and registration statement relating to such additional offering. Upon execution of such addendum, the terms “Series M Preferred Stock”, “Offering”, “Registration Statement” and “Prospectus” set forth herein shall be deemed to be amended as set forth in such addendum.

 

(e)           This Agreement, including Exhibit A hereto, embodies the entire agreement and understanding, and supersedes all prior agreements and understanding (whether written or oral), among the parties hereto with respect to the subject matter hereof.

 

(f)            No amendment to, or waiver of, any provision of this Agreement shall be deemed valid or effective unless it is in writing and signed by all the parties hereto.

 

(g)           If any provision of this Agreement shall be deemed void, invalid or ineffective for any reason, the remainder of the Agreement shall remain in full force and effect.

 

(h)           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.

 

[Signatures on following page]

 

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and year indicated on Exhibit A hereto.

 

	Dealer Manager:
	ASHFORD SECURITIES LLC
	By:
	Print Name:
	Title:
	Company:
	ASHFORD HOSPITALITY TRUST, INC.
	By:
	Print Name:
	Title:
	Selected Investment Advisor:
	By:
	Print Name:
	Title:

 

 

EXHIBIT A
TO
SELECTED INVESTMENT ADVISOR AGREEMENT

 

ASHFORD HOSPITALITY TRUST, INC.

 

This Exhibit A is attached to and made a part of that certain Selected Investment Advisor Agreement (the “Agreement”), among Ashford Securities LLC, Ashford Hospitality Trust, Inc., and.

 

 

To be Completed by SIA:

 

1.

Date of Agreement:

 

2.

Identity of Advisor:

 

Name:

 

	Type of Entity:
		(To be completed by the Advisor, e.g., corporation, limited liability company, partnership or sole proprietorship.)

 

	State Organized in:
		(To be completed by Advisor.)

 

Qualified to Do Business and in Good Standing in the Following Jurisdictions (including your state of organization). (Note: Qualification to do business in any jurisdiction is generally a requirement imposed by the secretary of state or other authority of jurisdictions in which you do business, and is not related to your holding a license as an investment advisor in such jurisdictions. Questions concerning this matter should be directed to your legal counsel.)

 

(To be completed by Advisor)

 

(a)

Are you registered as an Investment Advisor with the Securities and Exchange Commission? If no, complete Section 2(b).

 

Yes ¨         No ¨

 

	(b)	Registered as an Investment Advisor in the following States:
		(To be completed by Advisor)

 

 

3.	Name and Address for Notice Purposes (see Section 11 of the Agreement):

 

	Name:
	Title:
	Company:
	Address:
	City, State and Zip Code:
	Telephone Number (including area code):

 

4.	Name of Custodian:

 

	Address:
	City, State, and Zip Code:
	Telephone Number (including area code):
	If Broker of Record and Custodian are same legal entity, please check here: [  ]
	Otherwise, please provide the following:
	Name of Broker of Record:
	Address:
	City, State and Zip Code:
	Telephone Number (including area code):

 

If your firm utilizes more than one custodian/broker of record, please indicate below:

 

Name of Custodian	Name of Program

 

5.

Please complete the following for our records:

 

(a)

How many registered investment advisors are with your firm? _________

 

PLEASE ATTACH A CURRENT LIST. ALL INFORMATION WILL BE HELD IN CONFIDENCE.

 

(b)

Does your firm publish a newsletter?

 

Yes ¨         No ¨

 

 

What is/are the frequency of the publication(s)?

 

________ Weekly                     Monthly                      Quarterly

 

________ Bi-weekly                  Bi-monthly                  Other (please specify)

 

PLEASE PLACE ASHFORD SECURITIES LLC AND ASHFORD HOSPITALITY TRUST, INC. ON YOUR MAILING LIST AND PROVIDE A SAMPLE OF THE PUBLICATION IF AVAILABLE.

 

(c)

Does your firm have regular internal mailings, or bulk package mailings to its registered investment advisors?

 

Yes ¨         No ¨

 

PLEASE PLACE ASHFORD SECURITIES LLC AND ASHFORD HOSPITALITY TRUST, INC. ON YOUR MAILING LIST AND PROVIDE A SAMPLE OF THE PUBLICATION IF AVAILABLE.

 

(d)

Does your firm have an e-mail system for your registered investment advisors?

 

Yes ¨         No ¨

 

		If so, please provide e-mail address:
	(e)	Website address:
		Person responsible:

 

To be Completed by Ashford Securities:

 

In connection with the purchase of Series M Preferred Stock by clients of the SIA 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 Series M Preferred Stock in the Primary Offering to the SIA’s clients. To the extent this Dealer Manager Fee is less than the 3% Dealer Manager Fee described the Prospectus, the purchase price per share for the clients of the SIA will be correspondingly reduced.

 

ASHFORD SECURITIES LLC
By:
Print Name:
Title:

 

 

EXHIBIT B

 

ELECTRONIC SIGNATURE USE INDEMNITY AGREEMENT

 

The SIA 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 6(g) hereof). In consideration of the Company allowing the SIA 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, the SIA does hereby, for itself and its successors and permitted assigns, covenant and agree to indemnify and hold harmless the Company, 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 the SIA’s representations or covenants set forth in Section 6(g) hereof or the representations described below.

 

The SIA represents that it will comply with all applicable terms of Electronic Signature Law as outlined in Section 6(g) of this Agreement. The SIA represents that the Company may accept any Electronic Signature without any responsibility to verify or authenticate that it is the signature of the SIA’s client given with such client’s prior authorization and consent. The SIA represents that the Company may act in accordance with the instructions authorized by Electronic Signature without any responsibility to verify that the SIA’s client intended to give the Electronic Signature for the purpose of authorizing the instruction, transaction or request and that the SIA’s client received all disclosures required by applicable Electronic Signature Law. The SIA 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

 

January 22, 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 amended, the “Charter”), on January 20, 2025, the Board of Directors of the Corporation (the “Board”) reclassified and designated 5,000,000 unissued shares of common stock, par value $0.01 per share, of the Corporation, as unclassified and undesignated shares of preferred stock, par value $0.01 per share;

 

SECOND:  After giving effect to the foregoing reclassifications, the Corporation has the authority to issue 450,000,000 shares of capital stock, par value $0.01 per share, consisting of 395,000,000 shares of common stock, par value $0.01 per share, of the Corporation and 55,000,000 shares of preferred stock, of which 20,481,195 shares are unclassified and undesignated shares of authorized preferred stock.

 

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:	/s/ Stephen Zsigray
		Name: Stephen Zsigray
		Title: Chief Executive Officer and President
	ATTEST:
	By:	/s/ Alex Rose
		Name: Alex Rose
		Title: Executive Vice President, General Counsel and Secretary

 

[Signature page to 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 22, 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 charter (as the same may be amended or supplemented, the “Charter”), the Board of Directors of the Corporation (the “Board”) on January 20, 2025 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 classifying and designating the Series M Preferred Stock and filed by the Corporation with the Department on January 22, 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 11,200,000 and 4,800,000, respectively.

 

(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 7.5% per annum of the stated value of $25.00 per share (the “Stated Value”) (equivalent to an annual dividend rate of $1.875 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) 8.0% 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) 5.0% 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; and (iii) 0.0% 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 (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:	/s/ Stephen Zsigray
		Name: Stephen Zsigray
		Title: Chief Executive Officer and President
	ATTEST:
	By:	/s/ Alex Rose
		Name: Alex Rose
		Title: Executive Vice President, General Counsel and Secretary

 

[Signature page to Series L Preferred Stock Articles Supplementary]

 

 

 

Exhibit 4.12

 

ASHFORD HOSPITALITY TRUST, INC.

 

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

 

January 22, 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 charter (as the same may be amended or supplemented, the “Charter”), the Board of Directors of the Corporation (the “Board”) on January 20, 2025 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 classifying and designating the Series L Preferred Stock and filed by the Corporation with the Department on January 22, 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 11,200,000 and 4,800,000, respectively.

 

(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 7.7% per annum of the stated value of $25.00 per share (the “Stated Value”) (equivalent to an annual dividend rate of $1.925 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 8.2% 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) 1.5% of the Stated Value beginning on the Original Issue Date of the shares of Series M Preferred Stock to be redeemed; and (ii) 0.0% 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:	/s/ Stephen Zsigray
		Name: Stephen Zsigray
		Title: Chief Executive Officer and President
	ATTEST:
	By:	/s/ Alex Rose
		Name: Alex Rose
		Title: Executive Vice President, General Counsel and Secretary

 

[Signature page to Series M Preferred Stock Articles Supplementary]

 

 

 

 

 

EXHIBIT 5.1

 

Hogan Lovells US LLP Harbor East 100 International Drive Suite 2000 Baltimore, MD 21202 T +1 410 659 2700 F +1 410 659 2701 www.hoganlovells.com

 

January 23, 2025

 

Board of Directors

Ashford Hospitality Trust, Inc.

14185 Dallas Parkway

Suite 1200

Dallas, TX 75254

 

Ladies and Gentlemen:

 

We are acting as counsel to Ashford Hospitality Trust, Inc. a Maryland corporation (the “Company”), in connection with its registration statement on Form S-11 (the “Registration Statement”), filed with the Securities and Exchange Commission relating to the proposed public offering of up to 11,200,000 shares of Series L and up to 4,800,000 shares Series M Preferred Stock, $.01 par value per share (the “Preferred Shares”), which may be sold from time to time and on a delayed or continuous basis, as set forth in the prospectus which forms a part of the Registration Statement, and as to be set forth in one or more supplements to the prospectus. This opinion letter is furnished to you at your request to enable you to fulfill the requirements of Item 601(b)(5) of Regulation S-K, 17 C.F.R. § 229.601(b)(5), in connection with the Registration Statement.

 

For purposes of this opinion letter, we have examined copies of such agreements, instruments and documents as we have deemed an appropriate basis on which to render the opinions hereinafter expressed. In our examination of the aforesaid documents, we have assumed the genuineness of all signatures, the legal capacity of all natural persons, the accuracy and completeness of all documents submitted to us, the authenticity of all original documents, and the conformity to authentic original documents of all documents submitted to us as copies (including pdfs). As to all matters of fact, we have relied on the representations and statements of fact made in the documents so reviewed, and we have not independently established the facts so relied on. This opinion letter is given, and all statements herein are made, in the context of the foregoing.

 

For purposes of this opinion letter, we have assumed that (i) the issuance, sale, series, and amount any Preferred Shares to be offered from time to time will have been duly authorized and established by proper action of the board of directors of the Company or a duly authorized committee of such board (“Board Action”) consistent with the procedures and terms described in the Registration Statement and in accordance with the Company’s charter and bylaws and applicable Maryland corporate law, in an aggregate number of Preferred Shares that does not exceed the combined aggregate number then classified and designated as Series L Preferred Shares and Series M Preferred Shares and in a manner that does not violate any law, government or court-imposed order or restriction or agreement or instrument then binding on the Company or otherwise impair the legal or binding nature of the obligations represented by the Preferred Shares; (ii) at the time of offer, issuance and sale of the Preferred Shares, the Registration Statement will have been declared effective under the Securities Act of 1933, as amended (the “Act”), and no stop order suspending its effectiveness will have been issued and remain in effect; (iii) the Preferred Shares will be delivered against payment of valid consideration therefor and in accordance with the terms of the applicable Board Action authorizing such sale and any applicable underwriting agreement or purchase agreement and as contemplated by the Registration Statement and/or the applicable prospectus supplement; (iv) the Company will remain a Maryland corporation; and (iv) the Preferred Shares will not be issued in violation of the ownership limit contained in the Company’s charter.

 

Hogan Lovells US LLP is a limited liability partnership registered in the state of Delaware. “Hogan Lovells” is an international legal practice that includes Hogan Lovells US LLP and Hogan Lovells International LLP, with offices in: Alicante Amsterdam Baltimore Beijing Berlin Birmingham Boston Brussels Colorado Springs Denver Dubai Dublin Dusseldorf Frankfurt Hamburg Hanoi Ho Chi Minh City Hong Kong Houston Johannesburg London Los Angeles Luxembourg Madrid Mexico City Miami Milan Minneapolis Monterrey Munich New York Northern Virginia Paris Philadelphia Riyadh Rome San Francisco São Paulo Shanghai Silicon Valley Singapore Sydney Tokyo Warsaw Washington, D.C. Associated Offices: Budapest Jakarta Shanghai FTZ. Business Service Centers: Johannesburg Louisville. For more information see www.hoganlovells.com

 

 

Board of Directors Ashford Hospitality Trust, Inc.

- 2 -

January 23, 2025

 

This opinion letter is based as to matters of law solely on the applicable provisions of the Maryland General Corporation Law as currently in effect. We express no opinion herein as to any other statutes, rules or regulations (and in particular, we express no opinion as to any effect that such other statutes, rules, or regulations may have on the opinions expressed herein).

 

Based upon, subject to and limited by the foregoing, we are of the opinion that the Preferred Shares upon due execution and delivery on behalf of the Company of certificates therefor, or the entry of the issuance thereof in the books and records of the Company, as the case may be, will be validly issued, fully paid and nonassessable.

 

This opinion letter has been prepared for use in connection with the Registration Statement. We assume no obligation to advise of any changes in the foregoing subsequent to the effective date of the Registration Statement.

 

We hereby consent to the filing of this opinion letter as Exhibit 5.1 to the Registration Statement and to the reference to this firm under the caption “Legal Matters” in the prospectus constituting a part of the Registration Statement. In giving this consent, we do not thereby admit that we are an “expert” within the meaning of the Act.

 

Very truly yours,

 

/s/ Hogan Lovells US LLP

 

HOGAN LOVELLS US LLP

 

 

 

Exhibit 8.1

 

O’Melveny & Myers LLP January 23, 2025 Page 1

 

January 23, 2025

 

Ashford Hospitality Trust, Inc. 

14185 Dallas Parkway, Suite 1200

Dallas, Texas 75254

 

Ladies and Gentlemen:

 

We have acted as special United States federal income tax counsel to Ashford Hospitality Trust, Inc., a ‎Maryland corporation (the “Company”), in connection with a registration statement number 333-283802 on Form S-11 filed by the Company with the Securities and Exchange Commission on December 13, 2024, as amended by pre-effective Amendment No. 1 filed on January 23, 2025 (the “Registration Statement”), including the prospectus forming a part thereof (the “Prospectus”) providing for the issuance and sale of up to 16,000,000 shares, consisting of Series L Redeemable Preferred Stock (the “Series L Preferred Stock”) and Series M Redeemable Preferred Stock (the “Series M Preferred Stock”), including pursuant to a dividend reinvestment plan‎. You have requested our opinion as to certain United States federal income tax ‎matters in connection with the offering of Series L Preferred Stock and Series M Preferred Stock pursuant to the Prospectus. Capitalized terms used herein and not otherwise defined shall have the meanings set forth in the Registration Statement.

 

In connection with our opinion, we have examined and relied upon the following:‎

 

1.            the Company’s Articles of Amendment and Restatement, filed July 28, 2003, the Certificate of Correction to Correct an Error, in the form filed with the State Department of Assessments and Taxation of Maryland on August 7, 2003, as amended by Amendment Number One filed with the State Department of Assessments and ‎Taxation of Maryland on May 13, 2015, as amended by Amendment Number Two accepted for ‎record and certified by the Maryland State Department of Assessments and Taxation on May 19, ‎‎2017, as amended by Articles of Amendment filed with the State Department of Assessment and ‎Taxation of Maryland on July 1, 2020;

 

2.            the Company’s Articles Supplementary (Series A Preferred Stock), in the form filed with the State Department of Assessments and Taxation of Maryland on September 21, 2004;

 

3.            the Company’s Articles Supplementary (Series B-1 Preferred Stock), in the form filed with the State Department of Assessments and Taxation of Maryland on December 29, 2004;the Company’s Articles Supplementary (Series B-2 Preferred Stock), in the form filed with the State Department of Assessments and Taxation of Maryland on December 29, 2004;

 

4.            the Company’s Articles Supplementary (Series C Preferred Stock), in the form filed with the State Department of Assessments and Taxation of Maryland on April 10, 2007;

 

Austin • Century City • Dallas • Houston • Los Angeles • Newport Beach • New York • San Francisco • Silicon Valley • Washington, DC 

Beijing • Brussels • Hong Kong • London • Seoul • Shanghai • Singapore • Tokyo

 

 

O’Melveny & Myers LLP January 23, 2025 Page 2

 

5.            the Company’s Articles Supplementary (Series D Preferred Stock), in the form filed with the State Department of Assessments and Taxation of Maryland on July 17, 2007; the Company’s Articles Supplementary Establishing Additional Shares of Series D Preferred Stock, in the form filed with the State Department of Assessments and Taxation of Maryland on September 21, 2010; the Company’s Articles Supplementary Establishing Additional Shares of Series D Preferred Stock, in the form filed with the State Department of Assessments and Taxation of Maryland on September 30, 2011;

 

6.            the Company’s Articles Supplementary (Series E Preferred Stock), in the form filed with the State Department of Assessments and Taxation of Maryland on April 15, 2011; the Company’s Articles Supplementary Establishing Additional Shares of Series E Preferred Stock, in the form filed with the State Department of Assessments and Taxation of Maryland on October 14, 2011;

 

7.            the Company’s Articles Supplementary (Series F Preferred Stock), in the form filed with the State Department of Assessments and Taxation of Maryland on July 8, 2016;

 

8.            the Company’s Articles Supplementary (Series G Preferred Stock), in the form filed with the State Department of Assessments and Taxation of Maryland on October 17, 2016;

 

9.            the Company’s Articles Supplementary (Series H Preferred Stock), in the form filed with the State Department of Assessments and Taxation of Maryland on August 18, 2017;

 

10.          the Company’s Articles Supplementary (Series I Preferred Stock), in the form filed with the State Department of Assessments and Taxation of Maryland on November 13, 2017;

 

11.          the Company’s Articles Supplementary (Series J Preferred Stock), in the form filed with the State Department of Assessments and Taxation of Maryland on April 29, 2022;

 

12.          the Company’s Articles Supplementary (Series K Preferred Stock), in the form filed with the State Department of Assessments and Taxation of Maryland on April 29, 2022;

 

13.          the Company’s Articles Supplementary (Reclassifying Stock), in the form filed with the State Department of Assessments and Taxation of Maryland on January 22, 2025;

 

14.          the Company’s Articles Supplementary (Series L Preferred Stock), in the form filed with the State Department of Assessments and Taxation of Maryland on January 22, 2025;

 

15.          the Company’s Articles Supplementary (Series M Preferred Stock), in the form filed with the State Department of Assessments and Taxation of Maryland on January 22, 2025;

 

16.          the Company’s Amended and Restated Bylaws, as amended by Amendment No. 1 and Amendment No. 2, and the Company’s Second Amended and Restated Bylaws, as amended by Amendment No. 1 on October 26, 2014, Amendment No. 2 on October 19, 2015, Amendment No. 3 on August 2, 2016, and Amendment No. 4 on March 17, 2022, as filed with the SEC;

 

Austin • Century City • Dallas • Houston • Los Angeles • Newport Beach • New York • San Francisco • Silicon Valley • Washington, DC 

Beijing • Brussels • Hong Kong • London • Seoul • Shanghai • Singapore • Tokyo

 

 

O’Melveny & Myers LLP January 23, 2025 Page 3

 

17.          the Registration Statement;

 

18.          the Certificate of Limited Partnership of Ashford Hospitality Limited Partnership, a Delaware limited partnership (the “Operating Partnership”), effective May 13, 2003, as certified by the Secretary of State of the State of Delaware;

 

19.          the Certificate of Amendment to the Certificate of Limited Partnership of the Operating Partnership, effective July 25, 2003, as certified by the Secretary of State of the State of Delaware;

 

20.          the Amended and Restated Agreement of Limited Partnership of the Operating Partnership between Ashford OP General Partner LLC, as the general partner, and Ashford OP Limited Partner LLC, and certain officers, directors and others as the limited partners (the “Operating Partnership Agreement”), as amended through the relevant dates;

 

21.          the Officer’s Certificate to Counsel for Ashford Hospitality Trust, Inc. Regarding Certain Income Tax Matters dated the date hereof and executed by a duly appointed officer of the Company (the “AHT Officer’s Certificate”);

 

22.          the Officer’s Certificate to Counsel for Braemar Hotels & Resorts Inc. (formerly known as Ashford Hospitality Prime, Inc.) Regarding Certain Income Tax Matters dated the date hereof and executed by a duly appointed officer of Braemar Hotels & Resorts Inc. (the “Braemar Officer’s Certificate”);

 

23.          the Officer’s Certificate to Counsel for Ashford Inc. Regarding Certain Income Tax Matters dated the date hereof and executed by a duly appointed officer of Ashford Inc. (the “Ashford Inc. Officer’s Certificate”);

 

24.          the form of leases entered into between any taxable REIT subsidiary of the Company and each partnership, limited liability company or trust in which the Company directly or indirectly owns an interest, the form of which is attached to the AHT Officer’s Certificate; and

 

25.          such other documents, records and matters of law as we have deemed necessary or appropriate for rendering this opinion, including all exhibits and attachments to the foregoing.

 

In our examination, we have assumed, without independent investigation or verification, (i) the authenticity and completeness of all documents reviewed by us in original or copy form, (ii) the conformity to the original documents of all documents reviewed by us as copies, including electronic copies and conformed copies, (iii) the due authorization, capacity, execution and delivery on behalf of the respective parties thereto of all documents referred to herein and the legal, valid and binding effect thereof on such parties, (iv) the genuineness of all signatures on documents examined by us, (v) the truth, accuracy and completeness of the information, factual matters, representations and warranties contained in the records, documents, instruments and certificates we have reviewed, and (vi) that each unexecuted document submitted to us for our review will be executed in a form materially identical to the form we reviewed. We have further assumed that each of the parties to each of the documents referred to herein fully complies with all of its obligations thereunder and that there are no arrangements, understandings or agreements among any of the parties relating to such documents other than those evidenced by such documents. In connection with the opinion rendered below, we have also relied upon the correctness of the factual representations contained in the AHT Officer’s Certificate, the Braemar Officer’s Certificate, and the Ashford Inc. Officer’s Certificate and have assumed that all representations made “to the knowledge of” any person will be true, correct and complete as if made without that qualification. We have also assumed that:

 

Austin • Century City • Dallas • Houston • Los Angeles • Newport Beach • New York • San Francisco • Silicon Valley • Washington, DC 

Beijing • Brussels • Hong Kong • London • Seoul • Shanghai • Singapore • Tokyo

 

 

O’Melveny & Myers LLP January 23, 2025 Page 4

 

1.            the Company has not made and will not make any amendments to its organization documents or allow amendments to the Operating Partnership Agreement or organization documents of its corporate subsidiaries or partnership, limited liability or trust agreements of its partnership, limited liability company or trust subsidiaries after the date of this opinion that would adversely affect the Company’s qualification as a real estate investment trust (a “REIT”) under the Internal Revenue Code of 1986, as amended (the “Code”), for any taxable year;

 

2.            Braemar Hotels & Resorts Inc. has not made and will not make any amendments to its organization documents or allow amendments to the Amended and Restated Agreement of Limited Partnership of Braemar Hospitality Limited Partnership (formerly known as Ashford Hospitality Prime Limited Partnership) between Braemar OP General Partner LLC (formerly known as Ashford Prime OP General Partner LLC), as the general partner, and Braemar OP Limited Partner LLC (formerly known as Ashford Prime OP Limited Partner LLC), and certain officers, directors and others as the limited partners, as amended through the date hereof, or organization documents of its corporate subsidiaries or partnership, limited liability or trust agreements of its partnership, limited liability company or trust subsidiaries after the date of this opinion that would adversely affect its qualification as a REIT under the Code;

 

3.            no action has been or will be taken by the Company, the Operating Partnership, partnership, limited liability company and trust subsidiaries of the Company or corporate subsidiaries of the Company after the date hereof that would have the effect of altering the facts upon which the opinion set forth below is based;

 

4.            commencing with formation of Braemar Hotels & Resorts Inc. on April 5, 2013 through December 31, 2013, Braemar Hotels & Resorts Inc. operated in a manner that makes the representations contained in the Braemar Officer’s Certificate true for such year; and

 

5.            no action has been or will be taken by Braemar Hotels & Resorts Inc., Braemar Hospitality Limited Partnership, partnership, limited liability company and trust subsidiaries of Braemar Hotels & Resorts Inc. or corporate subsidiaries of Braemar Hotels & Resorts Inc. after the date hereof that would have the effect of altering the facts upon which the opinion set forth below is based.

 

We have assumed that all facts, information, representations, covenants, agreements and other statements set forth in the documents referred to above were initially and are currently, and will continue to be, true, correct and complete without regard to any qualification as to knowledge or belief. We have assumed that none of the documents referred to above has been or will be amended, modified, supplemented or otherwise altered in any respect.

 

Austin • Century City • Dallas • Houston • Los Angeles • Newport Beach • New York • San Francisco • Silicon Valley • Washington, DC 

Beijing • Brussels • Hong Kong • London • Seoul • Shanghai • Singapore • Tokyo

 

 

O’Melveny & Myers LLP January 23, 2025 Page 5

 

Based on the documents and assumptions set forth above and the representations set forth in the AHT Officer’s Certificate, the Braemar Officer’s Certificate and the Ashford Inc. Officer’s Certificate, and the discussion in the Prospectus under the caption “Material U.S. Federal Income Tax Considerations” (which is incorporated herein by reference), we are of the opinion that:

 

(a)           commencing with the Company’s taxable year ended December 31, 2003 through its taxable year ended December 31, 2024, the Company has been organized and operated in conformity with the requirements for qualification as a REIT under the Code, and the Company’s organization and current and proposed method of operation will enable it to continue to meet the requirements for qualification and taxation as a REIT under the Code for its taxable year ending December 31, 2025 and thereafter;

 

(b)          the Operating Partnership is classified as a partnership for United States federal income tax purposes and not as an association taxable as a corporation or a “publicly traded partnership” taxable as a corporation under the Code; and

 

(c)          we hereby confirm the opinion of O’Melveny & Myers LLP that is attributed to us in the discussion of the United States federal income tax consequences appearing under the heading “Material U.S. Federal Income Tax Considerations” in the Registration Statement.

 

It is not possible to predict whether the statements, representations, warranties or assumptions on which we have relied to issue this opinion will continue to be accurate in the future. The Company’s qualification and taxation as a REIT under the Code has depended and will depend on the ability of the Company to meet on a prior and an ongoing basis (through actual quarterly and annual operating results, distribution levels, diversity of stock ownership and otherwise) the various qualification tests imposed under the Code, and upon the Company’s utilizing any and all appropriate “savings provisions” (including the provisions of Sections 856(c)(6), 856(c)(7), and 856(g) of the Code and the provisions included in Section 856(c)(4) of the Code (flush language) allowing for the disposal of assets within 30 days after the close of a calendar quarter, and all available deficiency dividend procedures) available to the Company under the Code to correct violations of specified REIT qualification requirements of Sections 856 and 857 of the Code. Our opinion set forth above does not foreclose the possibility that the Company may have to utilize one or more of these “savings provisions,” which could require the Company to pay an excise tax or penalty tax (which could be significant in amount) in order to maintain its REIT qualification for a taxable year. We will not review on a continuing basis the Company’s compliance with the documents or assumptions set forth above, or the representations set forth in the AHT Officer’s Certificate, the Braemar Officer’s Certificate and the Ashford Inc. Officer’s Certificate. Accordingly, no assurance can be given that the Company’s operations for any given taxable year will satisfy the requirements for qualification and taxation as a REIT.

 

The foregoing opinion is limited to the United States federal income tax matters addressed herein, and no other opinion is rendered with respect to other United States federal tax matters or to any issues arising under the tax laws of any other country, or any state or locality. This opinion has been prepared solely in connection with the Registration Statement and may not be relied upon for any other purpose without our prior written consent.

 

Austin • Century City • Dallas • Houston • Los Angeles • Newport Beach • New York • San Francisco • Silicon Valley • Washington, DC 

Beijing • Brussels • Hong Kong • London • Seoul • Shanghai • Singapore • Tokyo

 

 

O’Melveny & Myers LLP January 23, 2025 Page 6

 

The foregoing opinion is based on current provisions of the Code and the Treasury regulations thereunder (the “Regulations”), published administrative interpretations thereof, and published court decisions, all of which are subject to change and new interpretation, both prospectively and retroactively. The Internal Revenue Service has not issued Regulations or administrative interpretations with respect to various provisions of the Code relating to REIT qualification. No assurance can be given that the law will not change in a way that will prevent the Company from qualifying as a REIT or otherwise adversely affect the accuracy of the opinions expressed herein. Although the conclusions set forth herein represent our best judgment as to the probable outcome on the merits of such matters, the Internal Revenue Service and the courts are not bound by, and may disagree with, the conclusions set forth herein. This opinion is rendered only as of the date hereof, and we assume no obligation to update our opinion to address other facts or any changes in law or interpretation thereof that may hereafter occur or hereafter come to our attention. If any one of the statements, representations, warranties or assumptions that we have relied upon to issue this opinion is incorrect in a material respect, our opinion might be adversely affected and may not be relied upon.

 

Our opinion is further subject to the qualifications, conditions, limitations and assumptions in the discussion set forth herein under the heading “Material U.S. Federal Income Tax Considerations” in the Registration Statement.

 

We hereby consent to the filing of this opinion as an exhibit to the Registration Statement. We also consent to the references to O’Melveny & Myers LLP under the caption “Material U.S. Federal Income Tax Considerations” and elsewhere in the Registration Statement. In giving this consent, we do not admit that we are in the category of persons whose consent is required by Section 7 of the Securities Act of 1933, as amended, or the rules and regulations promulgated thereunder by the SEC.

 

	Very truly yours,
	/s/ O’Melveny & Myers LLP
	O’Melveny & Myers LLP

 

Austin • Century City • Dallas • Houston • Los Angeles • Newport Beach • New York • San Francisco • Silicon Valley • Washington, DC 

Beijing • Brussels • Hong Kong • London • Seoul • Shanghai • Singapore • Tokyo

 

 

 

Exhibit 10.1.14

 

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

JANUARY 22, 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 January 22, 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 20, 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 22, 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 22, 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 22, 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:	/s/ Alex Rose
	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 11,200,000.

 

(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 7.5% 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 $1.875 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 4,800,000.

 

(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 7.7% 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 $1.925 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 8.2% 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 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

 

January 23, 2025

 

 

---